MENAF MIIlflI F EAST NORTH AFRICA FINAbCr 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, 2016 Contents Page Independent Auditor's Report 3 Statement of Special Account of Projects Funded by the International 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 7-10 MENAF MtnnII.V rA%r NORTH AFRICA PfVANCr 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, Loan #7967 LE, for the year ending and cumulatively as at December 31, 2016. 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, 2016. 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 die year ending December 31, 2016 and showing cumulative balances as at December 31, 2016 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, 2016; (c) The project was in all material respects in compliance with the laws, regulations, guidelines and provisions governed by the Loan agreement. May 17, 2017 MENAF Jihad Anouti Managing Partner Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2016 Statement of Special Account (7967 LE) Note USD Balance as of January 1, 2016 348,654 Add: World Bank replenishments Cash Receipt 1,016,450 Direct Payment 27,934,548 Deduct: Payments for project expenditures funded by the loan: Works 3 (27,934,548) Consultants' Services 3 (1,123,219) Balance as of December 31, 2016 241,885 See accompanying notes to the financial statements. Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2016 Statement of Project Expenditures Note USD Works 3 27,934,548 Consultants' services and training 3 1,123,219 29,057,767 See accompanying notes to the financial statements. Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 796. Financial Statements 31 December 2016 Statement of Expenditures No withdrawals against the statement of expenditures were made during 2016. Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2016 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 Goods, works and consultant's services 185,000,000 Front - end fee 462,500 185,462,500 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 500,000; 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 each January 15 and July 15 BeginningJanuary 15, 2017 2.94% through January 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 2016 3. Details of Expenditures Expenditures paid from the Greater Beirut Water Supply Project Special account and direct payments paid during the year 2016 are detailed as follows: Contractor's Name Deacription Amount financed from loan proceeds (100%) USD Consultant's Services Bruna Schnaoui Finance Specialist 51,037 Elie Moussalh Project Engineer 61,800 Dar Al -landasah (Shair & Supervision for tunnel and Pipeline 1,010,382 Partners) sal construction Total Consultant's Services 1,123,219 Amount Paid from Special 1,123,219 Account Direct Payment Tunnel and trasfer kines Contractor Coopranva Muraton c Cemenusi 27,934,548 Tunneland tansferlinesdi Ravenna 2,3,4 Total 29,057,767 4. S.O.E Withdrawals During the Year2016 No withdrawals against the statement of expenditures were made during 2016. Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 7967 Financial Statements 31 December 2016 9 5. Cumulative Statement of Special Account The cumulative drawings and payments made in this account since inception up to December 31, 2016 are detailed as follows- USD World Bank initial deposit 500,000 World Bank replenishments 1,139,427 Increase of the special account . Interest earned 1,639,427 Deduct: Payments for project expenditures funded by the Loan: Consultants' services and training (1,397,542) (1,397,542) Balance - December 31, 2016 241,885 Council for Development and Reconstruction Greater Beirut Water Supply Project - Loan No. 796, Financial Statements 31 December 2016 10 6. Cumulative Statement of Project Expenditures USD Front end fees 462,500 Works 57,779,777 Consultants' services and training 2,130,871 60,373,148