Significant accounting policies continued

Petroleum Fund of Timor-Leste Notes to the financial statements for the year ended 31 December 2013

7. Capital receipts and payments of the Petroleum Fund continue

Year ended 31122012 USD Month Article 6.1a receipts Article 6.1b receipts Article 6.1e Other receipts To Consolidated Fund Refunds of taxation TOTAL January 93,160,865 180,138,301 - - - 273,299,166 February 96,038,096 179,140,095 - - - 275,178,191 March 121,456,927 174,233,819 - - - 295,690,746 April 104,088,156 157,322,078 8,634,400 263,000,000 - 7,044,634 May 102,685,660 213,522,442 - 153,000,000 - 163,208,102 June 111,075,669 153,706,594 - 103,000,000 - 161,782,263 July 83,251,701 26,899,973 242,625 163,000,000 - 52,605,701 August 118,135,734 97,141,613 - 113,000,000 - 102,277,347 September 128,026,264 175,771,530 - 113,000,000 - 190,797,794 October 205,514,637 209,082,084 - 203,000,000 - 211,596,721 November 145,793,386 189,139,327 - 153,000,000 - 181,932,713 December 303,291,883 181,626,671 - 230,900,000 - 254,018,554 Totals 1,612,518,978 1,937,724,527 8,877,025 1,494,900,000 - 2,064,220,530 Total Article 6.1 3,559,120,530

8. Cash and cash equivalents

The Petroleum Fund invests surplus cash in overnight markets with banks or through reverse repurchase agreements. For the purposes of the statement of cash flows, cash and cash equivalents comprise the following balances with original maturity of less than 90 days: As at 31122013 As at 31122012 USD USD Cash at bank 65,685,105 25,784,289 Overnight reverse repurchase agreements 4,500,000 35,100,000 70,185,105 60,884,289 The cash at bank includes the balance at the Federal Reserve Bank of New York, in the earmarked receipts account held by the BCTL in accordance with Article 5.2 of the Petroleum Fund Law.

9. Financial assets valued through profit or loss

Transactions in financial assets, which arise either from the investment of new funds or the periodic rebalancing of the investment portfolio, are summarised as follows: As at 31122013 As at 31122012 USD USD Financial assets at fair value through profit or loss Opening fair value 11,711,144,753 9,285,303,671 Purchases at cost 16,125,029,431 16,082,784,005 Proceeds from sales 13,598,334,271 13,825,534,764 Net gains on financial assets at fair value through profit and loss 640,006,671 184,526,790 Net foreign exchange lossesgains 19,353,812 724,925 Net gainslosses through interest income 46,186,224 16,659,874 Closing fair value 14,904,678,996 11,711,144,753 There were no impairment losses at balance date. The carrying amount of these assets approximates their fair value. - 18 - Petroleum Fund of Timor-Leste Notes to the financial statements for the year ended 31 December 2013

9. Financial assets valued through profit or loss continued

A summary of securities is as follows: As at 31122013 USD As at 31122012 USD Designated as at fair value through profit or loss Fair Value of net assets Fair Value of net assets Fixed interest securities European treasury bill 3,417,170 - - - United States treasury notes 8,112,364,538 54 8,676,319,344 74 Australian government bonds 145,008,543 1 - - Japanese government bonds 136,010,191 1 - - United Kingdom government bonds 146,555,355 1 - - European government bonds 441,234,140 3 - - Other Public Sector Bonds 586,562,474 4 - - Total fixed interest securities 9,571,152,411 64 8,676,319,344 74 Equity securities United States equities 2,913,563,696 20 1,596,913,717 14 Australian equities 162,180,483 1 - - Japanese equities 468,696,730 3 260,955,141 2 United Kingdom equities 496,089,872 3 305,523,070 3 European equities 668,865,807 5 365,854,309 3 Equities from other countries 623,955,974 4 505,481,691 4 Total equity securities 5,333,352,562 36 3,034,727,928 26 Held for trading Derivatives Foreign currency forwards 174,023 - 97,481 - 174,023 - 97,481 - Total securities 14,904,678,996 11,711,144,753 The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. · Level 1 fair value measurements are those derived from quoted prices unadjusted in active markets for identical assets or liabilities. The Petroleum Fund does not adjust the quoted prices for these instruments. · Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly i.e. as prices or indirectly i.e. derived from prices. As level 2 investments include positions that are not traded in active markets andor subject to transfer restrictions, valuations may be adjusted to reflect illiquidity andor non-transferability which are generally based on available market information. · Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data unobservable inputs. As at 31122013 USD Financial assets Level 1 Level 2 Level 3 Total Financial Instruments designated at fair value through profit or loss Derivatives 174,023 - - 174,023 Equity securities 5,333,352,562 - - 5,333,352,562 Fixed interest securities 9,571,152,411 - - 9,571,152,411 Total 14,904,678,996 - - 14,904,678,996 - 19 -