THE WORLD BANK MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION PROJECT (MinDiver) (MINISTRY OF MINES & STEEL DEVELOPMENT) FINANCIAL STATEMENTS FOR THE YEAR ENDED 31Sr DECEMBER, 2018 AUDITED BY OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATION Plot 273, Samuel Ademulegun Street, Central Business District, Abuja. MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER) MINISTRY OF MINES AND STEEL DEVELOPMENT. CONTENT PAGE(S) CORPORATE INFORMATION__ 2-3 REPORT OF THE PROJECT MANAGEMENT TEAM 4 STATEMENT OF THE PROJECT MANAGEMENT RESPONSIBILITIES 5 REPORT OF THE AUDITORS 6 STATEMENT OF FINANCIAL POSITION 8 STATEMENT OF FINANCIAL PERFORMANCE 9 CASHFLOW STATEMENT 10 NOTES TO THE ACCOUNT 11-14 MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER) MINISTRY OF MINES AND STEEL DEVELOPMENT. FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018 CORPORATE INFORMATION Project Name: MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER) Project ID: P159761 Total Project Cost: US$150 million Commitment Amount: US$41million Responsible Agency: MINISTRY OF MINES AND STEEL DEVELOPMENT. ABUJA PROJECT MANAGEMENT TEAM 1. MR. ADIE LINUS UTSU - PROJECT COORDINATOR 2. ENGR. FRANK ODOOM - DEPUTY PROJECT COORDINATOR 3. MRS FUNKE DASYLVA - PROJECT ASSISTANT 4. MR. OLUMOYEGUN AYO OLUGBENGA - PROJECT ACCOUNTANT 5. MR JOHN MAXWELL EYRE - TECHNICAL ADVISOR 6. MR ABDULLAHI K. ALSO - NATIONAL TECHNICAL ADVISOR 7. MR. ABDULLAHI ALIYU - DEPUTY DIRECTOR MMSD 8. MR. AKINTUNDE BABARINDE - PROCUREMENT SPECIALIST 9. MR. ADEDOTUN AJIBOLA - MONITORING AND EVALUATION 10. MRS. AMANDA LUMUN FEESE - POLICY AND GOVERNANCE SPECIALIST 11. CHIDI NNABUGWU DANIEL - PROJECT ADMIN OFFICER 12. KELVIN EZEWU - IT OFFICER 13. LAWAL BELLO - PROJECT INTERNAL AUDITOR 2 P Project Beneficiaries: Ministry of Mines & Steel Development Solid Mineral Development Fund & its Facilitators Fund (SMDF) Mines Operators & Investors Mineral Producing States Women & Civil Society General Public Bankers: Central Bank of Nigeria GTB UK Auditors: Office of the Auditor-General for the Federation, Abuja Project Development Objective: To enhance the mining sector's contribution to the economy by strengthening key Institutions, improving information infrastructure and knowledge, and fostering domestic investment in the sector. 3 1 P MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER) MINISTRY OF MINES AND STEEL DEVELOPMENT. FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018 REPORT OF THE PROJECT MANAGEMENT TEAM The Project Management Team has the pleasure of presenting this report and accounts for the year ended 31st December, 2018. Project overview The project overview is for the FGN to embark on an economic diversification campaign with the aim of leverages on the Nation's vast national resources to diversify the economy from oil and gas sector to achieve economic. Functions of the Team The team is to ensure that the project work plans are properly coordinated and implemented by the different agencies and departments involved and coordinate strategic planning for project implementation Funding of the Project The MinDiver total project cost was USD 150m which is a loan from the International Development Association (IDA) Expenditure of the Project Disbursements to the project in line with the provisions of the PAD is designed in three components as follows: Component A: Establishing a strong foundation for mining Sector Development US68, 800,000.00 Component B: Facilitating Downstream Sector Development and Enhancing Competitiveness US67, 600,000.00 Component C: Project Management and Coordination US9, 600,000.00 4 1 ) MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER) MINISTRY OF MINES AND STEEL DEVELOPMENT. FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018 STATEMENT OF THE PROJECT MANAEMENT RESPONSIBILITIES 1. A dedicated Project Implementation Unit (PIU) will be established within MMSD and will be responsible for day-to-day project implementation activities, including procurement, disbursement, financial management, and monitoring and evaluation. All PIU staff will be hired following a competitive and open selection. 2. The head of the PIU is the Project Coordinator, who will report directly to the Permanent Secretary (PS) and Minister on issue related to project implementation. The PlU may also include two to three staff seconded from key departments within MMSD or other relevant agencies (i.e. Cadastre office, ASM department, NGSA, Admin). In addition to its fiduciary (Safeguards, Financing Management, and Procurement) responsibilities, the PIU's main functions are to ensure that the project work plans are properly coordinated and implemented by the different agencies and departments involved, coordinate strategic planning for project implementation. The PlU will be strengthened by additional national and international experts as necessary, in particular a technical expert. 3. The PlU will also compile a bi-annual (six months) implementation progress report for submission to the Bank and IFRs on a quarterly basis. The detailed terms of reference for the PIU will be further elaborated in the Project Operational Manual. The PIU also prepared the financial Statement in line with IPSAS Accrual and made it available to the external auditors for audit. The Financial Statement were prepared in a true and fair manner. r MR. U.L ADIE MR OLUM6GUN AYO 0. Project Coordinator Project Accountant 5 1P 1 a g e THE AUDITOR-GENERAL FOR THE FEDERATION Audit House, Plot 273, Samuel Ademulegun Street, Central Business District, RM.B. I28, Garki - Abuja, Nigeria. The Project Coordinator, Mineral Sector Support for Economic Diversification (MinDiver), Federal Ministry of Mines and Steel Development, Wuse, Abuja. AUDIT OF THE MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MinDiver) PERFORMED BY THE AUDITOR-GENERAL FOR THE FEDERATION AUDITOR'S REPORT Opinion I have audited the financial statements of Mineral Sector Support for Economic Diversification (MinDiver), for the year ended 31st December, 2018. These financial statements comprise the Statement of Financial Position, Statement of Financial performance, Cashflow Statement and Statement of Net Assets/Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at 31st December, 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS). Basis for Opinion I conducted the audit in accordance with International Standards for Supreme Audit Institutions (ISSAls). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements Section of my report. I am independent of the entity in accordance with the Code of Ethics for Supreme Audit Institutions together with the ethical requirements that are relevant to my audit of the financial statements and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidences obtained are sufficient and appropriate to provide a basis for my opinion. 6/Page Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with IPSAS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Entity's_ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the entity's financial reporting process. Auditor's Responsibility for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with (ISSAls), will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Financial Audit Methodology (FAM), which is consistent with the Fundamental Auditing Principles (ISSAIs 100-999) of the International Standards for Supreme Audit Institutions, I exercise professional scepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence, obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. I communicate with those charged with governance regarding, among other matters the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be brought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's report unless law or regulation precludes public disclosure about the matter or, when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. A. M. AYINE, FCA Auditor-General for the Federation June 17, 2019 MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MinDiver) 5 FEDERAL MINISTRY OF MINES AND STEEL DEVELOPMENT STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER, 2018 Notes 2018 2017 ASSETS NN CURRENT ASSETS Inventories Cash and Bank Balances 1 10,452,755,187.38 25,655,595.86 Receivables 2 34,722,629.82 35,570,202.03 Advances Total current assets 10,487,477,817.20 61,225,797.89 NON-CURRENT ASSETS Office Equipment 3 62,145,443.53 43,164,787.62 Furniture/Fittings 3 42,194,744.80 26,037,165.48 Motor Vehicle 3 155183,615.00 29,649,375.00 TOTAL NON-CURRENT ASSETS 259,523,803.33 98,851,328.10 TOTAL ASSETS 10,747,001,620.53 160,077,125.99 NET ASSETS AND FUNDS Payables (Unremitted deductions) 4 88,983,278.25 78,467,895.18 10,658,018,342.28 81,609,230.81 Financed By: 5 Accumulated Fund-Surplus/(Deficit) (1,399,522,569.79) 1,451,648.03 IDA Fund 6 11,613,095,344.80 FGN Fund 300,000,000.00 Exchange rate Difference 144,445,567.27 80,157,582.78 TOTAL LIABIUTIES&NET ASSETS/FUNDS 10,658,018,342.28 81,609,230.81 UT LNUS ADIE OLUMOY GUNA OLUGBENGA PROJECT COORDINATOR PROJECT ACC NTANT DATE 1 DATE o 05 2019 8 a MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MinDiver) E FEDERAL MINISTRY OF MINES AND STEEL DEVELOPMENT STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31ST DECEMBER, 2018 NOTE 2018 2017 N N Income Revenue 0.00 1,180,616,629.65 Interest Received - Expenditure Works (Renovation) 7 11,546,096.00 194,410,598.51 Consultancy Services 8 476,241,298.60 342,784,154.60 Operating cost 9 473,969,480.08 347,422,872.40 Training, Study, Tours and Workshops 10 348,941,941.68 294,547,356.11 Depreciation 3 88,823,753.43 1,399,522,569.79 1,179,164,981.62 Surplus/Deficit from operating activities (1,399,522,569.79) 1 ,4 5 1 ,6 4 8 .0 3 91 MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MinDiver) FEDERAL MINISTRY OF MINES AND STEEL CASHFLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018 2018 2017 Cashflows from operating activities Inflows: CASHFLOW FROM OPERATING ACTIVITIES Surplus/(Deficit) for the year (1,399,522,569.79) 1,451,648.03 Items not Involving Movement of Cash Exchange rate Difference 144,445,568.01 80,157,582.78 Depreciation 88,823,753.43 35,181,876.68 Working Capital changes Receiva ble 847,572.21 (35,570,202.03) Payables 10,515,383.08 Net Cashflow from Operating Activities -1,154,890,293.06 -35,570,202.03 Cashflow from Investing Activities 0.00 0.00 Property,Plant and Equipment -249,496,228.62 98,851,328.10 Net cashflow from investing activities (249,496,228.62) 63,281,126.07 CASHFLOW FROM FINANCING ACTIVITIES IDA Loans 11,613,095,344.80 FGN 300,000,000.00 11,913,095,344.80 63,281,126.07 CASH AND CASH EQUIVALENT Opening Balance 31,784,511.00 Closing Balance 10,452,755,187.38 31,784,511.00 10 I FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018 NOTES TO THE ACCOUNTS 1 Cash and Bank Balances NGN Exchange rate USD IDA Designated Account (Dollar) 10,270,443,996.53 304.9885739 33,674,848.42 IDA Drawdown Account (Naira) 133,943,797.13 FGN Support Fund 48,367,393.72 10,452,755,187.38 2 RENT RECEIVABLES 46,296,839.7/12*9 34,722,629.82 Property, Plant & 3 Equipment Motor Vehicles Furniture & Fittings Office Equipment 25% 12.50% 33.33% Total N N N N 29,649,375.00 26,037,165.48 43,164,787.62 98,851,328.10 Bank Charges Additions 177,262,111.62 22,185,400.00 50,048,717.00 249,496,228.62 Disposal As 31 December, 2018 206,911,486.62 48,222,565.48 93,213,504.62 348,347,556.72 Depreciation 25% 12.50% 33.33% As 1 January, 2018 9,883,125.00 3,719,595.07 21,579,156.61 35,181,876.68 Charge for the Year 51,727,871.66 6,027,820.69 31,068,061.09 88,823,753.43 Accumulated Dep. 61,610,996.66 9,747,415.76 52,647,217.70 124,005,630.11 Net Book Value As at 31 December, 2018 155,183,614.97 42,194,744.80 62,145,443.53 259,523,803.29 4 Unremitted Deductions WHT & VAT 88,983,278.25 88,983,278.25 5 Accumulated Fund IDA/FGN 11,913,095,344.80 Surplus /( deficit) for the year (1,399,522,569.79) Exchange Difference 144,445,568.01 10,658,018,343.02 11 Exchange 6 IDA Credit/FGN Support fund NGN rate USD Initial Deposit (IDA) 4,093,911,675.00 305.55 13,398,500.00 Replenishments (IDA) 7,519,183,669.80 304.50 24,677,334.00 FGN Support Fund 300,000,000.00 11,913,095,344.80 38,075,834.00 7 RENOVATION Renovation and partioning of Offices (IDA fund) 4,296,096.00 Renovation and partioning of Offices (FGN Support fund) 7,250,000.00 TOTAL 11,546,096.00 8 Consultancy Services COMPONENT A ESTABLISHING A STRONG FOUNDATION FOR MINING SECTOR DEVT. 198,616,624.48 COMPONENT B FACILITATING DOWNSTREAM SECTOR DEVELOPMENT & ENHANCING COMPETITIVENESS 78,745,424.23 COMPONENT C PROJECT MANAGEMENT & COORDINATION 198,879,249.89 TOTAL 476,241,298.60 9 Operating Cost IDA 318,618,356.05 FGN Support fund 155,351,124.03 TOTAL 473,969,480.08 10 Training, Study, Tours and Workshops Promotion of Mines and Steel Activities Nationwide (IDA) 262,309,459.43 Training and workshop (FGN Support Fund) 86,632,482.25 TOTAL 348,941,941.68 11 GOODS Stationery and printing 15,310,946.44 Office and Computer Equipment (IDA Fund) 34,670,320.00 Office and Computer Equipment (FGN Support Fund) 600,000.00 Furniture and Fittings 19,853,851.56 Furniture and Fittings (FGN Support Fund) 1,799,000.00 Motor Vehicles 177,262,111.62 TOTAL 249,496,229.62 12 12 Principal Accounting Policies The preparation and content of these financial statements are in compliance with the requirement of the International Public Sector Accounting Standard (IPSAS) Accrual Basis a) Basis of Accounting The financial statements have been prepared under the historical cost convention. b) Accounting Period The Financial Statement for the period January to December, 2018 c) Furniture & Fittings, Office Equipment and Motor Vehicle They are stated at cost less accumulated depreciation or impairment loss. The initial cost of an asset comprises of its purchase price, any cost directly attributable to bring the asset into operation. Within the period, there was no impairment recorded on the asset hence no basis for revaluation of the assets. d) Inventories: Inventories are assets held in the form of materials or supplies to be consumed or distributed in the rendering of services. Inventories are stated at the lower of costs and net realizable value, determined under first-in, first-out (FIFO) method. Net realizable value is determined by reference to prices existing at reporting date. e) Depreciation Furniture & Fittings, Office Equipment and Motor Vehicle are depreciated on straight line basis at rates considered adequate to write off their cost over their estimated useful life. The rates applied during the year are as follows: Furniture & Fittings - 12.50 Motor Vehicles - 25.00 Office Equipment - 33.33 13 f) Foreign currency transaction MinDiver financial statement is presented in Naira as the functional currency. Transaction balances: Transactions in foreign currencies are initially recorded at the functional currency spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date. Differences arising on settlement or translation of monetary items are recognized in excess or deficit. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the dates of the initial transactions. g) Employee Benefit MinDiver is a project that has initial estimated life span of five years. The project staff are drawn from the Federal Ministry of Mines, Steel and Accountant General of the Federation and Private as support staff. The benefit plans in terms of staff emoluments is the responsibilities of the project, but pensions and gratuity is not that of the respective parent ministries. h) IDA Loans: The loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. It is measured by the functional currency spot rate as at the date it is recognized.The loan is a liability to the Project and not an income and is treated as such in the preparation of the Financial statement. 14