+($'2)67$7((;3(1',785(0(7 )52038%/,&)81'6
)LYH P .(< 7KH4XHHQ·V&LYLO/LVW 3DUOLDPHQWDU\$QQXLWLHV *UDQWLQDLGIRU3URSHUW\6HUYLFHVDQG&RPPXQLFDWLRQVDQG,QIRUPDWLRQ *UDQWLQDLGIRU5R\DO7UDYHOE\$LUDQG5DLO *RYHUQPHQW'HSDUWPHQWVDQGWKH&URZQ(VWDWH 7KHDERYHFRORXUVFRUUHVSRQGWRWKRVHDSSOLHGWRWKHVHSDUDWHVHFWLRQVRIWKLVGRFXPHQW &217(176 3DJH +HDGRI6WDWH([SHQGLWXUHPHWIURP3XEOLF)XQGV 0DQDJLQJWKH5R\DO+RXVHKROG 2SHUDWLQJDQG)LQDQFLDO5HYLHZ )XWXUH'HYHORSPHQWV 6WDWHPHQWRQ,QWHUQDO&RQWUROV 6WDWHPHQWRIWKH.HHSHURIWKH3ULY\3XUVH·V)LQDQFLDO5HVSRQVLELOLWLHV )LQDQFLDO6WDWHPHQWVIRU 7KH4XHHQ·V&LYLO/LVW *UDQWLQDLGIRU3URSHUW\6HUYLFHV&RPPXQLFDWLRQVDQG,QIRUPDWLRQDQG 0DUOERURXJK+RXVH *UDQWLQDLGIRU5R\DO7UDYHOE\$LUDQG5DLO +($'2)67$7((;3(1',785(0(7 )52038%/,&)81'6 7KH4XHHQ·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·V&LYLO/LVWDQG*UDQWVLQDLGLQFOXGH PLOOLRQRI9$7 PLOOLRQ +HDGRI6WDWHH[SHQGLWXUHH[FOXGHVWKHFRVWVRIVHFXULW\SURYLGHGE\WKH3ROLFHDQG$UP\ DQGRI$UPHG6HUYLFHVFHUHPRQLDO 7KH DERYH ILJXUHV IRU 7KH 4XHHQ·V &LYLO /LVW DQG WKH *UDQWVLQDLG DUH EDVHG RQ DXGLWHG ILJXUHVWKHDFFRXQWVRIZKLFKDUHLQFOXGHGLQWKLVUHSRUW7KHRWKHUILJXUHVDUHQRWDXGLWHG $FKDUWVKRZLQJWKH+HDGRI6WDWHH[SHQGLWXUHIRUWKHSDVWILYH\HDUVLVVHWRXWRQSDJH )LJXUHVDUHIRUFDOHQGDU\HDUVDQG 7+(48((1·6'87,(6$6+($'2)67$7( 7KH4XHHQFDUULHVRXWWKHGXWLHVRI+HDGRI6WDWH7KHVHLQFOXGH • XQGHUWDNLQJFRQVWLWXWLRQDOGXWLHVIRUH[DPSOHWKH6WDWH2SHQLQJRI3DUOLDPHQWUHJXODU DXGLHQFHVZLWKWKH3ULPH0LQLVWHUPHHWLQJVRIWKH3ULY\&RXQFLOJLYLQJ5R\DO$VVHQWWR OHJLVODWLRQDQGDSSURYLQJPDQ\DSSRLQWPHQWV • IXOILOOLQJFRQVWLWXWLRQDOUHVSRQVLELOLWLHVLQUHODWLRQWRWKH6FRWWLVK3DUOLDPHQWDQGZKHUH DSSURSULDWHWKH:HOVKDQG1RUWKHUQ,UHODQG$VVHPEOLHV • FDUU\LQJRXW6WDWHDQG5R\DO9LVLWVRYHUVHDVDQGUHFHLYLQJ6WDWHDQG2IILFLDOYLVLWRUVWR WKH8QLWHG.LQJGRP • UHFHLYLQJFUHGHQWLDOVIURPIRUHLJQ+HDGVRI0LVVLRQ DQG • SUHVHQWLQJKRQRXUVDW,QYHVWLWXUHV ,Q DGGLWLRQ WKH UROH RI 7KH 4XHHQ VXSSRUWHG E\ PHPEHUV RI WKH 5R\DO )DPLO\ H[WHQGV PRUHZLGHO\WKDQWKHVHIRUPDOGXWLHVDQGLQFOXGHV • SURYLGLQJDIRFXVIRUQDWLRQDOLGHQWLW\XQLW\DQGSULGH IRUH[DPSOHRQ5HPHPEUDQFH 6XQGD\DQGDWWLPHVRIQDWLRQDOFHOHEUDWLRQRUWUDJHG\ • SURYLGLQJDVHQVHRIVWDELOLW\DQGFRQWLQXLW\ IRUH[DPSOHE\SDUWLFLSDWLQJLQWUDGLWLRQDO FHUHPRQLHVVXFKDV7URRSLQJWKH&RORXU • UHFRJQLVLQJVXFFHVVDFKLHYHPHQWDQGH[FHOOHQFH IRUH[DPSOHWKURXJKYLVLWVUHFHSWLRQV DQGDZDUGV DQG • FRQWULEXWLQJWKURXJKSXEOLFVHUYLFHDQGWKHYROXQWDU\VHFWRUWRWKHOLIHRIWKHQDWLRQ LQ WKLVDUHD7KH4XHHQLVSDUWLFXODUO\VXSSRUWHGE\WKHZRUNRIRWKHUPHPEHUVRIWKH5R\DO )DPLO\ HJ7KH3ULQFH·V7UXVWDQG7KH'XNHRI(GLQEXUJK·V$ZDUG6FKHPH 7+(48((1·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·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• %XFNLQJKDP3DODFH • 6W-DPHV·V3DODFH&ODUHQFH+RXVHDQG0DUOERURXJK+RXVH0HZV • 7KHUHVLGHQWLDODQGRIILFHDUHDVRI.HQVLQJWRQ3DODFH • 7KH5R\DO0HZVDQG5R\DO3DGGRFNVDW+DPSWRQ&RXUW DQG • :LQGVRU&DVWOHDQGEXLOGLQJVLQWKH+RPHDQG*UHDW3DUNVDW:LQGVRU 7KHVHSURSHUWLHVDUHUHIHUUHGWRDVWKH´2FFXSLHG5R\DO3DODFHVµRUWKH´(VWDWHµ7KH(VWDWH FRPSULVHV VRPH LQGLYLGXDO SURSHUWLHV ZLWK DQ DJJUHJDWH IORRU DUHD HVWLPDWHG DW DSSUR[LPDWHO\ VTXDUH PHWUHV 7KH %XFNLQJKDP 3DODFH 6W -DPHV·V 3DODFH DQG :LQGVRU &DVWOH 6WDWH $SDUWPHQWV WRJHWKHU ZLWK RIILFHV VHUYLFH DUHDV ZRUNVKRSV VWRUHV FRDFKKRXVHVVWDEOHVDQGJDUDJHVUHSUHVHQWDSSUR[LPDWHO\>RIWKHWRWDODUHD,QDGGLWLRQ WKHUH DUH 7KH 4XHHQ·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• IDFLOLWDWHFRVWUHGXFWLRQVDQGHQKDQFHYDOXHIRUPRQH\E\PDWFKLQJILQDQFLDODQGXVHU UHVSRQVLELOLW\ DQG • LPSURYH DFFRXQWDELOLW\ DQG WUDQVSDUHQF\ DQG HQDEOH D GHWDLOHG DQQXDO UHSRUW WR EH SXEOLVKHGE\JLYLQJRQHRUJDQLVDWLRQUHVSRQVLELOLW\IRUUR\DOWUDYHOH[SHQGLWXUH 7KH0HPRUDQGXPRI8QGHUVWDQGLQJGDWHGWK0DUFK EHWZHHQWKH/RUG&KDPEHUODLQ DQG WKH 3HUPDQHQW 6HFUHWDU\ RI WKH 'HSDUWPHQW RI 7UDQVSRUW QRZ WKH 'HSDUWPHQW IRU 7UDQVSRUW²´WKH'HSDUWPHQWµ VHWVRXWWKHEDVLVRQZKLFKWKH5R\DO+RXVHKROGVKRXOGXVH DQGDFFRXQWIRUWKHDQQXDO5R\DO7UDYHO*UDQWLQDLGSURYLGHGWRLWE\WKH'HSDUWPHQW7KH 0HPRUDQGXPRI8QGHUVWDQGLQJUHTXLUHVWKH3ULYDWH6HFUHWDU\WR7KH4XHHQDQGWKH.HHSHU RIWKH3ULY\3XUVHWKH5R\DO+RXVHKROGRIILFLDOVZLWKUHVSRQVLELOLW\IRUWKH*UDQWLQDLGWR DFFRXQWIRULWVVWHZDUGVKLSLQDQDQQXDOUHSRUW ,WLVDQLPSRUWDQWSDUWRI7KH4XHHQ·VUROHDV6RYHUHLJQVXSSRUWHGE\RWKHUPHPEHUVRIWKH 5R\DO)DPLO\WRDFWDVDIRFDOSRLQWIRUQDWLRQDOOLIHDQGWREULQJSHRSOHWRJHWKHUDFURVVDOO VHFWRUVRIVRFLHW\,QFDUU\LQJRXWWKLVUROHWKH5R\DO)DPLO\UHFHLYHVWKRXVDQGVRILQYLWDWLRQV HDFK\HDUIURPRURQEHKDOIRI*RYHUQPHQWWKH&KXUFKORFDODXWKRULWLHVDQGWKH$UPHG 6HUYLFHVDQGDZLGHUDQJHRILQGLYLGXDORUJDQLVDWLRQVDFURVVWKHSULYDWHSXEOLFDQGYROXQWDU\ VHFWRUV In 2004-05 it was agreed between UK Trade & Investment (UKTI) and the Department for Transport that the costs of The Duke of York’s official overseas travel as Special Representative of UKTI should be met by the Grant-in-aid. Detailed accounts showing how the Grants-in-aid have been spent during 2007-08 are shown on pages 63 and 101 of this report. EXPENDITURE MET DIRECTLY BY GOVERNMENT DEPARTMENTS AND THE CROWN ESTATE Year to 31st March 3 2008 2007 £m £m Administration of honours 0.7 0.5 Equerries, orderlies and other support 4 1.4 1.5 Maintenance of the Palace of Holyroodhouse 1.1 1.3 State Visits to and by The Queen and liaison with the 0.7 0.7 Diplomatic Corps 5 Ceremonial occasions 0.2 0.2 Maintenance of the Home Park at Windsor Castle 0.6 0.5 Other 0.2 0.1 4.9 4.8 Equerries and orderlies are seconded from the Armed Services to assist The Queen and other members of the Royal Family in undertaking their official duties. The Palace of Holyroodhouse is The Queen’s official residence in Scotland. COSTS FUNDED FROM OTHER SOURCES Duchy of Lancaster Income from the Duchy of Lancaster funds the Privy Purse. It is The Queen’s private income which after tax is largely used by Her Majesty to meet official expenditure. Accounts for the Duchy of Lancaster are presented to both Houses of Parliament annually. Duchy of Cornwall Income after tax from the Duchy of Cornwall funds the official duties of The Prince of Wales. Accounts for the Duchy of Cornwall are published and laid before Parliament annually. 3 Figures are not audited 4 2007 figures have been restated to reflect changes in the capitation rates used by the Ministry of Defence 5 2007 figures have been restated to reflect costs for the visit of the President of the Republic of Ghana and Mrs Kufuor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·V H[LVWLQJ*UDQWLQDLG$VIRUWKHPDLQWHQDQFHRIWKH2FFXSLHG5R\DO3DODFHVLQ(QJODQGWKH REMHFWLYHVDUHWRIDFLOLWDWHYDOXHIRUPRQH\DQGLPSURYHDFFRXQWDELOLW\DQGWUDQVSDUHQF\E\ SXEOLVKLQJDGHWDLOHGDQQXDOUHSRUW 7KH5R\DO+RXVHKROGLVRQO\UHVSRQVLEOHIRUPDMRUEXLOGLQJZRUNDQGWKH&XVWRG\*XDUGV &RVWVLQUHVSHFWRIPLQRUDQGJURXQGVPDLQWHQDQFHVSHFLDOLVWWHUPFRQWUDFWVXWLOLWLHVDQG RWKHU VXQGU\ PDWWHUV DUH UHFRYHUHG IURP WKH &RPPRQZHDOWK 6HFUHWDULDW 7KH 5R\DO +RXVHKROGPDLQWDLQV0DUOERURXJK+RXVHLQHIIHFWDVDFRQWUDFWRUIRUWKH'HSDUWPHQWIRU &XOWXUH0HGLDDQG6SRUWDQGWKHUHIRUHWKHFRVWVRISURSHUW\PDLQWHQDQFHDUHQRWLQFOXGHGLQ +HDGRI6WDWH([SHQGLWXUH )XUWKHULQIRUPDWLRQLVDYDLODEOHRQZZZUR\DOJRYXN 0$1$*,1*7+(52<$/+286(+2/' &RQWLQXLQJ LPSURYHPHQW LV DQ LPSRUWDQW SDUW RI WKH 5R\DO +RXVHKROG·V DSSURDFK DQG LW RSHUDWHV LQ D EXVLQHVVOLNH DQG SURIHVVLRQDO PDQQHU ZLWK D VWURQJ HPSKDVLV RQ YDOXH IRU PRQH\DQGDFFRXQWDELOLW\LQWKHXVHRISXEOLFIXQGVDQGUHVRXUFHV 6(1,250$1$*(0(17 7KH JHQHUDO PDQDJHPHQW RI 7KH 4XHHQ·V +RXVHKROG LV WKH UHVSRQVLELOLW\ RI WKH /RUG &KDPEHUODLQDQGWKHILYH+HDGVRIWKH+RXVHKROG·V'HSDUWPHQWVUHSRUWLQJWR7KH4XHHQ 7KH /RUG &KDPEHUODLQ WKH +HDGV RI 'HSDUWPHQW DQG WZR QRQH[HFXWLYH PHPEHUV DUH FROOHFWLYHO\UHIHUUHGWRDVWKH/RUG&KDPEHUODLQ·V&RPPLWWHH 7KH /RUG &KDPEHUODLQ·V &RPPLWWHH PHHWV IRUPDOO\ DSSUR[LPDWHO\ RQFH D PRQWK ,WV PHPEHUVDUHDVIROORZV • /RUG&KDPEHUODLQ7KH(DUO3HHO +HDGVRI'HSDUWPHQWV • 3ULYDWH6HFUHWDU\WR7KH4XHHQ7KH5W+RQ/RUG-DQYULQ WRWK2FWREHU 7KH5W+RQ&KULVWRSKHU*HLGW IURPWK2FWREHU • .HHSHURIWKH3ULY\3XUVH6LU$ODQ5HLG • 0DVWHURIWKH+RXVHKROG$LU9LFH0DUVKDO'DYLG:DONHU • &RPSWUROOHU/RUG&KDPEHUODLQ·V2IILFH/W&RO$QGUHZ)RUG • 'LUHFWRURIWKH5R\DO&ROOHFWLRQ6LU+XJK5REHUWV 1RQH[HFXWLYHPHPEHUV • 3ULYDWH6HFUHWDU\WR7KH'XNHRI(GLQEXUJK%ULJDGLHU6LU0LOHV+XQW'DYLV • 3ULYDWH6HFUHWDU\WR7KH3ULQFHRI:DOHV6LU0LFKDHO3HDW 7KH/RUG&KDPEHUODLQ·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·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·V&RPPLWWHHZKRDUHSDLGIURPWKH&LYLO/LVW EHIRUH WKH GHGXFWLRQ RI DEDWHPHQWV DQG RWKHU FKDUJHV LQ UHVSHFW RI KRXVLQJ DUH VKRZQ EHORZ 7KH VDODULHV DUH VHW ZLWK UHIHUHQFH WR 6HQLRU &LYLO 6HUYLFH SD\ VFDOHV 7KH QRQ H[HFXWLYHVUHFHLYHQRUHPXQHUDWLRQLQUHVSHFWRIWKHLUGXWLHVDVPHPEHUVRIWKH&RPPLWWHH 6DODU\ 3HQVLRQ3D\PHQWV 23(5$7,1*$3352$&+ 7KH&LYLO/LVW 7KH5R\DO+RXVHKROG·VRYHUULGLQJDLPLQPDQDJLQJWKH&LYLO/LVWLVWRJLYHH[FHOOHQWVXSSRUW WR7KH4XHHQWRHQDEOH+HU0DMHVW\WRVHUYHWKHQDWLRQDV+HDGRI6WDWHZKLOHHQVXULQJWKDW YDOXHIRUPRQH\LVDFKLHYHG 3URSHUW\6HUYLFHV 7KH5R\DO+RXVHKROG·VREMHFWLYHVLQPDQDJLQJSURSHUW\VHUYLFHVDUH D WRPDLQWDLQWKH2FFXSLHG5R\DO3DODFHVDVEXLOGLQJVRI6WDWHWRDVWDQGDUGFRQVLVWHQWZLWK WKH +RXVHKROG·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·V DSSURDFK VXEMHFW WR IXQGLQJ FRQVWUDLQWV LV EDVHG RQ SUHSODQQHG SUHYHQWDWLYHPDLQWHQDQFHDQGFRQVHUYLQJ DQGZKHUHYHUSRVVLEOHHQKDQFLQJ WKHDUFKLWHFWXUDO DQGKLVWRULFDOLQWHJULW\RIWKHEXLOGLQJVZKLOHHQVXULQJWKDWWKH3DODFHVFDQFRQWLQXHWREH XVHGLQWKHPRVWHIIHFWLYHDQGHIILFLHQWZD\DVOLYLQJDQGZRUNLQJEXLOGLQJV7KHFDUHRIWKH EXLOGLQJVLVEDVHGRQ • WKH GHWDLOHG VSHFLDOLVW NQRZOHGJH H[SHULHQFH DQG REVHUYDWLRQ RI PHPEHUV RI WKH 3URSHUW\6HFWLRQZKRZRUNLQWKHP • H[SHUWDGYLFHIURP(QJOLVK+HULWDJHDQGDZLGHUDQJHRILQGHSHQGHQWFRQVXOWDQWVZLWK H[SHULHQFHLQFRQVHUYDWLRQ • DSODQQHGPDLQWHQDQFHSURJUDPPHRIUHJXODUFKHFNVWHVWVDQGLQVSHFWLRQV • WKHRSHUDWLQJUHTXLUHPHQWVRIWKH'HSDUWPHQWVRI7KH4XHHQ·V+RXVHKROGDQGRIWKH RWKHU+RXVHKROGVDQGRUJDQLVDWLRQVZKLFKXVHWKHEXLOGLQJV DQG • QHZOHJLVODWLRQDQGUHJXODWLRQVDVWKH\DIIHFWLQWHUDOLDFRQVWUXFWLRQILUHSUHFDXWLRQVDQG KHDOWKDQGVDIHW\ 'HVLJQDQGEXLOGLQJZRUNRQWKH(VWDWHLVJRYHUQHGE\DFRPSUHKHQVLYHVHWRISURFHGXUHV UHIHUUHG WR DV ´'HVN ,QVWUXFWLRQVµ 7KHVH FRYHU SURMHFW MXVWLILFDWLRQV SODQQLQJ DQG VSHFLILFDWLRQFRPSHWLWLYHWHQGHULQJWKHFRPPLVVLRQLQJDQGPDQDJHPHQWRIFRQWUDFWRUVDQG GHVLJQ WHDP FRQVXOWDQWV ILUH SUHFDXWLRQV DQGWKH FRQWURO DQG DXWKRULVDWLRQ RI SURYLVLRQDO VXPVFRQWUDFWYDULDWLRQVRYHUUXQVDQG&RQVWUXFWLRQ 'HVLJQDQG0DQDJHPHQW 5HJXODWLRQV $OOSURMHFWVZLWKDFRQVWUXFWLRQFRVWRI RUPRUHDUHLQGLYLGXDOO\GHWDLOHGLQDUROOLQJ ZRUNVSURJUDPPHVKRZLQJSURMHFWHGDQGDFWXDOFRVWVZKLFKLVXSGDWHGRQDPRQWKO\EDVLV 5R\DO&RPPXQLFDWLRQVDQG,QIRUPDWLRQ 7KH5R\DO+RXVHKROG·VREMHFWLYHVLQPDQDJLQJ5R\DO&RPPXQLFDWLRQVDQG,QIRUPDWLRQDUH D WR VHHN WR FRQWUDFW LQ WKH PRVW HFRQRPLF DQG HIILFLHQW ZD\ IRU WKH VXSSO\ RI FRPPXQLFDWLRQV DQG LQIRUPDWLRQ VHUYLFHV FRQVLVWHQW ZLWK WKH UHTXLUHPHQW WR SURYLGH FOHDU DQG FRPSUHKHQVLYH FRPPXQLFDWLRQV DQG LQIRUPDWLRQ DERXW UR\DO IXQFWLRQV DQG HQJDJHPHQWV DQG E WRHQVXUHWKDWPHPEHUVRIWKH+RXVHKROGWDNHILQDQFLDOFRQVLGHUDWLRQVIXOO\LQWRDFFRXQW ZKHQIUDPLQJUHDFKLQJRUJLYLQJHIIHFWWRGHFLVLRQVZKLFKEHDUXSRQWKH*UDQWLQDLG 7KH4XHHQ·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·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·VREMHFWLYHVLQPDQDJLQJWKHPDLQWHQDQFHRI0DUOERURXJK+RXVHDUH VHWRXWLQWKH0HPRUDQGXPRI8QGHUVWDQGLQJGDWHGWK6HSWHPEHUEHWZHHQWKH/RUG &KDPEHUODLQDQGWKH3HUPDQHQW6HFUHWDU\RIWKH'HSDUWPHQWIRU&XOWXUH0HGLDDQG6SRUW 7KH\DUH D WR PDLQWDLQ WKH EXLOGLQJ WR D VWDQGDUG FRQVLVWHQW ZLWKWKH &RPPRQZHDOWK 6HFUHWDULDW·V RSHUDWLRQDOUHTXLUHPHQWVDQGZLWKWKHDUFKLWHFWXUDODQGKLVWRULFVWDWXVRIWKHEXLOGLQJLQD PDQQHUZKLFKHQVXUHVYDOXHIRUPRQH\ DQGWRWKDWHQG E WRRUJDQLVHDQGREWDLQZRUNVDQGRWKHUSURSHUW\VHUYLFHVLQWKHPRVWHFRQRPLFHIILFLHQW DQGHIIHFWLYHZD\ $8',7&200,77(( 7KH$XGLW&RPPLWWHHZKLFKUHSRUWVWRWKH/RUG&KDPEHUODLQ·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·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·V HPSOR\PHQW SROLFLHV DQG SUDFWLFHV KDYH EHHQ GHYHORSHG WR HQFRXUDJHDPRWLYDWHGDGDSWDEOHDQGVNLOOHGZRUNIRUFH 7KH +RXVHKROG LV FRPPLWWHG WR HTXDOLW\ RI RSSRUWXQLW\ 'LYHUVLW\ RI ERWK DSSOLFDQWV DQG HPSOR\HHV LV SURPRWHG ZLWK FDQGLGDWHV VRXJKW IURP DOO VHFWLRQV RI WKH FRPPXQLW\ 5HFUXLWPHQW RSHQ GD\V DUH KHOG DQG DGYHUWLVHPHQWV DUH SODFHG LQ QDWLRQDO UHJLRQDO DQG VSHFLDOLVW PHGLD DQG RQ WKH LQWHUQHW 7KH HIIHFWLYHQHVV RI WKH +RXVHKROG·V (TXDO 2SSRUWXQLWLHV3ROLF\LVPRQLWRUHG 6WDIIFRQVXOWDWLRQLVDNH\HOHPHQWRIWKH5R\DO+RXVHKROG·VHPSOR\HHUHODWLRQVVWUDWHJ\ZLWK DQXPEHURIFKDQQHOVRIFRPPXQLFDWLRQVLQFOXGLQJ´UR\DO#ZRUNµ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´/HDUQLQJDW:RUNµGD\VDVZHOODVUHVLGHQWLDOSURJUDPPHVDQGDGHYHORSLQJH OHDUQLQJ IDFLOLW\ DQG UHVRXUFH OLEUDU\ 6SHFLDOLVW ,7 WUDLQLQJ IRFXVLQJ RQ HQKDQFLQJ ,7 FDSDELOLW\LVDOVRDYDLODEOHWRDOOVWDII 62&,$/5(63216,%,/,7< 7KH5R\DO+RXVHKROGLVFRPPLWWHGWRFRQVLGHULQJWKHHFRQRPLFVRFLDODQGHQYLURQPHQWDO LPSDFWRILWVDFWLYLWLHV $Q(QYLURQPHQW&RPPLWWHHUHSRUWVWRWKH.HHSHURIWKH3ULY\3XUVHRQPHDVXUHVWR • UHGXFHWKHFRQVXPSWLRQRIPDWHULDOVDQGHQHUJ\ • XVHUHQHZDEOHRUUHF\FOHGPDWHULDOV • HQFRXUDJH HPSOR\HHV WR WDNH UHVSRQVLELOLW\ IRU DQG SDUWLFLSDWH LQ JRRG HQYLURQPHQWDOSUDFWLFHV DQG •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·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·V +HDOWK DQG 6DIHW\ 3ROLF\ GRFXPHQWDWLRQSURYLGHVFRPSUHKHQVLYHSURFHGXUHVWRHQVXUHWKDWKLJKVWDQGDUGVRIKHDOWK DQGVDIHW\PDQDJHPHQWDUHPDLQWDLQHG7KHKHDOWKDQGVDIHW\FXOWXUHWKURXJKRXWWKH5R\DO +RXVHKROGZKLOVWLPSURYLQJLVXQGHUFRQWLQXDOUHYLHZDQGVXSSOHPHQWHGE\WUDLQLQJIURP ERWKLQKRXVHDQGH[WHUQDOVRXUFHV&RPPXQLFDWLQJDSRVLWLYHDSSURDFKWRKHDOWKDQGVDIHW\ LVWKHFXUUHQWIRFXVRIDWWHQWLRQ7KH)LUH+HDOWKDQG6DIHW\%UDQFKLVKHDYLO\LQYROYHGLQ SURYLGLQJ VXSSRUW DQG FDUU\LQJ RXW ULVN DVVHVVPHQWV LQ DOO DUHDV RI WKH 5R\DO +RXVHKROG·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·V FRQVWLWXWLRQDO GXWLHV DV +HDG RI 6WDWH KHOSHG VXSSRUW 7KH 4XHHQ LQ IXOILOOLQJ WKLV SURJUDPPHRIWRXUVJDUGHQSDUWLHVUHFHSWLRQVDQGRIILFLDOHQWHUWDLQLQJ 7+(&,9,//,67 7KH4XHHQ·VSURJUDPPHIRUZDVVHWZLWKLQZKDWWXUQHGRXWWREHDQRWKHUYHU\EXV\ \HDU+LJKOLJKWVRI7KH4XHHQ·VSURJUDPPHKDYHLQFOXGHGWKHIROORZLQJ • $6WDWH9LVLWWRWKH8QLWHG6WDWHVRI$PHULFDLQ0D\WRFHOHEUDWHWKHWKDQQLYHUVDU\RI WKH-DPHVWRZQVHWWOHPHQW • $IRXUGD\YLVLWWR8JDQGDLQ1RYHPEHUGXULQJZKLFK7KH4XHHQRSHQHGWKHELHQQLDO &RPPRQZHDOWK+HDGV RI *RYHUQPHQWPHHWLQJWUDYHOOLQJYLD0DOWDIRUDVWRSRYHUWR PDUN7KH4XHHQDQG7KH'XNHRI(GLQEXUJK·V'LDPRQG:HGGLQJ$QQLYHUVDU\ • $Q RIILFLDO YLVLW WR %HOJLXP LQ -XO\ WR PDUN WKH WK DQQLYHUVDU\ RI WKH %DWWOH RI 3DVVFKHQGDHOH • $YLVLWLQ)HEUXDU\WRWKH1HWKHUODQGVZKHUH7KH4XHHQXQGHUWRRNHQJDJHPHQWVZLWK 4XHHQ%HDWUL[DQGDYLVLWLQ$SULOWR1RUWKHUQ)UDQFHZKHUH7KH4XHHQDQG7KH'XNH RI(GLQEXUJKMRLQHGZRUOGOHDGHUVWRFRPPHPRUDWHWKH WKDQQLYHUVDU\RIWKH%DWWOHRI 9LP\5LGJH • ,QZDUG6WDWH9LVLWVE\WKH3UHVLGHQWRIWKH5HSXEOLFRI*KDQDDQG0UV.XIXRULQ0DUFK DQGWKH&XVWRGLDQRIWKH7ZR+RO\0RVTXHV.LQJ$EGXOODK%LQ$EGXO$]L]$O6DXGRI 6DXGL$UDELDLQ2FWREHU • 2IILFLDOO\RSHQLQJWKHWKLUGVHVVLRQRIWKH1DWLRQDO$VVHPEO\IRU:DOHVGXULQJDYLVLWWR &DUGLII $GGLWLRQDOO\ WKHUH ZHUH YLVLWV WR 6WDIIRUGVKLUH :HVW • 7KHUH ZHUH ,QYHVWLWXUHV DW %XFNLQJKDP 3DODFH DQG WKH 3DODFH RI +RO\URRGKRXVH GXULQJ ZKLFK DURXQG SHRSOH UHFHLYHG KRQRXUV $ 'LSORPDWLF5HFHSWLRQZDVKHOGLQ1RYHPEHUDW%XFNLQJKDP3DODFH DSSUR[LPDWHO\ GLSORPDWVDQG%ULWLVKJXHVWVDWWHQGHG$GGLWLRQDOO\WKHUHZHUHUHFHSWLRQVDW%XFNLQJKDP 3DODFHIRU%DFNEHQFK0HPEHUVRI3DUOLDPHQWDQG0(3·V$PHULFDQVZRUNLQJLQWKH8. 7KH4XHHQ·V$ZDUGIRU(QWHUSULVHDQG&RPPRQZHDOWK$IULFDQVOLYLQJLQWKH8. ),1$1&( $IWHUWKHVXFFHVVIXOPHUJLQJRIWKH&LYLO/LVWDQG*UDQWLQDLGILQDQFHIXQFWLRQVLQ WKH5R\DO&ROOHFWLRQILQDQFHWHDPZDVLQFRUSRUDWHGLQWRDQHQODUJHGFHQWUDOIXQFWLRQXQGHU WKH PDQDJHPHQW RI WKH 'HSXW\ 7UHDVXUHU WR 7KH 4XHHQ LQ -XO\ .H\ GHYHORSPHQWV GXULQJ WKH \HDU KDYH LQFOXGHG WKH HVWDEOLVKPHQW RI D VKDUHG VHUYLFHV FHQWUH IRU LQYRLFH SURFHVVLQJDQGWKHLQWURGXFWLRQRIDFRPPRQFKDUWRIDFFRXQWVIURPVW$SULO )ROORZLQJ D FRPSHWLWLYH WHQGHU GXULQJ WKH \HDU .30* ZHUH DSSRLQWHG DXGLWRUV RI WKH *UDQWVLQDLG DQG WKH 5R\DO &ROOHFWLRQ 7UXVW DQG VXEFRQWUDFWRU IRU 7KH 7UHDVXU\ LQ WKH DXGLWRIWKH&LYLO/LVW ,1)250$7,216<67(06 7KLV\HDUKDVVHHQWKHFHQWUDOLVDWLRQRIDOO,QIRUPDWLRQ6\VWHP0DQDJHPHQWVXSSRUWWHDPV IRUWKH5R\DO+RXVHKROG7KH3ULQFHRI:DOHV·V+RXVHKROGDQGWKH5R\DO&ROOHFWLRQWRD VLQJOHRIILFHLQ%XFNLQJKDP3DODFH %ODFNEHUU\3'$VKDYHEHHQVXFFHVVIXOO\GHSOR\HGDORQJZLWKDQHZV\VWHPIRUVHFXUHUHPRWH DFFHVV$OOQHWZRUNGDWDKDVEHHQPRYHGWRDVWRUDJHDUHDQHWZRUNIRUUHVLOLHQFHILOHVHUYHUV KDYHEHHQXSJUDGHGDQGDEXVLQHVVFRQWLQXLW\SODQKDVEHHQSURGXFHGDQGWHVWHG$QHPDLO DUFKLYLQJ VROXWLRQ KDV DOVR EHHQ GHSOR\HG WR HQVXUH WKH 5R\DO +RXVHKROG·V LQIRUPDWLRQ UHWHQWLRQSROLF\LVEHLQJHQIRUFHG 7KH,QIRUPDWLRQ6HFXULW\&RPPLWWHHZKLFKFRPSULVHVWKH'LUHFWRUVRI6HFXULW\/LDLVRQ,7 DQG 7HOHFRPPXQLFDWLRQV DQG 5HFRUGV UHSRUWV WR WKH .HHSHU RI WKH 3ULY\ 3XUVH LQ KLV FDSDFLW\ DV $FFRXQWLQJ 2IILFHU 'XULQJ WKH \HDU WKH &RPPLWWHH KDV RYHUVHHQ WKH GHYHORSPHQWRIDQ,QIRUPDWLRQ$VVHWULVNUHJLVWHUDVSDUWRIWKH5R\DO+RXVHKROG·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´UR\DO#ZRUNµ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·VPRQH\$VWKHQHZSULRULWLVDWLRQV\VWHPLVGHYHORSHG WKH PRYHPHQW LQ WKH EDFNORJ ZLOO EH FORVHO\ PRQLWRUHG .H\ SURMHFWV LQ WKH EDFNORJ RI HVVHQWLDOZRUNVIRUZKLFKWKHUHDUHXQOLNHO\WREHIXQGVDYDLODEOHLQWKHQH[WWHQ\HDUVLQFOXGH • UHQHZDO RI OHDG DQG VODWH URRIV DW %XFNLQJKDP 3DODFH DQG :LQGVRU &DVWOH PLOOLRQ • UHSODFHPHQW RI H[LVWLQJ KHDWLQJ DQG HOHFWULFDO VHUYLFHV DW %XFNLQJKDP 3DODFH ZLWK DVVRFLDWHGDVEHVWRVUHPRYDO PLOOLRQ • UHSODFHPHQWRIFDVWLURQDQGOHDG9LFWRULDQZDWHUPDLQVDW:LQGVRU PLOOLRQ • PXFK QHHGHG FRQVHUYDWLRQ ZRUN DW WKH 9LFWRULD DQG $OEHUW 0DXVROHXP PLOOLRQ ZKLFKZLOOWKHUHIRUHUHPDLQRQ(QJOLVK+HULWDJH·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·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·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·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·VVPDOO WK FHQWXU\ZDWHUZRUNV$WRWKHUORFDWLRQVZDWHULVSURYLGHGE\WKHSXEOLFVXSSOLHU 0HWHUVPRQLWRULQJKRWZDWHUFRQVXPSWLRQDW%XFNLQJKDP3DODFHDUHOLQNHGWRWKH%XLOGLQJ (QHUJ\0DQDJHPHQW&RQWURO6\VWHPWRIDFLOLWDWHDQDO\VLVDQGFRQWURO 7HOHSKRQHV )LYHIXOOWLPHWHOHSKRQHRSHUDWRUVDUHHPSOR\HGDW%XFNLQJKDP3DODFH7HPSRUDU\VWDQGLQV DUHDOVRXVHG7KHVZLWFKERDUGLVVWDIIHGKRXUVDGD\DQGUHFHLYHGLQFRPLQJFDOOV LQ 7KHUHGXFWLRQLQLVGXHWRDKLJKQXPEHURIFDOOVLQ UHODWHGWRWKHWKELUWKGD\RI7KH4XHHQ 3ULYDWHZLUHVDUHUHTXLUHGIRUVHFXULW\SXUSRVHVDQG%XFNLQJKDP3DODFHKDVPHJDVWUHDPOLQNV WR:LQGVRU&DVWOH WKHUHLVDOVRDILEUHRSWLFOLQNEHWZHHQ%XFNLQJKDP3DODFHDQG6W-DPHV·V 3DODFH 121'20(67,&5$7(6 $FRQWULEXWLRQLQOLHXRIQRQGRPHVWLFRUEXVLQHVVUDWHVLVSDLGLQUHVSHFWRIWKRVHDUHDVRI WKH 3DODFHV ZKLFK DUH QRW XVHG IRU GRPHVWLF SXUSRVHV HJ RIILFHV DQG ZRUNVKRSV 7KLV FRQWULEXWLRQLVDVQRWLILHGE\WKH*RYHUQPHQW9DOXDWLRQ2IILFH&RXQFLO7D[LVSDLGIURPWKH *UDQWLQDLGIRUSURSHUWLHVWKDWDUHYDFDQWDQGIRUKRVWHODFFRPPRGDWLRQ7KH5R\DO)DPLO\ DQGDOORWKHUUHVLGHQWVZLWKVHOIFRQWDLQHGDFFRPPRGDWLRQSD\WKHLURZQ&RXQFLO7D[H[FHSW IRUWKH&KDSODLQ LQDFFRUGDQFHZLWKQRUPDODUUDQJHPHQWVIRUWKHFOHUJ\ &285732672)),&( 5R\DO0DLOVWDIIRSHUDWHWKH&RXUW3RVW2IILFHSURYLGLQJDZLGHUDQJHRIVHUYLFHVLQFOXGLQJ • WKHUXQQLQJRI3RVW2IILFHVDW%XFNLQJKDP3DODFHDQG:LQGVRU&DVWOHZKLFKSURYLGH FRXQWHUDQGGHOLYHU\VHUYLFHV • DOOSRVWDJH • FRXULHUDQGGHOLYHU\VHUYLFHVEHWZHHQWKH3DODFHVDQGDWRWKHUUHVLGHQFHVIRU7KH4XHHQ DQG7KH3ULQFHRI:DOHV DQG • RWKHUVHUYLFHVVXFKDVWHOHJUDPVDQGGHVSDWFKHV *$5'(16 %XFNLQJKDP3DODFH 7KH JDUGHQ FRYHUV DQ DUHD RI DSSUR[LPDWHO\ DFUHV LQFOXGLQJ WKH ODNH 7KH JDUGHQHUV DW %XFNLQJKDP3DODFHDUHDOVRUHVSRQVLEOHIRUWKHIORZHUEHGVDQGJUDVVDUHDVDW.HQVLQJWRQ DQG6W-DPHV·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·V 3DODFHDQGWKHUHVWRUDWLRQRIKLVWRULFFDUSHWV 5(17$1'27+(55(&29(5,(6 5HQWUHFHLYDEOHLQFOXGHVFRPPHUFLDOOHWWLQJVRIDSDUWPHQWVDQGSURSHUWLHVDQGSD\PHQWVLQ UHVSHFWRIQRQRIILFLDOHPSOR\HHVKRXVHGRQWKH(VWDWHDQGIURPSHQVLRQHUVDOORFDWHGWKHLU DFFRPPRGDWLRQ VLQFH WKH +RXVHKROG DVVXPHG UHVSRQVLELOLW\ IRU 3URSHUW\ 6HUYLFHV RQ VW $SULO ,QDGGLWLRQLQFRPHLVUHFHLYHGIURPWKH5R\DO:LQGVRU+RUVH6KRZDQG5R\DO &ROOHFWLRQ(QWHUSULVHVIRUWKHXVHRIRIILFHDFFRPPRGDWLRQDW:LQGVRU&DVWOHDQG6W-DPHV·V 3DODFH DQG IURP WKH &ROOHJH RI 6W *HRUJH IRU WKH WHPSRUDU\ XVH RI UHVLGHQWLDO DFFRPPRGDWLRQDW:LQGVRU &RPPHUFLDOOHWWLQJVRISURSHUWLHVDYHUDJHGLQ &20081,&$7,216$1',1)250$7,21 ,QVSHFLDOSURMHFWVLQFOXGHGWKHODXQFKRIDPLFURVLWHWRFHOHEUDWH7KH4XHHQDQG 7KH'XNHRI(GLQEXUJK·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·V+RXVHKROG $ QHZ GLVDVWHU UHFRYHU\ VLWH ZLOO EH EXLOW DQG WHVWHG IRU XVH E\ WKH 5R\DO +RXVHKROG DQG 5R\DO &ROOHFWLRQ QHWZRUNV 7KH UHPDLQLQJ IRFXV ZLOO EH RQ SURMHFWV WR LPSURYH QHWZRUN VHFXULW\DQGLQIRUPDWLRQDVVXUDQFH 7(/(&20081,&$7,216 7KH 5R\DO +RXVHKROG FXUUHQWO\ UHFHLYHV PRUH WKDQ FDOOV D \HDU MXVW RYHU KDOI RI ZKLFKDUHKDQGOHGE\WKHVZLWFKERDUGRSHUDWRUV'XULQJWKH+RXVHKROGZLOOFDUU\RXWD UHYLHZRIDOOLWVIL[HGWHOHFRPVFRVWVDQGFRQVLGHUWKHLQWHJUDWLRQRIYRLFHDQGGDWDFLUFXLWV IRUERWKUHVLOLHQFHDQGIOH[LELOLW\ ),1$1&( $IWHU WKH VXFFHVVIXO PHUJLQJ RI WKH &LYLO /LVW *UDQWVLQDLG DQG 5R\DO &ROOHFWLRQ ILQDQFH IXQFWLRQVLQWKHLPSOHPHQWDWLRQRI%$&6SD\PHQWVV\VWHPVIRUWKH&LYLO/LVWDQG *UDQWVLQDLGDQGWKHLQWURGXFWLRQRIQHZSXUFKDVHRUGHUSURFHVVLQJV\VWHPVIRUWKH&LYLO /LVWZLOOEHWKHPDLQGHYHORSPHQWVLQ 3(56211(/ 2YHUWKHQH[W\HDU3HUVRQQHOZLOOEHODXQFKLQJDQLQWHJUDWHGSHUVRQQHODQGSD\UROOV\VWHP ZKLFKZLOOSURYLGHHQKDQFHGDFFXUDF\VSHHGLQSURFHVVLQJDQGEHWWHUDFFHVVWRPDQDJHPHQW LQIRUPDWLRQ$VDIXUWKHUGHYHORSPHQWUHFUXLWPHQWZLOODOVREHEURXJKWRQOLQH&XUUHQWO\ > RI DOO DSSOLFDWLRQV UHFHLYHG DUH VHQW YLD HPDLO DQG YDFDQFLHV DUH DGYHUWLVHG RQ WKH UHFHQWO\XSGDWHG5R\DO+RXVHKROGUHFUXLWPHQWZHEVLWHDQGLQ DQHUHFUXLWPHQWV\VWHP ZLOO EH LQWURGXFHG ZKLFK ZLOO IXOO\ XWLOLVH WKH FDSDFLW\ RI WKH LQWHUQHW WR UHDFK D ZLGH FDQGLGDWHEDVHDQGHQVXUHDOOYDFDQFLHVDUHSURFHVVHGVSHHGLO\DQGHIIHFWLYHO\ 1HZ WUDLQLQJ LQLWLDWLYHV SODQQHG LQFOXGH DQ HOHDUQLQJ SURMHFW ZLWK WKH OHDUQLQJ DQG GHYHORSPHQW SURJUDPPH LQ WDLORUHG WR VXSSRUW D +RXVHKROGZLGH FRPSHWHQF\ LQLWLDWLYH 7KH+RXVHKROGLQWUDQHWLVEHLQJXSJUDGHGWRSURYLGHDPRUHLQWHUDFWLYHH[SHULHQFHWRXVHUV ZLWKIDFLOLWLHVIRUEXOOHWLQERDUGV 3523(57<6(59,&(6 7KH4XDGUDQJOHIDoDGHRIWKH(DVWZLQJRI%XFNLQJKDP3DODFHZKLFKLVFRQVWUXFWHGRI &DHQ VWRQH ZDV SDLQWHG LQ RQO\ VL[ \HDUVDIWHU LWV FRPSOHWLRQ ,Q 0D\ DQG 2FWREHU ODUJHSLHFHVRIVWRQHIHOOIURPWKHIDoDGHDQGIXUWKHUORRVHIUDJPHQWVZHUHUHPRYHG LPPHGLDWHO\DIWHUZDUGV,WLVQRZDPDMRUULVNWRKHDOWKDQGVDIHW\DQGLWLVHVWLPDWHGWKDWWKH UHSDLURIWKLVIDo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·V3DODFH ,Q RIILFH DUHDV ZLWKLQ ([WHUQDO)DEULF5HSDLUV 7KHORQJWHUPSURJUDPPHRIH[WHUQDOIDEULFUHSDLUVDW%XFNLQJKDP3DODFHDQG:LQGVRULV H[WHQVLYHDQGLVWKHUHIRUHGHSHQGHQWRQLQFUHDVHGIXQGLQJ,WLVKRZHYHULQWHQGHGWRPDQDJH DOLPLWHGSURJUDPPHRIUHSDLUVRYHUWKHQH[WILYH\HDUV,WPD\QRWEHSRVVLEOHWRFDUU\RXW PXFKZRUNWRWKH3DODFHLQYLHZRIWKHH[SHQGLWXUHRQWKH4XDGUDQJOHIDoDGHEXWLWLV KRSHG WKDW VRPH RI WKH URRIV RI WKH 8SSHU :DUG :LQGVRU ZLOO EH UHQHZHG ,W LV DOVR SURSRVHGWRUHSODFHVRPHOHDGDQGVODWHURRIVLQWKH+RPH3DUNZKLFKDUHLQSRRUFRQGLWLRQ (19,5210(17$/ 7KH 5R\DO +RXVHKROG KDYH XQGHUWDNHQ D VWXG\ ZLWK WKH &DUERQ 7UXVW WR UHYLHZ RSSRUWXQLWLHVIRUPRUHHIIHFWLYHFDUERQPDQDJHPHQW7KHUHVXOWVRIWKLVUHYLHZZLOODVVLVW IXUWKHUGHYHORSPHQWRIWKH+RXVHKROG·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·V+HOLFRSWHU ,QDQWLFLSDWLRQRIWKHH[SLU\RIWKH\HDUOHDVHRQ7KH4XHHQ·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·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·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•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• )LQDQFLDOUHSRUWLQJDQGLQIRUPDWLRQV\VWHPV 7KHUHDUHFRPSUHKHQVLYHSODQQLQJDQG ILQDQFLDO UHSRUWLQJ SURFHGXUHV IRU H[SHQGLWXUH IURP WKH *UDQWVLQDLG DQG &LYLO /LVW ZKLFK LQFOXGH WKH SUHSDUDWLRQ RI DQQXDO EXGJHWV DQG ILYH\HDU SODQV DOO RI ZKLFK DUH DSSURYHGE\WKH/RUG&KDPEHUODLQ·V&RPPLWWHH)RUWKH*UDQWVLQDLGTXDUWHUO\UHVXOWV DUH UHSRUWHG DJDLQVW EXGJHW ZKLOVW IRU WKH &LYLO /LVW PRQWKO\ H[SHQGLWXUH LV UHSRUWHG DJDLQVW EXGJHW 6LJQLILFDQW YDULDQFHV WR EXGJHW DQG NH\ SHUIRUPDQFH LQGLFDWRUV DUH H[DPLQHGDQGDSSURSULDWHDFWLRQLVWDNHQZKHUHUHTXLUHG)RUHFDVWVDUHUHJXODUO\XSGDWHG WKURXJKRXWWKH\HDUWDNLQJLQWRDFFRXQWSHUIRUPDQFHIRUWKH\HDUWRGDWH •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• $XGLW DQG VXSHUYLVLRQ 7KH *UDQWVLQDLG DQG &LYLO /LVW DUH VXEMHFW WR H[WHQVLYH VXSHUYLVLRQ DQG FRQWURO 7KH 5R\DO +RXVHKROG·V PDQDJHPHQW RI WKH *UDQWLQDLG IRU 3URSHUW\ 6HUYLFHV LVVXEMHFWWR VXSHUYLVLRQ E\ WKH 'HSDUWPHQW IRU &XOWXUH 0HGLD DQG 6SRUW WKH*UDQWLQDLGIRU5R\DO7UDYHOLVVXEMHFWWRVXSHUYLVLRQE\WKH'HSDUWPHQWIRU 7UDQVSRUW DQG WKH &LYLO /LVW LV VXEMHFW WR VXSHUYLVLRQ E\ 7KH 7UHDVXU\ 7KH 5R\DO +RXVHKROG KDV DQ LQWHUQDO DXGLW IXQFWLRQ ZKLFK RSHUDWHV WR VWDQGDUGV GHILQHG LQ WKH *RYHUQPHQW ,QWHUQDO $XGLW 6WDQGDUGV 7KH FRQWLQXLQJ ULVN DVVHVVPHQW SURFHVV XQGHUWDNHQE\PDQDJHPHQWIRUPVWKHEDVLVRIWKHDQQXDOLQWHUQDODXGLWSODQZKLFKLV DSSURYHG E\ WKH $XGLW &RPPLWWHH 3URJUHVV LQ LPSOHPHQWLQJ LQWHUQDO DXGLW UHFRPPHQGDWLRQVLVPRQLWRUHGE\PDQDJHPHQWDQGFRSLHVRILQWHUQDODXGLWUHSRUWVDUH PDGH DYDLODEOH WR WKH 'HSDUWPHQW IRU &XOWXUH 0HGLD DQG 6SRUW WKH 'HSDUWPHQW IRU 7UDQVSRUW DQG 7KH 7UHDVXU\ 7KH +HDG RI ,QWHUQDO $XGLW UHSRUWV WR WKH &RPPLWWHH DQQXDOO\RQWKHDGHTXDF\RIWKHLQWHUQDOFRQWUROV\VWHPDQGRQZKHWKHUDQ\ORVVHVDULVLQJ WKURXJKPLVFRQGXFWIUDXGRURWKHULUUHJXODULW\KDYHEHHQLGHQWLILHG4XDUWHUO\DXGLWVRI SURSHUW\H[SHQGLWXUHWRFKHFNWKDWWKH'HVN,QVWUXFWLRQVDQGEXLOGLQJUHJXODWLRQVDQG WHFKQLFDO VWDQGDUGV KDYH EHHQ FRPSOLHG ZLWK DQG YDOXH IRU PRQH\ REWDLQHG DUH XQGHUWDNHQE\LQGHSHQGHQWFKDUWHUHGVXUYH\RUV,QGHSHQGHQWVXUYH\VRIILUHSUHFDXWLRQV DUHXQGHUWDNHQE\WKH+RPH2IILFHIRUWKRVHEXLOGLQJVZKLFKUHTXLUHDILUHFHUWLILFDWH ,QKLVUHYLHZRIWKHHIIHFWLYHQHVVRIWKHV\VWHPRILQWHUQDOFRQWUROWKH.HHSHURIWKH3ULY\ 3XUVH WDNHV DFFRXQW RI WKH ZRUN RI WKH LQWHUQDO DXGLWRUV DQG PDQDJHUV ZKR KDYH UHVSRQVLELOLW\IRUWKHGHYHORSPHQWDQGPDLQWHQDQFHRIWKHLQWHUQDOFRQWUROIUDPHZRUNDQG FRPPHQWVPDGHE\WKHH[WHUQDODXGLWRUVLQWKHLUPDQDJHPHQWOHWWHUDQGRWKHUUHSRUWV7KH .HHSHURIWKH3ULY\3XUVHKDVEHHQDGYLVHGRQWKHLPSOLFDWLRQVRIWKHUHVXOWRIWKHUHYLHZRI WKHHIIHFWLYHQHVVRIWKHV\VWHPRILQWHUQDOFRQWUROE\WKH$XGLW&RPPLWWHHDQGDSODQWR DGGUHVVZHDNQHVVHVDQGHQVXUHFRQWLQXRXVLPSURYHPHQWRIWKHV\VWHPLVLQSODFH 6LU$ODQ5HLG .HHSHURIWKH3ULY\3XUVH WK-XQH 67$7(0(172)7+(.((3(52)7+( 35,9<3856(·6),1$1&,$/ 5(63216,%,/,7,(6 7+(&,9,//,67 7KH.HHSHURIWKH3ULY\3XUVHLVUHVSRQVLEOHIRUHQVXULQJWKDW • WKHDGPLQLVWUDWLRQRIWKH&LYLO/LVWIXOO\DFFRUGVZLWKWKHDFFRXQWVGLUHFWLRQVJLYHQE\WKH 7UHDVXU\LQSXUVXDQFHRI6HFWLRQ RIWKH&LYLO/LVW$XGLW$FW DQG • WKH &LYLO /LVW LV DSSOLHG RQO\ IRU WKH SXUSRVHV VHW RXW LQ WKH )LQDQFLDO 0HPRUDQGXP EHWZHHQWKH5R\DO+RXVHKROGDQGWKH7UHDVXU\DQGLQWKH&LYLO/LVW$FW *5$17,1$,' )25 3523(57< 6(59,&(6 52<$/ &20081,&$7,216 $1' ,1)250$7,21$1'7+(0$,17(1$1&(2)0$5/%2528*++286( 8QGHUWKHWHUPVRIWKH0HPRUDQGXPRI8QGHUVWDQGLQJDQGWKH)LQDQFLDO0HPRUDQGXPLQ UHVSHFWRI3URSHUW\6HUYLFHV5R\DO&RPPXQLFDWLRQVDQGWKH0DLQWHQDQFHRI0DUOERURXJK +RXVHGDWHGWK6HSWHPEHUWKH.HHSHURIWKH3ULY\3XUVHLVUHVSRQVLEOHIRUHQVXULQJ WKDW • WKHDGPLQLVWUDWLRQRIWKH*UDQWLQDLGIXOO\DFFRUGVZLWK0DQDJLQJ3XEOLF0RQH\DQGRWKHU JXLGDQFHWKDWPD\EHQRWLILHGWRWKH5R\DO+RXVHKROGE\WKH'HSDUWPHQWIRU&XOWXUH 0HGLDDQG6SRUW DQG • WKH*UDQWLQDLGLVDSSOLHGRQO\IRUWKHSXUSRVHVDSSURYHGE\WKH/RUG&KDPEHUODLQDQG WKH6HFUHWDU\RI6WDWHIRU&XOWXUH0HGLDDQG6SRUWDVVHWRXWLQWKH0HPRUDQGDRI 8QGHUVWDQGLQJ +HLVUHTXLUHGWRVXEPLWWKLVDQQXDOUHSRUWWRWKH/RUG&KDPEHUODLQDQGWKH6HFUHWDU\RI 6WDWHIRU&XOWXUH0HGLDDQG6SRUW *5$17,1$,')2552<$/75$9(/ 8QGHU WKH WHUPV RI WKH 0HPRUDQGXP RI 8QGHUVWDQGLQJ GDWHG WK 0DUFK DQG WKH )LQDQFLDO0HPRUDQGXPGDWHG0D\WKH.HHSHURIWKH3ULY\3XUVHLVUHVSRQVLEOHIRU HQVXULQJWKDW • WKHDGPLQLVWUDWLRQRIWKH*UDQWLQDLGIXOO\DFFRUGVZLWK0DQDJLQJ3XEOLF0RQH\DQGRWKHU JXLGDQFHWKDWPD\EHQRWLILHGWRWKH5R\DO+RXVHKROGE\WKH'HSDUWPHQWIRU7UDQVSRUW DQG • WKH*UDQWLQDLGLVDSSOLHGRQO\IRUWKHSXUSRVHVDSSURYHGE\WKH/RUG&KDPEHUODLQDQG WKH6HFUHWDU\RI6WDWHIRU7UDQVSRUWDQGVHWRXWLQWKH0HPRUDQGXPRI8QGHUVWDQGLQJ +HLVUHTXLUHGWRVXEPLWMRLQWO\ZLWKWKH3ULYDWH6HFUHWDU\WR7KH4XHHQWKLVDQQXDOUHSRUW WRWKH/RUG&KDPEHUODLQDQG6HFUHWDU\RI6WDWHIRU7UDQVSRUW *(1(5$/ 7KH.HHSHURIWKH3ULY\3XUVHLVUHVSRQVLEOHIRUHQVXULQJWKDW • WKH5R\DO+RXVHKROGPDLQWDLQVWKHERRNVDQGUHFRUGVZKLFKDUHSURSHUDQGQHFHVVDU\WR HQDEOHLWWRGLVFKDUJHLWVUHVSRQVLELOLW\DVVHWRXWLQWKH)LQDQFLDO0HPRUDQGDIRUWKH LQFRPHDQGH[SHQGLWXUH • WKH *UDQWVLQDLG DQG &LYLO /LVW DUH XVHG HFRQRPLFDOO\ HIILFLHQWO\ DQG HIIHFWLYHO\ WR VHFXUHEHVWYDOXHIRUPRQH\LQDFFRUGDQFHZLWKSURSULHW\DQGUHJXODULW\ • VWDII SDLG IURP WKH *UDQWVLQDLG RU &LYLO /LVW WDNH ILQDQFLDO FRQVLGHUDWLRQV IXOO\ LQWR DFFRXQWDWDOOVWDJHVLQIUDPLQJUHDFKLQJDQGH[HFXWLQJGHFLVLRQVLQVRIDUDVWKH*UDQWV LQDLGRU&LYLO/LVWLVFRQFHUQHG DQG •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·V&RPPLWWHH 6LU$ODQ5HLG .HHSHURIWKH3ULY\3XUVH WK-XQH