1 Project Financial Statements 1 EDM - ELECTRICIDADE DE MOQAMBIQUE, E.P. 1 Transmission Upgrade Project -Extension and Reinforcement of Matambo Substation - 2014-2016 1rst January 2014 to 31 December 2015 -I -J EY Building a better working world EDM - ELECTRICIDADE DE MOgAMBIQUE, E.P. TRANSMISSION UPGRADE PROJECT - EXTENSION AND REINFORCEMENT OF MATAMBO SUBSTATION - 2014-2016 CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT 1-2 FINANCIAL STATEMENTS 3 ACCOUNTING POLICIES 4 NOTES TO THE FINANCIAL STATEMENTS 5-7 LI LI Rua Belmiro Obadias Muianga, N' 179 Fax: +258 21 32 1984 ET M Y Caixa Postai 366 Maputo Email: emst.young.ey.com NUIT:400 006 245 Building a better Mogambique www.ey.com working world INDEPENDENT AUDITOR'S REPORT To the Project Management of ELECTRICIDADE DE MOQAMBIQUE, E.P. TRANSMISSION UPGRADE PROJECT - EXTENSION AND REINFORCEMENT OF MATAMBO SUBSTATION Report on the financial statements We have audited the accompanying financial statements of TRANSMISSION UPGRADE PROJECT - EXTENSION AND REINFORCEMENT OF MATAMBO SUBSTATION, which comprise the statement of receipts and payments at 31 December 2015 (reflecting a total of payments of USD 3.915.979), for the period from 1rst January 2014 to 31 December 2015, and a summary of significant accounting policies and other explanatory notes set out in page 5. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in Mozambique. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opin on on these financial statements based on our audit. We conducted our audit in accordance with nternational Standards on Auditing. Those standards require that we comply with ethcal requ rements and plan and perform the audit to obtain reasonable assurance whether the fnandia statements are free from material misstatement. U U U Building a better working world An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TRANSMISSION UPGRADE PROJECT - EXTENSION AND REINFORCEMENT OF MATAMBO SUBSTATION as of 31 December 2015, for the year then ended in accordance with accounting principles accordance with the accounting policies set out in page 5. YOUNG, LDA 2 CONSOLIDATED STATEMENT OF INCOME AND EXPENDITURE FOR THE PERIODO COMPRIDING 1JANUARY 2014 TO 31 DECEMBER 2015 (Accounts Expressed inUSD) L Notes 31-Dec-2015 31-Dec-2014 CASH RECEIPTS Opening balance 1.043.090 225.982 Funds received 3 3.357,736 1.192.182 Interests 4 602 349 TOTAL RECEIPTS 4.401.428 1.418.513 LI EXPENDITURES Supply and installation 5 2.484.040 45.339 Consultants services 6 728.876 329.324 Others suppliers 7 326.392 - Bank charges 8 1.128 690 Withholding tax 9 120 70 TOTAL EXPENDITURES 3.540.556 375.423 Closing balance 10 860.872 1.043.090 Bank balance 10 860.872 1.043.090 FINANCE AND ADMINISTRATION MANAGER PROJECT MANAGER LlL L A U U- (Accounts Expressed in USD) 1. INTRODUTION World Bank, represented by IDA - International Development Association and the Government of Mozambique represented by EDM signed an agreement to carry Out a project called EDM Transmission Upgrade Project, Mozambique 2013-2015. The main objective of improving the transmission system of Matambo Substation (Transmission upgrade of Matambo substation) is to province. LI reduce the frequency of electricity outages in Tete The specific objectives are to enable EDM to provide sufficient, affordable and reliable electricity for the purpose of economic growth. The project shall carried out in accordance with the programme document titled "Credit number 4354 - MOZ Amended and Restated Financing Agreement" dated 11-15-2013 LI SUMMARY OF SIGNIFICANT 2. Basis of Presentation ACCOUNTING POLICIES [AJ The financial statement, compiled from the Project Unit accounting records, was prepared on the cash basis of accounting. Under cash basis of accounting, receipts are not recorded until received in cash and disbursements are assigned to the period in which cash payment is made. Foreign Currency Transactions The books of accounts of the Project are maintained in American Dollars (USD). The statement of receipts and payments is also expressed in American Dollars (USD) unless otherwise stated. Transactions in other currencies are converted in American Dollars (USD) by the Project, and are reflected as expenditure inthe year of purchase. Procedures The disbursements of the funds, made available by the International Development Association (IDA), are made by direct transfers or by requests for payments sent to the Special Account, which was created with funds made available by IDA, in a bank account of the Project maintained in Maputo (BCI - Fomento) 3. Funds received Funds received from donor are analyzed as follows: ir 2015 Donors (Funds transferred on 02-06-2015) 122.208 Donors (Funds transferred on 28-08-2015) 567.326 Direct payment made by donor 2.668.202 Total cash receipts 3.357.736 U 4 (Accounts Expressed inUSD) U 4. Interests WI Revenue from interest relating with the Project's deposit account, could be analyzed as follows: 2015 January 60 February 54 March 61 April 58 May 38 June 31 July 31 August 40 September 66 October 64 November 50 December 49 602 U [. Supply and installation 5. Expenses with Supply an installation are made as follows: 2015 2014 Joint Venture National Contracting Co. Ltd - EMCO Ltd 2.484.040 45.339 2.484.040 45.339 6. Consultant's services LI Expenses with Consultant's services are made as follows: 2015 2014 SMEC Intemational (Pty) Ltd 728.876 329324 728.876 329.324 -incr.-LERM .VrWWILIm Wo 4.P 31 UMEilDErAUI a 1UrI %I (Accounts Expressed inUSD) 7. Others suppliers Expenses with Others suppliers are made as follows: 2015 2014 Siemens, S.A. 326.392 0 326.392 0 8. Bank charges Bank charges corresponds are made as follows: 2015 April 357 May 374 June 76 August 20 September 287 November 13 1.128 9. Withholding tax Corresponds to the interest withholding tax, and could be analyzed as follows: 2015 January 12 February 11 March 12 April 12 May 8 June 6 July 6 August 8 September 13 October 13 November 10 December 10 120 1 6 (Accounts Expressed inUSD) 10. Closing Balance The financial position of the income over expenditure as at December 31, 2014, corresponds to the existing final balance in banks, which is represented by: 2015 2014 BCl Fomento - 10488126.10.001 - USD 860.872 1,043.090 860.872 1.043.090 11. Taxes The possibility exists that the fiscal authorities could review the amount of company tax as well as other taxes paid by the company including employee tax and withholding taxes. FINANCE AND ADMINISTRATION MANAGER PROJECT MANAGER 2:ALV -] EY 1Assurance 1Tax 1Transactions 1Advisory Acerca da EY A EY é um líder global em auditoria, fiscalidade e serviços de consultoria e apoio a transacções. 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