O GrantThorntonAn instinct for growth-

Financial Statements of Projects Funded By the International BankFor Reconstruction and Development - Loan #8137 LE(Additional Financing for the Cultural Heritage and UrbanDevelopment Project)

And Auditor's Report

Council for Development and ReconstructionYear Ended December 31, 2014

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Contents

Page

Independent Auditor's Report 3

Statement of Special Account of Projects Funded by the International Bank For Reconstructionand Development - Loan #8137 LE (Additional Financing for the Cultural Heritage and Urban 4Development Project)

Statement of Project Expenditures of Projects Funded by the International Bank ForReconstruction and Development -Loan #8137 LE (Additional Financing for the CulturalHeritage and Urban Development Project)

Statement of Expenditures of Projects Funded by the International Bank For Reconstructionand Development -Loan #8137 LE (Additional Financing for the Cultural Heritage and Urban 6Development Project)

Notes to the Financial Statements/ Project Expenditures 7-9

GrantThornton

INDEPENDENT AUDITOR'S REPORT

Audit . Tax . AdvisoryPresident Grant ThornonCouncil for Development and Reconstruction Justinian StWorld Bank Loan No. 8137 LE Hamra -Beirut

Cultural Heritage and Urban Development Project - Additional Financing R ISx 114735Beirut - LebanonBeirut, Lebanon Tet + 9611351477

Fax: +961 1351478www.gUebanon.com

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 forReconstruction & Development, Loan #8137 LE for the year ending and cumulatively as at December31, 2014. The Project financial statements are the responsibility of the Council for Development andReconstruction's management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

We have also audited compliance with the laws, regulations, guidelines and provisions governed by theLoan Agreement for the year ended December 31, 2014.

We conducted our audits in accordance with International Standards on Auditing. Those Standardsrequire that we plan and perform the audits to obtain reasonable assurance about whether the financialstatements are free of material misstatement and about whether the " Additional Financing for theCultural Heritage and Urban Development Project" has complied with the laws, regulations, guidelinesand provisions governed by the Loan Agreement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used, as well as evaluating the overall financial statement presentation. We believethat 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 andpayments of the Urban Transport Additional Financing for the year ending December 31, 2014 andshowing cumulative balances as at December 31, 2014 in accordance with the International PublicSector Accounting Standards(IPSAS), under the cash basis of accounting;

(b) Internal control over financial reporting involved in the preparation of replenishments, directpayments, payments through special commitments, and reimbursements ie. expenditures reimbursedon the basis of Statements of Expenditures can be relied upon to support the related withdrawals as ofDecember 31, 2014;

(c) The project was in all material respects in compliance with the laws, regulations, guidelines andprovisions governed by the Loan agreement.

August 7, 2015Grant Thornton

Mowafak Al Yafi, Ph.DManaging Partner

Chartered Accountants & ConsultantsLicense No 111Member of Gmrnt Thornton Intemational

Council for Development and ReconstrictionCultural Heritage and Urban Development Project - Additional Financing - Loan No. 8137Financial Statements31 December 2014

4

Statement of Special Account (8137 LE)

Note USD

Balance as of Jan uary 1, 2014

Add'.World Bank replenishments 2,484,031

Qrduct:Payments for project expenditures funded by the loan:

Works 3 (1,028,713)Consultants' services 3 (269,124)

(1,297,837)

Balance December 31, 2014 1,186,194

See accompanying notes to the financial statements.

Council for Development and ReconstructionCultural Heritage and Urban Development Project - Additional Financing - Loan No. 8137Financial Statements31 December 2014

5

Statement of Project Expenditures

Note USD

Works 3 8,319,247

Goods & Equipment 3 95,880Consultants' services and training 3 2,207,817

10,622,944

See accompanying notes to the financial statements.

Council for Development and ReconstructionCultural Heritage and Urban Development Project - Additional Financing - Loan No. 8137Financial Statements31 December 2014

Statement of Expenditures

No withdrawals against the statement of expenditures were made during 2014.

Council for Development and ReconstructionCultural Heritage and Urban Development Project -Additional Financing -- Loan No. 8137Financial Statements31 December 2014

Notes to the Financial Statements

1. Project Background

A LOAN #8137 LE (Additional Financing for the Cultural Heritage and Urban Development Project)

for the amount of USD 27,000,000 was signed on August 9, 2012 between the International Bank for

Reconstruction and Development and the Lebanese Republic (the borrower) for the purpose of

providing additional financing for the original project "Cultural Heritage and Ur.an Development

Project). The objective of the Project are o assist the borrower in : (a) creating the conditions for

increased local economic development and enhanced quality of life in the historic centers of the cities of

Baalback, Byblos, Saida, Tripoli and Tyre; and (b) improving the conservation and management of the

country's cultural heritage.

The table below sets forth categories of items to be financed out of the proceeds of the Loan underCDR's management (USD 27,000,000) and the allocation of the amounts of the loan to each category.

Category USD

Works, Goods and non-consulting Consultants' service and training services,Consultants' services and training and In. operating Costs 26,932,500Front-end Fee 67,500

Interest Rate Cap 0

27,000,000

The closing date for this Loan is December 31, 2015

The front-end fee amounting to USD 67,500; 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 theloan proceeds booked in the accompanying statement of project expenditures.

The Payment Dates are January 15 and July 15 in each year.

The effectiveness Deadline is the date one hundred and eighty (180) days after the date on thisagreement.

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 dus basis, disbursements from loan are recognized when

received and expenses are recognized when paid rather than when incurred.

Council for Development and ReconstructionCultural Heritage and Urban Development Project - Additional Financing - Loan No. 8137Financial Statements31 December 2014

3. Details of Expenditures

Expenditures paid from the Additional Financing for the Cultural Heritage and Urban DevelopmentSpecial account and direct payments paid during the year 2014 are detailed as follows:

Amount financedfrom loan

Contractor's Name Description proceeds (100%)

WorksAl Bonian Engineering and Bailbeck and Tyre Archaelogical Project-Phase-Contracting I- Insfrastructure 482,373Jesco & Atelier Jean Loup Baalbek and Tyre Archaelogical Project-Phase 1Bouvier Conservation - Jesco/Aderier Jean Loup 359,672Jesco Contracting Trading &Enterprising Tripoli old city-rehabilitation of Khan El Askar 38,436Jesco Contracting Trading &Enterprising Tripoli old city- rehabilitation of Khan El Askar 148,232Amount paid from special account 1,028,713Afak/UDC Byblos Phase 2 79.802Al Bonian Saida old City-phase 2-BTAP-1 Infrastructure 769,454Geneco Ancienne Ville de Tripoli 13,102Green Line Tripoli Old City Phase 2-bloc C 101,632Jesco & Jean Loup BTAP-1 Infrastructure 1,323,815Jesco Cont Trading Jesco Cont Trading 2,884,228WARD Rehabilitation of Bawabeh Hamra-Tyre 2,118,501Direct Payment 7,290,534Total Works 8,319,247

GoodsICC/ 2-a)Goods Off Equip For DGA (2-Pick-up) 46,080NMC 2-a) Goods: Vehicules For DGA (2-Pick-up) 49,800Direct Payment 95,880Total Goods 95,880

ServicesAdnan Khanfour Municipal Engineer in Baalbeck 28,087Ahmad El Meched Municipal Engineer in Tripoli 27,909Hala Deghaili Procurement Specialist 4,628Jean Yasmine PIU/DGA Project Manager 21,400Josef Gaouch MIU-Josef Gaouch 28,462Lana Shahade Lana Shahade- Archeological Proj Imp Office 22,631Maher Baker MIU-Procurement/CM Specialist 37,450Manal Hallani Manal Hallani-MIU Municipal Engineer 25,094Michel Labban Michel Labban- Financial Officer 9,612Nabil Itani PIU/ Architecht-Planner 37,301Nidal Chehayeb- Cont Municipal Engineer in Baalbeck, Saida and Tyre-Engineer Nidal Chehayeb 7,500lean Yasmine PIU/DGA Project Manager 16,050Sonia Der Alexanian Adminstrative Assistant 3,000Amount paid from special account 269,124

Council for Development and Reconstruction

Cultural Heritage and Urban Development Project -Additional Financing - Loan No. 8137Financial Statements31 December 2014

Amount financedfrom loan

Contractor's Name Description proceeds (100%)ServicesAdnan Khanfour CDR Baalbeck, Saida and Tyre 119,350Ahmad El Mchad CDR Tripoli 118,287Annie Marie Ghossein Social Development Officer 85,844Hala Dghaili Procurement Specialist 180,860

Jean Yasmine DGA -Project Manager 168,850Josef Gaouch MIU 128,199Lana Shehadeh Archeological Project Implementation Officer 99,452Maher Baker Procurement Specialist 168,366Manal Hallani MIU Municipal Engineer 99,374Michel Labban Financial Officer 85,048Michel Samaha Social Development Officer 91,382Nabil Itani Architect Planner 167,323Nidal Chehayeb Municipal Engineer 190,390Sonia Der Alexanian Adminastrative Assistant 19,484Zeina Fathalla Seniar Social Specialist 124,927Rafic Khoury & CO/94435.21 Seniar Social Specialist 84,477Opinion survey/158867.15 Seniar Social Specialist 7,080Direct Payment 1,938,693Total Services 2,207,817Total 10,622,944

4. S.O.E Withdrawals During the Year 2014

No withdrawals against the statement of expenditures were made during 2014.