Emirates Refreshments P S C : Integrated report for the year 2021

EMIRATES REFRESHMENTS (P.S.C.)

Reports and consolidated financial statements for the year ended 31 December 2021

EMIRATES REFRESHMENTS (P.S.C.)

Reports and consolidated financial statements for the year ended 31 December 2021

	Pages
Director's report	1 - 4
Independent auditor's report	5 - 9
Consolidated statement of financial position	10
Consolidated statement of profit or loss	11
Consolidated statement of comprehensive income	12
Consolidated statement of changes in equity	13
Consolidated statement of cash flows	14
Notes to the consolidated financial statements	15 - 67

DIRECTORS' REPORT

TO THE SHARE HOLDERS

Report Statement

Dear Shareholders,

On behalf of the Board of Directors of Emirates Refreshments P.J.S.C, it gives me a great honour to present to you the Director's report and financial statements for the year ended 31st December 2021.

ERC robust risk management, business continuity and crisis management capabilities ensured uninterrupted services to our customers, while maintaining health and safety of ERC Minds despite the COVID-19 pandemic.

ERC's Business continuity task force consisting of senior leaders from different functions, has effectively coordinated our response to the pandemic. ERC has been a pioneer in FMCG industry services and agile delivery. This, coupled with our proactive response, has allowed us to ensure business continuity during these challenging times.

We are constantly reviewing the situation to ensure we are responding effectively to health, operational and financial concerns.

ERC continues to be committed to enhancing its product base through innovation and renovation which remains an integral part of the Company's vision to positively enhance the quality of life of our consumers.

2021 Outlook

During pandemic we were proud to prove again that our focus is "people first". Over the last few months everyone has had to adjust to a new normal due to the outbreak of COVID-19. At ERC our immediate task at hand was not to mitigate losses, but rather ensure that all processes continue smoothly. Our People Function Team wasn't far behind in crafting and executing the best people initiatives to keep our ERC minds motivated, secure and connected.

However, We understand that sustainability is an important consideration in our future development. We remain firmly committed to further enhancing our sustainable practices with the same innovative approach used to improve our customer experience.

With that goal in mind, In 2021 we redefined our Strategic future Plan for the coming years. The Plan, which was our roadmap for transforming and developing the company, consisted of the following elements:

First, an exhaustive and in-depth diagnosis of the reasons why some of the key parameters of ERC's business and financial performance had declined in recent years.

Secondly, a structured framework of strategic guidelines to lend coherence to our initiatives, both those we have taken so far and others that we shall explore in future and ambitious strategic targets for growth, performance

and cash generation over the following three years as a result of those initiatives, taking into account the extremely competitive and aggressive market environment.

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Financial Performance

The outspread of COVID 19 pandemic and lockdown of economy since beginning of the year 2020 has impacted financially across the world.

The company has adapted well to challenges of pandemic and adopted continual cost optimization and saving measures across all levels. Overall revenue has been declined by 8% in 2021 (2020: 46% decline) to AED 23.04M (2020: AED 25.04M).

Export sales have increased by 14% in 2021 (2020: 75% decline).

This resulted in to maintain gross profit margin to 39% (AED 9.02M) in year 2021 vs 41% (AED10.4M) in 2020. In addition, the SG&A expenses are also maintained effectively at AED 11.8M (2020: AED 11.8M).

Strategical decision of investing in investment securities has contributed significantly in company's growth.

Despite increasingly difficult economic conditions and competitive pressures ERC recorded net profit of AED 1.87M in 2021 Vs net loss of (AED 7.18M) in 2020.

Looking ahead

The Plan is structured into major blocks of strategic guidelines that shape the various initiatives: Trade equities; Targeting acquisitions and Business expansion (organic and non-organic growth).

Key Initiatives

ERC's Board of Directors recognised the need of laying down a sturdy corporate strategy. Collectively we rated long term strategic planning as the top issue demanding our attention.We established an ongoing strategic planning process by which it translates its mission and values into actionable and measurable goals and initiatives. The plan will provide direction for both long-term and short-term decision making by the Board to fulfill the mission of the organisation.

ERC's corporate strategy include trade equities, targeting acquisitions and business expansion. The future of the group is now focused on these three areas and we believe that this will help the company to outstrip average market growth and strategic acquisitions will further accelerate the targeted growth and market penetration. It will seek to set out a framework by which we can measure progress towards our purpose. The framework will identify how activities will be priortised and optimised to achieve the company's goals and objectives.

Key to success is the implementation of our strategy and as the new financial year unfolds, we constantly evaluate the business strategies with prudence through judicious observation while maintaining vision for the long term. Our equity restructuring initiative will leave the business resiliently so that we are ready for the future. We will continue to dedicate ourselves for the long-term growth of the company by placing prudence and at the same time, to explore and seize the new business opportunities to further improve the downturns and create value for our shareholders.

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