Abu Dhabi National Oil For Distribution : Management Discussion and Analysis Report for the Period Ended June 30,2022

SecondQuarterand

FirstHalf2022Results

Management Discussion & Analysis Report

8 August 2022

ADNOC Classification: Public

ADNOC Distribution

Second Quarter and First Half 2022 Results

Highlights: Strong set of results and execution momentum in H1 2022. Positive outlook expected for H2 2022

• The Company's total fuel volumes continued to grow in the first half of 2022 compared to the same period of last year, with an increase of 8.9% year-on-year. Retail fuel volumes (c.67% of total volumes) sold in the first half of 2022 increased by 6.8% compared to the H1 2021, while Commercial fuel volumes (c.33% of total volumes) increased by 13.3% year-on-yeardriven by strong growth in the corporate volumes. The volume increase was a result of the country's ongoing economic growth and the easing of travel restrictions globally. In addition, the Company continued to expand in Saudi Arabia by adding new stations, resulting in incremental fuel volumes in H1 2022 compared to the same period of 2021
• H1 2022 revenue was AED 15,373 million, an increase of 65.3% compared to H1 2021, driven by higher selling prices (as a result of higher crude oil prices), growth in fuel volumes and non-fuelbusiness
• H1 2022 gross profit was AED 3,166 million, an increase of 24.3% compared to H1 2021, driven by higher fuel volumes and inventory gains as well as growth in the Non-FuelRetail business
• • Fuel Retail gross profit increased by 31.9% year-on-year, mainly driven by higher fuel volumes and transactions, as well as higher inventory gains of AED 400 million in H1 2022 (versus inventory gains of AED 195 million in H1 2021).
  • Non-FuelRetail gross profit increased by 9.6% year-on-year, driven by strong growth in non-fuel transactions following improved consumer sentiment, increase in number of convenience stores, improved customer offerings following revitalization of our stores and marketing and promotion campaigns, and higher Food and Beverage (F&B) sales. Margins in the convenience stores business also improved as a result of the ongoing revitalization strategy to offer a modern, digitally enabled customer journey and superior in-store experience through a better product mix and the introduction of fresh food and coffee products
  • Commercial business gross profit increased by 14.8% year-on-year driven by higher Corporate fuel volumes, partially offset by lower Aviation fuel volumes
• H1 2022 reported EBITDA was AED 1,994 million, an increase of 30.5% compared to H1 2021, mainly driven by higher fuel volumes and inventory gains as well as non-fuelretail business
• H1 2022 underlying EBITDA (EBITDA excluding inventory losses/gains and one-offs) was AED 1,665 million, an increase of 18.9% compared to H1 2021
• H1 2022 net profit was AED 1,562 million, an increase of 35.6% compared to H1 2021, supported by higher EBITDA

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ADNOC Classification: Public

Strong cash generation and balance sheet

• In H1 2022, the Company generated free cash flow of AED 1.96 billion driven by robust cash flow from operations and a positive effect of the working capital change
• The Company maintained a strong financial position at the end of June 2022 with liquidity of AED 5.5 billion, in the form of AED 2.8 billion in cash and cash equivalents and AED 2.8 billion in unutilized credit facility.
• Existing term debt matures at the end of 2022 with no covenants in place. ADNOC Distribution's balance sheet remains strong with a Net debt to EBITDA ratio of 0.77x as of 30 June 2022

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ADNOC Classification: Public

Strategy Update: strong execution momentum

During the first half of 2022, ADNOC Distribution delivered robust results and demonstrated strong execution momentum on its smart growth strategy. The pace of the Company's network expansion accelerated with a steadfast focus on providing an enhanced customer experience across its network. The Company remains committed to delivering its growth strategy and generating long-term shareholder value through the next phase of its growth.

Fuel business (Retail and Commercial)

ADNOC Distribution recorded growth in total fuel volumes compared to the first half of 2021, with an increase of 9% year-on-year, following the ongoing economic growth, the easing of travel restrictions globally and the strong growth in the corporate business. In addition, the Company continued to expand in Saudi Arabia by adding new stations, resulting in incremental fuel volumes in H1 2022 compared to the same period of 2021.

Network Expansion: The Company accelerated delivering on its growth strategy throughout H1 2022, with the opening of 38 new stations in the UAE and KSA, achieving c. 60% of its network expansion target for 2022 to open 60-80 stations this year.

1. Domestically: ADNOC Distribution's UAE network reached 472 retail fuel stations as of 30 June 2022. In the first half of 2022, the Company opened 12 new service stations in the UAE, out of which four were in
   Dubai. As a result, the company's Dubai service station network reached 35 stations at the end of H1 2022.

1. Internationally: The Company continued to accelerate the execution on its plans in the Kingdom of Saudi Arabia, with 26 new stations added in the first half of 2022, taking its total network in Saudi Arabia to 66 stations as of 30 June 2022.
   Furthermore, delivering on its commitment to pursue attractive international growth, ADNOC Distribution recently entered in July 2022, into an agreement with TotalEnergies Marketing Afrique SAS, to acquire a 50% stake in TotalEnergies Marketing Egypt LLC (which is among the top four fuel retail operators in Egypt) for approximately AED 683 million ($185.9 million), with an additional earn-out of up to AED 63.5 million ($17.3 million) (if certain conditions are satisfied), marking ADNOC Distribution's largest investment.
   The partnership with TotalEnergies, a leading global multi-energy company with a strong brand and successful track record in Egypt, includes a diversified portfolio comprising 240 fuel retail stations, 100+ convenience stores, 250+ lube changing stations, and car wash sites, as well as wholesale fuel, aviation fuel and lubricant operations. This move aligns with the Company's vision to establish ADNOC Distribution as a regional fuel distribution leader and will provide sizeable operations in one of the largest countries in MENA. The acquisition is expected to be earnings accretive to ADNOC Distribution from year one post closing. Completion of the acquisition is expected to occur in Q1 2023, subject to the satisfaction of certain conditions, including customary regulatory approvals.

In the Commercial business, the Company continued to maintain strong focus on proactive sales strategy in the first half 2022, mainly in the Corporate business. ADNOC Distribution's corporate fuel volumes witnessed a 27% year-on-year increase, partially driven by the signing of new sales agreements confirmed in the final quarter of 2021. The business also increased its ADNOC Voyager lubricants export sales, with new distributors added in the first half of 2022, bringing export network to a total of 21 countries. In addition, the Company expanded its product offering with the launch of the ADNOC Voyager Green series, which offers customers a 100% plant- based lubricant range for both petrol and diesel engines.

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ADNOC Classification: Public

Non-fuel business

The Company's UAE network of convenience stores increased to 359 as of 30 June 2022, with the addition of 13 new convenience stores in the UAE in H1 2022. The convenience stores revitalization program continued over this period, with 5 stores renovated in the UAE in the first half 2022, offering fresh food, barista-brewed coffee and a wider menu selection.

In line with the Company's ambitious non-fuel retail strategy to offer modern and digitally enabled shopping experience, ADNOC Distribution continued to enhance customer offerings through various initiatives, such as refurbishment of stores, improvement in category management, the introduction of fresh food and premium coffee products. On the back of these initiatives, the Company saw growth in convenience stores transactions and revenues as well as an increase in gross profit margins.

ADNOC Rewards loyalty program and Customer Focus

The ADNOC Rewards loyalty program also continued to add members in the first half of 2022, with more than

1.4 million members now enrolled and 83 partners providing discounts and deals through the ADNOC Distribution app. The program has been expanded to include a fuel redemption option, whereby customers can pay for their fuel with their ADNOC Rewards points.

Customer experience has been integral to the Company throughout the first half 2022, with continuing to offer customers promotions in-store and through the ADNOC Rewards. This includes the Let's Go Shop and Win Raffle, as well as comprehensive vehicle inspection, car wash, and lube change offers.

Cost Optimization

ADNOC Distribution's operational expenditure (excl. depreciation) increased by 11.4% in the first half of 2022 compared to the same period in 2021 after an increase in its network and associated operational costs. However, the Company continues to implement management initiatives to increase operational efficiency across all business units and prudent cost controls.

Last year, the Company significantly exceeded its full year 2021 target of cost savings, realizing like-for-like operating expenses savings of AED 155 million versus guidance of up to AED 92m. The Company met its target of like-for-like OPEX savings of between AED 367 and 550 million over 2019-23 by achieving like-for-like OPEX savings of AED 378 million over 2019-21.

CAPEX

In line with the guidance and plans to continue with our expansion strategy, the Company incurred CAPEX (including accruals/provisions) of AED 413 million in the first half of 2022.

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