‫‪Agthia Annual Report 2015‬‬

‫اﻟﺘﻘﺮﻳـﺮ اﻟﺴﻨـﻮي ‪2015‬‬ ‫‪Annual Report 2015‬‬

‫أﻏﺬﻳﺔ اﻟـﺘـﻘﺮﻳـﺮ اﻟﺴﻨـﻮي ﻟﻌﺎم ‪2015‬‬

 Upholding strong A new start ‫ﺑﺪاﻳﺔ ﺟﺪﻳﺪة‬ ‫داء‬#‫اﻟﺘﻤﺴﻚ ﺑﺎ‬
performance and focus for Agthia ‫ﻟﻤﺠﻤﻮﻋﺔ‬ ‫اﻟﻘﻮي واﻟﺘﺮﻛﻴﺰ‬
on strategic priorities CEO’s Message "‫"أﻏﺬﻳﺔ‬ ‫وﻟﻮﻳﺎت‬#‫ﻋﻠﻰ ا‬
Chairman’s Message ‫ﻛﻠﻤﺔ اﻟﺮﺋﻴﺲ اﻟﺘﻨﻔﻴﺬي‬ ‫اﻻﺳﺘﺮاﺗﻴﺠﻴﺔ‬
‫دارة‬7‫ﻛﻠﻤﺔ رﺋﻴﺲ ﻣﺠﻠﺲ ا‬

10 14 14 10

Focus on distribution Stellar year with ‫ﻋﺎم ﻣﻤﻴﺰ ﻳﻘﻮده‬ ‫ﻛﺎن اﻟﺘﺮﻛﻴﺰ ﻋﻠﻰ ﺗﻮزﻳﻊ‬
of flour and introduction water and beverages ‫ﻗﻄﺎع اﻟﻤﻴﺎه‬ ‫اﻟﺪﻗﻴﻖ وﻃﺮح ﻣﻨﺘﺠﺎت اﻟﻌﻠﻒ‬
of performance-boosting leading the way ‫واﻟﻤﺸﺮوﺑﺎت‬ ‫داء‬C‫اﻟﺤﻴﻮاﻧﻲ اﻟﻤﻌﺰزة ﻟ‬
animal feed products ‫رﻛﻴﺰة ﻧﺠﺎﺣﻨﺎ‬
Operational Review –
‫اﻻﺳﺘﻬﻼﻛﻴﺔ‬
sealed our success Consumer Business
-‫اﻟﻤﺮاﺟﻌﺔ اﻟﺘﺸﻐﻴﻠﻴﺔ‬
-‫اﻟﻤﺮاﺟﻌﺔ اﻟﺘﺸﻐﻴﻠﻴﺔ‬
Operational Review –
Agri Business 18 22 22 ‫ﻗﺴﻢ اﻋﻤﺎل اﻻﺳﺘﻬﻼﻛﻴﺔ‬ 18 ‫ﻗﺴﻢ اﻋﻤﺎل اﻟﺰراﻋﻴﺔ‬

Contents ‫اﻟﻤﺤﺘﻮﻳﺎت‬
2 About Us 8 At a Glance 18 Operational Review 28 Corporate Governance ‫ ﺗﻘﺮﻳﺮ ﺣﻮﻛﻤﺔ‬٢٨ ‫ اﻟﻤﺮاﺟﻌﺔ اﻟﺘﺸﻐﻴﻠﻴﺔ‬١٨ ‫ ﻟﻤﺤﺔ ﻣﻮﺟﺰة‬٨ ‫ ﻣﻦ ﻧﺤﻦ‬٢
3 Core Values 10 Chairman’s Message Agri Business 39 Directors’ Report ‫اﻟﺸﺮﻛﺎت‬ ‫ﻗﺴﻢ اﻋﻤﺎل اﻟﺰراﻋﻴﺔ‬ ‫دارة‬7‫ ﻛﻠﻤﺔ رﺋﻴﺲ ﻣﺠﻠﺲ ا‬١٠ ‫ اﻟﻘﻴﻢ اﺳﺎﺳﻴﺔ‬٣
4 Financial Highlights 12 Board of Directors 22 Operational Review 41 Consolidated Financial ‫ ﺗﻘﺮﻳﺮ ﻣﺠﻠﺲ‬٣٩ ‫ اﻟﻤﺮاﺟﻌﺔ اﻟﺘﺸﻐﻴﻠﻴﺔ‬٢٢ ‫دارة‬7‫ ﻣﺠﻠﺲ ا‬١٢ ‫ أﻫﻢ اﻟﻤﺆﺷﺮات اﻟﻤﺎﻟﻴﺔ‬٤
5 Operational Highlights 14 CEO’s Message Consumer Business Statements ‫دارة‬7‫ا‬
‫ﻗﺴﻢ اﻋﻤﺎل اﻻﺳﺘﻬﻼﻛﻴﺔ‬ ‫ ﻛﻠﻤﺔ اﻟﺮﺋﻴﺲ اﻟﺘﻨﻔﻴﺬي‬١٤ ‫ﻧﺠﺎزات اﻟﺘﺸﻐﻴﻠﻴﺔ‬7‫ أﺑﺮز ا‬٥
6 Strategic Highlights 16 Executive Committee 26 Corporate Social ‫ اﻟﺒﻴﺎﻧﺎت اﻟﻤﺎﻟﻴﺔ‬٤١
‫ اﻟﻤﺴﺆوﻟﻴﺔ اﻻﺟﺘﻤﺎﻋﻴﺔ‬٢٦ ‫ اﻟﻠﺠﻨﺔ اﻟﺘﻨﻔﻴﺬﻳﺔ‬١٦ ‫ﻧﺠﺎزات اﻻﺳﺘﺮاﺗﻴﺠﻴﺔ‬7‫ أﺑﺮز ا‬٦
Responsibility ‫اﻟﻤﻮﺣﺪة‬
ّ
‫اﻟﻤﺆﺳﺴﻴﺔ ﻟﻠﻤﺠﻤﻮﻋﺔ‬

‫اﻟﺸﺮﻛﺎء اﻟﻤﺼﺮﻓﻴﻴﻦ‬
Bankers ‫أﺗﺶ أس ﺑﻲ ﺳﻲ اﻟﺸﺮق اوﺳﻂ‬
HSBC Middle East ‫ﺑﻲ أن ﺑﻲ ﺑﺎرﻳﺒﺎس‬
BNP Paribas ‫ﺟﻴﻪ ﺑﻲ ﻣﻮرﺟﺎن‬
J.P. Morgan
‫اﻟﻤﺪﻗﻖ اﻟﺨﺎرﺟﻲ‬
External Auditors ‫ﻛﻲ ﺑﻲ أم ﺟﻲ‬
KPMG
‫اﻟﻤﺴﺘﺸﺎرون اﻟﻘﺎﻧﻮﻧﻴﻮن‬
Legal Advisor ‫اﻟﺘﻤﻴﻤﻲ وﻣﺸﺎرﻛﻮه‬
Al Tamimi & Co
‫ﻋﻨﻮان اﻟﻤﻜﺘﺐ اﻟﺮﺋﻴﺴﻲ‬
Corporate Office Address ٣٧٧٢٥ .‫ب‬.‫ص‬
P.O. Box 37725 ‫ ﺳﻜﺎي ﺗﺎور‬،١٧ ‫اﻟﻄﺎﺑﻖ‬
17th Floor, Sky Tower ‫ﺟﺰﻳﺮة اﻟﺮﻳﻢ‬
Al Reem Island ‫أﺑﻮﻇﺒﻲ‬
Abu Dhabi ‫ﻣﺎرات اﻟﻌﺮﺑﻴﺔ اﻟﻤﺘﺤﺪة‬7‫ا‬
United Arab Emirates +٩٧١ ٢ ٥٩٦ ٠٦٠٠ :‫ﻫﺎﺗﻒ‬
Phone: +971 2 596 0600 :‫ﻟﻜﺘﺮوﻧﻲ‬7‫اﻟﻤﻮﻗﻊ ا‬
Website: www.agthia.com www.agthia.com

Designed and produced by Origin Communications Group ‫ﺗﺼﻤﻴـــﻢ وﻃﺒــﺎﻋﺔ أورﺟــﻦ ﻛﻮﻣﻴﻨﻴﻜﺸﻦ ﺟــﺮوب‬
Following strong sales and profit
performance, Agthia continued to
deliver on its strategy for sustainable
growth in 2015. By constantly
pioneering in bringing new products
to market and new ways of working
across the business, the Company
is well positioned to generate future
growth, which will benefit everyone
associated with the business.

1
About Us

We are a leading Abu Dhabi-based food and beverage company.

Established in the UAE in 2004, and listed on the Abu Dhabi Securities
Exchange (ADX) since 2005, the Agthia Group consists of a world-
class portfolio of integrated businesses and brands.
We provide high-quality, trusted, and essential food and beverage
products for customers and consumers across the UAE, GCC,
Turkey, and the wider Middle East.

Vision Mission
To be the UAE’s most valued food and Our mission every day is to consistently
beverage company. provide the best quality, nutritious, and
responsibly produced food and beverage
products of choice, essential at every
life stage, for everyone leading
progressive, energetic, and healthy
lifestyles, here at home, across the
Middle East, and beyond.

Philosophy
For Wholehearted Living This wholehearted commitment drives
Everything we do at Agthia is what we do at every stage of the food
wholehearted. chain – from field to fork.

We produce the essential and trusted We’re determined to meet the highest
food and drink that feeds and nourishes food and drink quality standards, in a
full and active lives, every day. sustainable way.

We do this here at home, across the region, We value everyone we serve, and
and beyond for people from all walks of everyone who works with us.
life, and all nationalities. We do this wholeheartedly.
Because when everyone lives life to the
full, then we all live a life worth living.

2 Agthia Annual Report 2015

Core Values

We use our knowledge and Motivated by the people and

expertise to ensure our top-quality places surrounding us, we’re
and trusted food and beverage driven to succeed and committed
products are accessible to to being the best. We are
everyone, making the everyday determined to create value
more enjoyable. through everything we do.

As employees of Agthia we work We believe in positive progress;

together, finding more ways to we anticipate and respond to
identify and meet the needs of change through focused action.
our community, consumers, and We are ambitious, but not at
customers. We embrace diversity. the expense of integrity.
At Agthia, everyone is welcome.

Open-minded and encouraging,

we share our ideas and experience
with our partners, suppliers, and
each other. To us there are no
barriers, just new directions.

At Agthia we know innovation Honest and genuine, we say what

drives economic change. So our we mean, and do what we promise.
commercial and inventive spirit
influences everyone at Agthia, and We are experienced and
everything we do. straightforward. We know what
it takes to do a good job. So
We create innovative answers to we make sure everyone working
new opportunities. We’re involved with us has the opportunity
and informed, always assessing and encouragement to do the
the implications of our actions best job they can.
on our customers, environment,
and society. We’re astute, inherently
knowledgeable, original in both
our thinking, and in what we
want to achieve.

3
Financial Highlights

Agthia reported another year of success, as reflected in year-on-

year double-digit revenue and profit growth. This is a testament
to the Company’s ability to deliver on a strategy for sustainable
growth by continually growing core business categories, while
pursuing product diversification and regional expansion.

Net Sales Net Sales Net Profit Net Profit

(AED million) Growth (AED million) Growth

1,866 +13% 231 +20%

Net Sales Net Profit Economic Value Added

(AED million) (AED million) (AED million)

1,866 231 176

1,655
1,512 193
136
1,327 159
1,144 106
123
85
85
34

11 12 13 14 15 11 12 13 14 15 11 12 13 14 15

Return on Assets Return on Equity Return on Net Capital Employed

10% 15% 18%

14% 17%
9% 9% 13%
8% 15%
11%
12%
6% 9%
8%

11 12 13 14 15 11 12 13 14 15 11 12 13 14 15

4 Agthia Annual Report 2015

Operational Highlights

2015 has been very busy in terms of capital expansion projects,

both at home in the UAE and in our international subsidiaries. We
have not only increased our installed production and warehousing
capacities in our existing facilities, but also added new ones
through acquisition of Al Bayan Water Company.

Acquisition of Al Bayan Water, New high-speed bottling line Food management system of Grand
one of the leading 5-gallon water investment, increasing installed Mills Flour and Animal Feed facility
players in the UAE with presence capacity by more than 40 percent upgraded to FSSG 22000 – first
also in Oman. to 74 million cases per annum, to Agri company in the UAE to reach
be completed in April 2016. this status.
New products and variants
across categories, revamped Capacity increase in Animal Feed Expansion of storage capacity of Al
with contemporary packaging production in the UAE and Bottled Ain warehouse to 32,000 pallets.
and artwork. Water in Turkey.
Purchase of a new warehouse
in Dubai.

Our International United Kingdom Germany

Footprint
Belgium
Romania

We remain focused Turkey

on growing our brand Italy
Iraq

portfolio and expanding Lebanon

Kuwait
Bahrain
geographically. Palestine Qatar
Morocco Jordan
Egypt
Libya
Saudi Arabia
United Arab Emirates Oman
Assets
UAE sourced products Nigeria Yemen
Egypt sourced products
Turkey sourced products Kenya

Somalia

5
Strategic Highlights

A thorough business review during the year has led into a new
business strategy that will be executed over the next five years, with
a goal of achieving revenues of more than a billion dollars by 2020.
Within this framework, we defined our core categories in which we
want to play; established a seven-step execution plan; and began
on-boarding key strategic positions as part of the organizational
redesign in parallel with the new strategy.
Where will we play? (core categories)

Consumer Business

Water Juice Dairy

Sizeable and growing Complementary to juice

Agri Business

Animal Feed Flour

Expand leadership

6 Agthia Annual Report 2015

How will we win? (seven-step plan)

1 5

Strengthen core Turn around non-core

organically in the UAE businesses (Tomato Paste,
(Water, Flour, Animal Feed) Frozen Vegetables, Frozen
Bakery, Monster)

2 6

Strengthen UAE consumer Enhance performance

business with a meaningful margins through
presence in 5-gallon Water, identified levers
Juice, and Dairy through
acquisition

3 7

Expand internationally Align organization and

in water through M&A capabilities to deliver
and JV sustainable profitable growth

Extend leadership of
Agri Business through
greenfield expansion
or Animal Feed acquisition

7
At a Glance

Agri Business

The Company operates two

business units: Agri Business
and Consumer Business. Both
businesses include in their
product portfolios leading
household brands that are
known and loved by customers
and consumers, thanks to our
uncompromising dedication
to manufacturing high-quality
and great-tasting products.

2013
7%
Net Sales Growth

2004/
06

13%
Net Profit Growth

Flour and Animal Feed

United Arab Emirates
Traditional Flour
Specialty Flour
Animal Feed

8 Agthia Annual Report 2015

 Consumer Business

Water and Beverages

2015 United Arab Emirates Turkey

Bottled Water Juice Drinks Natural Spring
5-Gallon Water Fresh Juices Water (PET)
Flavored Water Energy Drinks 5-Gallon Water
2014

2013

23%
Net Sales Growth
2012
Dairy
United Arab Emirates
Plain Yoghurts Kids’ Yoghurts
2011 Fruit Yoghurts Yoghurt desserts

50%Net Profit Growth

2010

2009
Processed Fruits and Vegetables
United Arab Emirates Egypt
Tomato Paste Tomato Paste
2008 Frozen Vegetables Hot Chilli Paste
Dates Frozen Vegetables
Fruit Puree

2007

2004/06

Frozen Baked Products

United Arab Emirates
Baguette Lattice
Ciabatta Loaf
Croissant Pain au Chocolat
Kaiser Roll Rolls

9
Chairman’s Message

Upholding strong performance

and focus on strategic priorities
The Company has managed to deliver We are a cornerstone of the UAE’s economy, The Award – the most prestigious for
another successful year, a reflection of nurturing families and working hand-in- Business Excellence in the UAE – is aligned
the depth of its foundations as well as its hand with the Government on its food with international best practice and adopts
dynamic leadership given the challenging security initiatives. Equally, we are committed the European Foundation for Quality
economic and competitive environment to being the partner of choice for the Management excellence model, recognizing
in which we are operating. thousands of farmers that we count as our companies that strive for excellence in
loyal customers, educating the farmers everything they do. Winning this Award is
Our management and the Board upheld and developing animal feed products that a tremendous achievement for Agthia, which
the Company’s focus on our strategic enhance the productivity of local livestock. is such a young company and has been
priorities throughout the year, emphasizing growing and transforming at such a fast pace.
profitable growth by expanding further And yet, our role goes beyond the provision
as well as more intensely targeting our of food and beverages. We are committed to Such success is due to the hard work and
multiple customer segments. From a contributing towards Abu Dhabi’s economic commitment of our management and our
longer-term perspective, plans to ensure diversification goals through the expansion employees, and I would like to thank them
sustainable growth were set in motion with of our manufacturing and infrastructure on behalf of the Board. On behalf of the
the development of a new strategy, which capabilities. Our growth strategy, together Board and management, I would also like
aims to truly distinguish us as a leading with our focus on expanding our operations to express my appreciation to the Government
food and beverage player in the region as through increased production, enlarging of Abu Dhabi, and the visionary leadership
it is executed over the next five years. the customer base, ongoing product of His Highness Sheikh Khalifa Bin Zayed
improvements, and mergers and acquisitions, Al Nahyan, President of the UAE and
Already in the UAE, we are the category will ensure that we continue to participate Supreme Commander of the UAE Armed
leaders in our core businesses of flour, in the nation’s industrial development. Forces, and His Highness General Sheikh
animal feed, and water. These critical areas Mohammed Bin Zayed Al Nahyan, Crown
of food security make us a vital partner to I am extremely proud that we surpassed Prince of Abu Dhabi and Deputy Supreme
the Government and the nation, and we our Emiratization target for the year. Commander of the UAE Armed Forces, for
continue to prioritize these businesses to Together with our Zaheb initiative that their continued support.
ensure we will always be able to serve that targets Emirati youth through the largest
customer base by investing in categories work-readiness program in Abu Dhabi, Our achievements and progress so far have
that are fundamental for our people and and the appointment of an Emirati Chief proved to our shareholders, customers, and
country. Our acquisition of Al Bayan Operating Officer, this truly demonstrates consumers that we can be trusted to deliver
Water towards the end of 2015 is a prime our commitment to the future generation. quality and value in the food and beverages
example of our commitment to accelerate we produce. I trust you will continue on the
Not only do we locally develop new products, journey with us as we embark on an exciting
the growth of these core categories.
customizing tastes and flavors to suit our new phase of growth.
Our other products, from fresh juices to local markets; there is also a strong drive at
dairy, encourage healthful and wholesome the Company to come up with new ideas,
living. The products we introduced to the and we proactively seek out individuals
market in 2015 prioritize the health of our that are entrepreneurial and think out of the
customers in their emphasis on natural box. As such, we are directly contributing
ingredients, and our research and to the UAE’s aspiration to be an innovation
development teams work hard on recipe hub, developing, supporting, and retaining
optimization to ensure that we do not talented minds that can participate in the
compromise on taste. Thus we encourage creation and durability of a vibrant Eng Dhafer Ayed Al Ahbabi
more healthy choices, by making sure knowledge economy. Chairman
our products are not only nutritious, but
It is this knowledge economy that will
delicious and rewarding as well.
secure a sustainable future for the coming
generations. We see ourselves as a company
that raises the bar, lifting the market upwards
with our high standards. Proof of the
success of our approach and our leadership
in the food and beverage sector in 2015
was the Gold prize we received from the
Sheikh Khalifa Excellence Award.

10 Agthia Annual Report 2015

11
Board of Directors

1 2 3

HE Eng Dhafer Ayed HE Rashed Hamad HE Khamis Mohamed

Al Ahbabi Al Dhaheri Buharoon Al Shamsi
Chairman Vice Chairman Member

Advisor, Senaat General Holding Deputy Director, Indexed Chairman, Abu Dhabi
Corporation Funds Department, Abu Dhabi National Takaful Co. PSC
Investment Authority
Chairman, Al Foah Chairman, Abu Dhabi
Board Member, LA Holdings Security LLC
Chairman, Industrialist Union
(Luxembourg) S.A.
Society, UAE Board Member, Abu Dhabi
Islamic Bank
Member of the Board of Trustees,
Institute of Applied Technology Board Member, Emirates
Insurance Association
Board Member, Naeem
Holding Co. Egypt
Board Member, Etihad Capital

12 Agthia Annual Report 2015

 4 6
2

1 5
3 7

4 5 6 7

HE Saif Saeed HE Salem Sultan HE Mohamed Saif HE Amna Obaid

Ghobash Al Dhaheri Al Suwaidi Al Zaabi
Member Member Member Member

Director Strategic Affairs, Deputy Director – Internal Audit, Director General, Abu Dhabi Manager, Projects and Business
Crown Prince Court Abu Dhabi Investment Authority Fund for Development Development, Senaat General
Holding Corporation
Board Member, Al Dhafra Board Member, TAQA Chairman, Al Ain Farms for
Insurance Company Livestock Production
Board Member, Al Etihad
Board Member, Emirates Credit Bureau Vice Chairman, Arab Bank for
Palace Company Investment and Foreign Trade
Board Member, First Gulf
Bank PJSC
Board Member, Emirates
Red Crescent
Board Member, Food Security
Center, Abu Dhabi

13
CEO’s Message

A new start
for Agthia
Our growth story continued impressively In response to growing demand, we All these efforts work towards and reflect
in 2015, due to an unwavering focus on began installing a second high-speed our commitment to creating sustained value
accelerating profit ahead of sales growth, bottling line that will boost Al Ain Water for our stakeholders.
driving sales ahead of category growth, production capacity by more than 40
percent, as well as constructing new Leading Agthia through change is both a
addressing underperforming businesses,
grain silos that will add 50,000 tons of privilege and a great responsibility. Together
and strengthening our infrastructure,
incremental capacity. A Dynamic Route with management and committed employees,
which enabled us to deliver our ambitious
Planning & Vehicle Management System we have the necessary foundations in place
financial targets. Our share price rose 24
is under implementation in order to to confidently take our company to the next
percent year-on-year, valuing the Company
enhance our customer responsiveness phase of development. I would like to express
at AED 4.6 billion at the close of 2015.
and improve our distribution efficiency. my sincere thanks to our Board members,
Sales and profit across the Group recorded And plans are underway for a new ERP passionate employees, loyal shareholders,
double-digit growth of 13 and 20 percent system, which will optimize efficiencies. customers and consumers, for all your
respectively, propelled by expansion in our support and contributions, and I look
core categories, in particular Water and I am extremely pleased with our forward to reporting on our progress during
Flour. Efforts to boost distribution enabled performance, and the numerous initiatives what is sure to be a very exciting year.
deeper penetration, while a focus on we have implemented to further improve
improving in-store presence and visibility, business performance and the working
new customer acquisition, new product environment, as well as driving our core
launches, and exports, along with values. Our ethos of wholehearted living
increased marketing support, helped drive runs through everything we do, from
sales. The acquisition of Dubai-based water offering quality products, practicing good
company Al Bayan greatly strengthened our governance, and maintaining a world-class
5-gallon water business, and offers an team, to establishing leadership in our
additional platform for our future growth. field and providing an optimal working
environment for our people. Iqbal Hamzah
The Juice and Dairy categories’
performance has significantly improved, It is this growth story, in its entirety, which Chief Executive Officer
with Capri-Sun juice reversing six quarters forms the backdrop for the thorough review
of declines to post sales and profit growth of our business that we conducted during
of 10 percent and 60 percent respectively, the year, as we endeavor to take the
and Yoplait recording a strong gross margin Company to its next phase of development.
turnaround following the change in strategy, We have set a target of surpassing $1
further helped by lower input cost. The Frozen billion in revenues by 2020, and a new
Baked business, although still a challenge, strategy is now in place that will be executed
is showing encouraging progress as we over the next five years. We have clearly
diversify into new products and channels. defined the core categories in which we
want to play, in order to allocate appropriate
We continued to reinforce and expand our focus and resources to these businesses
infrastructure to support our 2020 growth commensurate with their contribution and
strategy, committing significant Capex for the underlying growth opportunities. We
expansion. This included the establishment have established a seven-step plan to
of a new Distribution Centre in Al Ain, and guide the initiatives that will help us reach
the acquisition of a new facility in Dubai the goal. We are also finalizing our new
which, when ready in 2016, will facilitate organization structure to complement our
cold and ambient storage, as well as growth strategy, the execution of which
housing the Dubai sales team. will start in 2016. And we have begun
on-boarding key positions, including a
dedicated strategy function to support
geographical expansion, M&A initiatives,
and profit improvement.

14 Agthia Annual Report 2015

15
Executive Committee

1 2 3 4 5

Manolis Trigkonis Fatih Yeldan Fasahat Beg Tariq Al Wahedi Iqbal Hamzah
Executive Acting Chief Executive Chief Operating Officer Chief Executive Officer
Vice-President Financial Officer Vice-President
Agri Business Consumer Business

Greek Turkish Canadian Emirati Pakistani

Joined Agthia Group Joined Agthia Group Joined Agthia Group Joined Agthia Group Joined Agthia Group
in September 2009 in November 2008 in July 2006 in September 2015 in August 2006
Previous posts include: Previous posts include: Previous posts include: Previous posts include: Previous posts include:
General Manager, Vivartia, Finance Director, Commercial Director, Senior Vice President – Chief Financial Officer,
Central & Eastern Europe Agri Business, Agthia SE Asia Food & Snacks, Projects & Business Agthia Group PJSC
Group PJSC Pepsico International Development, Senaat
General Manager, Regional Financial
General Holding
Mars, Greece Financial Director, P&G, Marketing & Sales Director, The Gillette
Corporation, UAE
Blades and Razors Director, JT International Company/P&G, Russia,
Manufacturing & Packaging SA, Czech & Slovak Senior Vice President – Republics & Baltics
Operations, Poland Republics Petrochemicals, Abu
Regional Financial
Dhabi Basic Industries
Regional Financial Director, The Gillette
Corporation, UAE
Director, The Gillette Company, Middle East
Company, Turkey & & Africa
Mediterranean Markets

16 Agthia Annual Report 2015

 2 4 8
1 7

3 5 6 9

6 7 8 9

Toufic El Chaar Tariq Aziz Khalid Ahmed Daniel Marie

Vice-President Human Vice-President Projects Vice-President Vice-President
Capital and Organization and Business Solutions Public Affairs Manufacturing
Development Operations

Lebanese British Emirati French

Joined Agthia Group Joined Agthia Group Joined Agthia Group Joined Agthia Group
in January 2008 in February 2007 in May 2004 in January 2010
Previous posts include: Previous posts include: Previous posts include: Previous posts include:
Vice President HR & Associate Finance Director, Group Training & Managing Director,
Organization Development, P&G, UK Development Manager, Agralys Group, France
Al Homaizi Group, Kuwait Agthia Group, UAE
Group Finance Manager, Manufacturing Director,
Group HR Director, SITA, The Gillette Company, Human Resources & Admin Yoplait-Sodiaal Group,
Europe, Middle East & UK, Africa, Middle East Manager, Grand Mills for France & UK
Africa based in Rome & Eastern Regions Flour & Feed, UAE
& Geneva

17
Operational Review
Agri Business

Product Highlight

Arabic Bread Flour

A showcase of
responsiveness to our
customers’ needs

Arabic bread flour was developed by

us as a response to our customers
needing to mix two separate flours
to make Arabic bread flour.

18 Agthia Annual Report 2015

 Net Sales Net Sales Net Profit Net Profit
(AED million) Growth (AED million) Growth

1,106 +7% 226 +13%

Total Flour B2C Flour Animal Feed

(Grand Mills) (Grand Mills) (Agrivita)

90% 84% 83%

41% 41% 53%

Number 1 in Abu Dhabi at Number 1 in Abu Dhabi at Number 1 in Abu Dhabi at

90 percent volume market share 84 percent volume market share 83 percent volume market share
Number 1 in UAE at 41 percent Number 1 in UAE at 41 percent Number 1 in UAE at 53 percent
volume market share volume market share volume market share
(Source: Internal estimate) (Source: AC Nielsen) (Source: Internal estimate)

19
Operational Review (continued)
Agri Business

A clear focus to expand retail

distribution of flour, introduce new
high-potential animal feed, and
maintain strong relationships with
government institutions, as well as
the emerging success of our wheat
trading, resulted in net sales growing
7 percent to 1.1 billion dirhams, with
profit increasing 13 percent.

20 Agthia Annual Report 2015

Net Sales Net Profit

Grand Mills Flour +15%

Agrivita Agri Business
+2% +13%

AED AED AED

427m 679m 226m
Flour recorded an impressive 15 percent growth in sales to 427 million dirhams, as a result of distribution
expansion and new customer acquisitions, in addition to wheat trading. Distribution in the Northern
Emirates doubled as we strive to increase availability for consumers, as well as diversifying our growth
profile and further building our flour brands. Chakki Atta flour in particular gained traction in those
emirates, following the successful implementation of aggressive promotional activities in retail.

The development of specialized flours Overall sales grew 2 percent in value, Now our regular trading of wheat, corn,
helped further consolidate our market while profit grew twice as fast due to lower barley, and soybean meal positively supports
leadership of the B2B flour business. Arabic commodity prices, as well as production our overall sales and helps ensure a level
bread flour was introduced in the first efficiencies that were helped by capacity of supply security.
quarter and has seen positive uptake upgrades of poultry lines in May and large
among bakeries and food service industries. animal feed in June. Meanwhile, web ordering for flour and animal
We will continue to develop this approach feed products, an initiative that began in
because of the clear advantages it brings The strong relationships we enjoy with late 2014, was fully implemented in 2015
to customers, yielding a better product and municipalities, who receive about 40 percent in order to serve customers more efficiently.
avoiding trial and error. of our volumes, were maintained in spite
of increased competitive pressure, with a Looking ahead, aggressive promotions
In line with our strategy to expand beyond further three outlets added to our portfolio. In in retail flour will be combined with a
our existing markets, exports of our flour collaboration with the municipalities, services continued availability drive in the lower
products more than doubled. In the first to support farmers (such as product schools, trade all over the UAE, while encouraging
quarter we entered countries in East Africa, offering nutrition guidance, and animal feed acceptance of specialty flours in the B2B
and have been adding new geographies trials) have been developed, and loyalty segment through the introduction of new
throughout the year including Yemen, programs with distributors were initiated. varieties such as biscuit and pasta flours.
Madagascar, and Djibouti. We will continue This saturation of the local market will be
to build on this momentum, and expect in The conversion of poultry feed for layers buoyed by further development of export
2016 that major new export growth will (hens that produce eggs) from pellets to mash markets, in particular Saudi Arabia and
come from the GCC, predominantly resulted in a higher nutritional value product other GCC countries. Meanwhile, we will
Saudi Arabia. to improve performance, which boosted build on the success of our performance-
overall growth in the Animal Feed business. boosting products in the Animal Feed category
The Agrivita Animal Feed business recorded The quality of the mixed grain product was by continuing to upgrade existing varieties
a 5 percent increase in volumes as also upgraded, improving product quality to further enhance animal productivity.
intensive efforts were made to defend the and acceptance among customers.
brand’s market leadership as well as
deepen penetration. The consolidation of our trading activities
contributed to the gains. Having begun
in 2013 trading small amounts of grains,
we have steadily increased volumes and
developed a loyal customer base.

21
Operational Review
Consumer Business

Product Highlight

Al Ain Flavored Water

New flavors, healthier
sweetener

In the first quarter we relaunched our

improved Al Ain flavored water, with
healthier sweetener, and added two new
flavors to our existing range – lemon and
mint, and orange.

22 Agthia Annual Report 2015

 Net Sales Net Sales Net Profit Net Profit
(AED million) Growth (AED million) Growth

760 +23% 86 +50%

Bottled Water Still Juice Drink, Single-Serve Tomato Paste Frozen Vegetables
(Al Ain) (Capri-Sun) (Al Ain) (Al Ain)

31.2% 13.2% 27.5% 10.9%

23.1% 9.6% 21.1% 8.7%

Number 1 in Abu Dhabi at 31.2 Number 3 in Abu Dhabi at 13.2 Number 1 in Abu Dhabi at 27.5 Number 2 in Abu Dhabi at 10.9
percent volume market share percent volume market share percent volume market share percent volume market share
Number 1 in UAE at 23.1 Number 3 in UAE at 9.6 percent Number 1 in UAE at 21.1 Number 3 in UAE at 8.7 percent
percent volume market share volume market share percent volume market share volume market share
(Source: AC Nielsen) (Source: AC Nielsen) (Source: AC Nielsen) (Source: AC Nielsen)

23
Operational Review (continued)
Consumer Business

The Consumer Business excelled in

2015, driven by very strong growth in
the water and beverages category. The
expansion of Al Ain Water production
capacity, the acquisition of Al Bayan
Water Co., a return to positive business
performance from Capri-Sun, and
continued momentum in Dairy resulted
in sales rising 23 percent to 760 million
dirhams, and profit soaring 50 percent
to 86 million.

24 Agthia Annual Report 2015

Net Sales Net Profit

Water & Beverages +27%

Food +6%
Consumer +50%
segment segment Business

AED AED AED

644m 117m 86m
The first full year of operation of the new high-speed bottling line enabled significant improvements in supply across all trade channels,
buoying sales of water and beverages 27 percent to 644 million dirhams. Coupled with the success of our strategic focus on
distribution, the ensuing demand has necessitated the installation of a second high-speed line that will be ready in early second
quarter 2016, increasing capacity to 74 million cases a year from the current 51 million. The results of our continuous efforts in
securing new customers are shown in our financials and also in our ranking in the UAE water market, where we have become the
volume share leader according to the most recent AC Nielsen data.

Sales of Alpin, our natural spring water from The entry of Freezies in Q1 2015 will be Our Egyptian sales were hampered by
Turkey, more than doubled in the UAE. Now augmented by other new product launches political issues in some North African
that we have expanded our warehouse in in 2016. export markets, as well as heavy rains that
Adana, and increased production capacity impacted tomato harvests. In order to offset
by transferring a bottling line from UAE to The Dairy category saw Yoplait net sales the harvest risk we have leased a factory in
Turkey, we are fully equipped from a grow 23 percent to 26 million dirhams. Upper Egypt, securing a full year rather than
manufacturing and warehousing perspective The strategic portfolio rationalization of plain seasonal supply of tomatoes, and we expect
to continue this upward sales momentum. yoghurt, aimed at improving gross margins to see the positive full-year impact of this
We plan to extend our domestic footprint in and reducing waste and returns, as well as as well as our strategy to expand our B2C
Turkey by strengthening our presence in lower milk prices, secured a 25 percent gross network of distributors and sub-distributors
Ankara, the capital city, as well as driving margin for the category, from breakeven in Cairo and the Delta in 2016.
exports in the UAE, GCC, and in Europe, performance in 2014. Refocusing on the
supported by a new bottle and label design, brand’s value-added platform – products with We expect business momentum to commence
new shrink packaging, and a new ‘Nature a longer shelf-life and that command a higher for our Frozen Baked business in 2016,
in Every Sip’ marketing campaign. price – saw the launch of the indulgent with new customers being secured via the
dessert “Yoplait Delight” in February 2015, Monty’s Bakehouse airline snack co-pack
5-gallon water (HOD) sales more than the success of which has been followed in manufacturing agreement; the launch of
doubled with the acquisition of Al Bayan, early 2016 with the extra-fruit “Fruit Burst” “The Grand Baker” ambient croissant
the number two HOD player in the UAE. yoghurt accompanied by the brand’s global portfolio; and the continued development
Excluding Al Bayan, this business recorded “Joyful Goodness” marketing campaign. of a relevant “Grand Mills Bakery” portfolio.
a healthy 17 percent growth, supported
with the launch of Irtawi, an ordering In the food category, Frozen Vegetables sales Looking ahead, we plan to build on the
and delivery monitoring system, and the in the UAE grew 12 percent to 23 million success of 2015 and consolidate our core
MyAgthia smartphone application, which dirhams, driven by new packaging and categories of water, juice, and dairy by
simplifies the home delivery process increased distribution. The decision to increasing distribution, marketing support,
and provides consumers with real-time withdraw unprofitable SKUs of Tomato innovation, regional expansion, and through
notifications on delivery status and top-ups. Paste, primarily from export markets; the acquisition, while continuing to revitalize
transfer of all manufacturing assets from and grow our Egypt and Turkey businesses.
Positive business performance returned to the UAE to Egypt to create a manufacturing
Capri-Sun, with sales growing 10 percent hub there for all tomato paste production;
versus 2014 due to a new marketing and standardizing the product under the
positioning combined with an aggressive Al Ain brand name ensured sustained sales
push on distribution. and that the product remained the number
one brand in the UAE.

25
Corporate Social Responsibility

A wholehearted
lifestyle
In 2015, we took our commitment to We also sponsored the 3rd International All our production sites in the UAE are
Corporate Social Responsibility to new Child Mental and Behavioral Health now FSSC 22000 accredited in food safety
levels in all four pillars of the program: Conference 2015, and our Ramadan management, and certified by Lloyd’s
Health and Wellness, Food Safety and campaigns offered promotions on sales Register Quality Assurance. In addition,
Security, the Environment, and People of Grand Mills flour, enabling us to raise we have completed the implementation of
and Emiratization. A new endeavor in this substantial funds in support of the Global Good Agricultural Practices (Global
area was the launch of our pioneering Dubai Autism Center and Dubai Cares. GAP) in those farms supplying crops to our
Zaheb initiative, the largest program of Egypt operations, training farmers in best
To reinforce the message of health and practice and relevant HSE measures.
its kind that trains Emirati youth in
wellness within our organization, we
Abu Dhabi to be work-ready.
continued to hold a monthly Agthia In 2015, we completed the establishment
Health and Wellness lunch, serving nutritious food to promote of a business continuity management
a wholesome and balanced diet. system, an initiative we began in June
Our mission to encourage a wholehearted
2014 alongside the Government as part of
lifestyle extended throughout the community Food Safety and Security the Abu Dhabi Emirate’s wider food security
in 2015.
In order to establish strong foundations for initiatives. 2016 will focus on the Monitor
Al Ain Water became the official water our next phase of growth, we introduced and Review phase with the intention of
of the Emirati Cricket Board. As part in all our UAE sites Q Pulse, an electronic obtaining the ISO 22301, a robust indicator
of this agreement, we also co-sponsored quality management system. Q Pulse that our business is resilient to risks.
a program to develop young Emirati brings a single Agthia culture in food safety,
talent through training and recruitment. quality assurance, and health, safety,
We supported the Rashid Sports and the environment. The database has
Tournament for the Disabled in Dubai as streamlined and brought transparency
Gold Sponsor, and set up a stand at the to internal NCRs, audits, accidents, asset
event for participants and observers to management, and supplier management.
enjoy Agthia products including Capri-Sun, The system, which will be rolled out in
bread made from Grand Mills Flour, and Egypt and Turkey in 2016, supports our
Yoplait yoghurt. commitment to continuous improvement.

Health and Food Safety and Environment People and

Wellness Security Emiratization

Agthia is committed to Agthia aims to protect Agthia believes in building Agthia believes in investing
enhancing people's lives health and nutrition sustainable growth in its people, in the UAE
by providing healthy and in the UAE and beyond opportunities while creating and other territories where
nourishing products, by in a variety of ways, from an environment that will it operates. Promoting
helping the community preventing food-borne allow future generations Emiratization gives UAE
to manage health concerns, illnesses to ensuring to flourish. nationals equal opportunities
and by promoting an availability of food for to ensure they take a vital role
active lifestyle. all in need. in long-term self-sufficiency
and economic growth.

26 Agthia Annual Report 2015

Environment An R&D initiative on packaging in our Under the Zaheb initiative, Agthia is
Consumer Business yielded impressive taking part in training over 2,000 youth in
We are increasingly mindful of our results. The implementation of low-gram 2015-2016. 200 private sector mentors
environmental footprint, making concrete cartons resulted in annual material savings will conduct business mentoring sessions,
efforts in existing operations and factoring of 1,300 tons of cartons, the equivalent workshops such as JA Career Success®,
in environmental best practice in new of 150 fully loaded trailers. A stretch-wrap JA Job Shadow Day™, Steer Your Career,
initiatives. For example, in 2015 we optimization project halved the thickness and the signature Agthia Head Start
completed the implementation of the of stretch-wrap around pallets, while we Program®, which is to be piloted in the
Phytase enzyme in our animal feed, reduced the thickness of labels by a quarter, UAE for the first time. Some of these
to reduce the environmental impact of resulting in annual savings of more than sessions were launched in the second half
phosphorus in animal waste; we reduced 1,200 tons of PET. of the year. Abu Dhabi’s first iCamp was
gas consumption by 7 percent in our held in October and provided 200 foundation
Egypt operations by using new technology People and Emiratization students from Zayed University the
in the boilers; and we installed skylight opportunity to find innovative solutions to
During the summer, we signed an
panels in our new Al Ain warehouse to real business challenges using creativity,
exclusive three-year commitment to develop
take advantage of natural light. leadership, teamwork, and critical thinking
workforce-readiness skills for Emirati
We made remarkable progress on our youth. The initiative, known as “Zaheb,” skills. In November, Agthia hosted 15 UAE
“Go Green” project to cut back further or “Ready” in local dialect, consists of a national students for the Job Shadow Day,
the amount of our waste going to landfill, number of training activities and international matching them to Agthia mentors for an
reducing by more than 40 percent our business programs organized by INJAZ UAE, authentic real-world experience, combined
overall wastage due to better sorting, a member of Junior Achievement Worldwide with a variety of learning activities in work-
recycling, and reusing of materials such – the largest experiential business education readiness education and career planning.
as plastic, cartons, and wood. provider in the world.
Agthia already has an excellent track
Our PET usage also improved due to The program directly addresses one of the record of recruiting and training young
efficiencies of the new high-speed bottling UAE’s most pressing challenges, which is UAE nationals and giving them an
line, and a new water-treatment unit is to guide and encourage young Emiratis into opportunity to build interesting and
enabling us to save increasing amounts the workplace, and, more precisely, into enjoyable careers with us. Through Zaheb,
of water every year. We will be improving business and private enterprise. Teaching we believe we can make a meaningful
our environmental footprint further as we young people about work skills and business contribution in developing work-readiness
implement another high-speed line, and is key to building their own job security and among Emiratis in Abu Dhabi and the
we are in talks with recycling companies an economically prosperous future. country as a whole.
to be able to reuse even more of our waste.

Our mission to encourage a wholehearted

lifestyle extended throughout the
community in 2015.

In order to establish strong foundations for

our next phase of growth, we introduced
in all our UAE sites Q Pulse, an electronic
quality management system.

We are increasingly mindful of our

environmental footprint, making concrete
efforts in existing operations and
factoring in environmental best practice
in new initiatives.

Agthia has an excellent track record

of recruiting and training young UAE
nationals and giving them an opportunity
to build interesting and enjoyable careers
with us.

27
Corporate Governance

At Agthia, we believe that a solid The Company’s Philosophy

foundation of good corporate governance The Company acknowledges its responsibilities to its stakeholders. The Company believes
and business ethics significantly that good corporate governance supports management’s commitment to deliver value to
contributes to our company's ability shareholders through setting and achieving appropriate business objectives. Good corporate
to compete effectively and realize our governance provides an appropriate framework for the Board, its committees, and
full value potential. For our company, management to most effectively represent the interests of the Company and its stakeholders.
this means leadership by a management
team of uncompromising integrity The Company maintains high levels of transparency, accountability, and good management
under disciplined oversight from our practices. This includes adopting and monitoring appropriate corporate strategies, objectives,
Board of Directors, a commitment to and procedures that comply with its legal and ethical responsibilities. A rigorously applied
shareholder and stakeholder engagement, code of conduct ensures good corporate governance in business practices and activities
and creation of sustainable value throughout the organization.
through business fundamentals,
corporate social responsibility, and Group Governance Structure
environmental stewardship.
Shareholders
The Board is fully committed to consistently
protecting the interests of all shareholders Audit Board of Nomination and
through the application of high standards of Committee Directors Remuneration Committee
corporate governance. The Board believes
that strong corporate governance is essential Internal Conduct
for delivering sustainable shareholder value. External
Control and Values
It is the responsibility of the Board of Audit
Department Committee
Directors to serve as a judicious fiduciary
for shareholders and to oversee the
Chief Executive Officer
management of the Company’s business.
Effectively applied corporate governance Executive Committee Risk Management Committee
guidelines are the foundation of business
integrity, and ultimately lead to robust Management Committee
and sustainable business results. The
Company aims to continue implementing
the highest standards of professionalism, Organization Chart
corporate performance, and accountability
to ensure shareholder value is preserved Board of Directors
and enhanced.
Iqbal Hamzah
This report gives an overview of the CEO
Company’s corporate governance systems
and procedures as of December 31, 2015 Ozgur Serin Namir Aridi
and has been filed with Securities and Group Director – Investor Company Secretary
Commodities Authority (SCA), and posted Relations & Corp. Comm. & Group Legal Director
on the ADX website and the Company’s
website, in line with the Corporate
Governance and Institutional Discipline Manolis Trigkonis Fasahat Beg
Fatih Yeldan Tariq Al Wahedi
Ministerial Resolution no. (518) for the Executive Vice- Executive Vice-
Acting CFO COO
year 2009. President – ABD President – CBD

In the following pages we outline our Rabih Kamleh

approach to governance, to demonstrate Group Director, Wayne Turner
Group Director –
clearly how our corporate governance Governance Group Director –
Food Technology,
& Risk Supply Chain
practices support our strategy to Safety & Quality
create sustainable long-term growth
for shareholders.
Toufic El Chaar Tariq Aziz Daniel Marie
Ted Thorbjornsen Khalid Ahmed
Agthia has always had an exemplary VP – Human VP – Projects & VP – Manufacturing
VP – Strategy VP – Public Affairs
governance program. Our commitment Capital & OD Business Solutions Operations
to strong principles and the highest ethical
standards is critical to our goal of driving Executive Committee Members
sustained shareholder value. Capital
Finance International (CFI), United
Kingdom, ranked the Company as the
2015 Corporate Governance winner in
the United Arab Emirates for the second
year in a row.

28 Agthia Annual Report 2015

Corporate Governance Manual The Board of Directors • Undertaking diligent analysis of all
The Corporate Governance Manual as The Board of Directors’ role is to represent proposals placed before the Board.
approved by the Board of Directors covers the shareholders and be accountable to • Encouraging constructive debate in the
the following topics. These guidelines are them for creating and delivering sustainable Boardroom and ensuring all relevant
subject to modification from time to time as value through the effective governance of issues are given due consideration before
the Board of Directors deems appropriate the business. The Governance Framework a decision is made.
in the best interest of the Company, or as enables the Board to balance its role of • Scrutinizing the performance of
required by applicable laws and regulations. providing oversight and strategic counsel management in meeting agreed goals
with its responsibility to ensure conformance and objectives, and monitoring the
Board of Directors with applicable laws and regulations. Our
• Role of the Board reporting of performance.
Board is responsible for the long-term
• Board Responsibilities • Ensuring that the attainment of corporate
success of the Company.
goals achieved through measured
• Personal Liability
The Board of Directors issues an annual risk-taking is in line with the corporate
• Director Access to Officers and Employees Corporate Governance Report. This is a risk appetite. Furthermore, ensuring that
• Independent Advice and Judgment statement of the practices and processes the integrity of financial information,
• Board Composition the Board has adopted to discharge its financial controls, and systems of risk
responsibilities. It includes the processes management are effective.
• Term of Directors
the Board has implemented to undertake • Making decisions concerning the
• Nomination of Directors its own tasks and activities; the matters Company’s capital structure and dividend.
• Outside Board Memberships it has reserved for its own consideration
• Providing clear directions in cases where
• Board Meetings and decision making; the authority it has
it delegates to any of its members or the
delegated to the Vice-Chairman and CEO;
• Boardroom Minutes and Action Items executive management, some of the
and guidance on the relationship between
• Voting administrative matters on which the
the Board and the CEO.
• Director Orientation, Development, Board has the authority to decide.
and Continuing Education Once appointed, every Director shall disclose • Reviewing, approving, and
to the Company the nature of relations monitoring major investments and
• Director Remuneration he/she has with other listed companies, strategic commitments.
• Delegation of Authority including positions, investments, and other
• Reviewing and approving annual and
• Performance Evaluation significant obligations, through signing
interim Financial Statements.
• Measurement and Accountability a Declaration of Independence Form.
• Ensuring compliance with applicable
• Disclosure Pertaining to Board of Directors Board Responsibilities laws, regulations, and all appropriate
Board Committees It is the Board’s responsibility to ensure accounting standards.
• Nomination and Remuneration that effective management is in place to • Ensuring that an adequate risk
Committee and Charter implement the Company’s strategy. The management framework is in place
• Audit Committee and Charter Board is comfortable that the current pool to identify, assess, and mitigate risks.
of talent available within the Company • Ensuring appropriate policies and
Internal Control Framework
provides high potential capabilities for delegations are in place to effectively
• Internal Controls Definition
development towards adequate succession govern the Company.
• Internal Control planning in both the short and long term.
• Adopting a governance structure that is
• Risk Management
The Board is the primary decision-making aligned with the Company’s values and
• Responsibility for Policy Administration body for all matters that are considered strategies, and ensures the following:
• Standards and Best Practices to be material to the Company. The Board
has a rolling agenda to ensure that the key - Enhancing the Company’s reputation
• Communication and Compliance
areas remain in focus throughout the year. - Maintaining high standards of behavior
General Assembly and Shareholders Additionally, the Board of Directors has the - Promoting ethical and responsible
• Annual General Meeting following roles and responsibilities: decision-making
• Disclosure and Communication
• Providing entrepreneurial leadership to the - Communicating clear expectations and
• Board’s Interaction with Shareholders Company within a framework of prudent delegation of authority
• Designated Spokespersons and effective controls that enable risk to - Complying with applicable governance
• Role of Board and Audit Committee in be assessed and managed. regulations
Communication and Disclosures • Setting the Company’s values and
• Appointing a CEO and evaluating
• Internal and Electronic Communication standards, and ensuring obligations
his/her ongoing performance and
• Communication with Regulatory Authorities to its stakeholders and others are
remuneration (and that of senior
understood and met.
management) through the Nomination
Code of Conduct • Ensuring the effectiveness of the internal and Remuneration Committee.
• Business Ethics and Conflict of Interest controls system in the organization.
• Ensuring that an appropriate succession
External Audit • Acting in good faith and with care and plan for senior management is in place.
• Appointment of External Auditors diligence in the best interest of the
• Recognizing the legitimate interests
• Term of External Auditors Company, and avoiding conflicts from
of all stakeholders, including
any personal interest in the role of being a
• Requirements from External Auditors shareholders, business partners,
Director.
employees, and communities in
Corporate Social Responsibility • Constructively challenging and helping which the Company operates.
• Health and Wellness develop proposals on strategy.
• Setting written rules for the dealings of
• Food Safety and Food Security • Making reasonable enquiries to ensure the Company’s directors and employees
• People and Emiratization that the Company is operating efficiently, in the securities of the Company.
• Environment effectively, and legally towards achieving
its goals.

29
Corporate Governance (continued)

• Ensuring the integrity of external reporting Board of Directors: Current Positions:

to stakeholders, including: HE Eng Dhafer Ayed Al Ahbabi Chairman, Abu Dhabi National Takaful Co. PSC
- Reviewing and monitoring controls, Chairman Chairman, Abu Dhabi Security LLC
processes, and procedures in place to Non-Executive, Independent Board Member, Abu Dhabi Islamic Bank
maintain the integrity of the Company’s Director since: April 2014 Board Member, Emirates Insurance Association
financial and accounting records and
statements, with the guidance of the Qualifications: Board Member, Naeem Holding Co. Egypt
Audit Committee. Bachelor in Chemical and Board Member, Etihad Capital
Petroleum Engineering
- Ensuring accurate, objective, and
HE Salem Sultan Al Dhaheri
comprehensive information and Current Positions:
disclosure is conveyed to the Advisor, Senaat General Holding Corporation Member
shareholders to ensure that they are Non-Executive, Independent
Chairman, Al Foah
fully informed of material developments. Director since: June 30, 2015
Chairman, Industrialist Union Society, UAE
- Reviewing the reports of the Audit Qualifications
Committee in relation to risk, internal Member of the Board of Trustees, Institute
of Applied Technology Certified Public Accountant
controls, and internal and external
audit reports. Current Positions:
HE Rashed Hamad Al Dhaheri Deputy Director - Internal Audit, Abu Dhabi
• Making decisions through circular Vice Chairman Investment Authority
resolutions, provided the following Non-Executive, Independent
are taken into consideration: Board Member, TAQA
Director since: April 2014
- The instances of issuing decisions Board Member, Al Etihad Credit Bureau
Qualifications:
by passing a circular resolution may
Bachelor of Arts (Economics) (USA) HE Saif Saeed Ghobash
not exceed four during a year.
- The agreement of the majority of the Current Positions: Member
members of the Board of Directors that Deputy Director, Indexed Funds Department, Non-Executive, Independent
the matter concerned is an exception Abu Dhabi Investment Authority Director since: April 2014
and urgent. Board Member, LA Holdings
Qualifications:
- Circular resolutions for Board approval (Luxembourg) S.A.
Executive Master of Business Administration
are supported with relevant documents.
HE Mohamed Saif Al Suwaidi Bachelor of Science in Economics (USA)
- The written consent of the majority is
attained on any decision of the Board Member Current Positions:
of Directors that is issued through Non-Executive, Independent Director Strategic Affairs, Crown Prince Court
passing a circular resolution, and Director since: April 2014 Board Member, Al Dhafra Insurance Company
provided that the same is presented to
Qualifications: Board Member, Emirates Palace Company
the subsequent meeting of the Board
Bachelor of Science in Business
of Directors for ratification. HE Amna Obaid Al Zaabi
Administration (USA)
Board Structure and Composition Member
Current Positions:
Non-Executive, Independent
The present Board of Directors was elected Director General, Abu Dhabi Fund
at the Annual General Meeting held on for Development Director since: April 2014
April 28, 2014 for a term of three years. Chairman, Al Ain Farms for Qualifications:
The Board currently has seven members, Livestock Production Bachelor of Science in Business
comprising an Independent Non- (major in Finance) (UAE)
Vice Chairman, Arab Bank for Investment
Executive Chairman and six Independent
and Foreign Trade Current Position:
Non-Executive Directors. The Board has
female representation, with one member Board Member, First Gulf Bank PJSC Manager, Projects and Business Development,
on the Board (14.3 percent). Board Member, Emirates Red Crescent Senaat General Holding Corporation
The Board ensures, on an ongoing basis, Board Member, Food Security Center, HE IIias Assimakopoulos
that Directors possess the required skills, Abu Dhabi
Member
knowledge and experience necessary to
HE Khamis Mohamed Buharoon Al Shamsi Non-Executive, Non-Independent
fulfill their obligations. Composition of the
current Board of Directors: Member Board approved resignation of Mr. Ilias
Non-Executive, Independent on June 30, 2015
Director since: April 2014 Qualifications:
Bachelor of Arts (major in Economics) (Canada)
Qualifications:
Bachelor in Accounting and Business Master in Business Administration (USA)
Administration Current Positions:
Managing Partner, IOLAS & CO

30 Agthia Annual Report 2015

Board Induction and Development Board of Directors’, Audit, and Audit Committee Members’ fees for attending
The Chairman, with the support of the Nomination & Remuneration Committee Audit Committee meetings in 2015:
Company Secretary, is responsible for Members’ fees for 2015 are subject Audit Committee Member Amount in AED
the induction of new directors and the to shareholder approval: HE Rashed Hamad Al Dhaheri –
continuing development of directors. All Chairman 50,000
Board Members’ fees for attending Board
directors receive a tailored induction upon meetings in 2015: HE Saif Saeed Ghobash
joining the Board, covering their duties (1 Jan – 30 Jun) 25,000
Board Member Amount in AED
and responsibilities as directors. Directors HE Salem Sultan Al Dhaheri
HE Eng Dhafer Ayed Al Ahbabi – (30 Jun – 31 Dec) 25,000
also receive a full briefing document on Chairman 150,000
all key areas of the Group’s business, HE Amna Obaid Al Zaabi 50,000
HE Rashed Hamad Al Dhaheri –
and they may request further information Vice-Chairman 150,000 Mr. Osama Al Sheleh 50,000
as they consider necessary.
HE Mohamed Saif Al Suwaidi 150,000
Nomination & Remuneration Committee
Directors’ Fees and Remuneration HE Khamis Mohamed Buharoon
Al Shamsi 150,000
Members’ fees for attending Nomination &
According to the Company’s Articles of Remuneration Committee meetings in 2015:
HE Saif Saeed Ghobash 150,000
Association, remuneration of the Company’s Nomination & Remuneration
Directors is determined by the General HE Amna Obaid Al Zaabi 150,000 Committee Member Amount in AED

Holding Corporation (Senaat) from time Mr. Ilias Assimakopoulos HE Mohamed Saif Al Suwaidi –
to time. Directors’ fees of AED 1.05 million (1 Jan – 30 Jun) 75,000 Chairman 50,000
relating to 2014 were paid in 2015. No HE Salem Sultan Al Dhaheri HE Khamis Mohamed Buharoon
bonus was proposed for the Directors (30 Jun – 31 Dec) 75,000 Al Shamsi 50,000
relating to 2015. Mr. Ilias Assimakopoulos
(1 Jan – 30 Jun) 25,000
HE Saif Saeed Ghobash
(30 Jun – 31 Dec) 25,000

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 Company.

Relations with Shareholders

The Board is committed to effective communication between the Company and its shareholders. The Company announces its results and
future prospects to shareholders by way of interim management statements, the interim results, and the annual report and accounts.
Significant matters relating to the trading or development of the business are disseminated to the market by way of announcements, and
by press releases and postings on the Company’s website. The investor relations program includes:
• Regular meetings between • Regular investor roadshows and conferences; • A section dedicated to shareholders
institutional investors, analysts, • Responding to enquiries from on the Company’s website; and
and senior management; shareholders through the Company’s • Organizing site visits for our existing
• Quarterly conference calls; investor relations function; shareholders and potential investors.

Board and Annual General Meetings

During 2015, ten Board of Directors meetings were held.

Board Member 05-Feb 29-Mar 26-Apr 30-Jun 14-Jul 29-Jul 20-Sep 28-Oct 6-Dec 20-Dec
HE Eng Dhafer Ayed Al Ahbabi – Chairman P P P P P P (By Proxy) P (By Proxy) P P P
HE Rashed Hamad Al Dhaheri – Vice Chairman P P P P P P P A A P
HE Mohamed Saif Al Suwaidi P P (By Proxy) P A P A P A A A
HE Khamis Mohamed Buharoon Al Shamsi P P P P P P (By Proxy) P P P P
HE Saif Saeed Ghobash P P P P (By Proxy) P P P (By Proxy) P P P
Mr. Ilias Assimakopoulos P P (By Phone) P P
HE Salem Sultan Al Dhaheri P P P (By Proxy) P P A
HE Amna Obaid Al Zaabi P P (By Phone) 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). End of Committee Term Committee Term not started

The Company’s last Annual General Meeting Related Party Transactions 2015 2014
was held on April 26, 2015 and was Note 24 of Financial Statements provides
AL FOAH AED'000 AED'000
attended by the following Board Members: details of related party transactions. Local purchase 8 -
Other expenses 102 -
HE Eng Dhafer Ayed Al Ahbabi (Chairman) General Holding Corporation (Senaat)
Total 110 -
HE Rashed Hamad Al Dhaheri (holds 51% of Agthia Group PJSC Shares)
(Vice-Chairman)
2015 2014 Dealing in Company Securities
HE Khamis Mohamed Buharoon SENAAT AED'000 AED'000
Al Shamsi (Member) Apart from IIias Assimakopoulos, none of
Directors' and Committee
Members' fees paid 9 1,361
the Board Members or their direct family
HE Saif Saeed Ghobash (Member) members has traded in the Company’s
Mr. Ilias Assimakopoulos (Member) Other expenses 604 534
shares during 2015. All shares held by
Total 613 1,895 IIias Assimakopoulos were held prior to his
HE Amna Obaid Al Zaabi (Member)
appointment as a Board Member. As of
31st Dec 2015, Ilias Assimakopoulos does
not hold any Agthia shares.

31
Corporate Governance (continued)

Delegation of Authority • Employees in management positions Audit Committee

The Company operates a Delegated and employees involved in procurement The Audit Committee, appointed by the
Authority Framework, which specifies how are required to sign “Code of Business Board of Directors, consisted of four
executive authority is delegated from the Conduct” statements annually. members in 2015. Three members were
Board to the Chairman, who has delegated • Directors should notify the Company independent non-executive directors, and the
authorities to the Vice-Chairman and CEO Secretary if a material personal interest Committee included a fourth member with
and on to other senior management in the relating to the affairs of the Company relevant financial and accounting expertise.
Company. The Delegation of Authority arises. In this context, a material personal
policy is established to define the limits of interest would refer to a financial During 2015, six Audit Committee
authority designated to specified positions transaction with a related party of the meetings were held:
of responsibility within the Company, and Company exceeding AED 5 million. 05 29 26 26 27 14
to establish the types and limits that may • Directors should abstain from attendance Audit Committee Member Feb Mar Apr Jul Oct Dec
be approved by the specified positions. at a meeting of Directors where a matter HE Rashed Hamad
in which they have a material personal Al Dhaheri – Chairman P P P P P P
Some of the key authorities delegated
interest is being discussed, unless the HE Amna Obaid
jointly to the Vice-Chairman and CEO Al Zaabi P A P P P P
by the Board are as follows: other Directors vote otherwise.
HE Saif Saeed
• If one of the major shareholders Ghobash P P P
• To jointly manage the Company and (represented by a Board Member) has
its subsidiaries’ operations; a conflict of interest on a matter which
HE Salem Sultan
Obaid Al Dhaheri A P P
• To represent and jointly manage the can affect the price or volume of trading
Mr. Osama Al Sheleh P P P A P P
Company and its subsidiaries in all of the Company’s securities, the Board
transactions and documents before of Directors should conduct a meeting P: Present, A: Apologies sent/leave of absence was
granted to members not attending the meeting(s).
the Government; and issue a decision in the presence
of all its members, excluding the End of Committee Term Committee Term not started
• To sign jointly all contracts and
agreements on behalf of the Company concerned shareholders/Board Member. Total fee for the year 2015 is AED 0.20 million
inside and outside of the United Arab In extraordinary cases, such issues can (2014: AED 0.17 million).
Emirates (UAE); be resolved through a special committee
formed for that purpose. Roles and Responsibilities
• To represent the Company jointly in any
manufacturing and/or distribution deals; • Each Director shall on commencement The Audit Committee maintains free and
of his/her term disclose to the Company open communication between the external
• To represent the Company jointly before the
the nature of the positions he/she auditors, internal auditors, and senior
banks for opening and closing accounts,
occupies in other companies, public management. The objectives of the Audit
applying for loans and financial facilities,
establishments, and other important Committee include:
and signing LCs, bank guarantees, and
commitments, and specify the time
other bank documents. • Monitoring the integrity of the financial
allocated thereto, and any changes to
• The Board has not delegated any special the above mentioned upon occurrence. statements of the Company and any
authority to the Vice-Chairman and CEO formal announcements relating to the
• Additionally, each Director shall disclose,
in 2015. Company’s financial performance, as
on an annual basis, the nature of positions
well as reviewing significant financial
Conflict of Interest and Disclosure he/she occupies in the Company’s
reporting judgments that they contain.
securities, the parent company, and
In performing their duties, the Board of subsidiary or affiliate companies. • Reviewing the Company’s internal
Directors and employees are required to
• Directors should comply with the controls, risk management, and
be fully aware of, clearly understand, and
disclosure policy and take remedial compliance with the relevant regulations.
comply with all applicable laws, rules,
and regulations. Any monetary and non- action where necessary.
• Monitoring and reviewing the
monetary benefits presented to employees effectiveness of the Company’s
Board Committees
in addition to the normal compensation Internal Control Department.
paid by the Company should be in line with The Company has established two
the conflict of interest policy. Employees Committees of the Board, the terms of • Reviewing any insider affiliated or related
should perform their duties with the reference of which are available upon party transactions and reviewing
principles of integrity, fairness, and in request. Board Committees are established compliance with such rules for the conduct
conformity to professional standards. to assist the Board in discharging its and approval of such transactions.
responsibilities. They operate in terms
• The Company has formulated a policy for of Board approved charters. The charters
trading in the Company’s securities by its set out their roles, responsibilities, scope
employees and Board members. The of authority, composition, and procedures
policy ensures compliance with ADX/SCA for reporting to the Board.
regulations relating to insider trading.
• The Company has a policy restricting
employees from receiving/giving
gifts for benefits. This is to prevent
any influence on the employees’
independence and objectivity.

32 Agthia Annual Report 2015

• Making recommendations to the Board in Nomination and Remuneration Committee • Ensuring that Independent Non-Executive
relation to the appointment, reappointment, The Nomination and Remuneration Directors remain independent on
removal, and remuneration of the external Committee is responsible for the review a continuous basis and at all times.
auditor and ensuring a timely response by of the Company’s HR framework and • Organizing and follow-up of the
the Board on the matters contained in the compensation programs. The Committee nomination procedure related to the Board
external auditor’s letter. makes recommendations to the Board on of Directors’ election and membership.
• Reviewing and monitoring the external the remuneration, allowances, and terms • Reviewing the potential for conflicts
auditor’s independence and objectivity of service of the Company senior executives of interest and judgment, and that
and the effectiveness of the audit process, to ensure they are fairly rewarded for their there are appropriate safeguards against
taking into consideration relevant individual contribution to the Company. All such conflicts.
professional and regulatory requirements. the Committee members are Independent
• Reviewing the remuneration policy,
Non-Executive Directors of the Board.
• Developing and implementing policies HR policy, and training policy/plan.
on the engagement of the external auditor During the year, four Nomination and
Remuneration Committee (NRC) meetings Chief Executive Officer
to supply non-audit services, taking
into account relevant ethical guidance were held: The Chief Executive Officer (CEO) is
regarding the provision of non-audit appointed by the Board. The primary role
Nomination and Remuneration 18 13 28 22
services by the external audit firm. Committee Member Mar Apr Sep Dec
of the CEO is to define and execute the
business vision, mission, and strategy
• Reporting to the Board on matters that HE Mohamed Saif
Al Suwaidi – Chairman P P P P of the Company. He is responsible for the
in the Committee’s opinion require Company’s overall operations, profitability,
action or improvement, and providing HE Khamis Mohamed
Buharoon Al Shamsi P P P P and the delivery of sustained growth, and
recommendations on the necessary steps must direct the Company towards the
required to achieve such improvement. Mr. Ilias Assimakopoulos P P
achievement of its objectives. The CEO
HE Saif Saeed Ghobash P A
• Establishing a whistle-blower system is expected to achieve business objectives,
P: Present, A: Apologies sent/leave of absence was forecasts, and targets as defined by the
whereby employees can anonymously granted to members not attending the meeting(s).
notify their doubts on potential Board, and to ensure that all operations are
End of Committee Term Committee Term not started managed efficiently in terms of allocating
abnormalities in the financial report
or internal controls or any other matter, resources appropriately and profitably.
Total fee for the year 2015 is AED 0.15 million
and ensuring proper arrangements for (2014: AED 0.15 million). Roles and Responsibilities
independent and fair investigations of
such matters. Roles and Responsibilities The CEO’s key responsibilities include:

• Determining the appointment, salary, The key objective of the Nomination and Strategic Performance
bonus, benefits, compensation, performance Remuneration Committee is to assist
the Board in fulfilling its responsibilities • Defining and advocating the Company’s
appraisal, discipline, replacement, organization, values, and culture.
reassignment, or dismissal of the Head regarding the following:
of Internal Control and Compliance. • Executing the Company’s overall strategic
• Formulation and annual review of plans and ensuring that objectives set by
remuneration, benefits, incentives of the the Board are met.
Conduct and Values Committee CEO and senior executives, and that the
The Conduct and Values Committee remuneration and benefits given to senior • Providing input and ensuring the
is appointed as a sub-committee of the management are reasonable and in line development of an effective and dynamic
Audit Committee by the Board of Directors with the Company’s performance. organizational structure that is well suited
to assist the Audit Committee to review to the Company’s strategic goals.
• Consideration and putting forward for
arrangements by which staff of the Board approval proposals on remuneration • Leading critical negotiations and
Company may, in confidence, raise adjustments, performance bonus, agreements that have a strategic/crucial
concerns about possible improprieties long-term incentives etc. impact on the Company’s continuity,
including fraud, and to ensure that a success, or development.
process is in place for the independent • Attracting and retaining the best available
people based on competitive practices. • Reviewing the proposed acquisitions of
investigation of such matters and for any new business ventures, in conjunction
appropriate follow-up action. The • Driving the performance-based with the Board.
Committee is entrusted by the Audit remuneration culture within the Company.
Committee with responsibilities for • Promoting and protecting the Company’s
• Reporting to the Board on matters image and business objectives to the
receiving, reviewing, assessing credibility of that in the Committee’s opinion require
allegations, and investigating allegations. external community, and establishing and
action or improvement, and providing maintaining relations with the market and
The Committee members are: recommendations. third parties.
• Head of Internal Control and Compliance • While it is the Committee’s responsibility • Coordinating with senior management in
(Chairman) to exercise independent judgment, it the formulation of goals and objectives for
does request advice from management their respective functions as well as the
• Vice-President – Human Capital & OD and third-party independent sources as development of budgets.
• Group Legal Director appropriate, to ensure that its decisions
are fully informed given the internal and • Reviewing operating results, comparing
• Director, Governance and Risk (Secretary)
external environment. results to established objectives, and
ensuring appropriate measures are taken
• Determination of the Company’s needs to correct deviations, if any.
for qualified staff at the level of senior
executives and the basis of selection. • Overseeing the adequacy and soundness
of the Company’s financial structure.
• Annual performance review of the
Company’s senior executives and
succession planning.

33
Corporate Governance (continued)

Reporting The Executive Committee • Advise management on the content and

• Endorsing the monthly, quarterly, and The Executive Committee (EC) is composed organization of presentations prepared
year-end financial statements and of senior executives of the Company for Board meetings.
management reports. responsible for the management of the • Attend Board meetings and undertake
• Reviewing the reports, recommendations, business, and meets on a regular basis. secretarial responsibilities, including
and issues presented by senior The committee members report to the CEO. organizing minute-taking responsibility
management, and providing feedback The prime role of the EC is to review at each meeting.
and direction as required. business performance, and organizational • In conjunction with the CEO and other
and operational matters; set strategies/ senior management, carry out
• Managing a regular reporting process initiatives and monitor their successful
to the Board on the Company’s instructions of the Board and give
execution; and review key business KPIs, practical effect to the Board’s decisions.
plans, performance, issues, and other progress on key projects etc.
important matters. • Report to the Board with respect to all
• Performing periodic evaluation of direct Company Secretary corporate secretarial responsibilities.
reports and ensuring the existence of The Company Secretary is the focal point • Meet statutory reporting requirements
a continuous self-development program for communication with the Board of in accordance with relevant legislation.
for senior management. Directors and senior management, and • Work with the Chairman and the CEO to
plays a key role in the administration of establish and deliver good governance.
Internal Audit and Risk Management important corporate governance matters. • Arrange/organize shareholders’ meetings.
• Ensuring the existence of proper corporate-
wide risk management activities. The Company Secretary has the following • Maintain good relations with the Stock
key responsibilities: Exchange and SCA through regular
• Supporting the Audit Committee to ensure
interaction with the regulators.
the effectiveness and adequacy of • Organize Directors’ meetings in accordance
implemented internal audit programs. with the agreed-upon procedures. • Continually review developments in
applicable corporate governance regulations
Legal Requirements • Prepare notices, agendas of meetings,
and ensure the Company’s compliance
and supporting reports and
• Ensuring the appropriateness of the legal with the same.
documentation in a timely manner.
status of the Company and its subsidiaries,
and adherence to all applicable laws
and regulations. Senior Executives
Communication and Performance Evaluation Iqbal Hamzah
• Performing the duties of the primary Chief Executive Officer
spokesperson for the Company. Date of joining: August 2006
• Communicating business progress to the
Board, shareholders, and employees on Qualifications:
a regular basis. Fellow member, Institute of Chartered Accountants of Pakistan

• Encouraging and regulating internal and Fellow member, Institute of Chartered Corporate Secretaries
external communication, and creating Below are the details of all the Senior Executives, illustrating their appointment dates,
a transparent and collaborative working remuneration, and bonus for 2015.
environment. Ensuring the existence
Remuneration and Bonus for
of proper and effective communication Allowances paid in 2015 20151 (estimate)
across the Company. Position Appointment Date AED’000 AED’000

• Deciding on the recruitment of senior Chief Executive Officer Sept 29, 2014 2,491 2,062
management in consultation with the Acting Chief Finance Officer2 June 23, 2015 1,133 314
Nomination and Remuneration Committee. Chief Operating Officer3 Sept 13, 2015 668 286
• Establishing performance measures Executive Vice-President – CBD April 15, 2014 1,603 832
for senior management. Managing the Executive Vice-President – ABD April 15, 2014 1,327 747
performance of senior management Vice-President April 15, 2014 1,188 435
and assuming responsibility for their
Vice-President April 15, 2014 1,088 344
development, including regular performance
Vice-President April 15, 2014 1,236 337
reviews and development plans.
Vice-President Jan 6, 2016 NA NA
1 Payment for 2015 bonus is subject to shareholders’ approval of the audited financial statements.
2 On June 23, 2015, Fatih Yeldan was appointed Acting Chief Financial Officer of the Company. Prior to this
appointment, Fatih had been Finance Director of Agri Business.
3 On September 13, 2015, Tariq Al Wahedi was appointed Chief Operating Officer of the Company. He joined
Agthia from Senaat, where he held the position of Senior Vice President – Business Development and Projects.
Previously, Tariq was Senior Vice President – Petrochemicals at Abu Dhabi Basic Industries Corporation.

34 Agthia Annual Report 2015

External Auditors The Company’s policy and procedures are Employees and our Approach
The Board nominates the Company’s external considered to be adequate and effective, to Business Ethics
auditors based on the recommendation while recognizing that such a system is We are committed to ensuring that the
of the Audit Committee. The appointment designed to mitigate rather than eliminate people who work within our business are
and remuneration of the external auditors the risk of failure to achieve business treated with respect, and that their health,
is approved by the general assembly objectives, and can provide reasonable safety, and basic human rights are
of shareholders. but not absolute assurance against material protected and promoted. We have policies
misstatement or loss. There is an ongoing and procedures which set out the standards
At the Annual General Meeting held on April process for identifying, evaluating, and of behavior all employees are expected to
26, 2015, the shareholders re-appointed managing the risks faced by the Company. follow, and provide useful guidance to help
KPMG, one of the leading international The management is responsible for identifying employees when it comes to making the
audit firms, as the external auditors for key risks and assessing their probable right decision. We also have a whistle-
the year 2015. KPMG is a multinational impact through formal defined processes. blower system to enable employees to raise
professional services firm headquartered any concerns they may have that cannot be
in the Netherlands. It is one of the Big Four The Board of Directors acknowledges its
responsibility for the Company’s internal dealt with through the normal channels.
audit firms.
control framework and, to the best of their
KPMG has been the only external auditor Risk Management
knowledge, believes that during the year,
of the Company since their appointment there have been no significant control Risk management is an integral part of our
at the Annual General Meeting held on failings, the overall system of internal Corporate Governance Framework. The
April 26, 2015. control is sound and has been effectively Group has a Risk Management Department,
implemented and monitored. which acts as the custodian of the
Audit and non-audit related fees and costs Company’s risk architecture and its
of the services provided by the external Internal Control Department management. Risk management is integral
auditors during 2015 were AED 694,625. to Agthia’s strategy and to the achievement
The Board has delegated responsibility for
AED oversight of the Internal Control Department of our long-term goals. Our success as
(ICD) to the Audit Committee. The Head of an organization depends on our ability
Year End – Audit 226,724
Internal Control and Compliance is appointed to identify and exploit the opportunities
Quarter Review 374,325 generated by our business and the markets
by the Audit Committee.
Review of Subsidy 45,000 we operate in. In doing this, we take an
Other Non-Audit services* 48,576 The objective of the function is to provide embedded approach to risk management
Total 694,625 independent assurance and consulting that puts risk assessment at the core of the
services using a disciplined systematic leadership team agenda, which is where
*other non-audit services mainly includes XBRL reporting
approach to improve the effectiveness of risk we believe it should be.
No other services of external auditors were management, internal control, compliance
utilized during 2015. and governance process, and the integrity Risk can present itself in many forms, and
of the Company’s operations. The function has the potential to impact our health and
Internal Control Framework is also responsible for monitoring the safety, environment, community, reputation,
compliance of the Company and its regulatory, market and financial performance
The Company’s system of internal control
employees with the law, regulations, and and thereby the achievement of our
aims to ensure that the Board and
resolutions, as well as internal policies and corporate purpose. By understanding and
management are able to fulfill the
procedures. A Charter sets out the purpose, managing risk, we provide greater certainty
Company’s business objectives. An effective
authority, and responsibility of the function. and confidence for our shareholders,
internal control framework contributes to
employees, customers, suppliers, and
safeguarding the shareholders’ investment Reports prepared by ICD are submitted for the communities in which we operate.
and the Company’s assets. to the Audit Committee and copied to the Successful risk management can be a
The objective of the Company’s internal control senior management of the Company for source of competitive advantage.
framework is to ensure that internal controls action. On an ongoing basis, the Audit
Committee monitors the progress that Our risks are viewed and managed on a
are established; that policies and procedures
management has made with respect to Group-wide basis. Risk management is
are properly documented, maintained, and
remedial actions taken on issues and embedded in our critical business activities,
adhered to, and are incorporated by the
findings raised by ICD. The Audit Committee functions, and processes. Materiality and
Company within its normal management
reviews the effectiveness of ICD. our tolerance for risk are key considerations
and governance processes.
in our decision-making.
Abelardo Ramos is the Head of Internal
Control and Compliance. He is also the At strategic level, our risk management
Compliance Officer. objectives are:

Qualifications: • To identify the Company’s significant risks

Member, Institute of Internal Auditors (IIA) and appropriate mitigating actions.
(USA) • To formulate the Risk Appetite Statement
Member, Institute of Internal Controls (IIC) and ensure that our business profile and
(USA) plans are consistent with it.
B.Sc. in Accountancy (BSAc) • To ensure that business growth plans
are properly supported by effective
risk infrastructure.
• To help executives improve the control
and co-ordination of risk-taking across
the business.

35
Corporate Governance (continued)

The Company’s approach is to provide Muhammad Nadeem Sohail Note 3 of the financial statements
direction on: understanding the principal Director, Governance and Risk outlines the financial and capital risk
risks to achieving the overall strategy; management covering:
establishing risk appetite; and establishing Qualifications: • Market risk
and communicating the risk management Member, Institute of Chartered Accountants • Credit risk
framework. The process is then broken in England and Wales (ICAEW) (UK)
• Liquidity risk
down into five steps: identify, assess, Member, Association of Chartered Certified
control, report, and manage. The Company’s • Operational risk
Accountants (ACCA) (UK)
overall risk management strategy is broadly • Capital risk
B.Sc. (Hons) in Applied Accounting (UK)
unchanged from 2014. Other key risk areas listed below are those
Roles and Responsibilities
we believe could cause our results to differ
Steps Activity The responsibilities of the Risk
materially from expected and historical results.
Identify •Establish the process for identifying Management Committee include:
They are not listed in order of significance.
and understanding key business-
level risks • Advising the Board/Executive Committee
(EC) on the Company’s overall risk Fluctuations in commodity prices and
Assess •Agree and implement measurement
and reporting standards appetite, tolerance, and strategy. impacts of ongoing global economic
• Ensuring the risk register is up to date volatility may negatively affect our results
Control •Establish key control processes
and practices and that risk assessments and status The prices we obtain for our commodities
•Monitor the operation of the controls of mitigation actions are reviewed and are determined by, or linked to, prices in
•Provide early warning of updated quarterly. world markets, which have historically been
appetite breaches • Reviewing regularly and approving the subject to substantial volatility. The bulk
Report •Communicate with all stakeholders parameters used in these measures and of the Company’s input cost consists of
the methodology adopted. soft commodities (grains, PET, sugar, milk
Manage •Review all aspects of the Group’s
risk profile • Setting a standard for the accurate and powder), which are exposed to volatile
timely monitoring of large exposures and global prices. Soft commodities’ prices may
•Review and challenge risk
management practices certain risk types of critical importance. vary due to various factors including crop
performance, Government policies, demand
• Reviewing the Company’s capability
The Board has established a risk and versus supply, oil price, and weather
to identify and manage new risk types.
control structure designed to manage conditions. The Company’s Commodity
• Advising the Board/EC on proposed Risk Management Committee oversees the
the achievement of strategic business strategic transactions including acquisitions
objectives. It is not the Company’s strategy procurement strategy and its execution.
or disposals, ensuring that a due diligence Various commodity intelligence reports
to seek to generate earnings growth by appraisal of the proposition is undertaken,
taking higher risk. A risk appetite statement and forecasting tools are used to identify
focusing in particular on risk aspects
specifies the maximum performance international trends and facilitate
and implications for the risk appetite and
variability and risk exposure with qualitative competitive buying.
tolerance of the Company, and taking
and quantitative statements targeting independent external advice where Any change in the subsidy regime for Flour
parameters or acceptable boundaries, while appropriate and available. and Animal Feed, currently in place for Abu
executing our business model for creating • Reviewing reports of any material Dhabi Emirate, may result in volume loss in
sustainable shareholder value. The risk breaches of risk limits and the adequacy the short term. We have already developed
appetite of the Company can be defined of proposed action. plans to minimize the impact of such
as “the amount of risk we are willing to subsidy changes.
• Keeping under review the effectiveness of
seek or accept in the pursuit of our mid-
the Company’s risk management systems, A range of the Company’s products fall
to long-term strategic objectives.”
and reviewing and approving the
under price controls exercised by relevant
In addition, the Risk Committee reviews the statements to be included in the annual
Government regulators, with whom the
risk appetite and future risk strategy, and report concerning risk management.
Company maintains open communication.
makes recommendations on risk appetite • Considering and approving the remit Input costs of such products are regularly
to the Board and actions required to ensure of the risk management function, and monitored and, in the case of significant
adequate controls/mitigating actions are in ensuring it has adequate resources and cost increases, the matter is taken up with
place against key identified risks. appropriate access to information to the relevant authority, seeking approval
enable it to perform its function effectively for partially passing the cost increase to
The Audit Committee, with assistance from and in accordance with the relevant
the Internal Control Department, oversees consumers/customers.
professional standards.
compliance with risk management processes Inability to pass on higher input cost
and the adequacy of risk management The Management and Executive Committee
to consumers will impact profitability.
activities related to the Company’s operations. members of our business dedicate time
each year in a facilitated discussion with
An annual business risk assessment is the Group risk team to consider the risk
undertaken in order to structure an effective environment for their particular functional
management of risk. The Chairman of the or geographic area of responsibility and
Risk Committee reports risk management how these could impact on the achievement
activities/status to the Board on a half- of the Group’s strategic objectives. Through
yearly basis. the course of each year, the EC and Board
agendas address all of the top risks to ensure
proper focus and progress with mitigation.

36 Agthia Annual Report 2015

Quality and Food Safety All these initiatives show the high Brand Reputation
The Company adheres to a strict quality commitment of Agthia to the environment Various factors may adversely impact our
and food safety management system and sustainability. We reduced waste to reputation, including product quality
with certification to ISO 9001 (Quality landfill from 57 percent in 2014 to 32 inconsistencies or contamination resulting
Management System), ISO 22000 (Food percent in 2015 (target was 45 percent) in product recalls. The Company has a
Safety Management System), and HACCP across the group, complying with Abu comprehensive set of policies, processes,
(Food Safety System). Certifications Dhabi Center waste management and systems to drive compliance with good
are awarded by Lloyd’s Register Quality (Nadafa Program). manufacturing practice and monitor quality
Assurance (LRQA), with a recurring assurance. The Company has defined an
Laws and Regulations
six-month audit review program. In 2015, efficient process for product recalls where
all UAE facilities were awarded the Food We must also adapt to and comply with necessary and also maintains product
Safety System Certificate (FSSC) 22000 a broad range of laws and regulations. liability insurance coverage. There were
aligned with Global Food Safety Initiatives Moreover, as rules and regulations change, no instances of product recall during 2015.
(GFSI). Good Agriculture Practices (GAP) and governmental interpretation of those
is also being implemented in farms rules and regulations evolves, the nature Business Interruption
supplying crops to our operations in Egypt. of a particular risk may change. Changes to Risk that our business continuity plans are
Moreover, for the second year the animal certain regulatory regimes may be substantial. inadequate and we face interruptions of
feed operations in our Agri Business were Any change in, and any failure to comply our supply chain and disruptions in our
awarded a grade “A” rating by the Abu with, applicable law and regulation could production facilities, which could materially
Dhabi Food Control Authority (ADFCA) materially and adversely affect our financial adversely affect our operational results.
for excellence in facility management. results. Engaging with governmental and In 2015 there were no major business
Our Al Wathba bakery site has also been non-governmental organizations in a positive interruptions; some minor interruptions
selected by ADFCA as one of the best food and supportive way allows us to represent were observed and managed effectively.
establishments in the emirate of Abu Dhabi our views and to manage the impact of The Company has successfully implemented
for the year 2015. political and regulatory changes. a business continuity management system
as part of the Abu Dhabi emirate’s initiatives.
Agthia won the gold category in the Sheikh Supply Chain Continuity
Khalifa Excellence Awards (SKEA), aligned Failure to deliver a continuous supply of A dedicated team of Business Continuity
with international best practices and aligned compliant finished product. Our supply and Crisis Management experts supports
with the European Foundation for Quality chain model is designed to help ensure the our business. Their responsibilities include:
Management (EFQM) Excellence model. supply, quality, and security of our products. chairing the Business Resilience Steering
Where practical, dependencies on single Committee; coordinating crisis management
Agthia implemented Q-Pulse, a Quality
sources of critical items are removed. For and business continuity training; facilitating
software during 2015. This has helped
all of our key supplies, we aim to have a exercises and monitoring to provide for
streamline processes by bringing consistency
minimum of one back-up supplier to ensure consistency and alignment; and centrally
across all sites within the Group.
no major disruptions are caused in our storing and monitoring updates for plans
Strict and high-standard quality assurance day-to-day running of business. This supporting our critical business processes.
processes and systems are followed to ensure excludes supplies that need to be sourced These activities help ensure an appropriate
all raw materials procured and finished directly from a specific manufacturer, or the level of readiness and response capability
goods produced meet the set standards. procurement of which is governed by the is maintained. Also maintains insurance
underlying agreements. coverage for Business Interruption.
Environmental, Health, and Safety Laws
In order to ensure compliance with applicable Risks of underperformance against plan, Corporate Social Responsibility (CSR)
laws and regulations, the Company Company business may fail to meet the The Company’s CSR program has four
proactively works closely with local and stated strategy in full pillars: Health and Wellness, Food Safety
regional regulatory authorities to understand All business units have set targets; and Food Security, People and Emiratization,
changes to existing regulations and performance against budgets and KPIs are and Environment. More details can be
collaborate in complying with new monitored continually and reported regularly found in the CSR section of the 2015
regulations. The Company is certified for to the Board. Financial strategy risks and Annual Report. The total amount spent
ISO 14001 (Environmental Management performance are regularly reviewed by the in 2015 on CSR initiatives was AED 2.36
System) and OHSAS 18001 (Health and Board and Executive Committee. Consistent million (2014: AED 3.2 million). The key
Safety Management System) except our operational plans and budgets are developed initiatives or sponsorships related to
operations in Agthia Bakery and Turkey, throughout the Group to help drive delivery. community support are: Rashid Center for
where the implementation of these standards If any markets/business/products are not the Disabled; Autism campaign; third Child
is currently under way. In 2015, the performing as per plan, despite executing Mental & Behavioral Conference; Zaheb
Company was still using the Phytase required initiatives, we may consider pulling initiative, aiming at developing
enzyme in its animal (poultry) feed to reduce out or divesting from such businesses. Any workforce-readiness skills for 2000 Emirati
the environmental impact of phosphorus in material business divesting (e.g. shutting down youth in Abu Dhabi, in partnership with
animal waste. Furthermore, within the “Go an operation) will require Board approval. Injaz UAE, a member of Junior Achievement
Green” initiative in the Company to control Worldwide – the largest experiential
energy utilization and waste management, Human Capital business education provider globally.
Agthia has reduced the weight of Risk that the Company cannot implement
Polyethylene Terephthalate (PET) in its its strategies and meet objectives as a result
packaging materials and saved more than of key management leaving the business
1,200 tons of PET. Moreover, the optimization who cannot be readily replaced by equally
of carton specification saved 1,300 tons. experienced/qualified candidates. The
Our shrink film and secondary packaging Company utilizes a variety of talent attraction
material are 100 percent biodegradable. and retention tools to minimize regrettable
losses, and conducts a yearly performance
evaluation and succession planning review.

37
Corporate Governance (continued)

Employee Engagement Share movement versus ADI and ADCM Index 2015
We recognize the value of good Base: December 31, 2010
communication in engaging our employees 300% 272%
257%
in order to achieve common goals and we 250% 231%
246%

have a number of established employee 202% 188%

200% 160%
communication mechanisms in place 166%
150% 121%
to achieve this goal, including regular 106%
130%
150%
160%
95% 85% 139%
100%
communication meetings, the Group’s 47% 88% 83%
110% 113%
80% 67% 88% 67%
intranet site, and increased participation 50% 0% -5% -1% 0%
-7% -12% -4% 13% 12% 11% 23% 45%
41%
58% 64% 74% 66% 58%
0% -4% -7% -7% -4% 17% 31%
on Yammer – the Group’s social network. 0%
-0% -3%
-20% -20% 1% 11%
-14% -26% -26% -6% -10% -9% -3%
-50%
The transparency of our leadership has Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-14 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

increased through the institution of monthly Agthia share price movement fluctuation ADI (ADX Market index) ADCM (Sector index (Consumer sector))
CEO Messages, quarterly “town halls,” and
the Group’s quarterly IDEA-Logue newsletter. Shareholder category (number of shares)
As part of our efforts to empower all As of December 31, 2015
employees and drive an Owner’s Mindset,
we introduced an employee suggestion Category Government Individuals Institutional Total Percentage
scheme initiative: Em-Power. UAE 340,001,000 111,847,205 71,639,168 523,487,373 87.2%
We acknowledge and motivate employees GCC 137,059 23,654,625 23,791,684 4.0%
to contribute to Agthia’s success through Arabs 561,411 93,892 655,303 0.1%
recognition programs such as CEO Sales Foreign 2,172,137 49,893,503 52,065,640 8.7%
Champion Awards, IDEA (core values) Total 340,001,000 114,717,812 145,281,188 600,000,000 100.0%
Awards, and Leadership@Agthia Awards. Percentage 56.7% 19.1% 24.2% 100.0%

Compliance Statement
Shareholders owning 5% or more
During the year 2015, the Company was
not subject to any material fines or As of December 31, 2015
penalties imposed by SCA or any statutory Shareholders No. of shares Percentage
authority on any matter related to capital General Holding Company 306,000,000 51.00%
markets. Additionally, there have been no Emirates International Investment Company L.L.C 42,103,974 7.02%
cases of material non-compliance with any
Abu Dhabi Retirement Pensions and Benefits Fund 30,000,000 5.00%
applicable rules and regulations. No major
incidents occurred in 2015.
Distribution of shareholders according to the size of ownership
Share performance 2015 As of December 31, 2015
Month end share price (AED) Share ownership No. of shareholders No. of shares owned Percentage

Month Open High Low Close

Less than 50,000 72,804 101,867,464 17.0%
From 50,000 to less than 500,000 156 26,745,458 4.5%
Jan-15 6.30 6.30 6.30 6.30
From 500,000 to less than 5,000,000 44 64,060,222 10.7%
Feb-15 6.79 6.84 6.50 6.84
More than 5,000,000 6 407,326,856 67.9%
Mar-15 7.10 7.15 7.00 7.12
Total 73,010 600,000,000 100.0%
Apr-15 7.40 7.70 7.40 7.70
May-15 7.58 7.58 7.00 7.55
Significant Events 2015
Jun-15 7.35 7.47 7.35 7.43
On October 12, 2015 we announced the With an established brand and sales &
Jul-15 7.26 7.80 7.26 7.71
acquisition of 100 percent equity in Al distribution infrastructure, coupled with
Aug-15 7.60 7.85 7.60 7.82 Bayan Water Company, a leading player Agthia’s manufacturing expertise, sales
Sep-15 7.95 8.13 7.95 8.00 in the 5-gallon bulk water segment in the and marketing knowledge, and its iconic
Oct-15 7.52 7.86 7.50 7.65 UAE, with presence also in Oman. brands, Al Bayan is an excellent strategic
Nov-15 7.65 7.80 7.65 7.71 fit for Agthia. We look forward to further
Al Bayan, established in 1999, has a consolidating our leading position in the
Dec-15 7.67 7.67 7.67 7.67 strong presence in the UAE and particularly UAE water category and unlocking the
in the Northern Emirates, where the majority growth potential of the combined business.
of their assets are located, in addition to a
manufacturing operation in Oman since
2002. Al Bayan’s manufacturing and
warehousing facilities in Dubai and Ajman,
and Agthia’s facilities in the Abu Dhabi
emirate, provide many opportunities for
Eng Dhafer Ayed Al Ahbabi
synergy, ranging from lower production
costs to optimized distribution fleets, Chairman
manufacturing and warehousing facilities. February 28, 2016

38 Agthia Annual Report 2015

Directors’ Report

Dear Shareholders, As part of its geographical expansion efforts Integration of the two organizations is
We are very pleased to report another year into Saudi Arabia, the Company has been currently in progress, and we are advancing
of success for Agthia, reflected in our in talks with various renowned distributors well in identifying and capturing synergies
year-on-year double-digit revenue and profit for retail distribution of Grand Mills flour ranging from production to distribution
growth. Higher sales and lower commodity in the Saudi market, and expects to sign and logistics.
costs, in addition to favorable product mix a distribution agreement in Q1 2016.
In Juice Drinks, Capri-Sun revenues grew
and production efficiencies, propelled our by 10 percent, reversing previous periods of
profit to AED 231 million, a 20 percent Consumer Business
decline, and posted a significant 61 percent
increase compared with last year. Revenue, Our Consumer Business had a very strong year
profit surge versus last year. We launched new
at AED 1.87 billion, grew by 13 percent, with sales and profit registering double-digit
variants: Berry, Pineapple, and Multivitamin;
a manifestation of our customers’ and growth versus last year. Net sales for the year
and Freezies, an ice lollies/popsicles product,
consumers’ continued trust in our brands. reached AED 760 million, 23 percent ahead
in two natural flavors (Orange and Red
Accordingly, we maintained our volume of 2014, and net profit increased to AED
Fruits), and supported the launches with
market leadership position in the UAE in 86 million, a 50 percent leap over last year.
a complete revamp of brand positioning,
PET Bottled Water, Flour, and Animal Feed, communication, and marketing activities.
Water & Beverages: Al Ain, our flagship brand,
and significantly reinforced our presence in
maintained its volume leadership in the UAE
the 5-gallon bulk water segment following Food: Net sales for the year reached AED
PET bottled water market all through 2015.
acquisition of Al Bayan Water Company, 117 million, 6 percent growth versus last
Our aggressive distribution drives across the
a leading player in the 5-gallon bulk water year. Growth in Dairy (Yoplait) and Frozen
UAE, supported by reinforced brand equity
segment in the UAE with presence also in Vegetables businesses by more than 20
through effective consumer communication,
Oman. The Company’s balance sheet remains percent was partially offset by a contracting
resulted in a strong growth in consumer
healthy, with a positive operating cash flow Tomato Paste business, in a deliberate
demand, which we were able to meet
to support our future expansion plans. attempt to discontinue our profit-dilutive
uninterruptedly thanks to full-year operation
SKUs in export markets. In the UAE, Tomato
On behalf of the Board of Directors of Agthia of our high-speed bottling line. Consequently,
Paste maintained its leadership position.
Group PJSC, I commend our employees for revenues amounted to AED 644 million, 27
In Frozen Vegetables, we introduced new
their efforts in helping our Company achieve percent ahead of last year, and profit surged
packaging and supplemented our portfolio
this new level of performance. by 30 percent to AED 110 million, propelled
with value-added French Fries and Whole
by higher sales, price increases in the retail
Strawberry. In Dairy, shifting focus from
Performance of Our Businesses trade, lower PET usage and prices, and
plain yoghurt to the high-value fruit and kids
manufacturing efficiencies. A second high-
Agri Business segment, launching new flavors and variants
speed line will commence production in
Net sales for the year reached AED 1.1 billion, and “Yoplait Delight”, an indulgent yoghurt
April 2016 to meet future demand.
a 7 percent growth compared to 2014. Net dessert offered in three unique flavors,
profit rose by 13 percent to AED 226 million. 2015 has been a difficult year in general combined with lower milk powder prices,
A combination of higher sales, lower for our Alpin natural spring water brand has resulted in a gross margin turnaround
commodity prices, production efficiencies, in Turkey, as we encountered production- from negative to double-digit figures,
and favorable product mix all contributed related setbacks at the beginning of the reducing overall category losses significantly.
to a 230 basis point gross profit margin year in addition to a significant 30 percent
Although it still remains a challenge, there
improvement, which were the main drivers devaluation of the local currency, adversely
is encouraging progress in our Frozen Baked
behind profit outgrowing sales. affecting our financial performance.
business; regular shipments of Monty’s
Nevertheless, increased and upgraded
Both Grand Mills Flour and Agrivita Animal Bakehouse products to one of the leading
manufacturing and warehousing capabilities
Feed have maintained their leadership international airlines started in November.
towards the end of the year helped regain
positions in their respective categories. We are progressing in securing new airline
business momentum, and our PET bottled
Growing 15 percent over last year, Flour sales customers in order to strengthen our
water volume grew by a moderate 6 percent
reached AED 427 million (8 percent growth foothold in this channel. Also, our efforts
in comparison to last year, driving total
excluding wheat trading). Distribution and to develop new products in the ambient
revenues to grow 9 percent in local currency.
customer base expansion in Abu Dhabi and croissant range are progressing well,
On the other hand, sales of Alpin more than
the Northern Emirates, complemented by with the launch planned in March 2016.
doubled in the UAE, and with the launch
successful offtake of recently launched Arabic of “new look” bottles and branding, we In Egypt, a strong 13 percent year-on-year
bread flour, growing export and wheat aim for Alpin to become a leading player volume growth has been overshadowed
trading businesses, supported this strong in the Turkish Water segment in the UAE. by currency devaluation and lower market
performance. Despite aggressive competition, prices, in addition to an influx of cheap
Animal Feed sales volume recorded a With Al Bayan’s acquisition in the fourth
Chinese products in both domestic and
resilient 5 percent growth versus last year, quarter, we not only became a meaningfully
international markets. Consequently, net
demonstrating the trust our customers have large player in the 5-Gallon bulk water
sales remained slightly behind last year
in our brand. Net sales grew by a moderate market in the UAE, but also added to our
(in local currency 7 percent growth) with
2 percent as a result of increased trade portfolio an established value-accretive
break-even profit for the year.
spend to defend market leadership and business with multiple operational synergy
volume, reaching AED 679 million for the opportunities and a base in Oman for We are pleased to announce that following
period under review. We continued to add new potential future expansion. Including the the appointment as exclusive distributor in
municipality outlets, and introducing a second 4-month contribution of Al Bayan, net the UAE, we have started distribution of the
shift in response to local shopping habits has sales of our 5-Gallon business in the UAE Al Foah Dates range in the retail channels,
been well received by our customers. We also and Oman amounted to AED 62 million, effective December 2015.
completed production capacity upgrades in our slightly more than doubling last year’s
poultry and large animal feed lines, increasing sales. Excluding Al Bayan, like-for-like
our installed capacity by 11 percent. 5-Gallon business growth was 17 percent.

39
Directors’ Report (continued)

SG&A Expenses Within this framework, we defined the To support this strategy, Agthia’s stock
Total SG&A expenses rose 29 percent year- core categories in which we want to play, incentivization scheme includes the senior
on-year to AED 369 million; excluding Al established a seven-step plan, and began executives and a number of managers across
Bayan, the increase was 24 percent, which is on-boarding key strategic positions as the Group. The program complements the
part of the organization change, in parallel performance bonus incentives that reward
mainly attributable to increased brand-building
with the new strategy. individuals based on their ability to achieve
investment and trade spend to reinforce our
brands against aggressive competition, higher annual financial and operational targets. The
Corporate Social Responsibility stock scheme rewards management with
distribution costs from larger volumes shipped,
consultancy, and infrastructure strengthening In 2015, we took our commitment to Agthia stock based on the overall performance
costs to support growth. Corporate Social Responsibility to new levels of the Company, measured on the basis of
in all four pillars of the program: Health a three-year compounded EPS growth target
Cash Flow and Wellness, Food Safety and Security, the and the performance of the individual.
Environment, and People and Emiratization. Specific financial, operational, and individual
Cash accumulated from operating activities A new endeavor in this area was the launch
totaled AED 335 million during the period. development goals are set each year.
of our pioneering Zaheb initiative, aiming at
Cash and cash equivalents, and fixed deposits developing workforce-readiness skills of Emirati Financial Reporting Framework
as at December 31st, 2015 amounted to youth in Abu Dhabi, in partnership with
AED 571 million. Injaz UAE, a member of Junior Achievement The Directors of Agthia Group PJSC, to
Worldwide – the largest experiential business the best of their knowledge, believe that:
To ensure uninterrupted availability of funds,
education provider globally. • The consolidated financial statements,
the Company maintains sufficient bank credit
lines at very competitive pricing to cover any Emiratization is a priority in Agthia. Our prepared by the management of the
short-term working capital requirements. Emirati employee headcount reached 167 Company, fairly present its state of affairs,
at the end of 2015, 52 people more than the results of its operations, cash flows,
Unallocated Corporate Items a year ago, which included appointment of and change in equity,
Under segment reporting, an unallocated the COO in September 2015. • The Company has maintained proper
assets amount of AED 786 million A full report of the Company’s Corporate books of accounts,
primarily represents cash and bank Social Responsibility activities is provided • Appropriate accounting policies have
balances and goodwill. in the relevant section of the Annual Report. been consistently applied in preparation
of the consolidated financial statements,
Capital Commitments and Contingencies Company Directors and accounting estimates are based
Capital commitments of AED 81 million The present Board of Directors was elected on reasonable and prudent judgment,
mainly relate to our second high-speed at the Annual General Meeting on April 28, • International Financial Reporting Standards
water bottling line, warehouse expansion 2014 for a term of three years. (IFRS), as applicable, have been followed
in the UAE, capacity expansion in Turkey,
During the year Ilias Assimakopoulos resigned in the preparation of these consolidated
and other capital items.
from the Board, and HE Salem Sultan Obaid financial statements,
Bank guarantees and letters of credit of Aldhaheri was subsequently appointed as • The system of internal control is sound
AED 64 million have primarily been issued Board member. We would like to express our in design and has been effectively
in favor of governmental authorities and appreciation to Ilias for his contribution, and implemented and monitored,
the Company’s vendors for the supply of wish him success in his future endeavors.
• There is no doubt about the Company’s
materials and spare parts.
Directors’ fees of AED 1.37 million relating ability to continue as a going concern.
Key Investment Projects to 2014, including those of committee roles,
were paid in 2015 to Board members. Subsequent Events
2015 has been very busy in terms of capital Director’s fees for 2015, including those
expansion projects to support the Company’s As of the date of this report, no major
of committee roles, totaled AED 1.4 million. event has occurred which may have
future growth projections. All major projects
are well on track with their original timelines. a significant impact on the 2015
Dividend
Al Ain Water’s second high-speed line, which Consolidated Financial Statements.
The Board of Directors is pleased to
will add 40 percent incremental capacity, recommend a 12.5 percent cash dividend Future Outlook
is planned to commence production in April for the year 2015.
2016. New grain storage silos for an additional 2016 will be the first year in our journey
50,000 tons of capacity will be in place by Auditors toward our aspiration of reaching more
Q2 2017, and the new Dubai Distribution than $1 billion in revenues by 2020. New
The present auditors, KPMG, retire, and being business strategies and supporting action
Center, which will also accommodate our eligible, offer themselves for re-appointment
new Dubai commercial offices, is progressing plans have been developed and execution is
at the Annual General Meeting.
as planned. Expansion of Flour & Animal in progress. Barring consequential impacts of
Feed, Al Wathba, and Turkey warehouses Code of Corporate Governance potential future changes in the regional and
are also continuing on track. In addition, the global geo-political and economic situation
The Board of Directors and management
PET production capacity increase in Turkey and the fiscal policies of the Government, the
of the Company are committed to the
via transfer of one bottling line from UAE, outlook for 2016 is positive with yet another
principles of good governance. A full report
capacity increase in our poultry and large year of strong sales and profit growth.
of the Company’s Corporate Governance
animal feed lines, and expansion of our activities, endorsed by the Board, has been
Al Ain warehouse were completed in 2015. provided in the Corporate Governance section
of the annual report.
Business Strategy
A thorough business review during the year Incentivization/Remuneration
has led into a new business strategy that will The Board of Directors recognizes the Eng Dhafer Ayed Al Ahbabi
be executed over the next five years, with importance of aligning management
a goal of achieving group revenues of more interests with those of the Company’s Chairman
than $1 billion by 2020. shareholders. February 28, 2016

40 Agthia Annual Report 2015

Consolidated Financial Statements

Contents
Independent Auditor’s Report 42
Consolidated Statement of Profit or Loss 43
Consolidated Statement of Comprehensive Income 44
Consolidated Statement of Financial Position 45
Consolidated Statement of Changes in Equity 46
Consolidated Statement of Cash Flows 47
Notes to the Consolidated Financial Statements 48-70

41
Independent Auditor’s Report

KPMG Lower Gulf Limited Telephone +971 (2) 4014800

Abu Dhabi Branch Fax +971 (2) 6327612
Abu Dhabi, United Arab Emirates Website www.ae-kpmg.com

The Shareholders,
Agthia Group PJSC
Abu Dhabi, United Arab Emirates

Report on the consolidated financial statements

We have audited the accompanying 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 2015, the
consolidated statements of profit or loss, other comprehensive income, changes in equity and cash flows for the year then ended,
and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

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

Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the
Group as at 31 December 2015, and its consolidated financial performance and its consolidated cash flows for the year then ended
in accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements

Further, as required by the UAE Federal Law No. (2) of 2015, we report that:
i) we have obtained all the information and explanations we considered necessary for the purposes of our audit;
ii) 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;
iii) the Company has maintained proper books of account;
iv) the financial information included in the Directors’ report, in so far as it relates to these financial statements, is consistent with the
books of account of the Group;
v) as disclosed in note 28 to the consolidated financial statements, the Group has not purchased any shares during the year ended
31 December 2015.
vi) note 24 to the consolidated financial statements discloses material related party transactions and the terms under which they were
conducted; and
vii) based on the information that has been made available to us nothing has come to our attention which causes us to believe that
the Group has contravened during the financial year ended 31 December 2015 any of the applicable provisions of the UAE Federal
Law No. (2) of 2015 or in respect of the Company Articles of Association, which would materially affect its activities or its consolidated
financial position as at 31 December 2015.

Munther Dajani
Registration Number 268
Abu Dhabi, United Arab Emirates
28 February 2016

42 Agthia Annual Report 2015

Consolidated Statement of Profit or Loss
For the year ended 31 December

2015 2014
Notes AED’000 AED’000

Revenue 1,866,350 1,655,067

Cost of sales 6 (1,269,056) (1,191,774)

Gross profit 597,294 463,293

Selling and distribution expenses 7 (231,407) (184,572)
General and administrative expenses 8 (132,718) (97,959)
Research and development costs 9 (4,634) (3,487)
Other income, net 10 7,306 17,729

Operating Profit 235,841 195,004

Finance income 11 11,572 10,053
Finance expense 12 (15,718) (11,770)

Profit before income tax 231,695 193,287

Income tax (expense)/credit 13, 26 (381) 38

Profit for the year attributable to equity holders of the Group 231,314 193,325

Basic and diluted earnings per share 14 0.386 0.322

The notes on pages 48 to 70 form an integral part of these consolidated financial statements.
The independent auditors’ report is set out on page 42.

43
Consolidated Statement of Comprehensive Income
For the year ended 31 December

2015 2014
AED’000 AED’000

Profit for the year attributable to equity holders of the Group 231,314 193,325

Items that may be subsequently reclassified to profit or loss

Foreign currency translation difference on foreign operations (6,616) (3,444)

Other comprehensive income (6,616) (3,444)

Total comprehensive income for the year attributable to equity holders of the Group 224,698 189,881

The notes on pages 48 to 70 form an integral part of these consolidated financial statements.
The independent auditors’ report is set out on page 42.

44 Agthia Annual Report 2015

Consolidated Statement of Financial Position
As at 31 December

2015 2014
Note AED’000 AED’000

Assets
Non-current assets
Property, plant and equipment 15 933,491 841,749
Advances for property, plant and equipment 33,714 3,502
Goodwill 16 188,336 95,472
Intangible assets 17 35,454 10,548

Total non-current assets 1,190,995 951,271

Current assets
Inventories 18 262,032 393,193
Trade and other receivables 19 271,011 224,836
Government compensation receivable 20 80,103 99,586
Cash and bank balances 21 570,903 540,397

Total current assets 1,184,049 1,258,012

Current liabilities
Bank borrowings (current portion) 22 292,815 370,506
Trade and other payables 23 318,431 416,830
Due to related parties 24 513 1,373

Total current liabilities 611,759 788,709

Net current assets 572,290 469,303

Non-current liabilities
Provision for end of service benefits 25 49,343 36,167
Bank borrowings (non-current portion) 22 165,303 –
Deferred tax liability 26 918 671
Other liabilities 27 3,310 4,023

Total non-current liabilities 218,874 40,861

Net assets 1,544,411 1,379,713

Equity
Share capital 28 600,000 600,000
Legal reserve 29 121,423 98,292
Translation reserve (21,568) (14,952)
Retained earnings 844,556 696,373

Total equity 1,544,411 1,379,713

The consolidated financial statements were approved and authorised by the Board of Directors on 28 February 2016 and were signed
on their behalf by:

Eng Dhafer Ayed Al Ahbabi Iqbal Hamzah Fatih Yeldan

Chairman Chief Executive Officer Acting CFO

The notes on pages 48 to 70 form an integral part of these consolidated financial statements.
The independent auditors’ report is set out on page 42.

45
Consolidated Statement of Changes in Equity
For the year ended 31 December

Share Legal Retained Translation

capital reserve earnings reserve Total
AED’000 AED’000 AED’000 AED’000 AED’000

Balance at 1 January 2014 600,000 78,959 582,381 (11,508) 1,249,832

Total comprehensive income for the year
Profit for the year – – 193,325 – 193,325

Other comprehensive income:

Foreign currency translation difference on foreign operations – – – (3,444) (3,444)

Total comprehensive income – – 193,325 (3,444) 189,881

Owners’ changes directly in Equity

Dividend for the year 2013 – – (60,000) – (60,000)
Transfer to legal reserve – 19,333 (19,333) – –

Balance at 31 December 2014 600,000 98,292 696,373 (14,952) 1,379,713

Total comprehensive income for the year

Profit for the year – – 231,314 – 231,314

Other comprehensive income:

Foreign currency translation difference on foreign operations – – – (6,616) (6,616)

Total comprehensive income – – 231,314 (6,616) 224,698

Owners’ changes directly in Equity

Dividend for the year 2014 – – (60,000) – (60,000)
Transfer to legal reserve – 23,131 (23,131) – –

Balance at 31 December 2015 600,000 121,423 844,556 (21,568) 1,544,411

The notes on pages 48 to 70 form an integral part of these consolidated financial statements.
The independent auditors’ report is set out on page 42.

46 Agthia Annual Report 2015

Consolidated Statement of Cash Flows
For the year ended 31 December

2015 2014
Note AED’000 AED’000

Cash flows from operating activities

Profit for the year 231,314 193,325
Adjustments for:
Depreciation 15 82,522 63,071
Finance expense 12 15,718 11,770
Finance income 11 (11,572) (10,053)
Gain on sale of property, plant and equipment 10 (722) (114)
Movement in provision for slow moving inventory (367) (1,890)
Movement in allowance for impairment loss 32 821
Provision for end of service benefits 25 12,735 6,660
Income tax expense/(credit) 381 (38)

Operating cash flows before payment for employees’ end of service

benefits, tax and changes in working capital 330,041 263,552

Changes in:
Inventories 137,082 (118,410)
Trade and other receivables (31,829) (31,400)
Government compensation receivable 19,483 10,056
Trade and other payables (115,804) 156,261
Due to related parties (860) (277)
Other liabilities (713) (450)

Cash generated from operating activities 337,400 279,332

Payment of end of service benefits 25 (1,772) (3,354)
Tax paid (247) –

Net cash generated from operating activities 335,381 275,978

Cash flows from investing activities

Acquisition of property, plant and equipment 15 (169,488) (198,476)
Acquisition of intangible assets (337) –
Proceeds from sale of property, plant and equipment 834 733
Acquisition of subsidiary (162,410) –
Funds (invested in)/withdrawn from fixed deposits 21 (11,608) 14,189
Interest received 10,670 8,254
Proceeds from sale of available-for-sale financial assets – 5,200

Net cash used in investing activities (332,339) (170,100)

Cash flows from financing activities

Proceeds from long term loan 165,303 –
Bank borrowings, net (88,049) (51,522)
Dividend paid (60,000) (60,000)
Interest paid (15,126) (8,463)

Net cash generated from/(used in) financing activities 2,128 (119,985)

Increase/(decrease) in cash and cash equivalents 5,170 (14,107)

Cash and cash equivalents as at 1 January 38,985 53,092

Cash and cash equivalents as at 31 December 21 44,155 38,985

The notes on pages 48 to 70 form an integral part of these consolidated financial statements.
The independent auditors’ report is set out on page 42.

47
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

1 Legal status and principal activities

Agthia Group PJSC (the “Company”) was incorporated as a Public Joint Stock Company pursuant to the Ministerial Resolution No. 324 for 2004.
General Holding Corporation “SENAAT” owns 51% of the Company’s shares. The principal activities of the Company are to establish, invest, trade
and operate companies and businesses that are involved in the food and beverage sector.
The consolidated financial statements of the Company as at and for the year ended 31 December 2015 comprise the Company and it’s below
mentioned subsidiaries (collectively referred to as the “Group”). Details of subsidiaries acquired during 2015 are provided in note 32 of these
financial statements.

Country of Share of equity (%)

Incorporation
Subsidiary and operation 2015 2014 Principal Activity

Grand Mills Company PJSC UAE 100 100 Production and sale of flour and animal feed.
Al Ain Food and Beverages PJSC (AAFB-UAE) UAE 100 100 Production and sale of bottled water, flavored
water, juices, yogurt, tomato paste, frozen
vegetables and frozen baked products.
Agthia Group Egypt LLC (Agthia Egypt) Egypt 100 100 Processing and sale of tomato paste, chilli paste,
fruit concentrate and frozen vegetables.
Agthia Grup Icecek ve Dagitim Sanayi ve Ticaret Turkey 100 100 Production, bottling and sale of bottled water.
Limited Sirketi (Agthia Turkey)
Al Bayan Purification and Potable Water LLC UAE 100 – Production, bottling and sale of bottled water.
Shaklan Plastic Manufacturing Co. LLC UAE 100 – Production of plastic bottles and containers.
Al Manal Purification and Bottling of Mineral Water LLC Oman 100 – Production, bottling and sale of bottled water.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

(a) Statement of compliance
The consolidated financial statements of Agthia Group PJSC have been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRIC interpretations and comply with the Articles of Association. On 1 April 2015, UAE Federal law no. 8 has been
replaced with UAE Federal Law No 2 of 2015 being the Commercial Companies Law (“UAE Companies Law of 2015”) and has come into
force on 1 July 2015. However companies are allowed to ensure compliance with the new UAE Companies Law of 2015 by 30 June 2016 as
per the transitional provisions contained therein. The Group is in the process of amending its Articles of Association and the same will be
finalised in due course.

(b) Basis of measurement

The consolidated financial statements have been prepared under the historical cost convention.

(c) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in ‘United Arab
Emirates Dirham’ (AED), which is the Group’s functional and presentation currency.

(d) Use of estimates and judgements

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates and
assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 4. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates
are recognised prospectively.

2.1.1 Changes in accounting policies and disclosures

a) Application of new and revised IFRS
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2015 and earlier
application is permitted; however, the Group has not early adopted the following new or amended standards in preparing these consolidated
financial statements.

48 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

2 Summary of significant accounting policies (continued)

2.1 Basis of preparation (continued)
2.1.1 Changes in accounting policies and disclosures (continued)
a) Application of new and revised IFRS (continued)
IFRS 15 Revenue from Contracts with Customers: IFRS 15 establishes a comprehensive framework for determining whether, how much and
when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts
and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018,
with early adoption permitted.
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9
includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model
for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on
recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual period beginning on or after 1 January 2018.
However, early application of IFRS 9 is permitted.
The Group is assessing the potential impact of these standards on its consolidated financial statements.

2.2 Consolidation
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 is such 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 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.

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.
Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from
contingent consideration amendments. Cost also includes direct attributable costs of investment.

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.

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 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.

2.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s CEO.
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 CEO to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete financial information is available (see note 5).

49
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

2 Summary of significant accounting policies (continued)

2.4 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 income or 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 income or finance expense”.

(b) Group companies

The results and financial position of all the Group entities (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 at the date of that 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
(iii) all resulting exchange differences are recognised in the consolidated statement of comprehensive income.

2.5 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 straight-line
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 4-20 years
Other equipment 2-3 years
Vehicles 4-8 years
Furniture and fixtures 4-5 years

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 (note 2.7).
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 classification upon completion and commissioning,
and are depreciated over their useful economic lives from the date of such completion and commissioning.

2.6 Intangible assets

2.6.1 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.

50 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

2 Summary of significant accounting policies (continued)

2.6 Intangible assets (continued)
2.6.1 Goodwill (continued)
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.

2.6.2 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 entity.
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.

2.7 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 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
sell 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.

2.8 Financial assets

The Group classifies its financial assets in the following categories: loans and receivables, available for sale and at fair value through
profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified
as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and bank balances’ in the
consolidated statement of financial position (notes 2.12 and 2.13). These assets are initially recognised at fair value plus any directly
attributable transaction cost. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

(b) Financial assets at fair value through profit or loss

Financial assets/liabilities at fair value through profit or loss are financial assets held for trading. Derivative financial instruments are
also categorised as held for trading unless they are designated as hedges. Assets/liabilities in this category are classified as current
assets/liabilities if expected to be settled within 12 months, otherwise they are classified as non-current.

2.9 Impairment of financial assets

Impairment losses on financial assets carried at amortised cost are measured as the difference between the carrying amount of the
financial assets and the present value of estimated cash flows discounted at the original effective interest rate. Impairment losses
are recognised in the consolidated statement of profit or loss and reflected in an allowance account against such financial assets.
When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through
the consolidated statement of profit or loss.

2.10 Financial instruments

Financial instruments comprise trade and other receivables, cash and bank balances, trade and other payables, amounts due to related
parties, derivative financial instruments, and bank loans. A financial instrument is recognised if the Group becomes a party to the contractual
provisions of the instrument.
Financial instruments are recognised initially at fair value plus, any directly attributable transaction costs.
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire, or if the Group
transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial
liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Cash and bank balances comprise unrestricted cash balances and term deposits with original contractual maturities of three months or less.
The fair values of the financial instruments are not materially different from the carrying amount.

51
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

2 Summary of significant accounting policies (continued)

2.10 Financial instruments (continued)
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there
is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously.

Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Derivatives are initially
measured at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial
recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.

2.11 Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined using the first-in, first-out (FIFO) 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.
Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.12 Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current
assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,
less provision for impairment.

2.13 Cash and bank balances

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other
short-term highly liquid investments with original maturities of not more than three months and bank overdrafts. In the consolidated
statement of financial position, bank overdrafts are shown within current liabilities.

2.14 Share capital

Ordinary shares are classified as equity.

2.15 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 payable 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.

2.16 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.

2.17 Current and deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates that
have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.

2.18 Employee benefits

(a) 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.

52 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

2 Summary of significant accounting policies (continued)

2.18 Employee benefits (continued)
(b) Staff terminal 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.

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, Finance Department, represented by the Abu Dhabi Retirement Pensions and
Benefits Fund.

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 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 recognized immediately in the profit or loss.

2.19 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.

2.20 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the
Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably measured when the significant risks and rewards of ownership
have been transferred to the buyer, it is probable that future economic benefits will flow to the entity and when specific criteria have been
met for each of the Group’s activities as described below. Revenue is measured at the fair value of consideration received or receivable,
excluding discounts, rebates, and sales taxes or duty. The Group bases its estimates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics of each arrangement.

Sale of goods
Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, there is no continuing
management involvement with the goods, amount of revenue, recovery of the consideration is probable, the associated costs, possible return of
goods can be estimated reliably. The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.

Sale of services
Revenue from services rendered is recognised upon services performed.

2.21 Finance income and finance expenses

Finance income comprises interest income on call deposits and gains on derivative financial instrument (note 2.10). Interest income
is recognised as it accrues, using the effective interest method.
Finance expenses comprise interest expenses on borrowings and losses on derivative financial instrument. All borrowing costs are recognised
in the consolidated statement of profit or loss using the effective interest method.

2.22 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of
profit or loss on a straight-line basis over the period of the lease. The Group leases certain properties and vehicles.

53
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

2 Summary of significant accounting policies (continued)

2.23 Dividends 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 dividends are approved by the Group’s shareholders.

2.24 Government compensation and grants

Funds that compensate the Group for selling flour and animal feed at subsidised prices within the Emirate of Abu Dhabi 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.

2.25 Earnings per share

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

2.26 Research and development cost

In accordance with IAS 38 ‘Intangible Assets’, expenditure incurred on research and development, excluding known recoverable amounts on
contracts, and contributions to shared engineering programmes, is distinguished as relating either to a research phase or to a development
phase. All research phase expenditure is charged to consolidated statement of profit or loss. For development expenditure, this is capitalised
as an internally generated intangible asset only if it meets strict criteria, relating in particular to technical feasibility and generation of future
economic benefits. Expenditure that cannot be classified into these two categories is treated as being incurred in the research phase.

3 Financial risk management

3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value risk, interest rate risk, cash
flow risk and price risk), credit risk, liquidity risk and operational risk.
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance.

Risk management
The Group’s international operations expose it to a variety of financial risks that include the effects of changes in foreign currency exchange
rates (foreign exchange risk), market prices, interest rates, credit risks, liquidity and operational risk. The Group’s financing and financial
risk management activities are centralised into Group Treasury (“GT”) to achieve benefits of scale and control. GT manages financial
exposures of the Group centrally in a manner consistent with underlying business risks. GT manages only those risks generated by the
underlying commercial operations and speculative transactions are not undertaken.
Through the Group’s risk management process, risks faced by the Group are identified and analysed to set appropriate actions to
mitigate risk, and to monitor risks and adherence to the process. Risk management activities are reviewed when appropriate to reflect
changes in market conditions and the Group’s activities.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management activities.
The Group’s Audit Committee oversees how management manages the Group’s risk management process, and reviews the adequacy
of the risk management activities in relation to the risks faced by the Group. The Group Audit Committee is assisted in its oversight role
by Internal Audit. Internal Audit undertakes both regular and ad-hoc reviews of risk management activities, the results of which are
reported to the Audit Committee.

(a) Market risk

(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the Euro, Egyptian Pound, Turkish Lira and Indian Rupees. In respect of the Group’s transactions denominated in the US
Dollar the Group is not exposed to the foreign exchange risk as the AED is pegged to the US Dollar. Foreign exchange risk arises from
future commercial transactions, recognised assets and liabilities and net investments in foreign operations (note 30).

(ii) Price risk

The Group does not have investment in securities and is not exposed to equity price risk. The Group does not enter into commodity
contracts other than to meet the Group’s expected usage and sale requirements, and is exposed to commodities price risk. However,
the Group has entered into a derivative financial instrument whereby the Group will earn a minimum return of 1%, the value of
which is driven by a combination of interest rate movements and movements in foreign exchange rate of currencies that underlie the
derivative financial instrument. The principal amount under the derivative financial instrument is guaranteed in case Group does not
liquidate the structure before the contractual maturity of the instrument.

(iii) Interest rate risk

The effective rates of interest on the Group’s bank liabilities are linked to the prevailing bank rates. The Group does not hedge its interest
rate exposure.

54 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

3 Financial risk management (continued)

3.1 Financial risk factors (continued)
(b) Credit risk
Credit risk is managed on a Group basis, except for credit risk relating to accounts receivable balances. Each subsidiary is responsible for
managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered.
The Group, in the ordinary course of business, accepts letters of credit/guarantee as well as post dated cheques from major customers.
The Group establishes an allowance for impairment that represents its estimated losses in respect of trade and other receivables. The
main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss
component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss
allowance is determined based on historical data of payment statistics for similar financial assets and as per Group policy.
Credit risk arising from cash and bank balances and deposits with banks and financial institutions, is managed by making deposits taking
into account the bank’s/financial institution’s financial position, past experiences and other relevant factors.

(c) Liquidity risk

Cash flow forecasting is performed at a Group level. Group finance department monitors rolling forecasts of the Group’s liquidity requirements
to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing
facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, and, if applicable external regulatory
or legal requirements – for example, currency restrictions.
Surplus cash held by the operating entities are transferred to GT as per the Group’s cash pooling arrangements with a bank. GT invests
surplus cash in time deposits with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-
mentioned forecasts.
Typically 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 requirement, including the servicing of financial obligations; this excludes the potential impact of extreme
circumstances that cannot reasonably be predicted, such as natural disasters.
In addition, the Group maintains the following lines of credit:
• Facility for AED 737,953 thousand, which includes overdraft, guarantee line and import line. These facilities carry interest of EIBOR/
LIBOR/mid corridor rate plus margin.
• AED 123,893 thousand, short term loans which carries interest rate of EIBOR/LIBOR/mid corridor rate plus margin.
• AED 165,303 thousand, long term loans which carries interest rate of LIBOR plus margin.

(d) Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel,
technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and
regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group’s operations.
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s
reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management
within each business unit. This responsibility is supported by the practicing and managing of key operational risks, for example:
• Adequate internal controls
• Reconciliations and monitoring of transactions
• Compliance with regulatory and other legal requirements
• Policies and procedures compliance
• Business resumption and IT disaster recovery plans
• Code of business conduct
• Adequate insurance coverage
• Commodity Risk Management Committee
• QA compliance function independent of manufacturing
• Enterprise Risk Management
• Monthly and quarterly business reviews
• Training and professional development of talents
Compliance with Group standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal
Audit reviews are discussed with the management of the business unit to which they relate, with summaries submitted to the Audit
Committee and senior management of the Group.

55
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

3 Financial risk management (continued)

3.2 Capital risks management
Management’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business.
The Board seeks to maintain a balance between the higher returns that might be possible with higher level of borrowings and the
advantages and security afforded by a sound capital position.
There were no changes in the Group’s approach to capital management during the year.

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,
which are described in (note 2), management has made the following judgements which have a significant effect on the amounts of
the assets and liabilities recognised in the consolidated financial statements.

Impairment losses on trade receivables

Management reviews its receivables to assess impairment at each reporting date. In determining whether an impairment loss should
be recorded in the consolidated statement of profit or loss, management makes judgements as to whether there is any observable data
indicating that there is a measurable decrease in the estimated future cash flows.
Accordingly, an allowance for impairment is made where there is an identified loss event or condition which, based on previous experience,
is evidence of a reduction in the recoverability of the cash flows.

Provision for obsolescence on inventories

Management reviews the 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 there is any future saleability of the product and the net
realisable value for such product and expired or close to expiry raw material and finished goods.

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.

Impairment of other assets

At each reporting date, management assesses whether there is any indication that its assets may be impaired. The determination of
allowance for impairment loss requires considerable judgment and involves evaluating factors including industry and market conditions.

Impairment of non-current assets

The carrying values of all non-current assets are reviewed for impairment, either on a stand-alone basis or as part of a larger cash
generating unit, when there is an indication that the assets might be impaired. Additionally, goodwill and intangible assets with indefinite
useful lives are tested for impairment annually. Any provision for impairment is charged to the consolidated statement of profit or loss in
the year concerned. Impairments of goodwill are not reversed. Impairment losses on other non-current assets are only reversed if there
has been a change in estimates used to determine recoverable amounts and only to the extent that the revised recoverable amounts
do not exceed the carrying values that would have existed, net of depreciation or amortisation, had no impairments been recognised.

Income tax provision

Management has taken into consideration the requirements for a tax provision. Management has estimated the tax provision based
on the year’s performance after adjustment of non taxable items. The tax provision was calculated based on the tax rate of the country
where operations were performed taking into consideration the exemptions that could be claimed by conventions either locally or
internationally as at the balance sheet date.

Intangibles fair value estimation

Management has estimated the fair value of the spring water usage rights based on ten years estimate. Subsequent changes in the
term of license or water capacity levels may change the fair value of the rights.
Management has estimated the fair value of acquired trademark based on a twenty-five year business plan and recorded it on a provisional
basis. Management is in the process of hiring a valuation expert to finalise the value to be associated to the trademark acquired.

5 Segment reporting
Information about reportable segment for the year ended 31 December
The Group has two reportable segments, as described below. The 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 Board of Directors review internal management reports on at least a quarterly basis.

56 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

5 Segment reporting (continued)

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)

• Bottled Water and Beverages includes manufacturing and distribution of drinking water, water based drinks and juices.
- Business operation in Turkey is of similar nature as “Bottled Water”, hence, it is also reported under CBD.
- Business operation of Al Bayan is manufacturing and distribution of drinking water, hence, it is also reported under CBD.
• Food includes manufacturing and distribution of tomato and chilli paste, fruit concentrate, frozen vegetables, fresh dairy products,
and frozen baked products.
- Business operation in Egypt is of similar nature as “Food” hence it is also reported under CBD.
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 CEO. 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. Inter-segment pricing is determined on an arm’s length basis.
Segment wise operating results of the Group, for the year are as follows:

Agri Business Division (ABD) Consumer Business Division (CBD)

Flour and Animal Feed Bottled Water and Beverages Food CBD Total Total
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

External revenues 1,106,080 1,038,511 643,544 506,219 116,726 110,337 760,270 616,556 1,866,350 1,655,067

Gross profit 307,054 265,158 295,772 206,255 8,191 3,689 303,963 209,944 611,017 475,102
Finance income 165 30 1,130 9 346 – 1,476 9 1,641 39
Finance expense – (94) (7,170) (1,254) (956) (2,045) (8,126) (3,299) (8,126) (3,393)
Depreciation expense 24,359 22,480 51,431 30,343 1,087 5,328 52,518 35,671 76,877 58,151

Reportable segment
profit/(loss) after tax 226,494 200,753 110,118 84,948 (23,890) (27,644) 86,228 57,304 312,722 258,057

Material non cash items;

Impairment losses on
trade receivables (net) – 147 (62) 698 94 (24) 32 674 32 821

Agri Business Division Consumer Business Division Total

2015 2014 2015 2014 2015 2014
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

Others:
Segment assets 537,753 702,903 1,051,064 861,192 1,588,817 1,564,095
Segment liabilities 143,763 321,233 161,851 178,737 305,614 499,970
Capital expenditure 21,726 22,407 121,217 189,290 142,943 211,697

Reconciliations of reportable segments’ gross profit, interest income and expense, depreciation, capital expenditure, revenues, profit or loss,
assets and liabilities.

2015 2014
Reportable Consolidated Reportable Consolidated
segment totals Unallocated totals segment totals Unallocated totals
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

Gross profit 611,017 (13,722) 597,295 475,102 (11,809) 463,293

Finance income 1,641 9,931 11,572 39 10,014 10,053
Finance expense (8,126) (7,592) (15,718) (3,393) (8,377) (11,770)
Depreciation 76,877 5,645 82,522 58,151 4,920 63,071
Capital expenditure 142,943 3,814 146,757 211,697 2,408 214,105

57
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

5 Segment reporting (continued)

Reconciliations of reportable segments’ gross profit, interest income and expense, depreciation, capital expenditure, revenues, profit or loss,
assets and liabilities (continued)

31 December
2015 2014
AED’000 AED’000

Profit for the year

Total profit for reportable segments 312,722 258,057
Unallocated amounts
Other operating expenses (83,747) (66,370)
Net finance income 2,339 1,638

Consolidated profit for the period after income tax 231,314 193,325

Assets
Total assets for reportable segments 1,588,817 1,564,095
Other unallocated amounts 786,227 645,188

Consolidated total assets 2,375,044 2,209,283

Liabilities
Total liabilities for reportable segments 305,614 499,970
Other unallocated amounts 525,019 329,600

Consolidated total liabilities 830,633 829,570

6 Cost of sales
31 December
2015 2014
AED’000 AED’000

Raw materials 945,391 918,102

Salaries and benefits 144,220 116,781
Depreciation 70,304 54,323
Utilities 34,978 32,298
Maintenance 33,150 30,888
Rent Expense 11,715 12,729
Others 29,298 26,653

1,269,056 1,191,774

Cost of raw materials for flour and feed products is stated after the deduction of the Abu Dhabi Government compensation amounting to
AED 365,799 thousand (2014: AED 387,355 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.

7 Selling and distribution expenses

31 December
2015 2014
AED’000 AED’000

Salaries and benefits 98,972 73,050

Marketing expenses 54,868 45,486
Transportation 57,190 54,863
Rent expense 4,778 2,087
Depreciation 2,636 1,900
Maintenance 1,304 1,356
Royalty fees 3,636 380
Others 8,023 5,450

231,407 184,572

58 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

8 General and administrative expenses

31 December
2015 2014
AED’000 AED’000

Salaries and benefits 74,335 57,847

Legal and professional fees 15,564 9,284
Maintenance 9,967 9,244
Depreciation 9,267 6,770
Allowance for impairment of trade receivables 1,570 840
Rent expense 2,743 229
Others 19,272 13,745

132,718 97,959

9 Research and development costs

31 December
2015 2014
AED’000 AED’000

Salaries and benefits 4,014 3,038

Depreciation 315 78
Others 305 371

4,634 3,487

10 Other income, net

31 December
2015 2014
AED’000 AED’000

Other income
Management fee 9,704 9,508
Income on sale of raw material/scrap 2,226 4,146
Income from filling/storage etc. – 1,144
Insurance claim 602 844
Gain on sale of property, plant and equipment 722 114
Others 1,399 1,973
14,653 17,729

Other expenses
Professional fees (7,347) –

Other income, net 7,306 17,729

Management fee represents the wheat storage fees charged to an Abu Dhabi Government entity as part of food security program.

11 Finance income
31 December
2015 2014
AED’000 AED’000

Interest income 11,099 10,053

Gain on derivative instrument (note 27) 473 –

11,572 10,053

59
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

12 Finance expense
31 December
2015 2014
AED’000 AED’000

Interest expense 12,951 7,185

Loss on derivative instrument (note 27) – 3,726
Others 2,767 859

15,718 11,770

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

14 Basic and diluted earnings per share

The calculation of basic and diluted earnings per share at 31 December 2015 and 2014 was based on the profit attributable to
shareholders amounting to AED 231,314 thousand (2014: AED 193,325 thousand) and the weighted average number of shares
outstanding of 600,000 thousand shares (2014: 600,000 thousand shares).

15 Property, plant and equipment

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

Cost
At 1 January 2014 363,236 681,171 44,954 37,082 157,654 1,284,097
Additions 5,251 43,772 5,901 10,743 148,438 214,105
Transfers 140,910 129,849 5,418 1,731 (277,908) –
Disposals/write-offs (694) (8,267) (1,433) (3,174) – (13,568)
Currency retranslation (892) (1,068) (330) (59) (279) (2,628)

At 31 December 2014 507,811 845,457 54,510 46,323 27,905 1,482,006

Additions 1,341 18,952 6,343 10,427 109,694 146,757

Transfers 5,440 40,575 1,827 254 (48,096) –
Acquisition* 28,724 8,964 345 5,175 – 43,208
Disposals/write-offs – (14,789) (20) (3,628) – (18,437)
Currency retranslation (2,728) (1,783) (3,163) (201) (1,793) (9,668)

At 31 December 2015 540,588 897,376 59,842 58,350 87,710 1,643,866

Depreciation
At 1 January 2014 160,101 374,981 29,133 25,706 – 589,921
Charge for the year 9,432 42,694 7,506 3,439 – 63,071
Disposals (575) (7,261) (1,415) (3,056) – (12,307)
Currency retranslation (84) (183) (133) (28) – (428)

At 31 December 2014 168,874 410,231 35,091 26,061 – 640,257

Charge for the year 14,445 53,262 8,136 6,679 – 82,522
Disposals – (7,231) (16) (3,597) – (10,844)
Currency retranslation (304) 266 (1,424) (98) – (1,560)

At 31 December 2015 183,015 456,528 41,787 29,045 – 710,375

Net book amount

31 December 2015 357,573 440,848 18,055 29,305 87,710 933,491

31 December 2014 338,937 435,226 19,419 20,262 27,905 841,749

* Acquisition represents assets relating to Al Bayan Purification and Potable water LLC, Shaklan Plastic Manufacturing Co. LLC and Al Manal Purification and Bottling
of Mineral Water LLC acquired during 2015.

60 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

15 Property, plant and equipment (continued)

31 December
2015 2014
AED’000 AED’000

Acquisition of property, plant and equipment 146,757 214,105

Increase/(decrease) in advance for property, plant and equipment 30,212 (14,987)
Non cash transfer within group (7,481) (642)

Acquisition of property, plant and equipment in the statement of cash flows 169,488 198,476

16 Goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s operating segments where the goodwill is monitored for internal
management purposes. The aggregate carrying amount of goodwill allocated to each unit is as follows:

2015 2014
AED’000 AED’000

Agri business division 61,855 61,855

Consumer business division (UAE operations) 31,131 31,131
Consumer business division (Turkish operations) 2,486 2,486
Consumer business division (Al Bayan operations) 92,864 –

188,336 95,472

The recoverable amounts of Agri Business Division and Consumer Business Division (UAE operations) cash-generating units 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 and were based on the following key assumptions:

Consumer Consumer Consumer

Agri business division business division business division
business division (UAE operations) (Turkey operations) (Al Bayan operations)

Anticipated annual revenue growth (%) 7% – 10% 14% – 25% 10% – 30% 6% – 8%
Discount rate (%) 11.50% 11.50% 11.50% 11.50%

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.

17 Intangible assets
Trademark Spring water rights Others Total
AED’000 AED’000 AED’000 AED’000

At 1 January 2014 – 11,047 220 11,267

Additions – – 181 181
Currency retranslation – (884) (16) (900)

At 31 December 2014 – 10,163 385 10,548

Additions 26,733 – 337 27,070
Currency retranslation – (2,049) (115) (2,164)

At 31 December 2015 26,733 8,114 607 35,454

61
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

17 Intangible assets (continued)

Spring water rights is considered to have an indefinite life as per the term of agreement. The Group is not aware of any material legal,
regulatory, contractual, competitive, economic or other factor which could limit its useful life. Accordingly, it is not amortised.
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 ten year business plan and were based on the following key assumptions:

Anticipated annual revenue growth (%) 3% – 20%

Discount rate (%) 11.50%

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.
Addition of trademark during the year is as a result of the acquisition of Al Bayan operations by the Group in 2015. The amount has
been calculated on a provisional basis determined on a twenty five years business plan. Management is in the process of appointing
a valuation expert to finalise the value to be associated to the trademark acquired.

18 Inventories
31 December
2015 2014
AED’000 AED’000

Raw and packing materials 127,942 122,377

Work in progress 9,275 13,304
Finished goods 59,356 64,404
Spare parts and consumable materials 55,158 44,889
Goods in transit 21,378 159,663

273,109 404,637
Provision for slow moving inventory (11,077) (11,444)

262,032 393,193

19 Trade and other receivables

31 December
2015 2014
AED’000 AED’000

Trade receivable 202,045 176,908

Prepayments 46,387 29,929
Other receivables 22,579 17,999

271,011 224,836

Trade receivables are stated net of allowance for impairment loss on financial assets AED 8,185 thousand (2014: AED 8,018 thousand).
The Group’s exposure to credit and currency risk, and impairment loss related to trade and other receivables is disclosed in (note 30).

20 Government compensation receivable

31 December
2015 2014
AED’000 AED’000

Receivable at beginning of the year from the Government of Abu Dhabi 99,586 109,642
Compensation for the year 365,799 387,355
Amounts received during the year (385,282) (397,411)

Balance as at 31 December 80,103 99,586

62 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

21 Cash and bank balances

31 December
2015 2014
AED’000 AED’000

Cash in hand 920 547

Current and savings account 80,723 62,198

Cash and bank balances 81,643 62,745

Escrow account (for dividend distribution 2009 to 2014) (27,130) (23,760)

Bank overdrafts used for cash management purposes (note 22) (10,358) –

Cash and cash equivalents in the statement of cash flows 44,155 38,985

Cash and bank balances 81,643 62,745

Fixed deposits 489,260 477,652

Cash and bank balances including fixed deposits 570,903 540,397

Fixed deposits are for a period not more than one year (2014: up to one year) carrying interest rates varying from 1.50% – 2.55%
(2014: 1.80% – 2.25%).
Escrow account represents the amount set aside for payment of dividends. Equivalent amount has been recorded as liability in trade and
other payables. This restricted cash balance has not been included in the cash and cash equivalents for the purpose of cash flow statements.

22 Bank borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured
at amortised cost.

31 December
2015 2014
AED’000 AED’000

Current liabilities
Credit facility 245,723 300,578
Short term loan 36,734 69,928
Bank overdraft 10,358 –

292,815 370,506

Non-current liabilities

Term loan*** 165,303 –

Terms and repayment schedule

31 December 2015 31 December 2014
Face Carrying Face Carrying
Interest Year of value/limit amount value/limit amount
Currency Rate maturity AED’000 AED’000 AED’000 AED’000
LIBOR/EIBOR/mid
Short term loan** USD/AED/EGP corridor rate + margin* 2016 123,893 47,092 132,699 69,928
LIBOR/EIBOR/mid
Credit Facility** USD/AED/EGP corridor rate + margin* 2016 712,953 243,747 456,629 299,077
Credit Facility (Capex)** USD/AED LIBOR/EIBOR + margin* 2016 25,000 1,976 75,000 1,501
Term loan*** USD LIBOR + margin* 2020*** 165,303 165,303 – –
Total 1,027,149 458,118 664,328 370,506
*Margin on the above loans and facilities varies from 0.40% – 1.25% (2014: 0.50% – 1.25%).
**Credit facility of face value AED 375,000 thousand and credit facility (Capex) of face value AED 25,000 thousand is secured by a floating charge over the current assets,
stock and receivables of the Group.
*** During the year, Group availed a loan of AED 165,303 thousand for a tenure of five years. The loan is secured by floating charges over the current assets, inventory
and receivables of the Group.

63
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

23 Trade and other payables

31 December
2015 2014
AED’000 AED’000

Trade payables 119,719 245,676

Accruals 128,119 102,783
Other payables 70,593 68,371

318,431 416,830

24 Transactions with related parties

The Group, in the ordinary course of business, enters into transactions at agreed terms and conditions which are carried out on an arm’s
length basis, with other business enterprises or individuals that fall within the definition of a related party contained in International
Accounting Standard 24. The Company has a related party relationship with the Group entities, its executive officers and business entities
over which they can exercise significant influence or which can exercise significant influence over the Group.
The volume of related party transactions, outstanding balances and related expenses and income for the year are as follows:

Amounts due to related parties

31 December
2015 2014
AED’000 AED’000

General Holding Corporation PJSC (SENAAT)

Opening balance 1 January 1,373 1,650
Directors and committee members’ fees charged 9 1,361
Other expenses 604 534
Payments (1,575) (2,172)

Closing balance at 31 December 411 1,373

31 December
2015 2014
AED’000 AED’000

AL Foah Company LLC

Opening balance 1 January – –
Local purchases 8 –
Other expenses 102 –
Payments (8) –

Closing balance at 31 December 102 –

Transactions with key management personnel

Key management personnel compensation are as follows:

31 December
2015 2014
AED’000 AED’000

Short term benefits 19,094 17,354

Long term benefits 4,084 4,277

23,178 21,631

64 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

25 Provision for end of service benefits

31 December
2015 2014
AED’000 AED’000

Balance at 1 January 36,167 32,861

Acquired during the year 2,213 –
Charge for the year 12,735 6,660
Paid during the year (1,772) (3,354)

49,343 36,167

In accordance with the provisions of IAS 19, an actuary has carried out an exercise to assess the present value of its obligations as at
31 December 2015, using the projected unit credit method, in respect of employees’ end of service benefits payable under the U.A.E
Labour Law. The actuary has assumed average annual increment/promotion costs of 4.00% p.a. The expected liability at the date of
leaving the service has been discounted to its net present value using a discount rate of 3.50%. Under this method an assessment has
been made of an employee’s expected service life with the Group and the expected basic salary at the date of leaving the service.

26 Deferred tax liability

Deferred tax assets and liabilities resulted from the temporary differences between the tax base of an asset and liability and the carrying
amount of these assets and liabilities in the consolidated financial statements.

31 December
2015 2014
AED’000 AED’000

Balance at 1 January 671 764

Tax expense/(credit) for the year 381 (38)
Currency translation (134) (55)

918 671

The analysis of deferred income tax is as follows:

31 December
2015 2014
AED’000 AED’000

Deferred tax asset

Current assets 946 6
Current liabilities – 36

Gross deferred tax assets 946 42

Property, plant and equipment (1,860) (647)

Others (4) (66)

Gross deferred tax liabilities (1,864) (713)

Net deferred tax liabilities (918) (671)

65
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

27 Other liabilities
(a) During 2015, the Group entered into a forward contract with a bank to buy AED against the Turkish Lira (TRY) to hedge its receivables
in TRY. Under the arrangement, the Group has fixed the rate for buying AED against TRY to manage its TRY/AED foreign exchange
rate risk. This is due to mature on 15 March 2017.
(b) During 2014, the Group entered into a derivative instrument with a bank whereby:
i) Bank lends the Group USD 50,000 thousand at Libor+0.90%
ii) The Group invests USD 50,000 thousand in a structured product whereby the Group will earn a minimum return of 1%+ a rate
based on the performance of a foreign exchange index created by the bank.
The principal amount of USD 50,000 thousand is guaranteed in case the Group does not liquidate the structure before the contractual
maturity of the instrument (5 years). Under the instrument, lending arrangement and the arrangement to invest in the index are contained
in one agreement and not contractually separable.
The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) are determined
by using valuation techniques. The Group uses counterparty valuation at the end of each reporting date. This derivative instrument is
classified as a level 3 security.

31 December
2015 2014
AED’000 AED’000

Derivative instrument liability 3,253 3,726

Other liability 57 297

3,310 4,023

28 Share capital
The share capital includes 526,650 thousand shares of a par value of AED 1 each, which have been issued for in-kind contribution.

31 December
2015 2014
AED’000 AED’000

Authorised, issued and fully paid (600,000 thousand ordinary shares of AED 1 each) 600,000 600,000

The Group has not purchased any shares during the year.

29 Legal reserve
In accordance with the applicable Federal Law and the Company’s Articles of Association, 10% of the profit for each year 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.

30 Financial instruments
Credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was:

31 December
2015 2014
Notes AED’000 AED’000

Trade receivables 19 202,045 176,908

Other receivables 19 22,579 17,999
Cash at banks 21 569,983 539,850

794,607 734,757

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 estimated by the Group’s management based on prior experience and the current
economic environment.
The Group has no significant concentration of credit risk, with overall exposure being spread over a large number of customers.

66 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

30 Financial instruments (continued)

Credit risk (continued)
Impairment losses
The ageing of trade receivables at the reporting date was:

31 December
2015 2014
AED’000 AED’000

Trade receivables not impaired:

Not due 147,027 128,261
Past due 0 – 60 days 39,696 35,228
Past due 61 – 120 days 7,029 6,087
Past due 121 – 180 days 4,401 2,601
Past due 181 – 240 days 947 1,228
Past due 241 – 300 days 554 993
301 days and above 2,391 2,510

Trade receivable past due and provided for impairment:

Past due 181 – 240 days 359 398
Past due 241 – 300 days 29 333
301 days and above 7,797 7,287

210,230 184,926

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

31 December
2015 2014
AED’000 AED’000

Balance at 1 January 8,018 7,197

Acquired during the year 135 –
Provision for receivables 1,570 883
Write offs (1,538) (62)

8,185 8,018

The following are the contractual maturities of financial liabilities:

Contractual More than

Carrying value cash flows Up to 1 year 1-2 years 2-5 years 5 years
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

31 December 2015
Trade and other payables 190,312 190,312 190,312 – – –
Due to related parties 513 513 513 – – –
Bank borrowings 458,118 472,572 297,040 2,924 172,608 –
Long term liability 975 975 57 918 – –
Derivative Instrument liability 3,253 3,253 – 2,577 676 –

653,171 667,625 487,922 6,419 173,284 –

31 December 2014
Trade and other payables 314,047 314,047 314,047 – – –
Due to related parties 1,373 1,373 1,373 – – –
Bank borrowings 370,506 370,731 370,731 – – –
Long term liability 968 968 190 778 – –
Derivative Instrument liability 3,726 3,726 – – 3,726 –

690,620 690,845 686,341 778 3,726 –

67
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

30 Financial instruments (continued)

Market risk
Foreign currency risk
The Group’s exposure to foreign currency risk was as follows based on notional amounts:

2015 2014
Amounts in ’000 EUR INR CHF GBP EUR INR CHF GBP

Foreign purchases 1,868 1,704 150 206 3,597 3,671 485 237

The following exchange rates were applicable during the year:

Average rate Reporting date rate

2015 2014 2015 2014

EUR 4.073 4.880 4.012 4.464

CHF 3.821 4.017 3.705 3.711
EGP 0.478 0.516 0.468 0.512
TRY 1.355 1.680 1.260 1.580
INR 0.057 0.060 0.055 0.058
GBP 5.618 6.050 5.443 5.703

A strengthening/weakening of the AED, as indicated below, against the EUR, CHF, EGP, TRY, INR and GBP at 31 December would have
increased/(decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate
variances that the Group considered to be reasonably possible. The analysis assumes that all other variables, in particular interest rates,
remain constant. The analysis is performed on the same basis as for 2014, albeit that the reasonably possible foreign exchange rate
variances were different, as indicated below.

Equity Profit/(loss)
31 December 2015 AED’000 AED’000

EUR (strengthening by 0.02%) – 2

CHF (strengthening by 0.45%) – 3
INR (weakening by 0.02%) – –
GBP (strengthening by 0.29%) – 6
EGP (weakening by 0.58%) (3) –
TRY (strengthening by 0.14%) 51 –

48 11

Equity Profit/(loss)
31 December 2014 AED’000 AED’000

EUR (weakening by 8%) – 1,250

CHF (strengthening by 4%) – (73)
INR (strengthening by 3%) – (7)
GBP (weakening by 1%) – 9
EGP (weakening by 6%) (643) –
TRY (weakening by 7%) (3) –

(646) 1,179

The above analysis is based on currency fluctuations during January 2016 (2014: January and February 2015).

68 Agthia Annual Report 2015

Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

30 Financial instruments (continued)

Market risk (continued)
Interest rate risk
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was;

31 December
2015 2014
Fixed rates instruments AED’000 AED’000

Financial assets 489,260 477,652

Financial liabilities – (297)

489,260 477,355

Variable rates instruments

Financial liabilities 458,118 370,506

The fair value of the Group’s financial instruments is not materially different from their carrying amount.
At 31 December 2015, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, profit for the year
would have been AED 3,538 thousand (2014: AED 2,460 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 2015, the Group provided returns to
Shareholders in the form of dividends for the year 2014, current details of which are included in the statement of changes in equity
for the year.

31 Contingent liabilities and capital commitments

31 December
2015 2014
AED’000 AED’000

Bank guarantees and letters of credit 64,386 63,200

Capital commitments 80,628 46,702

At 31 December 2015 guarantees of AED 52,626 thousand were outstanding (2014: AED 43,038 thousand) and is included in bank
guarantees and letter of credit above.
The above 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.
Non-cancellable operating lease rentals are payable as follows:

31 December
2015 2014
AED’000 AED’000

Less than one year 19,253 16,700

Between one and five years 30,932 24,806
More than five years 6,632 4,914

56,817 46,420

The Group has leasehold land, building and vehicles under operating leases. The lease terms are with option to renew the lease at the
time of expiry.
Lease expense charged for the year is AED 26,437 thousand (2014: AED 19,533 thousand).

69
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015

32 Acquisition of subsidiary
During 2015, the Group acquired 100% shares of three entities, Al Bayan Purification and Potable Water LLC, Shaklan Plastic
Manufacturing Co. LLC in UAE and Al Manal Purification and Bottling of Mineral Water LLC in Sultanate of Oman. The entities are
leading companies in the 5 gallon bulk water segment. The Group took over management control of the entities on 31 August 2015
and completed 100% equity acquisition by October 2015 for a cash consideration of AED 162,410 thousand. The Group plans
to expand its regional distribution footprint in Northern Emirates of UAE and in Oman. The acquisition resulted in the recognition
of goodwill of AED 92,864 thousand.
The acquired entities contributed AED 26,365 thousand of revenue and a profit of AED 3,587 thousand for the period from 31 August 2015
(date of acquisition) to 31 December 2015. Acquisition-related costs incurred amounted to AED 610 thousand was charged to general
and administrative expenses in the consolidated statement of profit or loss for the year ended 31 December 2015.
The assets and liabilities recognised as a result of the acquisition are as follows:

Fair value
AED’000

Net assets acquired

Property, plant and equipment 43,208
Inventories 4,358
Other current assets 11,156
Other current liabilities (15,522)
Income tax payable (387)

Net identifiable assets acquired 42,813

Share of net identifiable assets acquired (100%) 42,813

Intangible acquired 26,733
Goodwill 92,864

Total consideration (satisfied by cash) 162,410

70 Agthia Annual Report 2015