1Harvesting Success

ANNUAL REPORT 2 0 1 5

His Highness

Sheikh Tamim Bin Hamad Al-ThaniEmir of the State of Qatar

His Highness

Sheikh Hamad Bin Khalifa Al-ThaniFather Emir

QAFCOBOARD OFDIRECTORS

© Qatar Fertiliser Company

Qatar Fertiliser Company (QAFCO) has made every effort to ensure the accuracy of the information contained in the annual report. Copyright of text, images and other information belongs to QAFCO. Permission is given to reproduce, store or transmit any part of this publication provided that the copyright of Qatar Fertiliser Company is acknowledged. This does not include right to amend or modify text, images and/or other information and does not extend to any material of which the copyright is identified as belonging to a third party (i.e. other than Qatar Fertiliser Company). Authorization to produce such third-party material must be obtained from the relevant copyright holders.

Mr. Abdulrahman Mohamed Al-SuwaidiDirector & Chief Executive Officer

Mr. Alvin Rosvoll Director

Mr. Fahad Mohammed Abdulla Al-KhaterDirector

Mr. Hamad Salah Al-BakerDirector

Mr. Ivan de WitteDirector

Mr. Khalid Khalifa Mubarak Al-JalahmaDirector

Mr. Said Mobarak Al MohannadiChairman

Sheikh Khalid Bin Abdulla Bin Mohammed Al-Thani Vice-Chairman

Head OfficeP.O. Box: 50001, Mesaieed, QatarTel: (+974) 4422 8888Fax: (+974) 4477 0347annualreport@qafco.com.qawww.qafco.com

CONTENTSCONTENTS

2015ANNUAL REPORT

2015

Qatar Fertiliser Company (QAFCO) 9QAFCO Downstream Milestones in QAFCO HistoryOur Products Safety, Environment and Quality at QAFCO

Business Policy 20 MissionVisionObjectivesManagement Systems

Chairman's Message 26

Management Report 30ProductionMarketingMaintenanceSafety, Environment and QualityHuman ResourcesCorporate and Social Events

Financial Statements 50

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9

FISCAL2015

ANNUAL REPORT

FISCAL 20152015

QAFCO’s inception in 1969 as a joint venture company to produce fertilisers was the first and significant step in Qatar’s industrial diversification program to utilize its abundant natural gas resources. Since then QAFCO has steered its way successfully, responding adequately to the world market demand for fertiliser and living up to the expectations of its shareholders, IQ and Yara.

ABOUTQATAR FERTILISERCOMPANY

The shareholders and their shareholding interests in the Company are as follows:

IQ is the immediate parent of the Company, which is a 70% owned subsidiary of Qatar Petroleum (QP). Thus, QP is the ultimate parent of the Company.

QAFCO inaugurated its first plant in 1973 with a design capacity of 900 tons of Ammonia and 1000 tons of urea daily. Through scientific strategic plans and integration of the latest technologies, QAFCO has developed steadily, over the years, in terms of nameplate capacity, production quantities, quality and competitiveness of products. Presently QAFCO complex comprises six completely integrated trains; QAFCO-1 (1973), QAFCO-2 (1979), QAFCO-3 (1997), QAFCO-4 (2004), QAFCO-5 (2011), QAFCO-6 (2012). Each train is made up of two units, one for the production of ammonia, and the other for urea.

Name of theShareholder

Country of incorporation

Interests

Industries Qatar (IQ) Qatar 75%

Yara Nederland BV Nederland 25%

QATAR FERTILISERCOMPANY

QAFCO has become one of the main producers and exporters of ammonia and urea in the world, with a sizable production capacity of 3.8 million MT of ammonia and 5.6 million MT of urea. Today, Qatar, after the inauguration of the sixth urea facility at QAFCO, is the 4th largest urea producer in the world with an export market extending to more than 35 countries across the continents.

QAFCO as well as boosting its fertiliser production it has gone into new product areas and joint ventures by establishing a urea formaldehyde and melamine downstream subsidiaries.

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13

1973QAFCO 1

1997QAFCO 3

1979QAFCO 2

2011QAFCO 5

2012QAFCO 6

2004QAFCO 4

2003Gulf

FormaldehydeCompany

2006Qatar Melamine

Companyestablished

2009QAFCO adopts

new brandidentity

2010Qatar Melamine

Companyinaugurated

2011First sale of

Aqueous Ammoniafor DeNOxapplication

2008Foundationstone laid

for QAFCO 5

2004Inauguration of QAFCO's

ammonia vesselLPG/C Al Marona

2009Construction

starts forQAFCO 6

expansion project

GULF FORMALDEHYDE COMPANYGulf Formaldehyde Company (Q.S.C) was incorporated on 16th June 2003 as a private Shareholding company. All the shareholders are Qatari Company in the State of Qatar. The company is engaged in the production and sale of Urea Formaldehyde Concentrate (“UFC”).

The Shareholder and their shareholding interests in the company are as follows:

Name of the Shareholder Interests

Qatar Fertiliser Company 70%

Qatar Industrial Manufacturing Company 20%

United Development Company. 10%

QATAR MELAMINE COMPANYIn 2006 a shareholder agreement has entered into by Qafco and Qatar Holding to establish Qatar Melamine Company to produce and sell Melamine.

Name of the Shareholder Interests

Qatar Fertiliser Company 60%

Qatar Petroleum 40%

QAFCODOWNSTREAM

MILESTONES IN QAFCO HISTORY

OUR PRODUCTS

AmmoniaAmmonia is a chemical compound made of Nitrogen 82% and Hydrogen 18%. It is produced using Natural gas as the primary feedstock. The other feeds required are Steam and Air. These feed materials undergo a series of reactions in the ammonia plant to produce gaseous Ammonia. High pressure converts the Gaseous Ammonia to liquid ammonia. The liquid ammonia is then stored at a temperature of minus 33 degrees centigrade in a specially refrigerated Ammonia storage tank.

Urea – Prilled and GranularUrea is a solid fertiliser with 46% Nitrogen. It is produced by the reaction of Ammonia and Carbon Dioxide (CO2) under high pressure. The liquid urea thus produced is turned into a solid fertiliser as prilled or spherical granules.

Urea Formaldehyde CondensateUrea Formaldehyde Condensate(UFC-85) is a viscous liquid with 60% Formaldehyde, 25% Urea and water. The formaldehyde produced by the reaction of Methanol with air. This is then dipped in Urea solution to form UFC-85. Urea Formaldehyde Condensate (UFC-85) is a urea additive, used as an anti-caking agent for the Urea.

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MelamineMelamine (C3H6N6) is a product in the form of white powder used for the production of a broad range of synthetic resins. It is obtained by thermal decomposition of Urea in liquid phase reaction. The urea for melamine synthes is supplied by the revamped Qafco Urea-1 plant.

Melamine is used in the synthesis of Melamine Formaldehyde (“MF”) and Melamine Urea Formaldehyde (“MUF”) resins, which are used mainly for laminates, wood adhesives, surface coating, paper, textile treatment and for molding compounds.

Aqueous Ammonia Aqueous ammonia is a solution composed of 19% ammonia produced by absorption of gaseous ammonia in demineralized water. It is used as absorbing agent of nitrogen oxides produced on the utilization and burning of gas in power generators and industrial plants. The aqueous ammonia facility was established in QAFCO premises in 2009 with an annual production capacity of about 60,000 tons. The aqueous ammonia solution is used for NOx reduction at QAFCO.

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Safety, Environment, and Quality are the hallmarks of QAFCO’s products and production units. QAFCO gives a high priority to excellence on all fronts and adhere to international standards of quality, safety, occupational health and environment protection. QAFCO’s Quality Management System was certified to ISO 9002 in 1996. Apart from Quality management system certification, QAFCO was certified to ISO 14001 (Environment management system) in 1997 and OHSAS 18001 (Occupational health and safety management system) in 1999. QAFCO catering and clubs are HACCP (Hazard Analysis and Critical Control Point) certified and company laboratory got ISO 17025 Accreditation for the analytical methods used for final product analysis of Urea, Ammonia & UFC from DAkks, Germany. In 2011, QAFCO achieved management system certifications in RC 14001 (the Responsible Care Management System) and the IFA Product Stewardship Certificate of Excellence. In 2015, QAFCO achieved the Energy Management System ISO 50001.

SAFETY, ENVIRONMENT AND QUALITY AT QAFCO

QAFCO has received various certifications from international bodies and institutions for its compliance with international standards. The details of the certifications received are highlighted below. Following are the valid management systems certificates:

AWARDS AND RECOGNITIONS

Company Management System

CurrentValidity Date

Current Certification/ Accreditation Body

First Certification/ Accreditation Date

QAFCO 1-6, GFC and QMC

QAFCO 1-6, GFC and QMC

QAFCO 1-6, GFC and QMC

QAFCO Canteen, Al Banush Club & Al Maha Club

QAFCOLaboratory

QAFCO 1-6

QAFCO 1-6

QAFCO 1-6, GFC and QMC

ISO 9001:2008 Quality Management System

ISO 14001:2004 – Environment Management Systems

OHSAS 18001:2007 Occupational Health & Safety Management Systems

Hazard Analysis & Critical Control Point (HACCP)

ISO /IEC 17025:2005 Requirements for the Competence of Testing and Calibration Laboratories

RC 14001:2013 Responsible Care

IFA Protect and Sustain Product Stewardship Programme (Excellence Level)

ISO 50001:2011 Energy Management System

ABS Quality Evaluations

ABS Quality Evaluations

ABS Quality Evaluations

SGS Gulf Ltd.

Deutsche Akkreditierungsstelle GmbH German Accreditation Body

ABS Quality Evaluations

Det Norske Veritas(DNV)

ABS Quality Evaluations

29-May-96

30-Dec-97

15-Dec-99

05-May-09

11-Mar-11

19-Apr-11

12-May-11

18-Oct-15

16-Nov-17

16-Nov-17

16-Nov-17

27-Jul-18

10-Mar-16

16-Nov-17

18-Jun-17

17-Oct-18

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BUSINESS POLICYQATAR FERTILISER COMPANY (QAFCO)

GULF FORMALDEHYDE COMPANY (GFC)

QATAR MELAMINE COMPANY (QMC)

MISSIONWe shall operate the plants efficiently, safely and in an environmentally responsible manner to produce and dispatch Ammonia, Urea, Urea Formaldehyde and Melamine at the quality required by customers and to carry out investments to maximize shareholders returns.

VISION• Maintain QAFCO as the largest quality ammonia and urea producer. • Satisfy QAFCO’s need for Urea Formaldehyde.• Quality melamine producer.

OUR MAIN OBJECTIVES• Achieve highest possible production at comparatively low cost.• Operate the plants with maximum online factor.• Design and operate the plants in a safe, secure, energy efficient and environmentally responsible manner.• Meet customers’ expectations with regard to quality and timely dispatch of our products.• Maximize the employment of qualified and skilled Qatari nationals and effectively develop them to meet the required competence.• Supply QAFCO with quality Urea Formaldehyde.

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WE ARE COMMITTED THROUGH OUR OCCUPATIONAL HEALTH & SAFETY, ENVIRONMENTAL, ENERGY, QUALITY AND RESPONSIBLE CARE INTEGRATED MANAGEMENT SYSTEMS TO:• Lead QAFCO in ethical ways that increase the benefits to society by protecting

our employees, environment and community.

• Increase the competency of personnel and use of technology to enhance Customers Satisfaction, environmental, energy, safety, health and security performance.

• Prevent pollution, avoid energy wastages, control operational & security risks in order to protect the environment, the safety and health of our employees, contractors, visitors, neighbours and the community.

• Steward our products and services through each life cycle stages in order to protect people and the environment.

• Implement Occupational Health & Safety, Environmental, Energy, Quality and Responsible Care Integrated Management Systems as a prime line responsibility at all levels of our organization and continually improve their performance and effectiveness.

• Involve and consult our employees on matters related to our Integrated Management Systems.

• Comply with all relevant Qatari Legislations, Regulations and Standards adopted by the Company.

• Communicate this Policy and systems performance measures to our employees, contractors and other stakeholders including public and make it available to them and other interested parties.

• Monitor, study, assess for significance and record the environmental impacts of our operations for possible reductions.

• Encourage re-use and recycling and manage our solid waste to reduce environmental impacts.

• Conduct regular reviews of relevant Occupational Health, Safety, Security, Environmental, Energy, Quality and Responsible Care activities for compliance with the adopted Standards.

• Open information, communication and sharing of experience with all parties affected by or interested in our activities on safe use, transportation and disposition of our products, energy use and to recognize, respect and respond to our community concerns about our products and operations.

• Support the procurement of energy-efficient products and services, and design for energy performance improvement.

• Work with government, agencies and associations at all levels in the development of effective and efficient health, safety, security, environmental & energy laws and in industry standards and supporting research.

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CHAIRMAN’SMESSAGE

Our production figures continued to be excellent during the year 2015 as QAFCO produced 3.71 million metric tonnes of ammonia and

5.69 million metric tonnes of urea. Our sales volume continued to be encouraging as we sold 588,926 MT of ammonia and 5.38 million metric

tonnes of urea – the second highest in the history of QAFCO – during the year under review.

In the year 2015, we systematically continued along our successful path, and we did so in spite of the persistent weak growth of the global economy. International Monetary Fund (IMF) reports that the global gross domestic product (GDP) rose by 0.3% less than in 2014 and 0.4% below IMF’s forecast of April 2015. This decline was exemplified by crude oil prices which dropped by 50% over the past 12 months to their lowest level in more than five years. Meanwhile, in the fertiliser industry, the financial period was characterized by near stagnant and fewer trade opportunities. Nevertheless, our achievements in the past financial year have further strengthened the foundation for our profits, favorable ammonia prices in the last quarter of 2015 helped QAFCO register a healthy profit of QAR 1.43 billion in the year under review.

Our production figures continued to be excellent as in the year 2015 as QAFCO produced 3.71 million metric tonnes of ammonia and 5.69 million metric tonnes of urea. Our sales volume continued to be encouraging as we sold 588,926 MT of Ammonia and 5.38 Million metric tonnes of urea – second highest in the history of QAFCO – in the year under review.

In the year 2015, our subsidiaries Gulf Formaldehyde Company (GFC) and Qatar Melamine Company (QMC) did well. GFC produced 54,610 MT of urea formaldehyde and QMC produced 59.920 MT of melamine.

We maintained our reputation for being one of the most environmentally responsible plant operators in the world. Our safety performance was satisfactory.

Meanwhile, on the Qatarisation front, QAFCO continues to work in its efforts to meet the targets set by Qatar Petroleum. The diligent implementation of the comprehensive guidelines for structuring and assessing post-qualification practical training program outcomes (that were introduced during 2015 for the main engineering disciplines), will contribute to the Company’s strategy for Quality Qatarization. Highly competent engineering professionals, developed to international practices and standards, will facilitate vertical mobility and deployment in key and sensitives positions.

It is projected that the planned allocation of future Vocational Education & Training Program sponsorships and Undergraduate Study Program sponsorships, recruitment of fresh graduates and experienced professionals will realize an accelerated growth in overall Qatari Headcount from 13.8% (end of 2015) to approximately 28% at the end of 2020

The coming years are expected to be challenging considering the anticipated fertiliser supply glut. This is due to the added capacities across the Middle East as well as elsewhere. However, years of hard work and prudent planning puts us in a comfortable position to overcome the challenge.

Responsibly responding to the market dynamics, we have planned a conventional production of 3.6 million MT of Ammonia and 5.54 million MT of urea in the year 2016. Our Urea formaldehyde production will continue to be same as the previous year while we cut down mildly on melamine production.

The coming year we hope to achieve our export targets of around 546.000 metric tonnes of ammonia and 5.3 million metric tonnes of urea.

To conclude, I would like to express my profound appreciation and gratitude to H. H. Sheikh Tamim Bin Hamad Al-Thani, Emir of the State of Qatar for his leadership and support, and I am pleased to note that with the meticulous following of his vision we have developed and grown as a world class company. I would like to extend my thanks to H.E. Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry, Industries Qatar, Yara Netherland and for Qatar Petroleum under the leadership of the President Eng. Saad Sherida Al Kaabi on the continued support for company also QAFCO Board, Management team together with all its employees for their sincere efforts in order to accomplish the achievement of the company's objectives/goals.

Said Mobarak Al MohannadiChairman, Qatar Fertiliser Company

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MANAGEMENTREPORT20152015

Moderate global growth, dropping oil prices, sluggish global fertiliser markets defined the year 2015. Reasonable price of urea through the year and a late surge in ammonia prices helped QAFCO to post a satisfactory profit for the year 2015.

QAFCO ACHIEVED A NET PROFIT OF QAR 1.43 BILLIONQAFCO and its subsidiaries made a net profit of QAR 1.43 Billion in the year under review. The profits were above what was initially budgeted. The primary drivers of growth were the last quarter surge in ammonia prices as well as higher sales volume of urea and ammonia. Apart from that, prudent decisions and actions helped in lower production cost as well as lower sales expenses contributed to profits this year.

5

4

3

2

1

02011

3.40

4.55

3.23

2.30

1.43

2012 2013 2014 2015

Profits (QAR Billion)

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RESPONDING TO GLOBAL DEMANDQAFCO is in tune with the global demand and supply dynamics. With a sizable annual production capacity of 3.8 million MT of ammonia and 5.6 million MT of urea, QAFCO is the world’s largest single-site producer of ammonia & urea.

Responding to modern requirements, QAFCO maximized production of granular urea to meet the specific demand of our customers based in different territories (such as Australia, US, India) with strict regulatory regimes. At present, QAFCO has four granular urea plants with a combined design capacity of 12,900 Metric Tons Per Day (MTPD).

6,000,000

4,000,000

2,000,000

02011 2012 2013 2014 2015

Ammonia and Urea Production Volume for 5 Years (MT)

2,298,260

3,193,269

3,641,331

3,624,161

3,717,203

3,217,025

4,501,083

5,510,995

5,431,915

5,690,796

Ammonia Urea

AMMONIA PRODUCTIONIn the year under review, QAFCO produced 3,717,203 MT, the highest volume in its production history. Of the total output this year, 3,133,120 MT was utilized in QAFCO for the production of Urea, Aqueous Ammonia, and Melamine.

UREA PRODUCTIONIn the year under review, QAFCO set a new record in urea production, QAFCO produced 5.69 Million MT of urea. Of this, 1.09 Million MT was prilled urea and 4.6 Million MT of granular urea.

Average FOB Sales Price of Ammonia and Urea in USD/MT for the last 5 years

MARKET CONDITIONSDropping oil prices had their impact on the supply-demand dynamics. Reduced oil prices allowed many marginal producers to produce more urea and push into the market. Apart from that, facility additions globally added to the supply glut.

In the year 2015, a surplus amount influenced total ammonia and urea prices globally. Ammonia prices, however, rebounded marginally in the last quarter and helped manufacturers maintain their healthy position. Urea prices, in the meantime, remained flat.

The price of ammonia in the year 2015 averaged at USD 421. Ammonia prices had come down sharply from a high of around USD 500 to around USD 400 in the early third quarter and then marginally recovered to post an annual average of USD 421 by the end of the year. In the meantime, average sale price of urea continued to dip for the third year in succession. This year the decline was sharper. The average sale price for urea for the year 2015 was USD 278. In 2014, it was USD 328 and in 2013 it was USD 345.

In 2015, QAFCO sold 588,926MT of ammonia and 5,387,485MT of urea through Muntajat.

2011 2012 2013 2014 2015

Ammonia Urea

476

425

516

421

475

345

504

328278

421

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MUNTAJAT CONTINUES TO MARKET QAFCO FERTILISER

Sales Volume in MT of Ammonia and Urea

2011 2012 2013 2014 2015

UreaAmmonia

2,725,031

556,337

4,215,637

683,195

5,462,640

592,038

5,048,277

544,366 588,926

5,387,485

The State of Qatar established Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat), which holds the exclusive rights to market, sell and distribute Qatar’s chemical and petrochemical products to the global market.

The company builds on more than 40 years of excellence by Qatar’s producing entities. It is adding new value to the supply chain through reduced lead times and enhanced the customer experience while retaining continuity of supply and excellent quality that customers demand.

SHUTDOWNS IN 2015 One of our primary targets is to operate our plants efficiently and with a maximum online factor. This factor is ensured by pursuing a predictive maintenance strategy alongside the daily and periodic maintenance schedules of the plants and other support facilities. Our operational efficiency is the result of a high level of continued attention we give to plant maintenance.

In 2015, one scheduled shutdown was executed in March at QAFCO 3 train. The shutdown period lasted for 30 days in Ammonia 3 plant and 26 days for urea 3 plant. Meanwhile, a shutdown of 21days was carried out at UFC – A plant. The combined unforeseen shutdown of all the Ammonia plants was 65 days and for the urea plants, it was 59 days.

During the shutdowns, there were no lost time incidents. More than 13000 activities were planned and executed during the shutdown.

There were no lost time incidents in more than 13,000 activities that were planned and executed during the shutdown.

PROVIDING A SAFE AND HEALTHY WORK ENVIRONMENTThe fertilizer industry is historically associated with health and safety risks for workers. At QAFCO, we are committed to providing a safe workplace to our people through risk-based safety and health programs across the business. In a case of any unfortunate incident leading to an injury, we provide assistance while returning to work through proactive injury management program.

We have set a target to achieve zero lost time accident and zero first aid accident for QAFCO staff as well as contractors on-site. We have worked hard over the years to ensure that we bring down the number of worksite injuries for both our contractors and employees

SAFETY TRAINING Safety staff conducted various training with the aim of increasing the Safety awareness among the employees and Contractors. The training involved different disciplines.

SAFETY DURING SHUTDOWNSDuring the shutdown, more than 300 people underwent the safety training. Two hours safety briefing for all Contractors (including confined space entry certificate) involved in the shutdown was arranged at QAFCO club before shutdown. During the shutdown, training was provided at QAFCO site wherein 2314 Contractors were trained, from more than 49 Contracting companies.

200

160

120

80

40

0Lost Time

178

Days Lost

000

Fatality 180 days lost 2 days in 2014 and 178* days carried forward to 2015

QAFCO SIGNED LONG-TERM SERVICES AGREEMENT WITH GE OIL & GASQAFCO signed on February 2, 2015. a six-year, long-term service contract with GE Oil & Gas (NYSE: GE) for its Downstream Technology Solutions (DTS) business to help optimize the performance of the company’s plants.

The deal covers the standard maintenance and repairs of existing GE on-site power and compression equipment as well as training for QAFCO workers and site operators.

This agreement with GE’s DTS will bring the cutting edge in GE’s innovative technology, assuring higher efficiency, reliability and will support the optimal performance of the company’s plants .

ActualLimit

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SAFETY CAMPAIGNS Safety campaigns are effective means of communicating with our stakeholders. In the year under review, various campaigns were conducted to increase awareness amongst QAFCO employees and contractors. These well thought out campaigns address safety concerns within and outside QAFCO.

Heat Stress CampaignHeat stress campaign was conducted during summer with flag posters, roll-ups, stickers, and flyers. The campaign included checking, reviewing and auditing all the contractors working in coordination with Area Supervisor, Contractor Supervisor, and contractor contact person. Apart from that, the safety section carefully monitored Heat Stress Index and communicated the status with QAFCO contact person.

Safety Campaign against using mobile phone while driving“Focus on the road” campaign by safety section highlighted the perils of mobile use while on the road. The campaign included computer pop up messages on desktops, banners and safety signs as well as simulators. Apart from this Ministry of Interior personnel delivered several presentations on road safety to the contractors.

Safety Awards and Recognitions for the year 2015In the year 2015, fifty-seven QAFCO Employees were awarded for the best-reported risk, near miss and unsafe condition. Apart from this, all QAFCO Employees were given an individual gift as a sign of appreciation from QAFCO Management for their safety commitment. Three QAFCO employees were recognized on QAFCO Day for their reporting of potential risk and near misses.

Meanwhile, contractor employees were also recognized for “visible Safety awareness” during QAFCO 3 shutdown.

CONFERENCES/ RESEARCH PROGRAMSIN 2015• In-house training course on Waste

Minimization.

• Course on OPCW (Organization for the Prohibition of Chemical Weapons).

• Conference on 1st GPCA Responsible Care.

• Workshop on Carriage & Security of Dangerous Goods at Dubai (Organised by GPCA).

• Training program for staff on GHG Emissions Accounting, Reporting & API Sangea 4.1.

• Seminar on Marine challenges faced by Qatar especially in fisheries organized by Center for Environment, Fisheries and Aqua Culture, co-hosted by Environmental Studies Center.

• Workshop on Qatar’s Marine Environment & Food Security at Qatar University Doha organized by ESC & Cefas.

WE OWE THE ENVIRONMENT TO THE NEXT GENERATIONThe world is committed to reducing climatic impact, and for this to be successful, we need to ensure the creation of growth, innovation, and solutions for a low-carbon and resource efficient world. At present, 70%–80% of the world’s food is produced using manufactured fertilizers, and being a responsible fertilizer manufacturer for more than four decades, QAFCO is aspiring to have a leadership role in producing high-quality fertilizer using sustainable and energy efficient technologies.

We are committed to mitigating our environmental impact. We are driven by the strong commitment to caring for and protect the environment and ensure a safer planet for the next generation to inherit. Our policies objectives and various projects reflect this. We understand that we have our share of emissions to air, discharges to sea and different wastes to manage. Strict environmental considerations are in place to minimize air emissions and discharges to the sea, as well as recycling and managing waste.

QAFCO ACHIEVED ISO 50001 CERTIFICATION IN ENERGY MANAGEMENT SYSTEM IN 2015Qatar Fertiliser Company (QAFCO) achieved the certificate of conformance to the ISO 50001:2011, the standard dedicated to the Energy Management Systems., thereby becoming one of the first few large scale organizations in Qatar to achieve it.

The certification is an endorsement of QAFCO’s efforts to become a sector leader in energy efficiency and strive to manage its resources proficiently as it undertakes several energy efficiency and conservation measures.

QAFCO was certified by ABS Quality Evaluations, a world-leading certification body that works with companies to assure the performance of their business, systems, people, and supply chains through management system certification, verification, assessment, and training. Over the years, QAFCO management system has enabled QAFCO to become a corporate leader in meeting stakeholder expectations, with the ISO 50001:2011 certification, it continues to be industry pioneers in the region.

CONSENT TO OPERATE In the year under review, the Qatar’s Ministry of Environment renewed the consent to operate for QAFCO 1-4 and Qatar Melamine Company. Meanwhile, application for renewal consent to operate for QAFCO 5&6 is in progress.

Meanwhile, request for an exemption for Environmental Clearance to High-Speed Drum Granulator Pilot Plant as a research project has been put before the Ministry of Environment.

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QAFCO ENVIRONMENT INITIATIVESIn the year 2015, we reinitiated the Fish Hatchery Pilot Project. The Technical and Commercial Evaluation has been completed for the same. We also embarked on a GHG Emissions Accounting and Reporting Initiative in the year under review as well as had an overview of Waste Management in QAFCO and Improvement Opportunities.

Meanwhile, a budgetary enquiry has been initiated for Environmental Monitoring Project for Al-Besheriya Island and Artificial Reef Balls for three years.

QAFCO FLOWER AND VEGETABLE SHOW 2015The environment corner at the QAFCO Flower and Vegetable show 2015 was a big draw. We organized three different workshops themed around recycle and reuse.

WORLD ENVIRONMENT DAY 2015

SCHOOL TRIP

On the World Environment Day 2015, QAFCO held a photography competition titled: “Seven Billion Dreams. One Planet. Consume with Care” for all Mesaieed & Al-Wakrah schools.

QAFCO organized a School Trip to Al Sulaiteen Agricultural & Industrial Complex for a group of 35 primary students.

A two-day recycling workshop called “Summer Boxes Recycling workshop” organized for girls in August at the company club.

RECYCLING WORKSHOP

TRAINING AND DEVELOPMENT IS AN INVESTMENT IN OUR PEOPLEQAFCO’s training and development programmes serve as a key to aim for a professional and highly productive workforce in the technical and non-technical areas. These plans help in continual improvement and develop employee skills & potential.

We invest in human capital and create opportunities for them to achieve their potential. Training is a major drive to establish a high-performance culture and thus, in growing the business dynamically. It provides the right resources and supports the growth and development needs of its workforce.

OUR EMPLOYEES EPITOMIZE OUR CORE VALUES Our employees form an integral part of QAFCO’s activities and plans. We believe that our people are the force behind our achievements and are the support during challenging times. Hence, we are heavily invested in the wellbeing of our employees and ensure that they are at their best always. This makes us the employer of choice. The company is committed to contributing positively to the intellectual and physical well-being of its employees. The commitment helps to improve performance, keep absenteeism and turnover rates to a minimum and create a great working experience, regardless of their race, colour, religion, gender, national origin, age, disability or any other basis protected by Qatari laws.

In the year under review, there were 1681established positions. Our employee strength was 1583.

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Qatar Fertiliser Company (Qafco) remains focused and committed to diligently pursue the strategic intent of the Energy and Industry Sector’s Qatarization target of 50% (or greater) of quality, competent Qataris holding permanent positions in QAFCO.

OUR APPROACH TOWARDS ACHIEVING STRATEGIC QATARISATION PLANAn important approach to achieving the Company’s overall Strategic Qatarisation Plan and Objectives is the focus on the development of the entrance pool (young Qataris) through sponsored studies, incorporating well-structured and well mentored post-qualification practical training programs. During 2015 approximately 33% of Qataris (based on Qatari Headcount) within the Company’s Qatari Talent Pipeline pursued such multiyear programs and development interventions.

Although training and development needs of expatriate employees (in support of organizational imperatives) are catered for, the development of Qatari employees (and prospective Qatari employees) are a strategic focus. Benchmarking of training and development courses and programs ensure that our Qatari Nationals are educated and trained to international standards.

QATARIZATION AND DEVELOPMENT QAFCO foresees an ambitious

growth in QAFCO’s Qatari Headcount to approximately 426 (28%) by end 2020. Longer-term projections in Qatari Headcount till 2025 indicate a growth to approximately 40%.

Proud QAFCO Graduates from London Southbank University

QUALITY - TO EXCEL IS OUR CHOICETo maintain and improve the high quality of products, QAFCO implements a stringent quality management program facilitated by real-time monitoring and measurement of production processes from the incoming raw material to the distribution of final products as well as by sophisticated laboratory analysis at various stages of production processes. QAFCO’s product quality is widely acclaimed within the industry, and several agencies have set a high rating for our products such as Level 1 Gold accreditation by the Australian Department of Agriculture ( DA ). DA is the Australian government agency responsible for enforcing Australian quarantine laws for maintaining very stringent and high quality standards.

QAFCO’s Quality Management System was certified to ISO 9002 in 1996. Over the years, QAFCO management system has gone further forward enabling QAFCO to become a corporate leader that takes care of needs and expectations of its customers and other stakeholders - its employees, suppliers, the community as well as the environment. QAFCO is also keen on adopting best management practices and integrating them into the system. Several certifications and accolades that QAFCO received over the years are a testimony for that.

Integrated management system surveillance audit for ISO 9001, ISO 14001, OHSAS 18001 & RC 14001 and certification audit for ISO 50001 was conducted by ABS Quality Evaluations from 13-17 September 2015. QAFCO was successfully certified with ISO 50001 and continuation of certification was recommended for ISO 9001, ISO 14001, OHSAS 18001 & RC 14001 standards.

The midterm review of IFA Product Stewardship was conducted by DNV from 13-16 September 2015, and the overall score of QAFCO was 92.0%, continuing at excellence level.

IFA Green Leaf excellence award: QAFCO received the IFA Green Leaf excellence award-2015 for significant Safety, Health and Environment (SHE) improvement in Fertiliser production between 2013 and 2015.

43

SUCCESSFUL INITIATIVESSupport and Liaison with the Education Sector As part of QAFCO’s Corporate Social Responsibility and Networking Strategy, the Company pursued its relationships with Universities, Schools and other Education Sectors through involvement and collaboration in:

• Continued sponsorship of a Chair at Qatar University in the field of Energy Systems and a chair at Texas A&M in the field of Green chemistry and green Engineering.

• Continued sponsorships and joint collaboration with local Universities to host Conferences to promote cutting-edge chemistry research in Qatar and further abroad;

• College Advisory Committee (Focus Group) activities on study program syllabi and new program offerings;

• Utilizing University laboratories for some chemical testing needs on a commercial basis;

• Hosting Summer Training and Internship Programs;

• Career fairs and Sponsorship Days;

• Hosting and facilitating students’ Plant Design Projects; and

• Hosting and facilitating Plant and School Visits.

Apart from formal multi-year Vocational Education and Training Programs and Academic Study programs, the Company continued to make substantial investments in continuing professional development of Qatari employees through short duration courses (in-company, local and abroad).

Diligent monitoring of progress in development programs and continued personal support to the Company’s Trainees / Students, whether at their workplaces or institutes of further education, are critical activities in supporting training and development of our Qataris.

The Company’s Strategic Qatarization Plan incorporates harnessing Qatari Talents.

The company’s plan to harness Qatari talents focuses on the development of Qatari Nationals through Vocational Education and Training Programs (VET), Undergraduate Academic Programs (UG), and Continuing Professional Development interventions.

At the end of December 2015, the Company’s Qatari Headcount was 232 representing 13.8% of approved establishment. Qafco plans and foresees an ambitious growth in Qatari Headcount to approximately 426 (28%) by end 2020. Longer-term projections in Qatari Headcount till 2025 indicate an increase to nearly 40%.

The Company continued to create opportunities for organizational progression for Qatari employees through job enrichment, rotation and appropriated corporate restructuring. This is supported by continuing professional development to ensure that the Qataris placed in key positions are competent and confident to perform their duties to the highest possible standards and professionalism.

During 2015, 23 Qataris pursued Post-Qualification Practical Training Programs towards final development to take-up established position (mainly in engineering).

Comprehensive guidelines for structuring and assessing post-qualification practical training program outcomes, based on internationally adopted practices and standards, were introduced during 2015 for the main engineering disciplines. The efforts and accomplishments of our Graduates are publicly acknowledged during the Company’s official annual functions and prove very motivational.

Qataris Recruited in 2015

Establishment GraduateDevelopees

QAFCOTrainees

AcademicSponsorship

QP IntakeTrainees

2 2 2

7

3

QATARI STUDENTS PARTICIPATED IN REGIONAL CONFERENCESAs part of QAFCO’s Corporate Social Responsibility, and Qatarization strategy QAFCO leverages its influence amongst regional and global institutions to provide opportunities for Qatari youth to develop their knowledge and have firsthand experience with the dynamics of the fertiliser industry in 2015, Qafco sponsored the participation of 26 Qatari students in GPCA Fertiliser Convention. QAFCO used the convention to help Qatari students from different universities in Qatar gain insights into the fertiliser industry. The students got a firsthand knowledge about the industry from the stalwarts of the fertilizer industry .By introducing them to the specialized conferences, a step that increases the Qatari young men' scientific and practical qualification so that they will become the ideal choice for employment in both public and private sectors, which is QAFCO's vision.

45

OUR CORPORATE AND SOCIAL EVENTS

QAFCO AND UNIVERSITY OF LIEGE BELGIUM SIGNED MOUsQAFCO, and University of Liege Belgium signed a Memorandum of Understanding on 22nd March 2015, to further their joint research initiatives. Depending on the results of their joint research related to the use of urea as an essential component of healthy poultry feed to prevent the use of antibiotics in agriculture and livestock, QAFCO and University of Liege will cooperate in developing a pilot plant for producing the healthy feed and pro-biotic. The MoU will also look at enhancing the fish biodiversity of Qatar using local hatcheries to deliver stocks either for indoor or outdoor (sea) purposes which will contribute to maintain the Stock Biomass of many Qatari species. The MOU also intends to cooperate on research on cross breeding Lamb varieties to enhance Arab or local species for meat purposes. It will include study on genetic stability and recurrence for a local production and farming.

QAFCO SPONSORS TAMUQ CONFERENCEThe 2015 conference was the eighth presented in cooperation with Texas A&M at Qatar. This year’s Conference, which took place in the Education City Doha on 3rd March 2015, focused on sustainable chemical processes. The conference featured an impressive technical program, and sessions with renowned experts from the field, highlighted opinions and research from some of the world’s most respected names in managing sustainable chemical processes. It also provided a forum for an exchange of ideas and opportunities for future collaborations.

QAFCO DONATES MOCK GASTURBINE TO QATAR UNIVERSITYQAFCO donated a Rolls Royce cutaway gas turbine to the College of Engineering at Qatar University (CENG) as part of its contribution towards encouraging research and development in Qatari universities. The engine is a mock model customized in order to view the internal workings of the engine. This donation is a continuation of QAFCO’s long-term support and efforts to open more communication channels with students at Qatar universities and giving them a better understanding of its processes. This will help Qatar’s new generation prepare for various industry roles as they take on new careers.

QAFCO DAY 2015QAFCO-Day is an annual get together function held in January every year, for the Company’s management and staff. The QAFCO day was celebrated at the Al-Banush Club. The impressive multipurpose hall of the club sparkled in the glitz of the light and sound effects.

QAFCO management presented the Company’s achievements in 2015 and outlined plans and objectives for the year 2016. The training section distributed its annual awards to many nationals who have completed their development programs. Apart from that, QAFCO also awarded its employees safety awards for the best-reported near miss and best-reported risks. During QAFCO Day long-serving employees were also recognized. A bouquet of entertainment programs, lucky draws and a gala dinner marked the day.

QAFCO CELEBRATED NATIONAL SPORT DAY As part of its social responsibility towards the community and its belief in the importance of sports in a sound body and mind, Qatar Fertiliser Company (QAFCO) on the third anniversary of Qatar National Sports Day (QNSD), stitched a busy schedule, featuring various sports activities. The event was a tremendous success with Qafco employees and their families actively participating in the event according to their ability and hobby.

QAFCO FLOWER AND VEGETABLE SHOW 2015HE Minister of Energy and Industry Dr. Mohammed Bin Saleh Al-Sada inaugurated QAFCO Flower & Vegetable Show 2015 on 27 March 2015 at Al-Banush Club in Mesaieed. The two-day event attracted a huge crowd of participants and visitors from all sections of society including professionals from hotels and nurseries, amateurs and school students involving in floral arrangements, vegetable and fruit carving, cake and candy decorating. HE Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry, hailed the Flower and Vegetable Show and appreciated the role QAFCO plays at different social levels, citing the show as one of its necessary tools to involve community members in various cultural and social activities. The event also displays QAFCO’s commitment towards the environment and helps spread awareness in the society through a raft of school exhibits on environmental issues.

QAFCO CELEBRATED QATAR NATIONAL DAY QAFCO celebrated Qatar National Day as part of its efforts to promote the concept of the unity of its staff members employees, representing over 35 countries, and the community. One of the great attractions of the event was the huge Qatari national flags with the photo of His Highness Sheikh Tamim Bin Hamad Al Thani, the Emir of Qatar and the Father Emir, Sheikh Hamed Bin Khalifa Al-Thani.

QAFCO SPONSORED AND PARTICIPATED IN THE 6TH ANNUAL GPCA FERTILISER CONVENTION IN DUBAIQAFCO participated in the 6th Annual Gulf Petrochemical Association (GPCA) fertiliser convention held in Dubai, from 14th to 16th September 2015. This year the conference focused on the theme – “Innovating for Growth: Ensuring an efficient, sustainable future”. The meeting shed light on how the GCC’s fertilizer industry can contribute to global food security while embracing an environmentally sustainable future. QAFCO, besides its sponsorship and participation in the convention, it had sponsored the participation of a number of professors and students from Qatar universities; as QAFCO invited twenty-six students representing different Qatari universities as well as QAFCO trainees were sponsored by QAFCO to attend the convention. With this initiative, QAFCO has stepped on to a new phase in educating the youth and developing their skills.

47

The Gulf Formaldehyde Company (GFC) was created in 2003. The plant began operations in 2004. The company has two plants namely UFC A – became operational in 2004 and UFC-B that became operational in 2012.

The GFC plants A, and B are designed to produce 82 and 85 tons per day of Urea Formaldehyde (UFC-85) respectively. Urea Formaldehyde Condensate is a viscous liquid with 60 percent formaldehyde, 25 percent urea and 15 percent of water. Eighty percent of the UFC-85 produced by GFC is consumed by QAFCO and is used as an anti-caking agent in the production of urea.

In the year under review, Gulf Formaldehyde Company produced 54,610 MT of urea formaldehyde. Of this, 26,097MT was produced in the UFC plant A and UFC-B produced 28,513MT, which is also the highest production figure for UFC-B. Of the total produced, 51,015 MT was used within QAFCO, and the rest was exported. The average sales price of urea formaldehyde was USD 446 in the year 2015.

Despite lower export volumes and selling price, the Gulf Formaldehyde Company made profits of QAR 8.6 Million. The primary drivers of profits were the lower cost of sales and lower urea prices. The profits are 72% higher than the QAR 5 Million achieved in 2014.

2012 2013 2014 2015

44,492

59,172 58,196 54,610

GULF FORMALDEHYDE COMPANY (GFC)

QATAR MELAMINE COMPANY QAFCO has utilized its expertise in fertilizer plant operations to operate and manage a production plant of premium grade Melamine, based on the Eurotechnica HP process, on behalf of the Qatar Melamine Company. The plant annual production capacity is 60,000 MT. The plant was inaugurated in 2010.

The plant performed extremely well in the year under review and produced 59,920 MT of Melamine. The company sold 58,799 MT of Melamine at an average sales price of USD 991.

Lower melamine sales volume and an approximately 17per cent reduction in sales price contributed to a net loss of QAR 55.2 Million in the year 2015 at the Qatar Melamine Company.

RESPONDING TO CHANGING MARKETSThe primary objective for the coming year will be responding to the fast-changing market conditions. A potential increase in fertiliser supply due to the new facilities across the world will pose a challenge to the businesses in the region. However, I firmly believe that QAFCO is well poised to withstand and respond actively to the new challenges.

In conclusion, I would like to convey my deepest thanks and gratitude to HH Sheikh Tamim Bin Hamad Al-Thani, Emir of the State of Qatar for his inspirable leadership and support. I am grateful to HE Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry, Eng. Saad Sherida Al Kaabi, President & CEO, QP and the QAFCO Board of Directors for their continuing support and valuable guidance. I am thankful to shareholders IQ and Yara Nederland, QAFCO Management, and employees of QAFCO, with whom I look forward towards yet another successful year.

2013 2014 2015

60,523 59,920

56,156

59,500 58,799

55,899

Melamine Production Melamine SalesMelamine Production and Sales Figures since 2013

OUR DOWNSTREAM OPERATIONS

Urea Formaldehyde Condensate Production in MT since 2012

49

51

FINANCIALSTATEMENTS

2015

FINANCIALSTATEMENTS

2015

53

INDEPENDENTAUDITOR’SREPORT

To the ShareholdersQatar Fertiliser Company (Q.S.C.C.)Doha - Qatar

Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Qatar Fertilisers Company (Q.S.C.C.) (the “Company’’) and its subsidiaries (together referred to as the “Group”), which comprise the consolidated statement of financial position as at December 31, 2015 and the consolidated statements of profit or loss, profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, the applicable provisions of Qatar Commercial Companies Law, and the Company’s Articles of Associations and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2015 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Other Legal and Regulatory RequirementsWe are also of the opinion that proper books of account were maintained by the Company and physical inventory verification has been duly carried out. We have obtained all the information and explanations which we considered necessary for the purpose of our audit. To the best of our knowledge and belief and according to the information given to us, no contraventions of the applicable provisions of Qatar Commercial Companies Law and the Company’s Articles of Association were committed during the year which would materially affect the Group’s activities or its financial position.

Doha, Qatar For Deloitte & ToucheJanuary 27, 2016 Qatar Branch

Midhat Salha Partner License No. 257

Notes 2015 2014 QR QR

ASSETSCurrent assets Bank balances and cash 5 2,700,188,412 1,952,185,872Accounts receivable and prepayments 6 100,505,719 102,273,651Due from related parties 7(a) 629,045,534 997,316,490Inventories 8 877,578,419 801,071,463

Total current assets 4,307,318,084 3,852,847,476

Non-current assets Catalysts 9 30,448,585 36,328,545Intangible asset – license fee 10 46,301,884 48,607,372Property, plant and equipment 11 15,331,010,480 16,064,444,324

Total non-current assets 15,407,760,949 16,149,380,241

TOTAL ASSETS 19,715,079,033 20,002,227,717

EQUITY AND LIABILITIES Current liabilities Accounts payable and accruals 12 414,541,510 428,342,438Due to related parties 7(b) 278,933,868 261,399,922Interest bearing loans 13 286,302,209 285,779,228Other financial liabilities 14 87,391,521 107,314,147Income tax payable 19 132,438,807 173,124,496

Total current liabilities 1,199,607,915 1,255,960,231

Non-current liabilities Interest bearing loans 13 2,398,018,867 2,684,321,076Other financial liabilities 14 48,920,732 106,403,589Employees’ end of service benefits 15 105,757,296 100,289,328

Total non-current liabilities 2,552,696,895 2,891,013,993

Total liabilities 3,752,304,810 4,146,974,224

Equity Share capital 16 1,000,000,000 1,000,000,000Legal reserve 17 210,088,076 209,220,824Cumulative changes in fair values (136,312,253) (213,717,736)Retained earnings 14,425,275,489 14,376,295,698

Equity attributable to equity holders of the parent 15,499,051,312 15,371,798,786Non-controlling interest 463,722,911 483,454,707

Total equity 15,962,774,223 15,855,253,493

TOTAL EQUITY AND LIABILITIES 19,715,079,033 20,002,227,717

Said Mobarak Said Al-Mohannadi Abdulrahman Mohamed F Al-SuwaidiChairman of the Board Chief Executive Officer

CONSOLIDATED STATEMENTOF FINANCIAL POSITIONAs at December 31, 2015

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

52

55

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

Notes 2015 2014 QR QR

Sales 20 6,627,313,105 7,278,789,389Cost of sales 21 (4,318,046,710) (3,957,365,904)

GROSS PROFIT 2,309,266,395 3,321,423,485

Other income 22 60,269,637 64,546,325Selling and distribution costs 23 (241,410,300) (273,968,320)Administrative expenses 24 (563,963,845) (653,985,424)Finance costs 25 (141,952,321) (156,180,516)Gain on foreign currency exchange 8,145,681 3,130,461

PROFIT FOR THE YEAR 1,430,355,247 2,304,966,011

Attributable to: Equity holders of the parent 1,449,847,043 2,307,472,545Non-controlling interest (19,491,796) (2,506,534)

1,430,355,247 2,304,966,011

Notes 2015 2014 QR QR

Profit for the year 1,430,355,247 2,304,966,011 Other comprehensive income Items that may be reclassified subsequently to statement of profit or loss:

Net unrealised gain on cash flow hedges 77,405,483 87,555,289

Total comprehensive income for the year 1,507,760,730 2,392,521,300 Attributable to: Equity holders of the parent 1,527,492,526 2,395,027,834Non-controlling interest (19,731,796) (2,506,534)

1,507,760,730 2,392,521,300

CONSOLIDATED STATEMENTOF PROFIT OR LOSS

CONSOLIDATED STATEMENTOF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the year ended December 31, 2015

For the year ended December 31, 2015

54

57

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

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Notes 2015 2014 QR QR

OPERATING ACTIVITIES Profit for the year 1,430,355,247 2,304,966,011Adjustments for: Depreciation of property, plant and equipment 11 1,084,619,148 1,072,363,452Interest expense 136,516,989 156,180,516Amortisation of catalysts 9 15,055,312 14,815,022Amortisation of deferred arrangement fee 13 5,435,332 5,957,355Interest income (8,915,234) (5,411,986)Amortisation of license fee 10 2,305,488 2,305,488Provision for obsolete and slow moving inventories – 11,657,969Bad debt written off – 240,316Loss on write-down of inventories – (118,852)Provision for employees’ end of service benefits 15 28,608,380 32,273,120Property, plant and equipment written-off 1,049 1,416

2,693,981,711 3,595,229,827

Working capital changes: Accounts receivable and prepayments 1,767,932 (21,263,712)Due from related parties 327,585,267 173,346,808Inventories (76,506,956) (284,018,563)Accounts payable and accruals (12,746,917) (145,485,667)Due to related parties 17,506,946 (17,649,631)

Cash flows from operating activities 2,951,587,983 3,300,159,062Interest paid (137,544,001) (156,180,516)Employees’ end of service benefits paid 15 (16,198,432) (7,107,484)Advance against employees’ end of service benefits (6,941,980) (6,805,658)

Net cash flows generated from operating activities 2,790,903,570 3,130,065,404 INVESTING ACTIVITIES Additions to property, plant and equipment 11 (351,186,352) (296,044,494)Interest income received 8,915,234 5,411,986Additions to catalysts 9 (9,175,352) (3,894,197)

Net cash flows used in investing activities (351,446,470) (294,526,705)

FINANCING ACTIVITIES Dividends paid to equity holders of the parent (800,000,000) (1,300,000,000)Interim dividends paid (600,000,000) (1,000,000,000)Dividends paid to non-controlling interest (240,000) (600,000)Repayment of interest bearing loans (291,214,560) (291,214,560)

Net cash flows used in from financing activities (1,691,454,560) (2,591,814,560)

Increase in cash and cash equivalents 748,002,540 243,724,139Cash and cash equivalents at the beginning of the year 1,952,185,872 1,708,461,733

Cash and cash equivalents at the end of the year 2,700,188,412 1,952,185,872

CONSOLIDATED STATEMENTOF CASH FLOWSFor the year ended December 31, 2015

56

59

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

1. CORPORATE INFORMATION Qatar Fertiliser Company (Q.S.C.C.) (the “Company”) was incorporated on September 29, 1969 as a

Closed Qatari Shareholding Company (“Q.S.C.C.”) in the State of Qatar under commercial registration no. 29. The Company is engaged in the production and sale of Urea and Ammonia. The Company’s registered office is at P.O. Box 50001, Mesaieed, State of Qatar. The consolidated financial statements of the Company as at and for the year ended December 31, 2015 comprise the Company and its subsidiaries (together referred to as the “Group”).

The shareholders and their shareholding interests in the Company are as follows:

Name of the shareholder Country of incorporation Interest

Industries Qatar Q.S.C. (“IQ”) Qatar 75%

Yara Nederlands B.V. Netherlands 25%

IQ is the immediate parent of the Company, which is a 51% owned subsidiary of Qatar Petroleum

(“QP”). Thus, QP is the ultimate parent of the Group.

Pursuant to Decree Law 11 of 2012 of the State of Qatar, Qatar Chemical and Petrochemical Marketing and Distribution Company Q.J.S.C. (“Muntajat”) was established in the year 2012 to carry out marketing and distribution activities of all regulated products, except for those expressly excluded by Muntajat or the Government in accordance with the law, of the producer(s). In accordance with the decree, the Group has entered into Offtake Requirements (Liquids) (“ORL”) agreements with Muntajat to carry out all marketing and distribution activities on behalf of the Group for an agreed marketing fee (product-wise) and reimbursement of the selling expenses. The arrangement with Muntajat commenced from March 1, 2013.

The consolidated financial statements of the Group for the year ended December 31, 2015 were authorised for issue in accordance with a resolution of the Board of Directors on January 27, 2016.

2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)

2.1 New and revised IFRSs affecting amounts reported in the financial statements The following are the revised IFRSs that were effective in the current year and have been applied

in the preparation of these financial statements:

i) Revised Standards: Effective for annual periods beginning on or after July 1, 2014

• IAS 19 (Revised) Amendments to clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service.

• Annual improvements to IFRSs 2010-2012 cycle

Amendments to issue clarifications on IFRSs- IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38.

• Annual Improvements 2011-2013 Cycle

Amendments to issue clarifications on IFRSs- IFRS 1, IFRS 3, IFRS 13 and IAS 40.

The adoption of these new and revised standards had no significant effect on the financial statements of the Company for the year ended December 31, 2015, other than certain presentation and disclosure changes.

2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (CONTINUED)

2.2 New and revised IFRSs in issue but not yet effective (Early adoption allowed) The Company has not applied the following new and revised IFRSs that have been issued but are

not yet effective:

i) New Standards:

Effective for annual periods beginning on or after January 1, 2016• IFRS 14 Regulatory Deferral AccountsEffective for annual periods beginning on or after January 1, 2018• IFRS 9 Financial Instruments• IFRS 15 Revenue from Contracts with CustomersEffective for annual periods beginning on or after January 1, 2019• IFRS 16 Leases

ii) Revised Standards: Effective for annual periods beginning on or after January 1, 2016

• IFRS 10 & IAS 28 (Revised)

Amendments regarding the sale or contribution of assets between an investor and its associate or joint venture

• IFRS 11 (Revised) Amendments regarding the accounting for acquisitions of an interest in a joint operation.

• IFRS 12 (Revised) Amendments regarding the application of the consolidation exception.

• IAS 1 (Revised) Amendments resulting from the disclosure initiative.

• IAS 16 (Revised) Amendments regarding the clarification of acceptable methods of depreciation and amortization and amendments bringing bearer plants into the scope of IAS 16.

• IAS 27 (Revised) Amendments reinstating the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements.

• IAS 38 (Revised) Amendments regarding the clarification of acceptable methods of depreciation and amortization.

• IAS 41 (Revised) Amendments bringing bearer plants into the scope of IAS 16.

• Annual Improvements 2012-2014 Cycle

Amendments to issue clarifications and add additional/specific guidance to IFRS 5, IFRS 7, IAS 19 and IAS 34.

Effective for annual periods beginning on or after January 1, 2018 (or on early application of IFRS 9)

• IFRS 7 (Revised) Financial Instruments Disclosures - Amendments requiring disclosures about the initial application of IFRS 9

• IAS 39 (Revised) Amendments to permit an entity to elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS 9 is applied, and to extend the fair value option to certain contracts that meet the 'own use' scope exception.

58

61

2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (CONTINUED)

2.2 New and revised IFRSs in issue but not yet effective (Early adoption allowed) Management anticipate that the adoption of the above Standards and Interpretations (except as

described in next paragraph) in future years will have no material impact on the consolidated financial statements of the Group in the period of initial application.

The Management anticipate that IFRS 15, IFRS 9 and Revised IFRS 16 will be adopted in the Group’s consolidated financial statements for the annual period beginning on or after January 1, 2018 and January 1, 2019, as applicable. The application of these standards may have significant impact on amounts reported in the consolidated financial statements and result in more extensive disclosures in the consolidated financial statements. However, the management have not yet performed a detailed analysis of the impact of the application of these Standards and hence have not yet quantified the extent of the impact.

3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial

Reporting Standards (“IFRS”) and the applicable provisions of Qatar Commercial Companies Law.

Basis of preparation The consolidated financial statements have been prepared on the historical cost convention modified to

include the measurement at fair value of derivative financial instruments.

These consolidated financial statements are presented in Qatari Riyal (QR), which is the Group’s presentation currency. The principal accounting policies are set out below.

Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and its

subsidiaries (together referred as the “Group”). Control is achieved when the Group: i) has power over the investee; ii) is exposed, or has rights, to variable returns from its involvement with the investee; and iii) has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Group and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Group and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The structure of the Group, incorporated in the consolidated financial statements of Qatar Fertiliser

Company (Q.S.C.C.) is as follows:

Name of entity Principal activity Country of incorporation

Effective shareholding percentage

Gulf Formaldehyde Company (S.A.Q.) (GFC)

Production and sale of Urea Formaldehyde Concentrate

Qatar 70%

Qatar Melamine Company (Q.S.C.C.) (QMC)

Production and sale of Melamine

Qatar 60%

Transactions eliminated on consolidation Inter-company balances and transactions, and any unrealised gains arising from intra-group transactions

are eliminated in preparing the consolidated financial statements.

Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in

value. Capital work-in-progress is not depreciated.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows: Buildings and foundations 13-25 years Plant, machinery and equipment 3-20 years Vehicles and mobile equipment 3 years Expenditure over QR 200,000 incurred to acquire or replace an item of property, plant and equipment that

is accounted for separately, is capitalised and the carrying amount of the component that is replaced, is written off. Other subsequent expenditure over QR 200,000 is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the consolidated statement of profit or loss as the expense is incurred.

The cost of plant, machinery and equipment includes the cost of the optimised and major shutdown which are amortised over a period of 3 years and 6 years, respectively.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and value in use.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the consolidated statement of profit or loss in the year the asset is derecognised.

The asset’s residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end.

Capital work-in-progress will be transferred to the respective classes of property, plant and equipment when the asset is ready for its intended used.

Project under development Project under development is stated at cost less any impairment in value and will be transferred to

property, plant and equipment when the asset is ready for its intended use by the management to respective category.

Catalysts Catalysts are initially recorded at cost. Subsequently, they are measured at cost less accumulated

amortisation and any impairment in value. Catalysts are amortised over the estimated useful lives of 1 to 12 years. Catalysts not in use at the plant are kept under inventories and stated at the lower of cost and net realisable value.

60

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

63

3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Intangible asset – license fee The license fee is stated at cost less accumulated amortisation and any impairment in value. Amortisation

is calculated on a straight line basis over a period of 25 years.

Inventories Inventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred

in bringing each product to its present location and condition, as follows:

Packing materials, chemicals, supplies and spare parts

– weighted average purchase cost

Finished goods – weighted average cost of direct materials, direct labor, other direct costs, plus attributable overheads based on normal level of capacity.

Net realisable value is based on estimated selling price less any further costs expected to be incurred on completion and disposal.

Financial assets Accounts receivable Accounts receivable are stated at original invoice amount less a provision for any uncollectible amounts.

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Cash and cash equivalents Cash and cash equivalents comprise cash on hand, bank balances and short term deposits with an

original maturity of three months or less, net of bank overdraft, if any.

Impairmentanduncollectibilityoffinancialassets An assessment is made at each reporting date to determine whether there is objective evidence that a

specific financial asset may be impaired. If such evidence exists, any impairment loss is recognised in the consolidated statement of profit or loss. Impairment is determined as follows:

a) For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment loss previously recognised in the consolidated statement of profit or loss;

b) For assets carried at cost, impairment is the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset;

c) For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future cash flows discounted at the original effective interest rate.

Derecognitionoffinancialassets The Group derecognises a financial asset only when the contractual rights to the cash flows from the

asset expire or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in consolidated statement of profit or loss.

3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial liabilities and equity instruments issued by the Group Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity

in accordance with the substance of the contractual arrangement.

Financial liabilities Interest bearing loan Interest bearing loan is recognised initially at fair value of the amounts borrowed, less directly attributable

transaction costs. Subsequent to initial recognition, the loan is measured at amortised cost using the effective interest method, with any differences between the cost and final settlement values being recognised in the consolidated statement of profit or loss over the period of the loan. Installments due within one year at amortised cost are shown as a current liability. The costs of raising finance applicable to amounts already drawn down are amortised over the period of the loan using the effective yield method. Gains or losses are recognised in the consolidated statement of profit or loss when the liabilities are derecognised.

Accounts payable and accruals Liabilities are recognised for amounts to be paid in the future for goods or services received, whether

billed by the supplier or not.

Derecognition of financial assets and liabilities Financial assets A financial asset (or, where applicable a part of a financial asset or part of a Company of similar financial

assets) is derecognised when: • The rights to receive cash flows from the asset have expired • The Group has transferred its rights to receive cash flows from the asset or has assumed an

obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset, is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or

expires.

Borrowing costs Borrowing costs directly attributable to the acquisition or construction or production of an asset that

necessarily takes a substantial period of time for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

62

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

65

3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Employees’ end of service benefits The Group provides end of service benefits to its employees in accordance with employment contracts

and Qatari Labour Law. The entitlement to these benefits is based upon the employees’ final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment.

Under Law No. 24 of 2002 on Retirement and Pension, the Group makes contribution to a government pension scheme for Qatari employees calculated as a percentage of the Qatari employees' salaries. The Group's obligations are limited to these contributions, which are expensed on accrual basis.

Provisions Provisions are recognised when the Group has an obligation (legal or constructive) arising from a past

event, and the costs to settle the obligation are both probable and able to be reliably measured.

Foreign currencies Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date

of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. All differences are taken to consolidated statement of profit or loss.

Derivative financial instruments and hedging Derivative financial instruments are contracts, the value of which are derived from one or more underlying

financial instruments or indices, and include a call option to repurchase equity at a predetermined price.

The Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to the consolidated statement of profit or loss.

The fair value of interest rate swap contracts is calculated by reference to the market valuation of the swap contracts.

For the purpose of hedge accounting, hedges are classified as: • fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or

liability or unrecognised firm commitment (except for foreign currency risk); or • cash flow hedges when hedging exposure to variability in cash flows that is either attributable

to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting change in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Derivative financial instruments and hedging (Continued) Hedges which meet the criteria for hedge accounting are accounted for as follows:

Fair value hedges The change in the fair value of a hedging derivative is recognised in the consolidated statement of profit

or loss in finance costs. The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part of the carrying value of the hedged item and is also recognised in consolidated statement of profit or loss in finance costs.

Cashflowhedges The Group uses interest rate swap contracts to hedge its risk associated primarily with interest rate

fluctuations relating to its interest bearing loan. For cash flow hedges which meet the criteria for hedge accounting, the effective portion of the gain or loss on the hedging instrument is recognised directly as other comprehensive income in the cumulative changes in fair values, while any ineffective portion is recognised immediately in the consolidated statement of profit or loss.

Amounts recognised as other comprehensive income are transferred to the consolidated statement of profit or loss when the hedge transaction affects profit or loss such as when a forecasted transaction occur or is expired.

Revenue recognition Revenue from the sale of goods is measured at fair value of the consideration received or receivable,

net of returns and allowances, freight and insurance, trade discount and volume rebate. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer at which time all the following conditions are satisfied:

i) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

ii) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

iii) the amount of revenue can be measured reliably; iv) it is probable that the economic benefits associated with the transaction will flow to the Company;

and v) the costs incurred or to be incurred in respect of the transaction can be measured reliably

Sale of goods Sale of goods is recognised when the risk and rewards of the product is transferred to the buyers, which

is at the time of loading at the terminal in Mesaieed, State of Qatar. Consequent to agreement with Muntajat the revenue is initially recognised at provisional price which is adjusted to actuals in the month following the shipment. Revenue from sale of goods is recorded net of direct costs such as freight and insurance.

Interest income Interest income is recognised as the interest accrues.

Operating leases Leases where the lessor retains substantially all the risks and benefits of ownership of the asset

are classified as operating leases. Operating lease payments are recognised as an expense in the consolidated statement of profit or loss on a straight-line basis over the period of lease term.

Income Taxes Income tax is payable on taxable income for the year in accordance with Qatar Income Tax Regulations

by applying tax rate of 35% on foreign partner’s share of profit.

64

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

67

4. CRITICAL JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group’s accounting policies, which are described in note 3, management is

required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgments in applying accounting policies In the process of applying the Group’s accounting policies, which are described in Note 3 to the financial

statements, due to the nature of the Group’s operations, management has not made any significant judgments that have a material effect on the amounts recognized in the financial statements, except as mentioned below:

Cost of take or pay gas In preparing the financial statements, management has expensed-off the cost of take or pay gas in its

accounts as the conditions attached to “Make-up gas” are restrictive in nature. Further, the current level of operations does not indicate that these make-up quantities will be recouped within the time period mentioned in the contract and therefore on conservative basis these costs are expensed-off.

Consolidation and control over subsidiaries QMC and GFC are effectively controlled by QAFCO, both administratively as well as operationally. All

relevant activities of these two companies cannot be carried out without active involvement of QAFCO, therefore, these companies are assessed as subsidiaries and consolidated in accordance with IFRS 10.

Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation

uncertainty at the consolidated statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Impairment of tangible assets The Group’s management evaluates whether there is an indication that tangible assets have suffered

impairment in accordance with accounting policies stated in note 3. The recoverable amount of an asset is determined based on value-in-use method. This method uses estimated cash flow projections over the estimated useful life of the asset discounted using market rates.

Tangible assets useful lives The Group’s management determines the useful lives and related depreciation or amortization charge.

The depreciation or amortization charge for the year will change significantly if actual life is different from the estimated useful life of the asset.

Impairmentoffinancialassets The Group’s management reviews periodically items classified as receivables to assess whether a

provision for impairment should be recorded in the consolidated statement of profit or loss. Management estimates the amount and timing of future cash flows when determining the level of provisions required. Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty.

Hedgeeffectiveness Management reviews its hedging relationship between the interest rate swaps and the underlying loans

on a regular basis. The hedge was found to be highly effective. As a result, the fair value of the derivative is recorded in equity under hedging reserve.

5. CASH AND CASH EQUIVALENTS 2015 2014 QR QR

Bank balances 3,410,518 277,368 Call deposits 1,189,958,312 1,132,204,470 Fixed deposits 1,506,715,005 819,654,327 Cash in hand 104,577 49,707

2,700,188,412 1,952,185,872

Fixed deposits are placed with a local commercial bank for a period of three months or less and earn interest at the average rate of 0.66% (2014: 0.65%).

6. ACCOUNTS RECEIVABLE AND PREPAYMENTS 2015 2014 QR QR

Trade accounts receivable – 58,523 Prepayments and advances 98,988,540 98,725,364 Other receivables 1,517,179 3,489,764

100,505,719 102,273,651

Prepayments and advances represent staff loan and advances, prepaid rents and advances to suppliers.

At December 31, 2015, the ageing of unimpaired financial assets is as follows:

2015 2014 QR QR

i) Aging of past due but not impaired:

Above 120 days – 58,523

7. RELATED PARTY TRANSACTION Related parties represent associated companies, shareholders, directors and key management personnel

of the Group, and entities controlled, jointly controlled or significantly influenced by such parties.

a) Due from related parties 2015 2014 QR QR

Muntajat 470,388,257 824,078,724 Yara International A.S.A 132,438,807 173,124,496 Qatar Petroleum 26,218,470 113,270

629,045,534 997,316,490

66

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

69

7. RELATED PARTY TRANSACTION (CONTINUED)

b) Due to related parties 2015 2014 QR QR

Yara International A.S.A 2,273,498 2,153,009 Qatar Petroleum 273,674,563 255,485,008 Qatar Fuel Additives Company Ltd. (Q.S.C.C.) 2,985,807 3,761,905

278,933,868 261,399,922

c) Related party transactions A significant portion of the Group’s transactions have been entered with the shareholders. The

prices and terms of payment for these transactions are in accordance with specific agreements entered into, with the shareholders as follows:

a) Urea marketing agreement entered on June 18, 1994 with Yara International ASA to market prilled and granulated Urea produced by the Group in the regional markets of Europe, Americas, Africa and Asia, in return for a marketing commission. This initial agreement was replaced by the Urea marketing and off-take agreement dated September 5, 2001 and valid until December 31, 2016. Consequent to the agreement with Muntajat, this agreement was cancelled in 2013.

b) Gas sale and purchase agreement entered with QP, on June 18, 1994, for a period of 25 years (renewable), to purchase feed gas at rates, which are lower than the prevailing international market rates, to use for the production of Urea and Ammonia. This agreement was amended and gas prices were revised on and from March 31, 2013.

c) Gas sale and purchase agreement entered with QP, on June 1, 2010, for a period until January 1, 2034 (renewable), to purchase feed gas based on an agreed formula to arrive at the purchase price, to use for the production of Urea and Ammonia for QAFCO – 5 project. This agreement was amended and gas prices above certain threshold volume were revised on and from March 31, 2013.

d) Effective March 1, 2013, the Group has entered into an agreement with Muntajat, whereby the latter will provide all marketing and sales services to the Group.

Transactions with related parties included in the consolidated statement of profit or loss are as follows:

2015 2014 QR QR

Muntajat (QMDC) – Sales 6,627,313,105 7,278,789,389 – Marketing charges 219,500,467 248,967,972

Ultimate parent: Qatar Petroleum (“QP”) – Purchase of feed stock 2,657,246,688 2,426,402,616 – Purchase of Methanol 40,196,315 60,772,689 – Insurance 31,108,952 31,167,165 – Take or Pay Gas cost 30,237,780 38,537,878 – Land lease and staff accommodation lease charges 26,200,661 24,650,970 – Training costs 14,439,309 6,482,575

7. RELATED PARTY TRANSACTION (CONTINUED)

d) Compensation of key management personnel The remuneration of Directors and other members of key management during the year are as

follows: 2015 2014 QR QR

Short-term benefits 13,121,635 14,582,921 Directors’ remuneration 2,700,000 2,760,000 Qatari employees’ pension fund contribution 455,988 723,084

16,277,623 18,066,005

8. INVENTORIES 2015 2014 QR QR

Spare parts, consumables and supplies 582,287,177 513,309,022 Finished goods 271,768,811 263,912,702 Chemicals and catalysts 27,354,969 30,329,240 Goods in transit 33,431,864 42,874,062 Packing materials 5,499,465 3,093,769

920,342,286 853,518,795 Less: Provision for obsolete and slow-moving inventories (40,359,434) (51,480,836) Less: Loss on write- down of inventories (2,404,433) (966,496)

877,578,419 801,071,463

As at December 31, 2015, the sales price of Melamine inventory decreased below its cost price. As a result, inventory was measured using net realisable value, which represents the estimated selling price less any further costs expected to be incurred to make the sell.

Movements in the provision for obsolete and slow moving inventories are as follows: 2015 2014 QR QR

At January 1, 51,480,836 43,072,702 Provided (reversed) during the year (Note 21) (10,189,502) 11,657,969 Amounts written off (931,900) (3,249,835)

At December 31, 40,359,434 51,480,836

68

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

71

9. CATALYSTS 2015 2014 QR QR

Cost: At January 1, 110,964,654 107,070,457 Additions 9,175,352 3,894,197

At December 31, 120,140,006 110,964,654

Amortisation: At 1 January 74,636,109 59,821,087 Charge for the year 15,055,312 14,815,022

At December 31, 89,691,421 74,636,109

Net carrying amount:

At December 31, 30,448,585 36,328,545

10. INTANGIBLE ASSETS – LICENSE FEE This non-exclusive license fee pertains to amounts paid by the Group for using the technology to

produce melamine to design, engineer, construct, operate, modify and maintain the plant facilities. As at December 31, the license is still in the name of Qatar Fertiliser Company (Q.S.C.C.).

2015 2014 QR QR

Cost: At January 1, 57,637,200 57,637,200

At December 31, 57,637,200 57,637,200

Accumulated amortisation: At January 1, 9,029,828 6,724,340 Charge for the year 2,305,488 2,305,488

At December 31, 11,335,316 9,029,828

Net carrying amount:

At December 31, 46,301,884 48,607,372

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70

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended December 31, 2015

73

11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Notes: i) Buildings and foundations, which include the industrial plant, office site and administrative facilities

at Mesaieed are constructed on the land leased from Qatar Petroleum, except the staff housing complex, which is constructed on the land leased from the Industrial Development Technical Centre.

ii) Capital work-in-progress represent work on various ongoing projects as at the reporting date. iii) The depreciation charge has been allocated in the consolidated statement of profit or loss as follows:

2015 2014 QR QR

Cost of sales 1,063,442,316 1,055,636,734 Administrative expenses 21,176,834 16,726,718

1,084,619,150 1,072,363,452

12. ACCOUNTS PAYABLE AND ACCRUALS 2015 2014 QR QR

Trade accounts payable 86,490,106 95,718,652 Other payables and accruals 328,051,404 332,623,786

414,541,510 428,342,438

13. INTEREST BEARING LOANS 2015 2014 QR QR

Term loan (i) 2,693,621,840 2,984,836,400 Less: Deferred arrangement fees (ii) (9,300,764) (14,736,096)

2,684,321,076 2,970,100,304

Presented in the consolidated statement of financial position as follows: 2015 2014 QR QR

Current portion 286,302,209 285,779,228 Non-current portion 2,398,018,867 2,684,321,076

2,684,321,076 2,970,100,304

i) The Group has entered into an agreement with a consortium of banks led by HSBC as the facility agent on December 2, 2007, to obtain a term loan facility amounting to USD 1.1 billion and a revolving facility of USD 500 million to finance the construction of QAFCO-5 project, which was completed on February 29, 2012. The loan bears interest at LIBOR plus an applicable margin. The Group has entered into two interest rate swaps contracts to hedge its risk associated with interest rate fluctuation on the term loan as fully explained in Note 14. The repayment of the term loan commenced after 4 years from the date of the agreement and is repayable in 12 equated semi-annual installments of USD 40 million each with one final bullet payment of USD 620 million, the last installment is due in December 2017.

Presented in the consolidated statement of financial position as follows: ii) The finance costs associated with obtaining the above loan represent arrangement, underwriting,

participation and agency fees paid (“arrangement fees”). Movements in the arrangement fees are as follows:

2015 2014 QR QR

Balance at the beginning of the year 14,736,096 20,693,451 Amortised during the year (5,435,332) (5,957,355)

Balance at the end of the year 9,300,764 14,736,096

The amortised arrangement fees was capitalised in the capital work-in-progress as borrowing costs until February 29, 2012 i.e. the date of capitalization of QAFCO-5 project. Subsequent amortisations are presented in the consolidated statement of profit or loss under interest expense.

72

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

75

14. OTHER FINANCIAL LIABILITIES 2015 2014 QR QR

Cashflowhedges: Interest rate swaps At January 1, 213,717,736 301,273,025 Unrealised gain on cash flow hedges (77,405,483) (87,555,289)

At December 31, 136,312,253 213,717,736

Presented in the consolidated statement of financial position as follows: 2015 2014 QR QR

Current portion 87,391,521 107,314,147 Non-current portion 48,920,732 106,403,589

136,312,253 213,717,736

The maturity profile of the derivatives is as follows:

Positive Negative Notional 3 – 12 1 – 5 fair value fair value amount months years QR QR QR QR QR “Mn” “Mn” “Mn” “Mn” “Mn”

At December 31, 2015

Interest rate swaps – 136 2,694 291 2,403

Positive Negative Notional 3 – 12 1 – 5 fair value fair value amount months years QR QR QR QR QR “Mn” “Mn” “Mn” “Mn” “Mn”

At December 31, 2014

Interest rate swaps – 213 2,984 291 2,693

Other financial liabilities represent the fair value of two interest rate swap contracts designated as cash flow hedges to hedge the floating interest rate exposure on its interest bearing loan until December 5, 2017. The terms of the interest rate swap contracts have been negotiated to match the terms of the commitments of the term loan. At December 31, 2015, the measurement of the fair values of the hedges resulted in a negative amount of QR 136,312,253 (2014: QR 213,717,736) which has been recognized in the other comprehensive income as changes in fair values and as derivative liabilities.

15. EMPLOYEES' END OF SERVICE BENEFITS The Group provides for end of service benefits for its employees. Movements in the provision are as

follows: 2015 2014 QR QR

At January 1, 174,552,656 149,387,020 Provision during the year 28,608,380 32,273,120 End of service benefits paid (16,198,432) (7,107,484)

186,962,604 174,552,656 Less: Advances against end of service benefits (81,205,308) (74,263,328)

At December 31, 105,757,296 100,289,328

16. SHARE CAPITAL 2015 2014 QR QR

Authorised, issued and fully paid:

10,000,000 ordinary shares of QR 100 each 1,000,000,000 1,000,000,000

17. LEGAL RESERVE As required by the Company’s Articles of Association, 10% of the profit for the year should be transferred

to legal reserve until the reserve equals 20% of the issued share capital. The Company resolved to discontinue such annual transfers since the reserve reached the required amount. In the books of the subsidiary companies, as required by Qatar Commercial Companies Law and the subsidiary companies’ Articles of Association, 10% of the profit for the year is required to be transferred to a legal reserve until the reserve equals 50% of the issued capital. The current year transfers represent only the subsidiary company’s share of transfers to the legal reserve.

The reserve is not available for distribution except in the circumstances stipulated in the above law and the Company’s and subsidiary companies’ Articles of Association.

18. DIVIDENDS PAID AND PROPOSED In 2015, a cash dividend of QR 80 per share aggregating to QR 800,000,000 for the year 2014 was

declared and paid (2014: QR 130 per share aggregating to QR 1,300,000,000 for the year 2013).

The Board of Directors has proposed and paid interim cash dividend of QR 60 per share aggregating to QR 600,000,000 for the year 2015 (2014: 1,000,000,000). Further, the Board of Directors in their meeting dated January 27, 2016 recommended management’s proposal to pay QR 1,100,000,000 as final dividend for the year 2015.

On January 26, 2016, the Board of Directors of the Company’s subsidiary, Gulf Formaldehyde Company (Q.S.C.C.) approved a dividend of QR 8,000,000 for the year 2015 (2014: QR 800,000).

74

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

77

19. INCOME TAX PAYABLE In accordance with the regulations of the Qatar Public Revenues and Taxes Department, the Group

is subject to corporate income tax in the State of Qatar for the share of profit attributable to foreign shareholders excluding exempted profit of QAFCO Plant 4 until June 26, 2014.

For the purpose of these consolidated financial statements, the income tax obligations of the Group have been included as amounts due from foreign shareholders given that such shareholders are fully liable for the tax payment.

Reconciliation between income tax and the product of accounting profit multiplied by the effective tax rate for the year is as follows:

2015 2014 QR QR

Profit attributable to QAFCO Plants 1, 2, 3, 5 and 6 1,477,133,289 1,438,285,138 Profit attributable to QAFCO Plant 4 (Exempt from tax) – 875,426,271 Profit/(loss) of Qatar Melamine Group (Q.S.C.C.) (55,233,881) (10,046,565) Profit of Gulf Formaldehyde Group (S.A.Q.) (“GFC”) 8,672,519 5,040,312

Accounting profit 1,430,571,927 2,308,705,156

Accounting profit liable for taxation 1,430,571,927 1,433,278,885

Expenses that are not deductible in determining taxable profit: Accounting depreciation (excluding Plant 4) 1,015,301,116 1,033,430,245 Provision for obsolete and slow-moving inventories (excluding Plant 4) – 10,681,470 Provision for donation – 9,166,667

1,015,301,116 1,053,278,382

Adjustments in determining taxable profit: Tax depreciation (973,747,165) (1,011,859,650) Loss/ (gain) on disposal (1,049) 1,416 Write-off of slow-moving inventories (11,121,402) (3,456,429) Costs related to exempt income – 498,975,930 Carried forward loss adjusted – (136,550,411)

(984,869,616) (652,889,144)

Taxable profit 1,461,003,427 1,833,668,123

Effective tax rate for the share of profit attributable to foreign shareholders 9.06% 9.44%

Total income tax payable 132,438,807 173,124,496

20. SALES 2015 2014 QR QR

Urea sales 5,481,450,638 6,023,044,556 Ammonia sales 927,101,375 1,003,657,563 Melamine sales 212,050,367 234,412,048 UF sales 6,710,725 17,675,222

6,627,313,105 7,278,789,389

21. COST OF SALES 2015 2014 QR QR

Raw materials consumed 2,735,998,521 2,431,329,681 Depreciation 972,686,706 1,055,636,734 Salaries, wages and related expenses 328,720,884 305,141,346 Spares and equipment consumed 65,738,644 63,593,207 License fee amortisation 2,305,488 2,305,488 Insurance, rents and fees 63,815,058 37,886,334 External services 38,629,557 28,899,820 Amortisation of catalysts 15,055,312 14,815,022 Provision for obsolete and slow moving inventories – 11,657,969 Shutdown costs expensed 92,362,811 1,212,796 Others 2,733,729 4,887,507

4,318,046,710 3,957,365,904

22. OTHER INCOME 2015 2014 QR QR

Reversal of excess provisions 21,013,695 38,973,701 Club contribution 21,370,456 2,000,716 Interest income 8,915,234 5,411,986 Sale of gas 876,201 3,120,309 Rental income – 75,136 Miscellaneous income 8,094,051 14,964,477

60,269,637 64,546,325

76

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

79

23. SELLING AND DISTRIBUTION COSTS 2015 2014 QR QR

Marketing Charge 198,147,977 219,537,265 Other sales expenses 43,262,323 54,431,055

241,410,300 273,968,320

24. ADMINISTRATIVE EXPENSES 2015 2014 QR QR

Salaries and related expenses 318,773,718 329,051,555 External services 88,206,574 97,917,712 Insurance, rents and fees 48,158,482 82,030,853 Cost of take or pay gas 17,067,004 38,537,878 Spares and equipment 38,693,312 47,486,880 Depreciation 21,176,834 16,726,718 Public relations and donations 10,391,607 20,927,214 Travel expenses 6,526,707 5,667,148 Communication expenses 4,579,470 6,206,409 Board of Directors remuneration 2,700,000 2,760,000 Loss on sale of assets – 1,416 Bad debt written off – 240,316 Miscellaneous expenses 7,690,137 6,431,325

563,963,845 653,985,424

25. FINANCE COSTS 2015 2014 QR QR

Interest on interest rate swap 105,669,664 118,317,208 Interest on loans (Note 13) 30,847,325 31,905,952 Amortisation of deferred arrangement fees (Note 13) 5,435,332 5,957,356

141,952,321 156,180,516

26. FAIR VALUE OF FINANCIAL INSTRUMENTS Set out below is a comparison by class of the carrying amounts and fair value of the Group's financial

instruments that are carried in the consolidated financial statements.

Carrying amount Fair value

2015 2014 2015 2014 QR QR QR QR

Financial assets Trade and other receivables 1,517,180 3,548,287 1,517,180 3,548,287 Due from related parties 629,045,534 997,316,490 629,045,534 997,316,490 Bank balances and cash 2,700,188,412 1,952,185,872 2,700,188,412 1,952,185,872

Total 3,330,751,126 2,953,050,649 3,330,751,126 2,953,050,649

Financial liabilities Interest bearing loans Floating rate borrowings 2,693,621,840 2,984,836,400 2,693,621,840 2,984,836,400 Trade and other payables 86,490,106 95,718,652 86,490,106 95,718,652 Due to related parties 278,933,868 261,399,922 278,933,868 261,399,922 Other financial liability: Interest rate swaps 136,312,253 213,717,736 136,312,253 213,717,736

Total 3,195,358,067 3,555,672,710 3,195,358,067 3,555,672,710

The fair value of the financial assets and liabilities are amounts at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values: a) Bank balances and cash, trade and other receivables and trade and other payables approximate

their carrying amounts largely due to the short-term maturities of these instruments. b) Interest bearing loan is estimated based on discounted cash flows using interest rate for items with

similar terms and characteristics. c) The Group enters into derivative financial instruments, principally with financial institutions with

investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are interest rate swaps. The most frequently applied valuation techniques include swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties and interest rate curves.

As at December 31, the marked to market value of derivative asset position is net of a credit valuation adjustment attributable to derivative counterparty default risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationship and other financial instruments recognised at fair value.

78

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

81

26. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial

instruments by valuation technique:

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2 : other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3 : techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

At December 31, the Group held the following financial instruments measured at fair value:

2015 Level 1 Level 2 Level 3 QR QR QR QR

Liabilities measured at fair value

Interest rate swaps 136,312,253 – 136,312,253 –

2014 Level 1 Level 2 Level 3 QR QR QR QR

Liabilities measured at fair value

Interest rate swaps 213,717,736 – 213,717,736 –

During the reporting years ended December 31, 2015 and 2014, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

27. FINANCIAL RISK MANAGEMENT Objectives and policies The Group's principal financial liabilities comprise interest bearing loan, trade accounts payable and

amounts due to related parties. The main purpose of these financial liabilities is to raise finance for the Group's operations. The Group has various financial assets such as trade accounts receivable, amounts due from related parties and cash and bank balances, which arise directly from its operations.

The main risks arising from the Group's financial instruments are cash flow interest rate risk, credit risk, liquidity risk and foreign currency risk. The Board of Directors review and agree on policies for managing each of these risks which are summarised below.

27. FINANCIAL RISK MANAGEMENT (CONTINUED) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

due to changes in market interest rates.

The Group is exposed to interest rate risk on its interest bearing assets and liabilities (short term deposits and term loan).

At reporting date, the interest rate profile of the Group's interest bearing financial instruments is as follows:

2015 2014 QR QR

Floating interest rate instruments: Fixed/Call deposits 2,696,673,317 1,951,858,797 Interest bearing loan (2,693,621,840) (2,984,836,400)

3,051,477 (1,032,977,603) The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's

financial assets and liabilities with floating interest rates and fixed interest instruments. To manage the risk of changes in floating interest rate on its interest bearing loan, the Group has entered into interest rate swaps. Under the swap agreements, the Group will pay an agreed fixed interest rate and receive a floating interest rate.

The following table demonstrates the sensitivity of the consolidated statement of profit or loss (due to fixed/call deposits) and equity (due to interest rate swaps) to reasonably possible changes in interest rates by 25 basis points, with all other variables held constant. The sensitivity of the consolidated statement of profit or loss and equity is the effect of the assumed changes in interest rates for one year, based on the floating rate financial assets and financial liabilities held at December 31, 2015. The effect of decreases in interest rates is expected to be equal and opposite to the effect of the increases shown.

Profit Equity +/-25b.p. +/-25 b. p. QR QR

At December 31, 2015 Variable rate instruments Fixed/Call deposits 6,741,683 – Interest rate swaps – 6,734,055

6,741,683 6,734,055 Profit Equity +/-25b.p. +/-25 b. p. QR QR

At December 31, 2014 Variable rate instruments Fixed/Call deposits 4,879,647 – Interest rate swaps – 7,462,091

4,879,647 7,462,091

80

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

83

27. FINANCIAL RISK MANAGEMENT (CONTINUED) Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and

cause the other party to incur a financial loss. The Group's exposure to credit risk is as indicated by the carrying amount of its assets which consist primarily of account receivables, bank balances and derivatives.

The Group seeks to limit its credit risk with respect to banks by only dealing with reputed financial institutions. With respect to customers, all sales are made to Muntajat and when Muntajat collects from its customers’, net back price is transferred to the Group after deducting marketing fees and other selling expenses. Muntajat assumes all credit risks for sales made on behalf of the producer. As at the year-end 99% of the outstanding receivable balance was due from Muntajat.

With respect to credit risk arising from the financial assets of the Group, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments as follows:

2015 2014 QR QR

Bank balances 2,700,083,835 1,952,136,166 Amounts due from related parties 629,045,534 997,316,490 Trade accounts receivable – 58,523 Other receivables 1,517,180 3,489,764

3,330,646,549 2,953,000,943

Liquidity risk Liquidity risk is the risk that the Group will not be able to meet financial obligations as they fall due.

The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The Group limits its liquidity risk by maintaining adequate funds in the banks and ensuring bank facilities are available. The Group's terms of sales require amounts to be paid once Muntajat collects the amount from its customers. Trade payables are normally settled within 45 - 60 days from the date of purchase.

Less than 3 to 12 1 to 5 Total 3 months Months Years QR QR QR QR

At December 31, 2015 Trade accounts payable 86,490,106 -- -- 86,490,106 Amounts due to related parties 278,933,868 -- -- 278,933,868 Derivative financial liability -- 87,391,521 48,920,732 136,312,253 Interest bearing loan- at gross -- 326,649,781 2,434,358,481 2,761,008,262

Total 365,423,974 414,041,302 2,483,279,213 3,262,744,489

27. FINANCIAL RISK MANAGEMENT (CONTINUED) Liquidity risk (Continued)

Less than 3 to 12 1 to 5 Total 3 months Months Years QR QR QR QR

At December 31, 2014 Trade accounts payable 95,718,652 -- -- 95,718,652 Amounts due to related parties 261,399,922 -- -- 261,399,922 Derivative financial liability -- 107,314,147 106,403,589 213,717,736 Interest bearing loan –at gross -- 320,000,290 2,761,008,261 3,081,008,551

Total 357,118,574 427,314,437 2,867,411,850 3,651,844,861

Currency risk Currency risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate

due to changes in foreign exchange rates.

As the Qatari Riyal is pegged to the US Dollars, the balances in US Dollars are not considered to represent significant currency risk.

The table below indicates the Group's foreign currency exposure as at December 31, as a result of its monetary assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the Qatari Riyal currency rate against the GBP and Euro, with all other variables held constant, on the consolidated statement of profit or loss (due to the fair value of currency sensitive monetary assets and liabilities). The effect of decrease in currency rates is expected to be equal and opposite to the effect of the increase shown.

Changes in currency rate to the Qatari Riyal Effect on profit QR

2015 GBP +/-5% 25,270 Euro +/-5% 471,791

2014 GBP +/-5% 5,286 Euro +/-5% 442,321

Capital management The Group manages its capital to ensure that it will be able to continue as a going concern while

maximising the return to shareholders through the optimisation of the debt and equity balances.

The Group makes adjustments to its capital structure, in light of changes in economic and business conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, or issue new shares.

Capital includes share capital, legal reserve, and retained earnings and is measured at QR 15,499,051,312 at December 31, 2015 (2014: QR 15,371,798,786).

82

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2015 For the year ended December 31, 2015

28. EXPENDITURE COMMITMENTS 2015 2014 QR QR

a) Capital expenditure commitments: Estimated capital expenditure budgeted and approved for at the reporting date but not provided for:

Other contract commitments 571,349,789 295,695,351 2015 2014 QR QR

b) Operating lease commitments: Future minimum lease payments: Within one year 78,875,842 60,991,550 After one year but not more than five years 92,628,515 92,837,294 More than five years 67,680,878 75,051,858

Total operating lease expenditure contracted for at the reporting date 239,185,235 228,880,702

29. CONTINGENCIES At December 31, the Group had the following contingent liabilities arising in the normal course from

which it anticipates that no material liabilities will arise: 2015 2014 QR QR

Letters of credit 9,807,454 2,116,529 Bank and other guarantees 772,992 772,992

10,580,446 2,889,521

84

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended December 31, 2015