CORPORATE GOVERNANCE REPORT 2020 CUSTOMER EXCELLENCE CREATING VALUE

ADNOC Distribution CONTENTS

Introduction 3 Our Corporate Governance Overview 4 Share Dealings 6 ADNOC Distribution’s Board of Directors 7 Executive Management 12 Transactions with Related Parties 15 External Auditor 19 Audit Committee 20 Nomination and Remuneration Committee 21 Executive Committee 22 Insider Dealing Committee 23 Internal Control System 24 Corporate Social Responsibility 26 General Information 28 2 2020 Corporate Governance Report | 3

INTRODUCTION

ADNOC Distribution (the Company) we serve. In order to achieve that, we Respectful is the UAE’s largest fuel and retail have created a corporate governance We encourage a culture of inclusivity convenience brand, with 445 service framework that fulfils all applicable and mutual respect, and always operate stations and 326 convenience stores1 laws and regulations while complying to the very highest professional and across the country, servicing all seven with international best practice. This ethical standards. emirates. We take pride in the progress framework was designed, and is being achieved with regards to our smart implemented, in line with our cultural Responsible growth strategy, which helped us deliver values, to ensure the sustainability of We are committed to proactively 10 fold growth in terms of our station our business and to help us achieve identifying ways that we can make a number count across the UAE during our future prospects - as dictated by difference to our community, while 2020, compared with 2019. our vision and mission statements. maintaining an unwavering commitment to health, safety and the environment. In addition, we increased our Our values are the core principles that commitment to the Kingdom of Saudi guide our decision making, and ensure Efficient Arabia, where we have two stations consistency in our employees’ actions We are a performance driven company, already operational, through the and behaviors. They represent our dedicated to maximizing the value of execution of a definitive agreement organization’s collective commitment energy resources for the benefit of our to acquire 15 service stations in the to set, achieve and exceed ambitious people, our community, our partners eastern region2. targets. We are: and our nation.

With such broad reach comes great Progressive This report gives an overview of responsibility to continuously develop We harness the UAE’s spirit of ADNOC Distribution’s corporate and maintain our operational and innovation to ensure that our business governance systems and governance excellence. remains at the forefront of the global procedures as of December 31, 2020 energy industry. and has been filed with the Securities We believe that an organizational and Commodities Authority (SCA), commitment to corporate governance Collaborative and posted on the Abu Dhabi can help drive enhanced management We work in close collaboration with Exchange (ADX) website and the accountability, create value for our partners and peers, leveraging our Company’s website. shareholders, and protect the interests collective strengths to deliver mutually of all stakeholders and the communities beneficial results.

Dr. Sultan Ahmed Al Jaber Chairman of the Board of Directors February 2021

Mr. Khaled Salmeen Mr. Jassim Alseddiqi Mr. David-Emmanuel Mr. Ben Hennessy Chairman of the Executive Chairman of the Beau General Counsel* Committee Nomination and Chairman of the Audit Remuneration Committee Committee

1 as of 31 December 2020 2 subject to certain conditions including obtaining regulatory approvals * The General Counsel is responsible for and oversees the Company’s internal control function 4 2020 Corporate Governance Report | 5

OUR CORPORATE GOVERNANCE OVERVIEW

We are committed to having Insider Dealing Policy Compliance interest must be promptly disclosed a corporate governance Investigations Policy so that the appropriate course of framework that is compliant The requirement to have fair and action can be taken in order to protect with all corporate governance WE ARE transparent dealings in our securities Our commitment to operating with ADNOC Distribution’s interests. requirements that are is of paramount importance to integrity includes investigating, applicable to public joint us and we take a zero tolerance where necessary, allegations of approach to any activities which ethical misconduct. Our Compliance stock companies in the UAE Whistleblowing Policy RESPONSIBLE RESPECTFUL would prevent this requirement from Investigations Policy and supporting and that are consistent with being properly implemented. procedures set forth our approach Having an open, honest and international best practices. to investigations relating to alleged transparent culture supports Below is a brief summary of Accordingly, we have implemented violation: of (a) ethical business our commitment to integrity. Our some of the key policies that an Insider Dealing Policy to practices; (b) integrity in our Whistleblowing Policy encourages our PROGRESSIVE COLLABORATIVE EFFICIENT ensure that the obligations and interactions and arrangements with employees to report concerns about we have implemented and responsibilities of our employees, third parties; and (c) applicable laws, unethical behavior in connection under which we operate. officers and directors with respect regulations, policies and procedures with our business by assuring to dealings in our securities are relating to ethical business practices confidentiality and by protecting good Corporate Governance Dividend Policy Related Party clearly defined. In accordance with and integrity. This policy requires all faith whistle-blowers from retaliation, Policy Transactions Policy the Insider Dealing Policy, we have of our personnel to cooperate fully even if they are mistaken. Our Dividend Policy sets out the clear established an Insider Dealing and truthfully with all investigations Our Corporate Governance Policy and transparent criteria and method Our Related Party Transaction Policy is Committee to oversee the ongoing and to avoid engaging in certain provides clear guidance on: (a) the for the distribution of our profits such designed to ensure that: (a) transactions implementation of this policy. activities that may hinder or interfere Gender Diversity Policy Company’s corporate governance that the distribution of our profits with related parties are conducted at with an investigation. structure and the interface serves the interests of both ADNOC arm’s length terms; (b) the Board of We are committed to advancing between the Company and its Distribution and its shareholders. Directors and senior management Anti-Bribery and gender diversity and equality across stakeholders; (b) the authorities are aware of the steps required to Corruption Policy Conflicts of Interest the organization and are constantly and decision-making mechanisms The payment of dividends is subject approve transactions with related Policy working to recruit more women in all within the Company and between to consideration of: (a) the cash parties; and (c) a legitimate business We are committed to doing areas of our business. We are also its stakeholders; and (c) the role and management requirements of the case is present and which supports business lawfully, ethically and with We understand that our employees, working on a number of initiatives responsibilities of the Company’s Company for operating expenses, the relevant related party transactions, integrity, and we expect all of our officers and directors will engage to advance women’s career growth corporate governance function. interest expense, and anticipated including their arm’s length nature. In employees and representatives to in legitimate social, financial and across the Company. To this end, we capital expenditures; and (b) market accordance with this policy, we may not act accordingly. Consistent with business activities outside the scope are developing a Gender Diversity conditions, the then current operating enter into a related party transaction this commitment, we take a zero of their work for us. Our Conflicts Policy to support our actions. Code of Conduct environment in our markets, and unless it has been approved by: (i) tolerance approach to fraud, bribery of Interest Policy sets forth our Additionally, the Company will continue the outlook for the business of the our Board of Directors, where the and all other forms of corruption. requirements for the avoidance to ensure that its female employees Our Code of Conduct demonstrates Company. In addition, any level or transaction’s value does not exceed Our Anti-Bribery and Corruption and management of conflicts of obtain access to all necessary training ADNOC Distribution’s commitment payment of dividends will depend on, 5% of the value of our share capital; Policy sets forth our requirements to interest that may arise as a result of and development in order to achieve to compliance and ethical behavior in among other things, future profits and or (ii) our shareholders at a General ensure that none of our employees these other activities, including the their full potential in line with the all that it does. Our Code of Conduct the business plan of the Company, at Assembly, where the transaction’s value or representatives engage in any of avoidance of situations that merely standards of high performance we (a) sets out the minimum standard of the discretion of the Board of Directors exceeds 5% of our share capital. The these activities. have the appearance of a conflict of expect from all our employees - both conduct that we expect from anyone and approval of the Shareholders. foregoing requirements do not apply to interest. Under this policy, conflicts of men and women alike. working for or on behalf of ADNOC transactions with ADNOC and with other Distribution; and (b) provides a set Under our Dividend Policy, the Company ADNOC group companies. of basic rules and standards that are may distribute quarterly, semi-annual designed to ensure that our business and/or annual dividends to shareholders However, for so long as ADNOC owns is conducted in an ethical and from operating profits and/or more than 50% of our shares, we may compliant manner and in accordance accumulated profits of the Company. not enter into transactions with ADNOC with our core values. The Company currently intends to pay a or other ADNOC group companies dividend twice each fiscal year, with an unless such transactions have been initial interim payment in October of that approved by our Board of Directors, year and a second payment in April of including a majority of the independent the following year. members of the Board of Directors. 6 2020 Corporate Governance Report | 7

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 Our Board of Directors comprises seven Directors. All Directors are independent non- doing so adhere to applicable laws children in 2020: executive directors, within the meaning of Resolution No. (3/R.M) of 2020 of the Securities and Commodities Authority of the United Arab Emirates (the SCA and the Corporate Shares held as at Total Sale Total Purchase Director Position 31 December 2020 Transactions Transactions Governance Rules). Pursuant to our Articles of Association, each Director serves a three- year term, after which a Director may be elected to a successive term or terms. H.E. Dr. Sultan Ahmed Al Jaber Chairman ─ ─ ─

Mr. Khaled Salmeen Director ─ ─ ─ The Board of Directors was elected on November 2017 for a three year term, with the exception of Mr. Khaled Salmeen and Mr. Ahmed Jasim Al Zaabi who were appointed Mr. Abdulaziz Abdulla Alhajri Director ─ ─ ─ on 5 February 2019 and 30 April 2019, respectively, to serve the remaining term of the Mr. Ahmed Jasim Al Zaabi Director ─ ─ ─ Directors they replaced. Notwithstanding the three year term the Board of Directors was Mr. Jassim Alseddiqi Director ─ ─ ─ elected for, an approval was obtained from SCA in October 2020 to enable the existing Board of Directors to continue to hold office until the next scheduled General Assembly Mr. Pedro Miró Roig Director ─ ─ ─ meeting (anticipated to be held in March 2021). Mr. David-Emmanuel Beau Director ─ ─ ─

Composition of the Board of Directors Set forth below is a table detailing the composition of our Board of Directors:

H.E. Dr. Sultan Ahmed Al Jaber Mr. Jassim Alseddiqi Chairman Director Since February 2016(1) Since November 2017

Mr. Khaled Salmeen Mr. David-Emmanuel Beau Director Director Since February 2019 Since November 2017

Mr. Abdulaziz Abdulla Alhajri Mr. Pedro Miró Roig Director Director Since November 2017 Since November 2017

Mr. Ahmed Jasim Al Zaabi Director Since April 2019

(1) Pre IPO, H.E. Dr. Sultan was appointed in February 2016 as the Chairman of the Board of Directors of ADNOC Distribution, he was reappointed as the Chairman of the Board in November 2017 at that time of the IPO 8 2020 Corporate Governance Report | 9

Our Board of Directors

H.E. Dr. Sultan Ahmed Al Jaber Chairman Ahmed Jasim Al Zaabi Jassim Alseddiqi H.E. Dr. Sultan Ahmed Al Jaber has served as Minister of Industry and Advanced Technology since July 2020, as Director Director a UAE Cabinet Member and Minister of State since March 2013 and as Chief Executive Officer of ADNOC since Member of the Audit Committee Chairman of the Nomination and Remuneration Committee February 2016. From January 2014 to February 2016, he served as Chief Executive Officer, Energy, of Mubadala Member of the Executive Committee Member of the Audit Committee Development Company. H.E. Dr. Al Jaber is also Chairman of several other ADNOC Group companies, Chairman Mr. Ahmed Jasim Al Zaabi has served as Group Chief Mr. Jassim Alseddiqi has served as the Group Chief of Masdar and Chairman of Abu Dhabi Media Company PJSC. He is also a member of the Board of Directors of Financial Officer of ADNOC since December 2019, Executive Officer of Shuaa Capital since October Emirates Global Aluminum and First Abu Dhabi Bank. H.E. Dr. Al Jaber holds a PhD in business and economics from and as Director, Finance & Investments Directorate 2019. He also serves as the Chairman of GFH Financial Coventry University in the ‎United Kingdom, an MBA from the California State University, and a Bachelor in‎ Chemical of ADNOC since February to December 2019. He Group, Islamic Arab Insurance Company (SALAMA), Engineering from the University of Southern California, the United States. previously served as Executive Director of the Office of Eshraq Investments, Khaleeji Commercial Bank and Government Investments at Abu Dhabi Department of The Entertainer. He is a member of the Board of Finance from 2018 until February 2019, and as a Director Directors of First Abu Dhabi Bank (FAB) and Dana Gas. of Office of State Owned Enterprises, GSEC from 2011 Mr. Alseddiqi holds a Bachelor’s degree in Electrical until 2018. Mr. Al Zaabi Currently serves as a board Engineering from the University of Wisconsin-Madison member of Khalifa Fund for Enterprise Development, and a Master’s degree in Electrical Engineering from TAZIZ, IFAD and several other ADNOC Group companies. Cornell University. He has also served as a lecturer at Mr. Al Zaabi holds a Master’s degree in Economics the Abu Dhabi-based Petroleum Institute. Science with Honors from University of Aberdeen, UK.

Khaled Salmeen Abdulaziz Abdulla Alhajri Director Director Chairman of Executive Committee Member of the Nomination and Remuneration Committee

Mr. Khaled Salmeen has served as Executive Director Mr. Abdulaziz Abdulla Alhajri served as Executive of Downstream Industry, Marketing and Trading Director, Downstream Directorate of ADNOC from Directorate of ADNOC since 24th January 2021, having May 2016 until 31 December 2020. From October previously served as Executive Director of Marketing, 2007 to May 2016, he was Chief Executive Officer Sales & Trading Directorate of ADNOC from 5 February of Abu Dhabi Polymers Company (Borouge), a joint Pedro Miró Roig David-Emmanuel Beau 2019. He previously also served as Chief Executive venture of ADNOC and Borealis. He also serves Director Director Officer of the Khalifa Industrial Zone (KIZAD), Chairman on several other ADNOC Group company boards Member of the Nomination and Chairman of the Audit Committee of Abu Dhabi Terminals, and Chief Operating Officer of directors. Mr. Alhajri holds a BSc in Chemical Remuneration Committee Member of the Executive Committee of National Central Cooling Company (Tabreed). Engineering from the University of Texas. He also served as Director of ADNOC’s Transformation Mr. Pedro Miró Roig was Chief Executive Officer Mr. David-Emmanuel Beau has served as Senior Vice Project Management Office from 2016 to 2017. of Compañía Española de Petróleos (CEPSA) from President, Asset Management & Business Development Mr. Salmeen currently serves on a number of ADNOC September 2013, and Vice Chairman from June (Downstream Industry, Marketing & Trading Directorate) Group company boards of directors. He is also 2014, in each case until October 2019. He served as at ADNOC since November 2020. He previously served Chairman of TA’ZIZ and Chairman of ADNOC Trading. Chief Operating Officer of CEPSA from 2011 to 2013. as Chief Investment Officer of the GSS Department Mr. Salmeen holds a BSc in Engineering from Colorado He serves as a member of the board of Mubadala at Abu Dhabi Investment Council (ADIC) from 2007 to School of Mines, Colorado, USA, and an Executive MBA Petroleum. Mr. Miró holds a Bachelor’s degree in 2020, where he focused on the MENA region, and prior from INSEAD. and a Project Management Professional Chemistry from the University of Barcelona. to that as a fund manager at the Abu Dhabi Investment (PMP) from the Project Management Institute (PMI) and Authority (ADIA) from 2003 until 2007. He serves as a Harvard Business School. member of the board of Invest AD. Mr. Beau is a CFA Charter holder. 10 2020 Corporate Governance Report | 11

Women’s representation Directors’ Statement of allowances on the Board of Directors Remuneration paid to committee members for 2020 In 2020, we did not have any female In 2020, our shareholders approved a members on the Board of Directors. total remuneration of AED 12 million In 2020, no allowances, salaries However, in keeping with our which was paid to the members of or additional fees were paid to commitment to gender diversity, our Board of Directors for 2019. It is committee members. we are actively seeking out proposed that the remuneration opportunities to include female for the Board of Directors for 2020, representation on our board. To this to be paid in 2021, is a total of end, where vacancies arise we will AED 12 million plus any applicable actively seek out greater female VAT. This will be presented to our representation while at the same time shareholders at our upcoming annual considering all qualified candidates, General Assembly for approval. regardless of gender.

Board Meetings – attendance records

Our Articles of Association require that the Board of Directors meets a minimum of four times each year. The quorum for meetings is a majority of directors, and voting during meetings is a majority of attendees. The following table sets forth the meetings held by our Board of Directors in 2020: (1) (2) (3)

Board Member Position on the Board 11 Feb 2020 11 May 2020 12 Aug 2020 03 Sept 2020 29 Sept 2020 10 Nov 2020 30 De 2020 H.E. Dr. Sultan Ahmed Al Jaber Chairman P P P P P P P Mr. Khaled Salmeen Director P P P P P P P Mr. Ahmed Jasim Al Zaabi Director P P P P P P P Mr. Abdulaziz Abdulla Alhajri Director P P P P P P P Mr. Jassim Alseddiqi Director P P A P P P P Matters reserved to the Board of Directors and Mr. Pedro Miró Roig Director P P P P P P P delegated to management Mr. David-Emmanuel Beau Director P P P P P P P

P – Present, A – Absent (note: all absences from the Board were properly verified and approved). The Board of Directors has issued Notwithstanding the Delegation of (1) Meeting held by circulation to approve the appointment of ADNOC Distribution’s new Chief Financial Officer a Delegation of Authority to our Authority that has been provided (2) Meeting held by circulation to approve payment of 2020 interim dividend Details of the Acting Chief Executive Officer, to Mr. Al Shamsi, the Board of (3) Meeting held by circulation to approve the acquisition of 15 retail stations in the Kingdom of Saudi Arabia. Delegation of Authority Mr. Ahmed Al Shamsi, under which Directors maintains oversight over the Board of Directors has delegated these activities, and Mr. Al Shamsi Name of the authorized person to him the authority to conduct the is regularly required to report to Acting Chief Executive Officer daily management activities of the the Board of Directors with respect Company, subject to appropriate to the activities undertaken by Scope of authority limits (beyond which, the approval him pursuant to the terms of the Authority to conduct the daily of the Board of Directors must be Delegation of Authority. management activities of ADNOC sought). Under the Delegation of Distribution, subject to appropriate Authority, Mr. Al Shamsi has the limits as set down by the Board of ability to sub-delegate activities Directors from time to time to other members of ADNOC Distribution’s management. Duration of delegation Until the authority is revoked by the Board of Directors 12 2020 Corporate Governance Report | 13

EXECUTIVE MANAGEMENT

Under the Delegation of Authority, and in consultation with the Board of Directors, our Acting Key Executive Management - Governance Chief Executive Officer, has sub-delegated some of the powers given to him to members of our executive management team. Our executive management team carries out the day-to-day activities Ahmed Al Shamsi of ADNOC Distribution pursuant to this authority and in line with international best practice and the Acting Chief Executive Officer

relevant governance rules and regulations. Mr. Ahmed Al Shamsi was appointed Acting Chief Executive Officer as of 5 January 2020 and Acting Chief Operating Officer as of from 30 September 2020. Before joining ADNOC ADNOC Distribution Organization Chart Distribution, Mr. Al Shamsi served as Senior Vice President for Middle East, Africa and Export at Borouge, and was responsible for leading that company’s Sales and Marketing initiatives, as well as developing and implementing the long-term strategies of that company within the Below is the organization chart of ADNOC Distribution region. Previously. Mr. Al Shamsi held senior leadership roles across diverse functions of Global Supply Chain and Project Management. 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 Chief Executive Officer Management (MQM) from the University of Wollongong. Ahmed Al Shamsi (Acting)

Mohamed Al Hashemi Chief Financial Officer VP Audit & Assurance Mohamed Saleh Mr. Mohamed Al Hashimi was appointed as Chief Financial Officer as of 30 September 2020. Prior to this appointment, Mr. Al Hashimi served as the Chief Operating Officer from July 2019 to September 2020. Prior to joining ADNOC Distribution, Mr. Al Hashimi served as Senior Vice President, Asset Management & Business Development for ADNOC Group and was also advisor to ADNOC Distribution’s Executive-Committee. Previously, Mr. Al Hashimi served as Senior Vice President, Group Strategic Investments for ADNOC Group delivering world-class projects and transactions. Mr. Al Hashimi holds a Master’s Degree in Business and Management from Harvard University. Chief Business Chief Investor Chief Financial Chief Marketing VP Health, Safety, VP Transformation Commercial Relations Officer Officer Officer Environment & Program Mgmt Support Officer Athmane Benzerroug Mohamed Al Hashimi Brian Kuz Majid Al Suwaidi Wim Van Asch Saeed Al Ahbabi

Chief Strategy & Business SVP Human Capital General Counsel Development Officer Mohd Alqedrah Ben Hennessy Athmane Benzerroug Aakash Nijhawan Chief Investor Relations Officer

Mr. Athmane Benzerroug joined ADNOC Distribution in September 2018 as Chief Investor Relations Officer. He has 20 years of experience in equity capital markets. Prior to joining ADNOC Distribution, Mr. Benzerroug managed industrial sectors for Emerging Markets Chief Operating Officer Ahmed Al Shamsi Equities for Deutsche Bank in Dubai, since 2008. Previously, Mr. Benzerroug was responsible (Acting) for European Infrastructure at Natixis Securities in Paris. Mr. Benzerroug holds an MSc in Econometrics from University of Paris X, France.

Ben Hennessy SVP Customer Experience SVP Production, Supply Chain SVP Non-Fuel Retail SVP Fuel Retail SVP Commercial General Counsel & Board Secretary & Operations Integration and Maintenance Lars Hoglund (Vacant) Juma Al Khemeiri (Vacant) Mohamed Al Mehrezi Mr. Ben Hennessy joined ADNOC Distribution in October 2019 as General Counsel and Company Secretary. He has served as an international lawyer for more than 16 years, initially at global law firm DLA Piper, followed by eight years at BP PLC, where he led legal teams supporting BP’s retail fuels and lubricants business. Mr. Hennessy is a qualified solicitor in England & Wales and holds an LPC from the University of Law, London and a BA from the University of Newcastle, UK. 14 2020 Corporate Governance Report | 15

TRANSACTIONS WITH RELATED PARTIES

Executive Management Remuneration

Details of the total salaries and benefits paid to the senior members of our executive management team in 2020 are provided in the table below: 2020

Appointment Total salaries & Total Other Position date allowances paid bonuses paid benefits(2)

Acting Chief Executive Officer January 2020 1,689,241 382,530 We are and have been a party to various agreements and other arrangements with Chief Financial Officer(1) July 2019 1,214,284 302,417 16,240 related parties, comprising ADNOC and certain of its other subsidiaries. Details of these Chief Investor Relations Officer September 2018 1,662,500 305,716 13,440 transactions are described below. In addition, the value of all related party transactions Chief Strategy and Business undertaken by ADNOC Distribution during 2020 (as disclosed in our 2020 financial January 2019 1,545,800 253,613 3,600 Development Officer statements) is as follows. AED’000 Chief Marketing Officer August 2019 1,444,583 Revenue - ADNOC group 748,543 Chief Business and Commercial June 2019 1,168,412 490,319 99,060 Support Officer Purchases – ADNOC 9,439,083

Senior Vice President, Commercial November 2020 236,020 Vessel hire and port charges – ADNOC group 62,057 Dividend paid (2,479,375) Senior Vice President, Non Fuel Retail September 2019 1,357,000 41,910 Rendering of service 220,630 Senior Vice President, Operations January 2020 1,494,424 111,523 85,475 Recovery of expenses incurred related to City Gas 60,175

(1) The Board appointed Mr. Mohamed Al Hashimi to serve as Chief Financial Officer, stepping down as Chief Operations Officer, effective Sept.2020 End of service benefits transferred N/A (2) Bonuses for 2020 that are payable in 2021 are yet to be determined or awarded.

Relationship Agreement with ADNOC

In 2017, we entered into a to terminate, and to renew at our which is effectively controlled by Relationship Agreement with ADNOC request, certain supply and other ADNOC. However, for so long as by which ADNOC agreed, for so long agreements we have entered into ADNOC holds the majority of our as our shares are listed on the ADX with ADNOC, in each case, so long as shares, ADNOC has agreed to and ADNOC owns or controls more we are not in material default of our procure that there shall be three than 50% of the shares, among obligations under those agreements. independent non-executive directors other things: (a) not to take certain appointed to the Board of Directors actions that might interfere with our Pursuant to the Relationship at all times and, if the overall size of status as an independent company, Agreement, we have also agreed to the Board of Directors increases, including: (i) ADNOC will not take enter into transactions with ADNOC that the number of independent any action that would interfere and other members of the ADNOC non-executive directors appointed with our ability to comply with our group only with the approval of a to the Board of Directors shall, if obligations under certain ADX and majority of our directors, including a necessary, also be increased so that SCA listing and governance rules, majority of our independent non- they amount to at least one-third of and (ii) ADNOC will conduct all executive directors (other than the total number of directors on the transactions with us on arm’s length transactions that, in accordance Board of Directors. terms and on a commercial basis and with our Delegation of Authority, do will allow us to carry out our business not require approval of the Board In any case, as noted under page 7 independently; (b) not to engage in of Directors). Any enforcement of of this report, all of our Directors a competing gasoline filling station the provisions of the Relationship are independent non-executive business or retail convenience store Agreement against ADNOC requires directors under the SCA’s Corporate business in the UAE; and (c) not approval by our Board of Directors, Governance Rules. 16 2020 Corporate Governance Report | 17

Refined Products (calculated by reference to actual retail Agreement, ADNOC has committed has agreed to sell to us, specified volumes of natural gas, which we may non-exclusive license to use certain Supply Agreement fuel sales revenue less the price we to supply the quantities of products volumes of base oil at prices set forth only resell at our retail fuel service ADNOC trademarks and logos in pay for such fuel under the Refined confirmed by ADNOC each month in the Base Oil Supply Agreement, stations, as part of our business selling Africa, Europe, the GCC, and any We entered into a Refined Products Products Supply Agreement) is less and has agreed to use its best which are reviewed annually. The term CNG to natural-gas powered vehicles, other countries or territories as may Supply Agreement with ADNOC, than certain specified minimum levels. endeavors to source such products of the Base Oil Supply Agreement or back to ADNOC. be agreed by us and ADNOC in writing effective 1 October 2017, pursuant Any fils-per-liter shortfall against such from third-party suppliers to the is for an initial five-year period from time to time in connection to which we have agreed to minimum margin levels is payable to us extent not otherwise available to it. expiring on 31 December 2022 and We also continue to provide certain with: (a) the operation of fuel service purchase from ADNOC, and ADNOC by ADNOC in respect of all retail fuel will be extended automatically for support services to assist ADNOC in stations; (b) the manufacture, sale, has agreed to sell to us, refined quantities we have sold of the affected Pursuant to the LPG Supply subsequent five-year terms unless operating the natural gas business storage, marketing, and distribution liquid hydrocarbons, comprising grade during the relevant period. For Agreement, prices for butane, either party notifies the other of its under a services agreement. of petroleum products, including unleaded gasoline (91, 95 and 98 other refined products, including propane and LPG are ADNOC’s intention not to renew at least 12 engine oils, bitumen, and other grades), gas oil (diesel), illuminating illuminating kerosene and aviation official selling prices as in effect from months prior to the then-effective petroleum by-products; (c) other kerosene, and aviation fuels. The fuels, prices will be ADNOC’s official time to time, provided that, for so long expiration date. Real Estate Transfer goods and services related to the term of the Refined Products Supply selling prices for such products. as the retail price of LPG cylinders Liability and Leaseback foregoing, including lubricants, car Agreement is for an initial period is regulated, the price for LPG to be Agreements washing services, merchandise, expiring on 31 December 2022, and Under the Refined Products Supply resold in subsidized cylinders will Transfer of Natural Gas and sponsorships; and (d) any other will be extended automatically for Agreement, we have agreed to be equal to the regulated retail price Business In order to continue to comply with activities that we currently are subsequent five-year terms unless purchase refined products exclusively less 108% of our operating costs for property ownership laws in the UAE engaged in or that may be otherwise either party notifies the other of its from ADNOC, and ADNOC undertakes distributing subsidized cylinders. In November 2017, we entered into following our IPO, our real property required for our operations from intention not to renew at least 12 not to compete with us in selling to a Business Transfer Agreement with portfolio was transferred to ADNOC time to time. The license granted months prior to the then-effective any customer in the UAE without Under the LPG Supply Agreement, ADNOC pursuant to which we agreed pursuant to decisions of the Crown under the Brand Usage Agreement expiration date. Under the Refined our consent, except for sales to we have agreed to purchase butane, to transfer to ADNOC all of the assets Prince of Abu Dhabi and the Rulers of is royalty-free for the first four years. Products Supply Agreement, Emarat, ENOC, customers purchasing propane and LPG exclusively from and operations relating to our natural the Northern Emirates. Thereafter, we will pay ADNOC a ADNOC has committed to supply more than 10,000 metric tons of ADNOC, and ADNOC undertakes gas business. These did not include license fee in an amount to be agreed all quantities of refined products refined products, and customers to not to compete with us in selling to those assets and operations located To allocate liabilities associated between us and ADNOC. Subject included in annual and quarterly whom we have elected not to sell any customer in the UAE without our at our retail fuel service stations for the with the property transfers, and to to the restrictions set forth in the plans and has agreed to use its best refined products. ADNOC has also consent, except for sales to Emarat, compression and sale of compressed ensure we have continued access Relationship Agreement, ADNOC endeavors to source such products undertaken not to sell on a spot basis ENOC, customers purchasing more natural gas (CNG) to operators of to our properties, we entered into may terminate the Brand Usage from third-party suppliers to the to unaffiliated non-export customers than 80,000 metric tons per annum natural gas-powered vehicles. The Transfer Liability and Leaseback Agreement upon 12 months’ notice, extent not otherwise available to it. in the UAE at prices lower that the of products, and customers to whom consideration equaled AED 64.1 million agreements with ADNOC. Under the including if the parties are unable to prices it charges us. we have elected not to sell products. (representing the net book value of the terms of the Real Estate Transfer agree on the license fee payable after Pursuant to the Refined Products ADNOC has also undertaken not to transferred assets), plus all operating Liability and Leaseback Agreements, the first four years. Supply Agreement, the prices we pay sell on a spot basis to unaffiliated costs and capital expenditure incurred ADNOC agreed to lease all real for gasoline and gas oil (diesel) will LPG Supply Agreement non-export customers in the UAE by us in relation to the natural gas estate transferred to it, back to us equal the Platt’s benchmarks utilized at prices lower than the prices it business between signing and closing, on a cost-pass-through basis. Each Civil Aviation Supply by the Retail Price Committee chaired We entered into an LPG Supply charges us. less: (a) all customer receipts received lease has a term of four years and will Carve-out by the UAE Ministry of Energy to set Agreement with ADNOC, effective by or on our behalf in relation to the renew automatically unless notice retail pump prices plus a fixed margin 1 October 2017, by which we have natural gas business between signing of termination is given by us at least We entered into an Aviation Sales per liter, provided that during the agreed to purchase from ADNOC, Base Oil Supply and closing; and (b) an amount equal to one year prior to the then-effective Transfer Agreement with ADNOC in initial term of the agreement expiring and ADNOC has agreed to sell to us, Agreement all duties and liabilities incurred by us in expiration date. Under the terms of September 2017 pursuant to which we on 31 December 2022, such prices butane, propane and LPG in quantities connection with the employment of the the agreements, we will indemnify transferred all contracts for the sale will be reduced on a fils-for-fils basis requested by us and confirmed by We purchase base oil used to employees to transfer with the natural ADNOC for any environmental and supply of jet fuel to the civil aviation if the regulated gross margins on ADNOC. The term of the LPG Supply produce lubricants and for resale to gas business prior to closing. liabilities relating to our operations on sector, and related receivables and retail sales of gasoline and diesel are Agreement is for an initial period our Corporate Division customers the properties. jet fuel inventories (other than any Jet reduced from their current levels. expiring on 31 December 2022, and from ADNOC pursuant to an annual In connection with the Business A-1 held at our Al Dhafra Terminal), to will be extended automatically for confirmation, which incorporates Transfer Agreement, we have agreed ADNOC effective 30 September 2017. In addition, ADNOC must make a subsequent five-year terms unless ADNOC’s general terms and to purchase natural gas from ADNOC Brand Usage Agreement payment to us to the extent that, either party notifies the other of its conditions for sales of base oils. for sale as CNG at our retail fuel service In connection with the Aviation Sales for any contract quarter, the actual intention not to renew at least 12 Under the terms of the Base Oil stations. Under the terms of the We entered into a Brand Usage Transfer Agreement, we entered per-liter gross margin we earn on months prior to the then-effective Supply Agreement, we have agreed to agreement, we purchase from ADNOC, Agreement with ADNOC pursuant to into an Aviation Services Agreement retail sales of gasoline and diesel expiration date. Under the LPG Supply purchase from ADNOC, and ADNOC and ADNOC sells to us, specified which ADNOC has granted to us a with ADNOC to provide ADNOC with 18 2020 Corporate Governance Report | 19

EXTERNAL AUDITOR

services to operate its civil aviation assets comprised certain storage, related taxes or other charges) plus We have entrusted the Deloitte & Touche (M.E.) is a member 26 offices in 15 countries with supply business and to provide pipeline and other fuel terminal and 8% of such amount, and to reimburse external audit function for firm of Deloitte Touche Tohmatsu more than 3,000 partners, directors operations and maintenance services distribution assets that ADNOC us for the amount of any required ADNOC Distribution’s yearly Limited (DTTL) and is the first Arab and staff. It has been a Tier 1 Tax in respect of certain assets related Refining had constructed primarily for capital expenditures. Amounts due to professional services firm established advisor in the GCC region since 2010 accounts to Deloitte & Touche to the civil aviation supply business. our benefit. us by AssetCo are offset by amounts in the Middle East region with (according to the International Tax Pursuant to the Aviation Services we owe AssetCo for utilization of the (M.E.) which has been ADNOC uninterrupted presence since 1926. Review World Tax Rankings). Agreement, ADNOC may request us The assets that were transferred to assets transferred to AssetCo. The Distribution’s external auditor to perform certain services relating to us had historically been operated and AssetCo O&M Agreement has an since 2014. Deloitte is among the region’s Details of the fees paid to Deloitte & the transportation and delivery of fuel maintained by us. In consideration initial term expiring on 31 December leading professional services firms, Touche (M.E.) for the 2020 auditing to its civil aviation customers, which of the transfer of these assets, we 2022, with successive five-year providing audit, tax, consulting, and services are provided in the we may perform ourselves or procure paid ADNOC Refining approximately renewal periods unless we provide at financial advisory services through table below: third-party service providers to AED 696.2 million, representing the least 12-months’ notice of our intent perform. For providing services under net book value of such assets. On not to renew. Number of years served as an the Aviation Services Agreement, the fifth anniversary of the transfer, external auditor for ADNOC 7 years including four years serving as our external auditors ADNOC has agreed to compensate we will discuss with the AssetCo the Distribution as a Public Joint Stock Company. us in an amount equal to our incurred potential acquisition of its assets, Shareholder Services operating expenses incurred in subject to agreement on pricing and Agreement Partner name Mr. Farhad Aklas connection therewith (including any other terms. related taxes or other charges) plus On 30 September 2017, we entered Number of years the Partner 8% of such amount, and to reimburse In connection with the ADNOC into a Shareholder Services served as the Company’s external us for the costs of any third-party Refining Asset Purchase Agreement, Agreement with ADNOC pursuant to audit partner 1 year service providers. we entered into an AssetCo O&M which ADNOC provides us with certain Agreement with AssetCo on 30 administrative and other support in the Total fees for auditing the AED 1,035,000.00 During the term of the Aviation September 2017 pursuant to areas of treasury, accounting, finance, financial statements of 2020 Services Agreement, we have agreed which we provide operations and tax, legal and compliance support, (in AED) including provision of Breakdown: that we will not own or engage in a maintenance services in respect of corporate governance, HR, logistics, reasonable assurance report on the • AED 395,215.00: Fee for auditing the Annual financial statements civil aviation supply business that those assets that were transferred to information technology, procurement, effectiveness of internal financial • AED 345,700: Fee for quarterly review of the financial statements competes with ADNOC’s civil aviation AssetCo under the ADNOC Refining insurance, risk management, record controls over financial reporting supply business. The Aviation Asset Sale Agreement and that keeping, reporting and general and • AED 294,085: Other relevant audit services in relations to the annual Services Agreement has an initial historically had been operated and administrative services to the audit of the Company’s departmental financial statements and term expiring on 31 December 2022, maintained by us. extent we determine based on our the provision of reasonable assurance report on the effectiveness with successive five-year renewal business requirements. of internal financial controls over financial reporting periods unless any party provides at Certain other assets that were least 12-months’ notice of its intent transferred to AssetCo under Pursuant to the terms of the Fees and costs of other private not to renew. the ADNOC Refining Asset Sale Shareholder Services Agreement, services other than auditing the AED 264,420.00 for services related to general accounting Agreement historically had been, we and ADNOC will negotiate the financial statements for 2020 (AED) and tax advice (including excise tax related matters) and will continue to be operated cost, including the cost of third-party ADNOC Refining and maintained by ADNOC Refining, service providers, for the provision of Perimeter for which ADNOC Refining will such services, provided that ADNOC Details and nature of other Review of International Financial Reporting Standard 9 – Financial Reorganization be compensated by AssetCo. will not charge us for the provision services provided (if any) Instrument (IFRS 9) Expected Credit Loss (ECL) model methodology. In addition, the AssetCo O&M of such services, other than the Determine the excise goods on 15 January 2020 for FTA compliance. On 30 September 2017, we entered Agreement grants us the right to use actual cost of third-party service into an ADNOC Refining Asset these assets in connection with our providers and allocated costs of group Statement of the other services Purchase Agreement with ADNOC fuel distribution operations. insurance, for the initial four-year term performed by an external auditor Refining and AssetCo, both of which of the agreement. After the initial other than ADNOC Distribution’s are subsidiaries of ADNOC, pursuant For providing services under the four-year term, the agreement may be auditor in 2020 (if any) None to which ADNOC Refining transferred AssetCo O&M Agreement, AssetCo extended by mutual agreement. certain assets to us or, to the extent has agreed to compensate us in such assets have been built at an amount equal to our incurred For our annual financial statements specifications and capacities that operating expenses incurred in for the year ended 31 December exceed our needs, to AssetCo. These connection therewith (including any 2020, Deloitte & Touche (M.E.) issued an unqualified audit opinion. 20 2020 Corporate Governance Report | 21

AUDIT NOMINATION AND COMMITTEE REMUNERATION COMMITTEE

Our Audit Committee assists The Audit Committee gives due independence issued by the relevant Our Nomination and the Board of Directors in consideration to the applicable laws accountancy and auditing bodies. Remuneration Committee discharging its responsibilities and regulations of the UAE, SCA and assists the Board of the ADX, including the provisions of The Audit Committee’s responsibilities with regard to financial Directors in discharging its the Corporate Governance Rules. in relation to the Audit & Assurance reporting, external and internal function include the review and responsibilities relating to audits and controls, including: The Corporate Governance Rules, approval of the overall audit strategies the composition and make- reviewing and monitoring the reflected in the Audit Committee and annual audit work plan, budget, up of the Board of Directors integrity of our annual and Charter require that the Audit and overseeing the Internal Audit and any committees of the interim financial statements; Committee comprises at least three programs and performance. In Board of Directors. It is members who are non-executive addition, the Audit Committee ensures reviewing and monitoring responsible for evaluating the directors, and that at least two of the that Audit & Assurance has full and the extent of the non-audit members must be independent. unrestricted access to all required balance of skills, knowledge work undertaken by external One of the independent members sources of information relevant to and experience and the size, auditors; advising on the must be appointed as chairman performance of its work. structure and composition It is also responsible for periodically comprised of at least three non- appointment of external of the committee. In addition, at of the Board of Directors and reviewing the Board of Directors’ executive directors, at least two auditors; overseeing the least one member is required to As part of his role as the Chairman committees of the Board of structure and identifying potential of whom must be independent. have recent and relevant audit and of the Audit Committee, Mr. David- candidates to be appointed as The chairman of the Nomination relationship with our external Directors and, in particular, for accounting experience. The current Emmanuel Beau is responsible directors or committee members as and Remuneration Committee auditors; reviewing the members of the Audit Committee are for ensuring the committee’s monitoring the independent the need may arise. must be chosen from amongst the effectiveness of the external Mr. Beau (Chairman), Mr. Alseddiqi overall effectiveness and that the status of the independent independent committee members. audit process; and reviewing and Mr. Al Zaabi. committee properly complies with all non-executive directors. In addition, the Nomination and The current members of the the effectiveness of our internal of its stated objectives. Remuneration Committee assists Nomination and Remuneration control review function. The The Audit Committee has taken the Board of Directors in determining Committee are Mr. Alseddiqi appropriate steps to ensure that In 2020, the Audit Committee met its responsibilities in relation to (Chairman), Mr. Miró and Mr. Salmeen. Audit Committee makes ADNOC Distribution’s external seven times. Details of those meetings remuneration, including making recommendations to the Board auditors are independent of ADNOC (including the attendance records for recommendations to the Board of As part of his role as the Chairman of Directors, which retains Distribution as required by the those meetings) are contained in the Directors on ADNOC Distribution’s of the Nomination and Remuneration ultimate responsibility for Corporate Governance Rules. The table below: policy on executive remuneration, Committee, Mr. Jassim Alseddiqi reviewing and approving our Audit Committee has also obtained setting the over-arching principles, is responsible for ensuring the annual report and written confirmation from its auditors parameters and governance committee’s overall effectiveness and that they comply with guidelines on framework of our remuneration that the committee properly complies financial accounts. policy and determining the individual with all of its stated objectives. remuneration and benefits package of our senior management. In 2020, the Nomination and Position in Remuneration Committee met seven Committee member Committee 11 Feb 2020 26 Mar 2020 11 May 2020 12 Aug 2020 08 Sept 2020 10 Nov 2020 22 Dec 2020 The Corporate Governance Rules, times. Details of those meetings reflected in the Nomination and (including the attendance records for Mr. David-Emmanuel Beau Chairman P P P P P P P Remuneration Committee Charter, those meetings) are contained in the Mr. Ahmed Jasim Al Zaabi Member P P P P P P P require the Nomination and table below: Remuneration Committee to be Mr. Jassim Alseddiqi Member P P P* P* P* P* P

P – Present, P*– Proxy Attendance Position in Committee member Committee 19 Mar 2020 14 May 2020 21 July 2020 29 July 2020 09 Aug 2020 06 Sept 2020 18 Oct 2020

Mr. Jassim Alseddiqi Chairman P P P P P P P In 2020, all recommendations of the Audit Mr. Pedro Miró Member A P P P P P P Committee were accepted by the Board Mr. Khaled Salmeen Member P P P P P P P of Directors. P – Present, A – Absent 22 2020 Corporate Governance Report | 23

EXECUTIVE INSIDER DEALING COMMITTEE COMMITTEE

Our Insider Dealing Committee Pursuant to our Share Dealing Code, Directors. Currently, the members of oversees compliance with the all directors, officers and other the committee are Mr. Ben Hennessy, Insider Dealing Policy and our employees who are in possession our General Counsel & Board of inside information are prohibited Secretary who chairs the committee, Share Dealing Code (which has from dealing in ADNOC Distribution’s Mr. Mohamed Al Hashimi our Chief been established by our Insider shares during certain periods, and Financial Officer who replaced Mr. Dealing Policy). must seek approval from the Insider Petri Pentti on the Committee on 10th Dealing Committee to purchase, November 2020, and Mr. Athmane sell or otherwise deal in our shares Benzerroug, our Chief Investor during other periods. Relations Officer.

In order to grant approval, the Insider The Insider Dealing Committee met Dealing Committee must be satisfied twice in 2020 to, among other things: that the individual seeking to deal in (a) review and discuss the Share ADNOC Distribution’s shares is Dealing Code and how it is to be not, at that time, in possession of applied; and (b) consider requests inside information. from members of staff to deal in our shares. The Insider Dealing Committee is comprised of three members who are appointed by the Board of

Our Executive Committee The role of the Executive Committee As part of his role as the Chairman consists of three members, is to act on behalf of the Board during of the Executive Committee, all being independent non- the intervals between scheduled Mr. Khaled Salmeen is responsible Board meetings so that matters that for ensuring the committee’s executive directors. The require Board approval during such overall effectiveness and that the Executive Committee was intervals can be dealt with in a timely committee properly complies with all established by the Board in and efficient manner. Additionally, of its stated objectives. 2019 in order to assist the the Executive Committee provides Board in the discharge recommendations to the Board on In 2020, the Executive Committee met of its duties. matters that require Board approval. ten times. Details of those meetings The current members of the (including the attendance records for Executive Committee are Mr. Salmeen those meetings) are contained in the (Chairman), Mr. Beau and Mr. Al Zaabi. table below:

Position in Committee member Committee 23 Jan 2020 05 Feb 2020 24 Apr 2020 21 May 2020 03 Jun 2020 28 Jul 2020 22 Oct 2020 28 Oct 2020 22 Nov 2020 23 Dec 2020

Mr. Khaled Salmeen Chairman P P P P P P P P P P

Mr. Ahmed Jasim Al Zaabi Member P A P P P P P P P P

Mr. David-Emmanuel Beau Member P P P P P P P P P P

P – Present, A – Absent 24 2020 Corporate Governance Report | 25

INTERNAL CONTROL SYSTEM

Risk Management These controls are designed to functions and is responsible for Responsibility of the ensure that we are able to (a) ensuring that, through the input of Board of Directors The Company has implemented continually meet the operational and these functions, we consistently an integrated enterprise risk financial objectives of the Company; operate in accordance with the The Board of Directors is responsible for the internal control system within ADNOC Distribution and has established a management system, which (b) properly manage risks; (c) ensure highest international standards. number of processes and procedures which are designed to ensure the effectiveness of our internal control system. showcases its commitment to the validity and transparency of 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 the independence of our Audit and report to him provide continued System departments and committees Assurance function, this division (a) facilitates risk informed strategic Our compliance and control function oversight of our control system. (including our enterprise risk reports functionally to our Audit planning to achieve business is, among other things, responsible The key objectives of the internal management and compliance Committee and administratively to the objectives and identify potential for ensuring that the Company This helps to ensure that our control system are: functions) are responsible for Company’s Chief Executive Officer. business opportunities; conducts its business in full control system is embedded in all developing, communicating compliance with all relevant laws and of our key processes so that we are (a) creating control mechanisms and monitoring the appropriate Audit and Assurance’s charter, (b) supports the Company in regulations, as well as professional able to ensure that our strategic that ensure efficient business policies, processes and policies, procedures, methodologies identifying and managing key standards, accepted business and business objectives are processes and the implementation procedures; and and the risk based internal audit plans strategic, functional, investment practices and internal standards. achieved within the required risk of the Company’s objectives; that it works to are presented to and and project risks (including tolerance levels. (iii) Level 3: the Company’s Audit approved by the Audit Committee. the use of an objective Our compliance and control function (b) ensuring the safety of the and Assurance function driven process); performs a number of tasks that Company’s assets and efficient conducts independent The Abu Dhabi Accountability are designed to ensure that our Identified issues and use of its resources; assessments of the efficiency Authority performs regular reviews (c) assesses the identified risks internal control system is recent developments of the internal control system. of our Audit and Assurance and the potential impact of such effectively implemented and (c) protecting the interests of the processes and methodology which risks on the Company and its managed. These include: For 2020, no significant issues Company’s shareholders and ensures alignment with industry key objectives; were identified with respect to our preventing and resolving conflicts Audit and Assurance best practices and regulatory (a) discussing the internal compliance and control systems. of interest; Function requirements. Our Audit and (d) enhances corporate performance control system with the Board Assurance activities are performed as processes become more risk of Directors; (d) creating conditions for timely The Board of Directors has approved by teams of appropriate, qualified and aware and control focused; and Violations committed preparation and submission and implemented governance experienced employees. (b) considering the results of during 2020 of reliable reports and other functions and structures, including (e) strengthens the Company’s primary investigations in internal information that is legally required an Audit and Assurance function that Additionally, a continuous resilience to market disruption control issues; to be publicly disclosed; and is independent of our management improvement process is and evolving business practices. No violations were and reports directly to the Company’s implemented through the use of a (c) studying internal control committed by ADNOC (e) ensuring the Company’s Audit Committee. The key aim of the learning and development framework The Company’s risks are monitored reports and following up the Distribution in 2020. compliance with applicable laws Audit and Assurance function is to that is designed to ensure that by a dedicated enterprise risk unit and implementation of corrective and requirements of regulators. provide assurance and advice on the the Audit and Assurance team this unit provides quarterly reports to measures arising from the adequacy of the Company’s internal members maintain their required the Audit Committee. An annual report findings of such reports; and In addition to the functions and control environment, corporate competencies and capabilities. of the identified risks is then provided remit of the Board of Directors, the governance framework and risk to the Board of Directors. (d) setting rules that enable Company’s internal control system management processes. Taking into account the ADNOC Distribution’s staff to is imbedded in the Company at independency factor, our Audit and confidentially report any potential three levels: Our Audit and Assurance function is Assurance function also serves as an Compliance and Control violations in financial reports, headed by Mr. Mohamed Saleh, who in-house advisor on many areas of internal control etc. (i) Level 1: the heads of the was appointed as Vice President Audit interest which allow that function to The Company has established various departments and and Assurance on 1st December 2017. provide value-added services that are and maintains an internal control Mr. Ben Hennessy, in his role as divisions within the Company Mr. Saleh is responsible for reporting critical to an efficient and effective framework that provides our General Counsel of the Company, are responsible for assessing the Audit and Assurance function’s organizational management. executive management and Board oversees the Company’s Legal, and managing risks and findings to our executive management of Directors with reliable assurances Compliance, Governance and building an efficient control and to our Audit Committee on a on the health of our internal controls. Enterprise Risk Management system for their functions; regular basis. In order to enhance 26 2020 Corporate Governance Report | 27

CORPORATE SOCIAL RESPONSIBILITY

We are committed to leveraging our presence in the UAE and the communities in which we operate to benefit our people and society as a whole. We do this through developing job opportunities for UAE nationals, encouraging local procurement, improving customer satisfaction, and through social initiatives and partnerships to advance community and environmental goals.

In 2020, our CSR outreach efforts were focused, like many, on supporting a nation through the fight against COVID-19. ADNOC Distribution 30,000 launched a number of campaigns Hand sanitizers throughout the year to raise were distributed awareness, combat the spread of the disease, and offer support to the campaign ran over the course of 70 communities we serve. days in 54 stations across Abu Dhabi, Al Ain, Sharjah, Umm Al Quwain, Rask In the wake of the crisis, our Al Khaimah and Fujairah. employees assembled 1,000 care packages that were distributed ADNOC Distribution also offered as a thank you token to medical the new complementary internal professionals for all their efforts during car sanitization service with any car the first initial month of the pandemic. wash during the period of the national The bags were sent to numerous sterilization program to help reduce hospitals and medical centers across the spread of the COVID-19 virus. We Our total the UAE including Sheikh Khalifa also distributed 100,000 water bottles Medical city and Al Ruwais hospital. and 30,000 hand sanitizers through expenditure on our Waqaiya Kit campaign. We continued to show support to social development our medical frontline heroes by and related offering them free hot beverages, with more than 50,000 distributed at sponsorship ADNOC Oasis across the UAE, with an 100,000 additional 10,000 KitKats distributed in Water bottles projects for 2020 partnership with Nestlé UAE. were distributed was approximately ADNOC Distribution, in collaboration As the UAE’s largest fuel supplier, AED 1,175,405. with the UAE health authorities, we are proud of our contributions to also provided support to all national social investment and community emergency response ambulances development programs, especially in refueling at ADNOC service stations. the times of crisis.

Our partnership with the Emirates While we invest heavily in developing Red Crescent launched a health our infrastructure nationwide to and safety awareness campaign ensure the continuous provision of where volunteers gave away PPE uninterrupted supply of energy to to customers at ADNOC service the most vital sectors of our life and stations including gloves, masks and economy, we are continually looking for hand sanitizers. The volunteers also new ways to make a positive impact on shared valuable information on how the lives of the people of the UAE and to maintain a hygienic lifestyle. The their communities. 28 2020 Corporate Governance Report | 29

GENERAL INFORMATION

Breakdown of shareholdings as at 31 December 2020 Our 2020 share performance High (AED) Low (AED) Close (AED) The table below shows the percentage of the shares owned by different categories of shareholders as at the end 2020 of 2020. Trading of ADNOC Distribution shares January 3.15 2.92 3.14 Percentage of Shares Held on the ADX started on 13 December February 3.12 2.96 2.99 Shareholder Category Individual Companies Government Total 2017 under the symbol ADNOCDIST. Local 2.65% 93.49% 1.21% 97.35% The share price at 31 December 2020 March 3.00 2.40 2.70 GCC 0.13% 0.49% 0.01% 0.63% was AED 3.75. ADNOC Distribution’s April 3.00 2.75 2.80 Arab 0.09% 0.00% 0.00% 0.09% market capitalization at 31 December May 2.90 2.77 2.90 2020 was AED 46.9 billion. Foreign 0.06% 1.88% 0.00% 1.94% June 3.03 2.90 2.97 Total 2.92% 95.86% 1.22% 100 % ADNOC Distribution’s paid-up share July 3.14 2.96 3.14 capital is AED 1 billion, divided into 12.5 billion shares, each with a August 3.24 3.10 3.20 Statement of shareholders who held 5% or more of ADNOC Distribution’s nominal value of AED 0.08. September 3.52 3.01 3.52 capital as at 31 December 2020 October 3.52 3.35 3.35 The following table sets forth the The table below shows the name of shareholders who held 5% or more of ADNOC Distribution’s capital at the end of closing price and the high and low November 3.54 3.29 3.46 2020 and the percentage of such shareholdings. % of the Shares Held of ADNOC share prices of our shares at the end December 3.90 3.51 3.75 Name Number of Shares Held Distribution’s capital of each month during 2020. Abu Dhabi National Oil Company 10,000,000,000 80%

Our 2020 share performance compared with our sector index Statement of shareholding distribution by the size of equity as at 31 December 2020 The below graph shows the ADNOC Distribution’s share performance comparative to our sector index during 2020. The below table shows the shareholding percentage to capital as at the end of 2020.

Share(s) Owned Number of Shareholders Number of Share Held % of the Shares Held 135 Less than 50,000 9,980 28,827,472 0.2% 130 +26.7% From 50,000 to less than 500,000 461 71,403,287 0.6% 125 From 500,000 to less than 5,000,000 154 228,842,320 1.8% 120 More than 5,000,000 54 12,170,926,921 97.4% 115 110 +10% 105 100 +3.3% 95 90 85 80 75 70 65 60 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20

ADNOC Distribution Abu Dhabi Securities Exchange Index (ADX) ADX Energylndex 30 2020 Corporate Governance Report | 31

Procedures taken with General Assembly and The Secretary to the respect to the controls Special resolutions Board of Directors of investor relations presented to the General Assembly in 2020 Mr. Ben Hennessy, our General Counsel, Throughout the year, ADNOC is the Board Secretary. The Board Distribution’s Investor Relations The Company held its annual Secretary attends all Board meetings Department publishes earnings General Assembly, virtually, on and is directly answerable to the Board. releases and arranges briefings, 31 March 2020. The Board Secretary provides advice conference calls and webcasts to raise and support to the Board on legal and investors’ awareness globally about the A Special Resolution is defined in regulatory matters and is responsible company’s unique value proposition our Articles of Association as a for ensuring that ADNOC Distribution’s among listed companies and provide resolution requiring the approval of governing bodies operate effectively updates on ADNOC Distribution’s the Company’s General Assembly and in compliance with all relevant laws growth strategy and performance. by shareholders owning not less and regulations. than three-quarters of the shares Each quarter, we hold earnings represented in that General Details of Mr. Hennessy’s background conference calls and webcasts Assembly. In 2020, the following and qualifications are provided above to communicate our quarterly special resolution was passed by the in page 13 of this report. and annual results to analysts, shareholders: shareholders and investors to discuss our financials and outlook. Copies Approve revising the dividend Statement of significant of all presentations, releases and policy of the Company for 2021 and events investor information are available on onwards as follows: our investor relations website. Changes to Senior Executive (a) A dividend in respect of year Management During 2020, and during the ending 31 December 2021 in On 24 December 2019, the Board COVID-19 pandemic, we believed an amount of AED 0.2057 per of Directors appointed Mr. Ahmed Amended Dividend Policy and allowing for greater liquidity Emiratization percentage it was important to engage with share, half of which is expected Al Shamsi as Acting Chief Executive On 31 March 2020, the Company’s of its shares on the Abu Dhabi in ADNOC Distribution as shareholders and investors and to be paid in October 2021 and Office (effective as from 5 January shareholders approved an amendment Securities Exchange. at 31 December 2020 maintain open communications half of which is expected to be 2020) in replacement of Mr. Saeed Al to its dividend policy, reaffirming 2020 channels with the markets to update paid in April 2022; and Rashdi who stepped down from his dividends and providing further visibility This transaction was the GCC Developing our human capital is on measures taken to build business role in order to take up a new role with for 2021 onwards, in recognition of the region’s largest-ever block trade a strategic priority, and part of resilience during and post-pandemic. (b) Thereafter, an annual dividend ADNOC Group. Company’s strong financial position at transaction of a publicly listed our commitment to achieving the A proactive Investor Relations strategy in respect of each fiscal year the end of 2019 and confidence in the company and leveraged significant Emiratization objectives outlined in was key to sustaining “investor” trust in an aggregate amount equal On 3 September 2020, The Board of Company’s growth prospects and cash- investor demand for ADNOC the UAE Vision 2021. Our national and maximizing shareholder value, to at least 75% of distributable Directors appointed Mr. Mohamed flow generation ability going forward. Distribution shares following a employees are a great asset to particularly during volatile market income for such year. Al Hashimi as Chief Financial Officer robust performance with a resilient ADNOC Distribution. We offer them conditions and global uncertainty. (effective as from 30 September 2020) Free float doubling to 20% post dividend since its initial public targeted development opportunities Our Investor Relations Department is All other sections of the in replacement of Mr. Petri Pentti who ADNOC’s Private Placement offering in 2017. to help them reach their full potential headed by Mr. Athmane Benzerroug, dividend policy remain the same stepped down from his role in order to of ADNOC Distribution Shares as competent and well-informed Chief Investor Relations Officer, and above changes shall be return home to Finland and spend time (AED 3.67 billion) industry professionals. who brings 20 years of experience subject to them. with his family. On 14 September 2020, ADNOC, Statement of deals the in equity capital markets, including our major shareholder, successfully company made in 2020, UAE nationals are appointed as trainees 10 years in emerging markets at completed an AED 3.67 billion which equal or exceed within various departments of ADNOC Deutsche Bank in Dubai. placement of 1.25 billion of its 5% of the company’s Distribution so they can successfully shares in ADNOC Distribution share capital complete their career development with institutional investors. This programs. As at 31 December 2020, our Investor Relations can be contacted at Additional investor relations information can be found on our represented 10% of ADNOC For 2020, no deals were made, which Emiratization rate was 72% of positions [email protected] website in Arabic at adnocdistribution.ae/ar/investor-relations/ Distribution’s total share capital, equal or exceed 5% of the company’s subject to Emiratization (Emiratizable Tel: +97126959770 and in English at adnocdistribution.ae/en/investor-relations/. and doubled the Company’s free share capital. positions), compared to a rate of 73% Mobile: +971552180294 float to 20%, broadening the and 74% in 2019 and 2018, respectively. Company’s shareholder base 32

Innovative projects and initiatives undertaken by ADNOC Distribution or under development in 2020

In 2020, ADNOC Distribution The Company also swiftly responded and LPG delivery. In addition to that, introduced a unique drive-through to the changing market needs by the Company has also launched the concept using a tablet-based ordering accelerating its digital strategy and UAE’s first customer loyalty program system at “ADNOC On The Go” offering customers more convenience from a fuel provider, ADNOC Rewards, stations, that requires significantly less through its digital channels, including a points-based system, allowing footprint than a traditional retail/service contactless payment options, customers to further benefit from their station facility. It not only minimizes the expanding its delivery services purchases at its outlets. environmental impact of construction, to include C-Store purchases it also uses, on average, 50 percent less and accessing new areas across power compared to traditional stations. Abu Dhabi for mobile My Station fuel 34