TINA HYDROPOWER LIMITED Financial Statements for the year ended 31 December 2022 TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 TABLE OF CONTENTS 1. Directors' Report Page 1 2. Statement of Financial Position Page 3 3. Statement of Profit and Loss Page 4 4. Statement of Changes in Equity Page 5 5. Statement of Cash Flows Page 6 6. Notes to and forming part of the financial statements Pages 7 to 16 7. Auditor's report Pages 17 to 19 -1- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 DIRECTORS' REPORT In accordance with a resolution of the board of directors, the directors herewith submit the statement of financial position of Tina Hydropower Limited (hereinafter referred to as the "Company") as at 31 December 2022 and the related statement of profit and loss, statement of changes in equity and statement of cash flows for the year ended on that date and the report as follows: Directors The names and directors in office at the date of this report and at any time during the financial year and up until the date the financial statements were authorised for issue are as follows: Mr Yong Hoon Chang, Non-Executive Director Mr Cheul Chang, Non-Executive Director Mr Jung Min Kim, Non-Executive Director (appointed 25 February 2022) Mr Shinchul Park, Non-Executive Director (appointed 25 February 2022) Mr Kap Soon Park, Non-Executive Director (appointed 25 February 2022) Mr Byoungdong Oh, Non-Executive Director (ceased 25 February 2022) Mr Gyu Seok Kwak, Non-Executive Director (ceased 25 February 2022) Mr Oeduk Kim, Non-Executive Director (ceased 25 February 2022) Director's Statement In the opinion of the directors, the accompanying statement of financial position gives a true and fair view of the state of affairs of the Company as at 31 December 2022 and the accompanying statement of profit and loss, statement of changes in equity and statement of cash flows give a true and fair view of the results, changes in equity and cash flows of the Company for the year then ended. At the date of this statement there are reasonable grounds to believe the Company will be able to pay its debts as and when they fall due. All relevant related party transactions have been adequately recorded in the books of the Company. Trading results The net profit for the year after tax amounted to $137,008 (2021: $162,847 profit). Dividends There were no dividends declared or paid to the shareholders during the year (2021: Nil). Principal activity The principal activity of the Company during the course of the financial year was the development and financing of the Tina River Hydropower Project (TRHDP) in particular, the design, construction and operation of the TRHDP project. There were no significant changes in the nature of this activity during the year. There have been no changes during the year under review in either the nature of the Company's business or in the classes of business in which the company has an interest. Dated at Honiara this 27th day of June 2023. Mr Yong Hoon Chang Director -3- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 31 December 2021 31 December 2022 (restated) Note USD USD Current assets Cash on hand and at bank 5 811,832 476,212 Prepaid insurance premium 6 854,930 848,815 Other current assets 7 13,987 17,206 Total current assets 1,680,749 1,342,233 Non-current assets Prepaid insurance premium 6 646,806 1,411,380 Property, plant and equipment 8 48,560 49,912 Right-of-Use Asset 9 1,185,733 1,278,135 Advance payment 10 3,343,485 3,440,156 Contract assets 11 3,478,800 1,995,844 Total non-current assets 8,703,384 8,175,427 Total assets 10,384,133 9,517,660 Current liabilities Accounts payable 12 1,163,635 2,725,775 Current lease liability 13 47,656 77,596 Total current liabilities 1,211,291 2,803,371 Non-Current Liabilities Non-current lease liability 13 1,190,897 1,244,352 Total non-current liabilities 1,190,897 1,244,352 Total liabilities 2,402,188 4,047,723 NET ASSETS 7,981,945 5,469,937 EQUITY Issued capital 14 7,462,540 5,087,540 Retained earnings 519,405 382,397 TOTAL EQUITY 7,981,945 5,469,937 Mr Yong Hoon Chang Director -4- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 DECEMBER 2022 31 December 2021 31 December 2022 (restated) Note USD USD Revenue from capital works performed 11 3,759,972 5,624,762 Other income 28,150 - Total income 3,788,122 5,624,762 Expenses Capital works costs 15 2,078,798 3,397,216 Depreciation and amortisation expenses 16 108,541 109,636 Finance costs 13 126,627 128,892 Other expenses 17 1,337,148 1,826,171 Total expenses 3,651,114 5,461,915 Profit before income tax 137,008 162,847 Income tax expense - - Profit for the year 137,008 162,847 -5- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 Share Capital Retained earnings Total Equity USD USD USD Balance as at 31 December 2020 5,087,540 219,550 5,307,090 Profit for the year - 162,847 162,847 Balance as at 31 December 2021 5,087,540 382,397 5,469,937 Share capital contribution during the year 2,375,000 - 2,375,000 Profit for the year - 137,008 137,008 Balance as at 31 December 2022 7,462,540 519,405 7,981,945 -6- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022 31 December 2021 31 December 2022 (restated) USD USD Cash flows from operating activities Receipt from customers 2,277,016 1,710,353 Interest received 6,872 - Payments to suppliers and employees (4,322,986) (2,848,702) Net cash used in operations (2,039,098) (1,138,349) Cash flows from investing activities Proceeds from sale of property, plant and equipment 11,520 - Payments for property, plant and equipment (23,022) - Net cash used in investing activities (11,502) - Cash flows from financing activities Proceeds from issue of shares 2,375,000 - Net cash from financing activities 2,375,000 - Net increase / (decrease) in cash and cash equivalents 324,400 (1,138,349) Cash and cash equivalents at the beginning of the year 476,212 1,614,561 Effect of foreign currency rate changes 11,220 - Cash and cash equivalents at the end of the year 811,832 476,212 -7- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 1. Reporting Entity Tina Hydropower Limited (the "Company") is a company domiciled in Solomon Islands. The address of the Company's registered office is P.O.Box 419, Pacific Ace Plaza, Honiara, Solomon Islands. 2. General Information (a) Principal Activities The principal activity of the Company during the course of the financial year was the development and financing of the Tina River Hydropower Project (TRHDP) in particular, the design, construction and operation of the TRHDP project (hereinafter the "Project"). There were no significant changes in the nature of this activity during the year. (b) Service Concession Arrangement The Company (Operator) entered into a service concession arrangement (SCA) with the Solomon Islands Government (SIG or Grantor). The Company is responsible for the development of the Tina Hydro Power Plant and its maintenance for a concession term of 30 years At the end of concession term, the Plant will be transferred to the Grantor in the conditions specified in Schedule 1 & 2 of the Power Purchasing Agreement (PPA) between the Solomon Islands Electricity Authority (SIEA) and the Company. The Company will also transfer all its rights, title and interest in accordance with PPA at the end of the concession period. According to the PPA, the SIEA will not only grant to the Company, at the applicable charge, a valid licence to generate and sell electricity but also purchase from the Company all electricity produced. The PPA also outlines termination grounds for both parties of the PPA. The Company's right to consideration under service concession arrangement is recognised as a financial asset. The consideration is classified as a contract asset during the construction period and comprise of accumulated capital works revenue less consideration received. 3. Adoption of new and revised Standards New and amended IFRS Standards that are effective for the current year During the financial year, the Company has considered the following new and amended IFRSs which are effective for the financial year ended 31 December 2022: 1. Amendment to IAS 16 Proceeds Before Intended Use 2. Amendment to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract 3. Amendment to IFRS 3 Reference to the Conceptual Framework 4. Amendment to IFRS 9 Fees in the '10 per cent' test for derecognition of financial liabilities 5. Amendment to IAS 41 Taxation in Fair Value Measurements The amendments listed above did not have any significant impact on the financial performance or position of the Company. New and revised IFRSs in issue but not yet effective At the date of authorization of these financial statements, the following new and revised IFRSs have been issued but not yet effective: IFRS 17 (including the June 2020 and December 2021 amendments to IFRS 17) Insurance Contracts Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Amendments to IAS 1 Classification of Liabilities a Current or Non-current Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies Amendments to IAS 8 Definition of Accounting Estimates Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial performance or position of the Company in the future periods. 4. Significant accounting policies (a) Basis of accounting The financial statements have been prepared in accordance with the requirements of the Solomon Islands Company Act 2009 and the applicable International Financial Reporting Standards (IFRS) in Solomon Islands. -8- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (a) Basis of accounting continued The financial statements have been prepared on the basis of historical cost. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The financial statements are presented in United States dollars, which is the Company's functional currency. All financial information has been rounded to the nearest dollar. (b) Going Concern The financial statements have been prepared on the going concern basis, which assumes that the Company will be able to meet its liabilities and obligations as and when they fall due, in the normal course of business for the foreseeable future. For the year ended 31 December 2022, the Company reported a profit after tax of USD $137,008 (2021: USD $162,847), had net cash outflows from operations of USD $2,039,098 (2021: USD$1,138,349), the Company had a working capital surplus of USD $469,458 (2021: deficiency of USD $1,461,138) and a net assets of USD $7,981,945 (2021: USD $5,469,937). The Company has a standing funding agreement with the Solomon Islands Government over the life of the Project. Accordingly, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. (c) Critical accounting estimates and judgements Critical judgements and key assumptions that management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements are detailed in the notes below: (i) Revenue recognition The revenue is measured at fair value, calculated on the basis of the total costs incurred plus the portion of the return on equity during construction (ROEDC) earned during the year. Annual internal rate of return for equity contributions as per the PPA is 13%. The ROEDC is calculated based on actual equity contributions and estimated equity contributions to be made during the construction period. The portion of the ROEDC earned during the year is determined by applying to the ROEDC amount the ratio of a total expenses for the year-to-date to a total project cost. (ii) Service concession arrangement The SCA between the Company and SIG gives rise to recognition of capital works revenue and contract assets in the statement of financial performance and position respectively. Calculation of capitals works revenue requires estimates outlined in Note 4.c.(i) above. Contract assets is the cumulative capital works revenue net of considerations received from grantor during the year. (d) Revenue Recognition Capital works revenue is construction services provided to the Solomon Islands Government (Grantor) relating to the concession arrangement and are recognised as non‑cash revenue in accordance with Interpretation 12 Service Concession Arrangements (IFRIC12). The revenue is measured at fair value, calculated on the basis of the total costs incurred plus the portion of the ROEDC earned during the year, as outlined in Note 4.c.(i) above. The deemed revenue for the provision of construction services is an addition to contract assets. (e) Leases (the Company as lessee) The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the leasee. The lease liability is initially measured at the present value of the lease arrangements that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the company uses its incremental borrowing rate. The rate is reviewed at the end of each reporting period. The lease liability is presented as a separate line in the statement of financial position. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. The depreciation starts at the commencement date of the lease. The right-of-use asset are presented as a separate line in the statement of financial position. (f) Financial instruments Financial assets and financial liabilities are recognised in the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument, except for debt securities issued which are initially recognised on the date they are originated. -9- TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (f) Financial instruments continued Financial assets and financial liabilities are initially measured at fair value, except for trade receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. The Company de-recognizes a financial liability when its contractual obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. (a) Non-derivative Financial assets Cash and cash equivalents comprises cash on hand and cash at bank. Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalent for the purpose of the statement of cash flows. (b) Non-derivative Financial liabilities The Company's only non-derivative financial liabilities is trade and other repayable. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest rate method. Trade and other payables are stated at cost. (g) Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effect. (h) Property, plant and equipment Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation on other assets is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the lease term (if shorter) as follows: Category Useful life Motor vehicle 5 years Office equipment 5 years Furniture and fittings 5 years Computer 5 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Comprehensive Income. (i) Advance Payments Advance payments is recognised as an asset by the Company on the Statement of Financial position when payment is made by the Company to a third-party for provision of services to the Company at a future date. The advance payment balance is reduced upon receipt of invoice from the service provider. Advance payments are recoverable from service providers over the period of the service provision. (j) Income Tax The Company is exempt from Income Tax according to the PPA. - 10 - TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (k) Restatement and change in classification The Company is restating its financial statements for the year ended 31 December 2021 to correct account balances as summarized below. (i) Grants received In 2022, the management of the Company identified that grants received from SI Government and other donors were incorrectly presented as a liability, whereas they should have been offset against contract asset relating to service concession agreement. (ii) Classification of prepaid insurance As part of the preparation of the 2022 statutory financial statements, the management of the Company determined that certain prepaid insurance policies have a maturity date after 12 months from the reporting date, as such the portion of such prepaid insurance expected to be amortised in a period beyond 12 months from the reporting date should be classified as non-current asset, rather than current asset. The table below show the adjustments recognised for each individual line item as at 31 December 2021. Line items that were not affected by the changes have not been included. There was no impact of the adjustments on the Statement of Profit and Loss. Statement of financial 31 December 2021 (as 31 December 2021 Impact of Restatement position (extract) previously reported) (restated) $ $ $ Prepaid insurance 2,260,195 (1,411,380) 848,815 premium Total current assets 2,753,613 (1,411,380) 1,342,233 Prepaid insurance - 1,411,380 1,411,380 premium Contract assets 13,100,844 (11,105,000) 1,995,844 Total non-current 17,869,047 (9,693,620) 8,175,427 assets Government subsidy (11,105,000) 11,105,000 - Total non-current (12,349,352) 11,105,000 (1,244,352) liabilities Statement of cash 31 December 2021 (as 31 December 2021 Impact of Restatement flows (extract) previously reported) (restated) $ $ $ Receipt from customers - 1,710,353 1,710,353 Net cash used in (2,848,702) 1,710,353 (1,138,349) operations Proceeds from grants 1,710,353 (1,710,353) - Net cash from 1,710,353 (1,710,353) - financing activities (iii) Change in classification Certain prior year amounts have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the reported results of operations. - 11 - TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 31 December 2022 31 December 2021 5. Cash and cash equivalents USD USD Cash at bank 811,832 476,212 Cash on hand and at bank 811,832 476,212 The above figure reconciles to the amount of cash shown in the statement of cash flows at the end of the financial year as follows: 31 December 2022 31 December 2021 USD USD Balance as above 811,832 476,212 Balance as per statement of cash flows 811,832 476,212 6. Prepaid Insurance Premium CIP1 MIGA2 Vehicle3 Workers4 Total USD USD USD USD USD At 31 Dec 2022 Opening Costs 2,094,940 163,937 262 1,056 2,260,195 Adjustments - - (629) - (629) Additions - 102,745 6,659 6,899 116,303 Amortisation (837,517) (24,054) (5,665) (6,897) (874,133) Ending balance 1,257,423 242,628 627 1,058 1,501,736 Current Prepaid Insurance Premium 839,048 14,197 627 1,058 854,930 Non-current Prepaid Insurance Premium 418,375 228,431 - - 646,806 1,257,423 242,628 627 1,058 1,501,736 At 31 Dec 2021 (restated) Opening Costs 2,109,382 79,509 189 901 2,189,981 Adjustments - - - - - Additions 1,073,322 98,008 5,351 6,899 1,183,580 Amortisation (1,087,764) (13,580) (5,278) (6,744) (1,113,366) Ending balance 2,094,940 163,937 262 1,056 2,260,195 Current Prepaid Insurance Premium 838,435 9,062 262 1,056 848,815 Non-current Prepaid Insurance Premium 1,256,505 154,875 - - 1,411,380 2,094,940 163,937 262 1,056 2,260,195 1. Construction Insurance Premium (12/December/2019 to 01/July/2024) 2. MIGA Insurance Premium (31/January 2020 to 30/January/2040) 3. Vehicle Insurance Premium (renewed on an annual basis) 4. Worker's Compensation (renewed on an annual basis) - 12 - TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 7. Other current assets TCLC1 Bond2 Other3 Total USD USD USD USD At 31 Dec 2022 Opening Costs 9,284 6,583 1,339 17,206 Additions - - 652 652 Amortisation - (2,532) (1,339) (3,871) Ending balance 9,284 4,051 652 13,987 At 31 Dec 2021 Opening Costs 9,284 13,673 - 22,957 Adjustments - - - - Additions 9,284 - 1,339 10,623 Amortisation (9,284) (7,090) - (16,374) Ending balance 9,284 6,583 1,339 17,206 1. Monthly lease payments of Tina Core Land Limited (TCLC) 2. Deposits of the leased office and apartments for the company 3. Prepaid insurance balance refundable for insurance cover of MC2302 sold during the year 8. Property, plant and equipment Motor Office vehicles Furniture Equipment Computer Total USD USD USD USD USD At 31 Dec 2022 Cost 60,196 25,291 9,662 15,797 110,946 Accumulated depreciation (28,202) (15,721) (6,089) (12,374) (62,386) Net book amount at the end of the year 31,994 9,570 3,573 3,423 48,560 At 31 Dec 2022 Net book amount at the beginning of the year 23,136 14,628 5,566 6,582 49,912 Additions 29,635 - 603 - 30,238 Disposals / adjustments (9,255) - (452) - (9,707) Depreciation (11,522) (5,058) (2,144) (3,159) (21,883) Net book amount at the end of the year 31,994 9,570 3,573 3,423 48,560 At 31 Dec 2021 Cost 52,083 25,291 10,670 15,797 103,841 Accumulated depreciation (28,947) (10,663) (5,104) (9,215) (53,929) Net book amount at the end of the year 23,136 14,628 5,566 6,582 49,912 At 31 Dec 2021 Net book amount at the beginning of the year 33,553 11,850 6,868 9,741 62,012 Additions - 7,210 848 - 8,058 Disposals / adjustments - - (88) - (88) Depreciation (10,417) (4,432) (2,062) (3,159) (20,070) Net book amount at the end of the year 23,136 14,628 5,566 6,582 49,912 - 13 - TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 9. Right-of-use assets (RoUA) 31 December 2022 31 December 2021 USD USD At the beginning of the year 1,278,135 1,299,911 Adjustments (59,437) - Addition & others 53,693 67,790 Depreciation (86,658) (89,566) At the end of the year 1,185,733 1,278,135 10. Advance Payment (to EPC Contractor) 31 December 2022 31 December 2021 USD USD Opening Costs (Access Road) 3,440,156 3,750,000 Amortizations (96,671) (309,844) Net book amount 3,343,485 3,440,156 Advances represent payments made to Hyundai Engineering Co., Ltd in relation to construction of the access roads. 11. Revenue from capital works performed 31 December 2021 31 December 2022 (restated) USD USD Total Project Cost 210,427,000 210,427,000 Actual costs for the financial year 3,651,114 5,461,915 Percentage of completion for the year 1.74% 2.60% Total return on equity during construction 6,273,890 6,273,890 Percentage of completion for the year 1.74% 2.60% Shareholder's return for the year 108,858 162,847 Actual Cost for the financial year 3,651,114 5,461,915 Shareholders' return for the year 108,858 162,847 Revenue from capital works performed 3,759,972 5,624,762 Contract assets at the beginning of the year 1,995,844 (1,918,565) Less: Considerations received (i) (2,277,016) (1,710,353) Contract assets at the end of the year 3,478,800 1,995,844 (i) Consideration received Grants at the beginning of the year 11,105,000 9,394,647 Additions 2,277,016 1,710,353 Grants at the end of the year 13,382,016 11,105,000 As part of US$201,259,000 Facility Agreement entered into with SIG, the Company receives CFPs' grants from the CFPs through the SIG in order to cover engineering, procurement and construction (EPC) costs as well as non-EPC costs relating to the TRHDP. These grants are accounted for as consideration received from the Grantor in accordance with the requirements of IFRS 15 "Revenue from contracts with customers" and offset against contract asset relating to service concession agreement when received. Total grants, covering EPC and non-EPC costs, obtained from the SIG as at 31 December 2022 is $13,382,016 as detailed below: Committed Disbursed EPC Costs Non-EPC Costs APIP grants* $10,000,000 $6,027,016 $5,505,781 $521,235 GCF grants* $16,000,000 IDA grants $7,355,000 $7,355,000 $7,355,000 ADB grants $12,000,000 GCF loans $70,000,000 IDA loans $21,304,000 ADB loans $18,000,000 EDCF loans $31,600,000 ADFD loans $15,000,000 Total $201,259,000 $13,382,016 $5,505,781 $7,876,235 *Only for Access Road - 14 - TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 11. Service Concession Revenue - continued 31 December 2022 31 December 2021 Concessional Grants (Government Subsidy) - continued USD USD APIP grants for Advance Payments (Access Road) 5,505,781 3,750,000 IDA grants for Non-EPC Costs (No.1) 2,066,578 2,066,578 IDA grants for Non-EPC Costs (No.2) 1,073,321 1,073,321 IDA grants for Non-EPC Costs (No.3) 2,504,748 2,504,748 IDA grants for Non-EPC Costs (No.4) 1,710,353 1,710,353 IDA grants for Non-EPC Costs (No.5) 521,235 - Total at the end of the year 13,382,016 11,105,000 12. Accounts Payables 31 December 2022 31 December 2021 USD USD EPC Interim payments 547,804 1,755,781 Salaries to Executives 294,434 578,851 Stantec New Zealand 296,869 141,153 Kosol Corporation Limited 7,216 - McDermott Will & Emery Singapore LLP 13,440 - Our Telekom 1,310 - INOGEN - 92,372 Norton Rose Fulbright - 87,886 SIG (Waiver Fee) - 38,000 PwC - 16,500 Payroll Tax Liabilities - 2,694 NPF contribution liabilities 20 2,671 HCC basic rate liabilities 638 94 Others 1,904 9,773 1,163,635 2,725,775 13. Lease Liability 31 December 2022 31 December 2021 USD USD Lease liability at the beginning of the year 1,321,948 1,325,040 Additions & others 53,693 67,791 Interests for the year 126,627 128,892 Adjustment on derecognition of lease contract (67,232) - Lease payments for the year (196,483) (199,775) Lease liability at the end of the year 1,238,553 1,321,948 Current lease liability 47,656 77,596 Non-current lease liability 1,190,897 1,244,352 1,238,553 1,321,948 14. Share Capital 31 December 2022 31 December 2021 USD USD Korea Water Resources Corporation 5,970,032 4,070,032 Hyundai Engineering Co., Ltd 1,492,508 1,017,508 7,462,540 5,087,540 15. Capital works costs 31 December 2022 31 December 2021 USD USD Construction Services EPC Interim Payments No.2 (at Account Payables) 547,804 1,755,781 Amortizations to Advance Payment 96,671 309,844 Owner's Engineer Fee Stantec New Zealand (1st quarter of the year) 142,727 157,657 Stantec New Zealand (2nd quarter of the year) 116,427 114,153 Stantec New Zealand (3rd quarter of the year) 153,436 124,156 Stantec New Zealand (4th quarter of the year) 143,433 141,153 Wages & Salaries Wages & Salaries 878,300 794,472 2,078,798 3,397,216 - 15 - TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 16. Depreciation 31 December 2022 31 December 2021 USD USD RoUA 86,658 89,566 Fixed Assets 21,883 20,070 108,541 109,636 17. Other expenses 31 December 2022 31 December 2021 USD USD Legal Advisory Fee Norton Rose Fulbright 165,083 268,861 SIG (Waiver Fee) - 48,000 McDermott Will & Emery Singapore LLP 13,440 - Pacific Lawyers - 2,532 Financial Advisory Fee PwC (Initial Payment) - 16,500 PwC (Final Payment) 28,200 16,500 Audit Service Fee Deloitte Touche Tohmatsu (Engagement Fee) 28,980 10,350 Deloitte Touche Tohmatsu (Final Fee) 18,900 23,895 Accounting Advisory Fee Morris & Sojnocki Chartered Accountants - 4,418 Insurance Insurance amortisation 874,133 1,113,366 ESMP Service Fee Stantec New Zealand - 33,825 INOGEN - 92,372 Others Administration costs 91,180 71,628 Travel and entertainment 61,340 62,360 Bank guarantee fee 48,667 48,667 Repairs and maintenance 3,927 8,518 Bank charge 3,298 4,377 Exchange loss - 2 1,337,148 1,826,171 18. Commitments and contingencies Capital Commitments As disclosed in Note 2(b), the Company entered into SCA with SIG. Per SCA, the Company is responsible for construction of the Tina Hydro Power Plant. The total project cost is US$210,427,000. The Company entered into EPC contract with Hyundai Engineering Co. Ltd and also entered into agreements with various subcontractors in order to fulfil its obligations under SCA. As at 31 December 2022, the percentage of completion of construction works is 7.79% (31 December 2021: 6.05%). Contingencies The company did not have any contingent assets, however, the Company has the liabilities. The contingent liability was provided with Solomon Islands Electricity Authority (the "SIEA") by the form of the Guarantee of the Company (issued by ANZ Bank) for the amount of 12 million US Dollars as the Construction Phase Security in accordance with the clause 6.2 of the PPA between the SIEA and the Company. - 16 - TINA HYDROPOWER LIMITED COMPANY NUMBER 20182824 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 19. Related parties Directors The names of Directors in office at the date of this report and at any time during the financial year and up until the date the financial statements were authorized for issue are as follows: Mr Yong Hoon Chang, Non-Executive Director Mr Cheul Chang, Non-Executive Director Mr Jung Min Kim, Non-Executive Director (appointed 25 February 2022) Mr Shinchul Park, Non-Executive Director (appointed 25 February 2022) Mr Kap Soon Park, Non-Executive Director (appointed 25 February 2022) Mr Byoungdong Oh, Non-Executive Director (ceased 25 February 2022) Mr Gyu Seok Kwak, Non-Executive Director (ceased 25 February 2022) Mr Oeduk Kim, Non-Executive Director (ceased 25 February 2022) Controlling Interests Korea Water Resources Corporation is the majority shareholder with 80% of total capital contributions. Related party transactions Total executive's remuneration during the year is US$678,073 (2021: US$669,324) . Executives remuneration for the year is paid by Korea Water Resources Corporation and is recoverable from the Company. Amounts payable to Korea Water Resources Corporation for executives remuneration as at 31 December 2022 is $294,434 (2021: $578,851). Amount payable is also outlined in Note 12 Accounts Payable. As disclosed in Note 18 the Company entered into EPC contract with Hyundai Engineering Co., Ltd. Amounts payable to Hyundai Engineering Co., Ltd for EPC services as at 31 December 2022 is US$547,804 (2021: US$1,755,781). Amount payable is also outlined in Note 12 Accounts Payable. The Company also made an advance payment to Hyundai Engineering Co., Ltd. for construction of access road. Amount recoverable from Hyundai Engineering Co., Ltd as at 31 December 2022 is $3,343,485 (2021: $3,440,156). Amount is recoverable over the construction period. Amount recoverable is also outlined in Note 10 Advance Payment (to EPC Contractor). 20. Subsequent events There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto that have occurred since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. 21. Approval of financial statements The date the financial statements were approved by the board of directors and authorised for issue is shown in the directors' report. Deloitte Touche Tohmatsu Level 9, Deloitte Haus MacGregor Street Port Moresby PO Box 1275 Port Moresby National Capital District Papua New Guinea Tel: +675 308 7000 Fax: +675 308 7001 www.deloitte.com.pg Independent Auditor’s Report to the Members of Tina Hydropower Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Tina Hydropower Limited (the “Company”) which comprise the statement of financial position as at 31 December 2022, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the declaration of directors. In our opinion, the accompanying financial statements, give a true and fair view of the Company’s financial position as at 31 December 2022 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act 2009. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Information The Directors are responsible for the other information. The other information comprises the Directors’ report for the year ended 31 December 2022, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. 17 Responsibilities of the Directors for the Financial Statements The directors of the Company are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the Companies Act 2009 and for such internal control as the directors determine is necessary to enable the preparation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the ability of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: · Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. · Obtain an understanding of internal control relevant to the audit 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 Company’s internal control. · Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. · Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. · Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the management and the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 18 Report on Other Legal and Regulatory Requirements The final statements of Tina Hydropower Limited is in accordance with the Companies Act 2009 and proper accounting records have been kept by the Company for the year ended 31 December 2022. We have no interest in the Company or any other relationship, other than that of the auditor of the Company. DELOITTE TOUCHE TOHMATSU Helen Hamilton-James Partner Port Moresby, 27 June 2023 19