GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF010940

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1 Public Disclosure Authorized Public Disclosure Authorized GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF IMPLEMENTED BY EUROPA REINSURANCE FACILITY LIMITED REPORT OF INDEPENDENT AUDITORS AND SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE 4 MONTHS ENDED 20 APRIL 2016 AND THE YEAR ENDED 31 DECEMBER 2015 Public Disclosure Authorized Public Disclosure Authorized

2 GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF IMPLEMENTED BY EUROPA REINSURANCE FACILITY LIMITED CONTENTS Page Statement of Management Responsibilities 3 Report of Independent Auditors 4-5 Balance Sheet 6 Statement of Sources and Uses of Funds 7 Statement of Project Activities 8 Statement of Designated Accounts 9 Notes to the Special Purpose Financial Statements 10 13

10 GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF EUROPA REINSURANCE FACILITY LIMITED NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE 4 MONTHS ENDED 20 APRIL 2016 AND THE YEAR ENDED 31 DECEMBER 2015 (Expressed in US dollars) 1. BACKGROUND The objective of the Project is to enable the Recipient to develop new weather risk insurance products, automate insurance underwriting, pricing and claims settlement processes for such products, and increase public awareness of the weather risk in the Participating Countries. The Project consists of the following parts: Component 1 Provision of technical and regulatory assistance required to develop, in conjunction with the SEEC CRIF Project, new insurance and reinsurance products that will increase Participating Countries resilience to climate change, including the equipment and technical services required in connection with carrying out the preparatory work needed for the development of weather risk insurance markets in Albania, FYR of Macedonia and Serbia. Such preparatory technical activities include but are not limited to acquisition of weather risk stations, public information campaigns, regulatory assistance, and development of catastrophe risk models and weather risk indexes. Component 2 Provision of technical assistance required for Project management by the Recipient. The World Bank agrees to extend to the Recipient, on the terms and conditions set forth or referred to in the Grant Agreement, a grant in an amount equal to five million five hundred thousand United States Dollars ($ 5,500,000) ( Grant ) to assist in financing the Project. According to the Grant Agreement the International Bank for Reconstruction and Development would finance 100 % of Eligible expenditures consisting of consultant s services, goods and incremental operating costs. The initial project s closing dates under the agreement were 31 December ACCOUNTING POLICIES a) Basis of Accounting These special purpose financial statements are prepared in accordance with the International Public Sector Accounting Standard ( IPSAS ) Financial Reporting under the Cash Basis of Accounting issued by the International Public Sector Accounting Standards Board ( IPSASB ), an independent standardsetting body within the International Federation of Accountants ( IFAC ) and incorporate the following principal accounting policies, which have been consistently followed in all material respects and comply with the "Guidelines: Annual Financial Reporting and Auditing for World Bank - Financed Activities issued by the World Bank's Financial Management Sector Board. These Special Purpose Financial Statements have been prepared under the historical cost convention. Project financing is recognised as a source of project funds when the cash is received. Project expenditure is recognised as a use of project funds when payment is made. b) Period of accounts These special purposes financial statements cover the periods from 1 January 2016 to 20 April 2016 and from 1 January 2015 to 31 December In addition, cumulative project funding and expenditure is presented because it is considered to be of more relevance to users of the financial statements. c) Transactions and balances in foreign currencies In accordance with the requirements of the World Bank, these special purpose financial statements are presented in United States dollars ("US dollar", "USD" or US$ ), which is the functional currency of the Project. 10

11 GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF EUROPA REINSURANCE FACILITY LIMITED NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) FOR THE 4 MONTHS ENDED 20 APRIL 2016 AND THE YEAR ENDED 31 DECEMBER 2015 (Expressed in US dollars) 3. CASH IN BANK Designated Account (IBRD TF USD) , , METHOD OF WITHDRAWAL a) The Project DA Account The Designated Account maintained with the UBS Switzerland is a designated disbursement account of the Project to effect the payment of eligible expenditure, within defined limits, which do not require individual authorisation from IBRD. b) Statement of expenditure ( SOE ) Under the SOE method, the Project forwards to the World Bank an application for reimbursement of payments already made using an Application for Withdrawal with SOE forms as the only documentation. 5. STATEMENT OF EXPENDITURE (SOE) WITHOUT SUPPORT DOCUMENTATION Statement of Expenditure ( SOE ) has been submitted as of 20 April 2016 and 31 December 2015 under IBRD Grant No. TF As of 20 April 2016 Application # Required for Consultant services Incremental operating cost Paid 38-GEF GEF 60, , GEF 15, , GEF Total for ,048 1,079 77,127 As of 31 December 2015 Application # Required for Consultant services Incremental operating cost Paid 25-GEF GEF 10, , GEF 24, , GEF 1, , GEF 24, , GEF 28, , GEF 12, , GEF 10, , GEF 24, , GEF 6, , GEF 4, , GEF 52, , GEF 28, ,485 Total for ,944 4, ,617 11

12 GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF EUROPA REINSURANCE FACILITY LIMITED NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) FOR THE 4 MONTHS ENDED 20 APRIL 2016 AND THE YEAR ENDED 31 DECEMBER 2015 (Expressed in US dollars) 6. ACTUAL VS. BUDGET Statement of Sources and Uses of Funds for the 4 months ended 20 April 2016 Statement of Project Activities for the 4 months ended 20 April 2016 Actual Planned Variance OPENING BALANCES International Bank for Reconstruction and Development 477, ,854 FUNDS RECEIVED BY SOURCES International Bank for Reconstruction and Development (16,728) (16,728) FOREIGN EXCHANGE DIFFERENCE Gain/ (loss) - - EXPENDITURE Consulting services 459,785 - (459,785) Incremental Operating costs (868) 460,653 - (460,653) CLOSING BALANCES International Bank for Reconstruction and Development Technical Preparation Work Actual Planned Variance (a) Regulatory Assistance (b) Weather risk models 158,991 - (158,991) (c) Weather stations (d) Risk maps 124,542 - (124,542) (e) Weather insurance products 133,752 - (133,752) (f) Public awareness 7,072 - (7,072) 424,357 - (424,357) 2. Project Management 36,296 - (36,296) 460,653 - (460,653) 12

13 GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF EUROPA REINSURANCE FACILITY LIMITED NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) FOR THE 4 MONTHS ENDED 20 APRIL 2016 AND THE YEAR ENDED 31 DECEMBER 2015 (Expressed in US dollars) 6. ACTUAL VS. BUDGET (CONTINUED) Statement of Sources and Uses of Funds for the year ended 31 December 2015 OPENING BALANCES International Bank for Reconstruction and Development 210, ,991 Statement of Project Activities for the year ended 31 December Technical Preparation Work Actual Planned Variance (a) Regulatory Assistance (b) Weather risk models 658, ,553 96,982 (c) Weather stations 26,332 15,977 (10,354) (d) Risk maps 341, , ,228 (e) Weather insurance products 97, , ,517 (f) Public awareness 86,422 50,737 (35,685) 1,210,227 1,572, , Project Management 143, ,193 64, SUBSEQUENT EVENTS Actual Planned Variance FUNDS RECEIVED BY SOURCES International Bank for Reconstruction and Development 1,621,054 1,621,054 FOREIGN EXCHANGE DIFFERENCE Gain/ (loss) - - EXPENDITURE Consulting services 1,349,815 1,730,969 (381,155) Incremental Operating costs 4,376 50,138 (45,762) 1,354,191 1,781,107 (426,916) CLOSING BALANCES International Bank for Reconstruction and Development 477, ,854 1,354,191 1,781, ,916 The amount of USD 15.9 was taken by UBS from the designated account on 29 April

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Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND GRANT No. TF010940 IMPLEMENTED