EV Building a better working world

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF

QURAIN PETROCHEMICAL INDUSTRIES COMPANY K.S.C.P. (continued)

Report on Other Legal and Regulatory Requirements Furthermore, in our opinion proper books of account have been kept by the Parent Company and the consolidated financial statements, together with the contents of the report of the Parent Company's Board of Directors relating to these consolidated financial statements, are in accordance therewith. We further report that we obtained all the information and explanations that we required for the purpose of our audit and that the consolidated financial statements incorporate all information that is required by the Companies Law No. 1 of 2016, and its executive regulations, and by the Parent Company's Memorandum of Incorporation and Articles of Association, as amended, that an inventory was duly carried out and that, to the best of our knowledge and belief, no violations of the Companies Law No. 1 of 2016 and its executive regulations, or of the Parent Company's Memorandum oflncorporation and Articles of Association, as amended, have occurred during the year ended 31 March 201 7, that might have had a material effect on the business of the Company or on its financial position.

W ALEED A. AL OSAIMI LICENCE NO. 68 A EY

(AL AIBAN, AL OSAIMI & PARTNERS)

3May2017 Kuwait

A member firm of Ernst & Young Global Limited

7

Qurain Petrochemical Industries Company K.S.C.P. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at 31 March 2017

13

1 CORPORATE INFORMATION

The consolidated financial statements of the Qurain Petrochemical Industries Company K.S.C.P. (the “Parent

Company”) and its subsidiaries (collectively, the “Group”) for the year ended 31 March 2017 were authorised for issue

by the Board of Directors on 3 May 2017. The shareholders of the Parent Company have the power to amend these

consolidated financial statements at the Annual General Assembly after issuance.

The Parent Company is a Public shareholding company, established by Amiri Decree No 432/2004 on 10 November

2004. The Parent Company’s shares were issued for public subscription by the Ministerial Decree No. 34/2004 on 28

November 2004. The Parent Company’s shares are listed on the Kuwait Stock Exchange.

The Parent Company’s registered address is at 26th floor, KIPCO Tower, Khalid Bin Al Waleed Street, Sharq, P.O. Box

No 29299, Safat 13153, Kuwait.

The activities of the Parent Company are carried out in accordance with the Article of Association. The principal

activities of the Parent Company are:

To manufacture all types of chemical and petrochemical materials and any other derivatives.

To sell, purchase, supply, distribute, export and store these materials and participate in all the activities relating to

the same including the establishment and lease of the necessary services.

To participate in Equate Petrochemical Company K.S.C. (Closed), Kuwait Aromatics Company K.S.C. (Closed),

Kuwait Styrene Company K.S.C. (Closed) and Kuwait Olefins Company K.S.C. (Closed).

Contribute in industrial companies as well as finance, manage and trade in its shares.

Develop industrial and craft zones and projects launched by the State or private sector.

Establishment of industrial projects or contribute therein after obtaining the necessary approvals from the Public

Authority for Industry and the concerned authorities.

The Parent Company may pursue the above mentioned activities in the State of Kuwait and abroad, originally or by

proxy. It may have an interest in or participate in any manner with entities that carry on business activities similar to its

own or which may assist the Parent Company in realising its objects in Kuwait or abroad, and it may buy or otherwise

acquire such companies.

The new Companies Law No. 1 of 2016 was issued on 24 January 2016 and was published in the Official Gazette on 1

February 2016 cancelled the Companies Law No 25 of 2012, and its amendments. According to article No. 5, the new

Law will be effective retrospectively from 26 of November 2012. The new Executive Regulations of Law No. 1 of 2016

was issued on 12 July 2016 and was published in the Official Gazette on 17 July 2016 which cancelled the Executive

Regulations of Law No. 25 of 2012.

2.1 BASIS OF PREPARATION

Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with the International Financial

Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (“IASB”).

Basis of measurement

The consolidated financial statements of the Group are prepared under the historical cost convention as modified for the

revaluation at fair value of financial assets available for sale and financial assets a fair value through profit and loss.

Functional and presentation currency

The consolidated financial statements of the Group are presented in Kuwaiti Dinars (“KD”), which is the functional and

presentational currency of the Parent Company.

2.2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

The accounting policies used in the preparation of these consolidated financial statements are consistent with those used

in the previous year, except for the adoption of accounting policy on financial assets at fair value through profit or loss

and the amendments to IFRSs relevant to the Group. The adoption of these amendments has no significant impact on the

consolidated financial statements of the Group.

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

The amendments address issues that have arisen in applying the investment entities exception under IFRS 10 consolidated

financial statements. The amendments to IFRS 10 clarify that the exemption from presenting consolidated financial

statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all

of its subsidiaries at fair value.