Jordan Petroleum Refinery Company - الرئيسية · PDF file1 56th Annual Report Jordan Petroleum Refinery Company (A Public Shareholding Limited Company) Amman -The Hashemite

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56th Annual Report

Jordan Petroleum Refinery Company(A Public Shareholding Limited Company)

Amman -The Hashemite Kingdom of Jordan

56th Annual ReportFor the Year Ended31st December, 2011

2011

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Jordan Petroleum Refinery Company

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56th Annual Report

His Majesty King Abdullah II Bin Al Hussein

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56th Annual Report

His Royal Highness The Crown Prince Prince Hussein bin Abdullah II

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56th Annual Report

Contents

Company’s Vision & Mission...............................................................................9

Board of Directors................................................................................................11

Chairman’s Statement..........................................................................................13

Historical Brief....................................................................................................16

Fourth Expansion Project...................................................................................18

Analysis of Financial Position and Outcome of Activities..................................19

Achievements and Activities of the Company......................................................23

Projects.....................................................................................................48

Geographical Locations of the Company................................................54

The Company’s Organization Chart…………………………………………55

Other Explanatory Statements.................................................................56

The Board’s Recommendations...............................................................57

Financial Statements for the Year Ending 31/12/2011 and the Auditor’s Report..59

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56th Annual Report

To be a Vibrant, Integrated & Diversified Regional Energy Company admired for its Performance, Competitiveness & Quality of Products & Services.

• Meeting the locald emand for our products in an economically, environmentally, socially responsible and safe manner.

• Focusing on the constant innovation, adopting advanced technology to enhance productivity and maximize profitability.

• Expanding the Company’s operations and diversifying the range of activities through different partnerships with reputable names to broaden our marketing network regionally.

• Developing the scientific and technical capabilities of the Company’s personnel, providing them with specialized training as well as incentives and rewards in order to realize optimum results and achievements.

• Building value into the investments of the Company’s shareholders.

Company’s vision

Company’s mission

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56th Annual Report

* The board of directors mentioned above was elected on the 12th of May 2011, with the exception of the representatives of the Islamic Development Bank- Jeddah and the Social Security Corporation, who were appointed without elections according to the company’s by-laws.

**Dr. Hesham Saleh Gharaibeh was appointed as Representative of The Social Security Corporation on 01/08/2011.

Board of Directors

ChairmanMr. Walid Mithkal Asfour

Deputy ChairmanEng.Omar Ashraf Al-Kurdi

Members*:Eng. Abed Al Rahim Fathi BoucaiEng.Wael Akram Al Saqqa (Representative of the Pension Fund of the Engineers Association)

Dr. Jamal Mohammad Salah (Representative of the Islamic Development Bank- Jeddah) Mr. Mohammad Majid Allan (Representative of Al Samaha

Real Estate Co.)

Mr. Mohammad Eid BundokjiDr. Nabeeh Ahmad SalamehEng. Suleiman Abd elRazzaq Al-DaoudMr. Mohammad Adnan Al-Madi (Representative of The Social

Security Corporation)

Dr. Mohammad Mahmoud ThniabatMr. Bassam Rashad SinokrotDr. Hesham Saleh Gharaibeh **(Representative of the Social

Security Corporation)

Chief Executive Officer:Eng. Abdel Karim Alawin

Financial Auditors:Deloitte & Touch Company -Middle East /Jordan

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Corporation Headquarter in Amman

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56th Annual Report

Dear Honored Shareholders:On behalf of the Board of Directors I am pleased to welcome you all to the 56th General Meeting to discuss the Company’s achievements for the year 2011, and the audited consolidated financial statements for the fiscal year ended 31/12/2011, and our company’s future plans.The Company has continued to perform its duties to meet the needs of the Kingdom of various petroleum products under continued volatility of oil prices with an average price of $ (114) per barrel of oil during the year 2011, compared with $ (82) per barrel in 2010.The drop in Egyptian natural gas supplies to the kingdom and its total discontinuationin many times for extended periods leading to the use of diesel and heavy fuel oil by the electricity sector instead of natural gas placed a great responsibility on the company to meet these requirements without delay or interruption.The extensive need to import crude oil and petroleum products led to several crises in the company’s liquidity as a result of fixing product prices despite the surge in global prices, which resulted in large subsidies not paid by the government in a timely manner, and the large increase in the electricity generation sector consumption of diesel and fuel oil have led to accumulating large debts for the company on the government represented by the National electricity company forcing the company to resort to banks like never before for necessary funding for the continuation of its work.The company maintained contact with the highest levels of government and the power companies to repay their accumulated debts, and it already has received some amount of these debts but that wasn’t enough. We are confident that the government is fully aware that debts’ repayment is very important to keep the refinery able to continue supplying petroleum products to all sectors in the Kingdom in order to ensure the continuation of the Kingdom’s economic momentum.As you know the company operated during the period 2008-2010 under a services agreement signed with the government, under which the company had to secure the Kingdom’s needs of petroleum products in exchange of receiving an annual net profit after tax equal to JD (7.5) million, plus profits from the lube oil factory and another amount in exchange of refining Iraqi oil. Where this agreement is not in the company’s interest, it has not been renewed for the year 2011 and the company has been engaged in negotiations with the government to improve the terms of the agreement in the interest of the company to enable it to continue its role and implement the fourth expansion project. Some understandings have been reached in this regard. Due to the limited time that the company has before holding its general assembly, the financial statements have been prepared for the year 2011 to conform to these understandings before signing a new agreement with the government.By reviewing the financial statements of the Company in 2011, we notice that the value of the

Chairman’s Statement

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Company’s sales increased by 47% to be JD (3.497) billion, compared to JD (2.379) billion in 2010, and that is due to the increase in petroleum products selling prices in line with the increase in international crude oil prices. The Company achieved a JD 25.5 million net profits before tax in 2011 compared to JD15.2 million in 2010, with a growth of 68%.Noting that profits in 2011 had been built on the basis of the under standing sreached with the government while the profits in 2010 were built on the basis of the services agreement signed with the government in 2009. In addition,the Company’s total assets value increased to JD (1,287) million compared to JD (795) million in 2010 and that was mainly due to the increase in the accounts receivable to about JD (441) million.

Dear Honored Shareholders:Following the company’s long history of success since its inception till now justifies the right to look optimistic to the future despite all the difficulties and challenges the company faces right now. The duty also requires from all of us to continue supporting the company and improve its performance by upgrading and improving its products to keep the company as you know one of the most important economic pillars in the Kingdom to meet all the kingdom’s needs of oil derivatives, and achieve the shareholders best expectations.In spite of all the difficulties and obstacles that encountered the company’s business, such as increasing oil prices, growing demand for petroleum products, and the accumulation of debt on governmental departments and institutions and other entities, the company has been able to move forward in its projects and business implementation programs according to plans. The credit for that goes to proper planning and concerted efforts based on the management and employees. The company was able to transmit and implement several important projects during 2011, including:-

• The company has awarded a tender for the supply, implementation and operation of a sulfur recovery unit to the French company (LE Gaz Integral) at a cost of JD (14.807) million.

• The company has awarded a tender for the purchase of (50) tractive units and semi-trailers on the German company(MAN) and the Omani company (ORYX) at a cost of JD (8.675) million.

• The company purchased refuellers and hydrant dispensers– For Airport service -from the German company (ROHR) at a cost of JD (2.750) million.

• The company has awarded an LPG gas cylinder painting facility with a capacity of (150) cylinders per hour to the Italian company (SAVIM) at cost of (1) one million Jordanian Dinars.

• The company has expanded by establishing new petrol stations and upgrading its existing ones (ten stations) and improving their performance in order to better serve the citizens.

Dear Honored Shareholders:In order for our company to be able to continue its efforts to increase and improve production and meet the needs of the local market of all petroleum products, the implementation of the fourth expansion project is a must. This project aims at improving the specification of some products and convert heavy fuel oil to more valuable light products. The company is currently importing the shortage in its production such as gasoline and diesel.The company has in the past two decades been preparing for the expansion project by conducting many studies especially the economic feasibility studies which have been updated from time to time according to the latest developments, a number of advisers have been contracted who unanimously agreed that the project is feasible, also many investors expressed interest in the project but were asking for guarantees from the government to reassure them on their investments in the project.

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56th Annual Report

The reason for not executing the project even after the completion of all studies which support its feasibility was due to delays in reaching with the government to a clear basis for future arrangements between the government and the company, as this would enable the company to start contacts with potential financiers to attract them to fund this vital project.Despite all the obstacles that stand in the face of the company for the implementation of this vital project, the Board of Directors did not leave a way to address the governmental and non-governmental organizations to explain the negative effects which will be reflected on the company on one hand and on the national economy on the other hand due to the conflicting decisions issued by the government regarding this important project. As a result, the Minister of Energy and Mineral Resources addressed a letter on 04.20.2011 to the company announcing a formation of a government committee to negotiate with the company its future planes. The government representatives and the refinery representatives held since then several meetings, the last one held at the Ministry of Energy and Mineral Resources on 01/09/2012 where a minutes of meeting was drafted showing the points that have been agreed upon, and we are currently waiting for the completion of this agreement which will be displayed to the companies extraordinary general assembly before its approval by the Council of Ministers.

Dear Shareholders:I am pleased to inform you that, after reviewing the outcome of the Company’s performance and net profits for the year 2011, the Board of Directors recommends to the General Assembly to approve the distribution of profits to the shareholders at an amount of(15%) of capital, and capitalize 8 million of profits to increase capital by 25% to be distributed as free stock share. While waiting for the final agreement with the government the remaining profit balance has been recorded as a provision for profits settlement with the government.In conclusion, I would like to express my thanks to our government, looking forward to its cooperation and support to enable the Company achieve its mission as a strategic institution contributing in the energy supply security and to all parties that cooperated with the Company, specially, the Institution of Standards and Meteorology, the General Directorate of Civil Defense, Security forces, and all other official bodies. I would like also to express my thanks and appreciation to the Syndicate of Petrol Filling Stations and to the owners of the filling stations themselves and to the gas distribution centers as well as the Jopetrol Lube Oil distribution centers for their continued cooperation with the Company.In addition, I would like to express my thanks and gratitude to members of the Board of Directors, the Company’s Management and all its employees, for their sincere efforts in serving the Company.I would like to seize this opportunity to express my deepest appreciation and gratitude for your support and trust vested in the management of the Company, hoping to continue serving our Country under the patronage of His Majesty King Abdullah II, God bless him.

Walid Mithkal Asfour

Chairman of the Board of Directors

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Annual Report of the Board of DirectorsJordan Petroleum Refinery Co.

(A Public Shareholding Limited Company)

Dear Honored Shareholders:The Board of Directors is pleased to present to you its fifty sixth annual report including the most important activities and achievements of the Company, the Company’s Financial Statements for the Year ended on 31st December 2011.A Historical BriefThe idea of building a Refinery was first conceived by the Ministry of National Economy along with a Group of Jordanian businessmen in 1952.What prompted this idea, in addition to the Kingdom’s need for fuels, was the passage of Tapline through Jordan. The establishment of JPRC witnessed the following milestones:

• On 30/06/1956, The Council of Ministers granted the go-ahead to set up a refinery in the Hashemite Kingdom of Jordan, and on 30/10/1957, The Council of Ministers approved the Company’s regulation and the Company was registered in the Ministry of Justice as a public Limited Company with a concession and with an issued share capital of four million Jordanian Dinars to which the Government contributed 250 thousand Jordanian Dinars.

• On 16/11/1957, the Concession Agreement was signed between the Government’s represented by the Minister of National Economy, the late Mr. Khulusi Al Khairi, and Jordan Petroleum Refinery Company, represented by its then Chairman, the late Mr. Abdul Majeed Shoman.

• On 10/2/1958, the concession agreement was endorsed by the Government and published in the Official Gazette (issue number 1373), on 03/03/1958.

• On 8/9/1958, The Board of Directors awarded a tender to construct a refinery to an Italian Company, and on 9/10/1958 the agreement was signed to implement the project that included the construction and running of a refinery with a daily production capacity of (1000) tons per day at a cost of approximately (3) million Jordanian Dinars, also another tender was awarded to construct a pipeline of (8) inch diameter and a (43) kilometer long connecting the Refinery to the Tapline at a cost of (235000) Jordanian Dinars.

• On 1/1/1961, the Company started producing different petroleum products. • On 2/2/1961 the Jordan Petroleum Refinery was officially inaugurated by His

Majesty the late King Hussein Bin Talal.The Refinery through its lifetime had witnessed many expansion and development projects,that included the following:

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56th Annual Report

1- Increased the Refinery’s capacity to (14000) tons per day through three expansion projects, which were completed in (1970, 1973 and 1982,) raising the capacity to ( 8700) ton per day and the throughput was subsequently increased to (14000) tons per day in 1998 by the technical and engineering staff of the Refinery.

2- Construction and commissioning of lube-oil blending plant in the year 1977 of (25000) tons per year capacity with the technical cooperation of Shell.

3- Construction and commissioning of LPG cylinders factory in 1976 capable of producing (100000) cylinders of (12.5) kg capacity per year. The plant incorporates LPG cylinders maintenance facilities.

4- Construction and commissioning of crude-oil unloading station to handle crude oil imported by road tankers in1986. The station is currently capable of handling (15000) tons per day.

5- Construction and commissioning of three LPG cylinders filling stations in Zarka, Amman, and Irbid in (1979 and 1989) capable of handling jointly (8400) cylinders per hour. The stations were later expanded to handle (15600) cylinders per hour.

6- Increasing the storage capacity of the Company facilities in phases to reach 1,581,725 Tons in 2011.

Production, Import and Sales • Quantities of petroleum products imported by the Company during 2011 amounted

to(2,833,441) tons against (1,737,493) tons in 2010, representing an increase of (1,095,948) tons or (63%).

• Quantity of crude oil processed amounted to (3,189,704) tons in 2011 against (3,482,526) tons in 2010, representing a decrease of (292,822) tons or (8.4%).

• The Company’s sales of petroleum products during 2011 amounted to (6,076,075) tons against (4,874,155) tons in 2010, representing an increase of (1,201,920) tons or (24.7%).

The sale of petroleum products in 2011 compared with 2010 is as follows:-

Gasoline sales increased by (1.7%).

Kerosene sales increased by (8.4%).

Diesel sales increased by (55.9%).

LPG sales increased by (21.2%).

Fuel Oil sales increased by (20.9%).

Jet Fuel sales increased by (1%).

Asphalt sales decreased by (28.2%).

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Fourth Expansion ProjectThe last expansion project for the refinery was completed in the early eighties of the last century. Consumption of oil products has almost tripled ever since. To meet the growing demands, the Company resorted during the nineties to increase the refining capacity through revamps of the process units and importing increasing amounts of liquefied gas, gasoline and diesel. The expansion of the refinery has become a necessity not only to meet the growing demands of oil products, but also to help the Refinery to improve the quality of the products and to convert heavy fuel oil to high-value products for the local market such as jet fuel, diesel and gasoline since demand for heavy fuel oil is diminishing due to the use of Egyptian natural gas in the power plants.The Company has carried out a number of feasibility studies on the expansion project, which all showed that this expansion is economically feasible because the only alternative is to import products from world markets, paying the international prices added to it the delivery cost to the center of consumption, at the northern and central parts of the Kingdom .After the government had granted the refinery an exclusive period of fifteen years to enable it to attract a strategic partner for the expansion project, the Cabinet decided on 15/12/2009 to suspend the decision of granting the exclusivity. The Cabinet formed a ministerial committee to develop recommendations to the Council of Ministers related to the grounds for granting exclusivity and the procedures to solicit and select the best offer, and to submit its recommendations to the Council of Ministers within one month from the decision’s issuance date and suspension of all decisions and actions that have been taken in this regard.On 26/10/2010 Council of Ministers decided under its resolution No. (2967) to go back to the government’s restructuring program of the oil sector emanating from the overall strategy for the energy sector (2007 - 2020). The decision also included the following: -The Petroleum Refinery Company to proceed with all the measures deemed appropriate concerning the implementation of the fourth expansion project leaving matters to the Company to determine the optimal configuration of the project and the way of funding in accordance with a license agreement to be prepared for this purpose.Duly retender the “structuring of the oil market “ tender related to the ownership and operation of the marketing companies, and to participate in owning and operating the Logistics Company. The said tender was suspended earlier by the Council of Ministers’ decision which was adopted at its meeting held on 06/10/2009. The government declining to grant exclusivity after almost one year passing by, and due to the difficulties that have prevented finding and attracting a partner to implement the expansion project, as well as the difficulty of investing in it in future under the current government guidelines and circumstances, the Company as a result was forced to change its strategy regarding the expansion. So instead of adopting a comprehensive expansion project to meet the market needs of petroleum products until 2025 with an investment cost estimated at two billion dollars, it has been studying other alternatives for the expansion, whereby improving the quality of petroleum products and converting fuel oil into high-value products without increasing refining capacity. The proposed

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expansion require an investment between (800-1000) million dollars.Also, the Company has contacted several international financial institutions in preparation to select a financial advisor. One of his tasks will be considering different alternatives for financing this project and to advise the Company in this regard. Communication is currently going on with the Government to determine future arrangements which will enable the Company to implement this expansion and to continue providing oil products to the Kingdom to remain the major source in energy supply security.Despite all the obstacles that stand in the face of the company for the implementation of this vital project, the Board of Directors did not leave a way to address the governmental and non-governmental organizations to explain the negative effects which will be reflected on the company on one hand and on the national economy on the other hand due to the lack of clarity caused by conflicting decisions issued by the government regarding this important project. As a result, the Minister of Energy and Mineral Resources addressed a letter on 04.20.2011 to the company on the formation of a government committee to negotiate the future of the company. The government and the refinery representatives held since then four meetings, the last one held at the Ministry of Energy and Mineral Resources on 13/02/2012. Government representatives questioned several points related to the company’s future and asked the company to prepare a paper containing the company’s position to be studied, noting that the discussions have not stopped till this date.

Analysis of the Financial Position and Outcome of Activities in 2011.The volatility of crude oil prices continued during the year 2011, the average price per barrel of oil reached ($114) compared with an average price of ($ 82) during the year 2010. The increase in the imported petroleum products and lube oils prices, resulted in an increase in the cost of sales. The Government continued fixing the price of LPG at JD (6.5) per cylinder during the whole year.In accordance with the arrangements that had been followed since 1983 until the expiry date of the concession on 2/3/2008, any excess or deficit achieved as a result of the Company’s activities is debited or credited to the Government account.The service agreement signed between the Government and the Company on 25/2/2008 and the subsequent extensions to it confirmed the continued subsidy of LPG at the expense of the treasury. No services agreement was signed in 2011 or 2012.The Following is a brief analysis of the costs and income for the year 2011 as compared with 2010:-

1-Sales:Comparing the Company’s sales for the year 2011 with those for 2010 shows that the sales revenue increased from JD (2,379) million in 2010 to JD (3,479) million in 2011, representing an increase of JD (1,118) million. The increase in the sales value is due to the increase in quantities sold this year by 24.7%.In addition to the increase in import parity prices (IPP) which are used in the company’s accounting.

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2-Crude Oil:The actual cost of crude oil used in production increased from JD (1,443) million in 2010 toJD (1,926) million in 2011 representingan increase of JD (483) million due to higher crude oil prices by (39%) despite the decrease in quantities processed by (5.7%).

3-Imported Petroleum Products:The cost of imported petroleum products increased from JD (880) million in 2010 to JD (1,846) million in 2011 representing an increase of JD (966) million.

4-Costs:Industrial costs increased from JD (52.6) million in 2010 to JD (71.9) million in 2011, representing anincrease of JD (19.3) million as a result of the increase in salaries’ expenses,, raw materials, spare parts , transportation fees and fuel expenses. As for the selling and distribution expenses, it increased from JD (22.6) million in the year 2010 to JD (26.2) million in 2011, representing an increase of JD (3.6) million, mainly as a result of the increase in staff costs and the increase in costs accompanied with increase in sales quantities.Administrative expenses increased from JD (7.2) million in 2010 to JD (10.4) million in 2011 representing an increase of JD (3.2) million, resulting mainly from an increase in staff costs and the penalties on sales tax.Bank interests on loans increased from JD (21.2) million to JD (44.5) million in 2011representing an increase of JD (23.3) million due to the increase in the volume of credit facilities utilized due to the high burden of financing the purchasing of crude oil and its derivatives at international prices, in addition to the high value of accounts receivable and the debt balance of Ministry of Finance during the year.

The Balance Sheet:Comparing figures of the balance sheet for the year 2011with 2010 shows that the balance sheet total figures increased from JD (795) million to JD (1287) million, representing an increase of JD (492) million.Following is a brief analysis of the assets and liabilities items on 31/12/2011 as compared with 2010.

-Current Assets and Liabilities:Accounts receivable and other debit balances increased from JD (347) million in 2010 to JD (788) million in 2011, representing an increase of JD (441) million, which was mainly due to an increase in the debit balance of the Ministry of Finance by JD (141) million plus the increase in the debit balance of the Central Electricity Generating Company to JD (455) million representing an increase of JD (300) million more than in 2010 as a result of switching some of electricity generating stations to operate on diesel and fuel oil in 2011 due to reduced quantities of Egyptian gas. The inventory

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value increased from JD (356) million to JD (389) million, representing an increase of JD (33) million as a result of the higher stock quantity of crude oil and other products. The deferred tax assets value was JD (14.5) million compared to JD (6.5) million in 2010.The increase in current assets were offset by an increase in the banking facilities which increased from JD (427) million in 2010 to JD (614) million in 2011 representing an increase of JD (187) million, in addition to a higher creditors’ balances, which rose from JD (265) million in 2010 to JD (501) million in 2011, an increase of JD (236) million.

-Fixed Assets:The book value for fixed assets increased from JD (315) million in 2010 to JD (331) million in 2011 representing an increase of JD (16) million while the accumulated asset depreciation had increased from JD (248) million to JD (254) million representing an increase of JD (6) million with a net increase in the net book value from JD (71) million in 2010 to JD (78) million in 2011 representing a increase of JD (7) million due to the constructions of gasoline and jet fuel storage tanks.

-Shareholders Equity:The statutory reserve account increased from JD (19.5) million in 2010 to JD (22) million in 2011 giving an increase of JD (2.5) million which is due to deducting (10%) of net profit as stated in the Company’s act No.(22) for the year 1997 and its amendments. The cumulative net change in fair value had decreased from JD (4.8) million in 2010 to JD (4.3) million in 2011representing a decrease of JD (0.5) million as a result of the decrease in the shares value owned by the Company, as stated in standard (39) of the International Accounting standards, although, the cost value for these shares is JD (338,047) only. Retained earnings had reached JD (28) millions. As a result, the value of shareholders equity increased from JD (74.9) million in 2010 to JD (86.6) million in 2011 giving an increase of JD (11.7) million.

The effects of the above mentioned changes on the financial position:As a result of the above changes, the cash in hand increased by JD (3) million reaching JD (11.8) million in 2011 compared with JD (8.8) million in 2010. The main reason for the increase is the rise in credit facilities utilized by JD (186) million that was due to the increase in the indebtedness balance of Ministry of Finance and other institutions and governmental departments and the indebtedness balance of some clients and electricity generating and transportation Companies by JD (391) million, in addition to the increase in the creditors’ accounts and other payables by JD (237) million, compared with an increase in inventory value by JD (33) million .

Risk Management:-The Company is following financial policies to manage the different risks within a specific strategy, the Company’s management monitors and controls the risks and proceed the optimal distribution strategy for every financial assets and financial

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liabilities. Risks include interest rates, market, credit and foreign exchange.

• Capital risk management :The Company manages its capital to ensure their viability and to maximize the return to stakeholders through an optimal balance between property rights and debt.

• Liquidity risk:The Company manages liquidity risk by maintaining adequate reserves and the ongoing monitoring on the actual and estimated cash flows and the compatibility between the entitlement financial assets with financial liabilities.

• Credit risk :The Company’s financial assets mainly consist of debtors and other receivables, and the available financial assets for sale and cash does not represent an important part for credit risk .The debtors are spread widely among the customers’ ratings and their geographical regions, in addition a strict credit monitoring system is maintained by monitoring each client’s credit limits separately on an ongoing basis. All the Company’s investments in shares are classified as financial assets available for sale.

• Market risk :Market risks is a loss of value resulting from changes in market prices like a change in interest rates, foreign exchange rates, prices of equity instruments and therefore change the fair value of cash flows of financial instruments within and outside the balance sheet.

• Currency risk :The main operations of the Company are in Jordanian Dinars and the U.S. dollar and the fact that the Jordanian dinar (currency of the Company) is linked to the U.S. dollar, the Company’s management believes that the risk of foreign currency is not physical.

• Interest rate risk :The Company continuously manages the risks due to interest, and is assessing various options such as return and renewal of existing financial centers and alternative funding.

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Achievements and activities of the Company:

IMPORTS

A. Crude Oil. Quantities of crude oil supplied to the Company during 2011 amounted to (3,189,704) tons against (3,482,526) tons in 2010, showing a decrease of (292, 822) tons or (8.4 %).

B. Petroleum Products:The Company processes crude oil producing different petroleum products needed by the Kingdom meeting the Jordanian Standard Specifications. The Company pursues a yearly production policy, which aims at striking the right balance between production and imports to meet the local demand, and to best serve the national economy.Petroleum products quantities imported during 2011 amounted to (2,833,441) tons against (1,737,493) tons in 2010, showing an increase of (1,095,948) tons or (63%).The following table shows the petroleum products quantities imported in 2011 compared with 2010 and 2009.

ImportedProducts Quantities in tons Percent Change

2010/2011 %

2009 2010 2011LPG 235738 222634 291068 30.73

Diesel 438821 670446 1325138 97.65Fuel Oil - 307303 674872 119.61Gasoline 230778 399935 410222 2.57

Avgas 1037 1059 831 -21.53MTBE 168687 136116 131310 -3.53Total 1075061 1737493 2833441 63.08

C- Base Oils:The quantities of base oils imported by the Company during 2011 amounted to (13,136) tons against (13,093) tons in 2010, showing an increase of (43) tons or (0.33%).

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2. PRODUCTION AND REFINING

A. Petroleum Products.The Company maintained its past production policy which aims at realizing an optimal economic balance between crude oil refining operations and petroleum products imports to meet all the Kingdom’s needs with high economic efficiency. The Company’s production of petroleum products amounted to (3,158,174) tons in 2011 against (3,349,763) tons in 2010, showing a decrease of (191,589) tons or (5.7%).The following table and graph show development of the Company’s production of petroleum products during the years (2008-2011) in ton compared with the base year 1961:

Product 1961 2008 2009 2010 2011 PercentChange

2010/2011

LPG 615 120155 106489 84903 83604 -1.5

Gasoline 37179 740488 756626 702899 680874 -3.1

Jet Fuel - 298656 308212 342641 329232 -3.9

Kerosene 39620 104657 80989 84646 57352 -32.2

Diesel 41209 1236206 1172852 903404 1030009 14

Fuel Oil 50605 1002416 919494 1080394 868197 -19.6

Asphalt 11897 167750 193268 150876 106564 -29.4 WhiteSpirit - - 675 - 2342 -

Total 181125 3670328 3538605 3349763 3158174 -5.7

view of the Refinery Process units

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B. Lubricating Oils (Jopetrol)The Company produces more than (100) different grades of lube oils of the highest quality under the trade name of (Jopetrol) to meet most of the local market requirements.All products comply with the Jordanian specifications, the American Petroleum Institute (API) standards, the Society of Automobiles Engineers (SAE) standards, European standards, and the American Army Military standards (Mil, Standard). The products are subjected to the most stringent quality control tests carried out in specialized modern laboratories.

Lube oils factory

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Jopetrol lube-oils maintained the ISO 9001/2000 quality management certificate where its quality system is periodically inspected by the Lloyds Register committee that originally awarded the certificate.This achievement comes after Jopetrol applied the international quality standards, reflecting the high level it has reached either in production, packaging or marketing.Also Jopetrol received the first level in the”laboratory results matching” program which was organized by the International company Shell, and an excellence level in the Dutch program (IIS) for testing performance efficiency between international laboratories. Also it obtained the approval of GE (General Electric Company) to use its oil production in their modern locomotives which are manufactured and are currently being used in Aqaba Railway. In addition, it received a certificate from Mercedes-Benz to use Ayla Synthetic oil grade10/40 and super diesel oil 16 grades 15 St. / 40 in their engines.Production in 2011 by blending and canning lubricant oil amounted to (14,035) tons against (15,308) tons in 2010, showing a decrease of (1,273) tons or (8.3 %).The following table and graph reflect the development in lube-oils production for the last four years compared with the initial production year 1977: -

Year 1977 2008 2009 2010 2011Percent Change

2010/2011

Production 1191 14055 17046 15308 14035 -8.3%

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56th Annual Report

C. LPG CylindersDuring 2011, the LPG cylinders factory repaired and fixed (82,061) cylinders compared with (75,330) in 2010; also (101,563) cylinder valves were replaced in 2011 compared with (86,988) valves in 2010, in addition (66,707) Cylinders of capacity (12.5) kg were written off in 2011 compared with (217,285) cylinders in 2010. Write off was done as a result of not passing the technical examination at the filling stations in order to protect public safety and to implement the adopted resolution by the Commission from the Ministry of Energy and Mineral Resources, Civil Defense, Jordan Institution for Standards and Metrology in addition to the Company, to withdraw the cylinders which were not approved by the technical staff and replace them with new ones.The Jordanian Company for The Manufacturing and Filling of Liquefied Petroleum Gas was registered as a wholly-owned subsidiary of the Jordan Petroleum Refinery Company with a capital of 4 million dinars, paid (50%) on 28/5/2008 and has not exercised its activities yet.

D. Filling of Asphalt DrumsThe number of drums filled with asphalt in 2011 reached (915) drums compared with (1009) drums for 2010. Total sales of asphalt drums in 2011 were (920) drums.

SALES:

A. Petroleum ProductsSales during 2011 reached (6,076,075) tons compared with (4,874,155) tons in 2010; this shows an increase of (1,201,920) tons representing a rate of (24.7%).The following table and graph show the development of sales for the last four years compared with the initial year of 1961 : -

Product 1961 2008 2009 2010 2011Percent Change

2010/2011LPG 673 321272 338553 311977 377985 21.2

Gasoline 39301 861177 1022515 1065405 1083154 1.7Jet Fuel - 297681 318437 350577 353780 1

Kerosene 50824 99633 110654 69355 75166 8.4Diesel 98428 1508376 1613536 1543479 2406709 55.9

Fuel Oil 36179 1096251 823043 1380905 1669826 20.9Asphalt 11101 167395 193785 151541 108738 -28.2

White Spirit - 641 1190 916 717 21.7Total 236506 4352426 4421713 4874155 6076075 24.7

Note: (190,162) tons of fuel oil, fuel gas, and naphtha were used in the Refinery during 2011 for steam production and process operation shall be added to the above sales figures.

28


B. Lubricating Oils (Jopetrol)Sales during 2011 of various grades of lube oil under the trade mark of JOPETROL reached (14,869) tons compared with (15,628) tons for 2010 representing a decrease of (759) tons or (4.85 %). Lube oils were sold in containers of capacities ranging between (1/4) liter to (209) liters as well as in bulk to large consumers.The following table and graph show the development in lube-oil sales for the last four years compared with the initial production year 1977.

Year 1977 2008 2009 2010 2011 PercentChange

2010/2011

Sales 535 13974 17332 15628 14869 -4.85 %

Despite the decrease in Jopetrol sales amount compared with last year, it achieved the highest value of profits in its history.

29

56th Annual Report

C. LPG CylindersSales of (12.5) kg empty LPG cylinders during 2011 reached (180,334) compared with (102,153) for the 2010, showing an increase of (78,181) cylinders or (76.53 %). Sales of (50) kg empty LPG cylinders in 2011 reached (110) cylinders compared with (82) in 2010. The estimated number of (12.5) kg LPG cylinders in circulation in the Kingdom during 2011 is (4.7) million cylinders.

Lub-Oil sales Ton.

30


4-Company’s Clients:

A-Petroleum Products:The Company supplies all consumers’ centers in the Kingdom with their needs of fuels and lube oils. The Company keeps good relationships with its customers and always works on meeting their expectations and considers them as partners in its development. The clients are from various sectors of the society. They are government institutions, filling stations, LPG Distributors, air line companies headed by the Royal Jordanian Airlines, The Central Electrical Generating Co, The Cement Company, Arab Potash Co, the Phosphate Mines Co, and many others.

B- Jopetrol Lube Oils:The largest customers of Jopetrol lube oils are the Armed forces, Royal Jordanian Air Force, the Potash Co, the Phosphate Mining Co, Comedat Co,The mining Company to develop mining, Royal Jordanian airlines, Jordan Steel Company, the Directorate of Civil Defense, , the Greater Amman Municipality, Aqaba Railway Corporation, Water Authority, Ministry of Public Works, and the Ports Corporation.

5. DISTRIBUTION OF PETROLEUM PRODUCTS:

The Company supplies petroleum products daily to all service stations and directly to some industries and other establishments.

Lube oile

31

56th Annual Report

A. Storage of Petroleum Products in the KingdomStorage capacity in the Kingdom amounted to (1,638,805) tons distributed as follows:-

Location Storage Capacity(ton)

Refinery tanks/site: Zarqa-Irbid-Amman 860754Aqaba stores tanks/old project 28000Aqaba stores tanks/new project 183000Fuel distribution stations 135826Large companies 402350Airports stations 10875Total 1620805

B. Service StationsAt the end of Year 2011, the number of service stations in the Kingdom reached (457) stations, capable of storing (135,582) tons of various fuels, including (19) stations for private use with storage capacity of (1148) tons.The number of new stations that entered into service in different parts of the Kingdom during 2011 was (18) stations, while the number of new stations expected to enter service during 2012 based on the number of awarded permissions given in 2011 is (9).The number of LPG distribution centers in the Kingdom reached (915) in 2011 plus (5) central distribution companies.The following table shows the number of stations and gas distribution centers in each governorate of the Kingdom:

Governorate No. of GasStations 2011

No. of LPG distribution centers/2011

Amman 173 246Zarka 49 91Balqa 37 51

Madaba 14 34Irbid 69 217

Mafraq 29 83Jerash 11 44Ajloun 11 34Karak 20 68Ma›an 15 20Tafeela 11 19Aqaba 18 8Total 457 915

32


C.LPG fillingThe number of LPG cylinders of (12.5) Kg capacity filled in the Zarka, Irbid and Amman stations in 2011reached (28) millions compared with (23) millions in 2010, showing an increase of (5) million cylinders or (22.3%). Also (28359) cylinders of (50) Kg capacity were filled in 2011 compared with (34237) during 2010, with a decrease of (5878) cylinders or (17%). The average daily filling rate in the three LPG filling stations based on actual working hours during 2011 was (77344) cylinders of (12.5) kg and (78) of (50) kg cylinders.

D. Airports StationsThe Company operates three refueling stations located in Queen Alia International Airport, Amman Civil Airport, and King Hussein International Airport in Aqaba. During 2011, the stations serviced (25874) flights and handled about (423,139) million liters compared with (425,095) million liters in 2010, a decrease of (1,956) million liters. The Company also refueled (7301) flights of Avgas. The Company imported sufficient quantities of avgas in 2011which were supplied at Amman airport station to airplanes reaching to(1,150,280) liters compared with (1,453,742) liters in year 2010 representing a decrease of (303,462) liters.

E. Aqaba DepotsFirst: Old Depot in the Port Area (Old Project).This facility has storage capacity of (28000) tons. It received (24039) tons of fuels and base oil during 2011 compared with (22534) tons in 2010 with an increase of (1505) tons or (6.6%). Sales from this depot reached (25854) tons in 2011 compared with (16467) tons in 2010 with an increase of (9387) tons or (57%).

33

56th Annual Report

Second: New Depot in the Industrial Area (New Project)This facility has storage capacity of (183000) tons. It received (4,896,513) tons during 2011 compared with (4,317,528) tons received in 2010, with an increase of (578,985) tons or (13.4%). Total sales from this depot in 2011were (4,767,139) tons compared to (4,198,179) tons in 2010, with an increase of (568,957) tons or (13.5%).

6. TRANSPORT OF PETROLEUM PRODUCTS:The transport fleet of the Company consists of (54) tankers, (182) trailers and (266) semi trailers which are used for hauling fuels and LPG. The fuel quantities transported in 2011 by the Company’s fleet amounted to (1,118) million tons compared with (1,189) million tons in 2010.The number of trips undertaken in 2011 was (58,254) in which the total distance travelled was (7.1) million kilometers compared with (60,604) trips in 2010 at a total distance of (7.7) million kilometers. In 2011, the Company boosted its transport capability by contracting local companies to transport (3.007) million tons of diesel, Jet Fuel and LPG compared with (2.1) million tons transported by contractors in the previous year.

7.TENDERS AND SUPPLIESThe Company’s tenders and purchases are governed by “a supplies and works code” that sets themechanisms for preparing the specifications and issuing the tenders and their evaluation.During 2011, the Company issued (168) tenders as follows:* (111) Tenders for supplying oil derivatives,base oils,compressors, pumps, laboratory

equipment and various spare parts * (24) Tenders for transporting various petroleum products. * (27) Tenders for Construction work. * (6) Tenders for selling various scrap, cylinder and valves

The number of purchase orders issued in 2011 was (1925) for both foreign and local orders.

34


8.Major Suppliers:The Company through its Purchasing Department deals with large number of suppliers andLocal agents representing more than (30) countries. The following table shows the major suppliers:

Crude Oil Oil derivatives Base Oils Additives Chemicals VehiclesSpare Parts

Reactors and heat

exchangersAramco,

Saudi Arabia

Aramco, Saudi Arabia

Luberef Aramco

Saudi ArabiaLubrizol(UAE)

Innospec, UK

Nissan, DieselJapan

ATB,Italy

SomoIraq Total, France Shell.UK Solvochem,

Holland Nalco, UAE RenaultFrance

KOCH,Italy

Naftomar,Greece Total, France Chevron,

France UOP,UK DieselTechnique, UAE

UTONRomania

I.P.G, Kuwait EXXON MOBIL, USA

AFTONU.K

GE Betz,Italy

United diesel,UAE

BORSIGGermany

Sabic,Saudi Arabia

Chemic,Italy

Bukke Have,Denmark

Godrej ,India

Gulf InterstateChematek,

Italy Osaka, Japan

Sonatrach. Algeria AFTON HTP, Germany

B.B.ENERGY Dow Chemical

SkaniaSweeden

Trafigura, UAE

SUD-CHEMIE ACERBI, Italy

ShellU.K

JOHNSONMATTHEY

METRA , Switzerland

LitascoSocar

ThomassenDutch

9.SHAREHOLDERSThe number of shareholders on 31/12/2011 was (32397).The following table and graph show the distribution of shareholders according to their nationalities:

Nationality Number of Shareholders

Percentage of shareholders %

Number of Shares

Percentage of number of

shares %Jordanian 28272 87.3 25,033,965 78.2%

Arab 2913 8.9 2,973,439 9.3%Foreign 1212 3.8 3,992,598 12.5%

Total 32397 100 32,000,000 100%

35

56th Annual Report

The following table and graph show the distribution of the Company’s shares according to the shareholders’ categories

Category Number of Shareholders

Number of Shares

Percentage of number of shares%

Individuals 32249 18,694,053 58.4Social Security Corporation 1 6,525,000 20,4Banks 3 2,205,061 6.9Saving funds 22 1,720,265 5.3Service companies and industry 64 2,269,568 7.1Other Public entities 33 215,445 0.7Insurance Companies 7 60,973 0.2The Ministry of Finance/Jordan Investment Corporation previously 1 84,540 0.3

Others 17 225,095 0.7Total 32397 32,000,000 100

Shareholders, Nationalition

36


Shareholders Holding more than (5%) of the Company’s Shares for Years 2010and 2011:

NameNumber of shares Percentage Total

Shares %

2010 2011 2010 2011

Social Security Corporation 6,525,000 6,525,000 20.4% 20.4%

Islamic Development Bank/ Jeddah 2,000,000 2,000,000 6.3% 6.3%

Total 8,525,000 8,525,000 26.7% 26.7%

Shares Activity in Amman Stock Exchange:The number of shares transacted during 2011 in the stock exchange amounted to (16.7) million shares valued at JD (87.5) million executed through (32,077) transfer contracts at an average share price of (5.23) JD.The following table shows the activity movement of the Company’s shares in Amman’s stock exchange from 2008 to 2011:

Particulars/ year 2008 2009 2010 2011

Shares transacted 150,746,253 46,124,142 7,391,412 16,721,965

Volume in JD 2,073,544,415 345,000,000 46,994,759 87,500,000

Number of executive contracts 180,656 80,085 19,037 32,077

Market value of shares JD 219,520,000 217,600,000 167,680,000 188,480,000

Closing price in JD 6.86 6.80 5.24 5.89

Average share price in JD 13.755 7.479 6.36 5.23

Circulation % 471.082 144.138 23.1 52.256

37

56th Annual Report

The following table shows the distribution of shareholders depending on number of shares as on 31.12.2011:

Share Hnoldig Range (Number of shares)

Shareholders Shares

Number Percentage

%Number

Percentage%

1-100 15083 46.5 694,983 2.1

101-500 11754 36.3 3,120,554 9.8

501-1000 2706 8.4 2,140,117 6.7

1001-5000 2301 7.1 5,026,798 15.7

5001-10000 298 0.9 2,186,787 6.8

10001-20000000 255 0.8 18,830,761 58.9

Total 32397 100 32,000,000 100

The following table shows the dividends distributed during the last four Years (2007-2010) and those recommended for 2011:

Year 2007 2008 2009 2010 2011*

Percentage % 12 20 25 30 15

Dividend per share (fills) 120 200 250 300 150

*Recommended for distribution for the year 2011, in addition to 25%distributed as shares.

38


The following table shows the net profits and shareholders Equity for the last four Years (2007-2010) and those recommended for distribution in 2011.

Year Net profits Distributed profits Total

Distributed Profit

Shareholders equity

JD Cash(JD) Shares JD JD

2007 5949863 3840000 -- 3840000 62073576

2008 9973938 6400000 -- 6400000 65373696

2009 10854768 8000000 -- 8000000 69514241

2010 12975249 9600000 -- 9600000 74876510

*2011 21853669 *4800000 *8000000 12800000 86581400

*Recommended for distribution for the year 2011.

39

56th Annual Report

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41

56th Annual Report

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ty/In

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7810

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N/A

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48

BS / M

echa

nical

Engin

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g Un

iversi

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Br

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Slov

akia

1975

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utive

Dire

ctor o

f the

Refi

nery

9/7/20

08N/

AN/

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1981

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1981

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1952

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42


The following table shows the number of shares owned by Members of the Board as in 31/12/2010

Name Number of shares owned personally

No. of shares owned by the organization

he represents

Chairman of the BoardMr. Walid Mithkal Asfour

1150-

Eng . Omar Ashraf AL KurdiVice Chairman of the Board

1000 -

Dr. Mohammad Mahmoud Thaibat 1000 -

Eng. Abed Al-Rahim Boucai 15700 -

Representative of the Islamic Development Bank-Jeddah.Dr. Jamal Mohammad Salah - 2000000

Representative of the Engineers Association Pension FundEng. Wael Akram Al Saqa 1 269419

Representative of Al Samaha Real Estate Co.Mr. Mohammed Majed Allan

100 2000

Mr.Mohammad Eid Bundokji 2500 -

Dr.Nabeeh Ahmad Salameh 500 -

Mr. Bassam Rashad Sinokrot 163044 -

Eng. Suleiman AbdelRazzaq Al - Daoud 118157 -

Representatives of Social Security CorporationDr. Hesham Saleh Gharaibeh *Mr.Mohammad Adnan Al-Madi

- 6525000

*Dr. Hesham Saleh Gharaibeh was appointed as representative of the social security corporation on 1/8/2011

43

56th Annual Report

11. Administrative Affairs In support of the Company’s policy of providing a decent living environment for its employees and their families motivating them to contribute their best efforts and energies in work, the Company’smanage ment decided during 2011 the following:-

• Convert (413) annual contract employees and casual laborers to open-term contracts and give them all the permanent staff privileges.

• Honoring employees who have worked at the company for more than (30) years at the end of their services with a valuable wristwatch expressing the companies gratitude for their services.

• Help the family of deceased employ eeswho pass away during the work time by giving them a reward equal to a six month salaries if the employee service in the company exceeds (15) years.

• Raise funeral expenses and condolences allowance to become (1500) dinars instead of (500) dinars paid to the family of an employee who passes away during his/her service of the company.

Training & DevelopmentThe Company continued developing the technical & management skills of its employees and conducted (137) training programs in 2011 benefiting (516) participants administered by the Training Department, these programs were held either in-house at Abdul MajeedShoman Training Center, or inside Jordan & abroad as shown briefly below:-

• Delegating 476 employees to training courses (technical, administrative, financial) inside Jordan executed through (108) training programs.

• Delegating (40) employees to various courses and conferences outside Jordan executed through (29) training activities.

• Training (21) delegates from the Ministry of Public Works and Housing, Engineers Association, and the Company’s training program for fresh graduates engineers.

• Continued cooperation with universities and colleges for training students to complete their undergraduate program requirements. (71) Students had been trained during 2011.

• Held (22) different training programs in the areas of maintenance and Operations and the establishment of occupational safety and awareness in quality management, within Abdul MajeedShoman Training Center, attended by (1104) employees.

• Continue the cooperation with the National Company for Employment and Training, where (33) trainees were trained in the company during the year 2011.

44


Manpower1-The total number of employees on 31/12/2011 was (3372) distributed as shown below:-

Particulars Numbers %Permanent Employees 2527 74.9Annual Contracts 771 22.9Semi-Annual Contracts (3-6) months 74 2.2

2- The Following table shows the numbers of staff and workers in the Company for the years 2010and 2011:

2010 2011Permanent Employees 2221 2527Annual Contracts 1075 771Workers, Casual laborers & temporary contracts 210 74Total 3506 3372

3- Distribution of Permanent & Annual Contract Employees by Rank as on 31/12/2011:-

Rank group Permanent Employees

Annual Contracts

Workers, Casual Laborers

& temporary contracts

TotalPercentage of permanent &

contract employees to grand total%

Special 23 4 - 27 0.8First 251 5 - 256 7.6Second 1763 296 - 2059 61.1Third 490 466 74 1030 30.5Total 2527 771 74 3372 100

Year Number

45

56th Annual Report

4- The following table & graph show the distribution of Permanent Employees & Annual Contracts by Educational Qualifications as on 31/12/2011:

Educational Qualifications Permanent Employees

Annual Contracts

Workers, casual

laborers & temporary contracts

Total

Percentage of Permanent

& contract employees to grand total %

Engineering graduates 121 64 - 185 5.5

University graduates 162 39 - 201 6

Intermediate diploma 305 82 - 387 11.5

General Secondary Certificate 418 143 - 561 16.6

Apprentice 315 47 - 362 10.7

Vocational Centers 84 6 - 90 2.7

Below general Secondary Certificate 1122 390 74 1586 47

Total 2527 771 74 3372 100

46


12. Safety and EnvironmentEver since its inception, the Company has been diligent for ensuring adequate safety of its staff, facilities and the environment under the motto (Safety first). The Company aims to consolidate the concept of “Safety culture” among its employees by ensuring that safety is everyone’s responsibility from the top management level to the lowest level, through the involvement of supervisors in decision-making in addition to establishing procedures for ensuring the safe operation of equipment and by providing personal protective equipment for the employees as required by the safety regulations in the Company.Major activities executed by the company during the year 2011 to improve the level of safety:1. The Company is working to provide safe working conditions for staff of the refinery

by following proper operating procedures practiced in the petrochemical industries in the world

2. The Company issued personal protective equipment to employees free of charge at the value of 137,224 Jordanian dinars in 2011.

3. Due to the special requirements of safety of equipment and various facilitie sat the refinery, the company contracted the services of several local and international parties such as the Royal Scientific Society to carry out periodic assessments on selected equipment especially the LPG spheres.

4. The Company realizes the importance of the scientific training aspects and continued sending a large number of staff and engineers to training sessions, locally and internationally, in the field of safety and environment.

5. In-house training courses were held for staff working in the refinery, with regard to safety issues to improve their level of technical and scientific capability and to raise the level of safety in the Company. (20) Department Managers and Section Heads attended specialized safety courses held by NEBOSH& IOSH (English company) througha local representative, Al-Tareaq Company.

6. As the Department of Safety and Risk Analysis contributed in the following activities during 2011:< Follow-up the issuance of various work permits in the refinery / location, and set

the conditions for implementing the actions required in the permits and ensure compliance to the safety of work and workers.

< Study and review the instructions and procedures for issuing personal protective equipment in the refinery.

< Holding orientation sessions to introduce new employees and trainees on the most important items of safety rules and regulations in force in the Company through lectures and road shows in various locations in the refinery, in addition to distributing copies of the safety manuals to the new engineers in the Company.

< Making daily rounds by supervisors to check safety in the refinery units and facilities and issue notices to prevent accidents that could affect the facility’s safety, staff or production process. (123) notices to prevent accidents and (21) for violation of safety were issued during the year 2011.Such notices were directed

47

56th Annual Report

to relevant departments to correct the observed irregularities.< As the Department of Environment contributed in the following activities during

2011:< Disposal of dangerous waste materials resulting from the refinery’s activities

according to the laws and regulations in force.< Conducting environmental survey’sin internal and external refinery areas and

applying the corrective actions.< Provide all refineries’ units with a list of hazardous materials and how to deal

with them.< Participate in a number of workshops and environmental forums and provide a

number of environmental lectures.< Follow-up the applicable procedures and safety measures on the site of

construction of a new LPG storage tanks project by a full time safety team.< Inspect the safety of fuel and petroleum derivatives tankers in both Shwaer

station and loading and unloading stations in the refinery to ensure safety< Based on realizing the company’s responsibilities towards the local community

and reflecting its environmental policy stated in this regard, it has awarded a tender for the construction of a sulfur recovery unit project with an estimated cost of JD (14.807) million, noting that this project is being implemented for the environmental considerations only, aimed to reduce sulfur oxides emissions in accordance with the international environmental standards in force.

13. LOCAL COMMUNITY SERVICE:The Company continued providing services to the local community by extending financial support for educational and religious institutions, charities, and local municipalities in the Kingdom through donation to support them in achieving their mission. In 2011, the Company donated JD (270,471) of which JD (259,620) were in cash for (42) institutions, the recurring constant donations including those approved by the board of directors were JD (10000) for every governmental university. In addition to the most important cash money donations to the following: - Jordanian Dinars (JD)Hashemiya Municipality 36700King Hussein Cancer Center 15000Charities 151930Jordanian Hashemite Charity Organization 15620Charity campaign 20000In addition, the value of In-kind contributions provided by the Company during the 2011 amounted to (21625) dinars, and were distributed to (10) different recipients.The company has also provided (5) scholarships on it expenses for students from Hashimya District who passed in high school exams starting from 2011/2012.

48


14- PROJECTS:Completed Projects and Projects under Construction:

First :Completed Projects:1. Works Related to the Refinery Units:

• Supply of an automatic reverse cleaning system for the Naphtha hydrotreating unit at total cost of JD (300,000).

• Purchase new cyclones for the Fluid Catalytic Cracking Unit with a new design at a total cost (150,000) dinars

• Purchase of (3) tube bundles for heat exchangers number (301-E1 A, B, C & D) in the atmospheric Crude distillation unit No.3 with an estimated cost of JD (140,000)

• Removing the debris of steam boiler No. 7003 at a cost of JD (72,000).• Purchase of Pressure vessel No. (304-V7X) for the Naphtha unitat acost of JD

(60,000).• Purchase of trays for the atmospheric distillation unit Tower No. (1) at a cost of

JD (60,000) .

2. Works Related to LPG Filling Stations, Factories, Airport Service Stations and Aqaba Depots

• Purchase of (50) tractive units and semi-trailers for oil derivatives trans portation with a capacity of (41,000) liters compatible with the European norms to transport hazardous materials (ADR 2011)at total cost ofJD (8.7) million.

• Purcashe of (6) jet fuel providers (Hydrant Dispensers)and (4)Bowser’s for jet fuel supplying stations at the airports at a total cost of JD (2.75)million.

• Supply and installation of automatic line for packaging lube oils in (1) litter plastic bottle sat a cost of JD (400,000).

• Purchase and install a fire refuellers water pump driven by diesel engine at Aqaba Depot at a cost of JD (200,000).

3. Construction Works:

• Re-asphalting the loading yards in oil facilities in south of Aqaba at a cost of JD (250,000).

• Construction of an evaporation pit in the oil facilities south of Aqaba at a costof JD (209,000).

49

56th Annual Report

• Construction of a new road for fire trucks in the eastern bushes, preparing parking yards in the site of the previous football stadium at a cost of JD (60,000).

• Construction of protection barriers for the control rooms in the process units at a cost of JD (58,000).

• Construct new defense and protection barricades at the refinery gates at acost of JD (53,000).

• Construct a prayer / break area for workers in gas cylinders filling units at the site / refinery at a cost of JD (53,000).

• Maintenance of roads and yards, and expand the contractor tankers› entrance to the loading area and develop the emergency road at a costof JD (50,000).

• Maintenance of various roads and yards at the site / refinery at a costof JD (40,000).

• Construct a new watch tower in the refinery sit eat cost of JD (32,000).

Second :Projects in Progress: 1. Works Related to the Refinery Units:

• Sulfur Recovery Unit Project, at an estimated cost of JD (14.807) million

• New steam boiler No. 7003X project at an estimated cost of JD (5.5) million.

• The purchase of four new gas compressors to replace the old ones at the Fluid Catalytic Cracking Unit at an estimated cost of JD (2.5) million

• Purchase heat exchangers and spare tube bundles for the refinery at an estimated cost of JD (1.06) million.

• New facilities for gas cylinders factory to paint cylinders, at an estimated cost of JD (1,000,000).

• Performing a periodic intensive inspection for rehabilitation of the spherical gas tanks at an estimated costof JD (700,000).

• Increase the capacity of the asphalt unit from (800) tons / day to (1,100) tons / day at a total cost of JD (400,000).

• Update circuit breakers in the main electricity switching stations (3KV) at the refinery at an estimated cost of JD (600,000).

• Purchase and installing of (72) Radar gauges to measure the liquid level and temperature on various storage tanks at an estimated cost of (500,000) JD.

• Connect the fire-fighting water network to the Water Authority line at an estimated cost of JD (320,000).

• Purchase and install a reactor for the Naphtha Hydrotreater unit at a total cost of JD (320,000).

50


• Construction of fire extinguishing systems on the loading racks in the refinery and on the oil’s facilities south of Aqaba, at an estimated cost of JD (350,000)

• Examination of crude oil tanks› floor in the refinery at an estimated cost of JD (250,000).

• Modify sections of current water fire-fighting network at an estimated cost of JD (750,000)

2. Projects Related to LPG Filling Stations, Factories, Airport Service Stations and Aqaba Depots:

• Construction of two gasoline storage tanks at South Aqaba Depot and two jet fuel storage tanks at Queen Alia International Airport JPRC Station Project, at a total cost of JD (10.4) million.

• Continue writing off gas cylinders which are unfit for circulation.

3. Construction Works:

Fireproofing for steel structures of the air cooled condensers inside refinery units(first phase)and the lower half of the spherical tank in Amman gas station, at an estimated costof JD (750,000). Construction work for JD (255,000) as follows:

• Project to increase the capacity of the hill irrigation water reservoir. • Isolate production halls in blending and packing lube oil factory from storage

depots using fireproof wall material. • Establish ten concrete pools for fire fighting water instead of current steel worn-

out water reservoirs at the site / refinery. • Project to construct a steel shelter for the fork lifts operating at Amman LPG

gas station. • Civil works project to install (72) radar gauges to measure the level of the

liquid in various refinery storage tanks.

Works for building maintenance and equipment foundation at a cost of JD (253.000) as follows:

• Foundations for machinery, pumps and miscellaneous pipes supports. • Interface maintenance and floor tiling for the administration building at the

refinery. • Maintenance of sanitary units at different buildings at the refinery. • Ramps construction project at the entrances of the cooling tower No. (3) on the

Eastern side. • Different civil works project in Aqaba. • Repair the damages at the company’s Petrol station in Naour. • Installation of traffic signs at the residential area and the parking lots north and

51

56th Annual Report

west of the administration building at the refinery site in Zarqa. • Installing sign boards for Salahuddin gas station. • Connecting rain water drainage sewage for gas cylinders filling station no. (2)

with the valley. • Maintenance of roads and yards at a cost of JD (213,000) as follows: • Maintenance for different roads and yards in the refinery during the year. • Re-asphalting yards and miscellaneous maintenance at the company’s station in

Queen Alia International Airport.

Third: Projects that shall be executed during 2012:1. Works Related to Refinery Units:-

• CCTV system for the refinery and south of Aqaba locations at an estimated cost of JD (700,000).

• Consulting study to update the control systems in the main units and boilers in the refinery at an estimated cost of JD (600,000).

• Installation of the SCADA system for the control of modern protection units (Siemens Relays) at an estimated cost of JD (500,000).

• Purchase the required equipment for full surface fire fighting on the floating roof tanks according to the recommendations of the” William’s Fire” Company at an estimated cost of JD (500,000), and establish a firefighting network to extinguish these kinds of fires at an estimated cost of JD (450,000).

• Buy a crane with acapacity of 80 tons at an estimated cost of JD (500,000) • Buy (3) mobile storage tanks for foam material with a capacity of (18000) liters

each, at an estimated cost of JD (400,000). • Buy a rescue and rapid intervention car at an estimated cost of JD (400,000). • Replacing the upper parts of the crude distillation towers at an estimated cost of

JD (400,000). • Establish a dual system for unloading imported fuel oil and diesel with capacity

of 2000 tons per day at an estimated cost of JD (400,000). • Drilling two water wells at an estimated cost of JD (350,000). • Consultancy study to purchase and install a remote operation valves and fire

fighting systems on the high heat pumps at an estimated cost of JD (300,000). • Replace Slurry Product pump and replace drivers for feed pumps at the distillation

unit No. 2 at an estimated cost of JD (270,000). • Buy tubes for the two steam boilers No. A/B at an estimated cost of JD (250,000). • Supply a new tank for the hydrogen gas plant with a volume of (90) m 3 and

(100) Bar pressure at an estimated cost of JD (250,000).

52


2. Projects Related to LPG Filling Stations, Factories, Airport Service Stationsand Aqaba Depots:

• Connecting the company’s jet fuel station in the Queen Alia International Airport to the water network which belongs to Water Authority at an estimated cost of JD (850,000).

• Purchase and install a booster pump for gasoline / diesel in southern Aqaba at an estimated cost of JD (250,000).

• Purchase and install cooling system with water sprinklers for gas pipeline located outside the pumps area in Amman station at an estimated cost of JD (50,000).

• Consultancy Services to modernize the ground refueling station’s control system in Queen Alia International Airport at an estimated cost of JD (50,000).

3.Construction Works:Maintenance of roads and yards at an estimated cost of JD (718,000) as follows:

• Replace concrete sidewalks for the residential area.

• Establish ramps for vehicles passing over fire pipelines in basins of tanks at theAqaba depot - the South site.

• Supply and install traffic boards on the streets and squares in the refinery /site.

• Maintenance of drainage systems and manholes in the refinery during a year.

• Cover the asphalt soccer field in the residential area with artificial grass.

• Rehabilitation of squares and streets next to the asphalt unit.

• Maintenance for different roads and yards in the refinery during the year.

• Remove the written off hangar in the old gas filling station No. (1), and establish asphalted yards in its place for lining up the loading tankers.

• Repair the damaged sidewalks in various locations in the refinery.• Rehabilitation of the outside fence for the purposes of installing security motion

sensors.

Maintenance of buildings and equipment at an estimated cost of JD (570,000) as follows:

• Various repair jobs for the foundations of tanks, pipes’ supports, machines, pumps and other various foundations’ in the refinery.

• Restoration project for roof insulation and construction in various buildings at the refinery - Zarqa.

• Maintenance for the guard building and guard towers.

• General maintenance for some of the houses in the residential area - site / Zarqa.

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56th Annual Report

• Supply and installation of external emergency escape staircase in the administration offices - Amman.

• Maintenance the interfaces of third residential area.

• Refurbishing offices in Amman, Irbid and Zarqa.

• Replace cabinets and laboratory furniture in the refinery.

• Construction of concrete basins and channels for the existing liquefied petroleum gas spherical tanks S301-S304 and S-1, S102 and S-203 and horizontal cylindrical tanks at an estimated cost of JD (350,000).

• Improve polluted water drainage systems; replace defected concrete slabs and constructing new concrete separation platforms at loading racks in locations (a) and (b) at the refinery site, at an estimated cost of JD (300,000).

• New construction projects at an estimated cost of JD (291,000) as follows:

• New Chemicals Storage for the Laboratory Department.

• Excavation works for radar cables to measure the liquid level in the tanks at Aqaba.

• Shelter to protect cylinders for Zarqa gas station.

• Complete installation of shelters for sealing towers in loading zones (A + B).

• Sanitary units for guard towers.

• Sanitary unit at the farm.

• Services buildings at the company’s station at Queen Alia Airport and connecting the company’s facilities sewage with the airport drainage network.

54


Geographical distribution locations for the Company’s activities, investment cost and number of employees as of 31/12/2011

Description

Value ofFixed assets(JD)

Number of employees

Permanent Contract

Contracted Workers

3 – 6 Months

Contracted daily

workers

Am

man

General Administration Departments 6,118,084 160 23 - -Petroleum Products Marketing Dept./Offices 81,479 33 4 - -Musdar Station 218,117 7 6 - -Um Al-Heeran Station 265,704 5 11 - -Marka Station 96,498 5 13 - -Gardens station –Tla›aAlali 3,100,279 - - - -Ameriah Station 1,115,100 5 6 - -Khan Alzabeeb Station 391,090 - 5 - -Distribution/Maintenance 13,150,381 67 8 - -Queen Alia International Airport Station 6,488,437 28 30 - -Amman Civil Airport Station 1,055,746 10 2 - -LPG activities/Amman LPG Filling Station 15,106,990 131 88 46 -Total 74,187,905 449 205 46 -

Zarq

a

Refinery’s Site 202,218,711 1082 347 9 -Transportation 12,371,701 461 27 - -Cylinders Factory 1,848,152 16 - - -LPG activities/Zarka LPG Filling Station 17,418,573 68 34 3 -Petroleum Products Marketing Dept./Zarka Office 905 3 - - -Petroleum Products Marketing /Site’s Station 115,804 11 1 - -Lube Oils Manufacturing and Marketing 5,643,097 65 26 - -Petroleum Products Marketing / AlRemal Station 732,749 1 8 - -Total 240,317,691 1707 443 12 -

Irbid

Distribution and Marketing / LPG activities- Irbid station 11,363,432 118 24 15 -Distribution and Marketing/Irbid Office & Maintenance Center 4,690 6 2 - -Financial /Accounting 22,721 4 - - -Total 11,390,843 129 26 15 -

Aqa

ba

Distribution and Marketing / Aqaba warehouses 30,397,540 228 79 - -Distribution and Marketing / King HusseinInternational Airport

231,439 7 2 - -

Gas Station 40,266 - - - -Residential area 683,654 - - - -Wadi Al- yutom land 25,245 - - - -Information Technology Department - 1 - - -Total 31,352,899 236 81 - -

Ker

ak Distribution and Marketing / Kerak Station 84,710 6 3 1 -Total 84,710 6 3 1 -

Tafe

lah Distribution and Marketing / Lands 8,328 - - - -Total 8,328 - - - -

Al-M

afra

q Distribution and Marketing / Buildings and Lands/MfraqStation 3,330 - 5 - -Distribution and Marketing / Buildings and Lands/Mfraq Station-Jaber road 953,480 - 8 - -Total 956,810 - 13 - -Ma›an Land 103,860 - - - -Total 103,860 - - - -Azraq Land 75,268 - - - -Total 75,268 - - - -

Grand Total 331,478,314 2527 771 74 -

Loca

tion

55

56th Annual Report

56


Other Explanatory Notes:• The total capital investment for the Company’s activities in 2011 was JD

(15,420,460).

• The Company owns as of 31/12/2011 the following subsidiary companies:

• The Jordanian Company for the Manufacturing and Filling of LPG with a total capital of JD 4 Million 50% paid.

• The Jordanian Company for the Manufacturing of Lube oils with a total capital of JD 3 Million 50% paid.

• Fees for the financial auditors Deloitte & Touch Company were JD (52,000).

• There were no unusual activities outside the main Company’s activities in 2011.Declaration of the Board of Directors1- The Board of Directors of Jordan Petroleum Refinery Co declares that there were

no substantial matters that would affect the sustainability of the Company for the upcoming financial years that were not disclosed.

2- Members of the board of directors mentioned below declare their full responsibility for the accuracy and complete information and accounts in the report.

Chairman of the Board Vice chairman Member

Name Mr. Walid Asfour Eng.Omar Al-Kurdi Eng.Abed Al-RaheemBoucai

Signature

Member Member Member

Name Dr. Jamal Mohammad Salah Eng.Wael Akram Al-Saqqa Mohammad Majed Allan

Signature


Name Eng.Suleiman Abdel Razzaq Al-Dawoo Dr. Nabeeh Ahmad Salame Mohammad Eid Bundokji

Signature


Name Mohammad Adnan Al-Madi Dr. Mohammad Mahmoud Thnaibat Bassam Rasheed Sinokrot

Signature

57

56th Annual Report


Name Dr. Hesham Saleh Gharaibeh

Signature

3- The mentioned below declare that they take the full responsibility for the accuracy and complete information and accounts in the report.

Chairman of Board of Directors Chief Executive Officer Chief Financial

OfficerName Walid Asfour Eng. Abdel karim Alawin Hani Gawdat Mango

Signature

The Recommendations of the Board of Directors1. To adopt the Company’s financial statements for the year ended on 31/12/2011

and the Board of Directors Report, future plans and to exonerate the members of the Board of Directors.

2. To approve the allocation of (2,555,957) JD to statuary reserves.

3. To declare (15%) dividend (150) fills per share payable to shareholders registered in Company’s register on the date of convening of the general meeting in which this resolution is adopted.

4. To select the Company’s auditors for the fiscal year 2012.

5. To capitalize (8,000,000) JD and distribute as free shares at (25%) percent of Capital.

6. To consider any other issues proposed by the General Assembly and falls within the scope of the General Meeting.

58


59

56th Annual Report

TABLE OF CONTENTS

JORDAN PETROLEUM REFINERY COMPANY(A PUBLIC SHAREHOLDING LIMITED COMPANY)

AMMAN - JORDAN

CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR

ENDED DECEMBER 31, 2011TOGETHER WITH INDEPENDENT

AUDITOR’S REPORT

PageIndependent Auditor’s Report 60

Consolidated Statement of Financial Position 64

Consolidated Statement of Cash Flows 66

Consolidated Statement of Comprehensive Income 67

Consolidated Statement of Changes in Shareholders’ Equity 68

Notes to Consolidated Financial Statements 71

60


Independent Auditor’s Report

AM / 7609

To the Shareholders ofJordan Petroleum Refinery Company(A Public Shareholding Limited Company)Amman - Jordan

We have audited the accompanying consolidated financial statements of Jordan Petroleum Refinery Company (a Public Shareholding Limited Company), which comprises of the consolidated statement of financial position as of December 31, 2011, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in shareholders’ equity, and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. We have previously audited the consolidated financial statements of the Company for the year 2010, and issued our qualified report thereon dated March 31, 2011.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, and for such internal control as management determines necessary to enable the preparation of the 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. Except for what is stated in paragraphs (1) and (2) below, 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 Company›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 Company›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.

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56th Annual Report

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.Basis of Qualified Opinion1. As stated in Notes (2) and (30) to the consolidated financial statements, the

Company’s concession period ended on March 2, 2008. Accordingly, the Company signed a settlement agreement with the Jordanian Government on February 25, 2008, concerning the expiry of the concession, which was approved by its General Assembly in its extraordinary meeting dated March 22, 2008. Moreover, no final settlement has been reached regarding the provision for doubtful debts and provision for slow-moving and obsolete inventories. The recoveries from these two provisions’ balances outstanding as of the concession expiry date should be credited to the Government account. In addition, the Government requires that any new or additional provisions should be agreed on with the Government according to the Ministry of Finance letter dated November 15, 2009 concerning the settlement of outstanding financial issues between the Government and the Company provided that these provisions are reviewed quarterly. Furthermore, the Ministry of Finance has been informed of the outstanding provisions amounts and balances with the Government as of December 31, 2011 as per the Company’s Letter No. 2/25/7/5696 dated May 27, 2012. Additionally, we were unable to verify these balances and the effect of not reaching a final settlement up to the date of this report regarding these provisions with the Government by performing alternative audit procedures.

2. The Company received a copy of the letter of the Ministry of Finance No. 31/17/5/16909 date June 21, 2012 addressed to H.E the Minister of Finance stating non-approval of the balances and transactions relating to the Ministry of Finance shown in the consolidated financial statements for the year 2011 and particularly the Company’s net profit, we also have been informed by the management that the following accounts have not been reconciled with the Government as of December 31, 2011. Moreover, we could not verify these balances through performing alternative audit procedures:

December 31, 2011

JD

Ministry of Finance (Note 5) 102,974,834Ministry of Energy and Mineral Resources – Provision for constructing alternative fuel tanks (Note 11) 62,313,963Ministry of Finance – Differences of pricing oil derivatives (Note 11) 314,124

Subsidy for crude oil derivatives charged to the Ministry of Finance – Debit (Note 19) 571,456,842

Ministry of Finance – Surplus from refining Iraqi crude oil- Credit (Note 19) 6,961,968Ministry of Finance – Surplus from differences of pricing oil derivatives – Credit (Note 19) 3,114,124Ministry of Finance – Surplus from importing Iraqi fuel oil – Credit (Note 19) 41,729

62


Qualified Opinion

In our opinion, except for the effect of any adjustments that might have been determined to be necessary had we been able to verify the financial impact of the settlement agreement with the Government regarding the provisions mentioned in paragraph (1) above, and the impact of not being able to verify the balances of the Ministry of Finance mentioned in paragraph (2) above, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Jordan Petroleum Refinery Company as of December 31, 2011, its consolidated financial performance, and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

Emphasis of a Matter Paragraph

a. As stated in Notes (2) and (35) to the consolidated financial statements, the Company’s income for the year ended December 31, 2011 was calculated according to the Board of Directors resolution No. (174/2012) stated in the notes referred to above, and according to preliminary negotiations with the Government, whereas the Government is claiming that the profit should be JD 7.5 million from the refining and distribution operations for the years 2011 and 2012, similar to the years 2008 to 2010 according to the Council of Ministers’ resolution No. (6668) dated November 24, 2009 As well as the non-approval of the net income stated in the Company’s consolidated financial statements for the year 2011.

b. Meanwhile, the comparative figures for the year ended December 31, 2010 were prepared according to the signed agreement with the Government for the prior years as stated in Note (2) to the consolidated financial statements. Consequently the results of the Company’s operations for the year 2011 could be materially different if a settlement has been reached with the Government on determining the Company’s profit for the year 2011 on a basis that is different from the basis of calculating the profit adopted by the Board of Directors.

Report on Legal Requirements

The Company maintains proper accounting records, and the accompanying consolidated financial statements are in agreement therewith and with the financial statements presented in the Board of Directors’ annual report. We recommend that the General

63

56th Annual Report

Assembly of Shareholders take into consideration the effect of what is mentioned in paragraphs (1) and (2) and paragraph (a) above when approving these consolidated financial statements.

The accompanying consolidated financial statements are a translation of the original consolidated financial statements in the Arabic language to which reference should be made.

Amman - Jordan Deloitte & Touche (M.E.) - Jordan

September 12, 2012

64


JORDAN PETROLEUM REFINERY COMPANYAMMAN JORDAN

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETSDecember 31,

Note2011 2010

JD JDCurrent Assets: Cash and bank balances 11,825,426 8,823,903 Accounts receivable and other debit balances 5 788,342,081 347,287,738 Crude oil, finished oil products and supplies 6 389,345,839 356,241,732 Total Current Assets 1,189,513,346 712,353,373

Deferred tax assets 7 14,483,051 6,538,177

Financial assets at fair value through other comprehensive income 8 & 34 4,645,658 - Available for sale financial assets 8 & 34 - 5,194,438

Property Plant and Equipment: Lands 6,953,325 6,953,325 Property plant and equipment 324,525,192 307,970,819 Less: Accumulated depreciation 254,277,230 248,130,474 Net Book Value of Property Plant and Equipment 70,247,962 59,840,345 Projects under construction 839,885 3,879,962 Total Property Plant and Equipment 9 78,041,172 70,673,632

TOTAL ASSETS 1,286,683,227 794,759,620

Contra AccountsCrude oil & strategic inventory derivatives 14 156,787,303 156,787,303Death, disability, and indemnity fund 28 28,440,739 25,691,414

Board of Directors ChairmanTHE ACCOMPANYING NOTES CONSTITUTE AN INTEGRAL PART OF THESE CONSOLIDATED

FINANCIAL STATEMENTS AND SHOULD BE READ WITH THEM.

65

56th Annual Report

(A PUBLIC SHAREHOLDING LIMITED COMPANY)AMMAN JORDAN

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

LIABILITIESDecember 31,

Note2011 2010JD JD

Current Liabilities: Due to banks 10 613,945,701 427,424,551 Accounts payable and other credit balances 11 501,206,009 264,740,456 Provision for income tax 12 10,185,418 4,551,887 Total Current Liabilities 1,125,337,128 696,716,894

Long - Term Liabilities: Due to death, disability, and indemnity fund 28 25,193,523 22,601,314 Provision for staff end-of-service indemnity 13 8,483,551 564,902 Total Long-Term Liabilities 33,677,074 23,166,216

Provision for settlement of profits with the Government 21/ B 41,087,625 -

SHAREHOLDERS› EQUITYAuthorized, subscribed and paid-up capital (32,000,000 shares at JD one per share) 32,000,000 32,000,000

Statutory reserve 15/ A 22,093,244 19,537,287

Voluntary reserve 15/ B 104,816 104,816

Fair value reserve/ Cumulative change in fair value - net 16 4,307,612 4,856,391 Retained earnings 17 28,075,728 18,378,016 Total Shareholders› Equity 86,581,400 74,876,510TOTAL LIABILITIES AND SHAREHOLDERS›EQUITY 1,286,683,227 794,759,620

Contra AccountsMinistry of Finance-funding of strategic inventory 14 156,787,303 156,787,303Provision for death, disability, and indemnity fund 28 28,440,739 25,691,414

Chief Executive Officer

66



AMMAN - JORDANCONSOLIDATED STATEMENT OF CASH FLOWS

NoteFor the Year Ended

December 31,2011 2010

CASH FLOWS FROM OPERATING ACTIVITIES: JD JDIncome before tax 25,494,573 15,237,498 Adjustments for:Depreciation of property plant and equipment 9 7,814,260 6,569,569 Settlement of targeted net income with the Government 21/A - 11,689,596 Provision for settlement of income with the Government 21/B 41,087,625 - Provision for staff end-of-service indemnity 13 8,083,727 38,519 Provision for replacing gas cylinders 11 7,315,672 6,241,537 Provisions of employees vacations 843,720 90,809 Provisions for lawsuits (3,801,337) - Provisions for slow-moving and spoiled inventory 6 220,388 - Provisions for doubtful debts 5 6,580,953 1,422,883 Net Cash Flows from Operations before Changes in Working Capital 93,639,581 41,290,411

Increase) in accounts receivable and other debit balances (447,635,296) (186,382,100)

(Increase) in crude oil, finished oil products and supplies (33,324,495) (72,900,620)Increase (decrease) in due to death, disability and indemnity fund 2,592,209 (498,216)Increase in accounts payable and other credit balances 232,408,717 1,726,370 Net Cash Flows (used in) Operating Activities before Income

Tax and Paid Provisions (152,319,284) (216,764,155)

Income tax paid 12 (5,952,248) (1,945,901)Staff end-of-service indemnity paid 13 (165,078) (177,959)Employees vacations paid (547,268) (99,594)Lawsuits paid (1,613,300) -

Net Cash Flows (used in) Operating Activities (160,597,178) (218,987,609)

CASH FLOWS FROM INVESTING ACTIVITIES:(Acquisition) of property plant and equipment (11,439,593) (4,245,246)Proceeds from selling property plant and equipment 20,820 52,886 Projects under construction - net (3,763,027) (14,057,595)Net Cash Flows (used in) Investing Activities (15,181,800) (18,249,955)

CASH FLOWS FROM FINANCING ACTIVITIES:Increase in due to banks 186,521,150 241,742,305 Dividends paid to shareholders (7,740,649) (6,392,470)Net Cash Flows from Financing Activities 178,780,501 235,349,835 Net Increase (Decrease) in Cash 3,001,523 (1,887,729)Cash and bank balances - beginning of the year 8,823,903 10,711,632 Cash and Bank Balances - End of the Year 11,825,426 8,823,903

THE ACCOMPANYING NOTES CONSTITUTE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS AND SHOULD BE READ WITH THEM.

67

56th Annual Report

For the Year EndedDecember 31,

2011 2010

JD JD

Income for the year 21,853,669 12,975,249

Change in fair value reserve/ cumulative change in fair value - net (548,779) 224,918

Comprehensive Income for the Year 21,304,890 13,200,167


AMMAN - JORDANCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Board of Directors Chairman Chief Executive Officer

68


Fair

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69

56th Annual Report

For the Year EndedDecember 31,

Note2011 2010JD JD

Sales 18 3,496,622,509 2,379,207,154

Cost of sales 19 (3,338,989,368) (2,296,533,882)

Gross Income from Sales 157,633,141 82,673,272

Add: Operating income and other income 20 4,271,007 3,303,424

Gross Income 161,904,148 85,976,696

Less: Selling and distribution expenses 22 (26,227,394) (22,640,730)

General and administrative expenses 23 (10,392,546) (7,237,714)

Bank interest and commissions (44,519,997) (21,294,363)

Provision for doubtful debts 5 (6,580,953) (1,422,883)

Provision for replacing gas cylinders 11 (7,315,672) (6,241,537)

Provision for slow moving and spoiled inventory 6 (220,388) -

Settlement of targeted net income with the Government (surplus) 21/A - (11,689,596)

Provision for settlement of profits with the Government 21/B (41,087,625) -

Other expenses 24 (65,000) (212,375)

Income before Tax 25,494,573 15,237,498

Income tax expense 12 (3,640,904) (2,262,249)

Income for the Year 21,853,669 12,975,249

Weighted Average Number of Shares 25 32,000,000 32,000,000

Earnings per Share 25 683 / - 405 / -


AMMAN - JORDANCONSOLIDATED STATEMENT OF INCOME

Board of Directors Chairman Chief Executive Officer

70


71

56th Annual Report

JORDAN PETROLEUM REFINERY COMPANY

(A PUBLIC SHAREHOLDING LIMITED COMPANY)

AMMAN - JORDANNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

72


1. GeneralThe Company was established on July 8, 1956 with a capital of JD 4 million. In 1968, the Company doubled its capital to JD 8 million, and in 1976, the capital was increased to JD 32 million.In addition to the main units of refining and producing hydrocarbon products, the Company owns four factories for the production of lube-oils, LPG cylinders, containers, and asphalt drums. The accompanying consolidated financial statements include the operations of the main refining units and those of the subsidiary factories.In addition to the refining and production of hydrocarbon products, the Company transports and distributes the products to distribution stations all over the Kingdom. It is also responsible for the maintenance of these stations and the marketing of lube-oils.According to the settlement agreement signed with the Jordanian government, dated February 25, 2008 concerning the termination of the concession, the Company has to segregate some of the Company’s activities through establishing new companies wholly or partially owned by Jordan Petroleum Refinery Company after the expiry of the concession agreement on March 2, 2008. During the year ended December 31, 2008, the Company established two subsidiary companies wholly owned by Jordan Petroleum Refinery Company, named: Jordan Liquid Gas Manufacturing and Packing Company and Jordan Lube-oil Manufacturing Company. These two companies have been founded in preparation of the segregation of the activities of gas packing and lube-oil manufacturing. Moreover, none of these companies conducted any commercial activities yet. Additionally, Jordan Petroleum Refinery Company is still in the process of segregating the Company’s other activities. The Board of Directors approved the accompanying consolidated financial statements in its meeting held on September 12, 2012, and these consolidated financial statements are subject to the approval of the General Assembly of Shareholders.

2. The Concession AgreementThe concession agreement expired on March 2, 2008. Accordingly, the Company signed a settlement agreement with the Government dated February 25, 2008, concerning the expiry of the concession agreement, which was approved by the Company’s General Assembly in its extraordinary meeting dated March 22, 2008. Moreover, the financial effect of some items in this agreement has not been determined nor reflected in the accompanying consolidated financial statements. Additionally, a final settlement has not been reached regarding the provision for doubtful debts and provision for slow-moving and spoiled inventory. The recoveries from these two provisions’ balances outstanding as of the concession expiry date should be credited to the Government. According to Jordan Petroleum Refinery Company’s Board of Directors’ resolution No. 132/2009 dated November 15, 2009, His Excellency the Minister of Finance’s letter


AMMAN - JORDANNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

73

56th Annual Report

No. (18/4/25741) dated November 15, 2009 was approved to settle the outstanding financial issues between the Company and both the Ministry of Finance and Ministry of Energy and Mineral Resources on the following bases:1. Through the petroleum derivatives pricing mechanisms, an annual profit of JD 7.5

million after tax will be achieved from refining and distribution activities taking into consideration that the change in the Company’s expenses is within the normal ratios.

2. The Lube - Oil Factory income shall be excluded from the profit referred to in item (1) above provided that it is subject to income tax.

3. The Company shall be granted an amount of 10 cents / barrel from the surplus realized by the Government as additional income from refining the Iraqi crude oil. This consideration is calculated based on the quantity of the barrels received by the Company provided that this income is subjected to income tax.

4. Agreement shall be made between the Government’s representatives and the Chairman of the Audit Committee, ensuing from the Company’s Board of Directors, concerning any new provisions or the increase of the outstanding provisions. These provisions shall be reviewed quarterly.

According to the Prime Ministry’s resolution in its meeting held on November 24, 2009, the above items have been approved to settle the financial relationship between the Government and Jordan Petroleum Refinery Company.According to the Prime Ministry’s letter No. 31/17/5/6014 dated March 24, 2010 and to the Ministry of Energy and Mineral Resources letter No. 6/5/1/1439 dated March 29, 2010 it was approved to extend the above agreement for the year 2010.According to the letter of H.E. the Chairman of the Negotiation Committee/ Secretary General of the Ministry of Energy and Mineral Resources dated June 28, 2012 addressed to the Company, the Government believes that the Council of Ministers’ resolution in determining the Company’s profits for the years 2008 to 2010 in an amount of JD 7.5 million from the refining and distribution operations in addition to the lube- oil factory income is also applicable to the years 2011 and 2012. In reference to the Prime Ministry’s letter No. 31/17/5/16909 dated June 21, 2012 addressed to H.E. the Minister of Finance, which includes non-approval of the balances and transactions related to the Ministry of Finance accounts stated in the consolidated financial statements for the year 2011 and particularly the Company’s profits as per the Council of Ministers’ resolution No. (6668) dated November 24, 2009.The agreement with the Government was not renewed accordingly, the Company profits for the year ended December 31, 2011 was calculated according to the Board of Directors resolution No. (174/2012) dated September 2, 2012 as a result of the preliminary negotiations with the Government which includes the following:An annual profit of JD 15 million after tax will be achieved from refining and distribution activities.The Lube - Oil Factory income shall be excluded from the profit referred to in item (1) above provided that the Lube – Oil Factory will be charged with the fixed and variable related costs whether it is direct or indirect.

74


The Liquid Gas income shall be excluded from the profit referred to in item (1).The profit granted to Jordan Petroleum Refining Company of 10 cents / barrel of refining the Iraqi crude oil is also excluded provided that this income is subject to tax.The difference between the calculation of net income above and the commercial basis calculation of net income is recorded as provision for settlement of profits with the Government and that is until a final consensus is reached with the Government regarding the calculation of the Company’s profits. Knowing that the liquid gas profit was not excluded from the profits as stated in point (3) above due to the fact that it does not have separate accounting books.

3. Significant Accounting Policies Basis of preparation of the consolidated financial statements- The consolidated financial statements have been prepared in accordance with

International Financial Reporting Standards (IFRSs) and related interpretations. - The consolidated financial statements are stated in Jordanian Dinar.- The consolidated financial statements have been prepared in accordance with

historical cost principle except for the financial assets and liabilities, which are stated at fair value at the date of the consolidated financial statements.

- The accounting policies adopted for the current year are consistent with those applied in the year ended December 31, 2010 except for the effect of adoption of the new and modified standard as in note (4 – a) herewith and the effect of adoption of the following:

IFRS 9 Financial Instruments issued in November 2009 and amended in October 2010The Company and its subsidiaries have early adopted the first stage for (IFRS 9) in the preparation of the consolidated financial statements as of January 1, 2011 in accordance with the requirements of the Jordan Securities Exchange Commission, and the transitional provisions of the standard. Therefore the comparative figures for the previous year were not modified.IFRS 9 Financial Instruments (issued in November 2009 and amended in October 2010) introduces new requirements for the classification and measurement of the fair value of financial assets and financial liabilities as per the following: IFRS 9 requires all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, investments held within a business model with the objective to collect the contractual cash flows and have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other (debt investments and equity investments) are measured at their fair values at the end of subsequent accounting periods.

75

56th Annual Report

The most significant effect of IFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in fair value of a financial liability (designated as at fair value through profit or loss) attributable to changes in the credit risk of that liability. Specifically, for financial liabilities designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss is recognised in the Consolidated Statement of Income. It is not acceptable anymore to present the financial assets at cost either at fair value through profit or loss or through other comprehensive income.The effects of applying the first stage of IFRS (9) on the consolidated financial statements are detailed in note (34).The followings are the most significant new and revised IFRSs adopted during the year ended December 31, 2011:

1- Financial assets at fair value through other comprehensive income - Those financial assets represent the investments in equity instruments held for long

term.- These financial assets are recognized at fair value plus transaction costs. Subsequently,

they are measured at fair value with gains and losses arising from changes in fair value recognized in the consolidated statement of other comprehensive income and within owner’s equity, including the changes in fair value resulting from translation of non-monetary assets stated in foreign currency. Gain or Loss from the sale of these investments or part of them should be recognized in the consolidated statement of comprehensive income and within owner’s equity, and the balance of the revaluation reserve for these assets should be transferred directly to the retained earnings not to the consolidated statement of income.

- Dividends are recorded in the consolidated statement of income.

IAS 24 Related Party Disclosures (Amended)- The amended standard simplifies disclosures for related entities to simplify the

determination of a related party and reduce the discrepancies upon implementation.- There was no impact on the consolidated financial position or financial performance

upon the implementation of the amended standard. IAS 32 Financial Instruments – Classification of Rights Issues (Amended) - The definition of the derivative liabilities was amended by states that if such rights

are issued pro rata to an entity’s all existing shareholders in the same class for

76


a fixed amount of currency, they should be classified as equity regardless of the currency in which the exercise price is denominated.

- There was no effect on the consolidated financial position or financial performance upon the implementation of the amended standard.

The details of significant accounting policies are as follows:a. Basis of Consolidation of the Financial StatementsThe consolidated financial statements include the financial statements of the Company, its subsidiaries, and entities under its control. Moreover, control is achieved when the Company has the ability to control the financial and operating policies of the subsidiary company to obtain benefits from its activities. Transactions, balances, revenues, and expenses between the Company and its subsidiaries are eliminated.- The financial statements of the subsidiary companies are prepared for the same

fiscal year of the Company through adopting the same accounting policies of the Company. If the accounting policies adopted by the subsidiary differ from those adopted by the Company, the necessary adjustments to the subsidiary company’s financial statements are made so that its accounting policies match those of the Company.

As of December 31, 2011, the Company owns the following subsidiaries:

Company’s Name Capital Ownership

Investment Balance

as of December 31, 2011

Location Establishment Date

JD % JD

Jordan Liquid GasManufacturing and Packin Company (paid 50%)*

4,000,000 100 2,000,000 Amman May 28, 2008

Jordan Lube-oilManufacturing Company (paid 50%)**

3,000,000 100 1,500,000 Amman May 28, 2008

* The Jordan Liquid Gas Manufacturing and Packing Company’s total assets amounted to JOD 2,180,399 and the total liabilities amounted to JOD 123,394 as of December 31, 2011. Moreover, the net income for the year ended December 31, 2011 amounted to JOD 57,005.

** The Jordan Lube-oil Manufacturing Company’s total assets amounted to JOD 1,635,296 and the total liabilities amounted to JOD 92,544 as of December 31, 2011. Moreover, the net income for the year ended December 31, 2011 amounted to JOD 42,752.

b. The crude oil and finished products inventory price is stated according to the lower of cost or net realizable value. Cost is determined according to the weighted average method.

77

56th Annual Report

Finished and under process products at the subsidiaries, lube-oil and cylinders factories are stated at the lower of cost, following the weighted average method, or net realizable value. Raw materials, spare parts and supplies are stated at the lower of cost, following the weighted average method, or net realizable value. A provision is taken for slow moving-inventory items.

c. Available-for-Sale Financial Assets The implemented policy prior to January 1, 2011These financial assets are acquired to be retained as available for sale and not for trading purposes or to be retained till maturity.These investments were classified as available for sale at the time of purchase because of management’s intention to sell these financial instruments when selling prices provide an opportunity to make profits or generate revenues resulting from the ownership of shares.Available-for-sale financial assets are stated at cost, plus acquisition expenses when acquired, and are revalued at fair value subsequently. Changes in the fair value of investments are recorded in a separate account within the cumulative change in fair value in shareholders’ equity. In case any of these investments are sold wholly or partially, or impaired, then the recorded gain or loss therefrom is transferred from shareholders’ equity to the consolidated statement of income. The impairment loss previously recorded in the consolidated statement of income can be recovered if it becomes objectively evident that the increase in fair value occurred in a period subsequent to the recording of the impairment loss. Moreover, the impairment loss of debt instruments can be recovered through the consolidated statement of income, while the impairment loss in the Company’s shares can be recovered through the cumulative change in fair value.- Interest earned from financial assets available for sale is recorded in the consolidated

statement of income using the effective interest method. Moreover, decline in the value of these assets is recorded in the consolidated statement of income when it occurs.

- Financial assets for which the fair value cannot be reliably determined are shown at cost. The impairment in value is recorded in the consolidated statement of income.

d. Fair ValueFair value represents the closing market price of financial assets and derivatives on the date of the consolidated financial statements. In case declared market prices do not exist, active trading of some financial assets and derivatives is not available, or the market is inactive, fair value is estimated by one of several methods including the following:- Comparison with the present market value of a very similar financial instrument.- Analysis of future cash flows and discounting expected cash flows at a rate used for

a similar financial instrument.

78


- Adoption of options pricing models.- The long term assets and liabilities that do not accrue interest are valuated according

to discounted cash flows at the actual rate and the discounted interest revenue is recorded in the consolidated statement of income.

The evaluation methods aim at obtaining a fair value that reflects market expectations and considers market factors and any expected risks or benefits upon valuing financial instruments.

e. Impairment in Financial AssetsThe Company’s management reviews the values of financial assets recorded on the date of the consolidated statement of financial position in order to determine if there are any indications of impairment in their value individually or in the form of a portfolio. In case such indication exists, the recoverable value is estimated so as to determine the impairment loss.

f. Accounts receivable are stated at net realizable value. Moreover, a provision for doubtful debts is computed according to management’s estimates, and the recoverable amounts. g. Property plant and equipment Property plant and equipment are stated at cost net of accumulated depreciation and impairment, and depreciated (except for land), when ready for use, according to the straight-line method over their expected operating lives at annual rates as follows:

%Buildings 2 – 4Machinery and production equipment 9 – 11

Machinery and support services equipment 5 – 15 Tanks and pipelines 5 – 15 Electrical supplies and equipment 10 – 15Products haulage units 10 – 11

Vehicles 15 Office Furniture and fixtures 10 – 15Library and training equipment 10Distribution stations assets 10 – 15Others 7 – 11Computers 40

79

56th Annual Report

- When the recoverable amount of any property, plant and equipment becomes less than its net book value, its value is reduced to the recoverable amount and the impairment loss is charged to the consolidated statement of income.

- The productive lives of property plant and equipment are revalued at the end of every year. If revaluation differs from previous estimates, the change is recorded in subsequent years, being a change in estimate.

- Property plant and equipment are eliminated when disposed of or when no future benefits are expected from their use or disposal.

h. A provision for income tax is taken through estimating the expected tax liabilities. The realized differences in estimated income tax are recorded in the consolidated statement of income when paid upon reaching a final settlement with the Income and Sales Tax Department.

i. Deferred taxes are taxes expected to be paid or recovered due to temporary timing differences between the value of the assets or liabilities in the consolidated financial statements and the value on the basis of which tax is calculated. Furthermore, deferred taxes are calculated using the liability method in the consolidated financial statements according to the tax rates expected to be applied at the time of settlement of the income tax liability or the recognition of the deferred tax assets.- On the consolidated financial statements date, the balance of deferred tax assets and

liabilities is reviewed and reduced in case it is expected that the Company would not benefit in whole or in part from the deferred tax assets, or the tax liability is settled or no longer needed.

j. Provisions are recognized when the Company has liabilities at the date of the consolidated statement of financial position arising from previous events, settlement of these liabilities is probable, and their value can be reliably measured.

k. Revenue from fuel sales is recognized upon delivery of fuel to the customer and issuance of the invoice.

l. Interest is charged to the consolidated statement of income on the accrual basis.m. Transactions in foreign currencies are recorded in Jordanian Dinars at the exchange rates prevailing at the dates of the transactions. Assets and liabilities denominated in foreign currencies are translated to Jordanian Dinars at the average exchange rates published by the Central Bank of Jordan at year-end. The resulting exchange gains or losses are taken to the consolidated statement of income.

n. A provision for the replacement of damaged gas cylinders is taken based on technical studies that estimate the number of cylinders intended to be destroyed every year.

80


o. The Company adopts the self-insurance policy for vehicles. A provision is taken against vehicles accidents equivalent to the value of the comprehensive insurance premiums of the vehicles and their cargo.

p. A provision for slow-moving, idle, and spoiled goods is taken based on technical studies performed by the Company’s specialized committees.

q. A provision for end-of-service indemnity is booked for any legal or contractual obligations related to end-of-service indemnity, death and disability at the end of the employees’ services according to the accumulated service terms at the date of the consolidated statement of financial position and the Company’s internal regulations.

r. Accounting Estimates Preparation of the accompanying consolidated financial statements and the application of accounting polices require the Company’s management to estimate and assess some items affecting financial assets and liabilities and to disclose contingent liabilities. These estimates and assumptions also affect revenues, expenses, provisions, and changes in the fair value within the statement of comprehensive income and shareholders’ equity and require the Company’s management to estimate and assess the amounts and timing of future cash flows. The aforementioned estimates and assumptions are based on multiple factors with varying degrees of assessment and uncertainty. Moreover, the actual results may differ from the estimates due to the changes resulting from the conditions and circumstances of those estimates in the future.

The Company’s management believes that the estimates in the consolidated financial statements are reasonable. The details are as follows: - A provision for doubtful debts and slow-moving and spoiled inventory items is

taken on the basis and estimates approved by management in conformity with International Financial Reporting Standards (IFRSs).

- Income tax expense for the year is accounted for in accordance with the prevailing laws, regulations, and International Financial Reporting Standards.

- Management periodically reassesses the economic useful lives of tangible assets for the purpose of calculating annual depreciation based on the general condition of these assets and the assessment of their expected useful economic lives in the future. Impairment loss (if any) is charged to the consolidated statement of income.

- A provision for cylinders expected to be scrapped and replaced in the future is taken on the basis and assumptions approved by the Company’s management according to International Financial Reporting Standards.

- A provision is booked for any legal or contractual obligations related to end-of-service indemnity and death and disability according to the Company’s internal regulations.

81

56th Annual Report

- A provision for lawsuits raised against the Company is taken based on an approved legal study prepared by the Company’s legal consultants. According to the study, probable future risks are identified. This study is reviewed periodically.

- Fair value hierarchy:The Company is required to determine and disclose the level in the fair value hierarchy into which the fair value measurements are categorised in their entirety, segregating fair value measurements in accordance with the levels defined in IFRS. Differentiating between Level 2 and Level 3 fair value measurements, i.e., assessing whether inputs are observable and whether the unobservable inputs are significant, may require judgment and a careful analysis of the inputs used to measure fair value, including consideration of factors specific to the asset or liability.

4. Adoption of New and Revised International Financial Reporting Standards (IFRSs)

4.a Standards and Interpretations effective for the current periodThe following new and revised IFRSs have also been adopted in the preparation of the Company’s consolidated financial statements for which it did not have any material impact on the amounts and disclosures of the financial statements, however, may affect the accounting for future transactions or arrangements.

IAS 24 Related Party Disclosures (2009)

Amends the requirements of the previous version of IAS 24 to:

• Provide a partial exemption from related party disclosure requirements for government-related entities

• Clarify the definition of a related party• Include an explicit requirement to disclose

commitments involving related parties.

Amendments to IFRS 1 relating to Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

Provides additional exemption on IFRS transition in relation to IFRS 7 Financial Instruments: Disclosures, to avoid the potential use of hindsight and to ensure that first-time adopters are not disadvantaged as compared with current IFRS preparers.

Amendments to IAS 32 Financial Instruments: Presentation, relating to classification of Rights Issues

Amends IAS 32 Financial Instruments: Presentation to require a financial instrument that gives the holder the right to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency to be classified as an equity instrument if, and only if, the entity offers the financial instrument pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. Prior to this amendment, rights issues (rights, options, or warrants) denominated in a currency other than the functional currency of the issuer were accounted for as derivative instruments.

82


Amendments to IFRIC 14: Prepayments of a Minimum Funding Requirement

Makes limited-application amendments to IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The amendments apply when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements, permitting the benefit of such an early payment to be recognized as an asset.

Improvements on IFRSs issued in 2010

The application of Improvements to IFRSs issued in 2010 which amended IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 32, IAS 34 and IFRIC 13 has not had any material effect on amounts and disclosures reported in the consolidated financial statements.

IFRIC 19 Extinguishing Liabilities with Equity Instruments

Requires the extinguishment of a financial liability by the issue of equity instruments to be measured at fair value (preferably using the fair value of the equity instruments issued) with the difference between the fair value of the instrument issued and the carrying value of the liability extinguished being recognized in profit or loss. The Interpretation does not apply where the conversion terms were included in the original contract (such as in the case of convertible debt) or to common control transactions.

4.b New and revised IFRSs issued but not yet effective:The Company has not applied the following new and revised IFRSs that have been issued but are not effective yet:

Effective for annual periodsbeginning on or after

Amendments to IAS 12 Income Taxes relating to DeferredTax: Recovery of Underlying Assets1 January 2012

Amendments to IAS 32 Financial Statements – OffsettingFinancial Assets and Liabilities1 January 2014

Amendments to IFRS 7 Financial Instruments: Disclosures / Financial Instruments – Transfer of Assets 1 July 2011

Amendments to IFRS 7 Financial Instruments: Disclosures– Offsetting Financial Assets and Liabilities1 July 2013

IAS 1 Presentation of Financial Statements1 July 2012

IAS 19 Employee Benefits1 January 2013

IAS 27 Separate Financial Statements1 January 2013

IAS 28 Investments in Associates and Joint Ventures1 January 2013

IFRS 10 Consolidated Financial Statements1 January 2013

83

56th Annual Report

IFRS 11 Joint Arrangements1 January 2013

IFRS 12 Disclosures of Interests in Other Entities1 January 2013

IFRS 13 Fair Value Measurement1 January 2013

IFRIC 20 Stripping Costs in the Production Phase ofaSurface Mine1 January 2013

The Company’s management anticipates the adoption of the above standards and interpretations on the consolidated financial statements when they are applicable and that they will not have a material impact on the Company’s consolidated financial statements.

5. Accounts Receivable and Other Debit Balances This item consists of the following:

December 31,

2011 2010

JD JD Governmental institutions and departments-fuel 38,378,987 45,575,270Ministry of Finance * 102,974,834 51,911,650

Fuel, electricity and transportation companies 539,245,700 191,294,106

Other receivables 26,822,316 18,621,192Employees receivable 1,644,939 1,290,180Advances against staff end-of-service indemnity 320,201 418,608Total Receivables 709,386,977 309,111,006Checks under collection ** 52,705,028 42,086,873Letters of credit deposits and purchase orders 38,197,833 1,518,783Prepaid expenses 1,223,828 1,166,321Other debit balances (refundable deposits and other) 42,398 40,677

801,556,064 353,923,660Less: Provision for doubtful debts *** (13,213,983) (6,635,922)

788,342,081 347,287,738

* This item includes advance payments to the government amounting to JD 8.79 million, on the account of the surplus from importing Iraqi crude oil. According to the Ministry of Energy and Mineral Resources letter No. 9/2/2/4113 dated October 6, 2009, the Company has been requested to calculate the surplus from the discount given to the Government from importing Iraqi crude oil since September 2008 to date and credited to the Government’s account.

** The maturity dates of checks under collection extend to January 30, 2012.*** The movement on the provision for doubtful debts is as follows:

84


2011 2010JD JD

Balance – beginning of the year 6,635,922 5,220,116Provision for the year 6,580,953 1,422,883Less: Debts written-off (2,892) (7,077)Balance – End of the Year 13,213,983 6,635,922

The Company has adopted a policy of dealing with only creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The following are the accounts receivable due but not impaired:

December 31,2011 2010JD JD

1 day – 119 days 446,100,783 188,262,401120 days – 179 days 246,080,837 102,083,053180 days – 365 days 3,094,139 5,129,891More than one year 14,111,218 13,635,661Total 709,386,977 309,111,006

6. Crude Oil, Finished Oil Products, and Supplies This item consists of the following:


Finished petroleum products and Lube oil 96,280,258 153,239,507Crude oil and materials under process 45,250,103 76,174,120Raw materials, spare parts, and other supplies 53,705,551 48,704,206Goods in transit 216,540,264 100,483,377Provision for slow-moving and spoiled inventory (22,430,337) (22,359,478)

389,345,839 356,241,732

- The movement on the provision for slow-moving and spoiled inventory items is as follows:

85

56th Annual Report

2011 2010

JD JD

Balance – beginning of the year 22,359,478 22,370,935

Provision for the year 220,388 -

Less: goods written-off (149,529) (11,457)

Balance – End of the Year 22,430,337 22,359,478

7. Deferred Tax Assets This item consists of the following:

For the Year Ended December 31, 2011

Description

Balance -Beginning

ofthe Year

Additions AmountsReleased

Year - EndBalance

Deferred Taxes

Trans-ferred tothe State-

ment of IncomeDuring the

Year

Deferred Tax

Assets as of

Decem-ber 31,2010

JD JD JD JD JD JD JD

Provision for staff end-of-service indem-nities

564,902 8,083,727 (165,078) 8,483,551 1,187,696 1,108,611 79,086

Provision for doubtful debts 6,635,922 6,580,953 (2,892) 13,213,983 1,849,958 920,929 929,029

Gas cylinders replace-ment provision 7,531,597 7,315,672 (1,103,580) 13,743,689 1,924,116 869,692 1,054,424

Provision for employ-ees vacations 1,742,198 843,720 (547,268) 2,038,650 285,411 41,503 243,908

Provision for slow-moving and spoiled items

22,359,478 220,388 (149,529) 22,430,337 3,140,247 9,921 3,130,326

Provision for lawsuits and other 7,867,170 - (5,414,637) 2,452,533 343,355 (758,049) 1,101,404

Provision for settle-ment of profit with government

- 41,087,625 - 41,087,625 5,752,268 5,752,268 -

46,701,267 64,132,085 (7,382,984) 103,450,368 14,483,051 7,944,875 6,538,177

- The deferred tax assets were calculated at a rate of 14% as of December 31, 2011.

86


8. Financial Assets at Fair Value through Other Comprehensive Income This item consists of the following:a – Available-for-sale financial assets upon initial recognition:

Listed Shares: No. ofShares

December 31,

2011 2010

JD JD

Jordan Electricity Company 626,347 - 2,586,813

Arab Potash Company 47,300 - 2,057,550

Jordan Dubai Islamic Bank 192,388 - 246,257

Jordan Paper and Cardboard Factories Company 33,300 - 19,314Public Mining Company 37,500 - 260,625

Palestine Development and InvestmentCompany 28,060 - 23,879

- 5,194,438

b – Financial assets at fair value through other comprehensive income classified in accordance to IFRS (9):

Listed Shares: No. ofShares

December 31,

2011 2010

JD JD

Jordan Electricity Company 626,347 2,160,897 -

Arab Potash Company 47,300 2,085,930 -

Jordan Dubai Islamic Bank 228,300 198,621 -

Jordan Paper and Cardboard Factories Company 33,300 18,315 -

Public Mining Company 37,500 162,000 -

Palestine Development and Investment Company 28,060 19,895 -

4,645,658 -

87

56th Annual Report

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88


10. Due to BanksThis item represents overdraft current accounts granted by several local banks to finance the Company’s activities at interest rates ranging from 5.7% to 8.25% against the Company’s guarantee.

11. Accounts Payable and Other Credit Balances This item consists of the following:


Suppliers against drafts and purchase orders 327,283,532 187,870,839Accounts payable and other credit balances 74,204,781 21,332,220Provision for vehicles self insurance (a) 4,650,653 4,658,063Provision for replacing gas cylinders (f) 13,743,689 7,531,597Provision for financing cylinders boxes (b) 2,255,415 2,255,415Provision for occupational accidents indemnity 2,003,580 1,731,237Deferred revenues 25,134 25,588Provision for lawsuits and other (Note 27 b)* 2,452,533 7,867,170Surplus from differences of pricing oil derivatives (c) 314,124 -Accrued bonuses 49,692 44,692Provision for employees vacations 2,038,650 1,742,198Municipalities fees (d) 250,560 250,319Provisions for sales taxes on oil derivatives (d) 8,906,682 3,320,121Provisions for constructing alternative fuel tanks (e) 62,313,963 25,478,162Retentions from contractors 713,021 632,835

501,206,009 264,740,456* During the year 2011, all lawsuits relating to the accident of the Ship Ben Gas

have been dropped and settled, the balance of the provision amounting to JOD 3.35 Million was reversed from provision for lawsuits and other to the Ministry of Finance account and recorded within accounts payable and other credit balances.

a- The Company adopts a self-insurance scheme on vehicles, and a provision is taken for the assessed comprehensive insurance premiums on vehicles and their cargo to meet any liabilities that might arise against the Company due to vehicles accidents.

b- According to the Council of Ministers’ resolution No. 58/1/1/4941 dated April 9, 2006, the additional commission on gas cylinders has been raised to 50 fils instead of 25 fils provided that the commission proceeds are collected in an account maintained by the Company for financing safety boxes to be distributed to gas distributors. Deduction of this commission has been stopped after the adoption of pricing mechanisms of oil derivatives subject to international prices IPP.

89

56th Annual Report

c- This item includes the amounts arising from pricing differences of the gas cylinders and petroleum derivatives between total cost including taxes, fees, and transportation fees and actual selling prices and the rounding-up of fractions effective March 2, 2008. These differences are considered as to the Government’s right according to the Ministry of Energy and Mineral Resources Letter No. 9/4/1/719 dated February 16, 2009 and the Ministry of Finance Letter No. 18/4/9952 dated April 29, 2009. Consequently, the Company was obliged, effective from March 2008 to record the result of the rounding-up of the prices in favor of the Ministry of Finance. Additionally, the Government has claimed the differences in the pricing of the petroleum derivatives effective December 14, 2008 according to the resolution of the Petroleum Derivatives Pricing Committee, in its meeting held on December 14, 2008, provided that the pricing surplus is recorded as a refundable under liabilities within the consolidated financial statements of the Company.

The transaction on the refundable arising from pricing differences of derivatives and surpluses was as follows:

2011 2010JD JD

Balance – beginning of the year - 31,460,714Differences of pricing oil derivatives during the year 3,114,124 43,200,297Paid to the Ministry of Finance during the year (2,800,000) (74,661,011)Balance – End of the Year 314,124 -

d- According to the Prime Ministry’s resolution No. 58/1/2444 dated February 7, 2008, the pricing mechanism of oil derivatives according to international prices during the year 2008 included municipalities’ fees of 6% of the ex-refinery price excluding fuel oil as per the Municipalities Law No. (14) for the year 2007 instead of one fils per liter applied during the concession period. The pricing mechanism of oil derivatives for municipalities fees was terminated at the beginning of the year 2010, and replaced with a special sales tax according to Regulations No. (4) for the Year 2010, amending Special Tax Regulations. During the year 2010, the pricing mechanism of oil derivatives according to the international prices included special sales tax on oil derivatives at 6% of ex-refinery prices excluding fuel oil, Avtur, and Afkaz . Moreover, the special sales tax on fuel (both types) was raised as stated in the pricing mechanism of oil derivatives letter dated June 18, 2010 to 18% and 24%.

According to the resolution of the Prime Ministry in its letter No. 12/11/4/2439 dated February 7, 2008, it was agreed to apply a general sales tax on unleaded fuel as follows starting February 8, 2008:1. To adjust the exemption on the unleaded fuel octane 90 according to Article (22/c)

of the General Sales Tax Law No. (6) for the Year 1994 and its amendments to become 12% subject to a general sales tax rate of 4%.

2. To cancel the exemption on unleaded fuel Octane 95 according to Article (22/c) of the General Sales Tax Law mentioned above and be subject to a general tax rate of 16%.

90


According to the resolution of the Council of Ministers in its meeting held on January 11, 2011, it was decided to grant exemption on diesel and kerosene from the special sales tax and to decrease the special tax on unleaded fuel octane (90) to become 12% instead of 18% effective January 12, 2011. e- According to the letter of his Excellency the Prime Minister No. 58/11/1/5930 dated

March 24, 2010, an amount of JD 34 per ton was added to the price of unleaded fuel (both types) within the pricing mechanism of oil derivatives starting April 16, 2010. Moreover, the related proceeds are recorded in a special account maintained by the Company for the Government represented by the Ministry of Energy and Mineral Resources to build tanks for the storage of crude oil or fuel oil derivatives at an average of 70 thousand tons in Aqaba.

f- The movement on the provision for replacing gas cylinders is as follows:

2011 2010JD JD

Balance – beginning of the year 7,531,597 6,421,849Provision for the year * 7,315,672 6,241,537Write-off during the year ** (1,103,580) (5,131,789)Balance – End of the Year 13,743,689 7,531,597

* The provision for replacing gas cylinders is taken according to technical studies prepared by management. During the year 2011, a provision of JD 7,315,672 was booked for the disposal and repair of cylinders mentioned in IPP pricing which amounted to JD 20 for each ton of gas. Moreover, the Company will be charged with the value of replacing or fixing damaged cylinders according to the related instructions. The number of gas cylinders in circulation is estimated to be (4.7) million cylinders.

** According to the decision of the Cylinders Write-off Committee, around 45 thousand damaged cylinders were written-off at an approximate value of JD 1,103,580.

12. Provision for Income TaxThe movement on the provision for income tax was as follows:


Balance – beginning of the year 4,551,887 3,904,317Add : Income tax expense for the year 11,585,779 2,593,471Less : Income tax paid (5,952,248) (1,945,901)Balance - End of the Year 10,185,418 4,551,887

91

56th Annual Report

Income tax expense for the year shown in the consolidated statement of income represents the following:

2011 2010JD JD

Income tax for the year 11,585,779 2,593,471Less : Deferred tax assets for the year (8,702,924) (353,578)Amortization of deferred tax assets for the year 758,049 22,356

3,640,904 2,262,249

- The Company has reached the settlement with the Income Tax Department up to the end of the year 2008. Furthermore, the Company submitted its income tax return and paid the declared tax for the years 2009 and 2010, these years have also been reviewed by the Income and Sales Tax Department and no settlement has been concluded yet. In the opinion of the Company’s management and its tax advisor, the provisions taken in the consolidated financial statements are adequate to meet tax obligations.- The income tax rate on the Company equal 14%.

13. Provision for Staff End-of-Service Indemnity The movement on the provision for staff end-of-service indemnity is as follows:

2011 2010JD JD

Balance-beginning of the year 564,902 704,342Additions during the year 8,083,727 38,519Paid during the year (165,078) (177,959)Balance-End of the Year 8,483,551 564,902

* The Board of Directors decided to book a provision for the amounts expected to be paid for the terminated employees who served 15 years or more, the provision represents six monthly salaries, which the Company was used to pay as rewards for the terminated employees in the years 2006 to 2011.

14. Ministry of Finance - Funding of Strategic Inventorya. This item represents an interest-free fund granted to the Company by the Ministry

of Finance to finance the strategic inventory.b. The concession agreement with the Government expired on March 2, 2008.

Consequently, the Company, during the year 2008, entered into an agreement with the Government to evaluate the strategic inventory and fix its quantity and value as of the expiry date of the concession on March 2, 2008. Accordingly, the strategic inventory has been stated as an off-consolidated statement of financial position based on the quantities and prices as of that date.

92


15. ReservesA. Statutory Reserve

In accordance with Article (186) of the Companies Law No. (22) for the Year 1997 and its amendments, the last of which was Law No. (17) for the Year 2003, 10% of net income shall be allocated to the statutory reserve every year. The allocation shall not be stopped before the total allocated amount is equivalent to one quarter of the Company’s authorized capital. However, upon approval of the General Assembly of the Company, this allocation can continue until the statutory reserve equal the Company’s capital. B. Voluntary Reserve

The amounts accumulated in the account represent what has been transferred from annual net income before taxes at a rate of 20 %, during the year and previous years, this reserve will be used for the purpose approved by the Board of Director, Moreover the General Assembly of Shareholders has the right to distribute the whole reserve or part thereof as dividend.

16. Fair Value Reserve / Cumulative Change in Fair Value - NetThis item represents the fair value reserve for the financial assets at fair value through other comprehensive income which resulted from assets revaluation at their fair value as of December 31, 2011, these financial assets were previously classified as available – for – sale financial assets prior to the adoption of IFRS (9).

17. Retained EarningsThe Board of Directors recommended the distribution of 15% of capital as cash dividends to shareholders, equivalent to JD 4.8 million for the year 2011 in addition to capitalizing a portion of retained earnings to increase the capital by 25% which is equivalent to JD 8 million to be distributed as stock dividends to the shareholders. These recommendations are subject to the General Assembly of Shareholders’ approval.The General Assembly of the Company decided in its ordinary meeting held on May 12, 2011, to approve the distribution of 30% of paid up capital, equivalent to JD 9.6 million, to the shareholders for the year 2010.

18. Sales This item consists of the following:

2011 2010JD JD

Refinery and distribution sales 3,455,481,325 2,395,259,577Gas cylinders packing sales 229,507,044 143,925,142 Lube oil factory sales 27,849,501 23,319,804 Transportation fleet proceeds 29,900,016 22,356,174Less: Sales Tax and Special Tax (246,115,377) (205,653,543)

3,496,622,509 2,379,207,154

93

56th Annual Report

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94


20. Operating Income and Other Income This item consists of the following:

2011 2010JD JD

Scrap sales 93,387 44,841Income from foreign exchange 574,262 756,189 Income from the Ports Corporation * 1,200,000 1,200,000Dividends income 132,551 83,836 Other income 2,270,807 1,218,558

4,271,007 3,303,424

* This item represents fees of JD 1,200,000 due to Jordan Petroleum Refinery Company resulting from the use of the service of the Company’s employees during the year 2011 by Aqaba Ports Corporation.

21. Settlement of Targeted Net Income with the GovernmentA- According to Jordan Petroleum Refinery Company’s Board of Directors’ resolution

No. 132/2009 dated November 15, 2009, His Excellency the Minister of Finance’s letter No. (18/4/25741) dated November 15, 2009 was approved to settle the outstanding financial issues between the Company and both Ministry of Finance and the Ministry of Energy and Mineral Resources on the following basis:

1. Through the petroleum derivatives pricing mechanisms, an annual profit of JD 7.5 million after tax will be achieved from the refining and distribution activities taking into consideration that the change in the Company’s expenses is within the normal ratios.

2. The Lube-Oil Factory income shall be excluded for the profit referred to in item (1) above.

3. The Company shall be granted an amount of 10 cents / barrel from the surplus realized for the Government as additional income from refining the Iraqi crude oil. This consideration is calculated based on the quantity of the barrels received by the Company provided that this income shall be subjected to income tax.

4. Agreement shall be made between the Government’s representatives and the Chairman of the Audit Committee ensuing from the Company’s Board of Directors, concerning any new provisions or the increase in the outstanding provisions. These provisions shall be reviewed quarterly.

According to the Prime Ministry’s resolution in its meeting held on November 24, 2009, the above items have been approved to settle the financial relationship between the Government and Jordan Petroleum Refinery Company for the year 2010. The settlement details of the year 2010 income are as follows:

95

56th Annual Report

2011 2010JD JD

Income before tax for the year - 26,927,094Less: Lube Oil Factory income after tax - (5,255,473)The Company’s share from the surplus after taxfrom Iraqi crude oil refining activity - (219,776)The Company targeted income after tax - (7,500,000)Income tax for the year - (2,262,249)Surplus to the Government - 11,689,596

According to the Prime Ministry’s letter No. 31/17/5/6014 dated March 24, 2010 and to the Ministry of Energy and Mineral Resources letter No. 6/5/1/1439 dated March 29, 2010 it was approved to extend the above agreement for the year 2010.B - The agreement with the Government was not renewed accordingly, the Company

profits for the year ended December 31, 2011 was calculated according to the Board of Directors resolution No. (174/2012) dated September 2, 2012 as a result of the preliminary negotiations with the Government which includes the following:

An annual profit of JD 15 million after tax will be achieved from refining and distribution activities.The Lube - Oil Factory income shall be excluded from the profit referred to in item (1) above provided that the Lube – Oil Factory will be charged with the fixed and variable related costs whether it is direct or indirect. The Liquid Gas income shall be excluded from the profit referred to in item (1).The profit granted to Jordan Petroleum Refining Company of 10 cents / barrel of refining the Iraqi crude oil is also excluded provided that this income is subject to tax.The difference between the calculation of net income above and the commercial basis calculation of net income is recorded as provision for settlement of profits with the Government and that is until a final consensus is reached with the Government regarding the calculation of the Company’s profits. Knowing that the liquid gas profit was not excluded from the profits as stated in point (3) above due to the fact that it does not have separate accounting books.

2011 2010JD JD

Income for the year 66,582,198 -Less: Lube Oil Factory income after tax (6,678,889) -The Company’s share of the surplus after taxfrom Iraqi crude oil refining activity (174,780) -

The Company targeted income after tax (15,000,000) -

Income tax for the year (3,640,904) -Provision for settlement of income withthe Government 41,087,625 -

96


According to the letter of H.E. the Chairman of the Negotiation Committee/ Secretary General of the Ministry of Energy and Mineral Resources dated June 28, 2012 addressed to the Company, the Government believes that the Council of Ministers’ resolution relating to determining the Company’s profits for the years 2008 to 2010 in an amount of JD 7.5 million from the refining and distribution operations in addition to the lube- oil factory profits is also applicable to the years 2011 and 2012. In reference to the Prime Ministry’s letter No. 31/17/5/16909 dated June 21, 2012 addressed to H.E. the Minister of Finance, which includes non-approval of the balances and transactions related to the Ministry of Finance accounts as stated in the consolidated financial statements for the year 2011 and particularly the Company’s profits as per the Council of Ministers’ resolution No. (6668) dated November 24, 2009.

22. Selling and Distribution Expenses This item consists of the following:

2011 2010

JD JD

Salaries and other employees benefits 15,971,504 13,322,890

Company’s contribution to the Death and DisabilityFund 1,049,245 816,794

Depreciation of property plant and equipment 2,771,593 2,865,324

Raw materials, spare parts and other supplies 1,130,833 1,320,372

Insurance fees 768,994 847,678

Fees, taxes and stamps 319,875 347,200

Other selling and distributing expenses 4,215,350 3,120,472

26,227,394 22,640,730

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56th Annual Report

23. General and Administrative Expenses This item consists of the following:

2011 2010JD JD

Salaries and other employee benefits 4,687,463 3,839,509Company’s contribution to the Death and

Disability Fund 303,894 151,242Donations and in kind contributions 260,876 270,471Postage and telephone 154,069 136,267Stationery and printing 86,736 142,205Depreciation of property plant and equipment 663,128 957,535Staff end-of-service indemnity provision 42,124 38,519Technical and legal consultations 357,250 428,198Advertisements 108,593 107,229Maintenance and repairs 297,880 189,886Rents 140,415 129,415Cars expenses 30,207 19,138Subscriptions 65,490 58,270Insurance premiums 74,432 76,107Water and electricity 95,118 85,920Professional fees 52,000 52,000Sales tax penalties* 1,792,380 -Security and Guard 427,356 -Other general and administrative expenses 753,135 555.803

10,392,546 7,237,714* This amount represents penalties for the Income and Sales Tax Department as a result

of late payment of the special and general sales tax related to crude oil derivatives.

24. Other Expenses This item consists of the following:

2011 2010JD JD

Additional universities fees - 152,375Board of Directors’ remunerations 65,000 60,000

65,000 212,375

98


25. Earnings per ShareEarnings per share are calculated by dividing net income for the year by the weighted average number of shares during the year as follows:

2011 2010JD JD

Income for the year 21,853,669 12,975,249Weighted average number of shares 32,000,000 32,000,000

Earnings per Share - / 683 - / 405

The adoption of IFRS (9) ‘Financial Instruments’ which resulted in the reclassification and fair value presentation of the financial assets did not have any effect on the earnings per share.

26. Fair Value Hierarchy The following table analyzes the financial instruments recorded at fair value according to the valuation method at different levels defined as follows:- Level 1: Quoted prices (unadjusted) for identical assets and liabilities.- Level 2: Information not included in level (1) advertised prices mentioned for the

asset or liability, either directly (e:g. prices) or indirectly (i.e. derived from prices); - Level 3: Information on the asset or liability not based on those observed from the

market (unobservable inputs).

Level 1 Level 2 Level 3 Total December 31, 2011 JD JD JD JDFinancial instruments:Financial assets at fair valuethrough other comprehensive income 4,645,658 - - 4,645,658

4,645,658 - - 4,645,658

27. Contingent Liabilities and Financial Commitmentsa. As of the consolidated statement of financial position date, the Company was

contingently liable and financially committed as follows:


Letters of credit and bills of lading* 551,514,553 393,356,037Letters of guarantee 3,549,820 2,588,074Contracts for projects under construction 20,377,687 6,951,032

* This item consist of Standby L/Cs amounting to JD 216 Million, equivalent to USD 305 Million, in favor of Saudi Aramco as of December 31, 2011(JD 252 Million, equivalent to USD 355 Million as of December 31, 2010).

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56th Annual Report

b. On July 12, 2006, and during the concession period, an accident occurred to a gas ship tanker that resulted in legal claims being filed claiming compensations at Aqaba Court of First Instance against the Company and the ship tanker’s captain by the four deceased persons’ heirs, the Ports Corporation, and the Jordanian Armed Forces. On March 11, 2009, the said court issued its verdict by holding both parties responsible, detaining the tanker, and disallowing it from traveling. The verdict was appealed at M’ain Appellate Court, which issued its final verdict on June 1, 2009, endorsing the Court of First Instance verdict, thus rendering it irrevocable.

The ship owner filed an arbitration case in London claiming USD 28 million as compensation. Moreover, the Company presented its arguments on the unavailability of an arbitration agreement and the non-specialization, successively. Additionally, the ship owner filed a marine attachment lawsuit at South New York Court. In its turn, the Company granted power of attorney to international legal offices in New York and London to follow up on the attachment case and arbitration case. This resulted in the lifting off of the attachment on the Company’s funds in New York. Consequently, the above court cancelled the previous attachment decision dated October 19, 2009. At the end of the year 2009, the arbitration case in London was seized based on both parties’ consents due to ongoing negotiations aimed at reconciliation between the two parties. During the year 2011, all the legal lawsuits were dropped and terminated regarding the Ben Gas accident, resulting in the payment of around JD 1.6 million, and according to the management and the legal advisor there are no legal obligations other than those paid regarding this lawsuit. In light of the above, and based on the legal consultants’ opinion, the Company’s management believes that no additional provisions are needed concerning this case. Adjustment of the provision balance will be made when the need arises. As mention in note No. (11) a portion of the provision was reversed from the provision for lawsuits and other to the Ministry of finance account under accounts payable and other credit balances.There are lawsuits in courts raised against the Company claiming amounts estimated at JD 2,452,533 as of December 31, 2011. Some of the current lawsuits originated in prior years and have been filed against both the Government and the Company. The contingent liabilities arising from unsettled lawsuits have been estimated, and provisions have been taken in accounts payable and other credit balances. Based on the opinion of the Company’s management and its legal consultant, provisions booked in the accompanying consolidated financial statements concerning this matter are sufficient.

C - According to the recommendation of H.E. the Minister of Finance, the Council of Ministers decided in their meeting held on March 1, 2011, according to Article (149/c) of the Customs Law No. (20) for the year 1998, to approve the exemption of custom fees (unified fees) for the imports of the Jordan Petroleum Refinery Company of crude oil derivatives for the period from January 1, 2011 to December 31, 2011. However, as of the date of the issuance of the consolidated financial statements there was no extension for the above exemption.

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28. Death, Disability and Indemnity FundThe Company’s liabilities for this fund are estimated at JD 28,440,739 on the assumption that the services of the Company’s employees are terminated all at the same time (JD 25,691,414 as of December 31, 2010). During the year 2007, a net amount of JD 6,116,931 was transferred to the Fund, and the Company’s liabilities net balance as of December 31, 2007 became JD 14,604,217. According to the Board of Directors’ resolution No. (132) dated September 9, 2008, it was agreed to borrow JD 3 million from the Fund at a rate of 7.5%. Consequently, the net balance due to the Fund became JD 17,822,000 as of December 31, 2008. According to the Board of Directors’ resolution No. (7) dated April 14, 2009, it was approved to adjust the Death and Disability Fund Regulations through an increase of JD 100 per bracket and record such an adjustment as an obligation to the Fund. Accordingly, the amount due to the Fund has become JD 25,193,523 as of December 31, 2011. Moreover, the Fund’s assets and liabilities of JD 28,440,739 have been recorded as off-consolidated statement of financial position.

However, in the subsequent period this fund was cancelled and replaced with the death, disability and indemnity and end of service compensation fund as stated in note (36).

29. Related Parties Balances The details of the balances and transactions with related parties are as follows:


Ministry of Finance account receivable (Note 5) 102,974,834 51,911,650

Ministry of Finance – strategic inventory (Note 14) 156,787,303 156,787,303Ministry of Finance – Refining Iraqi Oil (Note 5/A) 8,790,675 4,949,411Ministry of Finance – surplus fromdifferences of pricing oil derivatives (Note 11) (314,124) -

Ministry of Energy and Mineral Resources –Provision for constructing alternative fuel tanks (Note 11) (62,313,963) (25,478,162)

Subsidy for crude oil derivatives charged tothe Ministry of Finance – Debit (Note 19) 571,456,842 87,917,823

Ministry of Finance – Settlement of targeted net income (Note 21) - (11,689,596)Ministry of Finance – surplus from refining Iraqi crude oil – Credit (Note 19) (6,961,968) (17,916,474)

Ministry of Finance – Surplus fromdifferences of pricing oil derivatives – Credit (Note 19) (3,114,124) (43,200,297)

Ministry of Finance – Surplus fromimporting Iraqi fuel oil – Credit (Note 19) (41,729) -

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Moreover, executive management and members of the Board of Directors’ salaries and remunerations amounted to JD 495,623 for the year 2011 (JD 466,327 for the year 2010).

30. Settlement Agreement with the Government Relating to the Expiry of the Concession Granted to the CompanyIn light of the expiry of the Company’s concession and the necessity to settle all related issues including financial settlement and determination of the Company’s future after the concession expiry, and in reference to the Prime Minister’s Letter No. 58/11/1833 dated January 28, 2008 on conducting the concession termination bargains, the Company signed a settlement agreement with the Government relating to the expiry of the concession agreement on February 25, 2008. The details are as follows:

a. The Company shall be granted part of the distribution activity (one of the four companies to be licensed) representing 25% of the market share as a minimum provided that this Company is separate from but owned by Jordan Petroleum Refinery Company (JPRCO) and that all the conditions will be applied on the other three distributing companies according to a licence agreement for this purpose. Moreover, the Company’s assets shall include the (five) gas stations owned by JPRCO.

b. One logistics company shall be set up in Jordan whereby the Government’s share in this company is 51%, and JPRCO’s share is 49% upon its establishment. Moreover, this company shall operate on the basis of the free system of using the logistical facilities (This company is not entitled to trade in or import fuel derivatives). The Government and JPRCO shall be obliged to sell part of their shares in this company according to the Government’s program for restructuring the oil sector by opening it up for competition, and separating and evaluating assets as follows: 1. JPRCO shall be obliged to sell 29% of the logistics company’s capital to

the operator (private sector) so that its share becomes 20% of the logistics company’s capital. Furthermore, the Government shall be obliged to sell 31% of the logistics company’s capital to the operator so that its share becomes 20% of the logistics company’s capital and the operator’s share becomes 60% of the logistics company’s capital.

2. All JPRCO’s facilities and assets in the new location in Aqaba / Southern Area, erected on a plot of land with an area of 251,820 dunums rented to JPRCO by Aqaba Special Economic Zone Authority / Aqaba Development Company, shall be separated, and so shall all the facilities and assets of JPRCO in Queen Alia International Airport, King Hussein Airport, and Maraka Civil Airport from the facilities and assets of JPRCO. These facilities and assets in Aqaba and the airports shall be considered part of the logistics company’s facilities and assets.

3. 51% of the logistical assets transferred to the logistics company shall be charged to the Government for the benefit of JPRCO (as per item 2 above). This percentage is considered the Government’s share in the logistics company upon its establishment.

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4. All shares mentioned in item (1) above, including the option to sell the remaining Government’s share, shall be sold according to the Government’s program for restructuring the oil sector and establishing and licensing the logistics company. Moreover, JPRCO shall be obliged to sell its share, mentioned in item (1) above which represents 29% of the logistics company’s capital, at the same time the Government sells its share of 31% of the logistics company’s capital through competitive bidding offered by the Government for selling 60% to the operator (new buyer from the private sector). Moreover, both the Government and JPRCO shall receive the value of their sold shares according to the sale value charged to the operator (private sector).

5. The Government and JPRCO shall comply with all the requirements for establishing the logistics company and its tasks. The logistics company shall be responsible for securing future storage capacities to serve the distribution companies in all parts of the Kingdom during its licence term and ensure the availability of the necessary storage capacity for the strategic inventory.

6. The logistics company is considered the legal successor of JPRCO in connection with the rights and obligations on the executed tenders relating to the facilities mentioned in item (2) above, and shall charge the Government to the favor of JPRCO the equivalent of 51% of the tender’s value and 49% of the tenders value to JPRCO.

7. Settlement of the working employees’ rights and addressing their conditions are performed according to the pertinent laws and regulations in effect.

c. JPRCO’s ownership of the constructions, facilities, equipment, and accessories on the Company’s premises in Aqaba / old site / phosphate pavement shall be retained by JPRCO. Moreover, the request of Aqaba Special Economic Zone Authority (ASEZA) / Aqaba Development Company relating to the ownership of the site and what is constructed on it shall be left to JPRCO to deal with. In its Letter No. th b/b/11870 dated July 1, 2007, addressed to the Prime Minister, ASEZA requested reconsideration of the resolution of the Council of Ministers concerning ownership of these facilities for the purpose of selling them to the logistics company in order to enable Aqaba Development Company to translocate the main port facilities and equipment to the new site in the southern coast. JPRCO shall manage these facilities according to the free usage regulations to empower the distribution companies to supply the ships with fuel until the logistics company makes available new facilities to enable the distribution companies to supply ships with fuel.

d. JPRCO’s ownership of the petrol derivatives haulage facilities at the Refinery / Zarqa shall be retained as these facilities cannot be technically separated. Moreover, JPRCO shall manage these facilities according to the free usage regulations for a transitional period provided that the necessary improvements and upgrading of these facilities are executed in accordance with the international requirements until the logistics company is empowered to build its own haulage facilities. After the transitional period, work of these facilities shall be limited for JPRCO’s purposes.

e. JPRCO’s ownership of the liquid petrol gas containering facilities in Zarqa, Amman,

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and Irbid shall be retained provided that a company independent from and owned by JPRCO is established for the management of these facilities. Moreover, the Government shall be entitled to open the liquid petrol gas market for competition effective from the expiry date of the concession.

f. JPRCO shall make available the storage capacities in excess of its needs in Zarqa, for the benefit of the logistics company, on a commercial basis for a transitional period until the logistics company sets up its own storage and haulage facilities.

g. JPRCO shall continue to store its crude oil in tanks No’s. 70, 15, and 71 with an approximate capacity of 68,000 tons allocated to store crude oil on JPRCO’s site (new site in Aqaba). The facilities and assets of the site shall be handed over to the logistics company without paying the logistics company any additional costs aside from the current costs estimated at JD 1.5/ton/month for utilizing the above-mention tanks. JPRCO shall continue to use these tanks as arranged until alternative storage capacities are made available by Aqaba Development Company / Integrated Oil Port Project.

h. Approval of the financial settlement relating to the expiry of the concession according to the report of the financial specialist hired by the Government is as follows:

Final Status

The balance of profit appropriations to the statutory reserve of JD 1.383 million Government’s right

Value of the cumulative change in investments (shares)

Government’s right. The value is determined upon the concessionexpiry date

Value of interest paid on the bridge loan of JD 30 million Agreement on retaining it for JPRCO

Value of distributed profits (16%) on the difference between capital of JD 32 million and actual paid-in capital of JD 30.566 million for the period (1981 –2007)

Agreement on retaining it for JPRCO

Description

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Strategic inventory Government’s right according to actual valuation upon the concession expiry date

Operating stock Government’s right of evaluating it according to the prevailing international prices on the concessionexpiry date.

Provision for doubtful debts Recoveries of these debts shall be paid to Government

Provision for staff end-of-service indemnity

This relates to the Company’s employees who will be transferred to the other companies

Provision for employees vacations This relates to the Company’s employees who will be transferred to the other companies

Provision for gas cylinders This shall be the right of the party that will take responsibility of replacingthe citizens gas cylinders

Provision for slow-moving and spoiled inventory items

An independent study shall be conducted to evaluate slow-moving and spoiled inventory items. The difference shall be recovered fromGovernment.

Capital projects Agreement on retaining it for JPRCO.

The above amounts have been estimated in light of and at the date of the financial report. The final amount of the above items shall be adopted according to JPRCO’s consolidated financial statements at the date of the expiry of the concession, and the final financial settlements shall be prepared accordingly.

j. JPRCO shall make available the petrol derivatives needed by the kingdom until the logistics company, the distribution companies, and the new liquid petrol gas companies commence their operations according to the “Agreement on Petrol Derivatives Distribution, Storage, Import, and Availability”.

k. The distribution / marketing companies shall be obliged to purchase 75% of the Refinery’s production of light petrol derivatives. Moreover, fuel oil shall

Description Final Status

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be exclusively sold by JPRCO until the completion of its expansion project and operating it commercially no later than the year 2011 extendible for a year upon both parties approval. This shall be considered cancelled in case JPRCO does not complete its program for commencing the execution of the expansion project through attracting a strategic partner and/ or a financial partner and / or increasing capital no later than December 31, 2008 or any extension approved by both parties.

In accordance with the resolution of the Prime Ministry No. 58/11/1/2634 dated March 2, 2008, it was agreed to:1. Approve the settlement agreement signed on February 25, 2008 between the

representatives of the Government (the Minister of Finance and the Minister of Energy and Mineral Resources) and JPRCO’s representative (JPRCO’s Chairman of the Board of Directors) concerning termination of JPRCO’s concession including the financial settlement stated in the agreement.

2. Approve the import, storage, insurance, and distribution services of the petrol derivatives agreement signed on February 25, 2008 between the Government’s representative (Minister of Energy and Mineral Resources) and JPRCO’s representative (JPRCO’s Chairman of the Board of Directors).

3. Commence work on the above-mentioned agreements effective from the expiry of the concession. These agreements shall be considered cancelled in case JPRCO’s General Assembly does not approve them. Moreover, the resolution of the Council of Ministers No. 4487 dated June 5, 2007 shall be effective for separating and owning the logistics, distribution, and liquid petrol gas facilities belonging to JPRCO. Its assets shall be relocated to the new companies which shall be licensed according to the Government’s plan for restructuring the oil sector.

4. Complete the necessary procedures for signing the licensing agreement with JPRCO in light of the above settlement.

According to JPRCO General Assembly’s resolution in its extraordinary meeting held on March 22, 2008, it was agreed to:a. Approve the settlement agreement with the Government on the termination of the

concession on February 25, 2008.b. Approve the segregation of the Company’s activities through establishing companies

wholly or partially owned by JPRCO and authorizing the Board of Directors to do all what is necessary in this regard.

c. Amend the Company’s internal regulations to comply with the Company’s legal status given the expiry of the concession.

During the year ended December 31, 2008, the Company established two subsidiaries wholly-owned by Jordan Petroleum Refinery Company, namely: Jordan Liquid Gas Manufacturing and Packing Company and Jordan Lube-oil Manufacturing Company in preparation of segregating the activities of gas packing and lube-oil manufacturing. Moreover, these two companies have not yet conducted any commercial activities. Additionally, the Company is still in the process of segregating the Company’s other activities.

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31. Risk ManagementThe Company adopts financial policies for managing the various risks within a specific strategy. Moreover, the Company’s management controls and monitors risks and performs the optimal strategic allocation of financial assets and financial liabilities. Risks include interest rate risk, market risk, credit risk, and foreign currency risk.a. Capital Risk ManagementThe Company manages its capital to ensure its ability to continue as a going concern and maximize the return to stakeholders through achieving an optimal balance between equity and debt. Moreover, no change in the Company’s overall policy has occurred since the prior year.b. Liquidity RiskLiquidity risk, also known as funding risk, represents the difficulty that the Company will encounter in making available the necessary funds to fulfill its obligations. Moreover, the Company manages its liquidity risk through keeping adequate reserves, continuously monitoring the expected and actual cash flows, and matching the maturities of financial assets and financial liabilities.c. Credit RiskCredit risk relates to the other party’s inability to meet its contractual obligations leading to the incurrence of losses by the Company. Moreover, the Company adopts a policy of dealing with creditworthy parties in order to mitigate the financial losses arising from defaults.The Company’s financial assets consisting mainly of accounts receivable, financial assets at fair value through other comprehensive income, and cash and cash equivalents do not represent important concentrations of the credit risk. Furthermore, the debtors are wide spread among the clients’ categories and their geographic areas. Strict credit control is maintained over the credit limits granted to each customer separately on a continuous basis.All of the Company’s investments are classified as financial assets at fair value through other comprehensive income.The risk of investment in shares relates to the change in the value of the financial instrument as a result of the changes in the closing prices of shares.

The change in the financial market index whereby the above securities are traded as of the consolidated financial statements date represents a 5% increase or 5% decrease. The following is the impact of the change on the Company’s shareholders’ equity.

2011 2010

JD JD

5% Increase 232,383 259,722

5% (Decrease) (232,283) (259,722)

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d. Market RiskMarket risk is the loss in value resulting from the change in market prices such as interest rate, foreign currency exchange rate, and equity instruments prices, and consequently, the change in the fair value of the financial instruments cash flows on-and off-the statement of financial position.

1. Currencies Risk

The Company’s major transactions are in Jordanian Dinar and US Dollar. The following are the book values of the Company’s financial assets and financial liabilities denominated in foreign currencies as of December 31, 2011 and 2010:


Assets - US Dollar 7,687,569 5,240,246Liabilities - US Dollar 256,622,666 188,030,104

Currency risk relates to the changes in the prices of currencies in connection with foreign currency payments. As the Jordanian Dinar is pegged to the US Dollar, the Company’s management believes that the foreign currency risk is immaterial.

2. Interest Rate Risk

Interest rate risk is the risk of change in the value of the financial instrument due to changes in market interest rates.Moreover, the Company continuously manages its exposure to interest rate risk and considers the various scenarios such as refinancing, renewal of the present positions, and alternative financing.

The below-mentioned sensitivity analysis is determined according to the exposure to interest rate risk related to the lending banks as of the consolidated financial statements date. Moreover, the analysis has been prepared assuming that the liability amount at the consolidated financial statements date was outstanding during the whole year. An increase or decrease of half a percentage point (0.5%) is used, representing the evaluation of the Company’s management of the potential and acceptable change at market interest rates:

2011 2010JD JD

0.5% Increase 3,069,729 2,137,1230.5% Decrease (3,069,729) (2,137,123)

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32. Sectorial & Geographical Distribution Information on geographical and sectorial distribution:

- The Company is organized, for management purposes, into four major business sectors.

- Refining: This sector separates the components of imported lube-oil into a set of varied oil products according to international specifications.

- Distribution: Distribution links the production activity and refining activity on one hand, and all customers in the various areas of the Kingdom, on the other. Moreover, distribution fulfills customers demands on the Company’s petroleum derivatives and gas.

- Manufacturing of Lube-oil: This sector includes the manufacturing and production of several types of oil required in the local market.

- Manufacturing and Packing of gas cylinders: This sector includes manufacturing, repairing, and maintaining gas cylinders.

All of the Company’s assets, liabilities, and operations are inside the Kingdom of Jordan.

The following are the Company’s activities distributed according to activity type:

Manufacturing Total

Refining &Distribution

& Packing of

Liquid Gas

Manufacturingof Lube Oil

TransportationFleet Others

December 31,

2011 2010

JD JD JD JD JD JD JD

Income before tax 16,637,333 (621,235) 7,877,269 1,566,449 34,757 25,494,573 15,237,498

Other Information

Total sector’s assets 1,256,133,918 471,713 19,032,553 2,583,690 8,461,353 1,286,683,227 794,759,620

Total sector’s liabilities 1,186,978,960 12,623 13,110,244 - - 1,200,101,827 719,883,110

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33- Future Expansion PlanThe Company’s future refinery operations are linked with the implementation of the expansion project which aims for the following:

Improvement of some of the products such as the Diesel through decreasing the percentage of its sulfur content.

Transfer of the heavy fuel oil to the high quality derivatives such as LPG, gasoline, AVTUR and diesel.

Larger participation in the coverage of the Kingdom’s need for oil derivatives.The reason behind the inability to launch this dynamic project for the Company and for the Kingdom is due to the fact that a settlement with the Government was not yet reached on the nature of the future relationship between the Company and the Government which would consequently enable the Company to communicate with the related parties interested in financing the project to allow them to perform the necessary related studies and analysis to adopt the project.

According to the Economic Development Committee resolution dated March 29, 2012 the Government set up a committee made up from General Trustees of the Ministry of Energy, Finance, Trade and Commerce and Transportation in addition to the representative of the Executive Privatization Commission in order to negotiate with JPRCO the future directives of the Company in a comprehensive manner including the ability to increase the fixed annual income that the Company generates from Refining. Consequently, the Company set up a committee made up of the Company Board of Directors and the General Manager in order to negotiate on behalf of the Company, and both committees set up a number of meetings however a settlement was not yet reached.

Note that during the year 2011 the Company updated the expansion plan technical study in which the Company changed its strategic plan from comprehensively adopting a fulfillment of the Kingdom’s needs from fuel oil derivatives till the year 2025 for an investment amount of two billion dollars, to alternative studies that were performed to accommodate for the necessary needs and to partially accommodate for the future needs of the Kingdom for fuel oil derivatives for an investment amount of 800 million dollars to one billion dollars.

The Company continues its effort in trying to reach a settlement with the Government regarding the future directives between the Government and the Company especially concerning the product prices and their annual profit to enable the Company to communicate with the related parties for the financing of the expansion plan.

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34- The Effect of Applying IFRS (9)The Company and the Company’s subsidiaries implemented the early adoption of IFRS (9) starting January 1, 2011 (date of adoption) which resulted in the following:

The reclassification of debt and equity financial assets as following:

January 1, 2011

Measurement criteria Carrying amount

Description IAS(39) IFRS(9) IAS(39) IFRS(9) Difference

JD JD JD JD JD JD

Debt instruments

Available for Sale Financial

Assets

Financial assets at fair value

through other comprehensive

income

5,194,438 5,194,438 -

The investments in shares previously classified as available for sale financial assets at fair value were reclassified according to the management’s plan and its business model to financial assets at fair value through other consolidated comprehensive income as they are strategic investments and are not for trading purposes, accordingly an amount of JD 4,856,391 in the cumulative change in fair value has been reclassified as fair value reserve within the consolidated statement of equity as of January 1, 2011. The adoption of IFRS (9) did not result in any differences between the previous book value (IAS 39) and the current book value (IFRS 9) for the financial assets as of January 1, 2011 which represents the opening balance at the reclassification date.

35- Comparative FiguresThe Company profits for the year ended December 31, 2011 was calculated according to the Board of Directors resolution No. (174/2012) dated September 2, 2012 as a result of the preliminary negotiations with the Government which includes the following:

An annual profit of JD 15 million after tax will be achieved from refining and distribution activities.The Lube - Oil Factory income shall be excluded from the profit referred to in item (1) above provided that the Lube – Oil Factory will be charged with the fixed and variable related costs whether it is direct or indirect.

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The Liquid Gas income shall be excluded from the profit referred to in item (1).

The profit granted to Jordan Petroleum Refining Company of 10 cents / barrel from refining the Iraqi crude oil is also excluded provided that this income is subject to tax.The difference between the calculation of net income above and the commercial basis calculation of net income is recorded as provision for settlement of profits with the Government and that is until a final consensus is reached with the Government regarding the calculation of the Company’s income. Knowing that the liquid gas profit was not excluded from the income as stated in point (3) above due to the fact that it does not have separate accounting books. Meanwhile the comparative figures for the year ended December 31, 2010 are stated according to the agreement signed with the Government for the prior years as stated in note (2) to the consolidated financial statements.

36 - Subsequent EventsAccording to the general announcement No. 11/2012 issued by Jordan Petroleum Refinery Company dated March 3, 2012 , the Board of Directors agreed to merge the due to death, disability, and indemnity fund with the end of service compensation fund under one system to be named (death, disability, and indemnity and end of service compensation fund), to be calculated for employees at their end of service at 150% of their monthly gross salary and according to the last salary received of not more than JD 2,000 for every working year. If the monthly gross salary exceeded JD 2,000 the employee will be paid one monthly gross salary for every working year as an end of service compensation. The adoption of this new system will result in additional liability to the Company of about JD 19 million to be booked as a provision for the employees subscribed in the fund starting the year 2012. The required provision will be determined annually by the Board of Directors in light of the amount of the contingent liability and to enable the Company to build the whole provision within five years according to the Instruction No. (5) of the new fund referred to above. The Board of Directors decided to increase by range of 5% – 15% of the gross salaries of the employees and by not less than a monthly increment of JD 60 starting March 1, 2012.The Board of Directors decided to set up a housing fund for the Company employees without interest, in which the Company will pay an amount of JD one million as a contribution to the fund and set up a committee from the Company and the Union to arrange a by-laws for the fund. The operations of the fund will commence as of one month from the date of the announcement on March 3, 2012.The Board of Directors also decided to grant other privileges to the employees during the year 2012.

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Jordan Petroleum Refinery Company - الرئيسية · PDF file1 56th Annual Report Jordan Petroleum Refinery Company (A Public Shareholding Limited Company) Amman -The Hashemite

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