AGTHIA Group - Annual Report 2021

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ANNUAL REPORT 2021

For Download:

@AgthiaGroup

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ANNUAL REPORT 2021

About This Report

In line with our sustainability goals and ongoing efforts to minimise paper waste, our Annual Report is printed on recycled paper.

Here For the Better With Loved Brands Trusted by Millions of People

OUR PURPOSE

Is to grow for a greater good by offering loved brands; by creating better opportunities for our business, people and stakeholders to grow; by innovating responsibly so that our planet thrives.

Contents
Company Overview
At a Glance	4
Event Highlights 2021	6
Milestones People & Culture Creating value through our Brands Awards	8 9 10 11
Where we Operate	12
Strategic Report Chairman’s Statement	16
Interview with Our CEO	18
Strategy	21
Acquisitions Overview Transformation & Integration Sustainability	24 30 32
Business Review Consumer Business Water Protein & Frozen	38 39 40
Snacking	40
Agri Business	41
Flour	42
Animal Feed	43
KPIs	44
Operational Highlights
Food Safety & Quality Assurance Corporate Communications	48 49
Corporate Governance Corporate Governance Report Board of Directors	52 54
Executive Committee	63
Consolidated Financial Statements
Independent Auditor’s Report	76
Consolidated Statements of Financial Position	81
Notes to the Consolidated Financial Statements	83

02 Agthia Annual Report 2021

Agthia Annual Report 2021 03

Company Overview

A Regional Leader with Global ambitions

Agthia Group is a leading Abu Dhabi based food and beverage company. Established in 2004, the Company is listed on the Abu Dhabi Securities Exchange (ADX) and has the symbol “Agthia”. The Company’s assets are located in the UAE, Saudi Arabia, Kuwait, Oman, Egypt, Turkey and Jordan. Agthia offers a world-class portfolio of integrated businesses providing high quality and trusted food and beverage products for consumers across the UAE, GCC, Turkey and the wider Middle East. More than 8,200 employees are engaged in the manufacturing, distribution and marketing of various products in categories such as Consumer Business, Agri Business, Snacking, and Proteins & Frozen.

An Outstanding year with 49 % revenue growth

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216.04 3.07 6.39 2.76
Net Profit Net Revenue Total Assets Shareholders’ Equity
(AED Million) (AED Billion) (AED Billion) (AED Billion)
Net profit attributable to shareholders
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Manufacturing in 1.2 #1 7 Billion In UAE Countries Bottles Of Water In water, animal feed, Sold Annually flour and tomato paste Exporting to over 45 11 19 Countries Factories Brands Across the In an expanding World portfolio

8,200+ Employees Across the MENA region

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Company Overview

Event Highlights

2021

March 2021

Agthia Group embraces transformational change, with the announcement of its 2020 results

August 2021

Agthia announces the launch of 2021 dates marketing season for Al Foah
Agthia Group announces a 61% increase in H1 2021 Net Profit and a 21% increase in revenue

April 2021

Agthia Group’s Board of Directors approves acquisition of renowned Egyptian processed meat producer Ismailia (Atyab)
Agthia Group shareholders approve a 16.5% cash dividend during the 16th Annual General Meeting

September 2021

Agthia Group announces further investment in the snacking and healthy food market with the acquisition of BMB
Agthia Group’s shareholders approve an AED 65.31 million interim cash dividend payment for the first six months of 2021
Agthia Group announces 57% increase in Q1 2021 Earnings Per Share and 17% increase in Q1 2021 revenues

October 2021

May 2021

Agthia becomes a Foundation Partner at Future Food at Dubai Expo 2020
Agthia Group completes acquisition of leading processed food producer Nabil Foods

January 2021

Agthia completes transaction with Al Foah to create a top 10 F&B company in the region
Agthia completes transaction to acquire Kuwait’s Al Faysal Bakery & Sweets

February 2021

Agthia Group’s Board of Directors approves acquisition of the leading processed food producer Nabil Foods
Agthia and Veolia reinforce their commitment to a more circular economy in the UAE
Agthia Group welcomes inclusion in the MSCI Small Cap Emerging Markets

June 2021

Grand Mills accredited as a GAFTA approved analyst

July 2021

Agrivita celebrates its 40th anniversary

November 2021

Agthia Group continues strong growth momentum reporting AED 2.1 billion Net Revenue in the first nine months of 2021

December 2021

Agthia Group completes acquisition of regional healthy snacks pioneer BMB

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Company Overview

Milestones

1978 What started as a journey foreseen by a visionary leader in 1978 has transcended landscapes to becoming a regional leader with global ambitions driven by the passion of over 8,200 people across the world who come together to go beyond in everything they do and grow for a greater good.

1981 1990 2004 2005 2006
• Animal Feed • Al Ain Mineral • Formation of Emirates • IPO listed on ADX • Appointment of production Water Company Foodstuff and Mineral Water with 49% of the new management begins established Company – Agthia – as part company offered of Abu Dhabi government’s to the public privatisation initiative
2010 2009 2008 2007
• Production and • Egypt ‘greenfield’ • Acquisition of Al Ain • Acquisition of Ice distribution agreement operation launched Vegetable production Crystal, UAE signed with Yoplait and distribution agreement signed with Capri-Sun
2012 2015 2016 2017
• Acquisition of Pelit • Acquisition of Al Bayan • Launch of Al Ain Zero • JV signed with water company (Alpin), Water Company, UAE • JV signed to produce Al Ain Anderson Hay Turkey • Distribution agreement Water in Kuwait signed with Al Foah • Acquisition of Delta Water Factory Company, KSA
2020 2019 2018
Appointment of new Board of Directors and leadership team
Launch of Al Ain Zero Bromate, Grand Mills Vitamin D flour and Yoplait Grass-Fed Yoghurt
Launch of Al Ain Vitamin D and Al Ain Bambini
Launch of Al Ain Plant Bottle - region’s first plant-based water bottle
- R&D agreement signed with Nutreco
Inauguration of Agthia’s packaging technology centre
Launch of RECAPP app in partnership with Veolia
- United Khaleeji Water factory commences production in Kuwait
Transformation & Integration office launched
Completed acquisition of Al Foah Company, UAE, and Al Faysal Bakery & Sweets, Kuwait
2021 • Acquisition of Nabil, Jordan
Acquisition of BMB, UAE
Acquisition of Atyab, Egypt
Employees increased from 4,000 to over 8,200
Introduction of Proteins & Frozen business unit

People & Culture

Agthia puts people at the heart of the company, bringing together talented individuals from within the country and from across the world to deliver our collective vision. With our corporate values of collaboration, determination, agility, and responsibility, we contribute to the economic development of the nation while improving the quality of life of our workforce and their families. We aim to support local communities, as well as the wider society, in all markets where we have a presence. Social responsibility will always be central to our corporate culture.

8,293 61 Employees Nationalities 943 15 Employees trained UAE Nationals in 2021 Trained under Tatweer program in 2021 (NTIP)

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682 2,261
Above 50 Under 30
5,079
between 30 - 50
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Company Overview

Creating value through our Brands

In 2021 we expanded into new growth accretive categories - Snacking and Protein & Frozen - adding new inspirational brands to our portfolio which are now the products of choice for a growing number of consumers.

Award Winning

February 2021

Agthia won the “Most Impactful Sustainable Product” award at Gulfood Innovation Awards 2021

May 2021

Al Ain Water was awarded a three-star rating (highest) at the Superior Taste Award from the International Taste Institute, Brussels, Belgium

Consumer Business

November 2021

Al Ain Water won four awards at the PRIME Awards 2021 Bronze – Al Ain Plant Bottle

Bronze – Collation Shrink with Sustainability Credential Silver – 50th National Day Promo label Gold – Most Sustainable Water Bottle Label

December 2021

Al Ain Plant Bottle won Gold at SIAL Middle East Innovation Awards

Snacking

Protein & Frozen

Agri Business

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Company Overview

Increasing our international footprint

Our strategic acquisitions through the year have taken the Agthia name into new markets and countries. More people around the world now benefit from our sustainable growth strategy which gives them access to our range of iconic brands.

North America Europe UK Canada Asia Scotland USA Russia Ireland Mexico Singapore Netherlands Vietnam Poland Pakistan Hungary Afghanistan France Austria Germany Italy Africa Libya Middle East Tunisia UAE Morocco Saudi Arabia Djibouti Kuwait Kenya Oman Somalia Bahrain Lebanon Palestine Jordan Iran Turkey Egypt Cyprus Qatar Iraq Israel

Production Locations

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TURKEY
PRODUCTION
• Water
EXPORTING TO
• UAE • Ireland
• Kuwait • Netherlands
• Bahrain • Austria
• Palestine • Germany
• Morocco • Cyprus
• UK • Singapore
• Scotland
JORDAN
PRODUCTION
Protein &
Frozen KUWAIT
PRODUCTION
Water
Snacking
OMAN
PRODUCTION
Water
EGYPT
PRODUCTION
Frozen Vegetables, Food
Protein & Frozen
UAE
EXPORTING TO • Somalia
• UAE • UK HEADQUARTERS
• Saudi Arabia • Poland SAUDI ARABIA
PRODUCTION
• Lebanon • Hungary
• Palestine • France PRODUCTION Water, Food,
• Jordan • Germany Water Flour, Animal Feed, Snacking
• Turkey • Italy
EXPORTING TO
• Libya • Canada
• Oman
• Tunisia • Russia
• Bahrain
• Morocco • Vietnam
• Palestine
• Kenya
• Jordan
• Iran
• Djibouti
• Pakistan
• Afghanistan
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STRATEGIC REPORT

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Strategic Report

Chairman’s Statement

DEAR SHAREHOLDERS,

2021 was a transformational year for Agthia, in which we announced our growth strategy targeted to achieve the goal of becoming a regional leader in F&B by 2025. Despite ongoing market volatility and challenging economic headwinds, we continued our disciplined and methodical execution which has led to our commercial growth, geographical expansion, and an increase in our human capital. We have built a strong, progressive, and sustainable business that is opening up new markets and providing high-quality products to more people.

A New Strategy and Vision

Through 2021 we put in place three strategic pillars: growth, efficiency, and capability to achieve a disciplined expansion of the company. This took us into new markets across the MENA region and beyond and was supported by increased business efficiency and opportunities. As we continue to integrate our new businesses, we also maintained our core businesses with their consumer-centric and performance-driven approach - which is essential to deliver the required returns for shareholders.

Our M&A strategy provided the roadmap for the year, but it has been the ability we demonstrated to integrate the new companies into our core business that has been key to our success. The milestones achieved reflect our dedication to the ongoing transformation efforts across all our primary verticals as we build a more efficient organisation that will enhance value creation and improve productivity.

The acquisition of outstanding companies, who are leaders in their sectors, demanded commercial excellence across all parts of the business. This required us to further enhance our procurement, manufacturing, supply chains, and financial systems; acknowledging the irrefutable fact that these core disciplines are as important as identifying the right companies to partner with.

This growth trajectory has been supported by investment in people - bringing together the right leadership, with over 150 years of combined FMCG Experience, and proactively supporting the development of talented people throughout the company.

Business Performance

We started the year with the acquisition of Al Foah, quickly followed by Al Faysal, Nabil Foods, Atyab and finally BMB. These strong brands have allowed us to develop our snacking and protein categories, resulting in the diversification of our business portfolio and an expansion of our consumer business to close to 70% of our total revenues. Through all stages of the acquisitions, we have looked to achieve a seamless transition, rapidly identifying commercial benefits, and translating these into increased revenues.

Through this unprecedented period of growth, essential business disciplines were maintained, and a range of relevant new innovations were implemented, which led to AED73 million in cost optimization gains. This was 36.4% of our 5-year target of AED 200 million of productivity improvements, largely driven by our efficiency gains in existing businesses and value creation from the newly acquired businesses.

Working As One

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Khalifa Sultan Al Suwaidi
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As a nation, we have all come through an incredibly challenging time. At Agthia we are proud to have been able to support our customers, employees and the country. Last year we gave thanks to all the frontline workers who helped us overcome this global pandemic and this year we express the same heartfelt gratitude. The wise leadership of the UAE and the guidance of our rulers now means that we can look forward to delivering further growth and value for our shareholders as we accelerate the potential of our new businesses and add new value accretive platforms to our existing businesses.

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Chairman
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Acknowledgements

On behalf of my fellow Board members, I would like to express my gratitude to the government of Abu Dhabi for its continued guidance and support and my heartfelt appreciation of our visionary leadership. We are also deeply thankful for the loyalty of our customers, the trust of our shareholders and the dedication of our employees.

AGTHIA ANNUAL REPORT 2021

Strategic Report

Interview with our CEO

In 2021 Agthia set out an ambitious new strategy, CEO Alan Smith updates on progress

2021 was an exceptional year for Agthia, what were the highlights for you?

If I can summarize Agthia’s story in three parts, these would be growth through diversification, capability building, and innovation. Growth through diversification is a direct reflection of the success of our strategy to expand into future-proof businesses with strong fundamentals. The capability building has seen us grow stronger in terms of human capital, especially our integration team which has allowed us to quickly realize the benefit from acquired businesses. And what we have done in the water business in terms of responsible packaging highlights the growing culture of innovation in the Group.

I would like to applaud the effort and dedication of everyone across the organisation which has allowed us to achieve these stellar results.

The highlight for me has been the response from our partners and customers. Leading brands want to work with us, and we are increasing our base of loyal customers. This year has been a very successful start of the journey, but we know that we have a long way to go to deliver on our 2025 Strategy.

Last year was a difficult one for many businesses, how did Agthia meet the challenges?

Despite economic challenges and market volatility, we were able to achieve amazing milestones—a true reflection of our employees’ and leaderships’ dedication to enhancing value creation and improving productivity.

The quality of the acquisitions we have made and the way these have been integrated into our business is evidence of the hard work which has gone into realising our goals. By focusing on the future and implementing our strategy we were able to grow the business moving from a national to a regional leader in food and beverages.

Implementing several changes in such a short time has required us to assess all areas of our work. This included focusing on the training and development of our employees, making sure that we have the right people in the right roles. This has been effective in making us more flexible and responsive to customer requirements.

Our ability to substantially grow our business through this complex period was made possible because of clear guidance from the Board. We knew exactly what we had to achieve so every department and team could get on with the work they needed to deliver and contribute to the overall success of the company. We were able to build on the hard work of the previous years and achieve our collective goals.

What achievement are you most proud of?

For me, the way that we identified, acquired, and integrated the new businesses into the company through the year was a great credit to everyone involved. Implementing our M&A strategy was central to our plan, but it was the team’s approach to bringing onboard these companies, managing their integration, creating value and at the same time maintaining overall business momentum, which was so satisfying. It would have been easy to lose focus on the core parts of the business as we expanded into new markets, but this did not happen.

Alan Smith

As we started acquiring businesses, we took the decision to set up a dedicated Transformation & Integration office, which brought together the skills we knew would be needed to introduce them quickly and efficiently into the Agthia family. The team established an integration playbook which was vital in managing the multiple threads required to turn possibilities into realities.

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Strategic Report

The quality of the businesses who wanted to work with us was a wonderful validation of the esteem in which Agthia is held, both regionally and internationally. Well established, professionally run firms put Agthia as the growth partner of choice for their company. The management and boards of these companies trusted us to make them stronger and achieve more than they could on their own.

How did you deal with another year of COVID?

I am proud of our capability to proactively manage risks and react swiftly to mitigate any impact on our business. The pandemic has taught us all one thing, which is that we must always plan ahead. Our primary concern has always been the safety of our employees and customers. For this reason, we maintained our weekly Covid meetings, even when it appeared that the pandemic was easing. We were able to limit the number of cases and maintain our services when the next variant hit. In addition, we have fully supported the vaccination programs and looked to proactively back the actions taken by the government.

Across all our areas we have embraced the need for eCommerce, changing our business models so that customers continue to have access to our high-quality products. We have always been innovators and acquiring new businesses has given us more opportunities and an increased geographical footprint to put this innovation into practice.

Strategy 2021 – 2025

Have commodity prices been a concern?

Commodity price increases affect profit margins across the sector – this is not a dynamic that uniquely impacts Agthia. To maintain our market share we needed to strike a balance between distributing the higher costs between Agthia and the end consumer. Prior to these price increases, we were already well underway with our strategy to diversify the business, as evidenced by our aggressive M&A strategy, to reduce the Group’s sensitivity to the rising price of agricultural commodities.

Reducing our logistics cost is a key element of our 2025 strategy, and we aim to minimize these by extracting synergies through our existing businesses and the complementary acquisitions made throughout 2021.

Our foremost priority is to ensure we continue making great products available to our consumer base in the MENAP region and beyond.

Have you maintained your focus on sustainability?

Sustainability is important for Agthia and we are primarily addressing it through our innovative practices, in particular regarding the water business. Our plant-based bottle is recognised as one of the best innovations in the market and is steadily growing in popularity.

In 2021 we achieved several important milestones, including going towards zero landfill waste, and in partnership with Veolia we collected 70 tonnes of recyclable material. We continue to lead our sector in environmental stewardship, with more information available in our standalone sustainability report.

One year into a four-year journey to become a regional F&B leader by 2025

What can we expect from Agthia in 2022?

Agthia’s prudent acquisition strategy throughout 2021 was vital to creating value for both shareholders and stakeholders across the Group, by unlocking additional revenue streams and profits.

We expect next year, having established the four verticals of our operating model, to each contribute 25% to the business, and achieve our target of 75% of income being generated by consumer-based products.

2022 will be the year we fully reap the benefits of acquisitions made in line with our 2025 strategy. We have laid meaningful foundations in transitioning the company towards a more consumer product-based business, which we expect to deliver a significant impact on our performance over the next 12-month period.

Similar to our investment in new product sectors and lines, we will also maintain investment in our human capital. It will be through the development of talented people at all levels in the company that we will meet our targets and take on new challenges. Success will be driven by the value we all add as we continue to implement the strategy and continue to build Agthia’s position as a leading food and beverage company.

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Strategic Report

Three Strategic Pillars Growth, Efficiency and Capability deliver our Vision

Footprint MENAP and beyond
• Value-add F&B brands
UAE centric

• Commoditized portfolio • • Stable financial performance • • Local organization mindset • STRATEGIC MISSION Providing diverse and responsibly produced brands; driven by innovative, passionate people. Acquisitions Additional revenues 5 +49% F

Superior shareholder returns
• Consumer-centric and performance-driven

Profitability

Geographical Expansion

Synergies

Premiumization/ Diversification/ Expanded Customer Base/ Cross Selling Opportunities

Expanded normalised EBITDA by 391 bps Year-onyear.

Asia/ Kuwait/ Jordan/ Egypt/ KSA/ USA

Growth

Reshaped the Portfolio Mix Expanding Value-add Verticals

Agthia’s prudent acquisition strategy throughout 2021 was vital to creating value for both shareholders and stakeholders across the Group, by unlocking additional revenue streams and profits.

Underpinning the drive for growth has been geographical and category expansion. The MENA region was targeted as a significant market on Agthia’s doorstep. Focus was given to countries with strong macroeconomic fundamentals, growing consumption patterns and political stability.

The successful acquisition and consolidation of the five new entities created the Snacking and the Protein segments and continued the growth of the consumer business which now constitutes 70% of total revenues.

The future acquisition strategy establishes the availability of potential assets in the market, assessing whether they meet the acquisition criteria set out in the 2025 strategy.

The world-class expertise in the Agthia team has allowed for effective oversight and the injection of capital to rapidly scale high ROI businesses. Along with strong cost disciplines, this has maintained price points to enhance competitiveness.

Efficiency

Identifying synergies and simplifying business processes to unlock savings

Agthia has a proven track record of cost optimisation which in 2021 produced an aggregated total of AED 73 million in savings (36.4% of our five year target of AED 200 million in productivity improvements). These were achieved even as the business faced exceptional inflation in commodity and freight costs. By focusing on selective price intervention while still optimising the cost structure, the inflationary pressures were managed.

Efficiency gains were largely driven by careful day-to-day running of the existing business and value creation in the newly acquired entities. This included cross business integration of back office services (IT, HR and treasury).

Through 2021, there were increased demands on the business units as they switched traditional channels to eCommerce and Home Delivery solutions. This was made possible by Agthia’s world-class procurement, manufacturing, and supply chains.

Business simplification has seen the streamlining of suppliers and rationalisation of non-core or loss-making products. Across the company, non-scalable assets have been divested and resources used to develop expanding sectors.

Capability

Leveraging capability within the company has defined competitive advantage

At the start of 2021 serious questions were asked to make sure that Agthia had the right capabilities and the right approach to integrate a number of entrepreneurial businesses.

Critical paths key to success were identified and resourced through both internal and external appointments. Targeted talent acquisition added to the commercial excellence the strategic growth plan demanded.

A significant change was the cascading of responsibility to Business Unit levels, which empowered teams to create centres of excellence within the wider business. Standardised online performance management systems allowed the Executive Team to have oversight of delivery leading to effective capital allocation.

The drive on capability was led by through the establishment of a Transformation office responsible solely for the seamless integration of acquired companies into Agthia. The core focus of the Transformation team, with any acquisition is on three areas, firstly; people, processes, systems. Secondly, productivity and efficiency. And, finally, value creation.

AGTHIA ANNUAL REPORT 2021

Strategic Report

Acquisition Overview

A significant part of Agthia’s vision of becoming an F&B leader in the MENAP region is dedicated to the execution of a disciplined expansion plan, which involves acquisition, integration, and scaling of new businesses to strengthen our core existing businesses as well as expand into new categories and markets. Our strong balance sheet and goodwill in the market gives us leverage to explore and execute on such inorganic opportunities.

Our growth through diversification is a direct reflection of the success of our strategy to expand into categories and markets with strong fundamentals benefitting from attractive consumer trends. Our acquisition strategy is well defined. Any new potential business needs to meet various acquisition criteria which we have set in our ongoing strategy for 2025. At the core of our strategy, any new businesses have to be accretive from earnings perspective and complement our operating model.

2021

Partnership Approach

2021 was a landmark year for Agthia with five acquisitions completed and we expect to benefit from this strong momentum in the coming years.

We evaluate the growth potential of our new businesses and invest in them to nurture them and help them achieve their potential. This collaborative approach allows strong relationships to be developed with the teams of the new businesses, which has considerable benefits during the integration process and helps maintain an entrepreneurial spirit.

OCT 2020 ACQUISITION ANNOUNCED

AL FOAH COMPANY

of Al Foah’s total production is exported to over 45 markets worldwide

90%

Established in 2005 by the Abu Dhabi government, Al Foah is the world’s largest date receiving and processing company, exporting to over 45 international markets including India, Bangladesh, Oman, Indonesia and Malaysia. The company’s product portfolio consists of a wide variety of whole and valueadded dates and date-based products, sold in bulk and retail. Two date processing factories and eight receiving centres across the UAE handle over 160,000 tonnes per season.

Phase one of the integration has been successfully completed as planned. We managed to re-size and re-design the organizational setup and processes while unlocking cost synergies and operational efficiencies resulting in a notable contribution to overall cost optimization targets. The transaction serves as a milestone in Agthia’s expansion trajectory. With the integration of Al Foah as a strategic business unit, Agthia becomes the domestic market leader in four essential food and beverage categories and one of the top 10 F&B companies in the MENA region.

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January 1 Snacking International
2021
(GCC and Asia)
2021 Revenues 2021 EBITDA Rationale
Scale, Category
451.1 110.5 (Superfoods),
Brands
AED million AED million
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DEC
2020
AL FAYSAL
ACQUISITION
BAKERY & SWEETS ANNOUNCED
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4,700 customers

Al Faysal’s baked goods and snacks are distributed to over

Al Faysal Bakery and Sweets is one of Kuwait’s largest and most reputable bakeries, a household name with a strong brand heritage dating back to its establishment in 1991. With an expansive range of fresh baked goods, including packaged croissants, pastries, mini pizzas, rusks and cakes, the company distributes to over 4,700 customers across all key retail channels, and is a market-leading supplier of bakery products to schools.

Integration of Al Faysal has gone well with resources directed towards processes and governance while ensuring business continuity and on-track execution were maintained. The focus is now on leveraging Al Faysal’s strong network in Kuwait to unlock go-to-market opportunities in collaboration with Al Foah and the newly acquired BMB business.

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January 27
2021 Snacking Kuwait
2021 Revenues 2021 EBITDA Rationale
Brand, Market
Scale
91.5 23.0
AED million AED million
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JAN
2021
ACQUISITION
NABIL FOODS ANNOUNCED
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Founded in 1945 by Mr Nabil Rassam, Nabil Foods is a leading Jordan-based producer of frozen and chilled processed protein products sold under the “Nabil” brand. Nabil Foods has a broad product portfolio with more than 600 SKUs (100% Halal) of mostly chicken, beef and processed products. Nabil 600 brand is a market leader in Jordan and has expanded successfully across geographies in the MENA region, particularly in KSA and UAE. SKUs

The acquisition of Nabil started the creation of a fully focused Protein & Frozen business unit which is core to the Agthia diversification strategy. Potential synergies and value creation opportunities have been identified across the business and these are now being implemented.

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April 1
2021 Protein Jordan, GCC, Iraq
2021 Revenues 2021 EBITDA Rationale
New Category,
Brand, Scale
306.9 46.2
AED million AED million
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APR ISMAILIA AGRICULTURAL AND 2021 INDUSTRIAL INVESTMENTS ACQUISITION “ATYAB” ANNOUNCED

Established in 2008, Ismailia Agricultural and Industrial Investments (“Atyab”) is a producer of value-added/ processed beef and poultry products in Egypt. The company owns four brands with Atyab being the flagship premium brand and market leader in Egypt. The other three economy focused brands are Meatland, Shiketita and Furaty.

With the completion of the Atyab acquisition in Q3 a full 100-day diagnosis and analysis plan was started to extract all potential synergies and value creation opportunities with Nabil foods. Both firms are now part of the new Agthia Protein & Frozen business sector.

AUG 2021 ACQUISITION ANNOUNCED

“BMB GROUP ”

BMB Group is the GCC’s leading innovative healthy snacks and food company. Launched in 2007, BMB manufactures and distributes a large portfolio of confectionery and healthy food brands – including Asateer, Al Qamar, Freakin’ Healthy and Benoit – with over 2,000 SKUs in more than 23 countries worldwide, including the UAE, Saudi Arabia, and USA.

The acquisition of BMB represents Agthia’s commitment to expanding its healthy food categories and enables the company to leverage the strength of BMB’s capabilities to accelerate its presence in the snacking and healthy food segment. It is also expected to drive tangible short and long-term value for all stakeholders with significant cost and revenue synergy opportunities from the integration of the combined platform, enabling footprint expansion in the confectionery market, healthy snacking market, and cross-market distribution.

The 100-day BMB integration plan is underway, which includes seeking out opportunities for new product development, go-to-market synergies, and possible consolidation of production sites.

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August 1
2021 Protein Egypt
2021 Revenues 2021 EBITDA Rationale
230.0 55.2 Brand, Scale
AED million AED million
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December 31
2021 Snacking Saudi Arabia, UAE,
USA
Rationale
Category Upscaling,
Brand, Footprint
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Transformation & Integration

Adopting The Playbook

At the start of the year, it was recognised that to achieve inorganic growth targets and complete the integration of the two announced acquisitions, Al Foah and Al Faysal, would require the setting up of a Transformation & Integration team. The team was established in March and very quickly moved to create a Project Management Office (PMO) equipped to deliver the systems planning, governance and processes needed to successfully identify and integrate acquisition companies. The work was focused on value creation. Standard metrics were introduced to evaluate projects with agreed decision-making processes, efficiency and cost-saving targets. The approach was systematic and monitored, and able to identify opportunities as well as quickly solve problems and prevent issues escalating. These learnings were then developed into the Agthia playbook.

In- House

With the scale of the task, it was decided to bring all this work in-house which meant the playbook approach could be used for the core business as well as the acquisitions, producing an additional AED 73 million of efficiency savings. The Agthia playbook has now been audited by KPMG.

First 100 Day Plans

All acquisitions go through a 100-day plan which is based on a deep-dive review of all the systems and processes. This detailed due diligence allows all elements of the business to be evaluated from the employees through to IT systems, processes, and facilities. Red flags are identified and planned into the ongoing roadmap.

Constant Learning

The amount of work undertaken through the year has been exceptional but at all stages, the change required has been managed and the correct amount of time taken to achieve the projected results. There have been areas that have not worked but the systems adopted in the playbook allow for any steps back to be evaluated and learnt from.

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Strategic Report

Committed to sustainable living

Creating value for those who matter has been the cornerstone of Agthia’s success. With sustainability at heart, we aspire to conduct an inclusive and forward-looking business that fosters innovation and authenticity and drives positive impact.

for the year 2021, published on our corporate website, provides our shareholders and stakeholders with a summary of our performance against our non-financial directions and objectives. This chapter summarises our materiality approach and the fundamental pillars recognised under our sustainability framework, while presenting key highlights from our activities during 2021 under each pillar.

Our long term sustainability vision of wholeheartedly driving sustainable living from field to fork, reflects our aspiration to contribute to economic development while improving the quality of life of our workforce, their families and the local community. With sustainability and innovation at the core of our long-term strategy, we aim to become a food and beverage (F&B)leader in the Middle East, North Africa and Pakistan (MENAP) region and beyond by 2025.

We truly believe that “good business is good for business,” connecting each one to the essence of sustainability at Agthia and taking a holistic approach to measuring success.

Listening to Our Stakeholders

At Agthia, safeguarding our stakeholders’ interests and futureproofing the value delivered to each one of them have been a priority since day one. We believe that listening to our stakeholders is essential to deliver on our commitments and promote progress on our key material issues. We continue to enhance our engagement approach, ensuring transparency, inclusiveness, consistency and accountability to create shared value with every business stakeholder

Our sustainability goals are pursued by efforts throughout the Group, in each country and location, striving to improve our impact on the environment, economy and society around us, while delivering value for our shareholders and customers. To further reinforce our commitment to sustainability as an industry leader and global corporate citizen, our Sustainability Report

Materiality

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INVESTORS &
SHAREHOLDERS
LOCAL
ENVIRONMENTAL
COMMUNITIES
ORGANISATIONS
& NGOS
OUR
GOVERNMENT
ENTITIES STAKEHOLDERS SUPPLIERS
CUSTOMERS EMPLOYEES
BOARD OF
DIRECTORS &
SENIOR MANAGEMENT
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As we operate in an unpredictable business environment with varying market trends, consumer habits and spending power, conducting a material assessment allows us to identify the sustainability topics that are a priority to us and our stakeholders. The materiality process ensures the inclusion of all stakeholder groups, shedding light on the most important environmental, health, social, economic and governance issues we should address as a business now and in the near future.

In 2021, we reviewed our list of 19 material topics from 2020 against industry peers, international industry guidelines and frameworks, along with an analysis of our operating market. Based on internal feedback and external considerations, we have revised our matrix to address an increasingly important issue of customer security and privacy. In the following graph, we portray the materiality matrix highlighted in our 2021 Sustainability Report, where we delve deeper into the process and findings of this analysis.

MATERIALITY GRADING

Rank

Material Topics

Product safety & quality

Corporate Governance & Ethical Business Practices Food waste reduction

02 Business Practices 03 Food waste reduction 04 Financial performance & Economic contribution 05 Workplace health & safety 06 Employee development and retention 07 Packaging innovation & circular economyy 08 Workplace diversity & equal

Packaging innovation & circular economyy Workplace diversity & equal opportunities

09 Operational Waste Management

10 Responsible marketing & customer satisfaction 11 Responsible Supply Chain Management 12 Water Stewardship 13 Human rights 14 Food security 15 Employee Engagement & Wellbeing 16 Healthy Products 17 Climate change mitigation and resilience 18 Community contribution and investment 19 Biodiversity & Environmental Impact 20 Customer Privacy/Security

Our sustainability framework

Our sustainability framework underpins our strategy, serving our roadmap to a sustainable future and putting our purpose into action. It takes an integrated approach while focusing on the areas where we believe we can make the most difference.

The framework focuses on four key pillars that enable us to drive responsible growth and boost capability across our business, helping each of our operations to address business-critical issues related to environmental conservation and social empowerment.

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2021 Sustainability Highlights
The table below highlights our notable achievements, reflecting our sustainability
impact in alignment with each of our sustainability pillars. Each topic and KPI is
further elaborated in our 2021 Sustainability Report, which is published on the
corporate website.
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Fostering Healthy & Safe Communities

Maintaining Ethical, Responsible & Profitable Business

	Business
	AED 3.07 billion in revenue AED 9.60 million in R&D expenditure 0(Zero) bribery cases 0(Zero) complaints received concerning breaches of	60% 11% 8% 61	of newly hired employees are under 30 years of age turnover rate full-time female employees diferent nationalities work at Agthia
• • • • •	customerprivacy 0 (Zero) product recall from markets Financial performance & economic contribution Corporate governance & ethical business practices Responsible marketing & customer satisfaction Human rights Customer privacy/security	15% 27,524 33% 96%	reduction in Lost Time Injury FrequencyRate (LTIFr) hours of health & safety training to employees reduction in vehicle collision rate of vehicles have GPS installed
		0.82	million AED in community investments

Workplace diversity & equal opportunities

		Innovating & Rethinking		Preserving & Protecting the	Preserving & Protecting the
		Product Quality &		Environment
		Sustainability
	90.7	GMP Score	18%		decrease in diesel consumption
	96%	lab proficiency	17%		reduction in Direct Scope 1 emissions
	5 <1	awards won for sustainable packaging customer complaints per million products sold	13%		reduction in Direct Scope 1 emissionsper tonne ofproduction
	1.51	billion AED in procured goods and services	36 KG		of CO2 per tonne of production
	100%	of suppliers are screened on quality, social, and environmental criteria	15,972 tonnes		of recycled waste
	19	supplier site audits conducted	8%		landfilled waste from total waste

•	Product	safety & quality	1.07 cubic meter		of water per tonne of production
•	Healthy	products
• •	Responsible supply chain management Packaging innovation and footprint		25,000+		Completed collections through RECAPP programme
			113		of recyclable waste collected through
			tonnes		RECAPP

Employee development and retention
Employee engagement & well-being
Workplace health & safety
Food security
Community contribution and investment
Climate change mitigation and resilience
Operational waste management
Water stewardship
Food waste reduction & circular economy
Biodiversity & environmental impact

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Business Review

Consumer Business

2021 was a year of resurgence and renewal as despite all the volatility and disruption, Agthia continued to persevere. Our strategy of ‘For the Better’ has proven to be the right one, in good times and bad enabling us to be there for our communities when they need us most, whilst accelerating our growth and gaining share in many key categories while embarking on a journey of key acquisitions in the business.

We started the year with continued market unpredictability and challenging economic headwinds as the world recovered from COVID-19 and faced economic challenges in terms of increased material and fuel costs . Despite these challenges, we continued our disciplined and strategic execution of our growth strategy along with our dedication to build a more efficient organization that will boost value creation and enhance productivity.

To grow even stronger, we will continue our work in transforming our cost structure, capabilities, and culture, including refining our cost management plans, accelerating our digital transformation, and investing in our people and talent development.

Water

In the water segment, we actively defended our market leadership in the UAE against an overall market earmarked by aggressive promotions and competitive pressures. Moreover, we faced excessive challenges with PET costs increasing from US$800 to US$1,450 per tonne. Agthia commercial team aggressively worked on stabilizing the business on the back of “Insights driven activation plans, flawless execution with ‘smart’ promotion strategies.

Sector leadership was retained in the UAE with over 28% market share, with sales also increasing regionally, including expansion in Kuwait, Turkey and Oman. Moreover, our 5-gallon business in the UAE increased Its revenues by 9.7 percent driven by higher demand from homes compensating the challenges in corporate channel.

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CONSUMER BUSINESS NET BUSINESS
CONTRIBUTION
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MARKET OVERVIEW

ECOMMERCE DEVELOPMENT

Consumer Trends

Shoppers who had limited access to stores flooded back, having experienced the benefits of eCommerce they opted for a mixed, multichannel, approach to their shopping basket.

Retail trends

Our key categories are characterized by aggressive promotions and intense competitive pressures. Moreover, with the rapid evolution of eCommerce, a more omni - channel approach is key to deliver sustainable growth.

Food Services

The F&B sector in UAE is turning a corner and is primed for further growth in the coming years. The sector faced rapid recovery in the second half of 2021 with easing of restrictions in Hotels and Restaurants, influx of tourists and the success of Expo 2020.

The global pandemic accelerated the adoption of online solutions with Agthia now offering a wide range of apps to drive domestic consumption both for HOD and CSD channels. Moreover, the AgriVita app provided access to full range of products for farmers. This led to a 109% growth in eCommerce in 2021, with approximately AED 20 million of sales being handled by our online solutions. To achieve this level of growth the teams worked proactively with specialist eCommerce fulfilment

channels (Amazon, Noon and Talabat) to increase our strategic capability to help meet the spike in eCommerce demand for our key customers. Targeted activations and events were planned and rolled out to attract new customers, build penetration while building customer loyalty. An exclusive deal was arranged KEY MARKETS with Talabat (T-Mart) for local water delivery and a Vendor Flex programme, with dedicated warehouse space, ensured faster Amazon deliveries. UAE KSA KUWAIT

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Business Review

Protein & Frozen

Agthia is focused on creating a standalone Protein & Frozen business which is seen as a fast-growing high margin area. The two acquisitions in the protein sector, Nabil and Atyab, added AED 534 million to Agthia revenues in 2021, despite Nabil only being consolidated into the accounts for nine months and Atyab for five months. The ongoing success in the protein category will be secured through the implementation of the integration plans with their associated value creation initiatives. Sales of frozen vegetables and tomato paste were relatively flat for the year following overstocking through the lockdown period but still helped push the total revenues from the Protein & Frozen business to AED 656 million.

534 Million Nabil and Atyab contribution

Agri Business

The Agri business managed significant negative headwinds to produce results in-line with expectations. This was a very good result as the sector had to cope with unprecedented adverse commodity costs. Prices globally were up sharply for corn, soya and wheat which put pressure on both the flour and the animal feed business and their respective customers.

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AGRI BUSINESS NET REVENUE
CONTRIBUTION
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MARKET OVERVIEW

Consumer trends

As COVID lockdowns eased and more people returned to the work environment sales of flour increased as traditional snacking and out of home eating recovered to normal levels.

Snacking

Snacking represents an important growth area for Agthia and has been redesignated as a separate sector alongside Protein & Frozen. In 2021 three of the acquisitions consolidated into the business were in the snacking sector - Al Foah, Al Faysal and at the end of the year BMB. All three firms offer an exciting portfolio of well-known and respected brands which cover traditional snacking but also increase Agthia’s development of healthy snacking options.

The firms also increased Agthia’s international reach for snacking products. With the final acquisition of BMB work is focused on the continued integration of the firms looking at the overall sales mix, cost optimisation initiatives and logistic synergies. Snacking will be an important part of the ongoing business strategy helping to increase revenues for the consumer business.

Food services

There was a pronounced increase in the food service channel volumes as workers started to operate a full at office or hybrid working arrangements. This trend grew through the year building sales and overall volumes.

Volumes

The overall volumes lagged the previous year. This was mainly driven by unique charity one-off sales in 2020 to export markets. In 2021 volumes normalised and were on target.

2021

931.3m

AGRI BUSINESS REVENUES (AED MILLION)

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Business Review

Flour

Sales were down on the previous year as a result of oneoff export orders. The team has implemented a strategy of cost and efficiency savings to preserve profit margins, especially with increased wheat and energy prices.

Animal Feed

Agrivita has maintained its leading position in the category in the UAE. Sales expansion into the Northern Emirates and technical support to livestock farms helped strengthen the position amidst increased costs from commodity price and supply chain pressures.

The Agrivita mobile application has been a great success and was widely used through Covid. As soon as restrictions started to lift the sales team stepped up to provide farmers looking for face-to-face contact with the support they needed. Others continued to use the app working with the channels and routes to market which best serves their needs.

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Business Review

Key Performance Indicators

NET REVENUE EBITDA NET PROFIT CASH FROM OPERATIONS CAPITAL EXPENDITURE GROUP HEADCOUNT 3.07 452 216.04 497.85 134.20 8,293 AED billion AED million AED million AED million AED million Net profit attributable to shareholders Includes CAPEX of acquired companies 452 8,293 497.8 3.07 216 134 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021

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8,293
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Total Assets
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Bank Borrowings
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CSR Spending
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6.39 1.12 2.06 2.76 9.60 0.82
AED billion AED billion AED billion AED billion AED million AED million
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Operational Highlights

Food Safety & Quality Assurance

Agthia continues to maintain the highest standards in food safety and production managed under the umbrella of the Global Food Safety Initiatives (GFSI). In 2021 three of the five newly acquired companies were integrated into this system and two are being processed.

regulatory compliance and Good Laboratory Practices (GLP). The analysis focused on people, systems and infrastructure and was implemented according to Agthia corporate policies and procedures.

Through the year all Agthia sites (including the new acquired businesses) passed all third-party audits (Regulatory Authorities, certifying bodies, and customers) with no compliance issues and zero recalls. This shows the effectiveness of the Quality Assurance and Food Safety systems implemented across the Group.

The integration of QA and food safety systems involved a detailed gap analysis covering Prerequisite Programs (PRPs); HACCP reviews; Good Manufacturing Practices (GMP), Good Warehousing Practices (GWP), training modules (more than 15 training modules),

Innovation at Agthia is evolving in line with changing consumer trends towards health and wellness and sustainability. A limited number of products were launched in 2021 however a series of new products are in different stages of development. New products are developed in Agthia’s R&D centres as well as in partnership with local, regional, and international research institutions like UAEU, AUB, Nutreco, and patent houses in Europe and other regions. These developments focus on the four Mega Trends.

Sustainability & Product Development

Focusing on the four Mega Trends

The sustainability agenda, which has introduced ESG standards across all operations, is at the core of the company’s DNA. Packaging design is continuously optimized to reduce the CO2 footprint and create value for shareholders by helping to reduce usage. This has led to a reduction of 1500 tons of paper, 1200 tons of plastic and 3000 trucks trips per year. In addition, this optimization cut the cost of packaging materials by around AED 130 million (cumulative in the last 5 years).

Sustainability working to protect the planet

Snackification changing eating habits

Naturally Functional national products (dates)supporting the UAE sectors

Fragmentation

appealing to all audience groups

Corporate Communications

To support the 2025 Strategy, Agthia needed to change the way it communicated both internally and externally. Responsibility for all brand communications was centralised, and an integrated communications strategy was developed and implemented. This delivered consistent, proactive, high-quality content to all audiences. At a time when Agthia was undergoing unprecedented

change, expanding into new categories and markets, it was essential to have clear and consistent messaging. The Corporate Communications team created and managed a range of traditional and digital channels to cascade the vision and values of the firm, from the board and management team to shareholders, partners, and employees.

22 46 486 Press Releases Leadership Interviews Social Media Posts 134 35% 185% Videos Produced Increase in ‘Share of Voice’ Increase in Media Exposure 149K 232K 9310 Visits to the new Website Increase in Alexa Rankings (Global Digital Articles internet traffic rankings by Amazon)

149K

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Visits to the new Website
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CORPORATE GOVERNANCE

Corporate Governance Report Board of Directors Leadership Team Directors’ Report

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Corporate Governance Report

Corporate Governance Report for 2021

At Agthia, we believe that a solid foundation of good corporate governance and business ethics significantly contributes to our company’s ability to compete effectively and realize our full value potential.

For our company, this means leadership by a management team of uncompromising integrity under disciplined oversight from our Board of Directors, a commitment to shareholder and stakeholder engagement, and creation of sustainable value through business fundamentals, corporate social responsibility, and environmental stewardship.

Agthia Group PJSC (the Group) complies with the requirements of the ‘Chairman of Authority’s Board of Directors’ Resolution No. 3 of 2020 concerning the approval of joint-stock companies’ (Resolution 3). This report gives an overview of the Group’s corporate governance systems and procedures as of December 31, 2021 and has been filed with Securities and Commodities Authority (SCA), and posted on the Abu Dhabi Exchange (ADX) website and the Group’s website. The Board is fully committed to consistently protecting the interests of all shareholders through the application of high standards of corporate governance.

Implementation of Corporate Governance Principles

Effectively applied corporate governance guidelines are the foundation of business integrity and support management’s commitment to delivering value to shareholders through sustainable business results. The Group maintains high levels of transparency and accountability which includes adopting and monitoring appropriate corporate strategies, objectives, and procedures that comply with its legal and ethical responsibilities.

Group Governance Structure

The Group’s Corporate Governance Manual is approved by the Board to reflect the requirements of Resolution 3, determines the structures and processes by which the Group is controlled through its Board and the guiding governance principles followed by the Group. The manual clarifies the roles and responsibilities of all stakeholders involved in governance processes including the General Assembly of Shareholders, the Board of Directors including the Chairman of the Board and Board Committees, the Chief Executive Officer, the Executive Management, relevant Management Committees, Internal Audit, External Audit, Company Secretary and other stakeholders.

The Board has established and approved several Group policies and guidelines for achieving robust corporate governance standards. Following are the pertinent policies in this regard:

Code of Business Conduct to guide the conduct of Directors and Employees and prevent any influence on the employees’ independence and objectivity addressing matters such as conflict of interest and integrity, gifts, and confidentiality.
An appropriate delegation of authority to ensure efficient and effective decision making which balances empowerment against controls.
Investors Relations Policy to inform Shareholders and Stakeholders of how the Group intends to keep them aware of material developments as well as to provide a framework of processes upon which Agthia can successfully implement its Investors Relations Program.
Trading in Group Shares Policy to ensure that Directors and Employees do not make improper use of price-sensitive information, gained through their positions in the Group.
Dividend Distribution Policy to define the Group’s position on the appropriation of profit and declaration distribution of dividend.
Risk Management Policy to promote adequate and consistent risk management practices as well as a structured process for identifying, assessing, prioritizing, managing, and reporting material risks across the Group.
Business Continuity Management Policy to implement a Business Continuity Management System, compliant with international and local standards, to improve the overall business resilience of the Group.
Information Security Policy to underscore Agthia’s commitment and support towards the management of information security at Agthia.
Whistleblowing Policy to provide Employees a mechanism to confidentially report any violations of the Code of Business Conduct, internal policies and procedures, or applicable laws and regulations.

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Board Of Directors (BoD) Company Secretary
Audit Committee Nomination & Remuneration
Committee
Governance Internal External Conduct & Risk
Control Values
& Compliance Department Audit Committee Management
CEO
Leadership Team
Risk Management Insider Trading Commodity Risk Business Continuity Sustainability
Committee Management Committee Management Committee Management Committee Steering Committee
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Dealing in Company Securities

None of the Board Members have traded in the Company’s shares during 2021.

Board Member Name Khalifa Sultan Al Suwaidi	Position Board Chairman	Owned shares as on 31/12/2021 Nil	Total Sale Nil	Total Purchase Nil
Salmeen Obaid Alameri	Board Vice-Chairman	Nil	Nil	Nil
Khamis Mohamed Buharoon Al Shamsi	Board Member	Nil	Nil	Nil
Khalaf Al Hammadi	Board Member	Nil	Nil	Nil
Gil Adotevi Gianluca Fabbri	Board Member Board Member	Nil Nil	Nil Nil	Nil Nil
Saifuddin Rupawala	Board Member	Nil	Nil	Nil

Additionally, none of the Board Members’ direct family members have traded in the Company’s shares during 2021.

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Corporate Governance Report

The Board of Directors

The Board of Directors’ role is to represent the shareholders and be accountable to them for creating and delivering sustainable value through the effective governance of the business. It is the Board’s responsibility to ensure that effective management is in place to implement the Group’s strategy.

The Board is the primary decision-making body for all matters that are material to the Group. The Board has a rolling agenda to ensure that the key areas remain in focus throughout the year.

Board Structure and Composition

The present Board of Directors was elected at the Annual General Meeting held on April 16, 2020, for a term of three years. The Board currently has seven members, comprising an Independent Non-Executive Chairman and six Independent Non-Executive Directors.

The Group supports the inclusion and participation of women in business and believes that diversity contributes to the quality and effectiveness of governance. For the last election of the Board, the Group invited nominations from both male and female candidates; however, no nominations of female representatives were received during the year 2021. Agthia was successful in electing the woman as the board of directors in January 2022.

Khalifa Sultan Al Suwaidi Chairman

Non-Executive, Independent Director since: April 2020

Experience:

He is the Chief Executive Officer at Abu Dhabi Growth Fund (“ADG”) which is a sovereign investment fund established by ADQ. He brings a broad set of skills and experience to his additional role through serving on multiple boards and in other senior capacities across a variety of Abu Dhabi government assets.

Other Board memberships:

Chairman, SENAAT General Holding Corporation Chairman, National Petroleum Construction Company (NPCC) Vice Chairman, Abu Dhabi Ports Board Member, TAQA Board Member, Emirates Water and Electricity Company (EWEC)

Salmeen Obaid Alameri Vice Chairman

Non-Executive, Independent Director since: April 2020

Experience:

He holds the position of Chief Executive Officer at Al Dahra Agriculture and has more than 20 years of commercial and operational management expertise, notably in the feed and food sector. In his current role at Al Dahra, Alameri oversees global logistics, drives business growth within the Human Food division, as well as manages the global expansion of product lines and new geographies for the company.

Other Board memberships:

Chairman, Al Dahra Baywa Agriculture LLC Board Member & Managing Director, Al Dahra Food India Limited

Board Member, Al Dahra Food SP LLC Board Member, Al Dahra Food Industries LLC Board Member, Al Dahra Agricultural Company Egypt Board Member, Navigator Agricultural Investment Co Board Member, Agility Abu Dhabi Group

Khamis Mohamed Buharoon Al Shamsi Member

Non-Executive, Independent Director since: April 2014

Experience:

Mr. Khamis was re-elected to serve another term on Agthia Group’s Board. With over 30 years he has held various distinguished leadership positions in the banking and finance sector

Other Board memberships:

Chairman, Abu Dhabi National Takaful Co. PSC Board Member, Aran Group Sharjah Managing Director of Royal Capital

The Board ensures, on an ongoing basis, that Directors possess the required skills, knowledge, and experience necessary to fulfil their obligations. Composition of the current Board of Directors:

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Corporate Governance Report

Gil Adotevi Member

Non-Executive, Independent Director since: April 2020

Experience:

Mr. Gil Adotevi is Investment Director for Food and Agri sector at ADQ, and brings with him expertise in managing a portfolio of investments within the food and agriculture sectors of large asset management and investment corporations

Other Board memberships: Board Member, Arsamar / Andromeda (Spain Co.)

Gianluca Fabbri Member

Non-Executive, Independent Director since: April 2020

Experience:

He is Group Chief Financial Officer of Al Dahra and brings with him expertise in the agribusiness managing large finance teams and partnering with stakeholders including governments, banks, suppliers, shareholders, and customers.

Other Board memberships:

Board Member, Al Dahra BayWa Agriculture LLC (UAE) Board Member, Al Dahra Food SP LLC (UAE) Board Member, Al Dahra Food Industries SP LLC (UAE) Board Member, Al Dahra Barlett LLC (UAE) Board Member, Al Dahra Serbia D.O.O (Serbia) Board Member, Al Dahra Agriculture Spain SL (Spain) Board Member, Al Dahra Europe Srl (Italy) Board Member, Fagavi Canarias (Canaries) Board Member, Al Dahra Agriculture Company USA Inc (USA) Board Member, Al Dahra ACX Inc. (USA) Board Member, ACX Intermodal Inc. (USA) Board Member, Hualapai Valley Farms LLC (USA) Board Member, Al Dahra ACX Mexico S. de R.L. de C.V. (Mexico) Board Member, Al Dahra ACX Mexico Servicios (Mexico) Board Member, Al Dahra Food India Ltd (UAE)

Saifuddin Rupawala Member

Non-Executive, Independent Director since: April 2020

Experience:

Currently serves as Chief Executive Officer of LuLu Group International, where he spearheads global expansion efforts within the consumer goods retail sector.

Other Board memberships: Board Member, Lulu International Holdings Limited

HE Khalaf Al Hammadi Member

Non-Executive, Independent Director since: April 2020

Experience:

He brings over 25 years of executive management experience in government and semi-government sectors, and in his current position as Director General of Abu Dhabi Retirement Pensions Benefits Fund.

Other Board memberships:

Board Member, Social Development Committee, Executive council, Abu Dhabi Board Member, Daman

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Corporate Governance Report

Directors’ Fees and Remuneration

Remuneration of the Group’s Board of Directors is determined in accordance with the provisions of the Group’s Articles of Association. The Directors’ fees are a fixed fee and are not linked to Board meeting attendance. Directors’ fees of AED 2.33 million relating to 2020, was approved in the General Assembly held in 2021, and thereafter paid in 2021.

Total Director’s fees of AED 2.29 million relating to 2021, towards Board of Directors’, Audit, and Nomination & Remuneration Committee Members’ fees, are to be paid in 2022, subject to shareholder approval. No additional allowances, salaries, or fees were received by the Board members for the year 2021.

Board / Board Committee Member	Board/ Committee	Board Committee Membership	Board Director’s	Number of Board	Committee Members’	Number of Committee
	Term		fees in AED	meetings	fees in AED	meetings
				attended		attended
Khalifa Sultan Al	1 Jan - 31 Dec	-	500,000	9	-	-
Suwaidi– Chairman
Salmeen Obaid Alameri	1 Jan - 31 Dec	Nomination &	250,000	9	50,000	5
– Vice-Chairman		Remuneration
		Committee
Gil Adotevi	1 Jan - 31 Dec	Nomination & Remuneration	250,000	9	50,000	5
		Committee
Khamis Mohamed Buharoon Al Shamsi	1 Jan - 31 Dec	Audit Committee	250,000	9	50,000	5
Gianluca Fabbri Khalaf Al Hammadi	1 Jan - 31 Dec 1 Jan - 31 Dec	Audit Committee Nomination & Remuneration	250,000	9	50,000	5
		Committee
Audit Committee	250,000	9	90,000	9
Saifuddin RupaWala	1 Jan - 31 Dec	-	250,000	9	-	-

Circular Resolutions passed by the Company

The Board of the Company passed a Circular Resolution on 23 August 2021.

Board Effectiveness Evaluation

An evaluation to assess the performance of the Board as a whole, its committees, and that of the individual directors is conducted annually, with the aim of improving the effectiveness of the Board, its members and committees, and the performance of the Group. Our Board Performance Evaluation set out requirements for every principal component of effective Governance including but not limited to skills, training, accountability, effective communication, quality discussions, and succession planning. Based on the individual evaluation performed by the Board members, the Board believes that it is functioning effectively to discharge its’ duties towards the shareholders.

Board Induction and Development

The Chairman, with the support of the Company Secretary, is responsible for the induction of new directors and the continuing development of directors. All directors receive a tailored induction upon joining the Board, covering their duties and responsibilities as directors. Directors also receive a full briefing on all key areas of the Group’s business, and they may request further training as they consider necessary.

Company Secretary

The Company Secretary is the focal point for communication with the Board of Directors and senior management and plays a key role in the administration of important corporate governance matters. Our Company Secretary, Mr. Yasser Abdelkhalek Omar was appointed by the Board on 3 May, 2021 and reports to the Board in relation to secretarial responsibilities. The Company Secretary has the following key responsibilities:

To organize director’s meetings in accordance with procedures to be agreed upon from time to time by the Board Chair and the Board.
Prepare notices, agendas of meetings, and supporting reports and documentation in a timely manner.
to attend Board meetings and undertake secretarial responsibilities, including organizing minute-taking responsibilities at each meeting.
In conjunction with the CEO and other senior management, carry out instructions of the Board and give practical effect to the Board’s decisions.

Board Meetings

During 2021, nine Board of Directors meetings were held.

Board Member	19-Jan	18-Feb	08-March	07-Apr	03-May	09-Aug	31-Aug	25-Oct	02-Nov
HE Khalifa Sultan Al Suwaidi – Chairman	P	R	P	P	P	P	P	P	P
HE Salmeen	P	P	P	P	P	P	P	P	P
Obaid Alameri –
Vice Chairman
Mr. Gil Adotevi	P	R	P	P	P	P	P	P	P
HE Khamis Mo-	P	P	P	P	P	P	P	P	P
hamed Buharoon
Al Shamsi
Mr. Gianluca	P	P	P	P	P	P	P	P	P
Fabbri
Mr. Saifuddin Rupawala	P	P	P	P	P	P (Proxy to HE	P	P	P
						Khalifa)
HE Khalaf Al Hammadi	P	P	P	P (Proxy to HE	P	P	P	P	P (Proxy to HE
				Khalifa)					Khalifa)

P: Present, A: Apologies sent/leave of absence was granted to members not attending the meeting(s), R: Recused from attending due to H.E. Khalifa Al Suwaidi and Mr. Gil Adotevi recused themselves from attending as HE Khalifa is on the Board of Nutrivation and Mr. Gil Adotevi is on the board of Oriongreen.

to report to the Board with respect to all corporate secretarial responsibilities.
Arrange/organize shareholders’ meetings

External Auditors

The Board nominates the Group’s external auditors based on the recommendation of the Audit Committee. The appointment and remuneration of the external auditors are approved by the General Assembly of Shareholders.

At the General Assembly Meeting held on 8th April 2021, the shareholders appointed Deloitte, one of the leading international audit firms, as the external auditors for the year 2021. Deloitte is a multinational professional services firm headquartered in the United Kingdom. It is one of the Big Four audit firms.

Deloitte & Touche (M.E.) had been the only external auditor of the Company for four years, since their appointment at the General Assembly Meeting held on April 26, 2018. Mr. Badr El Hassan is the Deloitte partner assigned as Engagement Partner effective Q2 2021. Audit and non-audit related fees and costs of the services provided by the external auditors during 2021 were AED1,917,500

Deloitte	AED
Total audit fees for 2021	1,501,000
Other Non-Audit services
(Subsidyreview, ElectricityTarif Incentive Program, ICV)	416,500
Total	1,917,500

No other services of the external auditors were utilized during 2021.

There have been no qualified opinions reported by our external auditors on Agthia Group’s interim and annual consolidated financial statements as of 31 December 2021. Please refer to the Independent Auditors’ Report in the Financial Statements for further details.

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Board Committees

The Board has established two Board Committees to assist the Board in discharging its responsibilities. The Committees operate in line with their respective charters approved by the Board. The charters set out their roles, responsibilities, the scope of authority, composition, and procedures for reporting to the Board.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is responsible for the review of the Group’s HR framework and compensation programs. The Committee makes recommendations to the Board on the remuneration, allowances, and terms of service of the Group’s senior executives to ensure they are fairly rewarded for their individual contribution to the Group. All three Committee members are Independent Non-Executive Directors of the Board.

Audit Committee

The Audit Committee, appointed by the Board of Directors, consisted of three members. Three members were Independent NonExecutive Directors

Roles and Responsibilities

The Audit Committee maintains free and open communication between the external auditors, internal auditors, and senior management. The responsibilities of the Audit Committee include:

Monitoring the integrity of the financial statements of the Group and any formal announcements relating to the Group’s financial performance, as well as reviewing significant financial reporting judgments that they contain.
Reviewing the Group’s internal controls, risk management, and compliance with the relevant regulations.
Establishing, monitoring, and reviewing the effectiveness of the Group’s Internal Control department, systems, and processes.
Making recommendations to the Board in relation to the appointment, reappointment, resignation, discharge, and remuneration of the external auditor and ensuring a timely response by the Board on the matters contained in the external auditor’s letter.
Reviewing and monitoring the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements.
Developing and implementing guidelines on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm.
Reporting to the Board on matters that in the Committee’s opinion require action or improvement and providing recommendations on the necessary steps required to achieve such improvement.
Reviewing the whistle-blower system whereby employees can anonymously notify their doubts on potential abnormalities in the financial report or internal controls or any other matter and ensuring proper arrangements for independent and fair investigations of such matters.
Reviewing any related party transactions and reviewing compliance with such rules for the conduct and approval of such transactions.
Determining the appointment, compensation, benefits, performance appraisal, discipline, replacement, reassignment, or dismissal of the Head of Internal Control and Compliance as well as the Internal Control Department.
Oversight over governance, risk, and compliance matters.

The Chairman of the Audit Committee, HE Khamis Mohamed Buharoon Al Shamsi, acknowledges responsibility for discharging the Audit Committee’s mandate across the Group including review of its work mechanism and ensuring its effectiveness in line with the approved charter of the Audit Committee. During 2021, five Audit Committee meetings were held:

Roles and Responsibilities

The key objective of the Nomination and Remuneration Committee is to assist the Board in fulfilling its responsibilities regarding the following:

Organizing and follow-up of the nomination procedure related to the Board of Directors’ election and membership.
Ensuring that Independent Non-Executive Directors remain independent on a continuous basis and at all times.
Reviewing the potential for conflicts of interest and judgment, and that there are appropriate safeguards against such conflicts.
Formulation and annual review of remuneration, benefits, incentives of the CEO and senior executives, and that the remuneration and benefits given to senior management are reasonable and in line with the Group’s performance.
Consideration and putting forward for Board approval proposals on remuneration adjustments, performance bonus, long-term incentives, etc.
Driving the performance-based remuneration culture within the Group through annual performance review of the Group’s senior executives and succession planning.
Determination of the Group’s needs for qualified staff at the level of senior executives and the basis of selection.
Reviewing the remuneration policy and training policy to encourage the development and growth of female employees in the Group.
Reporting to the Board on matters that in the Committee’s opinion require action or and improvement and providing recommendations.
While it is the Committee’s responsibility to exercise independent judgment, it does request advice from management and third-party independent sources as appropriate, to ensure that its decisions are fully informed given the internal and external environment.

The Chairman of the Nomination and Remuneration Committee, HE Salmeen Obaid Alameri, acknowledges responsibility for discharging the Nomination and Remuneration Committee’s mandate across the Group, review of its work mechanism and ensuring its effectiveness in line with the approved charter of the Nomination and Remuneration Committee. During the year, five Nomination and Remuneration Committee meetings were held:

	Present Nomination and Remuneration Committee Member	1- Jan	4- Mar	18-Mar	26-May	21- Sep
	Salmeen Obaid Alameri - Chairman	P	P	P	P	P
	Khalaf Al Hammadi Gil Adotevi	P P	P P	P P	P P	P P

P: Present, A: Apologies sent/leave of absence was granted to members not attending the meeting(s).

Present Audit Committee Members	07-Mar	03-May	03-Aug	01-Nov	22-Nov
Khamis Mohamed Buharoon Al Shamsi – Chairman	P	P	P	P	P
Gianluca Fabbri	P	P	P	P	P
Khalaf Al Hammadi	P	P	P	A	P

Total fee for the year 2021 is AED 0.15 million (2020: AED 0.21 million).

P: Present, A: Apologies sent/leave of absence was granted to members not attending the meeting(s).

Total fee for the year 2021 is AED 0.14 million (2020: AED 0.12 million).

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Conduct and Values Committee

The Conduct and Values Committee is appointed as a sub-committee of the Audit Committee by the Board of Directors to assist the Audit Committee to review arrangements by which staff of the Group may, in confidence, raise concerns about possible improprieties including fraud, and to ensure that a process is in place for the independent investigation of such matters and for appropriate followup action. The Committee is entrusted by the Audit Committee with responsibilities for receiving, reviewing, assessing the credibility of allegations, and investigating allegations. The Committee through its established mechanism has reviewed all such cases or allegations reported in 2021 and reported the conclusion of the proceedings to the Audit Committee.

The Committee members are:

Head of Internal Control and Compliance (Chairman)
Chief – Human Capital & CS Officer;
Vice-President – Legal Affairs; and
Risk & Governance Manager

Delegation of Authority

The Board is and shall remain responsible for the overall governance of the Group and for those matters that are reserved for the Board. The Board through a resolution provided the Chairman, powers, and authorities on behalf of the Board with the right of delegation. The Chairman, under Special Power of Attorney, delegated key authorities to the CEO – Alan Smith, the CFO – Ammar Al Ghoul, and the CHC&CSO – Mubarak Al Mansoori to be exercised jointly by any two of them, which is valid for three years until April 15, 2023. Some of the key authorities delegated by the Board are as follows:

Leadership Team

Alan Smith

Chief Executive Officer

Alan Smith joined Agthia Group in 2020 and as Chief Executive Officer is responsible for the company’s growth and development.

Prior to his appointment as CEO, Alan held various positions at Mondelez International, the most recent being Managing Director – Middle East & Pakistan. Alan brings over 20 years of encompassing FMCG experience across MEA and emerging geographies, challenging convention and delivering strategic initiatives that have been successful in building business, opening new markets and developing organisational & structural capability.

Alan holds an Executive Masters in Marketing from INSEAD and a Bachelor of Engineering (Mechanical) from Manchester University.

To jointly manage the Company and its subsidiaries’ operations;
To represent and jointly manage the Company and its subsidiaries in all transactions and documents before the Government;
To sign jointly all contracts and agreements on behalf of the Company inside and outside of the United Arab Emirates;
To represent the Company jointly in any manufacturing and/or distribution deals;
To represent the Company jointly before the banks for opening and closing accounts, applying for loans and financial facilities, and signing LCs, bank guarantees, and other bank documents.
To incorporate companies and branches in the United Arab Emirates or abroad and sign their articles of association jointly.

In pursuance of the special powers and authorities delegated to the CEO, CFO, and CHC & CSO, they have delegated some of their decision-making and approval authorities to the management as specified in the Authority Matrix approved by Board. The Delegation of Authority framework and policy is established to define the limits of authority designated to specified positions of responsibility within the Group. The Authority Matrix ensures efficient and effective decision making which balances empowerment against controls

Organization Structure

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----- Start of picture text -----

Internal Audit Risk and Governance
Aamarjit Singh
Risk & Governance Director
Head of Internal Audit & Compliance
CBD – GCC Food & Protein &
Al Foah Value Chain
Category & Growth Feed - UAE Frozen Veg
Ahmad Yahya Declan Bennett Ahmad Sallakh Rafael Zanoni Ramy Merdan
EVP – CBD GCC EVP – Food & Feed EVP – Protein VP – AlFoah Chief Operating
& Frozen Veg. Commercial Officer
HC & CS Finance QA & R&D Transformation M&A Legal
Mubarak AlMansoori Ammar AlGhoul Dr. Rabih Kamleh Fabio Cattaneo Mujtaba Hussain Mohammad Amro
CHC & CS Officer Chief Financial Chief Quality and SVP - Transformation SVP - Merger and VP - Legal Affair
Officer R&D Officer & Strategy Acquisition
Leadership Team Members
----- End of picture text -----

Ammar Al-Ghoul

Chief Financial Officer

Ammar Al-Ghoul joined Agthia Group in 2020 and as CFO is responsible for strategically managing and planning the finances of the organisation. Prior to his appointment as CFO, Ammar was the Group CFO of MS Pharma in Jordan, where he contributed to driving both organic and non-organic growth for the company throughout the region. He has held senior management positions across various entities in the GCC, including Al Fozan Holding Company and Deloitte & Touche, and has served on various boards, including that of Al Fozan Holding subsidies as an appointed member. Ammar brings over 23 years of experience in the finance field with expertise in financial reporting and planning, corporate governance, investment management strategy, IPO advisory and auditing. He holds an MBA from London Business School in the UK, a CPA from the state of Colorado and a bachelor’s degree in Accounting from Jordan.

Mubarak Al Mansoori

Chief Human Capital and Corporate Services Officer

Mubarak Al Mansoori joined Agthia Group in 2016 and is currently the Chief Human Capital and Corporate Services Officer.

Prior to joining Agthia, Mubarak was the Vice President of Human Capital & Administration Support at Emirates Steel. Earlier roles include leadership positions at Emirates Advanced Investments Group and Etisalat.

Mubarak brings over 20 years of experience in Human Capital and Corporate Services, including Talent Management, Change Management, Senior Talent Sourcing, Performance Management and Leadership Development. Over the years, he has accumulated outstanding proficiency in HR Strategy, Corporate Communications, Project Management and Business Operational Efficiency.

He holds a Master of Business Administration degree from Zayed University, UAE, and a bachelor’s degree in Business Administration (Human Resources) from Eastern Washington University, USA.

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Leadership Team

Declan Bennett

Executive Vice President – Food and Feed

Ramy Merdan

Chief Operating Officer

Ramy Merdan joined Agthia Group in 2017 as the Senior Vice President – Value Chain and is today, the Chief Operating Officer of the Group.

Merdan brings over 20 years of experience in achieving revenues, profit, and business growth objectives through strategic planning and supply chain. Prior to joining Agthia, Merdan was Managing Director of Gandour Group in KSA and Chief Operating Officer for the same company prior to that.

Merdan’s expertise includes driving company performance across multiple markets and industries, as well as managing P&Ls for business divisions. Merdan holds a Bachelor of Accounting from the University of Alexandria in Egypt.

Declan Bennett joined Agthia Group in 2017 and is the Executive Vice President – Food and Feed of the company.

Bennett brings over two decades of experience in the food and beverages industry developing commercial strategies and operation plans for global Multi-National Companies.

Prior to joining Agthia, Bennett was Managing Director of KraftHeinz Middle East, North Africa, Turkey, Pakistan and Indian Ocean and served as Commercial Director of Kellogg Middle East prior to that.

Bennett’s expertise includes business development, customer insight and market planning, and business operations planning.

Bennett holds a Bachelor of Business Studies from the University of Limerick in Ireland.

Dr. Rabih Kamleh

Chief Quality & R&D Officer

Dr. Rabih Kamleh joined Agthia Group in 2013. An expert in food science/ Technology, and health, he holds over 24 years of experience as an Expert for food establishments in the region and international agencies.

Prior to joining Agthia, Dr. Rabih was an Assistant Professor in Food Science at the American University of Beirut, where he authored and co-authored several papers on food safety and technology, published in peer-reviewed journals.

His field experience includes working as a Center Manager at the Smallholder Livestock Rehabilitation Project – International Fund for Agricultural Development (UN), and as a food science expert for various international agencies such as WHO, ESCWA-UN, OXFAM, EU and Mercy Corps. Dr. Rabih holds a PhD in Biotechnology and Food Processing from Polytechnique de Lorraine, France. He is a Fellow at the International College for Nutrition (Canada) and a long-standing member of the Institute of Food Technologists (IFT), USA.

Ahmad T. Yahya

Executive Vice President – CBD GCC

Ahmad Yahya joined Agthia Group in December 2020 and is currently the Executive Vice President CBD GCC of the Group, responsible for the company’s marketing growth and development.

Prior to his appointment at Agthia, Ahmad was working at Kellogg’s Company in various roles, the most recent one being General Manager, GCC and CGO MENAT. Yahya also worked at Danone KSA as Marketing Director and Pepsi Canada as Marketing Manager. Yahya brings over 25 years of FMCG experience covering Middle East, North Africa and Asia where he has focused on executing brand strategies across multiple markets. Ahmad holds a Masters of Business Administration (MBA) from Lahore University of Management Sciences (LUMS).

Mujtaba Hussain

Senior Vice President –Mergers & Acquisitions

Mujtaba Hussain joined Agthia Group in 2020 as Senior Vice President – Mergers & Acquisitions, to lead a new role that was created to focus solely on identifying, assessing, acquiring and effectively integrating new businesses into the group, that are in line with overall group’s expansion strategy.

Mujtaba carries a wealth of experience and a proven track record of completing successful transactions across a number of sectors and geographies. Prior to joining Agthia, Mujtaba led investments at the Evercare Fund (an initiative of TPG), and prior to that he has worked as a Regional Investment Head (MENA) at Fosun International, and at another large regional private equity firm.

Mujtaba’s expertise lies across origination, execution, portfolio monitoring, turnaround management and exit realization across several industries. Mujtaba holds a Bachelors of Economics from Lahore University of Management Sciences.

Fabio Cattaneo

Senior Vice President – Transformation & Strategy

Fabio Cattaneo joined Agthia Group in 2021 and is Senior Vice President – Transformation & Strategy of the Group, supporting short, medium and long term organic and inorganic growth objectives, enhancing productivity and overall performance.

Prior to his appointment at Agthia, Fabio served as the SVP – Private Equity at Clermont Group in Singapore driving value creation, business transformation and turnaround. Fabio is also a 14 years General Electric veteran where he has held various senior business and finance leadership positions across several industries: Financial Services, Transportation, Energy and Healthcare.

Fabio brings over 22 years of multi-industry and multi-region experience driving initiatives, enhancing growth and profitability and providing business and financial leadership to develop strategy and implement change. He holds a University Degree in Economics and Business Administration from LIUC – Università Cattaneo in Italy.

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LEADERSHIP TEAM

The Leadership Team is composed of senior executives of the Group responsible for the management of the business, and meets on a regular basis. The committee members report to the CEO. The prime role of the Leadership Team is to review business performance, and organizational and operational matters; set strategies/initiatives and monitor their successful execution; and review key business KPIs, progress on key projects etc.

Chief Executive Officer

The Chief Executive Officer (CEO) is appointed by the Board. The CEO is responsible to delivering sustained growth and must direct the Group towards the achievement of its business objectives, as defined by the Board. The primary role of the CEO is to define and execute the business vision, mission, and strategy of the Group and to ensure that all operations are managed efficiently in terms of allocating resources appropriately and profitably.

Alan Smith was appointed as CEO of the Group on July 5, 2020. Prior to his appointment, Alan was the Managing Director – the Middle East and Pakistan for Mondelez International, where he spent more than 19 years across multiple roles, overseeing sales, logistics, and operations for the GCC. He has strong cross-functional experience having led strategic initiatives, business turnarounds, manufacturing build outs and led multi-country operations as a business leader.

INSIDER TRADING MANAGEMENT COMMITTEE

The Insider Trading Management Committee is appointed by the Board as a Management Committee to oversee and follow up on insiders’ trading and their holdings. The Committee is entrusted by the Board with the following responsibilities:

Ensuring that the reputation of the Group is not adversely impacted by perceptions of trading in the Group’s securities at inappropriate times or in an inappropriate manner by employees of the company.
Evaluating where the employee or third party (such as the Group’s auditors, bankers, lawyers, or other professional advisors) may be classified as an insider who has direct or indirect access to “inside information” which may affect the Group’s share price and/ or trading of Group’s shares.
Prepare and maintain a special and comprehensive register of all insiders, including Directors, Executive Management, and persons who could be considered as insiders on a temporary basis.
Developing, reviewing, and continuously improving the Trading in Group Shares Policy including guidelines and procedures, ensuring compliance with the policy, and assessing any indicative non-compliance to the policy.
Annual review of movement in insider shareholdings and report to the Board on compliance with the policy and regulatory requirements, highlighting any exception cases noted.
Effective communication with ADX and SCA regarding blackout days, temporary suspension of trading and insider trading
The above activities were adequately discharged in 2021by the Committee members and no exceptions were noted.

Alan Smith

Chief Executive Officer Date of joining: July 5, 2020 Qualifications:

Bachelor of Engineering in Mechanical Engineering (UK) Executive Master of Business Administration (INSEAD)

Below are the details of all the Senior Executives, illustrating their appointment dates, remuneration, and bonus for 2021.

Position	Appointment	Remuner-	Bonus for 2021	Remuneration
	Date	ation and Allowances paid in 2021 AED’000	(estimate)1 AED’000	accrued in future (estimate)2 AED’000
Chief Executive Oficer Chief Finance Oficer Chief Human Capital & CS Oficer Chief OperatingOficer	July5, 2020 Mar 17, 2020 Dec 4, 2016 Dec 11, 2017	2,414 1,826 2,203 1,654	1,002 435 452 458	To be determined To be determined To be determined To be determined
Executive Vice President -Food & Feed	Apr 9, 2017	1,594	540	To be determined
Executive Vice President - CBD (GCC) Chief Qualityand R & D Oficer	Nov 17, 2020 Jan 3, 2013	1,545 1,571	300 400	To be determined To be determined
Senior Vice President – M&A	Oct 11, 2020	1,298	466	To be determined
Senior Vice President Transformation & Strategy	Mar 02, 2021	1,031	173	To be determined
Senior Vice President – Al Foah	Sep15, 2020	1,700	261	To be determined

1 Estimated 2021bonus amount is subject to board’s approval and shareholders’ approval of the audited financial statements.

2 The total awarded value of Long-Term Incentive Plan (LTI) to be vested in 2021-22 is AED 1.68 million. The LTI benefits for the senior executives are subject to t board’s approval and are linked to long-term business performance achievement over a period of three years.

The Chairman of the Insider Trading Management Committee, Mr. Neeraj Jain - Senior Director Corporate Finance, acknowledges responsibility for the follow-up and supervision system on transactions of the insiders in the Company through discharging the Insider Trading Management Committee’s mandate across the Group, review of its work mechanism and ensuring its effectiveness in line with the approved charter.

The Committee members are:

	the approved charter. The Committee members are:
	Position	Name
	Senior Director, Corporate Finance (Chairman)	NeerajJain
	Vice President, Legal Afairs	Mohammad Amro
	Risk and Governance Manager	Riya Mathew
	Senior HR Director Overseas, C&B and Policy	AbyVarghese

Risk Management

Risk management is integral to Agthia’s strategy and to the achievement of our long-term goals. The Board has established a risk and control structure designed to manage the achievement of strategic business objectives. In doing so, we take an embedded approach that places risk management at the core of the leadership team agenda, which is where we believe it should be.

The Board provides oversight of the Group’s risk management strategy and has the overall responsibility for setting the Group’s risk appetite. Risk appetite guides the Group in determining the nature and extent of risk it would ordinarily accept while executing the business model for creating sustainable shareholder value.

The Group accepts and applies a moderate risk appetite as it seeks balanced management of opportunities for sustained business growth along with focused identification and exploitation of opportunities generated through its business. It is not the Group’s strategy to seek accelerated growth by embracing choices with significant uncertainties.

The Audit Committee oversees compliance with risk management processes and the adequacy of risk management activities related to the Group’s operations.

In addition, the Risk Management Committee reviews the risk appetite and overall risk strategy and makes recommendations to the Board through the Audit Committee and actions required to ensure adequate controls/mitigating actions are in place against key identified risks.

The Group applies a structured and robust Enterprise Risk Management approach whereby the risk management process is implemented in defined steps- Identity, Assess, Prioritize, Mitigate, Monitor and Report.

The Group has established a Risk and Governance Function separate from line management that enables and facilitates the risk management process across the Group. Riya Mathew is the Risk and Governance

Manager for the Group and has the following qualifications: Qualifications:

Member, Institute of Internal Auditors (IIA) Certification in Risk Management Assurance (CRMA) Master of Business Administration Bachelor of Technology

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Internal Control

The Group’s system of internal control aims to ensure that the Board and management can fulfil the Group’s business objectives. An effective internal control framework contributes to safeguarding the shareholders’ investment and the Group’s assets.

The objective of the Group’s internal control framework is to ensure that internal controls are established; those policies and procedures are properly documented, maintained, and adhered to, and are incorporated by the Group within its normal management and governance processes.

In accordance with the requirements set out in Abu Dhabi Accountability Authority (ADAA) Resolution No (1) of 2017. Management performs an ongoing process of identifying, evaluating, and managing the risks faced by the Group and establishes and maintains effective controls for the risks identified including those over financial reporting.

The Group carries out the review of its internal controls over financial reporting on an annual basis with respect to all material financial balances whereby the Management assesses the adequacy of design and operating effectiveness of such internal controls over financial reporting. This management assessment is reviewed by the Group’s independent auditors.

Management has adopted the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), 2013 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements.

Management has assessed the adequacy of design and the operating effectiveness of the Company’s internal controls over financial reporting as of 31 December 2021 Based on the assessment, management has concluded that the internal controls over financial reporting are adequately designed and operating effectively with no material weaknesses being identified.

Violations

During the year 2021, the Group was not subject to any material fines or penalties imposed by SCA or any statutory authority on any matter related to capital markets. Additionally, there have been no cases of material non-compliance with any applicable rules and regulations. No major incidents occurred in 2021.

Corporate Social Responsibility (CSR)

The Group’s approach to Corporate Social Responsibility focuses on the idea of creating shared value for all of its stakeholders through economic, environmental, and social actions. Accordingly, the Group’s CSR program has four pillars: Community, Workplace, Nutrition & Well-being, and Environment & Sustainability. The Group believes that in the heart of the shared value concept rests the ability of a company to create private value and to transform this into public value for society.

The total amount spent in 2021 on CSR initiatives was AED 0.83 million Agthia group joined hands with UAE Food Bank. In the month of giving “Ramadan”, we share our gratitude by donating our products to the underprivileged. Agthia distributes over 500 care packages of its products to families in need across UAE. Agthia partnered with the Emirates Red Crescent, Dubai Charity Association, and Sharjah Charity International. Agthia distributed free water in various large events like ADNOC Marathon, the ITU World Triathlon Abu Dhabi, and the World Cycling championship tour. Aghtia also participated in clean Up UAE with Emirates Environmental Group. Al Foah trained 24 members from the National Service and Reserve Authority during 2021. Group blood donation campaign was arranged in the Emirates dates factory.

The Group is also a stout believer in national talent development. Of over 60 different nationalities in Agthia, UAE nationals constitute the third largest and the top one in senior management. Agthia Group’s Emiratization percentage as of December 31, 2021, is 23.4% (excluding blue-collar contracted workers) in the United Arab Emirates (Emiratisation% for December 2019: 19.2%; Emiratisation% for December 2020: 19.2%).

The Group’s operating policies and procedures are adequate and effective while recognizing that such a system is designed to mitigate rather than eliminate the risk of failure to achieve business objectives and can provide reasonable but not absolute assurance against material misstatement or loss. The Board of Directors acknowledges its responsibility for the Group’s internal control framework. The Board has delegated responsibility for oversight of the Internal Control Department (ICD) to the Audit Committee. The Head of Internal Control and Compliance is appointed by the Audit Committee. The Audit Committee reviews the effectiveness of the ICD function.

The objective of the ICD function is to provide independent assurance and consulting services using a disciplined systematic approach to improve the effectiveness of risk management, internal control, compliance and governance process, and the integrity of the Group’s operations. The function is also responsible for monitoring the compliance of the Group and its employees with the law, regulations, and resolutions, as well as internal policies and procedures. A Charter sets out the purpose, authority, and responsibility of the function. 27 reports prepared by ICD are submitted to the Audit Committee and copied to the senior management of the Group for action. The overall internal controls environment remains robust across the Group. During the course of the year, there were certain process level internal control enhancements that were identified and accepted for implementation towards continuous improvement of internal controls across the Group. On an ongoing basis, the Audit Committee monitors the progress that management has made with respect to remedial actions taken on issues and findings raised by ICD.

On 14 May 2017, Aamarjit Singh was appointed as the Head of Internal Control and Compliance. He is also the Compliance Officer for SCA Resolution 3 of 2020 and has the following qualifications:

Qualifications:

Master of Business Administration, UK

Fellow Member, Association of Chartered Certified Accountants, UK

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Month-end share price (AED)

RELATED PARTY TRANSACTIONS

Note 12 of Financial Statements provides details of related party transactions. There were no related party transactions equal to or more than 5% of equity. below is a summary of related party transactions.

Particulars	As of 31 Dec	Sales	Collection	Expenses	Opening	Others	As of 31
	2020 AED	AED’000	AED’000	AED’000	Balance	AED’000	Dec 2021
	‘000				AED’000		AED ‘000
Due from related parties
Emirates Iron and Steel Company	165	471	(348)				288
General Holding Corporation	71		(282)	211			0
Kouttouf & Hala					14352		14352
Dubai Cable Company	172	140	(174)				138
Share performance 2021

Share performance versus ADI and sector Index 2021(Based on a monthly average)

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Month-end share price	(AED)
Month	Open	High	Low	Close
Jan-21 Feb-21	4.25 5.40	5.59 7.00	4.25 5.32	5.30 6.83
Mar-21	6.83	6.83	6.32	6.47
Apr-21	6.47	6.92	6.30	6.30
May-21	6.29	7.32	6.15	6.84
Jun-21	6.82	7.00	5.88	5.90
Jul-21	5.89	6.32	5.60	6.23
Aug-21	6.23	7.07	5.92	6.70
Sep-21	6.70	6.80	5.77	5.82
Oct-21	5.82	6.28	5.52	5.90
Nov-21	5.90	5.92	5.25	5.62
Dec-21	5.60	5.64	5.10	5.15

Shareholder category (number of shares in thousands)

As of December 31, 2021

Category	Government	Institutional	Individuals	Total	Percentage
UAE	527,578	78,385	117,601	723,565	91.4%
GCC		6,630	79	6,709	0.8%
Arabs		454	2,792	3,246	0.4%
Foreign		53546	4512	58,058	7.3%
Total	527,578	139,015	124,984	791,577	100.0%
Percentage	66.6%	17.6%	15.8%	100.0%

SHAREHOLDERS OWNING 5% OR MORE

As of December 31, 2021

As of December 31, 2021
Shareholders	No. of shares	Percentage
General HoldingCompany	527,578	78,385

DISTRIBUTION OF SHAREHOLDERS ACCORDING TO THE SIZE OF OWNERSHIP

As of December 31, 2021

As of December 31, 2021
Share ownership Less than 50,000	No. of shareholders 67967		No. of shares owned 96,267,231	Percentage 12.1%
From 50,000 to less than		178	25,544,593	3.2%
500,000
From 500,000 to less than		47	58,222,690	7.4%
5,000,000
5,000,000 and more Total		8 67,596	611,542,576 791,577,090	77.3% 100%

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Corporate Governance Report

INVESTOR RELATIONS

The Board is committed to effective communication between the Group and its shareholders. The Group regularly announces its results to SCA, ADX, and shareholders by way of interim management statements, quarterly results, and the annual report and annual financial statements. Significant matters relating to share trading or business development are disclosed to SCA, ADX, and the general public by way of market disclosures and announcements in accordance with the related provisions of applicable laws and regulations, in addition to press releases and postings on the Group’s website. The annual investor relations program of the Group includes:

Quarterly conference calls on financial results with investment community;
Responding to inquiries from shareholders through the Group’s investor relations function;
Meetings between investors, analysts, and senior management;
Regular investor roadshows and conferences organized by the investment community; and
A section dedicated to investors on the Group’s website, which comprises annual reports, quarterly results, corporate governance reports, analyst coverage, investor presentations, share price and dividend information (http://www.Agthia.com/en-us/Investorhome)
Our mobile application ‘Agthia IR’ is available for download on Apple Store or Google Play

Sahar Srour is the Investor Relations Manager for the Group and has the following qualifications:

Qualifications

Chartered Financial Analyst

Bachelor of Business Administration

Shareholders and investors can utilise the following channels to reach Agthia’s investors’ relations team: Phone: +971 2 596 0672

Email: [email protected]

RESOLUTIONS PASSED IN GENERAL ASSEMBLY

Three General Assembly Meetings were held in 2021.

The following resolutions were passed, following which all the resolutions were implemented.

AGM held on 8 April 2021:

Approval for the Board’s Report about the Company’s activities and financial position for the financial year ending on 31/12/2020.
Approval for the Auditor’s Report on the financial year ending on 31/12/2020.
Approval for the Company’s balance sheet and Profit/Loss Accounts for the financial year ending on 31/12/2020.
Approval for the Board’s proposal to distribute cash dividends of 16.5% which is equal to (0.165) Dirham per share for total amount of AED 118.8 Million.
Approval the Board Members remunerations for financial year ending 2020 with the sum of AED 2,330,000.
Discharge the Directors from liability for the financial year ending on December 31, 2020.
Discharge the Auditors from liability for the financial year ending on December 31, 2020.
Approval for the appointment Deloitte as Company’s auditors for the Company and its subsidiaries for the financial year that would end on December 31, 2021 and set their fees at AED 1,491,500.
Approval for the appointment of shareholders’ representatives.

EGM HELD ON 17 MAY 2021 FOR ACQUISITION OF NABIL FOODS IN JORDAN (“TRANSACTION”):

Approval of the Transaction (as described in the shareholders’ letter posted on ADX portal and by the Company on its website dated 28 April 2021, which includes the issuance by the Company of a mandatory convertible bond (capable of assignment to General Holding Company PJSC (SENAAT)).
Approval of the issuance by the Company of a mandatory convertible bond (capable of assignment to General Holding Company PJSC) with a nominal value of AED1 each in an aggregate principal amount of AED393,673,996 (at a conversion price of AED5.50 per each new share in the Company) to Nutrivation Holding Limited as the acquisition price to be paid by the Company to acquire 60% of Oriongreen Limited.
Approval of the following resolutions and the consequential amendments to the Company’s Articles of Association upon completion of the Transaction:
the increase of the issued share capital of the Company from AED720,000,000 to AED791,577,090 subject to the terms and conditions of the Transaction and with effect from the Transaction becoming effective;
the amendment of Article 6.1 of the Company’s Articles of Association to reflect the increase of share capital of the Company;
Approval of amending Article 47 of the Company’s Articles of Association by adding a new sub-article (47.2);
Approval of the Transaction given its value exceeds 5% of the Company’s share capital and it is entered into with a related party to the Company (Nutrivation).
Approval of the authorisation of the Board of Directors of the Company, or the Chairman of the Board of Directors, or the CEO of the Company, or any person so authorised by the Chairman of the Board of Directors, to affect the Transaction.

GENERAL ASSEMBLY MEETING HELD ON 27 SEPTEMBER 2021:

Approval for the distribution of interim dividends of AED 0.0825 per share with a total amount of AED 65.31 million.

SIGNIFICANT EVENTS IN 2021

Building up capable new management:

With the ongoing focus on step changing the capability and profile of the leadership team to strengthen the vibrant agenda of our Board, very bold steps have already been taken to re-set the base for future success. The appointments of a new CEO, CFO, and head of the International Business in the first half of 2020 is further complemented by the appointments and/or promotion of:

Chief Operating Officer, in line with the commitment to drive focus growth and efficiency, both in the UAE and International Markets.
Chief Quality and R & D Officer, to ensure there is correct focus on driving product innovation and quality to support growth agenda for the Group.
SVP Transformation, to ensure driving business initiatives, enhancing growth and profitability

NEW PROJECTS ARE UNDERTAKEN OR UNDER-DEVELOPMENT IN 2021

Acquisition of Nabil Foods in Jordan

Agthia Group on 18th Feb 2021, announced that its Board of Directors met and approved the acquisition of a majority stake in Nabil Foods after receiving certain key regulatory approvals. Nabil Foods is one of the leading regional producers of frozen and chilled processed protein products distributed in more than 20 markets. Nabil Foods has a processing capacity of 43,000 tons per year and 600 individual product lines distributed in more than 20 local and international markets, which will enable Agthia to expand its product offering and immediately access new revenue streams. The acquisition is expected to drive tangible short- and long-term value for all stakeholders, with cost and revenue synergy opportunities and cross-market distribution throughout the region. Acquisition of Atyab in Egypt

Agthia Group on 07th April 2021 announced that its Board of Directors has approved a strategic acquisition of a majority stake in Ismailia Investments (Atyab), a prestigious Egyptian producer of frozen processed chicken and beef products. Ismailia Investments has a portfolio of four brands – Atyab, Meatland, Shiketita and Furat – catering to the value, economy, and premium segments of the Egyptian market. It has a processing capacity of around 70,000 tons per year through its facilities and production lines, including a 60,000 sqm manufacturing facility. The company has achieved strong revenue growth with around 28% CAGR between 2016 and 2020, with healthy EBITDA margins of around 19% as of 2020. In 2020, the company achieved net revenues of AED 424 million with an EBITDA of AED 79 million. It has more than 2,500 employees and 11 distribution centers spread across Egypt.

Morgan Stanley includes Agthia in the prestigious MSCI Index

Effective 27 May 2021 Agthia Group join the MSCI (Morgan Stanley Capital International) Emerging Markets Index, after fulfilling all the listing conditions, which comprises market capital, liquidity rates, and foreign inclusion factors, among others. By being in the index, which enjoys wide interest from international investors, Agthia is expected to increase the attractiveness of its stocks to foreign investors.

Launch of online auction platform eZad

August 2021 Agthia launches eZad, an innovative, convenient, and efficient business-to-business eAuction platform, where buyers from across the globe can buy dates in bulk from sellers in the UAE. eZad makes buying and selling of dates faster, more transparent, and profitable for all stakeholders. The platform is committed to helping farmers grow better dates while enabling wholesale date buyers to grow their business.

Acquisition of BMB in UAE

Agthia Group on 1st Sep 2021 announced that its Board of Directors has approved a strategic acquisition of a 100% stake in BMB Group, the GCC’s leading innovative healthy snacks and food company. BMB manufactures and distributes a wide variety of chocolate, Mediterranean sweets, bakery ingredients, and healthy snacks and food for its own brands and partners. Launched in 2007, BMB has a large portfolio of confectionery and healthy food brands – including Asateer, Al Qamar, Freakin’ Healthy and Benoit – and distributes over 2,000 SKUs in more than 23 countries worldwide, including the UAE, Saudi Arabia, and USA. The acquisition of BMB is expected to drive tangible short- and long-term value for all stakeholders with significant cost and revenue synergy opportunities from the integration of the combined platform, enabling footprint expansion in the confectionery market, healthy snacking market, and crossmarket distribution.

Khalifa Sultan Al Suwaidi | Board Chairman

March 8, 2021

Khamis Mohamed Buharoon Al Shamsi | Audit Committee Chairman March 8, 2021

Salmeen Obaid Alameri | Nomination and Remuneration Committee Chairman March 8, 2021

Aamarjit Singh | Head of Internal Control and Compliance March 8, 2021

72 AGTHIA ANNUAL REPORT 2021

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74 AGTHIA ANNUAL REPORT 2021 AGTHIA ANNUAL REPORT 2021 75

Key Audit Matters

How our audit addressed the key audit matter

Independent Auditor’s Report

To the Shareholders of Agthia Group PJSC

Business Combinations

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Opinion

We have audited the consolidated financial statements of Agthia Group PJSC (the “Company”) and its subsidiaries (together referred to as the “Group”), which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the other ethical requirements that are relevant to our audit of the Group’s consolidated financial statements in the United Arab Emirates, 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.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Refer to note 3, note 4 and note 37 of the consolidated financial statements. During the year, the Group entered into five business We performed procedures over accounting and disclosures of acquisitions for a consideration of AED 2,347,565 thousands. business acquisitions and our work consisted of: Refer to Note 3 to the consolidated financial statements for (i) Evaluating the adequacy of the design and
the accounting policy, Note 4 for the key judgments around implementation of controls over acquisition
the acquisitions, and Note 37 for the business combination disclosure. accounting. (ii) Reviewing the sale and purchase agreements of
The acquisitions were accounted for by determining the fair the acquisitions, management position papers and values of assets and liabilities acquired, including intangible related supporting documents. assets and goodwill and resulted in the recognition of (iii) Assessing the acquisition accounting for
intangible assets of AED 374 million and goodwill of AED 1,370 million. each transaction, and testing the validity and completeness of the consideration; this includes also reviewing the contingent consideration
The Group has undertaken a purchase price allocation calculation to determine that it is in accordance as required by IFRS 3 Business Combinations for each with the purchase and sale agreements and the acquisition. We considered this to be a key audit matter given assumptions made agree to the underlying data, the complex valuation considerations, the use of multiple such as trading performance for the current year, estimates and the use of specialists. and approved budgets for future for the relevant period;

In particular, we focused on:

The allocation of the purchase price;
(iv) Determining that the acquisition date for each business acquisition had been appropriately identified;
The opening statement of financial position, considering fair value adjustments recognized;
The identification of intangible assets; and
(v) Engaging our valuation specialists to support our review of the acquisition accounting, and in particular the valuation of acquired intangible assets identified; This included evaluating the methodology applied to the valuation of the identified intangible assets and assessing whether the assumptions and inputs used in the model reflected the facts and circumstances as at the date of acquisition; challenging the assumptions used against our own independent expectations, which were based on our industry knowledge and experience; and assessing the consistency of forecast data included in the model with the Group’s own forecasts and business plans approved by the Board; and
The useful economic lives used in amortizing intangible assets. Due to the size and complexity of the acquisitions, we considered this to be a key audit matter.
(vi) Assessing the disclosures provided in Note 37 to the consolidated financial statements against the requirements of IFRSs.

76 AGTHIA ANNUAL REPORT 2021

AGTHIA ANNUAL REPORT 2021 77

Key Audit Matters

Carrying Value of Goodwill

How our audit addressed the key audit matter

in this regard.

When we will read the Annual Report 2021, if we conclude that there is a material misstatement therein, we will be required to communicate the matter to those charged with governance and consider whether a reportable irregularity exists in terms of the auditing standards, which must be reported.

Refer to note 3 and note 8 of the consolidated financial statements.

We have familiarized ourselves with the process implemented by the Group to determine the recoverable amounts of goodwill allocated to Cash-Generating Units (CGU). Our work consisted of:

As of 31 December 2021, the carrying value of goodwill amounted to AED 1,646 million, or 25.7% of total assets, as disclosed in Note 8.

(i) Evaluating the design and implementation of controls over the Group’s initial recognition and testing of goodwill for impairment;

In accordance with IAS 36 Impairment of Assets, an entity is required to test goodwill acquired in a business combination for impairment at least annually irrespective of whether there is any indication of impairment.

(ii) assessing the principles and methods used for determining the recoverable amounts of the CGU to which the goodwill is allocated and assessing that the methods used are in accordance with requirement of IAS 36;

Goodwill is monitored by management at the level of cash-generating units (“CGUs”). Management carried out an impairment exercise as at 31 December 2021 in respect of goodwill allocated to each CGU by determining a recoverable amount based on value-in-use derived from a discounted cash flow model, which was based on the most recent formal business plan prepared by the Group’s management and included the effects of the Covid-19 global pandemic.

(iii) reconciling the net carrying amount of the goodwill allocated to the CGU tested with the Group’s accounting records;
(iv) engaging our valuation specialists to review the management’s discounted cash flow models and assess the discount rates and the growth rates applied by benchmarking against independent data;

An impairment is recognized on the consolidated statement of financial position when the recoverable amount is less than the net carrying amount in accordance with IAS 36, as described in Note 3 to the consolidated financial statements. The determination of the recoverable amount is mainly based on discounted future cash flows.

(v) substantiating the key assumptions on which budget estimates underlying the cash flows used in the valuation models are based, including those which have been impacted by the Covid-19 global pandemic. For this purpose, we also compared the estimates of cash flow projections of previous periods with actual corresponding results, to assess the pertinence and reliability of the process for making forecasts;

We considered the impairment of goodwill to be a key audit matter, given the method for determining the recoverable amount and the significance of the account in the Group’s consolidated financial statements. In addition, the recoverable amounts are based on the use of significant assumptions, estimates or assessments made by management, in particular future cash flow projections, the estimate of the discount rates and long-term growth rates.

(vi) substantiating the results of sensitivity analyses carried out by management by comparing them to those realized by us;
(vii) verifying the arithmetical accuracy of the valuations used by the Group.

We have also assessed the disclosures provided in Note 8 to the consolidated financial statements against the requirements of IFRSs.

Other Information

The Board of Directors’ and Management are responsible for the other information. The other information comprises the Directors’ Report, which we obtained prior to the date of this auditor’s report, and the Annual Report 2021, which will be made available to us after the auditor’s report date. The other information does not include the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance or conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards and the applicable provisions of the articles of association of the Company and the UAE Federal Law No. (2) of 2015 (as amended), and for such internal control as management determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’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 Group or to cease operations, or has no realistic alternative but to do so.

Those Charged with Governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 ISAs 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 consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risk, 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 the one resulting from error, as fraud may involve collusion, forgery, intentional omission, 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 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 Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosure are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law and regulations preclude public disclosure about the matter or when, in extremely rare

AGTHIA ANNUAL REPORT 2021

circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Consolidated Statement of Financial Position as at 31 December 2021

Report on other Legal and Regulatory Requirements

As required by the UAE Federal Law No. (2) of 2015 (as amended), we report for the year ended 31 December 2021 that:

we have obtained all the information we considered necessary for the purposes of our audit;
the consolidated financial statements have been prepared and comply, in all material respects, with the applicable provisions of the UAE Federal Law No. (2) of 2015 (as amended);
the Group has maintained proper books of account;
the financial information included in the Directors’ report is consistent with the books of account of the Group;
Note 1 and note 37 to the consolidated financial statements disclose the shares purchased by the Group during the financial year ended 31 December 2021;
Note 1 to the consolidated financial statements of the Group discloses social contributions made during the financial year ended 31 December 2021;
Note 13 to the consolidated financial statements discloses the material related party transactions and balances, and the terms under which they were conducted; and
based on the information that has been made available to us, nothing has come to our attention which causes us to believe that the Company has contravened during the financial year ended 31 December 2021 any of the applicable provisions of the UAE Federal Law No. (2) of 2015 (as amended) or of its Articles of Association which would materially affect its activities or its consolidated financial position as at 31 December 2021.

Further, as required by the Resolution of the Chairman of the Abu Dhabi Accountability Authority No. (1) of 2017 pertaining to Auditing the Financial Statements of Subject Entities, we report that based on the procedures performed and information provided to us, nothing has come to our attention that causes us to believe that the Group has not complied, in all material respects, with any of the provisions of the following laws, regulations and circulars as applicable, which would materially affect its activities or the consolidated financial statements as at 31 December 2021:

law of establishment; and
relevant provisions of the applicable laws, resolutions and circulars organising the Group’s operations.

Deloitte & Touche (M.E.)

Mohammad Khamees Al Tah Registration No. 717 7 March 2022 Abu Dhabi United Arab Emirates

s at 31 December 2021
		2021	2020
	Notes	AED’000	AED’000
ASSETS
Non-current assets
Right-of-use assets Property, plant and equipment	5 6	109,444 1,500,436	73,087 1,049,990
Investment in an associate and a joint venture	7	24,251	-
Goodwill	8	1,646,032	275,933
Intangible assets	9	439,110 –––––––––––	79,510 –––––––––––
Total non-current assets		3,719,273	1,478,520
		–––––––––––	–––––––––––
Current assets
Inventories	10	708,241	346,014
Trade and other receivables	11	813,044	527,769
Government compensation receivable	12	10,283	12,451
Due from related parties	13	14,778	408
Cash and bank balances	14	1,123,257	775,509
		–––––––––––	–––––––––––
Total current assets		2,669,603	1,662,151
		–––––––––––	–––––––––––
Total assets		6,388,876	3,140,671

The accompanying notes form an integral part of these consolidated financial statements.

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AGTHIA ANNUAL REPORT 2021 81

Consolidated statement of financial position as at 31 December 2021 (continued)

		2021	2020
	Notes	AED’000	AED’000
EQUITY AND LIABILITIES
Equity
Share capital	20	791,577	600,000
Share premium	20	652,097	-
Legal reserve	21	227,263	205,659
Translation reserve		(77,742)	(64,254)
Retained earnings		1,166,698	1,157,104
		–––––––––––	–––––––––––
Equity attributable to the owners of the Company Non-controlling interests		2,759,893 198,626	1,898,509 29,662
		–––––––––––	–––––––––––
Total equity		2,958,519	1,928,171
		–––––––––––	–––––––––––
Non-current liabilities
Provision for employees’ end of service benefits	15	123,817	81,225
Bank borrowings	16	1,636,953	237,488
Lease liabilities	17	74,107	53,254
Deferred government grant	18	28,940	-
		–––––––––––	–––––––––––
Total non-current liabilities		1,863,817	371,967
		–––––––––––	–––––––––––
Current liabilities Bank borrowings	16	422,224	298,558
Lease liabilities	17	33,092	18,979
Deferred government grant	18	11,245	-
Trade and other payables	19	976,283	518,101
Due to a related party	13	-	4,895
Contingent considerations	37	123,696	-
		–––––––––––	–––––––––––
Total current liabilities		1,566,540	840,533
		–––––––––––	–––––––––––
Total liabilities		3,430,357	1,212,500
Total equity and liabilities		––––––––––– 6,388,876	––––––––––– 3,140,671

To the best of our knowledge, the consolidated financial statements present fairly in all material respects the financial condition, financial performance and cash flows of the Group as of, and for, the years presented therein.

These consolidated financial statements were approved by the Board of Directors and authorised for issue on 7 March 2022 and signed on its behalf:

Khalifa Sultan Al Suwaidi Chairman

Alan Smith Chief Executive Officer

Ammar Al Ghoul Chief Financial Officer

Consolidated Statement of Profit or Loss for the year ended 31 December 2021

		2021	2020
	Notes	AED’000	AED’000
Revenue	23	3,067,614	2,061,216
Cost of sales	24	(2,110,937)	(1,420,616)
Gross profit		956,677	640,600
Selling and distribution expenses	25	(449,041)	(357,014)
General and administrative expenses	26	(270,997)	(234,140)
Research and development costs	27	(9,598)	(7,447)
Share of loss of a joint venture	7	(2,900)	-
Other income / (expense)	28	28,185	(9,226)
Operating profit		252,326	32,773
Finance income	29	16,731	21,584
Finance expense	30	(20,855)	(17,353)
Profit before tax and zakat		248,202	37,004
Income tax and zakat expense	31	(16,997)	(1,483)
Profit for the year		231,205	35,521
Attributable to:
Owners of the Company		216,039	34,471
Non-controlling interests		15,166	1,050
		231,205	35,521
Basic and diluted earnings per share (AED)	32	0.286	0.057

The accompanying notes form an integral part of these consolidated financial statements.

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AGTHIA ANNUAL REPORT 2021 83

Consolidated Statement of Comprehensive Income for the year ended 31 December 2021

or the year ended 31 December 2021
	2021	2020
	AED’000	AED’000
Profit for the year	231,205	35,521
Other comprehensive loss:
Item that may be subsequently reclassified to profit or loss
Foreign currency translation diference on foreign operations	(13,309)	(6,889)
Item that will not be subsequently reclassified to profit or loss
Re-measurement of employees’ end of service benefits	(882)	(181)
Other comprehensive loss	(14,191)	(7,070)
Total comprehensive income for the year	217,014	28,451

Attributable to:
Owners of the Company	201,815	27,324
Non-controlling interests	15,199	1,127
	217,014	28,451

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Equity for the year ended 31 December 2021

						Attributable
						to the
						owners	Non-
	Share	Share	Legal	Translation	Retained	of the	controlling
	capital	premium	reserve	reserve	earnings	Company	interests	Total
	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000
Balance at 1	600,000	-	202,212	(57,475)	1,216,448	1,961,185	28,535	1,989,720
January 2020
	––––––––––	––––––––––––	––––––––––	–––––––––––––––	–––––––––––––––	–––––––––––––––	–––––––––––	–––––––––––––––
Profit for the year	-	-	-	-	34,471	34,471	1,050	35,521
Other
comprehensive
(loss)/ income:
Foreign currency	-	-	-	(6,779)	-	(6,779)	(110)	(6,889)
translation
diference on
foreign operations
Re-measurement	-	-	-	-	(368)	(368)	187	(181)
of employee’s end
of service benefits
	––––––––––	––––––––––––	––––––––––	–––––––––––––––	–––––––––––––––	–––––––––––––––	–––––––––––––	–––––––––––––––
Total	-	-	-	(6,779)	34,103	27,324	1,127	28,451
comprehensive
(loss)/ income for
the year
Dividend for the	-	-	-	-	(90,000)	(90,000)	-	(90,000)
year 2019 (note 22)
Transfer to legal	-	-	3,447	-	(3,447)	-	-	-
reserve
	––––––––––	–––––––––––––	––––––––––	–––––––––––––––	–––––––––––––––	–––––––––––––––	–––––––––––	–––––––––––––––
Balance at 31	600,000	-	205,659	(64,254)	1,157,104	1,898,509	29,662	1,928,171
December 2020

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AGTHIA ANNUAL REPORT 2021 85

Consolidated Statement of Changes in Equity for the year ended 31 December 2021 (continued)

Consolidated Statement of Cash Flows for the year ended 31 December 2021

						Attributable				Notes	2021	2020
						to the					AED’000	AED’000
						owners	Non-		Cash flows from operating activities
	Share capital	Share premium	Legal reserve	Translation reserve	Retained earnings	of the Company	controlling interests	Total	Profit before tax and zakat expense Adjustments for:		248,202	37,004
	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000	Depreciation of property, plant and equipment	6	151,930	107,999
									Amortisation of right-of-use assets	5	35,531	25,786
Balance at 31 December	600,000	-	205,659	(64,254)	1,157,104	1,898,509	29,662	1,928,171	Amortisation of intangible assets	9	12,672	2,459
2020									Interest income	29	(16,731)	(19,150)
	–––––––––––	–––––––––––	–––––––––––	–––––––––––––––	–––––––––––	–––––––––––––––	––––––––––––	–––––––––––	Interest expense	30	16,416	12,596
Profit for the year	-	-	-	-	216,039	216,039	15,166	231,205	Provision for employees’ end of service benefits Allowance for impairment losses of trade receivables, net	15 11	13,837 12,674	12,633 60,480
									Gain on sale of property, plant and equipment	28	(1,587)	(442)
Other comprehensive (loss)/ income:									Movement in allowance for slow moving inventory, net Interest expense on lease liabilities	10 17	17,992 3,768	8,190 3,138
									Property plant and equipment impairment	6	-	7,970
Foreign currency translation diference on	-	-	-	(13,488)	-	(13,488)	179	(13,309)	Property, plant and equipment write of Share of loss from investment in a joint venture	6 7	- 2,900	201 -
foreign operations
Re-measurement of	-	-	-	-	(736)	(736)	(146)	(882)
employees’ end of service											497,604	258,864
benefits									Movements in working capital:
	––––––––	––––––––	––––––––	––––––––––	–––––––	–––––––––––	–––––––––	––––––––	Inventories		(117,940)	(18,304)
Total comprehensive	-	-	-	(13,488)	215,303	201,815	15,199	217,014	Trade and other receivables		147,582	(8,937)
(loss)/ income for the year									Due from related parties		8,066	707
	––––––––	––––––––	––––––––	––––––––––	–––––––	–––––––––––	–––––––––	––––––––	Government compensation receivable		2,168	15,331
Dividend for the year 2020	-	-	-	-	(184,105)	(184,105)	-	(184,105)	Due to a related party		(4,895)	(4,390)
(note 22)									Deferred government grant		(1,082)	-
	––––––––	––––––––	––––––––	––––––––––	–––––––	–––––––––––	–––––––––	––––––––	Trade and other payables		(16,976)	73,388
Issuance of share capital
and share premium (note 20)	191,577	652,097	-	-	-	843,674	-	843,674	Cash generated from operations		514,527	316,659
	––––––––	––––––––	––––––––	––––––––––	––––––––	–––––––––––	–––––––––	––––––––	Payment of employees’ end of service benefits	15	(16,291)	(12,017)
									Income tax and zakat paid		(390)	(865)
Non-controlling interests	-	-	-	-	-	-	153,765	153,765
arising on business combinations (note 37)									Net cash generated from operating activities		497,846	303,777
	––––––––	––––––––	––––––––	––––––––––	––––––––	–––––––––––	–––––––––	––––––––
Transfer to legal reserve	-	-	21,604	-	(21,604)	-	-	-	Cash flows from investing activities
	––––––––	––––––––	––––––––	––––––––––	–––––––	–––––––––––	–––––––––	––––––––	Acquisition of property, plant and equipment	6	(134,204)	(71,083)
Balance at 31 December	791,577	652,097	227,263	(77,742)	1,166,698	2,759,893	198,626	2,958,519	Investment in fixed deposits, net		(275,015)	(33,452)
2021									Investment in subsidiaries, net of cash acquired	37	(1,252,426)	-
									Interest received		16,989	20,145
									Proceeds from sale of property, plant and equipment		2,360	5,720
he accompanying notes form an integral part of these consolidated			financial statements.						Net cash used in investing activities		(1,642,296)	(78,670)

The accompanying notes form an integral part of these consolidated financial statements.

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Consolidated Statement of Cash Flows for the year ended 31 December 2021 (continued)

Notes 2021 2020 AED’000 AED’000 Cash flows from financing activities Dividend paid 22 (184,105) (90,000) Proceeds from long term borrowings 1,402,493 254,349 Repayments of long term borrowings (11,884) (13,009) Movement in short term borrowings, net 68,667 (205,031) Repayments of principal amount of lease liabilities 17 (39,969) (28,313) Interest paid (13,048) (14,692) Net cash from / (used in) financing activities 1,222,154 (96,696) Increase in cash and cash equivalents 77,704 128,411 Efect of foreign exchange rate changes (5,312) (1,773) Cash and cash equivalents as at 1 January 14 155,471 28,833 Cash and cash equivalents as at 31 December 14 227,863 155,471 Non-cash transaction Acquisition of subsidiaries through issuance of shares 20 843,674 -	Notes 2021 2020 AED’000 AED’000 Cash flows from financing activities Dividend paid 22 (184,105) (90,000) Proceeds from long term borrowings 1,402,493 254,349 Repayments of long term borrowings (11,884) (13,009) Movement in short term borrowings, net 68,667 (205,031) Repayments of principal amount of lease liabilities 17 (39,969) (28,313) Interest paid (13,048) (14,692) Net cash from / (used in) financing activities 1,222,154 (96,696) Increase in cash and cash equivalents 77,704 128,411 Efect of foreign exchange rate changes (5,312) (1,773) Cash and cash equivalents as at 1 January 14 155,471 28,833 Cash and cash equivalents as at 31 December 14 227,863 155,471 Non-cash transaction Acquisition of subsidiaries through issuance of shares 20 843,674 -	Notes 2021 2020 AED’000 AED’000 Cash flows from financing activities Dividend paid 22 (184,105) (90,000) Proceeds from long term borrowings 1,402,493 254,349 Repayments of long term borrowings (11,884) (13,009) Movement in short term borrowings, net 68,667 (205,031) Repayments of principal amount of lease liabilities 17 (39,969) (28,313) Interest paid (13,048) (14,692) Net cash from / (used in) financing activities 1,222,154 (96,696) Increase in cash and cash equivalents 77,704 128,411 Efect of foreign exchange rate changes (5,312) (1,773) Cash and cash equivalents as at 1 January 14 155,471 28,833 Cash and cash equivalents as at 31 December 14 227,863 155,471 Non-cash transaction Acquisition of subsidiaries through issuance of shares 20 843,674 -
		(96,696)
		128,411 (1,773) 28,833
		155,471
		-

Notes to the Consolidated Financial Statements for the year ended 31 December 2021

1. General Information

Agthia Group PJSC (“the Company”) was incorporated as a Public Joint Stock Company pursuant to the Ministerial Resolution No. 324 for 2004 in the Emirate of Abu Dhabi. General Holding Corporation PJSC (SENAAT) owns 62.9% of the Company’s shares. Pursuant to Law No (02) of 2018 and Executive Council Resolution No. (33) of 2020, SENAAT became wholly owned by Abu Dhabi Development Holding Company “Public Joint Stock Company” (ADQ) which is wholly owned by the Government of Abu Dhabi.

In response to the spread of the Covid-19 where the Group operates and its resulting disruptions to the social and economic activities in those markets, the Group management has proactively assessed its impacts on its operations and has taken a series of preventive measures, including the creation of a contingency plan, to ensure the health and safety of its employees, customers, consumers and wider community as well as to ensure the continuity of supply of its products throughout its markets . The Group business operations currently remain largely unaffected as the food and beverage industry in general is exempted from various bans and constraints imposed by various regulatory authorities. Based on these factors, the Group management believes that the Covid-19 pandemic has had no material effects on the Group reported consolidated financial results for the year ended 31 December 2021. The Group management continues to monitor the situation closely.

The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are to establish, invest, trade and operate companies and businesses that are involved in the food and beverage sector.

The registered office of the Company is at Al Reem Island, Sky Towers, 17[th] Floor, P.O. Box 37725, Abu Dhabi, United Arab Emirates.

The Group made social contributions amounting to AED 825 thousand during the year ended 31 December 2021 (2020: AED 768 thousand).

The principal activities, country of incorporation and operation, and ownership interest of the Company in its sizable subsidiaries are set out below:

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----- Start of picture text -----

Place of Legal Beneficial
incorporation ownership ownership
Name of the subsidiary
and operation interest % interest (%) Principal activities
2021 2020 2021 2020
----- End of picture text -----

Grand Mills Company	UAE	100	100	100	100	Production and sale of flour
PJSC (Agri business						and animal feed.
division)
Al Ain Food and	UAE	100	100	100	100	Production and sale of bottled
Beverages PJSC(Al Ain						water, flavored water, juices,
Water)						yogurt, tomato paste, frozen
						vegetables, frozen baked products and trading products.
Agthia Group Egypt LLC	Egypt	100	100	100	100	Processing and sale of
(Agthia Egypt)						tomato paste, chilli paste,
						fruit concentrate and frozen
						vegetables.

The accompanying notes from an integral part of these consolidated financial statements

The accompanying notes form an integral part of these consolidated financial statements.

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

1. General information (continued)

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----- Start of picture text -----

Place of Legal Beneficial
incorporation ownership ownership
Name of the subsidiary and operation interest (%) interest (%) Principal activities
2021 2020 2021 2020
----- End of picture text -----

Al Bayan Purification and Potable	UAE	100	100	100	100	Production, bottling and
Water LLC (Al Bayan)						sale of bottled water.
Delta AlAgthia for Manufacturing	KSA	100	100	100	100	Production, bottling and
CompanyLimited (Delta)						sale of bottled water.
Al Rammah National for General	Kuwait	50	50	50	50	Production, bottling and
Trading and Contracting Company WLL (Al Rammah)						sale of bottled water.
Al Foah Company LLC (Foah) (note	UAE	100	-	100	-	Sourcing, processing and
37)						trading of dates related
						products
Al Faysal Bakery and Sweets	Kuwait	100	-	100	-	Manufacturing and trading
CompanyWLL (Al Faysal) (note 37) Al Nabil Food Industries LLC (Al Nabil) (note 37)	Jordan	80	-	80	-	in bakeryand foodstuf Manufacturing and trading in processed protein food
						products
Ismailia Agricultural and Industrial Investment (Furat) (Atyab) (note 37)	Egypt	75.02	-	75.02	-	Manufacturing and trading in processed protein food
						products
Mediterranean Confectionery	KSA	100%	-	80%	-	Trading of foodstuf and
CompanyLimited (BMB) (note 37) *						bakery products.
Baklawa Made Better Investments LLC (BMB) (note 37) *	UAE	100%	-	80%	-	Manufacturing and trading of sweets and snacking items.

* Represents the Group beneficial ownership after excluding the economic interest of the management party (note 37). Agthia Group legally owns 100% of these companies issued share capital.

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

2. Application of new and revised International Financial Reporting Standards (IFRS)

2.1 New and revised IFRSs applied with no material effect on the consolidated financial statements

During the year, the Group has applied the following amendments to IFRSs issued by the International Accounting Standards Board (“IASB”) that are mandatorily effective for an accounting period that begins on or after 1 January 2021. The application of these amendments to IFRSs has not had any material impact on the amounts reported for the current year but may affect the accounting for the Group’s future transactions or arrangements.

Amendments to Interest Rate Benchmark Reform in IFRS 9 and IFRS 7

In September 2020, the IASB issued Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39 and IFRS 7). These amendments modify specific hedge accounting requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty before the hedged items or hedging instruments affected by the current interest rate benchmarks are amended as a result of the on-going interest rate benchmark reforms.

In the current year, the IASB issued the Phase 2 amendments Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16). Adopting these amendments enables the Group to reflect the effects of transitioning from interbank offered rates (IBOR) to alternative benchmark interest rates (also referred to as ‘risk free rates’ or RFRs) without giving rise to accounting impacts that would not provide useful information to users of the financial statements. The entities can apply the amendments retrospectively with any adjustments recognising in the appropriate components of equity as at 1 January 2021, instead of restating the prior period.

Both the Phase 1 and Phase 2 amendments are not relevant to the Group given that they have not applied hedge accounting to its benchmark interest rate exposures and therefore do not have any impact on the Group’s consolidated financial statements.

Amendments to IFRS 16 Leases relating to Covid-19-Related Rent Concessions

In May 2021, the IASB issued Covid-19-Related Rent Concessions (amendment to IFRS 16) that provides practical relief to lessees in accounting for rent concessions occurring as a direct consequence of COVID-19, by introducing a practical expedient to IFRS 16. This practical expedient was available to rent concessions for which any reduction in lease payments affected payments originally due on or before 30 June 2021.

In March 2021, the Board issued Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) that extends the practical expedient to apply to reduction in lease payments originally due on or before 30 June 2022.

The practical expedient permits a lessee to elect not to assess whether a COVID-19-related rent concession is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the COVID-19-related rent concession applying IFRS 16 as if the change were not a lease modification.

The practical expedient applies only to rent concessions occurring as a direct consequence of COVID-19 and only if all of the following conditions are met:

The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
Any reduction in lease payments affects only payments originally due on or before 30 June 2021 (a rent concession meets this condition if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend beyond 30 June 2021); and
There is no substantive change to other terms and conditions of the lease.

The amendments are not relevant to the Group given that there are no rent concessions that occurred as a direct consequence of COVID-19 and therefore does not have any impact on the Group’s consolidated financial statements.

The accompanying notes form an integral part of these consolidated financial statements.

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

2.2 New and amended IFRSs in issue but not yet effective and not early adopted

The Group has not early adopted the following new and revised IFRSs that have been issued but are not yet effective:

Effective for annual periods beginning on or after

New and revised IFRSs

IFRS 17 Insurance Contracts

1 January 2023

IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 Insurance Contracts. IFRS 17 outlines a general model, which is modified for insurance contracts with direct participation features, described as the variable fee approach. The general model is simplified if certain criteria are met by measuring the liability for remaining coverage using the premium allocation approach.

The general model uses current assumptions to estimate the amount, timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty. It takes into account market interest rates and the impact of policy holders’ options and guarantees.

In June 2020, the IASB issued amendments to IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 was published. The amendments defer the date of initial application of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after 1 January 2023.

At the same time, the Board issued extension of the temporary exemption from applying IFRS 9 (amendments to IFRS 4) that extends the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after 1 January 2023.

IFRS 17 must be applied retrospectively unless impracticable, in which case the modified retrospective approach or the fair value approach is applied.

For the purpose of the transition requirements, the date of initial application is the start of the annual reporting period in which the entity first applies the Standard, and the transition date is the beginning of the period immediately preceding the date of initial application.

Effective date not yet decided

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture.

Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

1 January 2023

The amendments to IAS 1 affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items.

The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

New and revised IFRSs

Amendments to IFRS 3 Business Combinations: Reference to the Conceptual Framework

The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework. They also add to IFRS 3 a requirement that, for obligations within the scope of IAS 37, an acquirer applies IAS 37 to determine whether at the acquisition date a present obligation exists as a result of past events. For a levy that would be within the scope of IFRIC 21 Levies, the acquirer applies IFRIC 21 to determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date. Finally, the amendments add an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

Amendments to IAS 16 Property, Plant and Equipment related to proceeds before intended use

The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced before that asset is available for use, i.e. proceeds while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Consequently, an entity recognises such sales proceeds and related costs in profit or loss. The entity measures the cost of those items in accordance with IAS 2 Inventories.

The amendments also clarify the meaning of ‘testing whether an asset is functioning properly’. IAS 16 now specifies this as assessing whether the technical and physical performance of the asset is such that it is capable of being used in the production or supply of goods or services, for rental to others, or for administrative purposes. If not presented separately in the statement of comprehensive income, the financial statements shall disclose the amounts of proceeds and cost included in profit or loss that relate to items produced that are not an output of the entity’s ordinary activities, and which line item(s) in the statement of comprehensive income include(s) such proceeds and cost. The amendments are applied retrospectively, but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. The entity shall recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of that earliest period presented.

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets related to Onerous Contracts—Cost of Fulfilling a Contract

The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labour or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity first applies the amendments.

Comparatives are not restated. Instead, the entity shall recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of initial application.

Annual Improvements to IFRS Standards 2018-2020 cycle amending IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture

The annual improvements include amendments to four standards: IFRS 1 First-time adoption of international financial reporting standards

The amendment provides additional relief to a subsidiary which becomes a first-time adopter later than its parent in respect of accounting for cumulative translation differences. As a result of the amendment, a subsidiary that uses the exemption in IFRS 1:D16(a) can now also elect to measure cumulative translation differences for all foreign operations at the carrying amount that would be included in the parent’s consolidated financial statements, based on the parent’s date of transition to IFRS Standards, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. A similar election is available to an associate or joint venture that uses the exemption in IFRS 1:D16(a).

Effective for annual periods beginning on or after

1 January 2022

The amendments to IFRS 1, IFRS 9 and IAS 41 are effective from 1 January 2022 and the effective date for amendments to IFRS 16 Leases are not yet decided.

The amendments are applied retrospectively.

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New and revised IFRSs

IFRS 9 Financial Instruments

The amendment clarifies that in applying the ‘10 per cent’ test to assess whether to derecognise a financial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf. The amendment is applied prospectively to modifications and exchanges that occur on or after the date the entity first applies the amendment.

IFRS 16 Leases

The amendment removes the illustration of the reimbursement of leasehold improvements. As the amendment to IFRS 16 only regards an illustrative example, no effective date is stated.

IAS 41 Agriculture

The amendment removes the requirement in IAS 41 for entities to exclude cash flows for taxation when measuring fair value. This aligns the fair value measurement in IAS 41 with the requirements of IFRS 13 Fair Value Measurement to use internally consistent cash flows and discount rates and enables preparers to determine whether to use pre-tax or post-tax cash flows and discount rates for the most appropriate fair value measurement. The amendment is applied prospectively, i.e. for fair value measurements on or after the date an entity initially applies the amendment.

Amendments to IAS 1 Presentation of financial statements and IFRS Practice Statement 2 Making materiality judgements related to disclosure of accounting policies

The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements.

The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.

Effective for annual periods beginning on or after

The amendments to IFRS 1, IFRS 9 and IAS 41 are effective from 1 January 2022 and the effective date for amendments to IFRS 16 Leases are not yet decided.

The amendments to IAS 1 are effective from 1 January 2023 and the amendment to IFRS Practice Statement 2 does not contain an effective date or transition requirements

Effective for annual periods beginning on or after

New and revised IFRSs

Amendments to IAS 12 related to deferred tax related to assets and liabilities arising from a single 1 January 2023 transaction

The amendments introduce a further exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.

Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit. For example, this may arise upon recognition of a lease liability and the corresponding right-of-use asset applying IFRS 16 at the commencement date of a lease.

Following the amendments to IAS 12, an entity is required to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in IAS 12.

The Board also adds an illustrative example to IAS 12 that explains how the amendments are applied.

The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period an entity recognises:

A deferred tax asset (to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised) and a deferred tax liability for all deductible and taxable temporary differences associated with:

Right-of-use assets and lease liabilities

Decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the cost of the related asset

The cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.

Management anticipates that these new standards, interpretations, and amendments will be adopted in the Group’s consolidated financial statements as and when they are applicable and adoption of these new standards and amendments may have no material impact on the consolidated financial statements of the Group in the period of initial application.

The Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.

The amendments to IAS 1 are effective for annual periods beginning on or after 1 January 2023, with earlier application permitted and are applied prospectively. The amendments to IFRS Practice Statement 2 do not contain an effective date or transition requirements.

Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors related to definition of accounting estimates

1 January 2023

The accompanying notes form an integral part of these consolidated financial statements.

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”.

The definition of a change in accounting estimates was deleted. However, the Board retained the concept of changes in accounting estimates in the Standard with the following clarifications:

A change in accounting estimate that results from new information or new developments is not the correction of an error

The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors

The Board added two examples (Examples 4-5) to the Guidance on implementing IAS 8, which accompanies the Standard. The Board has deleted one example (Example 3) as it could cause confusion in light of the amendments.

The amendments are effective for annual periods beginning on or after 1 January 2023 to changes in accounting policies and changes in accounting estimates that occur on or after the beginning of that period, with earlier application permitted.

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

3. Summary of significant accounting policies

Statement of compliance

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and comply with the Articles of Association of the Company, as amended, and wherever applicable, with the UAE Federal Law No. 2 of 2015 (as amended).

Federal Law No. 32 of 2021 on Commercial Companies (the “New Companies Law”) was issued on 20 September 2021 and will come into effect on 2 January 2022, to entirely replace Federal Law No. 2 of 2015 on Commercial Companies, as amended (the “2015 Law”). The Company is in the process of reviewing the new provisions and will apply the requirements thereof no later than one year from the date on which the amendments came into effect.

Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. Gains or losses on disposals of non-controlling interests are also recorded in the consolidated statement of changes in equity.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s executive management. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s executive management to make decisions about resources to be allocated to the segment and assess its performance, and for which financial information is available (note 36).

Basis of preparation

These consolidated financial statements are presented in UAE Dirhams (AED), rounded to the nearest thousands, which is the functional currency of the Group.

These consolidated financial statements have been prepared on the historical cost basis, unless otherwise stated.

Basis of consolidation

These consolidated financial statements incorporate the financial statements of the Company and its subsidiaries.

IFRS 10 governs the basis for consolidation where it establishes a single control model that applies to all entities including special purpose entities or structured entities.

The definition of control under IFRS 10 is that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. To meet the definition of control in IFRS 10, all the following three criteria must be met, including:

(a) the investor has power over an investee;
(b) the investor has exposure to, or rights, to variable returns from its involvement with the investee; and
(c) the investor has the ability to use its power over the investee to affect the amount of the investor’s returns.

Foreign currency

(a) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss within “finance expense”.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated statement of profit or loss within “finance expense”.

(b) Group companies

The results and financial position of all the Group subsidiaries (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the Group’s functional and presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the date of the consolidated statement of financial position;
(ii) income and expenses for each statement of profit or loss are translated at the rate prevailing on the date of the transaction; and

Subsidiaries

Subsidiaries are investees that are controlled by the Group. The Group controls the investee if it meets the control criteria. The Group reassesses whether it has control if, there are changes to one or more of the elements of control. This includes circumstances in which protective rights held become substantive and lead to the Group having power over an investee. The financial statements of subsidiaries are included in these consolidated financial statements from the date that control commences until the date that control ceases.

Non-controlling interests

NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognised in the consolidated statement of profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

The accompanying notes form an integral part of these consolidated financial statements.

Business combination

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed at the date of exchange, together with the fair value of any contingent consideration payable.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the consolidated statement of profit or loss.

(iii) all resulting exchange differences are recognised in the consolidated statement of comprehensive income.

Property, plant and equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition or construction of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated statement of profit or loss during the financial period in which they are incurred.

Freehold land is not depreciated though it is subject to impairment testing. Depreciation on other assets is calculated using the straightline method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Buildings	20-40 years
Plant and equipment	2-20 years
Motor vehicles	4-8 years
Sofware Furniture and fixtures	4-8 years 4-8 years

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The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see note 3 “impairment of non-financial assets”). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘other income’ in the consolidated statement of profit or loss.

Capital work in progress

The Group capitalises all costs relating to the construction of property, plant and equipment as capital work in progress, up to the date of completion and commissioning of the assets.

These costs are then transferred from capital work in progress to the appropriate asset class upon completion and commissioning and are depreciated over their useful economic lives from the date of such completion and commissioning.

Cash and bank balances

In the consolidated statement of cash flows, cash and cash equivalents include cash on hand, cash at banks, and deposits held at call with banks with original maturities of not more than three months adjusted for bank overdrafts and restricted cash.

In the consolidated statement of financial position, cash and bank balances include cash on hand, cash at banks, deposits held at call with banks, and restricted cash.

Bank overdrafts are shown within current bank borrowings.

Share capital and share premium

Ordinary shares are classified as equity. Share premium related to ordinary shares is classified as equity.

The accompanying notes form an integral part of these consolidated financial statements.

Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Calculations are performed based on the expected cash flows of the relevant cash generating units and discounting them at an appropriate discount rate, the determination of which requires the exercise of judgement.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments.

Acquired intangible assets

Intangible assets acquired separately are measured initially at fair value which reflects market expectations of the probability that future economic benefits embodied in the asset will flow to the Group.

Intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level.

The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated statement of profit or loss when the asset is derecognised. Useful lives of intangible assets with definite lives are stated below.

Brand names	20-25 years
Customer relationships	10-12 years
Customer contracts	2 years

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is recognised in the consolidated statement of profit or loss over the period of loan.

Employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Bonus and long-term incentive plans

The Group recognises the liability for bonuses and long-term incentives in the consolidated statement of profit and loss on an accrued basis. The benefits for the management are subject to board’s approval and are linked to business performance.

Defined contribution plan

Monthly pension contributions are made in respect of UAE national employees, who are covered by the Law No. 2 of 2000. The pension fund is administered by the Government of Abu Dhabi, Department of Finance, represented by the Abu Dhabi Retirement Pensions and Benefits Fund. Pension is accounted for in accordance with the local and regulatory requirements for non-UAE GCC national employees.

Impairment of non-financial assets

Assets that have an indefinite useful life – for example, goodwill or intangible assets not ready to use – are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The accompanying notes form an integral part of these consolidated financial statements.

Inventories

Inventories are stated at the lower of cost or net realisable value. Cost is determined using the weighted average method. Cost of inventories includes expenditures incurred in acquiring the inventories, production or conversion cost and other costs incurred in bringing them to their existing location and condition. In case of manufactured inventories cost includes an appropriate share of production overheads based on normal operating capacity. It excludes borrowing costs.

Defined benefit plan

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group currently operates an unfunded scheme for defined benefits in accordance with the applicable provisions of the UAE Federal Labour Law and is based on periods of cumulative service and levels of employees’ final basic salaries. The Group’s net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods discounted to determine its present value. Any unrecognised past service costs are deducted. The discount rate is the yield at the valuation date on US AA-rated corporate bonds, which in the absence of a deep market in corporate bonds within the UAE is the relevant proxy market as determined by the Group.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When benefits of the plan are improved, the portion of the increased benefit related to past service by employees is recognised in the profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the consolidated statement of profit or loss. The Group recognises all actuarial gains and losses arising from defined benefit plans in the consolidated statement of other comprehensive income and all expenses related to defined benefit plans within the consolidated statement of the profit or loss.

Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

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Provisions

Provisions for claims are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required and settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

Finance income and finance expenses

Finance income comprises interest income on call deposits and gains on derivative financial instruments. Interest income is recognised as it accrues, using the effective interest method.

Finance expense comprises interest expenses on borrowings, interest expenses on lease liabilities, and foreign exchange results. All borrowing costs are recognised in the consolidated statement of profit or loss using the effective interest method.

Dividend distribution

Dividend distribution to the Group’s shareholders is recognised as a liability in the Group’s consolidated financial statements in the period in which the dividend is approved by the Group’s shareholders.

Revenue recognition

Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with customers and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.

Sale of goods

The Group’s contracts with customers for the sale of goods generally include one performance obligation. The Group accounts for that revenue at the point in time when control of the asset is transferred to the customer, generally on delivery of the goods.

Some contracts for the sale of goods provide customers with several considerations including a right of return and volume rebates. Rights of return and volume rebates give rise to variable consideration. The variable consideration is estimated at contract inception and constrained until the associated uncertainty is subsequently resolved. The application of the constraint on variable consideration increases the amount of revenue that will be deferred.

Right of return

When a contract provides a customer with a right to return the goods within a specified period, the consideration received from the customer is variable because the contract allows the customer to return the products, if any. The Group uses the expected value method to estimate the goods that will be returned because this method best predicts the amount of variable consideration to which the Group will be entitled. The Group applies the requirements in IFRS 15 on constraining estimates of variable consideration to determine the amount of variable consideration that can be included in the transaction price. If significant, the Group presents a refund liability and an asset for the right to recover products from a customer separately in this consolidated statement of financial position.

Volume rebates

Zakat and foreign income tax

The Group’s operations in the Kingdom of Saudi Arabia is subject to Zakat. Zakat is provided for in accordance with General Authority of Zakat and Tax (“GAZT”) regulations.

Income tax for overseas subsidiaries operating within taxable jurisdiction is provided for in accordance with the relevant income tax regulations of the countries of incorporation. Adjustments arising from final Zakat and Foreign income tax assessments are recorded in the period in which such assessments are made.

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax assets / liabilities

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated statement of financial position and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and unused tax losses can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference and unused tax losses arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the way the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Earnings per share

The Group presents earnings per share data for its shares. Earnings per share is calculated by dividing the profit or loss attributable to shareholders of the Company by the weighted average number of shares outstanding during the year.

The Group provides retrospective volume rebates to selected customers and products as per the terms specified in the contract. Rebates are offset against amounts payable by the customer on subsequent purchases. Retrospective volume rebates give rise to variable consideration. To estimate the variable consideration to which it will be entitled, the Group applied the method to each customer as per the agreed upon rebate scheme that best predicts the amount of variable consideration. The Group then applies the requirements on constraining estimates of variable consideration. Accordingly, the Group recognised contract liabilities for the expected future rebates.

Considerations paid or payable to customers

The Group pays exclusivity fees, display fees, remodeling fees, opening fees, and listing and other fees to certain customers for the provision of various services. The Group assesses whether these services are distinct when compared to the goods sold to the customers. The distinct or non-distinct services are then recognised as selling and distribution expenses or netted against revenue, respectively.

Leases

The Group as lessee

The Group assesses whether contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

fixed lease payments (including in-substance fixed payments), less any lease incentives;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease

The lease liability is presented as a separate line item in the consolidated statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using effective interest method) and by reducing the carrying amount to reflect the lease payments made.

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The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revise discount rate is used).

· a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

The Group did not make any such adjustments during the period presented.

The right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use of asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use of assets are presented as a separate line in the consolidated statement of financial position.

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for an identified impairment loss as described in the ‘Property, plant and equipment’ policy.

The Group as lessor

Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term

assessment and including forward-looking information. Forwardlooking information considered includes the future prospects of the industries in which the Group’s receivables operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant thinktanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Group’s core operations

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;
significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;
existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
an actual or expected significant deterioration in the operating results of the debtor;
significant increases in credit risk on other financial instruments of the same debtor;
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are past due, unless the Group has reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date.

A financial instrument is determined to have low credit risk if:

The financial instrument has a low risk of default;
The debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and

Financial instruments

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss (FVTPL). Transaction costs directly attributable to the acquisition of financial assets classified as at FVTPL are recognised immediately in the consolidated profit or loss.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification and measurement - Financial assets

Financial assets at amortised cost

Financial assets held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (SPPI) are measured at amortised cost. A gain or loss on a debt investment subsequently measured at amortised cost and not part of a hedging relationship is recognised in the consolidated statement of income when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

Financial assets at FVTPL

Financial assets at FVTPL are:

assets with contractual cash flows that are not SPPI; or/and
Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Group considers a financial asset to have low credit risk when the asset has external credit rating of ‘investment grade’ in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has a strong financial position and there is no past due amounts.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

For certain categories of financial assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio as well as observable changes in national or local economic conditions that correlate with default on receivables.

Measurement of ECL

The Group employs statistical models for ECL calculations for its trade and other receivables, government compensation receivables, due from related parties and cash and bank balances. ECLs are a probability-weighted estimate of credit losses. The parameters used in calculation are derived from the Group’s internally developed statistical models and other historical data and adjusted to reflect forward-looking information.

The Group assess impairment loss on its trade and other receivables portfolio using an expected loss measurement basis using the simplified approach.

assets that are held in a business model other than held to collect contractual cash flows or held to collect and sell; or
assets designated at FVTPL using the fair value option.

These assets are measured at fair value, with any gains/losses arising on remeasurement recognised in profit or loss.

Impairment

Loss allowance for financial investments measured at amortised costs are deducted from gross carrying amount of assets.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue costs or effort. This includes both quantitative and qualitative information and analysis, based on Group’s historical experience and informed credit

Derecognition of financial assets

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

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Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Payables and accruals and lease liabilities, classified as ‘financial liabilities’, are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis, except for short term liabilities when the recognition of interest is immaterial.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

Investments in an associates and joint ventures

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5.

Under the equity method, an investment in an associate or a joint venture is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the associate or joint venture is disposed of.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a Group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

The Group applies IFRS 9, including the impairment requirements, to long-term interests in an associate or joint venture to which the equity method is not applied and which form part of the net investment in the investee. Furthermore, in applying IFRS 9 to long-term interests, the Group does not take into account adjustments to their carrying amount required by IAS 28 (i.e. adjustments to the carrying amount of long-term interests arising from the allocation of losses of the investee or assessment of impairment in accordance with IAS 28).

Government compensation and grants

Compensation pertains to funds that compensate the Group for selling flour and animal feed at subsidised prices within the Emirate of Abu Dhabi and are recognised in the consolidated statement of profit or loss, as a deduction from the cost of sales, on a systematic basis in the same period in which the sales transaction is affected.

Grants from Abu Dhabi Government are provided to the Group to finance some of the operational and capital expenditures of the Group and are recognised at their nominal value where there is reasonable assurance that grants will be received. The nominal value is deemed to be the cost to the donor. There are no explicit conditions attached to the government grants received except that these should be utilised by the Group for the purpose these are provided for.

Any surplus of government grants which is not utilised in the year it is received by the Group, is deferred to the subsequent period. This deferred government grant is included in current liabilities. Any excess expenditure over government grants received is recorded as balance receivable from government in the consolidated statement of financial position.

Grants related to assets

Non-monetary government grants related to assets are recognised at the carrying amount of the assets and presented as deferred government grant in the consolidated statement of financial position. The grant is amortised over the life of the depreciable assets and is offset with the relevant depreciation expense of the assets.

Grants related to operations

Other government grants, which relate to operational expenditures, are recognised in consolidated statement of profit or loss over the periods necessary to match them with the costs that they are intended to compensate, on a systematic basis. Grants related to income are shown net of the related expenses when reporting these in profit or loss.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture. When the Group retains an interest in the former associate or a joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IFRS 9. The difference between the carrying amount of the associate or a joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or a joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

Discounting of lease payments

The lease payments are discounted using the Group’s incremental borrowing rate (“IBR”) except for few contracts with respect to the land and buildings, where implicit rate in lease is used. Management has applied judgments and estimates to determine the IBR at the commencement of lease.

Further information about accounting estimates, judgements and significant assumptions made in measuring fair values are disclosed in within these consolidated financial statements.

4. Accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the process of applying the Group’s accounting policies (see note 3); management has made the following judgements and estimates which have a significant effect on the amounts of the Group assets and liabilities recognised in these consolidated financial statements.

Provision for expected credit losses of trade receivables

The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for groupings of various customer channels that have similar loss patterns (i.e. customer type and rating, and coverage by letters of guarantees).

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the market, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The information about the ECLs on the Group’s trade receivables is within these consolidated financial statements (see note 3 and note 35 “Financial Instruments”)

Useful lives of property, plant and equipment

Management assigns useful lives and residual values to items of property, plant and equipment based on the intended use of the assets and the expected economic lives of those assets. Subsequent changes in circumstances such as technological advances or prospective utilisation of the assets concerned could result in the actual useful lives or residual values differing from the initial estimates.

Determination of acquisition date in a business combination

One of the critical steps in a business combination is to identify the acquisition date. As per IFRS 3 “Business Combinations”, the acquisition date is defined as the date on which the acquirer obtains control of the acquiree. The acquisition date is critical because it determines when the acquirer recognizes and measures the consideration transferred, the assets acquired, and liabilities assumed. The acquiree’s results are consolidated from this date. In a business combination affected by a sale and purchase agreement, the acquisition date is generally the specified closing or completion date. It is often readily apparent from the structure of the business combination and the terms of the sale and purchase agreement (if applicable) but this is not always the case.

IFRS 3 explains that the date on which the acquirer obtains control of the acquiree is generally the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree - the closing date. However, the acquirer should consider all pertinent facts and circumstances in identifying the acquisition date, including the possibility that control is achieved on a date that is either earlier or later than the closing date.

During 2021, the Group entered into several new business combination transactions (note 37). Management has considered all legal aspects of the sale and purchase agreements and the pertinent facts and circumstances around each transaction in order to determine the acquisition dates of these transactions in accordance to IFRS 3.

For convenience, management has consolidated the acquirees as of the beginning of the month in which the acquisition date was determined and assessed that this assumption had no material impact on the consolidated financial statements.

Fair value measurement of contingent considerations

Contingent considerations from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent liabilities meets the definition of a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on detailed assessment of performance targets. The key assumptions take into consideration the probability of meeting each performance target and the discount factor.

As part of the accounting for the acquisitions of Al Faysal Bakery and Sweets Company WLL, Baklawa Made Better Investments and Mediterranean Confectionery Company Limited, contingent considerations with an estimated fair value of AED 123,696 thousand were recognised at the acquisition date and remeasured as at the reporting date (refer note 37). Future developments may require further revisions to the estimate.

Impairment of non-current assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Group. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained within these consolidated financial statements (notes 8 and 9).

Provision for obsolescence on inventories

Management reviews the movement in ageing and movements of its inventory items to assess loss on account of obsolescence on a regular basis. In determining whether provision for obsolescence should be recorded in the consolidated statement of profit or loss, management makes judgements as to whether there is any observable data indicating that future salability of the product and the net realisable value for such product and expired or close to expiry raw material and finished goods.

Determining the lease term

In determining the lease term, management considers all facts and circumstances that create an economic incentive whether to exercise an extension or a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated).

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

5. Right-of-use assets

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Land and Plant and Motor
buildings equipment vehicles Total
AED’000 AED’000 AED’000 AED’000
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Cost At 1 January 2020 Additions Terminations Reclassifications Exchange diferences At 31 December 2020 Additions Acquired through business combina- tions (note 37) Terminations Exchange diferences At 31 December 2021 Accumulated amortisation At 1 January 2020 Charge for the year Terminations Exchange diferences At 31 December 2020 Charge for the year Terminations Exchange diferences At 31 December 2021 Carrying amount At 31 December 2021 At 31 December 2020	44,392 6,101 (3,580) (2,784) (26) 44,103 7,838 35,801 (4,120) 23 83,645 7,437 9,576 (38) 8 16,983 16,200 (1,282) 199 32,100 51,545 27,120	- - - - - - - 11,269 - - 11,269 - - - - - 673 - 61 734 10,535 -	50,868 21,053 (304) 2,784 (2) 74,399 15,803 4,320 - (4) 94,518 12,285 16,210 (70) 7 28,432 18,658 - 64 47,154 47,364 45,967	95,260 27,154 (3,884) - (28) 118,502 23,641 51,390 (4,120) 19 189,432 19,722 25,786 (108) 15 45,415 35,531 (1,282) 324 79,988 109,444 73,087

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

6. Property, plant and equipment

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Land and Plant and Furniture and Motor Capital work
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Cost At 1 January 2020 Additions Transfers Disposals Reclassifications Written of Exchange diferences At 31 December 2020 Additions Acquired through business combinations (note 37) Disposals Transfers Exchange diferences At 31 December 2021	buildings equipment AED’000 AED’000 783,536 1,179,897 259 22,633 8,425 36,616 (2,781) (38,392) - 266 - - (2,002) (3,404) 787,437 1,197,616 3,211 39,196 246,391 158,758 (3,560) (29,733) 5,374 24,405 (3,521) (6,578) 1,035,332 1,383,664	fixtures AED’000 50,672 666 15,570 (596) (266) (201) (113) 65,732 3,340 11,670 (58) 1,371 (253) 81,802	vehicles in progress AED’000 AED’000 69,448 48,414 1,196 49,178 4,128 (64,739) (2,799) (1,125) - - - - (82) (94) 71,891 31,634 6,201 82,256 8,503 50,015 (6,381) (45) 1,211 (32,361) (111) 342 81,314 131,841	Total AED’000 2,131,967 73,932 - (45,693) - (201) (5,695) 2,154,310 134,204 475,337 (39,777) - (10,121) 2,713,953

The amortization charge for the year is mainly allocated to the cost of sales and selling and distribution expenses amounting to AED 9.2 million (2020: AED 4 million) and AED 26 million (2020: AED 21.5 million) respectively.

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

6. Property, plant and equipment (continued)

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Land and Plant and Furniture and Motor Capital work
buildings equipment fixtures vehicles in progress Total
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
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Accumulated depreciation and impairment At 1 January 2020 Charge for the year Disposals Reclassifications Impairment loss Exchange diferences At 31 December 2020 Charge for the year Disposals Exchange diferences At 31 December 2021 Carrying amount At 31 December 2021 At 31 December 2020	279,849 20,266 (2,781) - - (152) 297,182 46,089 (3,431) (433) 339,407 695,925 490,255	662,492 76,621 (34,239) (5,826) 7,970 (1,227) 705,791 90,034 (29,194) (2,969) 763,662 620,002 491,825	34,560 4,598 (596) 5,826 - (80) 44,308 8,113 (58) (194) 52,169 29,633 21,424	53,396 6,514 (2,799) - - (72) 57,039 7,694 (6,321) (133) 58,279 23,035 14,852	- - - - - - - - - - - 131,841 31,634	1,030,297 107,999 (40,415) - 7,970 (1,531) 1,104,320 151,930 (39,004) (3,729) 1,213,517 1,500,436 1,049,990

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

6. Property, plant and equipment (continued)

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2021 2020
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Acquisition of property, plant and equipment Decrease in advances for property, plant and equipment Acquisition of property, plant and equipment in the consolidated statement of cash flows	AED’000 134,204 - 134,204	AED’000 73,932 (2,849) 71,083

Property, plant and equipment depreciation expenses during the year is charged to the consolidated statement of profit or loss as set out below:

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2021 2020
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Cost of sales (note 24) Selling and distribution expenses (note 25) General and administrative expenses (note 26) Research and development costs (note 27)	AED’000 129,284 10,964 11,493 189 151,930	AED’000 92,319 9,297 6,155 228 107,999

Capital work in progress represents the buildings, plant and equipment under construction across the Group companies.

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

7. Investment in an associate and a joint venture

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2021
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Opening balance Investment in a joint venture Investment in an associate Closing balance	AED’000 - 5,167 19,084 24,251

Summary of the latest available financial information on investment in a joint venture is set out below:

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2021
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Total assets Total liabilities Net assets Loss for the year Share of loss of a joint venture	AED’000 22,243 (16,443) 5,800 (5,800) (2,900)

Investment in an associate

Investment in a joint venture

Investment in joint venture represents 50% ownership interest in Palmera for Dates Cultivation and Trading LLC (incorporated in Jordan) acquired in 2021 through the acquisition of Al Foah Company LLC (note 37). The joint venture is accounted for using the equity method in these consolidated financial statements.

The principal activity of the joint venture is agricultural land reclamation, cultivation and production of all types of agricultural products, packing and wrapping vegetables and fruits, agricultural crops development, owning and setting up date farms and trading in their products.

Movement in investment in joint venture during the year is set out below:

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2021
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Opening balance Acquired through a business combination Share of loss of a joint venture Closing balance	AED’000 - 8,067 (2,900) 5,167

Investment in an associate represents 31% ownership interest in Kottouf & Hala Trading Co. a limited liability company registered in the Kingdom of Saudi Arabia. The Group acquired the associate in 2021 through the acquisition of BMB Group (note 37). The associate is accounted for using the equity method in these consolidated financial statements. The principal activity of the associate is trading in foodstuff and snacking products.

Movement in provisional investment in an associate during the year is set out below:

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2021
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	AED’000
Acquired through business combination (Provi- sional) (note 37)	19,084

Summary of the latest available financial information on investment in an associate is set out below:

	2021
Total assets Total liabilities Net assets Profit for the year	AED’000 76,147 (29,691) 46,456 26,704

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

8. Goodwill

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2021 2020
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Opening balance Acquired through business combinations (note 37) Closing balance	AED’000 275,933 1,370,099 1,646,032	AED’000 275,933 - 275,933

For the purpose of impairment testing, goodwill is allocated to the Group’s Cash Generating Units (“CGUs”) where the goodwill is monitored for internal management purposes. The aggregate carrying amount of goodwill allocated to each unit is as set out below:

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2021 2020
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Country Agri business division UAE Consumer business division (Al Ain Water) UAE Consumer business division (Agthia Turkey) Turkey Consumer business division (Al Bayan) UAE Consumer business division (Delta) KSA Consumer business division (Foah) UAE Consumer business division (Al Faysal) Kuwait Consumer business division (Al Nabil) Jordan Consumer business division (Atyab) Egypt Consumer business division (BMB) (Provisional) UAE	AED’000 61,855 31,131 2,486 92,864 87,597 102,465 97,160 264,092 425,401 480,981 1,646,032	AED’000 61,855 31,131 2,486 92,864 87,597 - - - - - 275,933

The recoverable amounts of Agri Business Division and Consumer Business Divisions CGUs were based on their values in use determined by management. The carrying amounts of these units were determined to be lower than their recoverable amounts.

Values in use were determined by discounting the future cash flows generated from the continuing use of the units. Cash flows were projected based on past experience and the five-year business plan approved by the management. CGUs related to the Group’s recent acquisitions of Consumer business division (Atyab) and Consumer business division (BMB) (Provisional) assumed to be similar to their carrying amounts stated as at 31 December 2021 due to their recent acquisitions and valuations.

Key assumptions used for the Group’s CGUs impairment testing are set out below:

Anticipated annual revenue growth (%)

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2021 2020
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Agri business division	1% - 2.1%	1%
Consumer business division (Al Ain Water)	2.7% - 3.8%	0.3% - 3.4%
Consumer business division (Agthia Turkey)	5% - 6%	2% - 14%
Consumer business division (Al Bayan)	1.5% - 9.5%	6% - 7.4%
Consumer business division (Delta)	4% - 6%	4% - 5%
Consumer business division (Foah)	3.8% - 5%	-
Consumer business division (Al Faysal)	0% – 3.3%	-
Consumer business division (Al Nabil)	12.2% - 18.6%	-

Discount rate (%)

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2021 2020
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Agri business division	9.1%	9.1%
Consumer business division (Al Ain Water)	8.4%	8.2%
Consumer business division (Agthia Turkey)	13%	11.5%
Consumer business division (Al Bayan)	8.4%	8.2%
Consumer business division (Delta)	8.5%	7.5%
Consumer business division (Foah)	9.6%	-
Consumer business division (Al Faysal)	8.1%	-
Consumer business division (Al Nabil)	9.6%	-

The values assigned to the key assumptions represent the management’s assessment of future trends in the food and beverage industry and are based on both external and internal sources.

Sensitivity analysis

The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for each of the group of CGUs to which goodwill is allocated. Management anticipates that no reasonably possible change in any of the key assumptions above would cause the carrying value of any of the CGU including goodwill to materially exceed its recoverable amount.

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114

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

9. Intangible assets

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Customer
relationships Spring water
Brand names Licenses /contracts rights Others Total
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At 1 January 2020 Amortisation Exchange diferences At 31 December 2020 Acquired through business combinations (note 37) Amortisation Exchange diferences At 31 December 2021	AED’000 52,135 (2,442) (89) 49,604 282,011 (8,530) 149 323,234		AED’000 26,521 - - 26,521 24,563 - - 51,084	AED’000 - - - - 58,068 (4,130) - 53,938	AED’000 3,934 - (796) 3,138 - - (1,431) 1,707	AED’000 318 (17) (54) 247 9,000 (12) (88) 9,147	AED’000 82,908 (2,459) (939) 79,510 373,642 (12,672) (1,370) 439,110

Anticipated annual revenue growth (%)

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2021 2020
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Spring water rights 5% - 6% License (Al Rammah) 4% - 14% License (Al Faysal) 0% – 3.3% Discount rates (%) 2021 Spring water rights 13% License (Al Rammah) 9.3% License (Al Faysal) 8.1%	2% - 14% 7% - 17% - 2020 11.5% 8.1% -

The values assigned to the key assumptions represent management’s assessment of future trends in the food and beverage industry and are based on both external and internal sources.

Spring water rights is considered to have an indefinite life as per agreement terms, while licenses have been acquired with the option to renew at the end of the period at little or no cost allowing the Group to determine that these licenses have indefinite useful life. The Group is not aware of any material legal, regulatory, contractual, competitive, economic or other factor which could limit its useful life. Accordingly, spring water rights and licenses are not amortised.

For the purpose of impairment testing, values in use were determined by discounting the future cash flows generated from the continuing use of these units. Cash flows were projected based on experience to build a five-year business plan for spring water rights and license using the following key assumptions:

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

10. Inventories

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2021 2020
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Raw and packing materials Work in progress Finished goods Spare parts and consumable materials Goods in transit Provision for slow moving inventory	AED’000 468,118 25,793 152,138 97,753 5,960 749,762 (41,521) 708,241	AED’000 201,427 3,412 94,597 74,307 4,359 378,102 (32,088) 346,014

Movement in the provision for slow moving inventory during the year is set out below:

Opening balance Acquired through business combinations (note 37) Charge for the year Written of Closing balance	2021 AED’000 32,088 11,354 17,992 (19,913) 41,521	2020 AED’000 23,898 - 23,091 (14,901)
		32,088

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

11. Trade and other receivables

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2021 2020
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AED’000
Trade receivables
826,183
Allowance for impairment losses
(141,850)
684,333
Other receivables
56,561
Prepayments and advances
72,150
813,044
Movement in the allowance for impairment losses of trade receivables during the year is set out below:
2021
AED’000
Opening balance
116,345
Acquired through business combinations
27,776
Charge for the year
12,674
Written of
(14,945)
Closing balance
141,850

AED’000
550,638
(116,345)
434,293
61,349
32,127
527,769
2020
AED’000
55,865
-
62,066
(1,586)
116,345

The following table details the risk profile of trade receivables based on the Group’s provision matrix. As the Group’s historical credit loss experience does not show significantly different loss pattern for different customer channels, the provision for loss allowance based on past due status is not further distinguished between the Group’s different customer base.

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Ageing analysis of gross receivables and ECL is set out below:

As at 31 December 2021:

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Gross
receivables ECL ECL provision
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AED’000 % Not due 440,687 6.6% 0 – 90 Days 108,961 11.2% 91 – 180 Days 17,163 33.4% 181 – 270 Days 14,694 17.3% 271 – 360 Days 32,261 31.4% 361 Days and above 212,417 38.8% 826,183 17.2%	AED’000 28,880 12,213 5,735 2,537 10,116 82,369 141,850

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As at 31 December 2020:
Gross
receivables ECL ECL provision
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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

12. Government compensation receivable

Government compensation receivables pertains to subsidy funds that compensate the Group for selling flour and animal feed in the Emirate of Abu Dhabi.

The movement in the government compensation receivable during the year is set out below:

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2021 2020
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AED’000 Opening balance 12,451 Compensation claimed during the year 150,708 Compensation received (152,876) Closing balance 10,283	AED’000 27,782 120,440 (135,771) 12,451

AED’000 % Not due 191,068 5.4% 0 – 90 Days 85,805 9.2% 91 – 180 Days 24,802 15.3% 181 – 270 Days 38,779 12.8% 271 – 360 Days 21,080 25.5% 361 Days and above 189,104 44.5% 550,638 21.1%	AED’000 10,270 7,888 3,788 4,981 5,369 84,049 116,345

The Group recognises lifetime expected credit losses (ECL) for trade receivables using the simplified approach. To determine the expected credit losses all debtors were classified into five categories and ECL rate for each category was determined using a provision matrix:

Category I – Government
Category II – Municipalities
Category III – Reprocessing / food service
· Category IV – Retail / distributors
Category V – Others

These were adjusted for factors that are specific to the debtors and general economic conditions and an assessment of both the current as well as the forecast direction of the conditions at the reporting date, including time value of money, where appropriate.

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

13. Balances and transactions with related parties

The Group, in the ordinary course of busines, entered into a variety of transactions at agreed terms and conditions, with companies, entities or individuals that fall within the definition of a related party as defined in IAS 24 Related Party Disclosures.

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

d) Transactions with related parties

Transactions with related parties during the year were as follows:

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2021 2020
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	AED’000	AED’000
Sales	611	27,371
Purchases	-	5,694
Expenses recharged	211	(15)

Related parties comprise major shareholders, key management personnel, Board of Directors and their related companies.

a) Key management personnel compensation

Key management personnel compensation for the year is set out below:

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2021 2020
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Short term benefits Long term benefits	AED’000 21,575 3,983 25,558	AED’000 20,244 4,083 24,327

b) Amounts due to a related party

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2021 2020
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		AED’000	AED’000
Al Foah Company LLC –	2021: Subsidiary (2020: afiliated company)- refer to note
37
		-	4,895

c) Amounts due from related parties

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2021 2020
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Dubai Cable Company (Private) Limited - afiliated company Emirates Iron & Steel Company LLC – afiliated company General Holding Corporation PJSC (SENAAT) – parent company Kottouf & Hala Trading Co. – associate company	AED’000 138 288 - 14,352 14,778	AED’000 172 165 71 - 408

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123

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

14 Cash and bank balances

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2021 2020 2020
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AED’000
Cash on hand
5,168
Current and savings accounts
248,032
Cash and bank balances
253,200
Restricted cash
(24,969)
Bank overdrafs (note 16)
(368)
Cash and cash equivalents in the consolidated
statement of cash flows
227,863
Cash and bank balances
253,200
Fixed deposits
870,057
Cash and bank balances in the consolidated
statement of financial position
1,123,257

AED’000
2,992
177,475
180,467
(24,996)
-
155,471
180,467
595,042
775,509

Fixed deposits are for a period not more than one year and not less than three months (2020: not more than one year and not less than three months). Interest is earned on these deposits at prevailing market rates, the carrying amounts of these assets approximate to their fair value.

Restricted cash represents amounts mainly set aside for payment of dividend distribution from 2009 to 2014. Equivalent amount has been recorded as liability in trade and other payables. Restricted cash balance has not been included in the cash and cash equivalents for the purpose of consolidated statement of cash flows.

Balances with banks are assessed to have low credit risk of default. Accordingly, management estimates the loss allowance on balances with banks at the end of the reporting period to an amount equal to 12 month ECL. None of the balances with banks at the end of the reporting period are past due, and taking into account the historical default experience and the current credit ratings of the bank, management anticipates that there is no impairment, and hence have not recorded any loss allowances on these balances.

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

15 Provision for employees’ end of service benefits

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Amounts recognised in the consolidated statement of financial position Opening balance Service cost (including interest costs) Acquired through business combinations (note 37) Benefit payments Reclassification Exchange diferences Loss on remeasurement Closing balance Amounts recognised in the consolidated statement of profit or loss Current service cost Loss on settlements Interest cost Amounts recognised in consolidated statement of other comprehensive income Efect of changes in demographic assumptions Efect of changes in financial assumptions Efect of experience adjustments	AED’000 81,225 13,837 46,613 (16,291) (2,393) (56) 882 123,817 12,327 - 1,510 13,837 2021 AED’000 1,672 (3,085) 2,295 882	AED’000 80,458 12,633 - (12,017) - (30) 181 81,225 10,223 183 2,227 12,633 2020 AED’000 (872) 5,157 (4,104) 181

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

15. Provision for employees’ end of service benefits (continued)

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

16. Bank borrowings

Contractual terms of the Group’s interest-bearing loans and borrowings is set out below:

Significant actuarial assumptions

Significant actuarial assumptions
Discount rate	3%	2%
Rate of salary increase	3% for all entities	3% for all
Sensitivity analysis Discount rate	except for Kuwait 5% per annum	entities per annum
- 50 basis points	6,131	4,200
+ 50 basis points	5,747	(3,920)
Salary increase rate
- 50 basis points + 50 basis points	5,764 6,111	3,935 (4,182)

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AED’000 Current liabilities: Credit facilities 406,173 Bank overdrafs 368 Term loans 15,683 422,224 Non-current liabilities Term loans 1,636,953	AED’000 286,587 - 11,971 298,558 237,488

The Group expects total benefit payments of AED 16,466 thousand in 2022 (2020: AED 10,637 thousand in 2021).

Terms and repayment schedule

(Amounts in AED’ 000)

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	Notes	Interest	Year of	Face value /	Carrying	Face value	Carrying
		Rate	maturity	limit	amount	/limit	amount
Short term loans /		Margin + Reference rate*	2022	389,534	62,088	197,770	55,936
bank overdrafs
Credit facilities		Margin + Reference rate*	2022	900,189	344,453	867,250	230,651
Term loan 1	(a)	LIBOR + margin*	2026	550,950	550,950	-	-
Term loan 2	(a)	LIBOR+ margin*	2026	550,950	550,950	-	-
Term loan 3	(a)	EIBOR+ margin*	2026	150,000	150,000	-	-
Term loan 4	(a)	LIBOR+ margin*	2026	150,593	150,593	-	-
Term loan 5	(b)	LIBOR+ margin*	2025	9,894	9,894	-	-
Term loan 6	(c)	LIBOR+ margin*	2025	183,670	183,670	183,670	183,670
Term loan 7	(d)	KIBOR + margin*	2026	19,666	19,666	21,729
							21,729
Term loan 8	(e)	SAIBOR + margin*	2025	34,237	34,237	44,060	44,060
Other term loans		EIBOR + margin *	2023 / 2024	3,824	2,676	-	-
				-------------------	--------------------	-------------------	--------------------
Total				2,943,507	2,059,177	1,314,479	536,046
				=========	=========	=========	=========

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126

Reference rates includes LIBOR, SAIBOR, EIBOR, KIBOR, mid corridor and Jordan PLR. Margin on the above loans and facilities varies from 0.4 % - 1.05 % (2020: 0.40 % - 0.95%) for UAE and 0.5 % - 2.85 % (2020: 0.50 % - 2.85%) for overseas..
(a) During the year, the Group availed four long-term loans of AED 1,402,493 thousand for a tenure of five years repayable in 2026. All loans payment term is a bullet repayment of principal amounts at maturity. Loans are secured against corporate guarantee.
(b) Upon the acquisition of Al Nabil Food Industries LLC (note 37), the Group has consolidated a liability of bank loan in Jordanian Dinar and US Dollar equivalent to AED 9,894 thousand as of 31 December 2021. The bank carry an interest rate ranging from 3% to 6.5% and are repayable over a period ranging from 48 to 60 months. Loans are guaranteed by a warehouse’s land and building. The Group has settled the full balance in the subsequent period and currently in the process of replacing the existing pledge with a corporate guarantee to align with the Group’s other borrowing arrangements.
(c) The Group has availed a long-term loan of AED 183,670 thousand in USD original currency for a tenure of five years repayable in 2025. The loan payment term is a bullet repayment at maturity.
(d) In 2020, one of the Group’s subsidiaries, availed a loan of KWD 1,800 thousand (2020: KWD 1,800 thousand) for a tenure of six years repayable in 2026 and secured by bank guarantee of 50% from the Group and the remaining 50% from the JV partner.
(e) In 2020, one of the Group’s subsidiaries, availed a long term facility of SAR 50,000 thousand (2020: SAR 50,000 thousand) for a tenure of five years till 2025 to be repaid one semi-annual instalments. The facility is secured by corporate guarantee of 100% from the Group.

Upon the acquisition of BMB (note 37), the Group has assumed a liability of bank loans equivalent in aggregate to AED 3,097 thousand as of 31 December 2021 covering different facility lines. The bank loans carry an interest rate similar to applicable market rates. Loans are guaranteed by a mix of personal guarantees from previous owners and two promissory notes of AED 12.5 million and AED 10 million respectively and the assignment of receivables and stocks. The Group in the process of settling the full balance in the subsequent period and substitute with a facility lines aligned with the Group’s other borrowing arrangements.

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

17 Lease liabilities

	2021	2020
Opening balance Acquired through business combinations (note 37) Lease liabilities for the year Payments made during the year Interest cost Lease liabilities as at 31 December 2021 is set out below:	AED’000 72,233 50,363 20,803 (39,968) 3,768 107,199	AED’000 74,030 - 23,378 (28,313) 3,138 72,233
	2021	2020
Current Non-current	AED’000 33,092 74,107 107,199	AED’000 18,979 53,254 72,233

The Group does not have a significant liquidity risk regarding its lease liabilities and does not have any significant variable component in lease payments.

Maturity analysis for the Group lease liabilities is set out below:

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Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years	AED’000 33,092 57,014 17,093 107,199	AED’000 18,979 41,846 11,408 72,233

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

18. Deferred government grant

The Government of Abu Dhabi provides an annual budget for capital expenditure in accordance with an approved budget. The capital grants are recorded as deferred government grants in the consolidated statement of financial position and classified as current and non-current liabilities (note 37).

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Current portion Unamortised government grants related to property, plant and Equipment Non-current portion Unamortised government grants related to property, plant and Equipment	AED’000 11,245 28,940 40,185

20. Share capital

Share capital includes issued and fully paid 791,577 thousand shares (31 December 2020: 600,000 thousand shares) at a par value of AED 1 each.

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AED’000 Authorised share capital (Ordinary shares of AED 1 each) 1,200,000 Issued and fully paid share capital 791,577	AED’000 1,200,000 600,000

During the year, the Company issued 191,577 thousand new shares with nominal value of AED 1 each as the acquisition price of Al Foah Company LLC and Al Nabil Food Industries LLC with an aggregate principal amount of AED 450,000 thousand (at a conversion price of AED 3.75 per share) and AED 393,674 thousand (at a conversion price of AED 5.5 per share) respectively (refer note 37), the Company’s issued and fully paid share capital increased from 600,000 thousand shares to 791,577 thousand shares

During the year, the movement in share premium account is set out below:

19. Trade and other payables

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Trade payables Accrued expenses Advances and deposits Unclaimed dividends (2009-2014) Other payables	AED’000 371,378 350,276 49,844 25,651 179,134 976,283	AED’000 150,031 222,231 12,621 25,700 107,518 518,101

31 December 2021	31 December 2021
Opening balance Issuance of share premium for the acquisition of Al Foah Company LLC (note 37) Issuance of share premium for the acquisition of Al Nabil Food Industries LLC (note 37) Closing balance	AED’000 - 330,000 322,097 652,097

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

21. Legal reserve

In accordance with the UAE Federal Law No. 2 of 2015 (as amended) and the Company’s Articles of Association, 10% of the profit for each year attributable to the owners of the Company is transferred to the legal reserve until this reserve equals 50% of the paid-up share capital. The legal reserve is restricted and not available for distribution.

22. Dividend

At the Annual General Meeting held on 8 April 2021, the shareholders approved cash dividends of AED 118,800 thousand for the year ended 31 December 2020 (at the Annual General Meeting held on 16 April 2020, the shareholders’ approved cash dividends of AED 90,000 thousand for the year ended 31 December 2019) which represents 16.5% of the 720,000 thousand issued share capital at the time of dividend declaration (2019: 15% of the 600,000 thousand issued share capital at the time of dividend declaration).

At the General Assembly Meeting was held on 27 September 2021, the shareholders approved cash interim dividends of AED 65,305 thousand for the six-month period ended 30 June 2021 which represents 8.25% of the 791,577 thousand issued share capital at the time of dividend declaration. All dividends were paid were paid during the year in cash.

23. Revenue

Revenues for the year ended 31 December 2021 amounting to AED 3,067,614 thousand (year ended 31 December 2020: 2,061,216 thousand) includes revenues from newly acquired subsidiaries (note 37) amounting to AED 1,072,095 thousand (year ended 31 December 2020: Nil).

25. Selling and distribution expenses

	2021	2020
Salaries and benefits Marketing expenses Transportation Amortisation of right-of-use assets Depreciation of property, plant and equipment Rent expense Maintenance Royalty fees Utilities Training and consulting Others	AED’000 239,452 54,135 53,829 26,043 10,964 8,447 8,072 1,467 5,533 1,962 39,137 449,041	AED’000 202,654 39,490 44,732 21,599 9,297 3,554 6,800 2,536 5,511 1,398 19,443 357,014

24. Cost of sales

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AED’000 Raw materials 1,590,566 Salaries and benefits 213,342 Depreciation of property, plant and equipment 129,284 Utilities 68,395 Maintenance 38,253 Rent expenses 6,973 Amortisation of right-of-use assets 9,244 Transportation 14,434 Insurance 6,567 Others 33,879 2,110,937	AED’000 1,066,171 142,108 92,319 42,192 29,813 4,340 4,007 11,181 4,834 23,651 1,420,616

Cost of raw materials for flour and feed products is stated after the deduction of the Abu Dhabi Government compensation amounting to AED 150,708 thousand (2020: AED 120,440 thousand). The purpose of the compensation is to partially reduce the impact of increased and volatile global grain prices on food retail prices for the consumers in the Emirate of Abu Dhabi (note 12).

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

26. General and administrative expenses

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Salaries and benefits Allowance for impairment loss of trade receivables Maintenance Legal and professional fees Depreciation of property, plant and equipment Rent expense Amortisation of intangible assets Amortisation of right-of-use assets Others	AED’000 155,099 12,674 13,619 35,795 11,493 4,939 12,672 244 24,462 270,997	AED’000 101,503 62,066 13,702 18,483 6,155 4,532 2,459 180 25,060 234,140

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

28. Other income / (expense)

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Income on sale of raw materials / scrap Management fee Income from filling / storage Grant income from receiving centres Gain on sale of property, plant and equipment Impairment of property, plant and equipment Others	AED’000 2,712 8,256 960 8,400 1,587 - 6,270 28,185	AED’000 2,225 540 - - 442 (7,970) (4,463) (9,226)

29. Finance income

27. Research and development costs

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Salaries and benefits Depreciation on property, plant and equipment Others	AED’000 AED’000 8,796 6,301 189 228 613 918 9,598 7,447

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Interest income Others	AED’000 16,731 - 16,731	AED’000 19,150 2,434 21,584

30. Finance expense

	2021	2020
Interest expense on borrowings Interest expense on lease liabilities (note 17) Foreign exchange loss	AED’000 16,416 3,768 671 20,855	AED’000 12,596 3,138 1,619 17,353

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

31. Income tax and zakat expenses

The Group’s operation in Egypt, Turkey, Jordan and Oman are subject to corporate taxation. Provision is made for taxes at rates enacted or substantively enacted at the consolidated statement of financial position date on taxable profits of overseas subsidiaries in accordance with the fiscal regulations of the countries in which they operate.

Further, the Group’s operation in the Kingdom of Saudi Arabia is subject to Zakat. Zakat is provided in accordance with the Regulations of the General Authority of Zakat and Tax (GAZT) in the Kingdom of Saudi Arabia on accrual basis. The provision is charged to the consolidated statement of profit or loss. Differences, if any, resulting from the final assessments are adjusted in the year of their finalisation.

32. Basic and diluted earnings per share

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Profit for the year attributable to the Owners of the Company (AED’000) Weighted average number of ordinary shares in issue throughout the year (‘000) Basic and diluted earnings per share (AED)	216,039 754,964 0.286	34,471 600,000 0.057

Basic and diluted earnings per share are calculated by dividing the Group profit for the year attributable to the owners of the Company by the weighted average number of shares in issue throughout the year.

As of 31 December 2021 and 2020, the Group has not issued any instruments that have an impact on diluted earnings per share when exercised and accordingly diluted earnings per share are the same as basic earnings per share.

The Company issued and fully paid share capital increase from 600,000 thousand shares to 791,577 thousand shares during the year with a nominal value of AED 1 each (note 20).

33. Contingent liabilities and capital commitments

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Bank guarantees Letters of credit Capital commitments	AED’000 39,660 111,513 44,971	AED’000 73,648 129 59,913

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

34. Partly-owned subsidiaries

Financial information of subsidiaries that have material non-controlling interests is set out below:

Proportion of equity interest percentage held by non-controlling interests

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Country of incorporation
and operation 2021 2020
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Al Nabil Food Industries LLC	Jordan	20%	-
(Ismailia Agricultural and Industrial Investment (Furat	Egypt	24.98%	-
Ripplette Corp. and Mediterranean Confectionary Company	UAE
Limited
	/ KSA	20%	-
Al Rammah National for General Trading and Contracting
Company WLL	Kuwait	50%	50%

Accumulated balances of individual non-controlling interests as at the reporting date

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Al Nabil Food Industries LLC Ismailia Agricultural and Industrial Investment (Furat) Ripplette Corp. and Mediterranean Confectionary Company Limited (provi- sional) Al Rammah National for General Trading and Contracting Company WLL	AED’000 69,372 56,487 40,854 31,913 198,626	AED’000 - - - 29,662 29,662

Bank guarantees and letters of credits were issued in the normal course of business. These include deferred payment credit, performance bonds, tender bonds, deferred payment bills, inward bill and margin deposit guarantees.

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Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

34. Partly-owned subsidiaries

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses.

The Group ensures that it has sufficient cash on demand to meet expected operational and capital expenditures in accordance with the Group’s working capital requirements, including servicing financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

Profit for the year allocated to individual non-controlling interests are set out below:

Contractual maturities of the Group’s financial liabilities as at the reporting date are set out below:

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Al Nabil Food Industries LLC Ismailia Agricultural and Industrial Investment (Furat) Al Rammah National for General Trading and Contracting Company WLL	AED’000 5,493 7,455 2,218 15,166	AED’000 - - 1,050 1,050

As at 31 December 2021:

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Carrying Contractual Up to 1-2 2-5 More than
Amounts in AED’000 value cash flows 1 year years years 5 years
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Trade and other payables 976,283 976,283 976,283 Bank borrowings 2,059,177 2,203,401 453,762 Lease liabilities 107,199 119,355 36,058 3,142,659 3,299,039 1,466,103	- - 47,121 1,702,518 41,037 26,150 88,158 1,728,668	- - 16,110 16,110

As at 31 December 2020:

35. Financial instruments

Credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as at the reporting date is set out below:

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Notes AED’000 Trade receivables, net 11 684,333 Other receivables 11 56,561 Due from related parties 13 14,778 Government compensation receivable 12 10,283 Cash at banks 14 1,118,089 1,884,044	AED’000 434,293 61,349 408 12,451 772,517 1,281,018

The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the consolidated statement of financial position are net of allowances for doubtful receivables as calculated using Expected Credit Loss approach based on lifetime expected credit losses using the Group’s management prior experience and the current economic environment adjusted for forward looking factors. The Group has no significant concentration of credit risk, with overall exposure being spread over a large number of customers.

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Carrying Contractual Up to 1-2 2-5 More than
Amounts in AED’000 value cash flows 1 year years years 5 years
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Trade and other payables Due to a related party Bank borrowings Lease liabilities	518,101 4,895 536,046 72,233 1,131,275	518,101 4,895 564,026 80,822 1,167,844	518,101 4,895 310,918 22,066 855,980	- - 17,181 22,933 40,114	- - 231,483 23,472 254,955	- - 4,444 12,351 16,795

Market risk

Foreign currency risk

Currency risk is the risk that the value of the Group financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in currency that’s not the Group’s currency. The Group exposure to foreign currency risk is primarily limited to transactions in Turkish Lira (“TRY”), Kuwaiti Dinar (“KWD”), Egyptian Pounds (“EGP”), Euro (“EUR”), United State Dollars (“USD”), Omani Riyals (“OMR”), Jordanian Dinars (“JOD”) and Saudi Riyals (“SAR”).

Management anticipates that the Group’s exposure to currency risk is limited as the Group’s currency, Jordanian Dinars (“JOD”) and Saudi Riyals (“SAR”) are pegged to USD. The fluctuation in exchange rates against TRY, KWD, EGP, Euro, and OMR are monitored on a continuous basis and the Group uses forward currency contracts to eliminate significant currency exposures if required.

A strengthening or weakening of these currencies by 0.5% against all other currencies would not have a material effect to the measurement of the Group’s financial instruments denominated in foreign currency and would not have a material effect on the Group’s consolidated equity and its consolidated profit and loss.

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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 Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s interest-bearing obligations with floating interest rates.

As at the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments is set out below:

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AED’000 Fixed rate instruments Financial assets 870,057 Variable rate instruments Financial liabilities 2,059,177	AED’000 595,042 536,046

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

36. Segmental analysis

The Group has two reportable segments, as described below. Reportable segments offer different products and services and are managed separately because they require different technology and operational marketing strategies. For each of the strategic business units, the Group’s executive management reviews internal management reports on at least a quarterly basis.

The following summary describes the operations in each of the Group’s reportable segment

Agri Business Division (“ABD”)

Flour and Animal Feed includes manufacturing and distribution of flour and animal feed.

Consumer Business Division (“CBD”)

The fair value of the Group’s financial instruments is not materially different from their carrying amount.

As at 31 December 2021, if interest rates on interest bearing borrowings had been 0.5% higher / lower with all other variables held constant, consolidated profit for the year would have been AED 7,568 thousand (2020: AED 2,285 thousand) lower / higher, mainly as a result of higher / lower interest expense.

Capital management

The Group’s objectives for managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an efficient capital structure to optimise the cost of capital. In maintaining an appropriate capital structure and providing returns for shareholders in 2021, the Group provided returns to shareholders in the form of cash dividends for the year 2020 results, current details of which are included in the consolidated statement of changes in equity.

Water and Food segment includes manufacturing, bottling, and distribution of drinking water, beverages, juices, dairy and trading products.
Protein and Frozen Vegetables segment includes manufacturing, packaging, distribution and trading of tomato and chili paste, fruit concentrate, frozen vegetables and processed protein products.
Snacks segment includes manufacturing, packaging, distribution of dates, sweets, baklawa and bakery products.
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit, as included in the internal management reports data reviewed by the Group’s executive management. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Fair value hierarchy

The Group measures financial instruments such as contingent considerations at fair value at each consolidated statement of financial position date and classified as level 3.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability

The fair value hierarchy levels have been defined as follows:

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

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as priced) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

During the year, there were no transfers between fair value levels.

The Group’s management considers that the fair values of its financial assets and financial liabilities that are not measured at fair value approximates to their carrying amounts as stated in the consolidated statement of financial position.

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2020
AED’000 2,143,479 (82,263) 2,061,216 651,251 122,351 62,066
AED’000 2,033,078 690,044 66,365 AED’000 640,600 21,584 (17,353) 107,999 73,932
Total
31 December 2020 Consolidated totals
2021
AED’000 3,154,644 (87,030) 3,067,614 966,982 327,160 12,674
Total Segments
2020 2021 AED’000 3,392,555 1,274,913 133,836 2020 AED’000 (10,651) 20,281 (9,458) 4,009 7,567
AED’000 1,178,604 (52,675) 1,125,929 420,059 (8,990) 51,701 31 December Unallocated
Total CBD
2021 9,157
AED’000 2,198,663 (62,384) 2,136,279 732,360 182,115
2020 AED’000 1,506,557 505,710 51,238 AED’000 651,251 1,303 (7,895) 103,990 66,365
Reportable
31 December segment totals
- -
2020
AED’000 14,681 14,681 (1,097) (3,019)
Snacks
-
2021 AED’000 544,903 (4,794) 540,109 178,692 90,049 2021 AED’000 2,786,099 1,053,757 125,553 totals AED’000 956,677 16,731 (20,855) 151,930 134,204
Consumer Business Division (CBD) 31 December Consolidated
-
2020 AED’000 142,519 (19,578) 122,941 23,664 8,621
2020 AED’000 526,521 184,334 15,127 2021 AED’000 (10,305) 14,297 (11,616) 3,944 368
Consumer Business Division (“CBD”) Protein and FV 31 December Unallocated
2021 881
AED’000 671,765 (16,226) 655,539 177,528 51,124
2020 AED’000 1,021,404 (33,097) 988,307 397,492 (14,592) 51,701 Agri Business Division (ABD) AED’000 606,456 221,156 8,283 AED’000 966,982 2,434 (9,239) 147,986 133,836
Reportable
segment totals
31 December 2021
Water and Food
2021 AED’000 981,995 (41,364) 940,631 376,140 40,942 8,276
2020
AED’000 964,875 (29,588) 935,287 231,192 131,341 10,365
(“ABD”)
2021 3,517
Agri Business Division AED’000 955,981 (24,646) 931,335 234,622 145,045
Finance income Finance expense
Gross profit / (loss) Capital expenditure
Depreciation of property, plant and equipment
Revenues Intra-group External revenues Gross profit / (loss) Reportable segment profit / (loss) Material non- cash item Impairment loss on trade receivables Others: Segment assets Segment liabilities Capital expenditure
Reconciliations of reportable segments’ gross profit / (loss), finance income and expense, depreciation, and capital expenditure are set out below:
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143

Reconciliation of reportable segments’ profit or loss for the year is set out below:

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2021 2020
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Total profit for reportable segments Unallocated amounts Other operating expenses Net finance income, net Profit for the year Non-controlling interests Profit for the year attributable to the owners of the Company	AED’000 327,160 (97,788) 1,833 231,205 (15,166) 216,039	AED’000 122,351 (97,262) 10,432 35,521 (1,050) 34,471

Reconciliation of reportable segments’ assets and liabilities are set out below:

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2021 2020
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AED’000
Segment Assets
Agri Business Division
606,456
Consumer Business Division
2,786,099
Total assets for reportable segments
3,392,555
Other unallocated amounts
2,996,321
Total assets
6,388,876
Segment Liabilities
Agri Business Division
221,156
Consumer Business Division
1,053,757
Total liabilities for reportable segments
1,274,913
Other unallocated amounts
2,155,444
Total liabilities
3,430,357

AED’000
526,521
1,506,557
2,033,078
1,107,593
3,140,671
184,334
505,710
690,044
522,456
1,212,500

Notes to the Consolidated Financial Statements For the year ended 31 December 2021 (continued)

37. Business combination

a) Al Foah Company LLC acquisition

On 5 January 2021, the Company acquired 100% of the shares of Al Foah Company LLC (“Al Foah”), a limited liability company based in United Arab Emirates that specialises in sourcing, processing and trading of dates and date related products. The Group has acquired Al Foah to diversify its portfolio mix and to expand within new markets. The acquisition has been accounted for using the acquisition method. The consolidated financial statements include the amounts of Al Foah for the period from the acquisition date. Fair values of the identifiable assets and liabilities of Al Foah as at the date of acquisition are set out below:

Fair value on acquisition	Fair value on acquisition
Assets Property, plant and equipment Brand names Customer contracts Inventories Trade and other receivables Cash and bank balances Due from related parties Other assets Total assets	AED’000 181,259 12,400 6,000 118,969 147,225 46,494 144,767 10,228 667,342
Liabilities
Employees’ end of service benefits Deferred government grants Trade and other payables Other liabilities Total liabilities Total identifiable net assets at fair value Goodwill arising on acquisition Purchase considerations satisfied through issuing 120,000 thousand common shares (note 20)	(34,043) (41,267) (242,229) (2,268) (319,807) 347,535 102,465 450,000

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b) Al Faysal Bakery and Sweets Company WLL acquisition

On 26 January 2021, the Company acquired 100% of the shares of Al Faysal Bakery and Sweets Company WLL (“Al Faysal”), a limited liability company based in the State of Kuwait that specialises in the manufacture and trading of bakeries and foodstuff. The Group has acquired Al Faysal because it is expanding both its existing product portfolio and customer base. The acquisition has been accounted for using the acquisition method. The consolidated financial statements include the amounts of Al Faysal as at the acquisition date. Fair values of the identifiable assets and liabilities of Al Faysal as at the date of acquisition are set out below:

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Fair value on acquisition
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Assets
Property, plant and equipment
Brand names
Licenses
Land grant
Inventories
Trade and other receivables
Cash and bank balances
Other assets
Total assets
Liabilities
Employees’ end of service benefits
Borrowings
Trade and other payables
Contingent considerations
Other liabilities
Total liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase considerations satisfied*

AED’000
14,120
9,000
24,000
27,000
4,886
12,724
16,118
6,327
114,175
(7,614)
(4,142)
(10,835)
(22,000)
(5,839)
(50,430)
63,745
97,160
160,905

c) Al Nabil Food Industries Limited

On 1 April 2021, the Company obtained control of 80% of the shares of Al Nabil Food Industries LLC (“Al Nabil”), a limited liability company based in Jordan that specialises in the manufacture and trading of processed protein products. The Group has acquired Al Nabil to diversify its portfolio and expand its existing customer base. The acquisition has been accounted for using the acquisition method. The consolidated financial statements include the fair values of the identifiable assets and liabilities of Al Nabil as at the acquisition date.

Fair values of the identifiable assets and liabilities of Al Nabil as at the date of acquisition are set out below:

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Fair value on acquisition
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Assets
Property, plant and equipment
Brand name
Customer relationships
Inventories
Trade and other receivables
Cash and bank balances
Other non-current assets
Other current assets
Total assets
Liabilities
Bank borrowings
Trade and other payables
Other non-current liabilities
Other current liabilities
Total liabilities
Total identifiable net assets at fair value
Goodwill
Non-controlling interests acquired
Total considerations satisfied

AED’000
117,458
104,003
15,068
51,954
81,546
57,558
5,662
4,180
437,429
(48,612)
(63,900)
(2,802)
(2,719)
(118,033)
319,396
264,092
(63,879)
519,609

As part of the SPA with the previous owners of Al Faysal dated 25 November 2020, part of the consideration was determined to be contingent, based on the performance of the acquired entity. As at 31 December 2021, the fair value for the contingent considerations amounted to AED 22,000 thousand given the performance indicators of Al Faysal against the target.

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c) Al Nabil Food Industries Limited (continued)

Total considerations satisfied to acquired 80% shares of Al Nabil are set out below:

Equity considerations through issuing 71,577 thousand common shares (note 20) Cash considerations Total considerations satisfied	AED’000 393,674 125,935
	519,609

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Fair value on acquisition
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Total identifiable net assets at fair value Goodwill Non-controlling interests acquired Total considerations satisfied in cash	AED’000 196,285 425,401 (49,032) 572,654

d) Ismailia Agricultural and Industrial Investment (Furat)

The Company obtained control of 75.02% of the shares of Ismailia Agricultural and Industrial Investment (Furat) (“Atyab”) on 10 August 2021, a joint stock company based in Egypt that specialises in the manufacture and trading of processed protein products with a portfolio of four brands (Atyab, Meatland, Shiketita and Furat). The Group has acquired Atyab to expand its existing customer base in Egypt and to empower the protein segment. The acquisition has been accounted for using the acquisition method. The consolidated financial statements include the fair values of the identifiable assets and liabilities of Atyab as at the acquisition date are set out below:

Fair value on acquisition	Fair value on acquisition
Assets Property, plant and equipment Brand names Inventories Trade and other receivables Cash and bank balances Other non-current assets Total assets	AED’000 91,866 99,265 56,746 21,776 11,845 25,983 307,481
Liabilities
Bank borrowings Trade and other payables Other non-current liabilities Other current liabilities Total liabilities Total identifiable net assets at fair value	(7,663) (80,077) (7,936) (15,520) (111,196) 196,285

e) Ripplette Corp. and Mediterranean Confectionary Company Limited

On 31 August 2021, the Group Board of Directors’ has approved a strategic acquisition of a 100% stake in Ripplette Corp. and Mediterranean Confectionary Company Limited (together “BMB”) and subsequently obtained the control on 13 December 2021. BMB was launched in 2007 and has a large portfolio of confectionery and healthy food brands and distributes in more than 23 countries worldwide, including the UAE, Saudi Arabia, and USA. The acquisition has been accounted for using the acquisition method.

The Group has entered into a management agreement with previous owners pursuant to the SPA to govern the terms of the management party’s economic interest in BMB which equals to 20% of the issued share capital.

These consolidated financial statements include the provisional fair values of the identifiable assets and liabilities of BMB as at the acquisition date as set out below:

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Provisional amounts on acquisition
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Assets Property, plant and equipment Brand names Non-compete clause Customer relationships Investment in an associate Inventories Trade and other receivables Cash and bank balances Other non-current assets Other current assets Total assets	AED’000 43,634 56,795 9,000 37,000 19,084 29,724 40,585 17,754 13,425 14,352 281,353

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Provisional amounts on acquisition
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Liabilities Employees’ end of service benefits Borrowings Lease liabilities Trade and other payables Total liabilities Total identifiable net assets at fair value Goodwill Non-controlling interests acquired Total considerations	AED’000 (4,577) (3,097) (13,636) (55,773) (77,083) 204,270 480,981 (40,854) 644,397

Details of total considerations to acquire BMB is set out below:

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Provisional amounts on acquisition
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Satisfied in cash Contingent considerations Total considerations*	AED’000 542,701 101,696 644,397

As part of the SPA with the previous owners of BMB dated 13 December 2021, part of the consideration was determined to be contingent, based on the performance of the acquired entity and certain tax liabilities settlement. As at the acquisition date, the fair value for the contingent considerations amounted to AED 101,696 thousand given the performance indicators of BMB against the target and tax settlement.

150 AGTHIA ANNUAL REPORT 2021

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AGTHIA Group — Annual Report 2021

66506_rns_2022-04-07_b05d640c-ff8f-4ea8-a068-b1bc8e2365e1.pdf

ANNUAL REPORT 2021

About This Report

Here For the Better With Loved Brands Trusted by Millions of People

OUR PURPOSE

A Regional Leader with Global ambitions

Event Highlights

2021

March 2021

August 2021

April 2021

September 2021

October 2021

May 2021

January 2021

February 2021

June 2021

July 2021

November 2021

December 2021

Milestones

People & Culture

Creating value through our Brands

Award Winning

February 2021

May 2021

November 2021

December 2021

Increasing our international footprint

Production Locations

STRATEGIC REPORT

Chairman’s Statement

DEAR SHAREHOLDERS,

A New Strategy and Vision

Business Performance

Working As One

Acknowledgements

Interview with our CEO

In 2021 Agthia set out an ambitious new strategy, CEO Alan Smith updates on progress

2021 was an exceptional year for Agthia, what were the highlights for you?

Last year was a difficult one for many businesses, how did Agthia meet the challenges?

What achievement are you most proud of?

Alan Smith

How did you deal with another year of COVID?

Have commodity prices been a concern?

Have you maintained your focus on sustainability?

What can we expect from Agthia in 2022?

Profitability

Geographical Expansion

Synergies

Growth

Reshaped the Portfolio Mix Expanding Value-add Verticals

Efficiency

Identifying synergies and simplifying business processes to unlock savings

Capability

Leveraging capability within the company has defined competitive advantage

Acquisition Overview

2021

Partnership Approach

90%

4,700 customers

Al Faysal’s baked goods and snacks are distributed to over

“BMB GROUP ”

Transformation & Integration

Adopting The Playbook

In- House

First 100 Day Plans

Constant Learning

Committed to sustainable living

Listening to Our Stakeholders

Materiality

MATERIALITY GRADING

Rank

Material Topics

Our sustainability framework

Consumer Business

Water

MARKET OVERVIEW

AGTHIA Group Annual Report 2021