Annual Report 201448
Annual Report 2014 49
QATAR FERTILISER COMPANY (Q.S.C.C.)
DOHA - QATAR
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED DECEMBER 31, 2014
INDEX Page
Independent auditor’s report --
Consolidated statement of financial position 1
Consolidated statement of profit or loss 2
Consolidated statement of profit or loss and other comprehensive income 3
Consolidated statement of changes in equity 4
Consolidated statement of cash flows 5-6
Notes to the consolidated financial statements 7 to 38
Annual Report 201450
To the Shareholders
Qatar Fertiliser Company (Q.S.C.C.)
Doha - Qatar
Report on the Consolidated Financial Statements
WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofQatarFertiliserCompany(Q.S.C.C.) (the “Company’’) and its subsidiaries(together referred to as the “Group”), whichcomprisetheconsolidatedstatementoffinancialposition as at December 31, 2014 and theconsolidatedstatementsofprofitorloss,profitorloss and other comprehensive income, changesinequityandcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesand other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Managementisresponsibleforthepreparationandfairpresentationof theseconsolidatedfinancialstatements in accordance with InternationalFinancialReportingStandardsandtheapplicableprovisionsofQatarCommercialCompaniesLaw,and for such internal control as managementdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrom material misstatement, whether due tofraudorerror.
Auditor’s Responsibility
Our responsibility is to express an opinion ontheseconsolidatedfinancialstatementsbasedonouraudit.Weconductedourauditinaccordancewith InternationalStandardsonAuditing.Thosestandards require that we comply with ethicalrequirements and plan and perform the auditto obtain reasonable assurance whether theconsolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures toobtain audit evidence about the amountsand disclosures in the consolidated financialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentof the risks of material misstatement of theconsolidatedfinancialstatements,whetherdueto
INDEPENDENT AUDITOR’S REPORT
fraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationand fairpresentationofthe consolidated financial statements in ordertodesignauditproceduresthatareappropriatein the circumstances, but not for the purposeof expressing an opinion on the effectivenessof the entity’s internal control. An audit alsoincludes evaluating the appropriateness ofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthe consolidated financial statements.
We believe that the audit evidence we haveobtainedissufficientandappropriatetoprovidea basis for our audit opinion.
Opinion
In our opinion, the accompanying consolidatedfinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheGroupasatDecember31,2014anditsfinancialperformanceand its cash flows for the year then ended inaccordancewithInternationalFinancialReportingStandards.
Other Legal and Regulatory Requirements
Wearealsooftheopinionthatproperbooksofaccount were maintained by the Company andphysical inventory verification has been dulycarriedout.Wehaveobtainedalltheinformationandexplanationswhichweconsiderednecessaryfor the purpose of our audit. To the best ofourknowledgeandbelief andaccording to theinformation given to us, no contraventions ofthe applicable provisions of Qatar CommercialCompaniesLawNo.5of2002andtheCompany’sArticles of Association were committed duringthe year which would materially affect theGroup’s activities or its financial position.
Doha–Qatar ForDeloitte&Touche--,2015 QatarBranch
Muhammad Bahemia Partner LicenseNo.103
Annual Report 2014 51
Notes 2014 2013
QR QRASSETS
Current assets
Bankbalancesandcash 5 1,952,185,872 1,708,461,733
Accountsreceivableandprepayments 6 102,273,651 81,250,255
Duefromrelatedparties 7(a) 997,316,490 1,170,663,298
Inventories 8 801,071,463 528,592,017
Total current assets 3,852,847,476 3,488,967,303
Non-current assets
Catalysts 9 36,328,545 47,249,370
Intangibleasset–licensefee 10 48,607,372 50,912,860
Property,plantandequipment 11 16,064,444,324 16,840,764,698
Total non-current assets 16,149,380,241 16,938,926,928
TOTAL ASSETS 20,002,227,717 20,427,894,231
EQUITY AND LIABILITIES
Current liabilities
Accountspayableandaccruals 12 428,342,438 533,292,211
Duetorelatedparties 7(b) 261,399,922 279,049,553
Interestbearingloans 13 285,779,228 285,257,205
Otherfinancialliabilities 14 107,314,147 117,967,225
Incometaxpayable 19 173,124,496 213,660,390
Total current liabilities 1,255,960,231 1,429,226,584
Non-current liabilities
Interestbearingloans 13 2,684,321,076 2,970,100,304
Otherfinancialliabilities 14 106,403,589 183,305,800
Employees’endofservicebenefits 15 100,289,328 81,929,350
Total non-current liabilities 2,891,013,993 3,235,335,454
Total liabilities 4,146,974,224 4,664,562,038
Equity
Sharecapital 16 1,000,000,000 1,000,000,000
Legalreserve 17 209,220,824 208,716,793
Cumulativechangesinfairvalues (213,717,736) (301,273,025)
Retainedearnings 14,376,295,698 14,369,327,184
Equity attributable to equity holders of the parent 15,371,798,786 15,276,770,952
Non-controllinginterest 483,454,707 486,561,241
Total equity 15,855,253,493 15,763,332,193
TOTAL EQUITY AND LIABILITIES 20,002,227,717 20,427,894,231
QATAR FERTILISER COMPANY (Q.S.C.C.)CONSOLIDATEDSTATEMENTOFFINANCIALPOSITIONAsatDecember31,2014
Abdul Aziz Ahmed Al-MalkiChairmanoftheBoard
Khalifa Abdullah Al-SowaidiChiefExecutiveOfficer
THEACCOMPANYINGNOTESAREANINTEGRALPARTOFTHESECONSOLIDATEDFINANCIALSTATEMENTS.
Annual Report 201452
Notes 2014 2013
QR QR
Sales 20 7,278,789,389 8,193,373,837
Costofsales 21 (3,957,365,904) (3,988,896,653)
GROSS PROFIT 3,321,423,485 4,204,477,184
Otherincome 22 64,546,325 109,014,987
Sellinganddistributioncosts 23 (273,968,320) (327,046,908)
Administrativeexpenses 24 (653,985,424) (590,582,476)
Financecosts 25 (156,180,516) (167,052,164)
Gainonforeigncurrencyexchange 3,130,461 2,165,277
PROFIT FOR THE YEAR 2,304,966,011 3,230,975,900
Attributableto:
Equityholdersoftheparent 2,307,472,545 3,226,794,007
Non-controllinginterest (2,506,534) 4,181,893
2,304,966,011 3,230,975,900
QATAR FERTILISER COMPANY (Q.S.C.C.)CONSOLIDATEDSTATEMENTOFPROFITORLOSSFortheyearendedDecember31,2014
THEACCOMPANYINGNOTESAREANINTEGRALPARTOFTHESECONSOLIDATEDFINANCIALSTATEMENTS.
Annual Report 2014 53
QATAR FERTILISER COMPANY (Q.S.C.C.)CONSOLIDATEDSTATEMENTOFPROFITANDOOTHERCOMPREHENSIVEINCOMEFortheyearendedDecember31,2014
2014 2013
QR QR
Profitfortheyear 2,304,966,011 3,230,975,900
Other comprehensive income Items that may be reclassified subsequently to statement of profit or loss
Netunrealisedgainoncashflowhedges 87,555,289 155,150,515
Total comprehensive income for the year 2,392,521,300 3,386,126,415
Attributableto: Equityholdersoftheparent 2,395,027,834 3,381,944,522Non-controllinginterest (2,506,534) 4,181,893
2,392,521,300 3,386,126,415
THEACCOMPANYINGNOTESAREANINTEGRALPARTOFTHESECONSOLIDATEDFINANCIALSTATEMENTS.
Annual Report 201454
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Annual Report 2014 55
2014 2013
QR. QROPERATING ACTIVITIES
Profitfortheyear 2,304,966,011 3,230,975,900
Adjustmentsfor: Depreciationofproperty,plantandequipment 1,072,363,452 1,017,873,540Interestexpense 156,180,516 167,052,164Amortisationofcatalysts 14,815,022 10,583,916Amortisationofdeferredarrangementfee 5,957,355 6,478,428Interestincome (5,411,986) (8,541,894)Amortisationoflicensefee 2,305,488 2,305,488Provisionforobsoleteandslowmovinginventories 11,657,969 13,763,317Baddebtwrittenoff 240,316 --Lossonwrite-downofinventories (118,852) 245,612Provisionforemployees’endofservicebenefits 32,273,120 23,575,856Property,plantandequipmentwritten-off 1,416 1,079,807
3,595,229,827 4,465,392,134
Working capital changes: Accountsreceivableandprepayments (21,263,712) 697,570,681Duefromrelatedparties 173,346,808 (365,771,796)Inventories (284,018,563) (6,782,861)Accountspayableandaccruals (145,485,667) (226,648,274)Duetorelatedparties (17,649,631) (185,562,407)
Cash flows from operating activities 3,300,159,062 4,378,197,477Interestpaid (156,180,516) (167,052,164)Employees’endofservicebenefitspaid (7,107,484) (11,488,600)Advanceagainstemployees’endofservicebenefits (6,805,658) (2,978,417)
Netcashflowsgeneratedfromoperatingactivities 3,130,065,404 4,196,678,296 INVESTING ACTIVITIES Additionstoproperty,plantandequipment (296,044,494) (325,130,789)Interestincomereceived 5,411,986 8,541,894Additionstocatalysts (3,894,197) (27,308,537)
Net cash flows used in investing activities (294,526,705) (343,897,432)
FINANCING ACTIVITIES Dividendspaidtoequityholdersoftheparent (1,300,000,000) (2,900,000,000)Interimdividendspaid (1,000,000,000) (1,700,000,000)Dividendspaidtonon-controllinginterest (600,000) --Repaymentofinterestbearingloans (291,214,560) (291,214,560)
Net cash flows used in from financing activities (2,591,814,560) (4,891,214,560) Increase/(decrease) in cash and cash equivalents 243,724,139 (1,038,433,696)Cashandcashequivalentsatthebeginningoftheyear 1,708,461,733 2,746,895,429
Cash and cash equivalents at the end of the year 1,952,185,872 1,708,461,733
QATAR FERTILISER COMPANY (Q.S.C.C.)CONSOLIDATEDSTATEMENTOFCASHFLOWSFortheyearendedDecember31,2014
THEACCOMPANYINGNOTESAREANINTEGRALPARTOFTHESECONSOLIDATEDFINANCIALSTATEMENTS.
Annual Report 201456
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
1 CORPORATE INFORMATION
QatarFertiliserCompany(Q.S.C.C.)(the“Company”)wasincorporatedonSeptember29,1969asaClosedQatariShareholdingCompany(“Q.S.C.C.”)intheStateofQatarundercommercialregistrationno.29.TheCompanyisengagedintheproductionandsaleofUreaandAmmonia.TheCompany’sregisteredofficeisatP.O.Box50001,Mesaieed,StateofQatar.TheconsolidatedfinancialstatementsoftheCompanyasatandfortheyearendedDecember31,2014comprisetheCompanyanditssub-sidiaries(togetherreferredtoasthe“Group”).
TheshareholdersandtheirshareholdinginterestsintheCompanyareasfollows:
Name of the shareholder Country of incorporation Interest
IndustriesQatarQ.S.C.(“IQ”) Qatar 75%
YaraNederlandsB.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.
PursuattoDecreeLaw11of2012oftheStateofQatar,QatarChemicalandPetrochemicalMarketingandDistributionCompanyQ.J.S.C.(“Muntajat”)wasestablishedintheyear2012tocarryoutmarketinganddistributionactivitiesofallregulatedproducts,exceptforthoseexpresslyexcludedbyMuntajatortheGovernmentinaccordancewiththelaw,oftheproducer(s).Inaccordancewiththedecree,theGrouphasentered intoOfftakeRequirements(Liquids)(“ORL”)agreementswithMuntajat tocarryoutallmarketinganddistributionactivitiesonbehalfoftheGroupforanagreedmarketingfee(prod-uct-wise) and reimbursement of the selling expenses. The arrangement with Muntajat commencedfromMarch1,2013.
TheconsolidatedfinancialstatementsoftheGroupfortheyearendedDecember31,2014wereautho-risedforissueinaccordancewitharesolutionoftheBoardofDirectorsonJanuary29,2015.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL RE-PORTING STANDARDS (IFRSs)
2.1 New and revised IFRSs affecting amounts reported in the financial statements
ThefollowingaretherevisedIFRSsthatwereeffectiveinthecurrentyearandhavebeenappliedinthepreparationofthesefinancialstatements:
(i) Revised Standards
(ii)
EffectiveforannualperiodsbeginningonorafterJanuary1,2014
• IAS32(Revised) FinancialInstruments:Presentation–Amendmentstoclarify existingapplicationissuesrelatingtotheoffsettingrequirements.
• IFRS10,IFRS12andIAS27 Amendmentstointroduceanexceptionfromtherequirementto(Revised) consolidatesubsidiariesforaninvestmententity.
• IAS36(Revised) Amendmentsarisingfromrecoverableamountdisclosuresfor non-financialassets.
• IAS39(Revised) AmendsIAS39FinancialInstruments:Recognitionand Measurementtomakeitclearthatthereisnoneedtodiscontinue hedgeaccountingifahedgingderivativeisnovated,provided certaincriteriaaremet.
Annual Report 2014 57
2.1NewandrevisedIFRSsaffectingamountsreportedinthefinancialstatements(continued)
(ii) New Interpretation:
EffectiveforannualperiodsbeginningonorafterJanuary1,2014
• IFRIC21 Levies
TheadoptionofthesenewandrevisedstandardshadnosignificanteffectonthefinancialstatementsoftheGroupfortheyearendedDecember31,2014,otherthancertainpresentationanddisclosurechanges.
2.2 New and revised IFRSs in issue but not yet effective (Early adoption allowed)
TheGrouphasnotappliedthefollowingnewandrevisedIFRSsthathavebeenissuedbutarenotyeteffective:
(i) New Standards:
Effective for annual periods beginning on or after January 1, 2016
• IFRS14 RegulatoryDeferralAccounts.
Effective for annual periods beginning on or after January 1, 2017
• IFRS15 RevenuefromContractswithCustomers.
Effective for annual periods beginning on or after January 1, 2018
• IFRS9 FinancialInstruments.
(iii) Revised Standards:
Effective for annual periods beginning on or after July 1, 2014
• IAS19(Revised) Amendmentstoclarifytherequirementsthatrelatetohow contributionsfromemployeesorthirdpartiesthatarelinkedto serviceshouldbeattributedtoperiodsofservice.
• AnnualimprovementstoIFRSs AmendmentstoissueclarificationsonIFRSs-IFRS2,IFRS3,2010-2012cycle IFRS8,IFRS13,IAS16,IAS24andIAS38.
• AnnualImprovements2011-2013 AmendmentstoissueclarificationsonIFRSs-IFRS1,IFRS3,Cycle IFRS13andIAS40.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)
2.2 New and revised IFRSs in issue but not yet effective (Early adoption allowed)
(ii) Revised Standards (continued):
Effective for annual periods beginning on or after January 1, 2016
• AnnualImprovements2012-2014Cycle
Amendmentstoissueclarificationsandaddadditional/specificguidancetoIFRS5,IFRS7,IAS19andIAS34.
• IFRS10&IAS28(Revised) Amendmentsregardingthesaleorcontributionofassetsbetweenaninvestoranditsassociateorjointventure
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201458
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
• IFRS11(Revised) Amendmentsregardingtheaccountingforacquisitionsofaninterestinajointoperation.
• IAS16(Revised) AmendmentsregardingtheclarificationofacceptablemethodsofdepreciationandamortizationandamendmentsbringingbearerplantsintothescopeofIAS16.
• IAS38(Revised) Amendmentsregardingtheclarificationofacceptablemethodsofdepreciationandamortization.
• IAS41(Revised) AmendmentsbringingbearerplantsintothescopeofIAS16.
Effective for annual periods beginning on or after January 1, 2016
• IAS27(Revised) Amendmentsreinstatingtheequitymethodasanaccountingoptionforinvestmentsininsubsidiaries,jointventuresandassociatesinanentity’sseparatefinancialstatements.
Effective for annual periods beginning on or after January 1, 2018 (on application of IFRS 9)
• IFRS7(Revised) FinancialInstrumentsDisclosures-AmendmentsrequiringdisclosuresabouttheinitialapplicationofIFRS9
• IAS39(Revised) AmendmentstopermitanentitytoelecttocontinuetoapplythehedgeaccountingrequirementsinIAS39forafairvaluehedgeoftheinterestrateexposureofaportionofaportfoliooffinancialassetsorfinancialliabilitieswhenIFRS9isapplied,andtoextendthefairvalueoptiontocertaincontractsthatmeetthe‘ownuse’scopeexception.
ManagementanticipatesthattheadoptionoftheseStandardsandInterpretationsinfutureperiodswillhavenomaterialfinancialimpactonthefinancialstatementsoftheGroupintheperiodofinitialapplication,otherthancertainpresentationanddisclosurechanges.
3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
TheconsolidatedfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(“IFRS”)andtheapplicableprovisionsofQatarcommercialCompanieslawNo.5of2002.
Basis of preparation
Theconsolidatedfinancialstatementshavebeenpreparedonthehistoricalcostconventionmodifiedtoincludethemeasurementatfairvalueofderivativefinancialinstruments.
TheseconsolidatedfinancialstatementsarepresentedinQatariRiyal(QR),whichistheGroup’spresentationcurrency.Theprincipalaccountingpoliciesaresetoutbelow.
Basis of consolidation
TheconsolidatedfinancialstatementsincorporatethefinancialstatementsoftheCompanyanditssubsidiaries(togetherreferredasthe“Group”).ControlisachievedwhentheGroup:
(i) haspowerovertheinvestee;
(ii) isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee;and
(iii)hastheabilitytouseitspowertoaffectitsreturns.
Annual Report 2014 59
TheGroupreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneormoreofthethreeelementsofcontrollistedabove
ConsolidationofasubsidiarybeginswhentheGroupobtainscontroloverthesubsidiaryandceaseswhentheGrouplosescontrolofthesubsidiary.Specifically,incomeandexpensesofasubsidiaryacquiredordisposedofduringtheyearareincludedintheconsolidatedstatementofprofitorlossandothercomprehensiveincomefromthedatetheGroupgainscontroluntilthedatewhentheGroupceasestocontrolthesubsidiary.
ProfitorlossandeachcomponentofothercomprehensiveincomeareattributedtotheownersoftheGroupandtothenon-controllinginterests.TotalcomprehensiveincomeofsubsidiariesisattributedtotheownersoftheGroupandtothenon-controllinginterestsevenifthisresultsinthenon-controllinginterestshavingadeficitbalance.
Whennecessary,adjustmentsaremadetothefinancialstatementsofsubsidiariestobringtheiraccountingpoliciesintolinewiththeGroup’saccountingpolicies.Allintragroupassetsandliabilities,equity,income,expensesandcashflowsrelatingtotransactionsbetweenmembersoftheGroupare
eliminatedinfullonconsolidation.
ThestructureoftheGroup,incorporatedintheconsolidatedfinancialstatementsofQatarFertiliserCompany(Q.S.C.C.)isasfollows:
Nameofentity Principalactivity Countryofincorporation
Effectiveshareholdingpercentage
GulfFormaldehydeCompany(S.A.Q.)(GFC)
ProductionandsaleofUreaFormaldehydeConcentrate
Qatar 70%
QatarMelamineCompany(Q.S.C.C.)(QMC)
ProductionandsaleofMelamine
Qatar 60%
Transactions eliminated on consolidation
Inter-companybalancesandtransactions,andanyunrealisedgainsarisingfromintra-grouptransactionsareeliminatedinpreparingtheconsolidatedfinancialstatements.
Property, plant and equipment
Property,plantandequipmentisstatedatcostlessaccumulateddepreciationandanyimpairmentinvalue.Capitalwork-in-progressisnotdepreciated.
Depreciationiscalculatedonastraightlinebasisovertheestimatedusefullivesoftheassetsasfollows:
Buildingsandfoundations 13-25years
Plant,machineryandequipment 3-20years
Vehiclesandmobileequipment 3years
ExpenditureoverQR200,000incurredtoacquireorreplaceanitemofproperty,plantandequipmentthatisaccountedforseparately,iscapitalisedandthecarryingamountofthecomponentthatisreplaced,iswrittenoff.OthersubsequentexpenditureoverQR200,000iscapitalisedonlywhenitincreasesfutureeconomicbenefitsoftherelateditemofproperty,plantandequipment.Allotherexpenditureisrecognisedintheconsolidatedstatementofprofitorlossastheexpenseisincurred.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Annual Report 201460
Thecostofplant,machineryandequipmentincludesthecostoftheoptimisedandmajorshutdownwhichareamortisedoveraperiodof3yearsand6years,respectively.
Thecarryingvaluesofproperty,plantandequipmentarereviewedforimpairmentwheneventsorchangesincircumstancesindicatethatthecarryingvaluemaynotberecoverable.Ifanysuchindicationexistsandwherethecarryingvaluesexceedtheestimatedrecoverableamount,theassetsarewrittendowntotheirrecoverableamount,beingthehigheroftheirfairvaluelesscoststosellandvalueinuse.
Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Anygainorlossarisingonderecognitionoftheassetisincludedintheconsolidatedstatementofprofitorlossintheyeartheassetisderecognised.
Theasset’sresidualvalues,usefullivesanddepreciationmethodsarereviewed,andadjustedifappropriate,ateachfinancialyearend.
Capitalwork-in-progresswillbetransferredtotherespectiveclassesofproperty,plantandequipmentwhentheassetisreadyforitsintendedused.
Project under development
Projectunderdevelopmentisstatedatcostlessanyimpairmentinvalueandwillbetransferredtoproperty,plantandequipmentwhentheassetisreadyforitsintendedusebythemanagementtorespectivecategory.
Catalysts
Catalystsareinitiallyrecordedatcost.Subsequently,theyaremeasuredatcostlessaccumulatedamortisationandanyimpairmentinvalue.Catalystsareamortisedovertheestimatedusefullivesof1to12years.Catalystsnotinuseattheplantarekeptunderinventoriesandstatedatthelowerofcostandnetrealisablevalue.
Intangible asset – license fee
Thelicensefeeisstatedatcostlessaccumulatedamortisationandanyimpairmentinvalue.Amortisationiscalculatedonastraightlinebasisoveraperiodof25years.
Inventories
Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costsarethoseexpensesincurredinbringingeachproducttoitspresentlocationandcondition,asfollows:
Packingmaterials,chemicals,suppliesandspareparts -weightedaveragepurchasecost
Finishedgoods -weightedaveragecostofdirectmaterials,directlabor,otherdirectcosts,plusattributableoverheadsbasedonnormallevelofcapacity.
Netrealisablevalueisbasedonestimatedsellingpricelessanyfurthercostsexpectedtobeincurredoncompletionanddisposal.
Financial assets
Accountsreceivable
Accountsreceivablearestatedatoriginalinvoiceamountlessaprovisionforanyuncollectibleamounts.Anestimatefordoubtfuldebtsismadewhencollectionofthefullamountisnolongerprobable.Baddebtsarewrittenoffasincurred.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Annual Report 2014 61
Cashandcashequivalents
Cashandcashequivalentscomprisecashonhand,bankbalancesandshorttermdepositswithanoriginalmaturityofthreemonthsorless,netofbankoverdraft,ifany.
Impairmentanduncollectibilityoffinancialassets
Anassessmentismadeateachreportingdatetodeterminewhetherthereisobjectiveevidencethataspecificfinancialassetmaybeimpaired.Ifsuchevidenceexists,anyimpairmentlossisrecognisedintheconsolidatedstatementofprofitorloss.Impairmentisdeterminedasfollows:
(a) Forassetscarriedatfairvalue,impairmentisthedifferencebetweencostandfairvalue,lessanyimpairmentlosspreviouslyrecognisedintheconsolidatedstatementofprofitorloss;
(b) Forassetscarriedatcost,impairmentisthedifferencebetweencarryingvalueandthepresentvalueoffuturecashflowsdiscountedatthecurrentmarketrateofreturnforasimilarfinancialasset;
(c) Forassetscarriedatamortisedcost,impairmentisthedifferencebetweencarryingamountandthepresentvalueoffuturecashflowsdiscountedattheoriginaleffectiveinterestrate.
Derecognitionoffinancialassets
TheGroupderecognisesafinancialassetonlywhenthecontractualrightstothecashflowsfromtheassetexpireorittransfersthefinancialassetandsubstantiallyalltherisksandrewardsofownershipoftheassettoanotherentity.IftheGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipandcontinuestocontrolthetransferredasset,theGrouprecognisesitsretainedinterestintheassetandanassociatedliabilityforamountsitmayhavetopay.IftheGroupretainssubstantiallyalltherisksandrewardsofownershipofatransferredfinancialasset,theGroupcontinuestorecognisethefinancialassetandalsorecognisesacollateralisedborrowingfortheproceedsreceived.
Onderecognitionofafinancialassetinitsentirety,thedifferencebetweentheasset’scarryingamountandthesumoftheconsiderationreceivedandreceivableandthecumulativegainorlossthathadbeenrecognisedinothercomprehensiveincomeandaccumulatedinequityisrecognisedinconsolidatedstatementofprofitorloss.
Financial liabilities and equity instruments issued by the Group
DebtandequityinstrumentsissuedbytheGroupareclassifiedaseitherfinancialliabilitiesorasequityinaccordancewiththesubstanceofthecontractualarrangement.
Financialliabilities
Interest bearing loan
Interestbearingloanisrecognisedinitiallyatfairvalueoftheamountsborrowed,lessdirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,theloanismeasuredatamortisedcostusingtheeffectiveinterestmethod,withanydifferencesbetweenthecostandfinalsettlementvaluesbeingrecognisedintheconsolidatedstatementofprofitorlossovertheperiodoftheloan.Installmentsduewithinoneyearatamortisedcostareshownasacurrentliability.Thecostsofraisingfinanceapplicabletoamountsalreadydrawndownareamortisedovertheperiodoftheloanusingtheeffectiveyieldmethod.Gainsorlossesarerecognisedintheconsolidatedstatementofprofitorlosswhentheliabilitiesarederecognised.
Accountspayableandaccruals
Liabilitiesarerecognisedforamountstobepaidinthefutureforgoodsorservicesreceived,whetherbilledbythesupplierornot.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Annual Report 201462
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derecognition of financial assets and liabilities
Financialassets
Afinancialasset(or,whereapplicableapartofafinancialassetorpartofaCompanyofsimilarfinancialassets)isderecognisedwhen:
• Therightstoreceivecashflowsfromtheassethaveexpired
• TheGrouphastransferreditsrightstoreceivecashflowsfromtheassetorhasassumedanobligationtopaythereceivedcashflowsinfullwithoutmaterialdelaytoathirdpartyundera‘pass-through’arrangement;andeither(a)theGrouphastransferredsubstantiallyalltherisksandrewardsoftheasset,or(b)theGrouphasneithertransferrednorretainedsubstantiallyalltherisksandrewardsoftheasset,buthastransferredcontroloftheasset.
WhentheGrouphastransferreditsrightstoreceivecashflowsfromanassetorhasenteredintoapass-througharrangement,andhasneithertransferrednorretainedsubstantiallyalltherisksandrewardsoftheassetnortransferredcontroloftheasset,theassetisrecognisedtotheextentoftheGroup’scontinuinginvolvementintheasset.
Inthatcase,theGroupalsorecognisesanassociatedliability.ThetransferredassetandtheassociatedliabilityaremeasuredonabasisthatreflectstherightsandobligationsthattheGrouphasretained.
Continuinginvolvementthattakestheformofaguaranteeoverthetransferredasset,ismeasuredattheloweroftheoriginalcarryingamountoftheassetandthemaximumamountofconsiderationthattheGroupcouldberequiredtorepay.
Financialliabilities
Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelledorexpires.
Borrowing costs
Borrowingcostsdirectlyattributabletotheacquisitionorconstructionorproductionofanassetthatnecessarilytakesasubstantialperiodoftimeforitsintendeduseorsalearecapitalizedaspartofthecostoftherespectiveassets.Allotherborrowingcostsareexpensedintheperiodtheyoccur.Borrowingcostsconsistofinterestandothercoststhatanentityincursinconnectionwiththeborrowingoffunds.
Employees’ end of service benefits
TheGroupprovidesendofservicebenefitstoitsemployeesinaccordancewithemploymentcontractsandQatariLabourLaw.Theentitlementtothesebenefitsisbasedupontheemployees’finalsalaryandlengthofservice,subjecttothecompletionofaminimumserviceperiod.Theexpectedcostsofthesebenefitsareaccruedovertheperiodofemployment.
UnderLawNo.24of2002onRetirementandPension,theGroupmakescontributiontoagovernmentpensionschemeforQatariemployeescalculatedasapercentageoftheQatariemployees’salaries.TheGroup’sobligationsarelimitedtothesecontributions,whichareexpensedonaccrualbasis.
Provisions
ProvisionsarerecognisedwhentheGrouphasanobligation(legalorconstructive)arisingfromapastevent,andthecoststosettletheobligationarebothprobableandabletobereliablymeasured.
Annual Report 2014 63
Foreign currencies
Transactionsinforeigncurrenciesareinitiallyrecordedinthefunctionalcurrencyraterulingatthedateofthetransaction.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesareretranslatedatthefunctionalcurrencyrateofexchangerulingatthereportingdate.Alldifferencesaretakentoconsolidatedstatementofprofitorloss.
Derivative financial instruments and hedging
Derivativefinancialinstrumentsarecontracts,thevalueofwhicharederivedfromoneormoreunderlyingfinancialinstrumentsorindices,andincludeacalloptiontorepurchaseequityatapredeterminedprice.
TheGroupusesderivativefinancialinstrumentssuchasinterestrateswapstohedgeitsrisksassociatedwithinterest.Suchderivativefinancialinstrumentsareinitiallyrecognisedatfairvalueonthedateonwhichaderivativecontractisenteredintoandaresubsequentlyre-measuredatfairvalue.Derivativesarecarriedasassetswhenthefairvalueispositiveandasliabilitieswhenthefairvalueisnegative.
Anygainsorlossesarisingfromchangesinfairvalueonderivativesthatdonotqualifyforhedgeaccountingaretakendirectlytotheconsolidatedstatementofprofitorloss.
Thefairvalueofinterestrateswapcontractsiscalculatedbyreferencetothemarketvaluationoftheswapcontracts.
For the purpose of hedge accounting, hedges are classified as:
• fairvaluehedgeswhenhedgingtheexposuretochangesinthefairvalueofarecognisedassetorliabilityorunrecognisedfirmcommitment(exceptforforeigncurrencyrisk);or
• cashflowhedgeswhenhedgingexposuretovariabilityincashflowsthatiseitherattributabletoaparticularriskassociatedwitharecognisedassetorliabilityorahighlyprobableforecasttransactionortheforeigncurrencyriskinanunrecognisedfirmcommitment.
Attheinceptionofahedgerelationship,theGroupformallydesignatesanddocumentsthehedgerelationshiptowhichtheGroupwishestoapplyhedgeaccountingandtheriskmanagementobjectiveandstrategyforundertakingthehedge.Thedocumentationincludesidentificationofthehedginginstrument,thehedgeditemortransaction,thenatureoftheriskbeinghedgedandhowtheentitywillassessthehedginginstrument’seffectivenessinoffsettingtheexposuretochangesinthehedgeditem’sfairvalueorcashflowsattributabletothehedgedrisk.Suchhedgesareexpectedtobehighlyeffectiveinachievingoffsettingchangeinfairvalueorcashflowsandareassessedonanongoingbasistodeterminethattheyactuallyhavebeenhighlyeffectivethroughoutthefinancialreportingperiodsforwhichtheyweredesignated.
Hedges which meet the criteria for hedge accounting are accounted for as follows:
Fairvaluehedges
Thechangeinthefairvalueofahedgingderivativeisrecognisedintheconsolidatedstatementofprofitorlossinfinancecosts.Thechangeinthefairvalueofthehedgeditemattributabletotheriskhedgedisrecordedasapartofthecarryingvalueofthehedgeditemandisalsorecognisedinconsolidatedstatementofprofitorlossinfinancecosts.
Cashflowhedges
TheGroupusesinterestrateswapcontractstohedgeitsriskassociatedprimarilywithinterestratefluctuationsrelatingtoitsinterestbearingloan.Forcashflowhedgeswhichmeetthecriteriafor
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Annual Report 201464
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
3. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
hedgeaccounting,theeffectiveportionofthegainorlossonthehedginginstrumentisrecogniseddirectlyasothercomprehensiveincomeinthecumulativechangesinfairvalues,whileanyineffectiveportionisrecognisedimmediatelyintheconsolidatedstatementofprofitorloss.
Amountsrecognisedasothercomprehensiveincomearetransferredtotheconsolidatedstatementofprofitorlosswhenthehedgetransactionaffectsprofitorlosssuchaswhenaforecastedtransactionoccurorisexpired.
Revenue recognition
Revenuefromthesaleofgoodsismeasuredatfairvalueoftheconsiderationreceivedorreceivable,netofreturnsandallowances,freightandinsurance,tradediscountandvolumerebate.Revenueisrecognisedwhenthesignificantrisksandrewardsofownershiphavebeentransferredtothebuyeratwhichtimeallthefollowingconditionsaresatisfied:
(i) theCompanyhastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoods;
(ii) theCompanyretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontroloverthegoodssold;
(iii) theamountofrevenuecanbemeasuredreliably;
(iv) itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheCompany;and
(v) thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably
Saleofgoods
Saleofgoodsisrecognisedwhentheriskandrewardsoftheproductistransferredtothebuyers,whichisatthetimeofloadingattheterminalinMesaieed,StateofQatar.ConsequenttoagreementwithMuntajattherevenueisinitiallyrecognisedatprovisionalpricewhichisadjustedtoactualsinthemonthfollowingtheshipment.Revenuefromsaleofgoodsisrecordednetofdirectcostssuchasfreightandinsurance.
Interest income
Interestincomeisrecognisedastheinterestaccrues.
Operating leases
Leaseswherethelessorretainssubstantiallyalltherisksandbenefitsofownershipoftheassetareclassifiedasoperatingleases.Operatingleasepaymentsarerecognisedasanexpenseintheconsolidatedstatementofprofitorlossonastraight-linebasisovertheperiodofleaseterm.
Income Taxes
IncometaxispayableontaxableincomefortheyearinaccordancewithQatarIncomeTaxRegulationsbyapplyingtaxrateof35%onforeignpartner’sshareofprofit.
4. CRITICAL JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
IntheapplicationoftheGroup’saccountingpolicies,whicharedescribedinnote3,managementisrequiredtomakejudgments,estimatesandassumptionsaboutthecarryingamountsofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatareconsideredtoberelevant.Actualresultsmaydifferfromtheseestimates.Theestimatesandunderlyingassumptionsarereviewedonan
Annual Report 2014 65
ongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiodorintheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.
Critical judgments in applying accounting policies
IntheprocessofapplyingtheGroup’saccountingpolicies,whicharedescribedinNote3tothefinancialstatements,duetothenatureoftheGroup’soperations,managementhasnotmadeanysignificantjudgmentsthathaveamaterialeffectontheamountsrecognizedinthefinancialstatements,exceptasmentionedbelow:
Costoftakeorpaygas
Inpreparingthefinancialstatements,managementhasexpensed-offthecostoftakeorpaygasinitsaccountsastheconditionsattachedto“Make-upgas”arerestrictiveinnature.Further,thecurrentlevelofoperationsdoesnotindicatethatthesemake-upquantitieswillberecoupedwithinthetimeperiodmentionedinthecontractandthereforeonconservativebasisthesecostsareexpensed-off.
Consolidationandcontroloversubsidiaries
QMCandGFCareeffectivelycontrolledbyQAFCO,bothadministrativelyaswellasoperationally.AllrelevantactivitiesofthesetwocompaniescannotbecarriedoutwithoutactiveinvolvementofQAFCO,therefore,thesecompaniesareassessedassubsidiariesandconsolidatedinaccordancewithIFRS10.
Key sources of estimation uncertainty
Thefollowingarethekeyassumptionsconcerningthefuture,andotherkeysourcesofestimationuncertaintyattheconsolidatedstatementoffinancialpositiondate,thathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyear:
Impairmentoftangibleassets
TheGroup’smanagementevaluateswhetherthereisanindicationthattangibleassetshavesufferedimpairmentinaccordancewithaccountingpoliciesstatedinnote3.Therecoverableamountofanassetisdeterminedbasedonvalue-in-usemethod.Thismethodusesestimatedcashflowprojectionsovertheestimatedusefullifeoftheassetdiscountedusingmarketrates.
Tangibleassetsusefullives
TheGroup’smanagementdeterminestheusefullivesandrelateddepreciationoramortizationcharge.Thedepreciationoramortizationchargefortheyearwillchangesignificantlyifactuallifeisdifferentfromtheestimatedusefullifeoftheasset.
Impairmentoffinancialassets
TheGroup’smanagementreviewsperiodicallyitemsclassifiedasreceivablestoassesswhetheraprovisionforimpairmentshouldberecordedintheconsolidatedstatementofprofitorloss.Managementestimatestheamountandtimingoffuturecashflowswhendeterminingthelevelofprovisionsrequired.Suchestimatesarenecessarilybasedonassumptionsaboutseveralfactorsinvolvingvaryingdegreesofjudgmentanduncertainty.
Hedgeeffectiveness
Managementreviewsitshedgingrelationshipbetweentheinterestrateswapsandtheunderlyingloansonaregularbasis.Thehedgewasfoundtobehighlyeffective.Asaresult,thefairvalueofthederivativeisrecordedinequityunderhedgingreserve.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
4. CRITICAL JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)
Annual Report 201466
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
5. CASH AND CASH EQUIVALENTS
2014 2013
QR. QR.
Bankbalances 21,200,250 53,793,832
Calldeposits 1,111,281,589 1,106,459,147
Fixeddeposits 819,654,327 548,185,185
Cashinhand 49,706 23,569
1,952,185,872 1,708,461,733
Fixeddepositsareplacedwithalocalcommercialbankforaperiodofthreemonthsorlessandearn
interestattheaveragerateof0.66%(2013:0.65%).
6. ACCOUNTS RECEIVABLE AND PREPAYMENTS
2014 2013
QR. QR.
Tradeaccountsreceivable 58,523 58,523
Prepaymentsandadvances 98,725,364 75,855,047
Otherreceivables 3,489,764 5,336,685
102,273,651 81,250,255
Prepaymentsandadvancesrepresentstaffloanandadvances,prepaidrentsandadvancesto
suppliers.
AtDecember31,2014,theageingofunimpairedfinancialassetsisasfollows:
2014 2013
QR QR
(i)Agingofpastduebutnotimpaired:
Above120days 58,523 58,523
7. RELATED PARTY TRANSACTION
Relatedpartiesrepresentassociatedcompanies,majorshareholders,directorsandkeymanagementpersonneloftheGroup,andentitiescontrolled,jointlycontrolledorsignificantlyinfluencedbysuchparties.
(a) Due from related parties
2014 2013 QR QR
YaraInternationalA.S.A 173,124,496 215,933,384
Muntajat 824,078,724 952,132,399
IndustriesQatar -- 2,588,780
QatarPetroleum 113,270 8,735
997,316,490 1,170,663,298
Annual Report 2014 67
7. RELATED PARTY TRANSACTION
(b) Due to related parties
2014 2013
QR QR
YaraInternationalA.S.A 2,153,009 1,926,349
QatarPetroleum 255,485,008 271,067,234
QatarFuelAdditivesCompanyLtd.(Q.S.C.C.) 3,761,905 6,055,970
261,399,922 279,049,553
(c) Related party transactions
AsignificantportionoftheGroup’stransactionshavebeenenteredwiththeshareholders.Thepricesandtermsofpaymentforthesetransactionsareinaccordancewithspecificagreementsenteredinto,withtheshareholdersasfollows:
a) UreamarketingagreemententeredonJune18,1994withYaraInternationalASAtomarketprilledandgranulatedUreaproducedbytheGroupintheregionalmarketsofEurope,Americas,AfricaandAsia,inreturnforamarketingcommission.ThisinitialagreementwasreplacedbytheUreamarketingandoff-takeagreementdatedSeptember5,2001andvaliduntilDecember31,2016.ConsequenttotheagreementwithMuntajat,thisagreementwascancelledin2013.
b)GassaleandpurchaseagreemententeredwithQP,onJune18,1994,foraperiodof25years(renewable),topurchasefeedgasatrates,whicharelowerthantheprevailinginternationalmarketrates,tousefortheproductionofUreaandAmmonia.ThisagreementwasamendedandgaspriceswererevisedonandfromMarch31,2013.
c) GassaleandpurchaseagreemententeredwithQP,onJune1,2010,foraperioduntilJanuary1,2034(renewable),topurchasefeedgasbasedonanagreedformulatoarriveatthepurchaseprice,tousefortheproductionofUreaandAmmoniaforQAFCO–5project.ThisagreementwasamendedandgaspricesabovecertainthresholdvolumewererevisedonandfromMarch31,2013.
d) EffectiveMarch1,2013,theGrouphasenteredintoanagreementwithMuntajat,wherebythelaterwillprovideallmarketingandsalesservicestotheGroup.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201468
Transactionswithrelatedpartiesincludedintheconsolidatedstatementofprofitorlossareasfollows:
2014 2013
QR QRShareholder:
Yara International A.S.A.
-Saleofureaandammonia -- 949,070,041
-Salescommission -- 20,379,036
-Purchaseofinventories -- 12,542
Muntajat (QMDC)
-Sales 7,278,789,389 6,342,726,107
-Marketingcharges 248,967,972 254,717,429
Ultimate parent:
Qatar Petroleum (“QP”)
-Purchaseoffeedstock 2,426,402,616 2,391,135,793
-PurchaseofMethanol 60,772,689 63,492,785
-Insurance 31,167,165 28,239,917
-Landleaseandstaffaccommodationleasecharges 24,650,970 24,038,484
-Trainingcosts 6,482,575 15,621,915
(d) Compensation of key management personnel
TheremunerationofDirectorsandothermembersofkeymanagementduringtheyearareasfollows:
2014 2013
QR QR
Short-termbenefits 14,582,921 12,743,866
Directors’remuneration 2,760,000 2,922,084
Qatariemployees’pensionfundcontribution 723,084 458,104
18,066,005 16,124,05
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
7. RELATED PARTY DISCLOSURES (Continued)
Annual Report 2014 69
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
8. INVENTORIES
2014 2013
QR QR
Spareparts,consumablesandsupplies 513,309,022 378,360,569
Finishedgoods 263,912,702 131,725,236
Chemicalsandcatalysts 30,329,240 29,797,553
Goodsintransit 42,874,062 30,325,049
Packingmaterials 3,093,769 2,541,660
853,518,795 572,750,067
Less:Provisionforobsoleteandslow-movinginventories (51,480,836) (43,072,702)
Less:Lossonwrite-downofinventories (966,496) (1,085,348)
801,071,463 528,592,017
AsatDecember31,2014,thesalespriceofMelamineinventorydecreasedbelowitscostprice.
Asaresult,inventorywasmeasuredusingnetrealisablevalue,whichrepresentstheestimated
sellingpricelessanyfurthercostsexpectedtobeincurredtomakethesell.
Movementsintheprovisionforobsoleteandslowmovinginventoriesareasfollows:
2014 2013
QR QR
AtJanuary1, 43,072,702 35,089,882
Providedduringtheyear(Note21) 11,657,969 13,763,317
Amountswrittenoff (3,249,835) (5,780,497)
AtDecember31, 51,480,836 43,072,702
9. CATALYSTS
2014 2013
QR QR
Cost:
AtJanuary1, 107,070,457 79,761,920
Additions 3,894,197 27,308,537
At December 31, 110,964,654 107,070,457
Amortisation: At1January 59,821,087 49,237,171
Chargefortheyear 14,815,022 10,583,916
AtDecember31, 74,636,109 59,821,087
Net carrying amount:
At December 31, 36,328,545 47,249,370
Annual Report 201470
10. INTANGIBLE ASSETS – LICENSE FEE
Thisnon-exclusivelicensefeepertainstoamountspaidbytheGroupforusingthetechnologytoproducemelaminetodesign,engineer,construct,operate,modifyandmaintaintheplantfacilities.AsatDecember31,thelicenseisstillinthenameofQatarFertiliserCompany(Q.S.C.C.).
2014 2013
QR QR
Cost:
AtJanuary1, 57,637,200 57,637,200
At December 31, 57,637,200 57,637,200
Accumulated amortisation:
AtJanuary1, 6,724,340 4,418,852
Chargefortheyear 2,305,488 2,305,488
At December 31, 9,029,828 6,724,340
Net carrying amount:
At December 31, 48,607,372 50,912,860
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 2014 71
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QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201472
Notes:
(i) Buildingsandfoundations,whichincludetheindustrialplant,officesiteandadministrativefacilitiesatMesaieedareconstructedonthelandleasedfromQatarPetroleum,exceptthestaffhousingcomplex,whichisconstructedonthelandleasedfromtheIndustrialDevelopmentTechnicalCentre.
(ii) Capitalwork-in-progressrepresentworkonvariousongoingprojectsasatthereportingdate.
(iii)Thedepreciationchargehasbeenallocatedintheconsolidatedstatementofprofitorlossasfollows:
2014 2013
QR QR
Costofsales 1,055,636,734 1,007,395,790
Administrativeexpenses 16,726,718 10,477,750
1,072,363,452 1,017,873,540
12. ACCOUNTS PAYABLE AND ACCRUALS
2014 2013
QR QR
Tradeaccountspayable 95,718,652 173,114,144
Otherpayablesandaccruals 332,623,786 360,178,067
428,342,438 533,292,211
13. INTEREST BEARING LOANS
2014 2013
QR QR
Termloan(i) 2,984,836,400 3,276,050,960
Less:Deferredarrangementfees(ii) (14,736,096) (20,693,451)
2,970,100,304 3,255,357,509
Presentedintheconsolidatedstatementoffinancialpositionasfollows:
2014 2013
QR QR
Currentportion 285,779,228 285,257,205
Non-currentportion 2,684,321,076 2,970,100,304
2,970,100,304 3,255,357,509
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
7. PROPERTY, PLANT AND EQUIPMENT (Continued)
Annual Report 2014 73
(i)TheGrouphasenteredintoanagreementwithaconsortiumofbanksledbyHSBCasthefacil-ityagentonDecember2,2007,toobtainatermloanfacilityamountingtoUSD1.1billionandarevolvingfacilityofUSD500milliontofinancetheconstructionofQAFCO-5project,whichwascompletedonFebruary29,2012.TheloanbearsinterestatLIBORplusanapplicablemargin.TheGrouphasenteredintotwointerestrateswapscontractstohedgeitsriskassociatedwithinterestratefluctuationonthetermloanasfullyexplainedinNote14.Therepaymentofthetermloancommencedafter4yearsfromthedateoftheagreementandisrepayablein12equatedsemi-an-nualinstallmentsofUSD40millioneachwithonefinalbulletpaymentofUSD620million,thelastinstallmentisdueinDecember2017.
(ii)Thefinancecostsassociatedwithobtainingtheaboveloanrepresentarrangement,underwriting,participationandagencyfeespaid(“arrangementfees”).Movementsinthearrangementfeesareasfollows:
2014 2013
QR QR
Balanceatthebeginningoftheyear 20,693,451 27,171,879
Amortisedduringtheyear (5,957,355) (6,478,428)
Balanceattheendoftheyear 14,736,096 20,693,451
Theamortisedarrangementfeeswascapitalisedinthecapitalwork-in-progressasborrowingcostsuntilFebruary29,2012i.e.thedateofcapitalizationofQAFCO-5project.Subsequentamortisationsarepresentedintheconsolidatedstatementofprofitorlossunderinterestexpense.
14. OTHER FINANCIAL LIABILITIES
2014 2013
QR QR
Cashflowhedges:
Interestrateswaps
AtJanuary1, 301,273,025 456,423,540
Unrealisedgainoncashflowhedges (87,555,289) (155,150,515)
AtDecember31, 213,717,736 301,273,025
Presentedintheconsolidatedstatementoffinancialpositionasfollows:
2014 2013
QR QR
Currentportion 107,314,147 117,967,225
Non-currentportion 106,403,589 183,305,800
213,717,736 301,273,025
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
13 INTEREST BEARING LOANS (Continued)
Annual Report 201474
Thematurityprofileofthederivativesisasfollows:
Positive fair
value
QR
“Mn”
Negative fair
value
QR
“Mn”
Notional
amount
QR
“Mn”
3 – 12
months
QR
“Mn”
1 – 5
years
QR
“Mn”
AtDecember31,2014
Interestrateswaps -- 213 2,984 291 2,693
Positivefair
value
QR
“Mn”
Negativefair
value
QR
“Mn”
Notional
amount
QR
“Mn”
3–12
months
3–12
months
QR
“Mn”
AtDecember31,2013
Interestrateswaps -- 301 3,276 291 2,985
Otherfinancialliabilitiesrepresentthefairvalueoftwointerestrateswapcontractsdesignated
ascashflowhedgestohedgethefloatinginterestrateexposureonitsinterestbearingloanuntil
December5,2017.Thetermsoftheinterestrateswapcontractshavebeennegotiatedtomatch
thetermsofthecommitmentsofthetermloan.AtDecember31,2014,themeasurementofthefair
valuesofthehedgesresultedinanegativeamountofQR213,717,736(2013:QR301,273,025)which
hasbeenrecognizedintheothercomprehensiveincomeaschangesinfairvaluesandasderivative
liabilities.
15. EMPLOYEES’ END OF SERVICE BENEFITS
TheGroupprovidesforendofservicebenefitsforitsemployees.Movementsintheprovisionareas
follows:
2014 2013
QR QR
AtJanuary1, 149,387,020 137,299,764
Provisionduringtheyear 32,273,120 23,575,856
Endofservicebenefitspaid (7,107,484) (11,488,600)
174,552,656 149,387,020
Less:Advancesagainstendofservicebenefits (74,263,328) (67,457,670)
AtDecember31, 100,289,328 81,929,350
16. SHARE CAPITAL
2014 2013
QR QR
Authorised,issuedandfullypaid: 1,000,000,000 1,000,000,000
10,000,000ordinarysharesofQR100each
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
13 OTHER FINANCIAL LIABILITIES (Continued)
Annual Report 2014 75
17. LEGAL RESERVE
AsrequiredbytheCompany’sArticlesofAssociation,10%oftheprofitfortheyearshouldbe
transferredtolegalreserveuntilthereserveequals20%oftheissuedsharecapital.TheCompany
resolvedtodiscontinuesuchannualtransferssincethereservereachedtherequiredamount.Inthe
booksofthesubsidiarycompanies,asrequiredbyQatarCommercialCompaniesLawNo.5of2002
andthesubsidiarycompanies’ArticlesofAssociation,10%oftheprofitfortheyearisrequiredto
betransferredtoalegalreserveuntilthereserveequals50%oftheissuedcapital.Thecurrentyear
transfersrepresentonlythesubsidiarycompany’sshareoftransferstothelegalreserve.
Thereserveisnotavailablefordistributionexceptinthecircumstancesstipulatedintheabovelaw
andtheCompany’sandsubsidiarycompanies’ArticlesofAssociation.
18. DIVIDENDS PAID AND PROPOSED
Duringtheyear,acashdividendofQR130pershareaggregatingtoQR1,300,000,000fortheyear
2013wasdeclaredandpaid(2013:QR290pershareaggregatingtoQR2,900,000,000fortheyear
2012).
TheBoardofDirectorshasproposedandpaidinterimcashdividendofQR100pershare
aggregatingtoQR1,000,000,000fortheyear2014(2013:1,700,000,000).Further,theBoardof
DirectorsintheirmeetingdatedJanuary29,2015recommendedmanagement’sproposaltopay
QR.1,800,000,000asfinaldividendfortheyear2014.
19. INCOME TAX PAYABLE
InaccordancewiththeregulationsoftheQatarPublicRevenuesandTaxesDepartment,theGroup
issubjecttocorporateincometaxintheStateofQatarfortheshareofprofitattributabletoforeign
shareholdersexcludingexemptedprofitofQAFCOPlant4untilJune26,2014.
Forthepurposeoftheseconsolidatedfinancialstatements,theincometaxobligationsoftheGroup
havebeenincludedasamountsduefromforeignshareholdersgiventhatsuchshareholdersarefully
liableforthetaxpayment.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201476
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
19 INCOME TAX PAYABLE (Continued)
Reconciliationbetweenincometaxandtheproductofaccountingprofitmultipliedbytheeffective
taxratefortheyearisasfollows:
2014 2013
QR QR
ProfitattributabletoQAFCOPlants1,2,3,5and6 1,438,285,138 2,429,327,954
ProfitattributabletoQAFCOPlant4(Exemptfromtax) 875,426,271 788,998,616
Profit/(loss)ofQatarMelamineGroup(Q.S.C.C.) (10,046,565) 3,870,959
ProfitofGulfFormaldehydeGroup(S.A.Q.)(“GFC”) 5,040,312 8,778,371
Accountingprofit 2,308,705,156 3,230,975,900
Accountingprofitliablefortaxation 1,433,278,885 2,441,977,285
Expensesthatarenotdeductibleindeterminingtaxableprofit:
Accountingdepreciation(excludingPlant4) 1,033,430,245 941,650,514
Provisionforobsoleteandslow-moving
inventories(excludingPlant4) 10,681,470 12,040,713
Provisionfordonation 9,166,667 4,166,667
1,053,278,382 957,857,894
Adjustmentsindeterminingtaxableprofit:
Taxdepreciation (1,011,859,650) (922,123,806)
Loss/(gain)ondisposal 1,416 (57,911)
Adjustmentrelatingtotheprioryeardepreciation -- (23,878,100)
Write-offofslow-movinginventories (3,456,429) (4,817,081)
Costsrelatedtoexemptincome 498,975,930 --
Carriedforwardlossadjusted (136,550,411) (4,956,308)
(652,889,144) (955,833,206)
Taxableprofit 1,833,668,124 2,444,001,973
Effectivetaxratefortheshareofprofitattributableto
foreignshareholders 9.44% 8.74%
Totalincometaxpayable 173,124,496 213,660,390
Annual Report 2014 77
20. SALES
2014 2013
QR QR
Ammoniasales 1,003,657,563 1,029,017,854
Ureasales 6,023,044,556 6,859,024,289
UFsales 17,675,222 21,329,882
Melaminesales 234,412,048 284,001,812
7,278,789,389 8,193,373,837
21. COST OF SALES
2014 2013
QR QR
Rawmaterialsconsumed 2,431,329,681 2,533,216,737
Depreciation 1,055,636,734 1,007,395,790
Salaries,wagesandrelatedexpenses 305,141,346 283,241,157
Sparesandequipmentconsumed 63,593,207 58,431,349
Licensefeeamortisation 2,305,488 2,305,488
nsurance,rentsandfees 37,886,334 44,442,954
Externalservices 28,899,820 30,900,624
Amortisationofcatalysts 14,815,022 10,583,916
Provisionforobsoleteandslowmovinginventories 11,657,969 13,763,317
Shutdowncostsexpensed 1,212,796 707,700
Others 4,887,507 3,907,621
3,957,365,904 3,988,896,653
22. OTHER INCOME 2014 2013
QR QR
Interestincome 5,411,986 8,541,894
Reversalofexcessprovisions 38,973,701 85,764,807
Saleofgas 3,120,309 993,416
Demurragesanddispatch -- 820,727
Clubcontribution 2,000,716 1,374,494
Rentalincome 75,136 416,300
Miscellaneousincome 14,964,477 11,103,349
64,546,325 109,014,987
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201478
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
23. SELLING AND DISTRIBUTION COSTS
2014 2013
QR QR
Salescommission -- 22,673,082
MarketingCharge 219,537,265 191,488,373
Othersalesexpenses 54,431,055 112,885,453
273,968,320 327,046,908
24. ADMINISTRATIVE EXPENSES
2014 2013
QR QR
Salariesandrelatedexpenses 329,051,555 281,394,930
Costoftakeorpaygas 38,537,878 44,312,951
Insurance,rentsandfees 82,030,853 81,671,272
Externalservices 97,917,712 83,272,046
Sparesandequipment 47,486,880 46,810,768
Publicrelationsanddonations 20,927,214 18,773,784
Depreciation 16,726,718 10,477,750
Travelexpenses 5,667,148 6,673,614
Communicationexpenses 6,206,409 4,910,765
BoardofDirectorsremuneration 2,760,000 2,922,084
Baddebtwrittenoff 240,316 --
Lossonsaleofassets 1,416 1,079,807
Miscellaneousexpenses 6,431,325 8,282,705
653,985,424 590,582,476
25. FINANCE COSTS
2014 2013
QR QR
Interestoninterestrateswap 118,317,208 119,152,281
Interestonloan(Note13) 31,905,952 41,421,455
Amortisationofdeferredarrangementfees(Note13) 5,957,356 6,478,428
156,180,516 167,052,164
Annual Report 2014 79
26. FAIR VALUE OF FINANCIAL INSTRUMENTS
SetoutbelowisacomparisonbyclassofthecarryingamountsandfairvalueoftheGroup’s
financialinstrumentsthatarecarriedintheconsolidatedfinancialstatements.
Carrying amount Fair value
2014
QR
2013
QR
2014
QR
2013
QR
Financial assets
Tradeandother
receivables
3,548,287 5,395,208 3,548,287 5,395,208
Duefromrelatedparties 997,316,490 1,170,663,298 997,316,490 1,170,663,298
Bankbalancesandcash 1,952,185,872 1,708,461,733 1,952,185,872 1,708,461,733
Total 2,953,050,649 2,884,520,239 2,953,050,649 2,884,520,239
Financial Liabilities
Interestbearingloans
Floatingrateborrowings 2,984,836,400 3,276,050,960 2,984,836,400 3,276,050,960
Tradeandother
payables
95,718,652 173,114,144 95,718,652 173,114,144
Duetorelatedparties 261,399,922 279,049,553 261,399,922 279,049,553
Otherfinancialliability:
Interestrateswaps 213,717,736 301,273,025 213,717,736 301,273,025
Total 3,555,672,710 4,029,487,682 3,555,672,710 4,029,487,682
Thefairvalueofthefinancialassetsandliabilitiesareamountsatwhichtheinstruments
couldbeexchangedinacurrenttransactionbetweenwillingparties,otherthaninaforcedor
liquidationsale.
Thefollowingmethodsandassumptionswereusedtoestimatethefairvalues:
a) Bankbalancesandcash,tradeandotherreceivablesandtradeandotherpayables
approximatetheircarryingamountslargelyduetotheshort-termmaturitiesofthese
instruments.
b) Interestbearingloanisestimatedbasedondiscountedcashflowsusinginterestratefor
itemswithsimilartermsandcharacteristics.
c) TheGroupentersintoderivativefinancialinstruments,principallywithfinancialinstitutions
withinvestmentgradecreditratings.Derivativesvaluedusingvaluationtechniqueswith
marketobservableinputsareinterestrateswaps.Themostfrequentlyappliedvaluation
techniquesincludeswapmodels,usingpresentvaluecalculations.Themodelsincorporate
variousinputsincludingthecreditqualityofcounterpartiesandinterestratecurves.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201480
AsatDecember31,themarkedtomarketvalueofderivativeassetpositionisnetofacredit
valuationadjustmentattributabletoderivativecounterpartydefaultrisk.Thechangesin
counterpartycreditriskhadnomaterialeffectonthehedgeeffectivenessassessmentfor
derivativesdesignatedinhedgerelationshipandotherfinancialinstrumentsrecognisedatfair
value.
Fair value hierarchy
TheGroupusesthefollowinghierarchyfordetermininganddisclosingthefairvalueoffinancial
instrumentsbyvaluationtechnique
Level1: quoted(unadjusted)pricesinactivemarketsforidentical
assetsorliabilities
Level2: othertechniquesforwhichallinputswhichhaveasignificant
effectontherecordedfairvalueareobservable,either
directlyorindirectly
Level3: techniqueswhichuseinputswhichhaveasignificanteffect
ontherecordedfairvaluethatarenotbasedonobservable
marketdata.
AtDecember31,theGroupheldthefollowingfinancialinstrumentsmeasuredatfairvalue:
2014 Level 1 Level 2 Level 3
QR QR QR QR
Liabilitiesmeasuredatfairvalue
Interestrateswaps 213,717,736 -- 213,717,736 --
2013 Level 1 Level 2 Level 3
QR. QR. QR. QR.
Liabilitiesmeasuredatfairvalue
Interestrateswaps 301,273,025 -- 301,273,025 --
DuringthereportingyearsendedDecember31,2014and2013,therewerenotransfersbetween
Level1andLevel2fairvaluemeasurements,andnotransfersintoandoutofLevel3fairvalue
measurements.
27. FINANCIAL RISK MANAGEMENT
Objectives and policies
TheGroup’sprincipalfinancialliabilitiescompriseinterestbearingloan,tradeaccountspayable
andamountsduetorelatedparties.Themainpurposeofthesefinancialliabilitiesistoraise
financefortheGroup’soperations.TheGrouphasvariousfinancialassetssuchastrade
accountsreceivable,amountsduefromrelatedpartiesandcashandbankbalances,whicharise
directlyfromitsoperations.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
26 FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Annual Report 2014 81
ThemainrisksarisingfromtheGroup’sfinancialinstrumentsarecashflowinterestraterisk,
creditrisk,liquidityriskandforeigncurrencyrisk.TheBoardofDirectorsreviewandagreeon
policiesformanagingeachoftheseriskswhicharesummarisedbelow.
Interest rate risk
Interestrateriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwill
fluctuateduetochangesinmarketinterestrates.
TheGroupisexposedtointerestrateriskonitsinterestbearingassetsandliabilities(shortterm
depositsandtermloan).
Atreportingdate,theinterestrateprofileoftheGroup’sinterestbearingfinancialinstrumentsis
asfollows:
2014 2013
QR QR
Floatinginterestrateinstruments:
Fixed/Calldeposits 1,930,935,916 1,656,378,323
Interestbearingloan (2,984,836,400) (3,276,050,960)
(1,053,900,484) (1,619,672,637)
TheGroup’sexposuretotheriskofchangesinmarketinterestratesrelatesprimarilytothe
Group’sfinancialassetsandliabilitieswithfloatinginterestratesandfixedinterestinstruments.
Tomanagetheriskofchangesinfloatinginterestrateonitsinterestbearingloan,theGrouphas
enteredintointerestrateswaps.Undertheswapagreements,theGroupwillpayanagreedfixed
interestrateandreceiveafloatinginterestrate.
Thefollowingtabledemonstratesthesensitivityoftheconsolidatedstatementofprofitor
loss(duetofixed/calldeposits)andequity(duetointerestrateswaps)toreasonablypossible
changesininterestratesby25basispoints,withallothervariablesheldconstant.Thesensitivity
oftheconsolidatedstatementofprofitorlossandequityistheeffectoftheassumedchanges
ininterestratesforoneyear,basedonthefloatingratefinancialassetsandfinancialliabilities
heldatDecember31,2014.Theeffectofdecreasesininterestratesisexpectedtobeequaland
oppositetotheeffectoftheincreasesshown.
Profit Equity
+/-25b.p. +/-25b.p.
QR QR
At December 31, 2014
Variablerateinstruments
Fixed/Calldeposits 4,827,339 --
Interest rate swaps -- 7,462,091
4,827,339 7,462,091
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201482
Profit Equity
+/-25b.p. +/-25b.p.
QR QR
AtDecember31,2013
Variablerateinstruments
Fixed/Calldeposits 4,140,946 --
Interestrateswaps -- 8,190,127
4,140,946 8,190,127
Credit risk
Creditriskistheriskthatonepartytoafinancialinstrumentwillfailtodischargeanobligation
andcausetheotherpartytoincurafinancialloss.TheGroup’sexposuretocreditriskisas
indicatedbythecarryingamountofitsassetswhichconsistprimarilyofaccountreceivables,
bankbalancesandderivatives.
TheGroupseekstolimititscreditriskwithrespecttobanksbyonlydealingwithreputed
financialinstitutions.Withrespecttocustomers,allsalesaremadetoMuntajatandwhen
Muntajatcollectsfromitscustomers’,netbackpriceistransferredtotheGroupafterdeducting
marketingfeesandothersellingexpenses.Muntajatassumesallcreditrisksforsalesmadeon
behalfoftheproducer.Asattheyear-end99%oftheoutstandingreceivablebalancewasdue
fromMuntajat.
WithrespecttocreditriskarisingfromthefinancialassetsoftheGroup,theGroup’sexposure
tocreditriskarisesfromdefaultofthecounterparty,withamaximumexposureequaltothe
carryingamountoftheseinstrumentsasfollows:
2014 2013
QR QR
Bankbalances 1,952,136,166 1,708,438,164
Amountsduefromrelatedparties 997,316,490 1,170,663,298
Tradeaccountsreceivable 58,523 58,523
Otherreceivables 3,489,764 5,336,685
2,953,000,943 2,884,496,670
Liquidity risk
LiquidityriskistheriskthattheGroupwillnotbeabletomeetfinancialobligationsastheyfall
due.TheGroup’sapproachtomanagingliquidityriskistoensure,asfaraspossible,thatitwill
alwayshavesufficientliquiditytomeetitsliabilitieswhendue,underbothnormalandstressed
conditions,withoutincurringunacceptablelossesorriskingdamagetotheGroup’sreputation
TheGrouplimitsitsliquidityriskbymaintainingadequatefundsinthebanksandensuringbank
facilitiesareavailable.TheGroup’stermsofsalesrequireamountstobepaidonceMuntajat
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
27 FINANCIAL RISK MANAGEMENT (Continued)
Annual Report 2014 83
collectstheamountfromitscustomers.Tradepayablesarenormallysettledwithin45-60days
fromthedateofpurchase.
Less than 3 to 12 1 to 5 Total
3 months Months Years
QR QR QR QR
At December 31, 2014
Tradeaccountspayable 95,718,652 -- -- 95,718,652
Amountsduetorelatedparties 261,399,922 -- -- 261,399,922
Derivativefinancialliability -- 107,314,147 106,403,589 213,717,736
Interestbearingloan-atgross -- 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
Lessthan 3to12 1to5 Total
3months Months Years
QR QR QR QR
AtDecember31,2013
Tradeaccountspayable 173,114,144 -- -- 173,114,144
Amountsduetorelatedparties 279,049,553 -- -- 279,049,553
Derivativefinancialliability -- 117,967,225 183,305,800 301,273,025
Interestbearingloan–atgross -- 322,938,511 3,081,008,551 3,403,947,062
Total 452,163,697 440,905,736 3,264,314,351 4,157,383,784
Currency risk
Currencyriskistheriskthatthefairvalueorthefuturecashflowsofafinancialinstrumentwill
fluctuateduetochangesinforeignexchangerates.
AstheQatariRiyalispeggedtotheUSDollars,thebalancesinUSDollarsarenotconsideredto
representsignificantcurrencyrisk.
ThetablebelowindicatestheGroup’sforeigncurrencyexposureasatDecember31,asaresult
ofitsmonetaryassetsandliabilities.Theanalysiscalculatestheeffectofareasonablypossible
movementoftheQatariRiyalcurrencyrateagainsttheGBPandEuro,withallothervariables
heldconstant,ontheconsolidatedstatementofprofitorloss(duetothefairvalueofcurrency
sensitivemonetaryassetsandliabilities).Theeffectofdecreaseincurrencyratesisexpectedto
beequalandoppositetotheeffectoftheincreaseshown.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
27 FINANCIAL RISK MANAGEMENT (Continued)
Annual Report 201484
Changesin
currencyrateto Effectonprofit
theQatariRiyal QR
2014
GBP +/-5% 5,286
Euro +/-5% 442,321
2013
GBP +/-5% +/-88,388
Euro +/-5% +/-1,669,560
Capital management
TheGroupmanagesitscapitaltoensurethatitwillbeabletocontinueasagoingconcernwhile
maximisingthereturntoshareholdersthroughtheoptimisationofthedebtandequitybalances.
TheGroupmakesadjustmentstoitscapitalstructure,inlightofchangesineconomicand
businessconditions.Tomaintainoradjustthecapitalstructure,theGroupmayadjustthe
dividendpaymenttoshareholders,orissuenewshares.
Capitalincludessharecapital,legalreserve,andretainedearningsandismeasuredatQR
15,371,798,786atDecember31,2014(2013:QR15,276,770,952).
28. EXPENDITURE COMMITMENTS 2014 2013
QR QR.
(a) Capital expenditure commitments:
Estimatedcapitalexpenditurebudgetedandapproved
foratthereportingdatebutnotprovidedfor:
Othercontractcommitments 295,695,351 133,531,188
2014 2013
QR QR.
(b) Operating lease commitments:
Futureminimumleasepayments:
Withinoneyear 60,991,550 52,542,739
Afteroneyearbutnotmorethanfiveyears 92,837,294 71,605,662
Morethanfiveyears 75,051,858 155,344,875
Totaloperatingleaseexpenditurecontracted
foratthereportingdate 228,880,702 279,493,276
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
27 FINANCIAL RISK MANAGEMENT (Continued)
Annual Report 2014 85
29. CONTINGENCIES
AtDecember31,theGrouphadthefollowingcontingentliabilitiesarisinginthenormalcourse
fromwhichitanticipatesthatnomaterialliabilitieswillarise:
2014 2013
QR. QR.
Lettersofcredit 2,116,529 9,229,689
Bankandotherguarantees 772,992 772,992
2,889,521 10,002,681
30. SUBSEQUENT EVENT
TheBoardofDirectorsoftheCompanynotedintheirmeetingofSeptember2014thatQPand
IQhasjointlyagreedtointegratetheoperationsofQMCwiththeCompany.Theestimateddate
ofsuchmergerisscheduledinearly2015.
QATAR FERTILISER COMPANY (Q.S.C.C.)NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFortheyearendedDecember31,2014
Annual Report 201486
We are committed through our Occupational Health & Safety, Environmental, Quality and Responsible Care Integrated Management systems to:• LeadQAFCOinethicalwaysthatincreasesthebenefitstosocietybyprotectingourpeople,
environmentandcommunity.
• IncreasethecompetencyofpersonnelanduseofadequatetechnologytoenhanceCustomersSatisfaction,environmental,safety,healthandsecurityperformance.
• Preventpollutionandcontroloperationalandsecurityrisksinordertoprotecttheenvironment,thesafetyandhealthofouremployees,contractors,visitors,theneighborsandthecommunity.
• Stewardourproductsandservicesthrougheachlifecyclestagesinordertoprotectpeopleandtheenvironment.
• ImplementOccupationalHealth&Safety,Environmental,QualityandResponsibleCareIntegratedManagementSystemsasaprimelineresponsibilityatalllevelsofourorganizationandcontinuallyimprovetheirperformanceandeffectiveness.
•InvolveandconsultwithouremployeesonmattersrelatedtoourIntegratedManagementSystems.
• ComplywithallrelevantQatariLegislations,RegulationsandStandardsadoptedbytheCompany.
• CommunicatethisPolicyandsystemsperformancemeasurestoouremployees,contractorsandotherstakeholdersincludingpublicandmakeitavailabletothemandotherinterestedparties.
• Monitor,studyandrecordtheenvironmentalimpactsofouroperationscausedbydischargestotheseaandemissionstoairforpossiblereductions.
• Encouragere-useandrecyclingandmanageoursolidwastetoreduceenvironmentalimpacts.
• ConductregularreviewsofrelevantOccupationalHealth,Safety,Security,Environmental,QualityandResponsibleCareactivitiesforcompliancewiththeadoptedStandards.
• Openinformation,communicationandshareexperienceswithallpartiesaffectedbyorinterestedinouractivitiesonsafeuse,transportationanddispositionofourproductsandtorecognize,respectandrespondtoourcommunityconcernsaboutourproductsandoperations.
• WorkwithGovernments,AgenciesandAssociationsatalllevelsinthedevelopmentofeffectiveandefficienthealth,safety,securityandenvironmentallawsandindustrystandardsandsupportresearch.