CORPORATE GOVERNANCE REPORT 2019 CUSTOMER EXCELLENCE CREATING VALUE

ADNOC Distribution 2019 Corporate Governance Report | 1

INTRODUCTION

At ADNOC Distribution (the Company), we believe that by having a high quality corporate governance framework and complete information transparency, we are better able to promote the long-term sustainable success of ADNOC Distribution, generate value for all stakeholders and contribute to the wider community. Accordingly, we have adopted and implemented a complete corporate governance framework that fulfils all applicable laws and regulations while also being in line with international best practice.

This corporate governance framework is designed to ensure that our Company has a culture of consistency, responsibility, accountability and transparency of the highest standards at all levels.

Ensuring that our governance processes and procedures are undertaken properly helps to contribute to our long-term sustainable success. Accordingly, we are taking this opportunity to remind you of the comprehensive corporate governance framework that we have adopted and under which we operate. In this report, we will provide you with an overview of our corporate governance processes and report on how these processes have been implemented by us.

Dr. Sultan Ahmed Al Jaber Chairman of the Board of Directors CONTENTS 25 March 2020 1 Introduction 2 Our Corporate Governance Overview 4 Share Dealings 5 ADNOC Distribution’s Board of Directors 11 Executive Management 15 Transactions with Related Parties 19 External Auditor Mr. Khaled Salmeen Mr. Jassim Alseddiqi Mr. David-Emmanuel Mr. Ben Hennessy Chairman of the Executive Chairman of the General Counsel* 20 Audit Committee Beau Committee Nomination and Chairman of the Audit 21 Nomination and Remuneration Committee Remuneration Committee Committee 22 Executive Committee 23 Insider Dealing Committee 24 Internal Control System 26 Corporate Social Responsibility

29 General Information * The General Counsel is responsible for and oversees the Company’s internal control function 2 2019 Corporate Governance Report | 3

OUR CORPORATE GOVERNANCE OVERVIEW

We are committed to having a corporate governance framework that is compliant WE ARE with all corporate governance requirements that are applicable to public joint stock RESPONSIBLE RESPECTFUL companies in the UAE and that are consistent with international best practices. Below is a brief summary of some of PROGRESSIVE COLLABORATIVE EFFICIENT the key policies that we have implemented and under which we operate.

Corporate Governance Dividend Policy Related Party Insider Dealing Policy Compliance avoidance of situations that merely Policy Transactions Policy Investigations Policy have the appearance of a conflict of Our Dividend Policy sets out the clear The requirement to have fair and interest. Under this policy, conflicts of Our Corporate Governance Policy and transparent criteria and method Our Related Party Transaction Policy is transparent dealings in our securities Our commitment to operating with interest must be promptly disclosed provides clear guidance on: (a) the for the distribution of our profits such designed to ensure that: (a) transactions is of paramount importance to us and integrity includes investigating, so that the appropriate course of Company’s corporate governance that the distribution of our profits with related parties are conducted we take a zero tolerance approach where necessary, allegations of action can be taken in order to protect structure and the interface between serves the interests of both ADNOC on arm’s length terms; (b) the Board to any activities which would prevent ethical misconduct. Our Compliance ADNOC Distribution’s interests. the Company and its stakeholders; Distribution and our shareholders. of Directors and senior management this requirement from being properly Investigations Policy and supporting (b) the authorities and decision- are aware of the steps required to implemented.Accordingly, we have procedures set forth our approach making mechanisms within The payment of dividends is subject approve transactions with related implemented an Insider Dealing to investigations relating to alleged Whistleblowing Policy the Company and between its to consideration of: (a) the cash parties; and (c) a legitimate business Policy to ensure that the obligations violations: (a) ethical business practices; stakeholders; and (c) the role and management requirements of the case is present and which supports and responsibilities of our employees, (b) integrity in our interactions and Having an open, honest and responsibilities of the Company’s Company for operating expenses, the relevant related party transactions, officers and directors with respect arrangements with third parties; and (c) transparent culture supports corporate governance function. interest expense, and anticipated including their arm’s length nature. In to dealings in our securities are applicable laws, regulations, policies our commitment to integrity. Our capital expenditures; and (b) market accordance with this policy, we may not clearly defined. In accordance with and procedures relating to ethical Whistleblowing Policy encourages our conditions, the then current operating enter into a related party transaction the Insider Dealing Policy, we have business practices and integrity. This employees to report concerns about Code of Conduct environment in our markets, and unless it has been approved by: (i) established an Insider Dealing policy requires all of our personnel to unethical behavior in connection the outlook for the business of the our Board of Directors, where the Committee to oversee the ongoing cooperate fully and truthfully with all with our business by assuring Our Code of Conduct demonstrates Company. In addition, any level or transaction’s value does not exceed implementation of this policy. investigations and to avoid engaging confidentiality and by protecting good ADNOC Distribution’s commitment payment of dividends will depend on, 5% of the value of our share capital; in certain activities that may hinder or faith whistle-blowers from retaliation, to compliance and ethical behavior in among other things, future profits and or (ii) our shareholders at a General interfere with an investigation. even if they are mistaken. all that it does. Our Code of Conduct the business plan of the Company, at Assembly, where the transaction’s value Anti-Bribery and (a) sets out the minimum standard of the discretion of the Board of Directors. exceeds 5% of our share capital. The Corruption Policy conduct that we expect from anyone foregoing requirements do not apply to Conflicts of Interest working for or on behalf of ADNOC Under our Dividend Policy, the transactions with ADNOC and with other We are committed to doing business Policy Distribution; and (b) provides a set Company may distribute quarterly, ADNOC group companies. lawfully, ethically and with integrity, of basic rules and standards that are semi-annual and/or annual dividends and we expect all of our employees We understand that our employees, designed to ensure that our business to shareholders from operating profits However, for so long as ADNOC owns and representatives to act accordingly. officers and directors will engage is conducted in an ethical and and/or accumulated profits of the more than 50% of our shares, we may Consistent with this commitment, in legitimate social, financial and compliant manner and in accordance Company. The Company currently not enter into transactions with ADNOC we take a zero tolerance approach business activities outside the scope with our core values. intends to pay a dividend twice each or other ADNOC group companies to fraud, bribery and all other forms of their work for us. Our Conflicts fiscal year, with an initial interim unless such transactions have been of corruption. Our Anti-Bribery and of Interest Policy sets forth our payment in October of that year and approved by our Board of Directors, Corruption Policy sets forth our requirements for the avoidance a second payment in April of the including a majority of the independent requirements to ensure that none of and management of conflicts of following year. members of the Board of Directors. our employees or representatives interest that may arise as a result of engage in any of these activities. these other activities, including the 4 2019 Corporate Governance Report | 5

SHARE ADNOC DISTRIBUTION’S DEALINGS BOARD OF DIRECTORS

Purchases and sales of our It is the policy of ADNOC Distribution that apply to inside information and shares and other transactions that inside information must not be dealings in ADNOC Distribution’s involving our securities by used by any of our employees, officers securities. or directors for personal gain. ADNOC employees, officers and Distribution expects that all of its The following table sets forth the directors are governed by our people, as well as the other persons details of all purchases and sales Insider Dealing Policy. with whom ADNOC Distribution of our shares undertaken by our transacts, abide by this policy, and in Directors, their spouses and their doing so adhere to applicable laws children in 2019: Our Board of Directors comprises seven Directors. All Directors are non-executive Shares held as at Total Sale Total Purchase Director Position 31 December 2019 Transactions Transactions directors, with three of our Directors being independent within the meaning of Resolution No. (7/R.M) of 2016 of the Securities and Commodities Authority of the United Arab H.E. Dr. Sultan Ahmed Al Jaber Non-executive Chairman ─ ─ ─ Emirates (the SCA and the Corporate Governance Rules). Pursuant to our Articles of (1) Mr. Khaled Salmeen Non-executive Director ─ ─ ─ Association, each Director serves a three-year term, after which a Director may be elected Mr. Abdulaziz Abdulla Alhajri Non-executive Director ─ ─ ─ to a successive term or terms. Mr. Ahmed Jasim Al Zaabi(2) Non-executive Director ─ ─ ─

Independent Mr. Jassim Alseddiqi ─ ─ ─ Composition of the Board of Directors Non-executive Director Set forth below is a table detailing the composition of our Board of Directors: Independent Mr. Pedro Miró Roig ─ ─ ─ Non-executive Director

Independent H.E. Dr. Sultan Ahmed Al Jaber Mr. David-Emmanuel Beau Mr. David-Emmanuel Beau ─ ─ ─ Non-executive Director Non-executive Chairman Independent Non-executive Director Since February 2016(1) Since November 2017 Mr. Matar Hamdan Al Ameri (3) Non-executive Director ─ ─ ─ (2) Mr. Abdulla Salem Al Dhaheri(4) Non-executive Director ─ ─ ─ Mr. Khaled Salmeen Mr. Pedro Miró Roig Non-executive Director Independent Non-executive Director (1) Mr. Salmeen was appointed to our Board of Directors on 5 February 2019. Since 5 February 2019 Since November 2017 (2) Mr. Al Zaabi was appointed to our Board of Directors on 30 April 2019. (3) Mr. Al Ameri resigned from our Board of Directors on 30 April 2019 (4) Mr. Al Dhaheri resigned from our Board of Directors on 5 February 2019. Mr. Abdulaziz Abdulla Alhajri Mr. Abdulla Salem Al Dhaheri (5) Excludes 16,000,000 shares owned at 31 December 2019 by Jenaan Investment LLC and 1,790,451 shares owned at 31 December 2019 by Non-executive Director Non-executive Director Fornax Services Private Limited, in each of which Mr. Al Ameri has a significant ownership interest. (4) Since November 2017 March 2016 to 5 February 2019

Mr. Ahmed Jasim Al Zaabi(3) Mr. Matar Hamdan Al Ameri Non-executive Director Non-executive Director Since 30 April 2019 Since November 2017 to 30 April 2019

Mr. Jassim Alseddiqi Independent Non-executive Director Since November 2017

(1) Pre IPO, H.E. Dr. Sultan was appointed in February 2016 as the Chairman of the Board of Directors of ADNOC Distribution. Post IPO, he was reappointed as the Chairman of the Board in November 2017. (2) Mr. Salmeen was appointed to our Board of Directors on 5 February 2019 following the resignation of Mr. Abdulla Salem Al Dhaheri, who served on the Board from March 2016 to 5 February 2019. In accordance with our Articles of Association, Mr. Salmeen’s appointment was ratified by shareholders at our annual General Assembly held on 4 April 2019. (3) Mr. Al Zaabi was appointed to our Board of Directors on 30 April 2019 following the resignation of Mr. Matar Al Ameri, who served on the Board from November 2017 to 30 April 2019. In accordance with our Articles of Association, Mr. Al Zaabi’s appointment will be submitted for ratification by shareholders at our annual General Assembly to be held on 31 March 2020, subject to SCA approval. (4) Pre IPO, Mr. Al Dhaheri was appointed in March 2016 as a member of the Board of ADNOC Distribution. Post IPO, he was reappointed as a member of the Company’s Board in November 2017 and he resigned on 5 February 2019. 6 2019 Corporate Governance Report | 7

Our Board of Directors

Ahmed Jasim Al Zaabi Non-executive Director (appointed on 30 April 2019)

H.E. Dr. Sultan Ahmed Al Jaber Member of the Audit Committee Non-executive Chairman Member of the Executive Committee

H.E. Dr. Sultan Ahmed Al Jaber has served as UAE Cabinet Member and Minister of State since March 2013, and as Mr. Ahmed Jasim Al Zaabi has served as Group Chief Financial Officer at the Finance and Investments Directorate of ADNOC Chief Executive Officer of ADNOC since February 2016. From January 2014 to February 2016, he served as Chief since February 2019. He previously served as a Director of the Office of Government Investments at Abu Dhabi Department Executive Officer, Energy, of Mubadala Development Company. H.E. Dr. Al Jaber is also Chairman of Masdar, the of Finance from 2018 until February 2019, and as a Director of Office of State Owned Enterprises, General secretariat of National Media Council, and several other ADNOC Group companies. He is also a member of the Board of Directors of the Executive Council from 2011 until 2018. Prior to this, he held senior management positions in organisations such as the Emirates Global Aluminum. Abu Dhabi Municipality and Khalifa Fund for Enterprise Development. Mr. Al Zaabi serves as a board member of Khalifa Fund for Enterprise Development and several other ADNOC subsidiaries. H.E. Dr. Al Jaber holds a BSc in Chemical Engineering from the University of Southern California, a PhD in Business and Economics from Coventry University, and an MBA from California State University. Mr. Al Zaabi holds a Master’s degree in Economics Science with Honors from University of Aberdeen.

Khaled Salmeen Non-executive Director (appointed on 5 February 2019) Jassim Alseddiqi Independent Non-executive Director Chairman of Executive Committee Chairman of the Nomination and Remuneration Committee Member of the Nomination and Remuneration Committee Member of the Audit Committee

Mr. Khaled Salmeen has served as Executive Director, Marketing, Sales & Trading, of ADNOC since 5 February 2019. He Mr. Jassim Alseddiqi has served as a Director and Chief Executive Officer of Abu Dhabi Financial Group since January 2011, previously served as Chief Executive Officer of the Khalifa Industrial Zone (KIZAD), Chairman of Abu Dhabi Terminals, and a Chief Executive Officer of Shuaa Capital PSC. He also serves as the Chairman of Eshraq Properties PJSC, Chairman of and Chief Operating Officer of National Central Cooling Company (Tabreed). He also served as Director of ADNOC’s Islamic Arab Insurance Co. (Salama) PJSC, Chairman of GFH Financial Group BSC and Chairman of Khaleeji Commercial Bank Transformation Project Management Office from 2016 to 2017. BSC. He is also a member of the Board of Directors of First Abu Dhabi Bank, Dana Gas and the Tourism and Development Investment Company. Mr. Salmeen holds a BSc in Engineering from Colorado School of Mines, Colorado, USA, and a Project Management Professional (PMP) from the Project Management Institute (PMI) and Harvard Business School. Mr. Alseddiqi holds a Bachelor’s degree in Electrical Engineering from the University of Wisconsin-Madison and a Master’s degree in Electrical Engineering from Cornell University. He has also served as a lecturer at the Abu Dhabi-based Petroleum Institute.

Pedro Miró Roig Independent Non-executive Director Abdulaziz Abdulla Alhajri Non-executive Director Member of the Nomination and Remuneration Committee

Mr. Abdulaziz Abdulla Alhajri has served as Executive Director, Downstream Directorate of ADNOC since May 2016. From Mr. Pedro Miró Roig was Chief Executive Officer of Compañía Española de Petróleos (CEPSA) from September 2013, and October 2007 to May 2016, he was Chief Executive Officer of Abu Dhabi Polymers Company (Borouge), a joint venture of Vice Chairman from June 2014, in each case until October 2019. He served as Chief Operating Officer of CEPSA from 2011 ADNOC and Borealis. He also serves on several other ADNOC Group company boards of directors. to 2013. Mr. Miró also serves as a member of the Board of Trustees of Linea Directa Foundation.

Mr. Alhajri holds a BSc in Chemical Engineering from the University of Texas. Mr. Miró holds a Bachelor’s degree in Chemistry from the University of Barcelona. 8 2019 Corporate Governance Report | 9

Women’s representation their full potential in line with the Statement of allowances on the Board of Directors standards of high performance we paid to committee expect from all our employees - both members for 2019 David-Emmanuel Beau In 2019, we did not have any female men and women alike. Independent Non-executive Director members on the Board of Directors. In 2019, no allowances, salaries Chairman of the Audit Committee However, in keeping with our or additional fees were paid to commitment to gender diversity, we Directors’ Remuneration committee members. Member of the Executive Committee are actively seeking out opportunities to include female representation In 2019, our shareholders approved a Mr. David-Emmanuel Beau is Chief Investment Officer of the Direct Investments Department at the Abu Dhabi on our board. To this end, we value total remuneration of AED 4.8 million Board Meetings – Investment Council (ADIC), where he focuses on the MENA region. Previously, he was a fund manager at the Abu Dhabi diversity in our organization and are which was paid to the members of our attendance records Investment Authority (ADIA). He is also a Director of Invest AD. constantly working to recruit more Board of Directors for 2018. women in all areas of our business and Our Articles of Association require Mr. Beau is a CFA Charter holder. we are also working on a number of It is proposed that the remuneration that the Board of Directors meets a initiatives to advance women’s career for the Board of Directors for 2019, minimum of four times each year. The growth across the Company. to be paid in 2020, is a total of quorum for meetings is a majority of AED 12 million plus any applicable directors, and voting during meetings Additionally, the Company will continue VAT. This will be presented to our is a majority of attendees. The to ensure that its female employees shareholders at our upcoming annual following table sets forth the meetings obtain access to all necessary training General Assembly for approval. held by our Board of Directors in 2019: and development in order to achieve

Abdulla Salem Al Dhaheri

Non-executive Director (resigned on 5 February 2019) (2) (3)

Member of the Nomination and Remuneration Committee 13 February 2019 30 April 2019 1 August 2019 29 September 2019 31 October 2019 17 December 2019 24 December 2019 Board Member Position on the Board (resigned on 5 February 2019)

H.E. Dr. Sultan Ahmed Al Jaber Chairman P P P P P P P Mr. Abdulla Salem Al Dhaheri served as Director, Marketing, Sales and Trading, of ADNOC from 2016 until February 2019. From 2009 to 2016, Mr. Al Dhaheri served as our Chief Executive Officer. Mr. Khaled Salmeen Director P P P P P P P

Mr. Al Dhaheri holds a Bachelor’s degree in Business Administration from California Baptist University, California, USA. Mr. Ahmed Jasim Al Zaabi Director P(1) P P P P A P

Mr. Abdulaziz Abdulla Alhajri Director P P A A P A A

Mr. Jassim Alseddiqi Independent Director A P P P A P P

Mr. Pedro Miró Roig Independent Director P P P P P P P

Matar Hamdan Al Ameri Mr. David-Emmanuel Beau Independent Director P P A P A P P Non-executive Director (resigned on 30 April 2019) P – Present, A – Absent (note: all absences from the Board were properly verified and approved). Member of the Audit Committee (resigned on 30 April 2019) (1) Mr. Al Ameri (Mr. Al Zaabi’s predecessor) was still on the Board and attended this meeting (2) Meeting held by circulation to approve payment of 2019 interim dividend Mr. Matar Hamdan Al Ameri has served as Director, Finance and Investments of ADNOC since 2012 until February 2019. He (3) Meeting held by circulation to approve the appointment of ADNOC Distribution new Acting Chief Executive Officer also serves as the Vice Chairman of Aafaq Islamic Finance Company.

Mr. Al Ameri holds a Bachelor’s degree from the United Arab Emirates University. 10 2019 Corporate Governance Report | 11

EXECUTIVE MANAGEMENT

Matters reserved to the Board of Directors and Details of the Under the Delegation of Authority, and in consultation with the Board of Directors, our Acting Chief delegated to management Delegation of Executive Officer, has sub-delegated some of the powers given to him to members of our executive Authority are management team. Our executive management team carries out the day-to-day activities of ADNOC The Board of Directors has issued a Under the Delegation of Authority, provided below: Distribution pursuant to this authority and in line with international best practice and the relevant Delegation of Authority to the Chief the Chief Executive Officer has the Executive Officer of the Company. ability to sub-delegate activities Name of the authorized person governance rules and regulations. to other members of ADNOC Acting Chief Executive Officer* For the whole of 2019, this role was Distribution’s management. ADNOC Distribution Organization Chart fulfilled by Mr. Saeed Al Rashdi, our Scope of authority then Acting Chief Executive Officer. Notwithstanding the Delegation of Authority to conduct the daily Below is the organization chart of ADNOC Distribution Authority that has been provided management activities of ADNOC As from 5 January 2020, this role to the Company’s Chief Executive Distribution, subject to appropriate has been fulfilled by Mr. Ahmed Officer, the Board of Directors limits as set down by the Board of Chief Executive Officer Ahmed Al Shamsi Al Shamsi, our current Acting maintains oversight over these Directors from time to time (Acting) Chief Executive Officer. Under this activities and our Acting Chief Delegation of Authority, the Board Executive Officer, Mr. Al Shamsi is Duration of delegation of Directors has delegated to the regularly required to report to the Until the authority is revoked by the SVP Human Capital VP Health, Safety, Environment VP Audit & Assurance Chief Executive Officer, the authority Board of Directors with respect Board of Directors Mohd Omar Majid Alsuwaidi Mohamed Saleh to conduct the daily management to the activities undertaken by * For 2019, this delegation was provided to the activities of the Company, subject to him pursuant to the terms of the Company’s previous Acting Chief Executive appropriate limits (beyond which, the Delegation of Authority. Officer, Mr. Al Rashdi who stepped down from his approval of the Board of Directors role with the Company effective as of 5 January 2020. As from 5 January 2020, this delegation must be sought). has been provided to Mr. Ahmed Al Shamsi, our current Acting Chief Executive Officer.

General Counsel Chief Financial Officer Chief Investor Chief Business Chief Strategy & Chief Marketing Ben Hennessy Petri Pentti Relations Officer Commercial Support Officer Business Development Officer Officer Athmane Benzerroug Saeed Al Ahbabi Aakash Nijhawan Brian Kuz

Chief Operating Officer Mohamed Al Hashemi

SVP Non Fuel Retail SVP Fuel Retail SVP Production, Supply Chain and Maintenance SVP Commercial Lars Hoglund Mohamed Al Obaidli Mohamed Al Mehrezi Jose Aramburu (Acting) (Acting) 12 2019 Corporate Governance Report | 13

Key Executive Management - Governance

Ahmed Al Shamsi Athmane Benzerroug Acting Chief Executive Officer Chief Investor Relations Officer

Mr. Ahmed Al Shamsi was appointed as Acting Chief Executive Officer with effect as from Mr. Athmane Benzerroug joined ADNOC Distribution in September 2018 as Chief Investor 5 January 2020. Before joining ADNOC Distribution, Mr. Al Shamsi served as Senior Vice Relations Officer. He has 20 years of experience in equity capital markets. Prior to joining President for Middle East, Africa and Export in Borouge, and was responsible for leading ADNOC Distribution, Mr. Benzerroug managed industrial sectors for Emerging Markets Equities that company’s Sales and Marketing initiatives, as well as developing and implementing the for Deutsche Bank in Dubai, since 2008. Previously, Mr. Benzerroug was responsible for long-term strategies of that company within the region. Previously, Mr. Al Shamsi held senior European Infrastructure at Natixis Securities in Paris. leadership roles across diverse functions of Global Supply Chain and Project Management. Mr. Benzerroug holds an MSc in Econometrics from the University of Paris X, France. Mr. Al Shamsi holds a Bachelor’s degree in Chemical Engineering from the University of Tulsa, USA. He also holds a Master’s degree in Quality Management (MQM) from the University of Wollongong.

Mohamed Al Hashemi Ben Hennessy Chief Operating Officer General Counsel & Board Secretary

Mr. Mohamed Al Hashemi was appointed as Chief Operating Officer in July 2019. Before joining Mr. Ben Hennessy joined ADNOC Distribution as General Counsel and Company Secretary ADNOC Distribution, Mr. Al Hashemi served as Senior Vice President, Asset Management in October 2019. Previously, he served as an international lawyer for over 15 years, initially & Business Development for ADNOC Group and was also advisor to ADNOC Distribution’s at global law firm DLA Piper and for the past eight years at BP PLC, leading legal teams and Executive-Committee. Previously, Mr. Al Hashemi served as Senior Vice President, Group supporting BP’s retail fuels and lubricants business. He has worked in the UAE for four years, Strategic Investments for ADNOC Group delivering world-class projects. two of which were in Musanada.

Mr. Al Hashemi holds a Master’s Degree in Business Administration and Management from Mr. Hennessy is a qualified solicitor in England & Wales and holds an LPC from the University of Harvard University. Law, London and a BA from the University of Newcastle.

Petri Pentti Chief Financial Officer

Mr. Petri Pentti joined ADNOC Distribution as Chief Financial Officer in November 2017. Before joining ADNOC Distribution, Mr. Pentti served as Chief Financial Officer of Emirates National Oil Company (ENOC) since 2008. Previously, Mr. Pentti served as Chief Financial Officer of Neste Corporation, an oil refining, renewable fuels and marketing company, from 2004 to 2008, and Chief Financial Officer of Finnair from 1998 to 2004.

Mr. Pentti holds a Master’s degree in Economics and Business Administration from the Turku School of Economics and Business Administration, Finland. 14 2019 Corporate Governance Report | 15

TRANSACTIONS WITH RELATED PARTIES

We are and have been a party to various agreements and other arrangements with related parties, comprising ADNOC and certain of its other subsidiaries. Details of these transactions are described below. In addition, the value of all related party transactions undertaken by ADNOC Distribution during 2019 (as disclosed in our 2019 financial statements) is as follows:

2019 AED’000

Revenue - ADNOC group 1,055,564

Purchases – ADNOC 15,322,254

Vessel hire and port charges – ADNOC group 69,970 Executive Management Remuneration Dividend paid (1,928,750) Rendering of service 273,488 Details of the total salaries and benefits paid to the relevant members of our executive management team in 2019 are provided in the table below: Recovery of expenses incurred related to City Gas 57,456 Total salaries & End of service benefits transferred 124 Appointment allowances paid Total bonuses Other benefits Position date in 2019 paid in 2019 for 2019(4)

Acting Chief Executive Officer(1) March 2016 2,209,118 800,000 18,600 Relationship Agreement with ADNOC Chief Operating Officer July 2019 603,345 - 2,240

Chief Financial Officer November 2017 2,340,000 780,000 20,160 In 2017, we entered into a business or retail convenience store of Directors). Any enforcement of Relationship Agreement with ADNOC business in the UAE; and (c) not the provisions of the Relationship Chief Investor Relations Officer September 2018 1,680,000 448,000 49,280 by which ADNOC agreed, for so long to terminate, and to renew at our Agreement against ADNOC requires Chief Strategy and Business as our shares are listed on the ADX request, certain supply and other approval by our Board of Directors, January 2019 1,493,400 169,000 8,400 Development Officer and ADNOC owns or controls more agreements we have entered into which is effectively controlled by than 50% of the shares, among with ADNOC, in each case, so long as ADNOC. However, for so long as Chief Marketing Officer August 2019 513,667 - - other things: (a) not to take certain we are not in material default of our ADNOC holds the majority of our Chief Business and Commercial actions that might interfere with our obligations under those agreements. shares, ADNOC has agreed to June 2019 760,623 - - Support Officer status as an independent company, procure that there shall be three including: (i) ADNOC will not take Pursuant to the Relationship independent non-executive directors Senior Vice President, Commercial September 2017 2,043,000 666,000 18,000 any action that would interfere Agreement, we have also agreed to appointed to the Board of Directors (2) Senior Vice President, Retail Fuel September 2017 1,865,069 438,096 30,300 with our ability to comply with our enter into transactions with ADNOC at all times and, if the overall size of obligations under certain ADX and and other members of the ADNOC the Board of Directors increases, Senior Vice President, Operations February 2012(3) 1,896,236 438,096 26,600 SCA listing and governance rules, group only with the approval of a that the number of independent and (ii) ADNOC will conduct all majority of our directors, including a non-executive directors appointed (1) Remuneration details have been provided for the Company’s previous Acting Chief Executive Officer, Mr. Al Rashdi who served the Company in that role for the whole of 2019 but stepped down from this role effective as of 5 January 2020. transactions with us on arm’s length majority of our independent non- to the Board of Directors shall, if (2) Remuneration details have been provided for the Company’s previous Senior Vice President, Retail Fuel, who served the Company in that role for terms and on a commercial basis and executive directors (other than necessary, also be increased so that the whole of 2019 but stepped down from this role effective as of 6 January 2020. will allow us to carry out our business transactions that, in accordance they amount to at least one-third of (3) Remuneration details have been provided for the Company’s previous Senior Vice President, Operations, who served the Company in that role for the whole of 2019 but stepped down from this role effective as of 6 January 2020. independently; (b) not to engage in with our Delegation of Authority, do the total number of directors on the (4) Bonuses for 2019 that are payable in 2020 are yet to be determined or awarded. a competing gasoline filling station not require approval of the Board Board of Directors. 16 2019 Corporate Governance Report | 17

Refined Products per-liter gross margin we earn on either party notifies the other of its incorporates ADNOC’s general terms In connection with the Business basis. Each lease has a term of four Supply Agreement retail sales of gasoline and diesel intention not to renew at least 12 and conditions for sales of base Transfer Agreement, we have agreed years and will renew automatically (calculated by reference to actual months prior to the then-effective oils. Under the terms of the Base Oil to purchase natural gas from ADNOC unless notice of termination is given We entered into a Refined Products retail fuel sales revenue less the expiration date. Under the LPG Supply Supply Agreement, we have agreed to for sale as CNG at our retail fuel by us at least one year prior to Supply Agreement with ADNOC, price we pay for such fuel under Agreement, ADNOC has committed purchase from ADNOC, and ADNOC service stations. Under the terms of the then-effective expiration date. effective 1 October 2017, pursuant the Refined Products Supply to supply the quantities of products has agreed to sell to us, specified the agreement, we purchase from Under the terms of the agreements, to which we have agreed to purchase Agreement) is less than certain confirmed by ADNOC each month volumes of base oil at prices set forth ADNOC, and ADNOC sells to us, we will indemnify ADNOC for any from ADNOC, and ADNOC has specified minimum levels. Any and has agreed to use its best in the Base Oil Supply Agreement, specified volumes of natural gas, environmental liabilities relating to our agreed to sell to us, refined liquid fils-per-liter shortfall against such endeavors to source such products which are reviewed annually. which we may only resell at our retail operations on the properties. hydrocarbons, comprising unleaded minimum margin levels is payable to from third-party suppliers to the fuel service stations, as part of our gasoline (91, 95 and 98 grades), gas us by ADNOC in respect of all retail extent not otherwise available to it. The term of the Base Oil Supply business selling CNG to natural-gas oil (diesel), illuminating kerosene, and fuel quantities we have sold of the Agreement is for an initial five-year powered vehicles, or back to ADNOC. Brand Usage Agreement aviation fuels. affected grade during the relevant Pursuant to the LPG Supply period expiring on 31 December 2022 period. For other refined products, Agreement, prices for butane, and will be extended automatically for We also continue to provide We entered into a Brand Usage The term of the Refined Products including illuminating kerosene propane and LPG are ADNOC’s subsequent five-year terms unless certain support services to assist Agreement with ADNOC pursuant to Supply Agreement is for an initial and aviation fuels, prices will be official selling prices as in effect from either party notifies the other of its ADNOC in operating the natural gas which ADNOC has granted to us a period expiring on 31 December ADNOC’s official selling prices for time to time, provided that, for so long intention not to renew at least 12 distribution business, for which, non-exclusive license to use certain 2022, and will be extended such products. as the retail price of LPG cylinders months prior to the then-effective ADNOC has agreed to compensate ADNOC trademarks and logos in automatically for subsequent is regulated, the price for LPG to be expiration date. us in an amount equal to our incurred Africa, Europe, the GCC, and any five-year terms unless either party Under the Refined Products Supply resold in subsidized cylinders will operating expenses incurred in other countries or territories as may notifies the other of its intention not Agreement, we have agreed to be equal to the regulated retail price connection therewith (including any be agreed by us and ADNOC in writing to renew at least 12 months prior to purchase refined products exclusively less 108% of our operating costs for Transfer of Natural Gas related taxes or other charges) plus from time to time in connection the then-effective expiration date. from ADNOC, and ADNOC undertakes distributing subsidized cylinders. Business 8% of such amount, and to reimburse with: (a) the operation of fuel service Under the Refined Products Supply not to compete with us in selling to us for the costs of any third-party stations; (b) the manufacture, sale, Agreement, ADNOC has committed any customer in the UAE without Under the LPG Supply Agreement, In November 2017, we entered into service providers. storage, marketing, and distribution to supply all quantities of refined our consent, except for sales to we have agreed to purchase butane, a Business Transfer Agreement with of petroleum products, including products included in annual and Emarat, ENOC, customers purchasing propane and LPG exclusively from ADNOC pursuant to which we agreed engine oils, bitumen, and other quarterly plans and has agreed to more than 10,000 metric tons of ADNOC, and ADNOC undertakes to transfer to ADNOC all of the assets Real Estate Transfer petroleum by-products; (c) other use its best endeavors to source refined products, and customers to not to compete with us in selling to and operations relating to our natural Liability and Leaseback goods and services related to the such products from third-party whom we have elected not to sell any customer in the UAE without our gas business. These did not include Agreements foregoing, including lubricants, car suppliers to the extent not otherwise refined products. ADNOC has also consent, except for sales to Emarat, those assets and operations located washing services, merchandise, available to it. undertaken not to sell on a spot basis ENOC, customers purchasing more at our retail fuel service stations for the In order to continue to comply with and sponsorships; and (d) any other to unaffiliated non-export customers than 80,000 metric tons per annum compression and sale of compressed property ownership laws in the UAE activities that we currently are Pursuant to the Refined Products in the UAE at prices lower that the of products, and customers to whom natural gas (CNG) to operators of following our IPO, our real property engaged in or that may be otherwise Supply Agreement, the prices we pay prices it charges us. we have elected not to sell products. natural gas-powered vehicles. portfolio was transferred to ADNOC required for our operations from time for gasoline and gas oil (diesel) will ADNOC has also undertaken not to pursuant to decisions of the Crown to time. The license granted under the equal the Platt’s benchmarks utilized sell on a spot basis to unaffiliated The consideration equaled AED 64.1 Prince of Abu Dhabi and the Rulers of Brand Usage Agreement is royalty- by the Retail Price Committee chaired LPG Supply Agreement non-export customers in the UAE million (representing the net book the Northern Emirates. free for the first four years. by the UAE Ministry of Energy to set at prices lower than the prices it value of the transferred assets), retail pump prices plus a fixed margin We entered into an LPG Supply charges us. plus all operating costs and capital To allocate liabilities associated with Thereafter, we will pay ADNOC a per liter, provided that during the Agreement with ADNOC, effective expenditure incurred by us in relation the property transfers, and to ensure license fee in an amount to be agreed initial term of the agreement expiring 1 October 2017, by which we have to the natural gas business between we have continued access to our between us and ADNOC. Subject on 31 December 2022, such prices agreed to purchase from ADNOC, Base Oil Supply signing and closing, less: (a) all properties, we entered into Transfer to the restrictions set forth in the will be reduced on a fils-for-fils basis and ADNOC has agreed to sell to us, Agreement customer receipts received by or on Liability and Leaseback agreements Relationship Agreement, the Parent if the regulated gross margins on butane, propane and LPG in quantities our behalf in relation to the natural with ADNOC. may terminate the Brand Usage retail sales of gasoline and diesel are requested by us and confirmed by We purchase base oil used to gas business between signing and Agreement upon 12 months’ notice, reduced from their current levels. ADNOC. The term of the LPG Supply produce lubricants and for resale to closing; and (b) an amount equal to Under the terms of the Real Estate including if the parties are unable to Agreement is for an initial period our Corporate Division customers all duties and liabilities incurred by us Transfer Liability and Leaseback agree on the license fee payable after In addition, ADNOC must make a expiring on 31 December 2022, and from ADNOC pursuant to an annual in connection with the employment Agreements, ADNOC agreed to the first four years. payment to us to the extent that, will be extended automatically for confirmation, the most recent of of the employees to transfer with the lease all real estate transferred to it, for any contract quarter, the actual subsequent five-year terms unless which is effective 1 October 2017 and natural gas business prior to closing. back to us on a cost-pass-through 18 2019 Corporate Governance Report | 19

EXTERNAL AUDITOR

Civil Aviation Supply ADNOC Refining connection with our fuel distribution We have entrusted the external Deloitte & Touche (M.E.) is a member 26 offices in 15 countries with Carve-out Perimeter operations. For providing services audit function for ADNOC firm of Deloitte Touche Tohmatsu more than 3,000 partners, directors Reorganization under the AssetCo O&M Agreement, Distribution’s yearly accounts to Limited (DTTL) and is the first Arab and staff. It has been a Tier 1 Tax We entered into an Aviation Sales AssetCo has agreed to compensate professional services firm established advisor in the GCC region since 2010 Deloitte & Touche (M.E.) which Transfer Agreement with ADNOC On 30 September 2017, we entered us in an amount equal to our incurred in the Middle East region with (according to the International Tax in September 2017 pursuant to into an ADNOC Refining Asset Purchase operating expenses incurred in has been ADNOC Distribution’s uninterrupted presence since 1926. Review World Tax Rankings). which we transferred all contracts Agreement with ADNOC Refining and connection therewith (including any external auditor since 2014. for the sale and supply of jet fuel to AssetCo, both of which are subsidiaries related taxes or other charges) plus 8% Deloitte is among the region’s Details of the fees paid to Deloitte the civil aviation sector, and related of ADNOC, pursuant to which ADNOC of such amount, and to reimburse us leading professional services firms, & Touche (M.E.) for the 2019 receivables and jet fuel inventories Refining transferred certain assets to us for the amount of any required capital providing audit, tax, consulting, and auditing services are provided in (other than any Jet A-1 held at our Al or, to the extent such assets have been expenditures. Amounts due to us by financial advisory services through the below presentation: Dhafra Terminal), to ADNOC effective built at specifications and capacities AssetCo are offset by amounts we owe 30 September 2017. that exceed our needs, to AssetCo. AssetCo for utilization of the assets These assets comprised certain transferred to AssetCo. The AssetCo In connection with the Aviation Sales storage, pipeline and other fuel terminal O&M Agreement has an initial term Transfer Agreement, we entered and distribution assets that ADNOC expiring on 31 December 2022, with Number of years served as an Six years including three years into an Aviation Services Agreement Refining had constructed primarily for successive five-year renewal periods external auditor for ADNOC serving as our external auditors as a with ADNOC to provide ADNOC with our benefit. unless we provide at least 12-months’ Distribution Public Joint Stock Company. services to operate its civil aviation notice of our intent not to renew. supply business and to provide The assets that were transferred to Partner name Rama Padmanabha Acharya operations and maintenance services us had historically been operated and in respect of certain assets related maintained by us. In consideration of Shareholder Services Total fees for auditing the financial AED 770,956.00 to the civil aviation supply business. the transfer of these assets, we paid Agreement statements of 2019 (in AED) Pursuant to the Aviation Services ADNOC Refining approximately AED Agreement, ADNOC may request us to 696.2 million, representing the net On 30 September 2017, we entered perform certain services relating to the book value of such assets. On the fifth into a Shareholder Services Fees and costs of other private AED 250,000 for services related to transportation and delivery of fuel to its anniversary of the transfer, we will Agreement with ADNOC pursuant to services other than auditing the general accounting and tax advice civil aviation customers, which we may discuss with the AssetCo the potential which ADNOC provides us with certain financial statements for 2019 (AED) (including excise tax related matters) perform ourselves or procure third- acquisition of its assets, subject to administrative and other support in the party service providers to perform. agreement on pricing and other terms. areas of treasury, accounting, finance, Review the costs incurred on various tax, legal and compliance support, consultancy, transformation and IT For providing services under the In connection with the ADNOC Refining corporate governance, HR, logistics, related projects and evaluate if these Aviation Services Agreement, ADNOC Asset Purchase Agreement, we entered information technology, procurement, meet the criteria of capitalization has agreed to compensate us in an into an AssetCo O&M Agreement insurance, risk management, record as per the requirements of IAS 16 amount equal to our incurred operating with AssetCo on 30 September keeping, reporting and general and Property, plant and equipment. expenses incurred in connection 2017 pursuant to which we provide administrative services to the extent therewith (including any related taxes operations and maintenance services we determine based on our business Details and nature of other Determine the excise goods on 30 or other charges) plus 8% of such in respect of those assets that were requirements. Pursuant to the terms of services provided (if any) November 2019 for FTA compliance amount, and to reimburse us for transferred to AssetCo under the the Shareholder Services Agreement, the costs of any third-party service ADNOC Refining Asset Sale Agreement we and ADNOC will negotiate the Statement of the other services None providers. During the term of the and that historically had been operated cost, including the cost of third-party performed by an external auditor Aviation Services Agreement, we have and maintained by us. Certain other service providers, for the provision of other than ADNOC Distribution’s agreed that we will not own or engage assets that were transferred to such services, provided that ADNOC auditor in 2019 (if any) in a civil aviation supply business that AssetCo under the ADNOC Refining will not charge us for the provision competes with ADNOC’s civil aviation Asset Sale Agreement historically had of such services, other than the supply business. The Aviation Services been, and will continue to be operated actual cost of third-party service Agreement has an initial term expiring and maintained by ADNOC Refining, providers and allocated costs of group For our annual financial statements for the year ended 31 December 2019, Deloitte & Touche (M.E.) issued an on 31 December 2022, with successive for which ADNOC Refining will be insurance, for the initial four-year term unqualified audit opinion. five-year renewal periods unless any compensated by AssetCo. In addition, of the agreement. After the initial party provides at least 12-months’ the AssetCo O&M Agreement grants four-year term, the agreement may be notice of its intent not to renew. us the right to use these assets in extended by mutual agreement. 20 2019 Corporate Governance Report | 21

AUDIT NOMINATION AND COMMITTEE REMUNERATION COMMITTEE

Our Audit Committee assists The Audit Committee makes Mr. Al Zaabi who replaced Mr. Al Ameri Our Nomination and It is also responsible for periodically non-executive directors, at least the Board of Directors in recommendations to the Board of on the Committee on 30 April 2019. Remuneration Committee reviewing the Board of Directors’ two of whom must be independent. discharging its responsibilities Directors, which retains ultimate assists the Board of Directors in structure and identifying potential The chairman of the Nomination responsibility for reviewing and The Audit Committee has taken candidates to be appointed as and Remuneration Committee with regard to financial discharging its responsibilities approving our annual report and appropriate steps to ensure that directors or committee members as must be chosen from amongst the reporting, external and internal financial accounts. ADNOC Distribution’s external relating to the composition the need may arise. independent committee members. audits and controls, including: auditors are independent of ADNOC and make-up of the Board of reviewing and monitoring the The Audit Committee gives due Distribution as required by the Directors and any committees In addition, the Nomination and The current members of the integrity of our annual and consideration to the applicable laws Corporate Governance Rules. The of the Board of Directors. It is Remuneration Committee assists Nomination and Remuneration interim financial statements; and regulations of the UAE, SCA and Audit Committee has also obtained responsible for evaluating the the Board of Directors in determining Committee are Mr. Alseddiqi the ADX, including the provisions of written confirmation from our auditors its responsibilities in relation to (Chairman), Mr. Miró and Mr. Salmeen. reviewing and monitoring the balance of skills, knowledge the Corporate Governance Rules. that they comply with guidelines on remuneration, including making Mr. Salmeen replaced Mr. Al Dhaheri extent of the non-audit work independence issued by the relevant and experience and the size, recommendations to the Board of on the Committee on 5 February 2019. undertaken by external auditors; The Corporate Governance Rules, accountancy and auditing bodies. structure and composition Directors on ADNOC Distribution’s advising on the appointment of reflected in the Audit Committee of the Board of Directors and policy on executive remuneration, As part of his role as the Chairman external auditors; overseeing Charter require that the Audit As part of his role as the Chairman committees of the Board of setting the over-arching principles, of the Nomination and Remuneration the relationship with our Committee comprises at least three of the Audit Committee, Mr. David- Directors and, in particular, for parameters and governance Committee, Mr. Jassim Alseddiqi members who are non-executive Emmanuel Beau is responsible for framework of our remuneration is responsible for ensuring the external auditors; reviewing the monitoring the independent directors, and that at least two of the ensuring the committee’s overall policy and determining the individual committee’s overall effectiveness and effectiveness of the external members must be independent. One effectiveness and that the committee status of the independent non- remuneration and benefits package that the committee properly complies audit process; and reviewing of the independent members must properly complies with all of its stated executive directors. of our senior management. with all of its stated objectives. the effectiveness of our internal be appointed as chairman of the objectives. control review function. committee. In addition, at least one The Corporate Governance Rules, In 2019, the Nomination and member is required to have recent In 2019, the Audit Committee met reflected in the Nomination and Remuneration Committee met five and relevant audit and accounting nine times. Details of those meetings Remuneration Committee Charter, times. Details of those meetings experience. The current members (including the attendance records for require the Nomination and (including the attendance records for of the Audit Committee are Mr. Beau those meetings) are contained in the Remuneration Committee to those meetings) are contained in the (Chairman), Mr. Alseddiqi, and table below: be comprised of at least three table below: (1) (1) (1) (1) Position in Committee member Committee 24 Mar 2019 28 Jul 2019 10 Oct 2019 25 Nov 2019 19 Dec 2019 Position in Committee member Committee 13 Feb 2019 14 Mar 2019 30 Apr 2019 22 May 2019 30 Jun 2019 1 Aug 2019 17 Sep 2019 30 Oct 2019 17 Dec 2019 Mr. Jassim Alseddiqi Chairman P A P P P

Mr. David-Emmanuel Beau Chairman P P P P P P(2) P P P Mr. Pedro Miró Member P P P P P

Mr. Ahmed Jasim Al Zaabi Member P(1) P(1) A P P P P A A Mr. Khaled Salmeen Member P P P P P

(2) (2) (2) (2) Mr. Jassim Alseddiqi Member A P P P P P P P P P – Present, A – Absent (1) Meetings held by circulation P – Present, A – Absent (1) Mr. Matar Al Ameri (Mr. Ahmed Jasim Al Zaabi’s predecessor) was still on the Audit Committee and attended this meeting (2) Attended the relevant meeting by proxy

In 2019, all recommendations of the Audit Committee were accepted by the Board of Directors. 22 2019 Corporate Governance Report | 23

EXECUTIVE INSIDER DEALING COMMITTEE COMMITTEE

Our Executive Committee The role of the Executive Committee As part of his role as the Chairman Our Insider Dealing Committee Pursuant to our Share Dealing Code, Directors. Currently, the members of consists of three members, all is to act on behalf of the Board during of the Executive Committee, oversees compliance with the all directors, officers and other the committee are Mr. Ben Hennessy, being non-executive directors the intervals between scheduled Mr. Khaled Salmeen is responsible Insider Dealing Policy and our employees who are in possession our General Counsel & Board Board meetings so that matters that for ensuring the committee’s overall of inside information are prohibited Secretary who chairs the committee, with one member also being Share Dealing Code (which has require Board approval during such effectiveness and that the committee from dealing in ADNOC Distribution’s Mr. Petri Pentti, our Chief Financial an independent director. The intervals can be dealt with in a timely properly complies with all of its stated been established by our Insider shares during certain periods, and Officer, and Mr. Athmane Benzerroug, Executive Committee was and efficient manner. Additionally, objectives. Dealing Policy). must seek approval from the Insider our Chief Investor Relations Officer. established by the Board in the Executive Committee provides Dealing Committee to purchase, Mr. Hennessy replaced Mr. Ian 2019 in order to assist the recommendations to the Board on In 2019, the Executive Committee met sell or otherwise deal in our shares Blumenstein on the Committee on 31 Board in the discharge of matters that require Board approval. ten times. Details of those meetings during other periods. October 2019. The current members of the (including the attendance records for its duties. Executive Committee are Mr. Salmeen those meetings) are contained in the In order to grant approval, the Insider The Insider Dealing Committee (Chairman), Mr. Beau and Mr. Al Zaabi. table below: Dealing Committee must be satisfied met two times in 2019 to, among Mr. Al Zaabi replaced Mr. Al Ameri on that the individual seeking to deal other things: (a) review and discuss the Committee on 30 April 2019. in ADNOC Distribution’s shares is the Share Dealing Code and how not, at that time, in possession of it is to be applied; and (b) consider inside information. requests from members of ADNOC Distribution’s staff to deal in Position in The Insider Dealing Committee our shares. Committee member Committee 24 Apr 2019 15 May 2019 19 May 2019 29 May 2019 13 Jun 2019 16 Jul 2019 29 Jul 2019 4 Sep 2019 30 Oct 2019 11 Dec 2019 is comprised of three members Mr. Khaled Salmeen Chairman P P P P P P P P P P who are appointed by the Board of

Mr. Ahmed Jasim Al Zaabi Member P(1) P(2) A A P P P A A A

Mr. David-Emmanuel Beau Member P P P P(2) P P A P P P

P – Present, A – Absent (1) Mr. Al Ameri (Mr. Al Zaabi’s predecessor) was still on the Committee and attended this meeting by proxy (2) Attended the relevant meeting by proxy

24 2019 Corporate Governance Report | 25

INTERNAL CONTROL SYSTEM

Risk Management These controls are designed to functions and is responsible for Responsibility of the Board of Directors ensure that we are able to (a) ensuring that, through the input of The Company has implemented continually meet the operational and these functions, we consistently The Board of Directors is responsible for the internal control system an integrated enterprise risk financial objectives of the Company; operate in accordance with the within ADNOC Distribution and has established a number of processes management system, which (b) properly manage risks; (c) ensure highest international standards. and procedures which are designed to ensure the effectiveness of our showcases its commitment to the validity and transparency of internal control system. protecting the business and the the information we provide to our In his role as General Counsel, interest of all stakeholders. This stakeholders; and (d) comply with Mr. Hennessy is responsible for Enterprise Risk Management system: applicable laws and regulations. ensuring that the functions that Our Internal Control (ii) Level 2: appropriate internal and to our Audit Committee on a report to him provide continued System departments and committees regular basis. In order to enhance (a) facilitates risk informed strategic Our compliance and control function oversight of our control system. (including our enterprise risk the independence of our Audit and planning to achieve business is, among other things, responsible The key objectives of the internal management and compliance Assurance function, this division objectives and identify potential for ensuring that the Company This helps to ensure that our control system are: functions) are responsible for reports functionally to our Audit business opportunities; conducts its business in full control system is embedded in all developing, communicating Committee and administratively to the compliance with all relevant laws and of our key processes so that we are (a) creating control mechanisms and monitoring the appropriate Company’s Chief Executive Officer. (b) supports the Company in regulations, as well as professional able to ensure that our strategic that ensure efficient business policies, processes and identifying and managing key standards, accepted business and business objectives are processes and the implementation procedures; and Audit and Assurance’s charter, strategic, functional, investment practices and internal standards. achieved within the required risk of the Company’s objectives; policies, procedures, methodologies and project risks (including, tolerance levels. (iii) Level 3: the Company’s audit and the risk based internal audit plans the use of an objective Our compliance and control function (b) ensuring the safety of the and assurance function that it works to are presented to and driven process); performs a number of tasks that As part of the oversight process f Company’s assets and efficient conducts independent approved by the Audit Committee. are designed to ensure that our or our internal controls, a yearly use of its resources; assessments of the efficiency (c) assesses the identified risks internal control system is effectively report is prepared and presented to of the internal control system. The Abu Dhabi Accountability and the potential impact of such implemented and managed. These the Board of Directors regarding (c) protecting the interests of Authority performs regular reviews of risks on the Company and its key include: the effectiveness of our internal the Company’s shareholders our Audit and Assurance processes objectives; control system. and preventing and resolving Audit and Assurance and methodology which ensures (a) discussing the internal control conflicts of interest; Function alignment with industry best practices (d) enhances corporate performance system with the Board of and regulatory requirements. as processes become more risk Directors; Identified issues and (d) creating conditions for timely The Board of Directors has approved aware and control focused; and recent developments preparation and submission and implemented governance Our Audit and Assurance activities are (b) considering the results of of reliable reports and other functions and structures, including performed by teams of appropriate, (e) strengthens the Company’s primary investigations in internal For 2019, no significant issues information that is legally required an Audit and Assurance function that qualified and experienced employees. resilience to market disruption control issues; were identified with respect to our to be publicly disclosed; and is independent of our management and evolving business practices. compliance and control systems. and reports directly to the Company’s Additionally, a continuous (c) studying internal control (e) ensuring the Company’s Audit Committee. improvement process is implemented The Company’s risks are monitored reports and following up the compliance with applicable laws through the use of a learning and by a dedicated enterprise risk unit and implementation of corrective Violations committed and requirements of regulators. The key aim of the Audit and development framework that is this unit provides quarterly reports to measures arising from the during 2019 Assurance function is to provide designed to ensure that the Audit the Audit Committee. An annual report findings of such reports; and In addition to the functions and assurance and advice on the and Assurance team members of the identified risks is then provided No violations remit of the Board of Directors, the adequacy of the Company’s internal maintain their required competencies to the Board of Directors. (d) setting rules that enable were committed Company’s internal control system control environment, corporate and capabilities. ADNOC Distribution’s staff to by ADNOC is imbedded in the Company at governance framework and risk confidentially report any potential Distribution in three levels: management processes. Taking into account the independency Compliance and Control violations in financial reports, 2019. factor, our Audit and Assurance internal control etc. (i) Level 1: the heads of the Our Audit and Assurance function is function also serves as an in-house The Company has established various departments and headed by Mr. Mohamed Saleh, Vice advisor on many areas of interest and maintains an internal control Mr. Ben Hennessy, in his role as divisions within the Company President Audit and Assurance. Mr. which allow that function to provide framework that provides our General Counsel of the Company, are responsible for assessing Saleh is responsible for reporting value-added services that are executive management and Board oversees the Company’s Legal, and managing risks and the Audit and Assurance function’s critical to an efficient and effective of Directors with reliable assurances Compliance, Governance and building an efficient control findings to our executive management organizational management. on the health of our internal controls. Enterprise Risk Management system for their functions; 26 2019 Corporate Governance Report | 27

CORPORATE SOCIAL RESPONSIBILITY

We are committed to leveraging In 2019, our CSR outreach efforts to help cut down on the use of Supporting social development our presence in the UAE and reflected our desire to help a broad disposable plastic bags. the communities in which we range of Emirati society, including As the UAE’s largest fuel supplier, we are proud of our contributions to social investment and community development its most vulnerable. For example, we As we move into the new decade, programs. We are continually looking for new ways to make a positive impact on the lives of the residents of the UAE operate to benefit our people once again conducted a successful ADNOC Distribution will continue to and the wider community. and society as a whole. We do campaign that distributed food during listen, respond and collaborate with this through our job creation fasting breaks to thousands of people our customers and the communities Our main social initiatives for 2019 are outlined below: and development initiatives, during the holy month of Ramadan. we serve. As we grow as a company, and through an extensive we will never lose sight of our program of sponsorships, social We organized and administered obligation to serve the people whose free health checks to hundreds of lives we touch every day. initiatives and partnerships people at selected ADNOC Oasis to advance community and fuel stations, and when necessary, Our total expenditure on social environmental goals. referred them for treatment. We sold development and related sponsorship thousands of reusable shopping projects for 2019 was approximately bags through our sales outlets AED 800,000.

Bag 4 Life Have a Healthy Day Rahma Campaign We are committed to encouraging ADNOC Distribution provided free In this initiative, we assisted responsible use of the UAE’s precious health screenings to more than ADNOC LNG in distributing water resources and protecting our pristine 500 people at four ADNOC stations bottles and juices in August to environment. In partnership with in Abu Dhabi and Al Dhafra. In 12,000 people who work outdoors in the Ministry of Climate Change and coordination with VPS Healthcare, Abu Dhabi and Al Dhafra. This project Environment, we sold thousands of we conducted the public awareness was coordinated with the summer reusable shopping bags at ADNOC campaign in Rabdan, Mahawi North, midday break period and timings, stations in a new campaign to Madinat Zayed and Ghayathi. during which laborers, construction encourage people to cut down on We placed a mobile health unit workers and other outdoor workers disposable plastics. Customers in each station for two days. We are prohibited from working in the responded to our ‘Bag for Life’ distributed 925 first-aid kits and hot sun. campaign and bought our reusable supported with the provision of bags, which are made of 75% jute 515 health screenings. vegetable fiber and 25% cotton.

The holy month of Ramadan The spirit of kindness of Ramadan Preservation of Grace, a humanitarian informs everything we do. Partnering initiative run by the Emirates Red with the Khalifa bin Zayed Al Nahyan Crescent to spread awareness about Foundation, we allocated and the virtues of grace and giving in distributed 6,340 LPG cylinders to society, allocated 116,000 Iftar boxes more than 300 families across the of water, dates, cookies and cleansing UAE during Ramadan in 2019. These wipes from ADNOC Distribution cylinders were used to cook Iftar service stations throughout the UAE. meals that were distributed by our employees and the general public to Ramadan tents in Abu Dhabi, Al Dhafra and Fujairah. 28 2019 Corporate Governance Report | 29

GENERAL INFORMATION

Sponsorship Our 2019 share performance High Low Close In 2019, we sponsored several initiatives in coordination with local entities such as the Pink Caravan campaign for Trading of ADNOC Distribution shares 2019 (AED) (AED) (AED) early breast cancer detection, the Dubai Police White Points Program to encourage responsible driving behavior, the on the ADX started on 13 December January 2.34 2.22 2.31 AD Desert Challenge Cross-Country Rally and to Ms. Alia Al Mansoori, the UAE teenager and resident NYU research 2017 under the symbol ADNOCDIST. fellow who aspires to be an astronaut. The share price at 31 December 2019 February 2.28 2.20 2.23 was AED 2.96. ADNOC Distribution’s March 2.25 2.16 2.22 12,700 market capitalization at 31 December 2019 was AED 37 billion. April 2.81 2.22 2.60 Reusable shopping 515 bags sold to May 2.70 2. 63 2.69 Free health checks discourage plastic ADNOC Distribution’s paid-up share 116,000 given to customers June 2.71 2.65 2.65 waste capital is AED 1 billion, divided into Breakfast boxes 12.5 billion shares, each with a July 2.75 2.63 2.71 distributed during nominal value of AED 0.08. August 2.73 2.63 2.63 Ramadan 12,000 Water bottles The following table sets forth the September 2.70 2.62 2.67 distributed to 925 closing price and the high and low October 2.73 2.59 2.62 outdoor workers First-Aid kits share prices of our shares at the end November 2.72 2.62 2.71 given away of each month during 2019. December 3.05 2.71 2.96

Our 2019 share performance compared with our sector index

The below graph shows the ADNOC Distribution’s share performance comparative to our sector index during 2019.

135

130 +27.6% 125

120

115

110

105 +3.3% 100 -2.2% 95

we are proud of our contributions to social 90 investment and community development 85 programs. Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19

ADNOC Distribution Abu Dhabi Securities Exchange Index(ADX) ADX Energylndex 30 2019 Corporate Governance Report | 31

Breakdown of shareholdings as at 31 December 2019 General Assembly and of Directors in October 2019. The Board Officer (effective as from 5 January Special resolutions Secretary attends all Board meetings 2020) in replacement of Mr. Saeed The table below shows the percentage of the shares owned by different categories of shareholders as at the end presented to the General and is directly answerable to the Board. Al Rashdi who stepped down from his of 2019. Assembly in 2019 The Board Secretary provides advice role in order to take up a new role with Percentage of Shares Held and support to the Board on legal and ADNOC Group. Shareholder Category Individual Companies Government Total The Company held its annual General regulatory matters and is responsible Local 1.71% 93.88% 1.10% 96.69% Assembly on 27 March 2019. However, for ensuring that ADNOC Distribution’s since the quorum was not met in the governing bodies operate effectively GCC 0.13% 0.25% 0.04% 0.42% New Dividend Policy first General Assembly, a second and in compliance with all relevant On 4 April 2019, the Company’s Arab 0.09% 0.00% 0.00% 0.09% meeting was held on 4 April 2019. laws and regulations. shareholders approved a significant Foreign 0.05% 2.75% 0.00% 2.80% increase in the Company’s dividend Total 1.98% 96.88% 1.13% 100% A Special Resolution is defined in Details of Mr. Hennessy’s background policy in recognition of the Company’s our Articles of Association as a and qualifications are provided above strong financial performance and resolution requiring the approval of in page no.13 of this report. cash position in 2018, as well as its Statement of shareholders who held 5% or more of ADNOC Distribution’s the Company’s General Assembly by confidence in the Company’s strong capital as at 31 December 2019 shareholders owing not less than three- growth prospects and cash flow quarters of the shares represented in Statement of significant generation ability going forward. A The table below shows the name of shareholders who held 5% or more of ADNOC Distribution’s capital at the end of that General Assembly. In 2019, the events summary of the Company’s dividend 2019 and the percentage of such shareholdings. following special resolutions were policy is provided in section one of % of the Shares Held of ADNOC passed by the shareholders: Changes to the Board this report. Name Number of Shares Held Distribution’s capital of Directors Abu Dhabi National Oil Company 11,250,000,000 90% (a) the amendment of Article 22.2 In 2019, there were two changes to the of the Company’s Articles of members of the Board of Directors. On Emiratization percentage Statement of shareholding distribution by the size of equity as at 31 December 2019 Association (establishment of 5 February 2019, Mr. Abdulla Salem in ADNOC Distribution as committees and membership Al Dhaheri resigned from our Board of at 31 December 2019 The below table shows the shareholding percentage to capital as at the end of 2019. of committees); Directors. The Board elected Mr. Khaled Salmeen to replace Mr. Al Dhaheri with Developing our human capital is Share(s) Owned Number of Shareholders Number of Share Held % of the Shares Held (b) the amendment of Article 59 Mr. Salmeen’s appointment to the Board a strategic priority, and part of of the Company’s Articles of being ratified by our shareholders at our our commitment to achieving the Less than 50,000 9,953 26,368,056 0.2% Association (distribution of annual General Assembly in April 2019. Emiratization objectives outlined in the From 50,000 to less than 500,000 356 58,022,954 0.5% quarterly and/or semi-annual UAE Vision 2021. From 500,000 to less than 5,000,000 112 186,068,003 1.5% dividends to shareholders); On 30 April 2019, Mr. Matar Al Ameri More than 5,000,000 47 12,229,540,987 97.8% resigned from our Board of Directors. Our national employees are a great (c) the amendment of Article 38 The Board elected Mr. Ahmed Jasim asset to ADNOC Distribution. We of the Company’s Articles of Al Zaabi to replace Mr. Al Ameri. offer them targeted development Procedures taken with respect to the controls of investor relations Association (notice of General Mr. Al Zaabi’s appointment to the opportunities to help them reach their Assembly); Board will be presented at our annual full potential as competent and well- Throughout the year, ADNOC investor information are available capital markets, including 10 years in General Assembly for ratification by informed industry professionals. Distribution’s Investor Relations on our investor relations website. emerging markets at Deutsche Bank (d) the approval of a revised dividend our shareholders. Department publishes earnings releases in Dubai. policy for the Company; and UAE nationals are appointed as and arranges briefings, conference calls In May 2019, we hosted our first trainees within various departments and webcasts to ensure that regular Capital Markets Days at which the Investor Relations can be contacted at (e) the approval of a share buyback Changes to Senior Executive of ADNOC Distribution so they can updates are provided on ADNOC Company’s senior management [email protected] of up to 62.5 million of the Management successfully complete their career Distribution’s performance. discussed the Company’s key Tel: +97126959770 Company’s own shares. On 11 July 2019, Mr. John Carey development programs. achievements since our IPO and the Mobile: +971552180294 stepped down from his role as Deputy Each quarter, we hold earnings Company’s mid-term growth targets Chief Executive Officer and was As at 31 December 2019, our conference calls and webcasts that support our new dividend policy. Additional investor relations information The Secretary to the replaced by Mr. Mohamed Al Hashimi, in Emiratization rate was 73% of to communicate our quarterly can be found on our website in Arabic at Board of Directors the new role of Chief Operating Officer. positions subject to Emiratization and annual results to analysts, Our Investor Relations Department is adnocdistribution.ae/ar/investor-relations/ (Emiratizable positions), compared to shareholders and investors to discuss headed by Mr. Athmane Benzerroug, and in English at Mr. Ben Hennessy, our General Counsel, On 24 December 2019, the Board a rate of 74% and 73% in 2018 and our financials and outlook. Copies Chief Investor Relations Officer, who adnocdistribution.ae/en/investor-relations/. is the Board Secretary. Mr. Hennessy of Directors appointed Mr. Ahmed 2017, respectively. of all presentations, releases and brings 20 years of experience in equity was appointed to this role by the Board Al Shamsi as Acting Chief Executive 32

Innovative projects and initiatives undertaken by ADNOC Distribution or under development in 2019

Building value through enhanced commitment to our shareholders smaller more agile retail points, customer experience, digital solutions by unveiling a progressive and an designed for locations where and a progressive dividend policy attractive dividend policy. traditional stations are impractical and contribute to the rapid build out In 2019, we were able to drive of our network as well as efficient higher fuel volumes (both retail and Customer Service capital allocation. commercial) through a series of Our focus on customer experience targeted customer campaigns and contributed to our success in successfully grew our convenience 2019. We spoke with 14,000 Smart Technology store business through a customer customers during the year through We offered a more seamless experience-led store revitalization surveys and focus groups. The digital experience at the first of campaign and improved category results: free, nationwide assisted- our next-generation ADNOC Oasis management. We launched a number fuels service, launch of ADNOC convenience stores, with new multiple of customer experience initiatives Rewards loyalty program, with the payment points at the redesigned like offering free assisted fueling return of the popular “Fuel Up and coffee station and bakery counter, to all our customers, our innovative Fly Off” partnership with Etihad in addition to a self-checkout point neighborhood fuel station concept Airways. We also launched our first on exit where customers have the ‘ADNOC On the go’, the new ADNOC next-generation ADNOC Oasis quick and easy option to “tap and Rewards program and multiple convenience store offering baked go.’’ We also introduced new digital digital payment incentives. We also goods, made-to-order sandwiches technologies at ‘ADNOC On the go’ to maintained a strong focus on higher and baristas. The launch of the improve customer experience such as operating and capital efficiencies. first of our new ‘ADNOC On the go’ integrated smart system for payments We demonstrated our continued neighborhood stations, provide and drive-through ordering. 34