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ANNUAL REPORT2017

HIS MAJESTY KING ABDULLAH II IBN ALHUSSEIN

HRH CROWN PRINCE HUSSEIN IBN ABDULLAH II

Our water situation forms a strategic challenge that cannot be ignored, and we must balance between drinking water needs, and industrial and irrigation water requirement.

Drinking water remains the most essential and the highest priority issue.

King Abdullah II bin Al-Hussein

1ANNUAL REPORT - 2017

CONTENTS

PAGE NO.SUBJECT2VISION, MISSION AND GOALS3LETTER CHIEF OF BOARD OF DIRECTORS4LETTER GENERAL DIRECTOR5ABOUT THE COMPANY6THE COMPANY IN FIGURES7ORGANIZATIONAL CHART8PERFORMANCE INDICATORS

13LAB TESTS14FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED DECEMBER 31, 2017


VISION MISSION

Efficiency in resources and operations management, and upgrading the level of services and technologies and to be a key part in raising environmental and health standards in accordance with local and international standards, and to ensure coverage of the cost and ensure continuity, with the expansion in building partnerships, and continuous quest to provide a fertile environmental for investment, thus contributing to prosperity community and secure its requirements.

Pioneering in managing and operating the sectors of water and wastewater, and excellence in service delivery.

GOALS

VISION, MISSION AND GOALS

• Provide drinking water within the highest specifications for the recipients of the service in Aqaba Governorate.

• Ensure continuity of water supply to all sectors in Aqaba Governorate to serve the objectives of development on Social, economic and environmental aspects.

• Maximize the utilization of available water sources in the service area and work to provide alternative sources that meet current and future needs.

• Working to cover all areas within Aqaba Economic Zone for Sewage Services.

• Creating the optimal model for managing the water and wastewater sectors in the service area to be followed in other areas of the Kingdom.

• Reduce water losses to a level comparable to that of developed countries.

• Spreading water awareness among service recipients in all sectors to establish best practices for rationalizing water consumption.


water through using processed water. The company is looking forward to raising this rate in the coming years through the wastewater plant extension project.Furthermore, we have concluded a study about replacing automatic meters with smart electronic meters all over Aqaba governorate which will be achieved through a five-year project with the support the USAID. The project archives multiple advantages the most important of which is reducing the water loss rate in both technical and managerial aspects, in addition to accuracy in reading meters which will be directly sent to the company’s Head Office from the meter by using the RFtechnology. The inception of the first phase of the project will begin in the mid of 2018 with the replacement of 7500 meters in the Tenth, Ninth and Seventh residential areas.Aqaba Water Company will remain the focus of our special attention due to the specificity of Aqaba as a special economic zone, in the light of the new investments aimed at increasing the demand for water, thus forcing a strong challenge for the company by providing adequate, distinctive and high-quality services and high quality for all investment sectors. In conclusion, I would like to point out that the company pays a particular attention to employee training because of its great importance in carrying on the work progress. We will continue to focus our efforts on developing the skills and abilities of the company’s employees so as to become more competent to overcome all the challenges that the company encounters at all the works articulations.

LETTER CHIEF OF BOARD OF DIRECTORS

At the beginning of my letter I am pleased to commend the many achievements accomplished by Aqaba Water Company in 2017, as that year was concluded by a strong operational and financial performance.The company has also continued achieving further success specially in focusing on efficiently reducing costs.The company’s aspirations to carry on being distinct at the regional level makes it in a challenge in order

to ensure progress and development in its performance. This made winning the King Abdullah II Award for Excellencea, main aim for the company for which we will pay more attention, beginning from the current year and on ward in order to prepare the company for registration in the King Abdullah II Award for Excellence.We are proud of the company’s excellence for this year at all levels in its all operational and managerial departments, along with its accomplishments in the field of achieving the highest degrees of health, safety, security and protection of the environment of the Special Economic Zone through the inception of the wastewater plant extension projects, in addition to putting up with the increasing demand on processed water. This provides a fertile ground for investment projects at various sectors, which mitigates pressure on the consumption of drinking water for industrial, agricultural and service purposes Where the company has managed to save a rate of about 30% of drinking

President of the Board of Directors Engineer Saad Abu Hammour


Aqaba Water Company would not have been able to achieve such achievements in 2007 without the presence of the cadre of qualified personnel that we are proud of. I would like to thank all the staff who are behind the success of Aqaba Water Company for their great efforts and their commitment to work in difficult conditions, and for striving to serve the citizens and enhancing the interests of the company.

We will continue to focus our efforts on developing the skills and capabilities of our team while working to achieve our long-term ambitions and objectives all over the regions of Aqaba governorate.To emphasize its entrepreneurship and excellence, and its achievements of many successes in various fields and at record time, Aqaba Water Company is in the process of applying for the King Abdullah II Award for Excellence, as it is important to improve performance in general, and to provide the best service to its recipients. Based on the nature of the relationship between the Aqaba Water Company and the Water Authority and because of the Water Authority's receipt of this award, there has been coordination and cooperation between the company and the Authority in order to benefit from their expertise in this regard. A road map was drawn up to develop a strategic plan for the company for the period 2018 - 2022 which ends with the company’s winning of the King Abdullah II Award for Excellence, God willing.As the company continues to develop its business, we will always maintain our commitment to our responsibilities towards the community. We will spare no effort to participate in the promotion and development of the efficiency of the infrastructure of water and sanitation networks and securing drinking water resources.At the wastewater level, and in order to achieve the highest standards of health, safety, security and environmental protection, a device was purchased for testing

LETTER GENERAL DIRECTOR

the concentrations of Hydrogen Sulphide Gas in air with the aim of monitoring the emission of odours from the purification plant and improving the environmental and health level of the city of Aqaba, as well as minimizing the negative environmental impacts of the sludge by working on cleaning all the evaporation ponds with the cadres and equipment of the operating department in the Drainage Department, and through buying the salt from the Arab Potash Company with a total of 850 tons. The salt was extended all over the four evaporation ponds. In addition, a trench of 350 m long was also constructed to adopt the recommendations of the Technical Committee of the Water Authority using the trench method for landfill. The trench landfill is being treated on a daily basis to prevent any possibility of breeding flies. The insect control agreement has also been renewed to the value of 22000 Jordanian dinars, to fight the flying insects inside the sewage station.One of the most significant achievements in 2017 is the completion of several projects, including the design, implementation and operation of irrigation networks and drainage systems and the water network of Al Raha Village in the Marsa Zayed project and linking it to the main line. A pumping station and a water tank of 500 m3 capacity were also constructed to supply the tank with a capacity of 1000 m3. The project network was also connected to feed the tank that is feeding the project with a capacity of 1000 m3. The project network was connected with the sewage network and the processed water network for the purpose of using it in irrigation. In addition, the main line feeding Al-Matal Resort Project was completed and a water tank of 2000 m3 was constructed after studying the daily needs of the project.We are committed to providing the best service to all investment sectors and to our citizens throughout the geography of Aqaba Governorate as you have known the company since its establishment in 2004.

A Letter from the General DirectorGeneral Manager

Engineer Khalid Obaidyn


ABOUT THE COMPANY

Aqaba Water Company is considered one of the leading companies in the sectors of water and wastewater at the level of the Hashemite Kingdom of Jordan, and all over the region in general. This comes because of its outstanding performance and the successive accomplishments that the company has achieved and made it one of the leading institutions, in spite of the record time that has extended since its inception in August 2004 to the present day. Because of that, it is considered the first company in Jordan which is entrusted with the management and operation of the systems of both water and wastewater with the methodology of the private sector.The establishment of the Aqaba Water Company was in line with what Aqaba has witnessed ofthe accelerated development and improvement that come in line with the objectives of the Aqaba Special Economic Zone Authority (ASEZA), which was established in 2001 under a special law, to manage the region and to achieve economic and social well-being. This made Aqaba become an attractive investment center at both regional and international levels at various fields of tourism, industry, trade and service. What added to the importance of Aqaba is that Aqaba is the only marine port in Jordan, where the coastline has many ports, factories and facilities that greatly contribute to the national economy of Jordan. This has made it a great challenge for Aqaba Water Company to meet the growing needs in the water and sanitation sectors, especially with the region witnessing a steady increase in its population considering the limited water resources, which constitute an additional challenge, despite the efforts that are made and are still being made to develop radical and strategic solutions for them.Aqaba Water Company is the legal heir to the Water Authority, where it was established with a capital that Water Authority owns 85% of it, while Aqaba Development Company (ADC), which is equally owned by the Government of Jordan and Aqaba Special Economic Zone Authority, owns 15%. Thus, Aqaba Water Company, in addition to being responsible for meeting the needs concerned with the nature of its work, is also responsible for contributing to the comprehensive development of Aqaba in all its forms and fields, by creating the investment environment in the region through providing adequate, distinctive and high-quality services.About 142 thousand people representing the population of Aqaba governorate benefit from the services provided by the company, as well as many institutions operating in various industrial, agricultural, tourism, service and other sectors. In addition, the company runs several sanitation facilities in other governorates because the company occupies a prestigious position in this field. It is noteworthy that the company's purification plants in the city of Aqaba produce about five million cubic meters of processed water annually used for agricultural and industrial purposes.


Number of wells supplying Aqaba Governorate

Number of wells supplying Aqaba city

Quantity of water pumped to Aqaba city33

18

16610438 m3

31

6957802 m3

19685

1047 km

100%

42462 2573989 m3

36094 4648117 m3

352 1852766 m3

3662430 m38850

325 km86328070

97%25.37%-

15583226

16240909 11031

Number of reservoirs

Quantity of water pumped to the rest of Governorate

Number of water served buildings

Water network length (km)

Number of water subscribers

Percentage of water supply coverage / Aqaba Governorate

Number of sewage subscribers

Amount of water entering into the natural plant

Number of employees

Amount of water entering into the mechanical plant

Number of training hours

Amount of reclaimed water produced by natural plant

Amount of reclaimed water produced by mechanical plant

Total fixed assets (JOD) Sewage network length (km)

Water loss / Aqaba Governorate

Sales (JOD) / Aqaba Governorate

Collections (JOD) / Aqaba Governorate

Percentage of sewage service coverage / Aqaba Governorate

Number of buildings connected to sewage network

THE COMPANY IN FIGURES


BOARD OF DIRECTORS

Audit and InternalControl Department External Auditor

Legal Counsel

General ManagerDeputy General Manager

General Manager'sOffice

Public Relations

Projects Department

Technical Auditing and Control Section

Audit and Management Control Section

Audit and Financial Control Section

Planning and Studies Section

Supervision and Management Section

Mechanisms Section

Electromechanical Section

Precision Machinery andEquipment Section

Maintenance planning Section

Operating and Maintenance Section

Customer Service Section

Administrative Services Section

Maintenance Department

The Desi and AL-QuweiraWater Department

Wastewater Department

Procurement and WarehousesDepartment

Purchases and Procurement Section

Warehouses Section

Follow-up Section

Environment and QualityControl Section

Human Resources Planning Section

Institutional development Section

Training Section

Quality Section

Laboratories Section

Quality and LaboratoriesDepartment

Financial Affairs Department

Personnel Section

Administrative Services Section

Archive and the central court Section

Procedures Development Section

Strategic Planning Section

Quality Assurance and StrategicPlanning Department

Health, Safety, Security andEnvironment Standards Section

Human Resources andTraining Department

Customer Service Department

Public Service SectionV.I.P. Section

Billing Section

Collection Section

Follow-up and Audit Section

Systems and InformationTechnology Department

Databases Section

Programming and Applications Section

Infrastructure Section

G.I.S Section

Cash Accounting Section

General Accounting Section

Financial Planning Section

Network & Lift stations Section

Reuse Section

Purification Plants Section

Water Networks Section

Networking and Lift Stations Section

Management of Ma'an WastewaterContract Section

Management of Wadi Musa WastewaterContract Section

Water Department

External Contracts Department

ORGANIZATIONAL CHART


PERFORMANCE INDICATORS

Water loss in Aqaba Governorate for the last five years: Cases of illegal use for the last five years:


The growth in the number of sanitation subscribers during the last five years:

The growth in the number of water subscribers during the last five years:


Percentage of water pumped to the rest of the Aqaba governorate:

Percentage of water pumped to Aqaba city to the total water supply:

The DesiAL-QuweiraWadi Araba


Percentage of quantities of consumption (sales) by sectors:

Percentage of water production by water sources:

CommercialWells waterReclaimed water

Imported water

Desalination water

AgriculturalResidentialTouristIndustrial


Percentage of use of reclaimed water by the mechanical plant:

Agricultural 48.4%

Industrial 51.6%

Percentage of use of reclaimed water by the agricultural sector:

Mechanical and natural plant 65.8%

Percentage of use of reclaimed water by the industrial sector:

Mechanical and natural plant 34.2%

Percentage of sold reclaimed water by buyer:

Aqaba Special Economic Zone Authority 57.7%

Industrial Complex 34.2% Others 8.1%


LAB TESTS

RESULTS OF LAB TESTS ON DRINKING WATER

JSS STANDARD UNIT AQABA MAIN RESERVOIR DESI WELLS STANDARD &PROPERTIES

NO3 mg/L 11.83 8.76 50PH Unit 8.12 7.55 8.5 - 6.5

Turbidity NTU 0.91 0.52 5Electrical conductivity E.C. µs/cm 346 408 1562

T.D.S mg/L 221 261 1000Hardness mg/L as caco3 128 144 500

RESULTS OF LAB TESTS ON RECLAIMED WATER

STANDARD&PROPERTIES UNIT

MECHANICALTREATMENT PLANT-

AQABA

NATURAL TREATMENT

PLANT-AQABA

WADI MUSATREATMENT-PLANT-

MECHANICAL

MAAN TREATMENTPLANT-MECHANICAL

JSS STANDARD-MECHANICAL

JSS STANDARD-NATURAL

B.O.D mg/L 4.7 36 5.6 8.3 200 300C.O.D mg/L 20.3 401 35.1 39.4 500 500T.S.S mg/L 4.3 280 6.8 11.7 200 300NO3 mg/L 18.1 17.8 31.2 28.3 45 70T.N mg/L 9.7 63.8 11.5 13.4 70 100

T.D.S mg/L 551 676 837 1.46 1500 1500PH mg/L 7.0 7.7 7.58 7.83 6-9 6-9

Turbidity mg/L 1.88 142 2.68 5.3 .………………… ..………………NH4 mg/L 1.3 53.4 0.258 5.69 .………………… ..………………


FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED DECEMBER 31, 2017

INDEPENDENT AUDITOR'S REPORT

To the ShareholdersAqaba Water CompanyLimited Liability CompanyAqaba - The Hashemite Kingdom of Jordan

Opinion

We have audited the financial statements Aqaba Water Company (Limited Liability Company), which comprise the statement of financial position as at December 31,2017, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements comprising significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects of the financial position of the Company as at December 31, 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report.


We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

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

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


As part of an audit in accordance with International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Talal Abu-Ghazaleh & Co. InternationalAziz Abdelkader(License # 867)

Amman, April 8, 2017


Statement of financial position as at December 31, 2017

NOTES 2017 2016JD JD

AssetsNon - current assetsProperty & equipment 3 52,618,008 51,780,779 837,229.00-Current assetsWarehouses 2,099,765 2,017,757 82,008.00-Other debit balance 4 4,383,859 1,087,906 3,295,953.00-Share holder receivable - water authority 5 11,320,796 9,966,579 1,354,217.00-Accrued revenues 6 3,026,425 3,007,994 18,431.00-Accounts receivable 7 4,224,387 4,397,011 172,624.00 Cash at banks 8 5,090,145 5,226,566 136,421.00 Total current assets 30,145,377 25,703,813 Total assets 82,763,385 77,484,592


Statement of financial position as at December 31, 2017


EQUITY AND LIABILITIESEquityCapital 9 20,000,000 20,000,000 - Statutory reserve 2,940,379 2,793,638 146,741.00 Voluntary reserve 6,385,349 6,091,867 293,482.00 Retained earnings 21,361,332 20,498,591 862,741.00 Total Equity 50,687,060 49,384,096 Non-Current LiabilitiesDeposits payable 1,678,143 1,788,003 109,860.00-Deferred revenues - non-current portion 10 20,287,407 21,472,529 1,185,122.00-Total Non-Current Liabilities 21,965,550 23,260,532 Current LiabilitiesLoan 11 2,608,750 - Income tax provision 12 160,760 209,048 48,288.00-Accounts payable and other credit balances 13 6,160,264 3,392,944 2,767,320.00 Deferred revenues-current portion 10 1,181,001 1,237,972 56,971.00-Total Current Liabilities 10,110,775 4,839,964 Total Liabilities 32,076,325 28,100,496 TOTAL EQUITY AND LIABILITIES 82,763,385 77,484,592


Statement of comprehensive income for the year ended December 31, 2017


RevenuesWater revenue 13,415,457 14,067,106 Sewerage and draining fees 3,175,365 3,005,940 Subscriptions and installation fees 804,077 740,110 Sewerage tax 853,722 769,212 Net revenue from Wadi Mousa station managing contract 14 142,908 128,667

Net revenue from Ma'an station managing contract 15 131,932 63,472 Net revenue from managing , operating, and maintaining Mutah water refinery, Al- Mazar, Al-Adnaniah stations and pumping stations managing and operating contract

16 218,295 306,017

Net revenue from managing , operating, and maintaining Shubak station 17 4,445 5,524

Bank interests 31,696 212,667 Amortization of deferred revenues 11 1,249,480 1,252,176 Others, net 205,901 141,370 Total revenues 20,233,278 20,692,261 ExpensesWater purchases 5 4,066,756 3,979,957 Salaries and wages 6,337,165 5,976,702 Depreciation 3 3,517,930 3,326,929 Operating and maintenance 18 3,992,692 3,965,859


Statement of changes in equity for the year ended December 31, 2017

CAPITAL PAID STATUTORY RESERVE

VOLUNTARY RESERVE

RETAINED EARNINGS TOTAL

JD JD JD JD JDBalance as of January 1, 2016 20,000,000 2,526,647 5,557,886 18,883,575 46,968,108 Dividends - - - (44,869) (44,869)Profit - - - 2,460,857 2,460,857 Transferred to reserves - 266,991 533,981 (800,972) - Balance as of December 31, 2016 20,000,000 2,793,638 6,091,867 20,498,591 49,384,096 Profit - - - 1,302,964 1,302,964 Transferred to reserves - 146,741 293,482 (440,223) - Balance as of December 31, 2017 20,000,000 2,940,379 6,385,349 21,361,332 50,687,060

NOTES 2017 2016Administrative 19 596,254 772,909 Doubtful debts 7 255,071 - Total expenses 18,765,868 18,022,356 Profit before tax 1,467,410 2,669,905 Income tax expense for previous years 12 (3,686) - Income tax expense 12 (160,760) (209,048)Profit 1,302,964 2,460,857


Statement of cash flows for the year ended December 31, 2017

2017 2016JD JD

CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 1,467,410 2,669,905 Adjustments for:Depreciation 3,521,157 3,329,888 Gains on disposal of property and equipment - (37,265)Doubtful debts 255,071 - Amortization of deferred revenues (1,249,480) (1,252,176)Change in operating assets and liabilities:Warehouses (82,008) 52,514 Other debit balances (3,295,953) (408,320)Accrued revenues (18,431) (74,201)Deferred revenues 7,387 130,530 Accounts receivable (82,447) 703,584 Deposits payable (109,860) 62,423 Accounts payable and other credit balances 2,767,320 2,178,060

3,180,166 7,354,942 Income tax paid (212,734) (245,808)Net cash from operating activities 2,967,432 7,109,134


2017 2016CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property and equipment (4,358,386) (3,078,419)Proceeds from disposal of property and equipment - 37,265 Net cash from investing activities (4,358,386) (3,041,154)CASH FLOWS FROM FINANCING ACTIVITIESShareholder receivable - Water Authority (1,354,217) (6,318,313) Loan 2,608,750 - Dividends - (44,869)Net cash from financing activities 1,254,533 (6,363,182)Net change in cash and cash equivalents (136,421) (2,295,202) Cash and cash equivalents - beginning of year 5,226,566 7,521,768 Cash and cash equivalents - end of year 5,090,145 5,226,566


Notes to the financial statements

1. General

• Aqaba Water Company was established as a limited liability Company with the Companies Control Department in the Ministry of Industry and Trade under number (8602) in March 11, 2004.

• The Company's main objective is water distribution.

2. Basis for preparation of financial statements and significant accounting policies

• Financial statements preparation frameworkThe financial statements have been prepared in accordance with International Financial Reporting Standards.

• Measurement bases used in preparing the financial statementsThe financial statements have been prepared on the historical cost basis except for measurement of certain items at bases other than historical cost.

• Functional and presentation currencyThe financial statements have been presented in Jordanian Dinar (JD) which is the functional currency of the entity.

• Using of estimates- When preparing of financial statements, management uses judgments, assessments and assumptions that affect applying the accounting policies and carrying amounts of assets, liabilities, revenue and expenses. Actual result may differ from these estimates.- Change in estimates shall be recognized in the period of the change, and future periods if the change affects them.- For example, estimates may be required for doubtful and bad debts, inventory obsolescence, useful lives of depreciable assets, provisions, and any legal cases against the entity.

• Financial instrumentsFinancial instrument is any contract that gives rise to a financial asset of one entity and financial liabilities or equity instrument of another entity.


• Financial assets- A financial asset is any asset that is:(a) Cash; or(b) An equity instrument of another entity; or(c) A contractual right to receive cash or another financial asset from another entity, or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity; or(d) A contract that will or may be settled in the entity’s own equity instruments.

- Financial assets are initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.

- All recognized financial assets are subsequently measured either at amortized cost or fair value, on the basis of both:(a) The entity’s business model for managing the financial assets, and (b) The contractual cash flow characteristics of the financial assets.

- A financial asset is measured at amortized cost if both of the following conditions are met:(a) The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows.(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

- All other financial assets are subsequently measured at fair value- A gain or loss on a financial asset that is measured of fair value and is not part of a hedging relationship is recognized in profit or loss unless the financial asset is an investment in an equity instrument and the entity has elected to present gains and losses on that investment in other comprehensive income.

• Trade receivables- Trade receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. - Trade receivables are stated at invoices amount net of allowance for doubtful receivables which represents the collective impairment of receivables. - The Company's funds and rights with others are considered Ameery Funds that are collected according to the provisions of Ameery Funds collection Law, accordingly, uncollectible receivables are not written off.


• Cash and cash equivalents- Cash comprises cash on hand, current accounts and demand deposits with banks.- Cash equivalents are short- term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

• Financial liabilities- A financial liability is any liability that is:(a) A contractual obligation to deliver cash or another financial asset to another entity, or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the entity; or(b) A contract that will or may be settled in the entity’s own equity instruments.

- Financial liabilities are initially recognized at fair value plus transaction costs, directly attributable to the acquisition or issue of those liabilities, except for the financial liabilities classified as at fair value through profit or loss, which are initially measured at fair value.- After initial recognition, the entity measures all financial liabilities at amortized cost using the effective interest method, except for financial liabilities at fair value through profit or loss which are measured at fair value and other determined financial liabilities which are not measured under amortized cost method.- Financial liabilities at fair value through profit or loss are stated at fair value, with any resulting gain or loss from change in fair value is recognized through profit or loss.

• Trade payables and accrualsTrade payables and accruals are liabilities to pay for goods or services that have been received or supplied and have been either invoiced or formally agreed with the suppliers or not.

• Property and equipment- Property and equipment are initially recognized at their cost being their purchase price plus any other costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management.- After initial recognition, the property and equipment are carried, in the statement of financial position, at their cost less any accumulated depreciation and any accumulated impairment. Land is not depreciated.


- The depreciation charge for each period is recognized as expense. Depreciation is calculated on a straight line basis, which reflects the pattern in which the asset's future economic benefits are expected to be consumed over the estimated useful life of the assets using the following rates:

CATEGORY DEPRECIATION RATEBuildings 2-2.5%Mechanical sanitation station 2.5%Wells and tanks 3.3-6.7%Network distribution, water and sewerage 5%Mechanical tools and equipment 10-15%Vehicles and machinery 15%Valves, stops, and water meters 6.7-15%Furniture 10%Computers and softwares 20%

- The estimated useful lives are reviewed at each year-end, with the effect of any changes in estimate accounted for on a prospective basis.- The carrying values of property and equipment are reviewed for impairment when events or changes in the circumstances indicate the carrying value may not be recoverable. If any such indication of impairment exists, impairments losses are calculated in accordance with impairment of assets policy.- On the subsequent derecognition of the property and equipment, the resulting gain or loss, being the difference between the net disposal proceed, if any, and the carrying amount, is included in profit or loss.- Amounts paid to establish property and equipment are initially incurred to projects under construction, and when the project becomes ready to use, it is transferred to property and equipment.

• Impairment of assets- At each statement of financial position date, management reviews the carrying amounts of its assets to determine whether there is any indication that those assets have been impaired.- If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any, being the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of asset's fair value less costs to sell and the value in use. The asset's fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction be-


tween market participants at the measurement date. The value in use is the present value of the future cash flows expected to be derived from the asset. - An impairment loss is recognized immediately as loss.- Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but the increased carrying amount due to reversal should not be more than what the depreciated historical cost would have been if the impairment had not been recognized in prior years. A reversal of an impairment loss is recognized immediately as income.

• Inventory (warehouses)- Inventory is measured at the lower of cost and net realizable value.- Inventory costs comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condi-tion.- The cost of inventory is assigned by using the First-in, First-out formula. - Net realizable value is the estimated selling/usage price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale/usage.

• Related parties- Transactions with related parties represent transfer of resources, services, or obligations between related parties. - Terms and conditions relating to related party transactions are approved by management • Reserves- Statutory reserveStatutory reserve is allocated according to the Jordanian Companies Law by deducting 10% of the annual net profit until the reserve equals of the Compa-ny’s subscribed capital. Such reserve is not available for dividends distribution.

- Voluntary reserveThis reserve is determined in accordance with the Jordanian Companies Law by allocating not more than 20% annually of the profit to this reserve.


• Provisions

- Provisions are present obligations (legal or constructive) resulted from past events, the settlement of the obligations is probable and the amount of those obligations can be estimated reliably. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the statement of financial position date.- Provisions reviewed and adjusted at each statement of financial position date. If outflows, to settle the provisions, are no longer probable, reverse of the provision is recorded as income.

• Income taxIncome tax is calculated in accordance with Jordanian laws and regulations.

• Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable

• Water salesRevenue is recognized when invoice is issued and water is delivered to and accepted by client, if all of the following conditions have been satisfied:- The entity has transferred to the buyer the significant risks and reward of ownerships of the water. - The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the waters sold. - The amount of revenue can be measured reliably.- It is probable that the economic benefits associated with the transaction will flow to the entity.- The costs incurred or to be incurred in respect of the transaction can be measured reliably.

• Rendering of services- Revenue from a contract to provide services is recognized by reference to the stage of completion of the transaction at the statement of financial position date.- The outcome of the transaction can be estimated reliably when all the following conditions are satisfied:- The amount of revenue can be measured reliably.


- It is probable that the economic benefits will flow to the entity.- The stage of completion at the statement of financial position date can be measured reliably.- The costs incurred, or to be incurred, in respect of the transaction can be measured reliably.- When the above criteria are not met, revenue arising from the rendering of services is recognized only to the extent of the expenses recognized are recoverable.

• Grants- Unrestricted grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognized in profit or loss in the period in which they become receivable.- Restricted grants are recognized as income on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.- Grants whose primary condition is that the entity should purchase, construct or otherwise acquire non-current assets are recognized as deferred income in the statement of financial position and transferred to profit and loss on a systematic and rational basis over the useful lives of the related assets.

• Interest revenueInterest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

• Foreign currencies- In preparing the financial statements, transactions in currencies other than the functional currency (foreign currencies) are recorded at the rates of ex-change prevailing at the dates of the transactions. At each statement of financial position date, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the statement date (closing rate). Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. - Non-monetary items that are measured at fair value in foreign currency are translated using the exchange rates at the date when the fair value was deter-mined. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognized in profit or loss in the period in which they arise.


3. Property and equipment

Lands BuildingsMechanical Sanitation

Station

Wells & Tanks

Networks Distribution

Water & Sewer

Mechanical Tools &

Equipmet

Vehicles & Machinery

Valves Stopp &

WatermetersFurniture omputers &

Softwares

Projects Under

ConstructionTotal

JD JD JD JD JD JD JD JD JD JD JD JDCostBeginning of year balance 1,572,482 2,326,876 25,532,475 8,055,569 30,741,804 4,372,866 2,097,199 3,579,750 393,475 1,784,458 1,512,730 81,969,684 Additions 6,540 - 21,763 124,098 206,755 264,511 75,163 13,013 57,805 3,588,738 4,358,386 Transfers - 134,454 - 423,237 435,948 519,205 - - - - (1,512,844) - End of year balance 1,572,482 2,467,870 25,532,475 8,500,569 31,301,850 5,098,826 2,361,710 3,654,913 406,488 1,842,263 3,588,624 86,328,070 Accumulated depreciationBeginning of year balance - 632,705 6,010,770 2,898,327 13,189,148 2,269,545 1,848,084 2,010,526 224,337 1,105,463 - 30,188,905 Depreciation (**) - 98,567 638,312 334,556 1,511,019 378,193 97,234 180,277 31,213 251,786 - 3,521,157 End of year balance - 731,272 6,649,082 3,232,883 14,700,167 2,647,738 1,945,318 2,190,803 255,550 1,357,249 - 33,710,062 Net 1,572,482 1,736,598 18,883,393 5,267,686 16,601,683 2,451,088 416,392 1,464,110 150,938 485,014 3,588,624 52,618,008 CostBeginning of year balance 1,546,644 2,240,756 25,532,475 7,126,051 29,203,212 4,119,816 2,167,629 3,474,583 341,967 1,708,444 1,541,418 79,002,995 Additions 25,838 7,840 - 170,097 112,952 253,050 41,300 105,167 51,508 76,014 2,234,653 3,078,419 Transfers - 78,280 - 759,421 1,425,640 - - - - - (2263.341) - Disposal - - - - - - (111,730) - - - - (111.730)End of year balance 1,572,482 2,326,876 25,532,475 8,055,569 30,741,804 4,372,866 2,097,199 3,579,750 393,475 1,784,458 1,512,730 81,969,684 Accumulated depreciationBeginning of year balance - 540,063 5,372,458 2,586,280 11,739,870 1,983,396 1,856,600 1,832,972 195,959 863,149 - 26,970,747 Depreciation (**) - 92,642 638,312 312,047 1,449,278 286,149 103,214 177,554 28,378 242,314 - 3,329,888 Disposal - - - - - - (111,730) - - - - (111.730)End of year balance - 632,705 6,010,770 2,898,327 13,189,148 2,269,545 1,848,084 2,010,526 224,337 1,105,463 - 30,188,905 Net 1,572,482 1,694,171 19,521,705 5,157,242 17,552,656 2,103,321 249,115 1,569,224 169,138 678,995 1,512,730 51,780,779


(**) Depreciation expense allocated on statement of comprehensive income as follows:

2017 2016JD JD

Depreciation expense 3,517,930 3,326,929 Net revenue from managing , operating, and maintaining Mutah water refinery, Al- Mazar, Al-Adnaniah stations and pumping stations managing and operating contract

3,227 2,959

Total 3,521,157 3,329,888

4. Other debit balances

2017 2016JD JD

Prepaid to suppliers 3,446,762 325,513 Checks under collection 588,401 303,243 Refundable deposits 135,080 124,780 Prepaid expenses 104,014 67,334 Payments on income tax 42,797 49,738 Health insurance deposits 37,141 9,990 Other 9,074 27,355 Employees' receivable 8,989 22,993 Insurance certified checks 8,000 - Others deposits 3,601 156,960 Total 4,383,859 1,087,906


5. Transactions with shareholders

Major transactions with shareholders included in the statement of comprehensive income are as follows:

2017 2016JD JD

Water purchases - Water Authority 4,066,756 2,610,943 "Revenue from Wadi Mousa station managing contract - Water Authority" 981,820 968,735 Revenue from Ma'an station managing contract - Water Authrority 841,015 766,737 Revenue from Mutah, Al- Mazar, Al-Adnaniah stations and pumping stations managing and operating contract 805,498 836,208

Revenue from Al-Shobak station managing and operating contract 45,000 40,000 Water sales - Aqaba Development Company 39,872 33,062

6. Accrued revenues

This item represents management estimate for the fourth quarter's revenues from the sale of water to customers that have not been invoiced yet in addition to accrued bank interests.


7. Accounts receivable

2017 2016JD JD

Subscribers' receivables 6,643,614 6,151,999 Water receivables 160,010 413,357 Sanitation receivables 84,465 157,039 Other debit balances 72,408 155,655 Deduct: Allowance for doubtful receivables (*) (2,736,110) (2,481,039) Net 4,224,387 4,397,011

(*) Provision movement during the year :

2017 2016دينـار أردنـي دينـار أردنـي

Beginning of year balance 2,481,039 2,481,039 Provided during year 255,071 - End of year balance 2,736,110 2,481,039


8. Cash at banks


Current accounts at banks 5,090,145 3,510,982 Demand deposits at banks - 1,715,584 Total 5,090,145 5,226,566

9. capital

Share Amount% دينـار أردنـي

Water Authority 85 17,000,000 Aqaba Development Company 15 3,000,000 Total 100 20,000,000


10. Deferred revenues

2017 2016Mechanical

sanitation station (*)

Rehabilitation of Aqaba water

network (**)Other Total Total

JD JD JD JD JDCostBeginning of year balance 10,991,402 1,505,644 33,792,003 33,661,473 Additions - 7,387 7,387 130,530 End of year balance 10,991,402 1,513,031 33,799,390 33,792,003 Accumulated amortizationBeginning of year balance 4,942,362 1,125,951 11,081,502 9,829,326 Amortization 542,426 174,679 1,249,480 1,252,176 End of year balance 5,484,788 1,300,630 12,330,982 11,081,502 Net 5,506,614 212,401 21,468,408 22,710,501 Current portion 542,426 106,200 1,181,001 1,237,972 Non-current portion 4,964,188 106,201 20,287,407 21,472,529

(*) Deferred revenues represent USA grant which is 85% of the station value. Revenues amortization started on August 2007 at annual rate of 2.5%.(**) Rehabilitation of Aqaba water network revenues represent USAID grant which is 83% of the network value. Where the initial receipt of the project was received in November 2007 and the final receipt in November 2009. The date of January 1, 2008 was adopted as the date of registration of the project.


11. Loan

This item represents a payment of the interest free lone granted by the Aqaba Special Economic Zone Authority (ASEZA) to finance the northern mechanical purification station project, where the ASEZA will be obliged to pay an amount of JD 17,618,868 to the company on four semi-annual equal payment the first payment was received on June 1, 2017 and the last is on January 1, 2019. noting that the company will apply the loan payments in accordance with the financing agreement as follows:- Through monthly claims of the treated wastewater which is consumed by the water authority.- Drinking water prices issued by the company for all of the water authority’s subscribers.

12. Income tax provision

2017 2016JD JD

Balance - beginning of year 209,048 245,808 Provided during the year 160,760 209,048 Provided from previous years 3,686 - Paid during the year (212,734) (245,808) Balance - end of year 160,760 209.048

- The Company's tax status was settled until year 2013. The Company has submitted its tax return for year 2016 to Income Tax Department-Aqaba Special Economic Zone Authority within the legal period. According to the Company's management, the provided provision is adequate for any future liabilities.


13. Accounts payable and other credit balances

2017 2016JD JD

Payments recevied in advance on projects 3,283,140 1,531,550 Suppliers and contractors payables 1,345,371 379,324 Accrued expenses 1,264,915 1,019,481 Advance payaments from subscribers 140,965 109,257 Employees payable 67,675 - Lawsuits provision 24,969 318,438 Deposits for others 18,250 20,374 Uncleared checks 14,979 14,520 Total 6,160,264 3,392,944

14. Wadi Mousa station managing contract


Revenue from Wadi Mousa managing contract (*) 981,820 968,735 Expenses of Wadi Mousa managing contract (**) (838,912) (840,068) Net 142.908 128.667


- This item represents revenue from the agreement to manage, operate and maintain Wadi Mousa sanitation station between Water Authority and Aqaba Water Company. The agreement started on April 1, 2006 for a fixed amount of JD 625,804 for the first contractual year, and this amount increases yearly by 3% for each subsequent year in addition to the differences of electricity price increase that resulted from the price paid and the price at the date of signing the agreement. This agreement is for five years subject to extension by both parties approval.- The agreement has been extended for the period from April 1, 2011 until March 31, 2016 with same original agreement's terms.- The agreement has been extended for the period from April 1, 2016 until March 31, 2018 with same original agreement's terms.

(**) Expenses of Wadi Mousa managing contract consist of the following:

2017 2016JD JD

Salaries and wages and related benefits 503,430 501,537 Electricity 208,766 201,942 Social security 61,925 60,412 Laboratories and chemical materials 22,070 12,481 Fuel 12,186 14,053 General maintenance and property development 9,297 10,236 Miscellaneous 9,030 2,264 Stations and wells maintenance 7,211 9,916 Communication 2,161 7,868 Cleaning 1,087 1,475 Insurance 1,051 1,738 Stationery, printings and advertisment 534 250 Transport and freight 164 136 Stamps - 11,693 Fines - 4,067 Total 838,912 840,068


15. Ma’an station managing contract

2017 2016JD JD

Revenue of Ma'an managing contract (*) 841,015 766,737 Expenses of Ma'an managing contract (**) (709,083) (703,265) Net 131,932 63,472

(*) This item represents revenue from an agreement to manage, operate and maintain Ma’an sanitation station between Water Authority and Aqaba Water Company. The agreement ends on May 31, 2014, in consideration of:

- The Company will claim the actual amounts paid from the reserve amounting to JD 100,000 annually which is appropriated to structural development, me-chanical, electrical or any emergency work after obtaining the Water Authority's approval. - The Company submits monthly claims that include amounts paid as operating, maintenance, insurance, licenses expenses, general and administrative ex-penses and any other expenses paid by the company as a result of operation.- The agreement was extended on June 1, 2016 for two years for an annual lump sum amount of JD 800,000 in exchange for all operation, maintenance and administration expenses.


(**) Expenses of Ma’an managing contract consist of the following:

2017 2016JD JD

Salaries and wages and other benefits 415,269 407,871 Electricity 160,242 161,433 Social security 50,863 47,093 Security 24,240 25,002 Purchase of supplies and consumables 13,639 2,961 Stations and wells maintenance 11,168 10,431 Fuel 10,507 10,956 Cleaning 6,288 1,751 Insurance 4,258 3,898 General maintenance 3,932 11,167 Communication 3,164 4,240 Rental of vehicles 2,195 - Laboratories and chemical materials 2,192 6,023 Miscellaneous 1,126 694 Stamps - 9,745 Total 709,083 703,265


16. Net revenue from Mutah, Al- Mazar, Al-Adnaniah stations and pumping stations managing, operating and maintaining contract.

2017 2016JD JD

Revenue of managing contract(*) 805,389 836,208 Expenses of managing contract(**) (587,094) (530,191) Net 218,295 306,017

(*) This item represents revenue from an agreement to manage, operate and maintain Mutah, Al- Mazar, Al-Adnaniah stations and pumping stations which was signed on December 11, 2014 between Water Authority and Aqaba Water Company for two years period in consideration of:- A fixed amount of 800,000 JD to be provided for administrative, operating and maintaining expenses for the first contract year which will increase a 3% yearly, The agreement was extended for a period of 3 years ending on December 31, 2020 with an amount of JD 850,000 started from January 1, 2017.- What the company actually pays form the reserve amount JD 95,000 and the amount was adjusted to JD 100,000 yearly according to the agreement terms, which is appropriated to the development of construction, mechanical and electrical work, and also to purchase tools and equipment that will be used in these development work provided that the Authority prior approval is obtained.- Claiming the cost difference between electricity price increase between the paid price and the price used when the agreement signed base on actual con-sumption.


(**) Expenses of managing contract consists of:

2017 2016JD JD

Salaries, wages and related benefits 254,546 233,759 Electricity 169,796 169,209 Security 42,420 44,030 Social security 33,771 29,550 Stamps 20,101 - Insurance 10,154 9,904 Fuel 9,172 10,993 Laboratories and chemical materials 9,088 9,437 Stations and wells maintenance 8,840 3,584 General maintenance 8,781 8,132 Miscellaneous 5,349 3,486 Purchase of supplies and consumables 4,936 1,811 Improvements and development of project assets 4,080 - Depreciation 3,227 2,959 Cleaning 1,135 1,006 Communication 794 1,696 Transport and freight 635 365 Stationary and printings 269 270 Total 587,094 530,191


17. Net revenue from Al-Shubak station managing, operating and maintaining contract

2017 2016JD JD

Revenue of managing contract (*) 45,000 40,000 Expenses of managing contract (**) (40,555) (34,476) Net 4,445 5,524

(*) This item represents revenue from an agreement to manage, operate and maintain Al- Shubak station between Water Authority and Aqaba Water Com-pany for two years period from starting date. All station assets were submitted on August 6, 2015 in consideration of:- An Amount of 40,000 JD to be provided for administrative, operating and maintaining expenses yearly,The agreement was extended for a period of 3 years ending on December 31, 2020 with an amount of JD 60,000.- The company pays JD 3,000 annually from the reserve amount and the amount was adjusted to JD 100,000 according to the agreement terms, that is ap-propriated for the development of construction, mechanical and electrical work and also to purchase the tools and equipment needed for that, provided that Authority approval is obtained first- Claiming the cost difference between electricity price increases between prices paid and agreement price based on actual consumption. In case the price dropped the difference goes to the company.


(**) Expenses of Al-Shubak station managing and operating contract consists of:

2017 2016JD JD

Salaries and wages and related benefits 30,561 26,055 Social security 4,418 3,708 Insurance 2,161 1,996 Electricity 1,513 2,285 Rental of vehicles 1,080 - Misellaneous 453 142 Cleaning 369 290 Total 40,555 34,476


18. Operating and maintenance expenses

2017 2016JD JD

Electricity 3,133,522 3,118,513 General maintenance 304,166 318,698 Fuel 112,662 87,635 Security 81,826 43,073 Wells and stations maintenance 81,527 88,320 Laboratories - chemical materials 72,008 51,049 Telecommunication 62,832 75,368 Insurance 48,877 49,786 Transport and freight 48,071 69,976 Training 18,693 16,709 Governmental expenses and fines 8,602 7,672 Field survey 4,611 - Stationery, printings and advertisements 3,629 2,528 Travel expenses 2,863 3,215 Miscellaneous 2,521 6,417 Cleaning 2,233 14,479 Vehicles 1,859 1,618 Subscriptions 1,720 - Hospitality 470 1,523 Studies - 9,280 Total 3,992,692 3,965,859


19. Administrative expenses

2017 2016JD JD

General maintenance 89,708 131,252 Communication 61,748 76,873 Professional and consulting fees 48,149 85,172 Electricity 47,294 69,971 Fuel 41,893 41,674 Board of Directors expenses 39,273 42,674 Transport and freight 30,123 63,871 Stationery and printings 26,640 24,122 Cleaning 25,187 21,553 Security 21,860 42,064 Training 21,026 21,353 Rent 20,489 25,384 Laboratories and chemical materials 19,833 17,715 Field survey 19,149 - Government fees and fines 18,136 23,632 Public relations and subscribers awareness 14,049 14,672 License 12,565 12,668 Travel and transportation 10,595 16,050 Hospitality 10,464 9,809 Insurance 4,527 4,882 Miscellaneous 5,826 1,382 Advertisment 4,344 23,809 Donations 2,550 1,160 Bank charges 826 1,167

Total 596,254 772,909


20. Litigations As stated in the lawyer’s letter, there are two legal cases raised from others against the Company with undetermined amounts, these cases are still pending in the related courts.

21. Risk management

a) Capital riskRegularly, the capital structure is reviewed and the cost of capital and the risks associated with capital are considered. In addition, capital is managed properly to ensure continuing as a going concern while maximizing the return through the optimization of the debt and equity balance.

b) Currency risk:- Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.- The risk arises on certain transactions denominated in foreign currencies, which imposes sort of risk due to fluctuations in exchange rates during the year. - Certain procedures to manage the exchange rate risk exposure are maintained.- The following table shows foreign currency accounts as of December 31, 2017:

As at December 31, 2017 Currency Exchange rate Amount in foreign currency Amount in local currencyCurrent account at banks EUR 0/841 9,207 7,742

c) Interest rate risk:- Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.- The risk is managed by maintaining an appropriate mix between fixed and floating interest rates balances during the financial year.- The risk arises on exposure to a fluctuation in market interest rates resulting depositing in banks.- The entity is not exposed to interest rate risk.


d) Other price risk:- Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. - The risk arises from investing in equity investments. - The entity is not exposed to other price risk.

e) Credit risk:- Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.- Regularly, the credit ratings of debtors and the volume of transactions with those debtors during the year are monitored. - Ongoing credit evaluation is performed on the financial condition of debtors. - The carrying amount of financial assets recorded in the financial statements represents the maximum exposure to credit risk without taking into account the value of any collateral obtained.

f) Liquidity risk:- Liquidity risk is the risk of encountering difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another fi-nancial assets.- Liquidity risk is managed through monitoring cash flows and matching with maturity dates of the financial assets and liabilities.


- The following table shows the maturity dates of financial assets and liabilities as of December 31:

Less than one year One year and above2017 2016 2017 2016

Financial assets: JD JD JD JDOther debit balancesShareholder receivable - Water Authority 790,286 645,321 - - Accrued revenues 11,320,796 9,966,579 - - Accounts receivable 3,026,425 3,007,994 - - Cash at banks 4,224,387 4,397,011 - - Total 5,090,145 5,226,566 - - Financial liabilities: 24,452,039 23,243,471 - - Deposits payable - - 1,678,143 1,788,003 Loan 2,608,750 - - - Accounts payable and other credit balances 2,711,190 1,513,538 - - Total 5,319,940 1,513,538 1,678,143 1,788,003


22. Standards and Interpretations issued but not yet effective

Up to the date of these financial statements, the following Standards and Interpretations were issued by the International Accounting Standards Board but not yet effective:

Effective dateDescriptionStandard or Interpretation No.Jan 1, 2018 or after.Financial InstrumentsIFRS (9) - NewJan. 1, 2018 or after.Revenue from contracts with customersIFRS (15) – New

Jan 1, 2019 or after Leases – all leases are being recognized in the statement of financial position, without distinctions between operating

.and finance leasesIFRS (16) – New

Jan 1, 20121 or after.Insurance contractsIFRS (17) - NewJan 1, 2018 or after.Foreign currency transactionsIFRIC No. (22)Jan 1, 2019 or after.Uncertainty over income tax treatmentsIFRIC No. (23)

Management anticipates that the adoption of these Standards and Interpretations in current or future periods may not have material impact on the financial statements.

ANNUAL REPORT 2017 - a Waw.jo/en/files/AW-Report-2017-En.pdf · ANNUAL REPORT - 2017 3 water...

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