MENAF MOI KCEAST %1URTI AVRICA FINA1C9' Financial Statements of Projects Funded By the International Bank For Reconstruction and Development - Loan #7967 LE (Greater Beirut Water Supply Project) And Auditor's Report Council for Development and Reconstruction Year Ended December 31, 2018 Contents Page Independent Auditor's Report 3 Statement of Special Account of Projects Funded by the Internanonal Bank For Reconstruction 4 and Development - Loan #7967 LE (Greater Beirut Water Supply Project) Statement of Project Expenditures of Projects Funded by the International Bank For 5 Reconstruction and Development -Loan #7967 LE (Greater Beirut Water Supply Project) Statement of Expenditures of Projects Funded by the International Bank For Reconstruction 6 and Development -Loan #7967 LE (Greater Beirut Water Supply Project) Notes to the Financial Statements/ Project Expenditures 7-9) MENAF ,%IFL V WAST NURTH1 AVRCA FINANCK INDEPENDENT AUDITOR'S REPORT President Council for Development and Reconstruction World Bank Loan No. 7967 LE Greater Beirut Water Supply Project Beirut, Lebanon We have audited the accompanying financial statements comprising of the statement of Special Account, Project Expenditures, and Statement of Expenditures of Project Funded by the International Bank for Reconstruction & Development, CDR's share of Loan #7967 LE, for the year ending and cumulatively as at December 31, 2018. The Project financial statements are the responsibility of the Council for Development and Reconstruction's management. Our responsibility is to express an opinion on these financial statements based on our audit. We have also audited compliance with the laws, regulations, guidelines and provisions governed by the Loan Agreement for the year ended December 31, 2018. We conducted our audits in accordance with International Standards on Auditing. Those Standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether the "Greater Beirut Water Supply Project" has complied with the laws, regulations, guidelines and provisions governed by the Loan Agreement- An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion: (a) The accompanying Financial Statements present fairly, in all material respects, the cash receipts and payments of the Greater Beirut Water Supply Project for the year ending December 31, 2018 and showing cumulative balances as at December 31, 2018 in accordance with the International Public Sector Accounting Standards(IPSAS), under the cash basis of accounting, (b) Internal control over financial reporting involved in the preparation of replenishments, direct payments, payments through special commitments, and reimbursements i.e. expenditures reimbursed on the basis of Statements of Expenditures can be relied upon to support the related withdrawals as of December 31, 2018; (c) The project was in all material respects in compliance with the laws, regulations, guidelines and provisions governed by the Loan agreement- June 10, 2019 MENAF Jihad Anouti Managing Partner Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No, 7967 Financial Statements 31 December 2018 4 Statement of Special Account (7967 LE) Note USD Balance as ofJanuary 1, 2018 408,759 World Bank replenishments Cash Receipt 2,044,463 Deduct Payments for project expenditures funded by the loan; Works Goods and Equipment Consultants' Services 3 (2,304,120) Balance December 31, 2018 149,102 See accompanying notes to the financial statements. Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2018 Statement of Project Expenditures Note USD Works 3 31,725,011 Consultants' Services 3 2,304,120 34,029,131 See accompanying notes to the financial statements. Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2018 Statement of Expenditures Note USD Works Consultants' Services 4 42,640 42,640 See accompanying notes to the financial statements. Council for Development and Reconstruction Greater Beirut Water Supply Project - Ioan No. 7967 Financial Statements 31 December 2018 7 Notes to the Financial Statements 1. Project Background A LOAN #7967 LE (Greater Beirut Water Supply Project) for the amount of USD 200,000,000 was signed on February 8, 2012 between the International Bank for Reconstruction and Development and the Lebanese Republic (the borrower) for increasing the provision of potable water to the residents in the Project area within the greater Beirut region. The table below sets forth categories of items to be financed out of the proceeds of the Loan under CDR's management (USD 185,000,000) and the allocation of the amounts of the loan to each category. Category USD Works 177,204,750 Consultants' service and training 7,332,750 Front -end fee 462,500 185,000,000 The closing date for this Loan is June 30, 2019 or such later date as shall the donor establish. The front-end fee amounting to USD 462,500; being 0.25% of loan amount under CDR's management was settled to the Lender as of February 13, 2013 (the effective date) in the form of deduction from the loan proceeds booked in the accompanying statement of project expenditures. The repayment schedule of the loan is as follows: Principal Payment Date Installment Share (Expressed as a Percentage) On eachJanuary 15 and July 15 BeginningJanuary 15, 2018 2.94% throughJanuary 15, 2033 On July 15, 2033 2.98% 2. Summary of Significant Accounting Policies The accompanying statement of special account, project expenditures and statement of expenditures are prepared on the cash basis of accounting. On this basis, disbursements from loan are recognized when received and expenses are recognized when paid rather than when incurred. Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2018 3. Details of Expenditures Expenditures paid from the Greater Beirut Water Supply Project Special account and direct payments paid during the year 2018 are detailed as follows: Amount rmanced Contractor's Name Description from loan proceeds (100%) Works Contractor Coopertiva Muratori e Cementisti di Greater Beirut Water Supply Project 31,725,011 Ravenna Amount Paid from Special Account Direct Payment 31,725,011 Total 31,725,011 Services Under Category 1 Dar Al Handasa Supervision for Tunnel and Pipeline construction 2,189,850 Elie Mousai Project Manager 71,630 Raghida Shour CDR-Finance Specialist 42,640 Amount Paid from Special Account304,20 Direct Payment - Total 2,304,120 Total 34,029,131 Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2018 10) 5. Cumulative Statement of Special Account The cumulative drawings and payments made in this account since inception up to December 31, 2018 are detailed as follows: USD World Bank initial deposit 500,000 World Bank replenishments 4,744,030 Increase of the special account - Interest earned 5,244,030 1Dcduct: Payments for project expenditures funded by the Loan: Works Consultants' Services (5,094,928) (5,094,928) Balance - December 31, 2018 149,102 Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2018 6. Cumulative Statement of Project Expenditures USD Front end fees 462,500 Works 123,929,634 Consultants' services and training 5,828,258 [30,220,392 7. Cumulative Statement of Expenditures USD Consultants' Services 74,580 74,580