TSE:FTS Financials MANAGEMENT’S RESPONSIBILITY  FOR FINANCIAL REPORTING Deloitte & Touche, LLP, independent auditors appointed by the shareholders of Fortis Inc. upon recommendation of the Audit Committee, have performed an audit of the 2001 Consolidated Financial Statements and their report follows. The accompanying Consolidated Financial Statements of Fortis Inc. and all information in the 2001 Annual Report have been prepared by management, who are responsible for the integrity of the information presented including the amounts that must of necessity be based on estimates and informed judgments. These Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in Canada. Financial information contained elsewhere in the 2001 Annual Report is consistent with that in the Consolidated Financial Statements.  In meeting its responsibility for the reliability and integrity of the Consolidated Financial Statements, management has developed and maintains a system of accounting and reporting which provides for the necessary internal controls to ensure transactions are properly authorized and recorded, assets are safeguarded and liabilities are recognized. The systems of the Corporation and its subsidiaries focus on the need for training of qualified and professional staff, effective communication between management and staff and management guidelines and policies. The external auditors evaluate the effectiveness of the internal controls of Fortis Inc. on an ongoing basis.  The Board of Directors oversees management’s responsibilities for financial reporting through an Audit Committee which is composed entirely of outside directors. The Audit Committee meets with the shareholders’ auditors, with and without management present, to discuss the results of the audit, the adequacy of the internal accounting controls and the quality of  financial reporting. The Corporation’s annual Consolidated Financial Statements are reviewed by the Audit Committee with each of management and the shareholders’ auditors before the statements are recommended to the Board of Directors for approval. The shareholders’ auditors have full and free access to the Audit Committee.  The Audit Committee has the duty to review the adoption of, and changes in, accounting principles  and practices which have a material effect on the Consolidated Financial Statements, to review the Corporation’s use of derivative financial instruments, to review financial reports requiring Board approval prior to submission to securities commissions or other regulatory authorities, to assess and review management judgments material to reported financial information and to review shareholders’ auditors’ fees.  The December 31, 2001 Consolidated Financial Statements and Management Discussion and Analysis contained in the 2001 Annual Report were reviewed by the Audit Committee and, on their recommendation, were approved by the Board of Directors of Fortis Inc.  St. John’s, Newfoundland and Labrador February 18, 2002 Deloitte & Touche LLP Chartered Accountants Neon ‘ Dauk, Le? ss H. Stanley Marshall President and Chief Executive Officer Fortis Inc. Karl W. Smith Vice President, Finance and Chief Financial Officer Fortis Inc. AUDITORS’ REPORT To the Shareholders, Fortis Inc.  We have audited the Consolidated Balance Sheets of  Fortis Inc. as at December 31, 2001 and 2000 and the Consolidated Statements of Earnings, Retained Earnings and Cash Flows for the years then ended. These Consolidated Financial Statements are the responsibility  of the Corporation’s management. Our responsibility is  to express an opinion on these Consolidated Financial Statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as at December 31, 2001 and 2000 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles. 41 FORTIS Inc. 2OO1 Annual Report