Inclusive Housing Financing Program Social Housing Fund Auditor's Report & Special Purpose Financial Statement June 30" 2018 Contents 1- Auditor's Report 2- Special Purpose Financial Statement as at 30h June 2018. 3- Notes to the Special Purpose Financial Statement as at 30th June 2018. H r a :r A. M. Hegazy & Co Horwath A7Lv A4allraus & C'nmS10 itna A M'vimber of Horwalih Internationil 6 Boulos Hannah St.,- DAkki 12311 Giy; - Egypt Tel.: 7600319 - 7600320 - 7616310 Fax; 760046S wv.-Ahorwath.com Auditor's Report To the Social Housing Fund Inclusive Housing Financing Program We have audited the accompanying Special Purpose Financial Statement (SPFS) of Inclusive Housing Financing Program represented in the Sources and Uses of Funds statement for the year ended 30"' June 2018. The Program's management is responsible for ensuring that the Special purpose financial statement is perpared. It is our responsibility is to form an independent opinion, based on our audit, on this statement and to report our opioin to you. We conducted our audit in accordance with Egyptian and International Auditing Standards and such other specific procedures requested by the Program's management. An audit includes examination, on a test basis, evidence supporting amounts and disclosures in the funds receipts and expenditures statement. It also includes an assessment of the significant estimates and judgements made by the Program's management in the preparation of the statement, and of whether the accounting policices are appropriate to the project's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanation which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the statements is free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the statements. Opinion In our opinion, the special purpose financial statements referred to above present fairly, in all material respects, the Sources and Uses of Fund Statement as at 301! June 20.18 in conformit%' with the accounting principles described in Note 2 to the special plury e financiai st-a tement¾. Epend-iture roKded are prokrlv suplportL.d and Dr. i1talet AbQeJ A7Z -iegazy Cairo: November - 2 Social Housing Fund (SHE) Inclusive Housing Finance Program Financial Management Unit (FMU) World Bank Loan No 8498 JQ Sources and Uses of Funds Statement For 1 July 2017 to 30 June 2018 Amounts in US $ For 1 July 2017 to Cumulative till 30 30 June 2018 June 2018 Cash Receipt World Bank (WB) 66,925,514 185,726,279 Social Housing Fund 92,947 329,483 Guarantee and Support Mortgage Activity Fund 288,510 470,767 Total Financing 67,306,971 186,526,529 Uses of Funds Demand Side Housing Subsidy Support 66,925,262 185,725,998 Improving Management Information System 222,747 430,198 67,148,009 186,156,196 Other Expenditure Salaries & Wages 144,549 342,682 Others 14,413 27,651 158,962 370,333 Total Expenditures 67,306,971 186,526,529 Net Funds balances Dr. Khaled A. Hegazy Dr. A. M. Hegazy & Co. Accouintants & Consultants Member Firm of Crowe Horwath Fr. Ju6.1 to3 Sue 201 Note I -Nature of Activities The Arab Republic of Egypt and the International Bank for Reconstruction and Development agreed that the latter shall provide additional finance Social Housing Fund on June 10, 2015, through Loan No8498EG, The Bank agrees to lend an amount of five hundred million United States Dollar (US$500 Million) The objective of the Program is to improve the affordability of formal housing for low income households in the Arab Republic of Egypt and to strengthen the SHF's capacity to design policies and coordinate programs in the social housing sector. The Project consist of the following parts: The Program is a part of the Borrower's Social Housing Program and consists of the following components: Part A: Institutional Strengthening of SHF 1. Enhancing the capacity of SHF to improve the Borrower's housing sector through, interalia: (a) coordination and consolidation of housing entities and functions; (b) formulation of social housing policy, programs, regulations and procedures; and (c) preparation and implementation of reforms to improve the efficiency and equitability of the housing system. 2. Enhancing the effectiveness of SHF to provide oversight to the implementation of the Program through, inter alia: (a) the establishment of an improved management information system; (b) the establishment of a sound fiduciary management and governance structure and (c) improving monitoring and evaluation capacity. Part B: Demand-side Housing Subsidy Support 1. Affordable Mortgage Program (AMP) 2. Public Rental Subsidy Program for Tenants 3. Private Rental Subsidy Programs for Investors 4. Private Rental Subsidy Programs for Tenants, The Project Duration: The project closing date is June 30, 2020 Terms of repayment and Grace period: According to the loan agreement, Schedule 3, the Arab Republic shall repay the loan on semi-annual installment due on January and July 15theach year, starting from July 15Lh 2020 and ending on January 15th2050. Each installment amounts to (1.67%) of the Notes to the special purpose financial statement Social Housing Fund (SHF) The World Bank Loan No. 8498 EG From I July 2017 to 30 June 2018 Page 4 loan amount, except for the Installment dated January 15th 2050 which will amount to (1.47%) Note 2 - Accounting Policies The following are the significant applied accounting policies: 2/1 Method of Accounting The Project maintain its accounts on the cash basis of accounting. On this basis receipts are recognized when received by the Projectand expenditures are recognized when paid. 2/2Translation of non U$ dollars currency: The SHF maintains its accounts in Egyptian Pounds. Transactions in U$ dollar currencies are recorded at the average exchange rates ruling at the end of the financial year 30 June 2017, the statement of funds receipts and expenditures has been prepared on the cash basis of accounting. Note 3-Cash receipt (Financing) Analysis Amounts in US $ For I J uly 2017 Cumulative till 30 to 30 June 2018 June 2018 Cash Receipt World Bank (WB) 66,925,514 185,726,279 Social Housing Fvurd 92,947 329,483 Guarantee and Support Mortgage Activity Fund 288,510 470,767 Total Financing 67,306,971 186,526,529 Note 4 - Expenditure Analysis 4/1: Analysis of Wages & Salaries as at 30th June 2018 is represented as follows: Amounts in US $ Salaries &Wages For 1 July 2017 Cumulative till to 30 June 2018 30 June 2018 Improving Management Infonation System 38,944 100,040 Improving Monitoring & Evaluation 38,346 93,326 Internal audit ftu-cdon 27,856 31,302 Mechanism for considering complaints and grievances 39,403 118,013 Total Salaries & Wages 144,549 342,681 4/2: Analysis of Others - Other Expenditures as at 30th June 2018 is represented as follows: Amounts in US $ Others For 1 July 2017 Cumulative till to 30 June 2018 30June 2018 Irdependent Verification Agent ( IV.A) Fees 14,161 27,371 bank charges & interest 252 280 Total Others 14,413 27,651