ipo prospectus - qa.dohabank.com

IPO Prospectus

Sharq Law Firm Qatari Legal Advisors

Eversheds Sutherland (International) LLP Joint International Legal Advisor

Baladna Q.P.S.C. (Qatar Public Shareholding Company)Under incorporation under the Commercial Companies Law of the State of Qatar

Offer of 1,425,750,000 Shares each at an Offer Price of QAR 1.01 per ShareOffer Price includes a nominal value of QAR 1 plus offering and listing expenses of QAR 0.01 per Share.

Shares offered for subscription in this Prospectus represent 75% of the issued share capital of Baladna Q.P.S.C.

Addleshaw Goddard (GCC) LLP Lead International Legal Advisor

Rödl & Partner Valuators

This is an English translation of the Arabic Prospectus that was approved by the QFMA on 10 October 2019 and is considered only a draft that is provided as guidance for non-Arabic speakers.

Qatar National Bank َ Q.P.S.C Lead Receiving Bank

Ahli Bank Q.P.S.C., Doha Bank Q.P.S.C., Masraf Al Rayan Q.P.S.C., Qatar Islamic Bank Q.P.S.C., Qatar International Islamic Bank Q.P.S.C., Arab

Bank PLC., The Commercial Bank Q.P.S.C., Barwa Bank Q.S.C., Al Khalij Commercial Bank (Al Khaliji) Q.P.S.C.

Receiving Banks

QNB Capital LLC Listing Advisor and Offering Manager

Ernst & Young (Qatar Branch) Independent Auditors

PricewaterhouseCoopers Qatar LLC Valuators

2

Baladna IPO Prospectus

Prior to investing in the Shares, prospective Investors should carefully consider the risk factors relating to the Company’s business and the relevant sector in Qatar, together with all other information contained in this Prospectus. The Company’s Founders and Senior Management believe that the risks set out in this Prospectus in the Risk Factors section are the material risks facing the Company and its business. However, these risks and uncertainties are not the only issues that the Company faces; additional risks and uncertainties not presently known to it, or that it currently believes not to be material, may also have a material adverse effect on the Company’s financial condition or business success. If any combination of these risks actually occurs, the Company’s business, financial condition, cash flow and results of operations could be adversely affected. If this occurs, the market price of the Shares may decline and Investors could lose part of or all of their investment. Additionally, this Prospectus contains forward-looking statements that are also subject to risks and uncertainties. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by the Company as described below. It should also be noted that the risks below are to an extent interrelated. The occurrence of one risk may trigger other risks to materialise. For example, if there is a material downturn in the Qatari economy, the Company could incur substantial trading losses and could, in turn, experience an increased need for liquidity and as a result become over-leveraged. Each of these is a separate risk described below but demonstrates the interconnection between these and other risks to which the Company is exposed. For more information on the risks Investors in the Shares must take into consideration, please refer to the risk analysis set out in this Prospectus in the Risk Factors section.

As at the date of this Prospectus, it is anticipated that the following individuals shall constitute the Board of Directors of Baladna Q.P.S.C. (under incorporation) once fully incorporated. References in this Prospectus to the designated Directors refer to these Directors once formally announced at the Constitutional General Assembly of the Company.

Designated Board of Directors (to be confirmed following Constitutive General Assembly)

Name Position Address

Mr. MohamadMoataz Mhd Ruslan AlKhayat (representing Founders) Chairman

Baladna FarmNorth Road, Exit 44Umm Al-Hawaya AreaAl Khor & Al-ThakiraQatar

Mr. Mohammed Badr Al Sada (representing Special Shareholder / Hassad Food) Vice Chairman

Sheikh Faleh Bin Nasser Bin Ahmad Al-Thani (representing Special Shareholder / Qatar Food Security Committee)

Member

Mr. Hamad Bin Abdullah Bin Khalid Al-Attiya (representing Special Shareholder / GRSIA) Member

Mr. Ramez Mhd Ruslan AlKhayyat (representing Founders) Member

Mr. Mazen Alsbeti (representing Founders) Member

Mr. Aidan Tynan (Independent) Member

3


QFMA DISCLAIMER

The QFMA shall bear no liability for the validity, comprehensiveness and sufficiency of the details and information mentioned in this Prospectus, and the QFMA explicitly declares that it bears no liability for any loss which could be incurred by any person taking decisions according to the whole or some of the aforesaid details or information.

The QFMA also bears no responsibility towards any party in relation to the Company’s valuation analysis, including the estimated values or assumptions that the Valuators had based their estimate on as well as any results in light of those estimates and assumptions. The QFMA will not provide any ratifications in relation to the technical aspects of the analysis or the economic, commercial and investment feasibility study for the estimates and assumptions which were determined by the analysis results and the value of the Offering. The role of the QFMA is limited to ensuring the implementation of the External Auditors and Financial Valuators Rules issued by the QFMA Board of Directors.

Founders and Founding Directors of the Company

Name Position Number of Shares Signature

Mr. MohamadMoataz Mhd Ruslan AlKhayat Founder and Founding Director 237,475,000

Mr. Ramez Mhd Ruslan AlKhayyat Founder and Founding Director 237,475,000

Ms. Alaa Mhd Reslan AlKhaiat Founder 100,000

Mr. MohamadRaslan Mhd Ezzat AlKhayat Founder 100,000

Mr. Mohamad Mhd Reslan AlKhaiat Founder 100,000

We, the Founders and Founding Directors of Baladna Q.P.S.C. (a company under incorporation in accordance with the applicable laws and regulations of the State of Qatar) whose names and signatures appear below, shall be jointly and severally responsible for the information and statements set out in this Prospectus. We hereby declare that we have endeavoured to ensure that the information and statements set out in this Prospectus are true and do not omit any information that may impair the significance, completeness or adequacy of the information.

4


MINISTRY OF COMMERCE AND INDUSTRY DISCLAIMER

The Ministry of Commerce and Industry, as the regulator of commercial companies in Qatar, shall bear no responsibility for the validity, comprehensiveness and sufficiency of the details and information mentioned in this Prospectus, and the Ministry of Commerce and Industry explicitly declares that it bears no responsibility for any loss which could be incurred by any person taking decisions according to the whole or some of the aforesaid details or information. The Ministry of Commerce and Industry, as the regulator of commercial companies in Qatar, also bears no responsibility towards any party in relation to the Company’s valuation analysis, including the estimated values or assumptions that the Valuator had based their estimate on as well as any results in light of those estimates and assumptions. The Ministry of Commerce and Industry will not provide any ratifications in relation to the technical aspects of the analysis or the economic, commercial and investment feasibility study for the estimates and assumptions which were determined by the analysis results and the value of the Offering, whereas the Ministry of Commerce and Industry’s role is limited to ensuring the implementation of the provisions of the Commercial Companies Law number 11 of 2015.

This Prospectus does not constitute an offer or solicitation to buy, subscribe or sell the securities described herein, and no securities are being offered or sold pursuant to this Prospectus.

The Listing Advisor and Offering Manager confirms that, to the best of its knowledge based on the information provided by the Company’s Founders and Senior Management (as defined herein) and having conducted appropriate due diligence, the information disclosed in the Prospectus at the date of the Prospectus is correct and complete and does not include misleading information or omit information.

In order to obtain information on the risks that investors should take into consideration, please refer to the risk analysis mentioned in this Prospectus in Part 2 (Risk Factors).

Ministerial Decision no. (69) of 2019 was issued, approving the establishment of the Company.

Baladna Q.P.S.C., a company under incorporation in the State of Qatar (the “Company”), is offering 1,425,750,000 shares of nominal value QAR 1.00 per share, constituting 75% of the issued share capital of the Company (the “Offer Shares” and each an “Offer Share”) for subscription (the “Offering”). The Offer Shares will rank pari passu in all respects with the 475,250,000 Shares (equal to 25%) in the Company held by the five founding Shareholders of the Company (the “Founders”), which are not offered for subscription (the “Founders’ Shares”).

The State of Qatar, represented by the Ministry of Commerce and Industry, will hold the Special Share, along with the rights and privileges afforded to that Share, as described in detail herein. The Offer Shares will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Offer Shares after the Offering. Any references to statements, beliefs, intentions, and declarations attributed to the Company are in fact references to statements, intentions and declarations of the Founders and Senior Management which will be automatically deemed to be ratified by the Company upon final incorporation (in other words, the issuance of the commercial registration certificate and publication in the Official Gazette) of the Company.

5


The Company received initial approval to incorporate from the Minister of Commerce and Industry on 11 April 2019 and anticipates the issuance of its commercial registration and full incorporation as a public shareholding company on 26 November 2019, following the meeting of the constitutive general assembly (the “Constitutive General Assembly”).

The Offer Shares are offered to each of: (i) Individual and Corporate Investors, which comprise: (a) individual Qatari citizens (the “Individual Investors”) and (b) legal entities incorporated in the State of Qatar, with a commercial registration certificate issued by the Ministry of Commerce and Industry (“Corporate Investors”); and (ii) strategic investors (the “Strategic Investors”) which will comprise selected Qatari institutions including the Qatari Government, governmental institutions, public corporations and other entities and may include natural persons who are eligible Investors.

The Offer Shares are being offered at QAR 1.01 per Offer Share (the “Offer Price”), representing the nominal value of QAR 1.00 per Offer Share plus offering and listing expenses of QAR 0.01 per Offer Share (the “Offering and Listing Expenses”). The Company will have a total share capital of QAR 1,901,000,000 divided into 1,900,999,999 ordinary shares consisting of the Offer Shares, the Founders’ Shares (all ordinary shares), and the Special Share (which is not an ordinary share) (together, the “Shares”). The Founders’ Shares are fully paid up as in-kind shares as at the date of this Prospectus.

The Strategic Investors have made prior commitments to subscribe to part of the Offer Shares which will constitute 23% of the issued share capital of the Company which will be allocated to these Investors. The remaining Offer Shares, constituting 52% of the issued share capital of the Company, will be allocated to eligible Individual and Corporate Investors, as follows: one (1) Special Share for the Government of Qatar represented by the Ministry of Commerce and Industry (the “Special Shareholder”) and the remaining 988,519,999 ordinary shares offered to the Individual and Corporate Investors. The Founders’ Shares, equal to 25% of the issued share capital of the Company, are not included in the Offering. Following the Offering and allotment of subscribed shares to investors, non-Qataris (individuals and legal entities) will be able to own up to 49% of the Shares of the Company.

Prior to the Offering, there was no public market for the Shares. The Company shall, prior to the date of closing of the Offering, submit an application to Qatar Financial Markets Authority and Qatar Exchange to list the Shares on the Qatar Exchange and shall allocate the Offer Shares and refund excess amounts, if any, to investors by no later than 21 November 2019.

The Founders, as indirect owners of Baladna Food Industries W.L.L. (“BFI”), have undertaken to transfer, or cause the transfer of, the entire issued and outstanding share capital including the shareholders current account balance of BFI by way of an instrument of transfer with the Company (as a company under incorporation), having effect following the incorporation of the Company and on completion of all required legal formalities (the “Instrument of Transfer”). The share capital of the Company will be issued with effect from the date of registration of the Company at the commercial register of MOCI in Qatar and the issuance of the first commercial registry extract of the Company, which should occur around 26 November 2019. Simultaneously with, or immediately following, incorporation, the Instrument of Transfer shall be registered before the Ministry of Justice. Upon registration of the Instrument of Transfer, the Company will hold 100% of the issued share capital of BFI. Simultaneously, the indirect owners of BFI (who are also the Founders) will receive, as consideration for the transfer of the BFI shares, 25% of the Shares.

The Offering is subject to the Company’s Constitutional Documents, the Qatar Financial Markets Authority (the “QFMA”) Listing Rules and the Commercial Companies’ Law No. 11 of 2015 of the State of Qatar (the “Companies Law”) and all other applicable laws and regulations of the State of Qatar. This Prospectus has been prepared in accordance with the requirements of the QFMA and shall be valid for a period of six (6) months from the date of its approval by the QFMA.

6


Expected Key Dates in relation to Offering and Listing (the dates may vary subject to the approval of the Board, QFMA and Ministry of Commerce and Industry)

Intention to Float / Offering Invitation published in newspapers Sunday 20 October 2019

Subscription Period opens Sunday 27 October 2019

Subscription Period ends Thursday 7 November 2019

Allotment of Offer Shares Thursday 21 November 2019

Refund of excess application amounts, if any Thursday 21 November 2019

Constitutive General Assembly Tuesday 26 November 2019

Issuance of the commercial registration certificate of the Company Tuesday 26 November 2019

Finalization of Transfer of the shares of Baladna Food Industries WLL to the Company Tuesday 26 November 2019

Approval of QFMA on the Listing of Shares on Qatar Exchange Wednesday 4 December 2019

First day of trading of the Shares on the Qatar Exchange Wednesday 11 December 2019

Senior Management

Name Position Signature Address

Dr. Kamel Abdallah CEO (Baladna Q.P.S.C.) Baladna FarmNorth Road, Exit 44Umm Al-Hawaya AreaAl Khor & Al-ThakiraQatar

Mr. Malcolm Jordan CEO (BFI)

Mr. Saifullah Khan CFO (BFI)

Mr. Thomas White COO (BFI)

We, the Senior Management of Baladna Q.P.S.C. (a company under incorporation in accordance with the applicable laws and regulations of the State of Qatar) whose names and signatures appear below, shall be jointly and severally responsible for the information and statements set out in this Prospectus. We hereby declare that we have endeavoured to ensure that the information and statements set out in this Prospectus are true and do not omit any information that may impair the significance, completeness or adequacy of the information.

This document is an English translation and the original Arabic version of the Prospectus was approved by the QFMA on 10 October 2019.

Unless the context otherwise requires, capitalised terms used in this Prospectus have the same meaning given in Part 27 (Definitions).

7


The Company has entered into pre-commitment agreements with the Strategic Investors, however the Share allocations set out above are subject to change. The Offer Shares subscribed for by the Strategic Shareholders will have the same rights and obligations as the Offer Shares subscribed for by the Individual and Corporate Investors.

Name Number of Shares Percentage Shareholding

General Retirement and Social Insurance Authority (GRSIA) 190,100,000 10%

Hassad Food Company Q.P.S.C. (Private) 95,050,000 5%

Al Meera Consumer Goods Q.P.S.C. 76,040,000 4%

Qatar Ports Management Company (Mwani Qatar) 38,020,000 2%

Widam Food Company Q.P.S.C. 38,020,000 2%

TOTAL 437,230,000 23%

StructureThe Company is a Qatari Public Shareholding Company under incorporation. The Companies Law requires the meeting of the Constitutive General Assembly upon completion of the initial public offering (the “IPO”) to declare the Company to be finally incorporated and for the commercial registration to be issued and the Ministerial Resolution and Articles of Association to be published in the Official Gazette. Until that point, the Company will be deemed to be ‘under incorporation’ and any references to the Company are references to the Company under incorporation. Any references to statements, beliefs, intentions, and declarations attributed to the Company are in fact references to statements, intentions and declarations of the Founders and Senior Management which will be automatically deemed to be ratified by the Company upon final incorporation (in other words, the issuance of the commercial registration certificate) of the Company.

Except for the Special Share held by the State of Qatar represented by the Ministry of Commerce and Industry (“MOCI”), the Founders will hold all of the Shares of the Company other than the Offer Shares. The Founders indirectly own 100% of the shares of Baladna Food Industries W.L.L. (“BFI”), and they have undertaken to transfer, or cause the transfer of, 100% of the shares of BFI (the “Transfer Shares”) as an in-kind contribution to the Company upon the Constitutive General Assembly ratifying the valuation of the Shares to be issued in exchange for the Transfer Shares. Once the Transfer Shares have been transferred to the Company, the Company will be finally registered in the commercial register at the MOCI, and the Founders’ Shares, as well as the Special Share, will be deemed to be fully paid up in accordance with the Companies Law.

Upon final incorporation, the Company will own 100% of the issued share capital of BFI. All economic rights (including right to dividends) attaching to the Transfer Shares will accrue to the account of the Company from the date of transfer of the Transfer Shares to the Company.

The Strategic Shares, comprising 437,230,000 of the Offer Shares, equivalent to 23% of the entire share capital of the Company, are being offered and fully allocated to the following Strategic Investors:

8


The information in this Prospectus is provided to potential investors to inform their decision whether to invest in the Offer Shares pursuant to the Offering, in accordance with the terms and conditions described in this Prospectus and in accordance with the Company’s Constitutional Documents. This Prospectus does not contain misleading information, nor has any material information been intentionally omitted that might affect potential investors’ decisions regarding their investment in the Offer Shares.

Potential Investors are required to carefully review the entire contents of this Prospectus prior to making an investment decision regarding the Offer Shares, taking into account all facts described therein in light of their own investment considerations.

The QFMA takes no responsibility for the contents of this Prospectus or the Arabic Prospectus, makes no representations as to its accuracy or completeness, and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon any part of the contents of this Prospectus or the Arabic Prospectus.

The distribution of this Prospectus and the Offering of the Offer Shares may, in certain jurisdictions, be restricted by law or may be subject to prior regulatory approvals. This Prospectus does not constitute an offer to sell or an invitation by or on behalf of the Company or the Listing Advisor and Offering Manager to purchase any of the Offer Shares in any jurisdiction outside of Qatar or from or within the Qatar Financial Centre. This Prospectus may not be distributed in any jurisdiction where such distribution is, or may be deemed, unlawful. The Company, the Founders, the Listing Advisor and Offering Manager and the Receiving Banks require persons into whose possession this Prospectus comes to inform themselves of and observe all such restrictions. None of the Company, the Founders, the Listing Advisor and Offering Manager, or any of the Receiving Banks accepts any legal responsibility for any violation of any such restrictions on the sale, offer to sell or solicitation to purchase the Offer Shares by any person, whether or not a prospective purchaser of the Offer Shares is in any jurisdiction outside of Qatar, and whether or not such offer or solicitation was made orally or in writing, including by electronic mail.

No action has been or will be taken in any jurisdiction other than Qatar that would permit a public offering of the Offer Shares, or possession or distribution of this Prospectus or any other offering material in any country or jurisdiction other than Qatar, where action for that purpose is required. Accordingly, the Offer Shares may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisement in connection with the Offer Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction. Persons into whose possession this Prospectus comes should inform themselves about and observe any restrictions on the distribution of this Prospectus and the Offering and sale of the Offer Shares, including those in the paragraphs below. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Prospectus does not constitute an offer to buy any of the Offer Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

Important Notice

9


THE OFFER SHARES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAW OF ANY STATE OR TERRITORY OF THE UNITED STATES AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATIONS UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAW. THE SHARES ARE BEING OFFERED OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATIONS UNDER THE SECURITIES ACT.

Neither this Prospectus, nor any other document issued in connection with the Offering, may be passed on to any person in the United Kingdom. All applicable provisions of the Financial Services and Markets Act of 2000, as amended, must be complied with in respect of anything done in relation to the Offer Shares in, from, or otherwise involving the United Kingdom.

No person is or has been authorised to give any information or to make any representations other than the information and those representations contained herein in connection with the Offering. If given or made, such information or representations must not be relied upon as having been authorised by the Company under incorporation, the Listing Advisor and Offering Manager or any of their respective legal or accounting advisers, or any of the Receiving Banks. Each prospective Investor should conduct his, her or its own assessment of the Offering and consult his, her or its own independent professional advisers. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, constitute a recommendation to purchase Offer Shares or a confirmation that the information contained herein is correct as of any time subsequent to its date. The content of this Prospectus may, however, still be subject to change until the completion of the Offering. If required, these changes will be made through an amendment to this Prospectus. The Listing Advisor and Offering Manager is acting for the Company in connection with the matters described in this document. The Listing Advisor and Offering Manager is not acting for any other person and will not be responsible to any other person for providing the protections afforded to customers of the Listing Advisor and Offering Manager or for advising any other person in connection with the matters described in this Prospectus.

10


Valuation Approach (as submitted by PwC and Rödl & Partner)The Valuation has been prepared for BFI whereby 100% of its issued share capital will be acquired by the Company. Two independent valuators have each prepared an independent Valuation as described below.

Any valuation is subjective and dependent on a number of factors including valuation methodologies used, financial prospects for the Company, key assumptions, market driven factors (such as commodity prices, import tariffs, regulation, etc.), sentiment of investors in the sector, comparability of peers and key assumptions used.

Potential investors (including their advisers) in the Company must make their own assessment of the valuation of the Company, whether they should invest in the Offering and whether they consider that the nominal value of the Offer Share accurately reflects the value of the Company. It is important to note that the day-to-day trading price of the Shares after the offering may be greater or lesser than the nominal value of the Offer Share, and may or may not necessarily accurately reflect the underlying value of the Company. In particular, potential investors in the Offering must read and understand this Prospectus in its entirety, including the section entitled “Risk Factors”.

The valuation has been prepared in order to comply with the Offering and Listing Rulebook of Securities issued by the QFMA. It was not prepared for investors to rely on or use to make investment decisions. In assessing the valuation of BFI, information including business plans provided by the management team of BFI, as well as public market data and industry research were utilized and certain financial assumptions have been made by BFI. The management team of BFI has provided information and guidance on the historical performance and financial statements of the business, business plans including financial forecasts as well as industry specific insights. The business plan of BFI has been developed by the management team. Key assumptions in the business plan were based on both third party consultant data and management’s views of the market. The business plan inherently assumes continuity of the current local market dynamics and geopolitical conditions.

It is important to note that there may be material differences between the forecast financial information provided and the actual results that the Company may achieve. Accordingly, no opinion is expressed and no assurance is provided as to the achievability of the financial forecasts provided by Management.

A number of different valuation methodologies may be used to value the Company. For the purposes of the Valuators’ analyses, a number of recognised valuation approaches were considered. 100% of the Company’s equity was valued as of 31 March 2019, on a marketable controlling basis (before considering any discounts that may be applicable for IPO purposes) based on the business plan provided to the Valuators by the Company’s management. As such the valuation might be different from the nominal value of the Offer Share. The methodology considered to estimate the value of the Company was primarily based on the income approach (using the Discounted Cash Flow (DCF) method). The valuation was then cross-checked against other valuation approaches, including market multiples based on listed peers.

11


Market and Industry InformationThis Prospectus contains historical market data and industry forecasts, which have been obtained from market research, publicly available information and industry publications or other sources considered to be generally reliable. Such information has not been independently verified, and although the Company and the Listing Advisor and Offering Manager have a reasonable belief that such information contained in this Prospectus is reliable, no representation is made regarding the accuracy, adequacy or completeness of such information. However, the logic behind this information has been verified.

Financial InformationThe financial information set out in this Prospectus has been, unless otherwise indicated, derived from the audited financial statements of BFI for the fiscal year ended 31 December 2018 and the unaudited interim condensed consolidated financial statements of BFI for the fiscal period ended 30 June 2019 (the “BFI Financial Statements”).

The audited financial statements of BFI for the fiscal year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (the “IFRS”) as issued by the International Accounting Standards Board (the “IASB”) and applicable requirements of Companies Law. The unaudited interim condensed consolidated financial statements of BFI for the fiscal period ended 30 June 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting.

Rounding Adjustments Certain financial data in this Prospectus has been rounded. Consequently, figures shown for the same category presented in different tables may vary slightly, and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

The Company intends to present its financial statements in Qatari Riyals. The Qatari Riyal is, and since July 2001 has been, pegged to the US Dollar at a fixed exchange rate of QAR 3.64 per USD 1.00 and, accordingly, translations of amounts from US Dollars to Qatari Riyals have been made at this exchange rate for all periods in this Prospectus. However, please note that these rates may differ from the actual rates used in the preparation of the financial statements of the Company and financial information derived from the financial statements that appear in this Prospectus.

No representation is made that any particular currency referred to in this Prospectus could have been converted into US Dollars or Qatari Riyals, as the case may be, at any particular rate or at all.

Forward-looking Statements This Prospectus contains forward-looking statements that are subject to risks and uncertainties, including statements about BFI management’s beliefs and expectations. All statements other than statements of historical or current facts included in this Prospectus are forward-looking statements. Forward-looking statements express the current expectations and projections of the concerned directors of the Company relating to the condition, results of operations, plans, objectives, future performance and business of the Company and BFI, as well as their expectations in relation to external conditions and events relating to the Company, BFI and their respective sectors, operations and future performance. Prospective Investors can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The statements may include words such as “anticipate”,

12


“estimate”, “believe”, “project”, “plan”, “intend”, “prospective” or other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

These forward-looking statements are based on assumptions that the Founders and Senior Management of the Company have made in light of their experience in the industries in which they operate, as well as their perceptions of historical trends, current conditions, expected future developments and other factors which the Founders and Senior Management of the Company believe are appropriate under the circumstances. As prospective Investors read and consider this Prospectus, they should understand that these statements are not guarantees of future performance or results. They involve risks, uncertainties (some of which are beyond the control of the Founders and Senior Management of the Company) and assumptions. Although the Founders and Senior Management of the Company believe that these forward-looking statements are based on reasonable assumptions, prospective Investors should be aware that many factors could affect the Company’s actual financial condition or results of operations and cause actual results to differ materially from those in the forward-looking statements. These factors include, among other things, those discussed under the heading “Risk Factors” in this Prospectus.

Due to these factors, the Founders and Senior Management of the Company caution that prospective Investors should not place undue reliance on any forward-looking statements. Further, any forward-looking statement only applies as at the date on which it is made. New risks and uncertainties arise from time to time, and it is impossible to predict these events or how they may affect the Company and/or BFI. Except as required by Qatari law, the rules and regulations of the QFMA, especially Article 43 of the Offering and Listing Rulebook of Securities, or the rules of the QE, neither the Founders of the Company (prior to its incorporation) nor the management of the Company (as at its incorporation) have any duty to, and do not intend to, update or revise the forward-looking statements in this Prospectus after the date of this Prospectus.

Information not contained in this Prospectus No person has been authorised to give any information or make any representation other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been so authorised. Neither the delivery of this Prospectus nor any subscription, sale, or purchase made under it shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Prospectus or that the information in this Prospectus is correct as of any time subsequent to the date of this Prospectus.

No incorporation of website information The contents of the Company’s website, any website mentioned in this Prospectus or any website directly or indirectly linked to such websites have not been verified and do not form part of this Prospectus, and Investors should not rely on such information.

Constitutional Documents All Shareholders are entitled to the benefit of, and are bound by, and are deemed to have notice of, the constitutional documents of the Company, including the Articles and the memorandum of association.

InterpretationCertain terms used in this Prospectus are defined in Part 27 entitled “Definitions”.

13


1. SUMMARY

2. RISK FACTORS

3. THE OFFERING

4. INFORMATION ON THE COMPANY (BALADNA Q.P.S.C.)

5. INFORMATION ON BALADNA FOOD INDUSTRIES W.L.L.

6. INFORMATION ON THE DAIRY INDUSTRY AND THE JUICE INDUSTRY

7. ECONOMY OF QATAR

8. INDEPENDENT PRACTIONER’S ASSURANCE REPORT ON THE COMPILATION

OF PRO FORMA FINANCIAL INFORMATION

9. UNAUDITED PRO FORMA FINANCIAL INFORMATION

10. HISTORICAL FINANCIAL INFORMATION

11. MANAGEMENT DISCUSSION AND ANALYSIS

12. LEGAL COUNSEL’S CERTIFICATION

13. DIVIDENDS AND DISTRIBUTION POLICY

14. MANAGEMENT AND CORPORATE GOVERNANCE

15. FOUNDERS (EXISTING SHAREHOLDERS)

16. CAPITALISATION AND INDEBTEDNESS

17. RELATED PARTY TRANSACTIONS

18. UNDERTAKINGS BY THE FOUNDERS AND SENIOR MANAGEMENT

OF THE COMPANY

19. DESCRIPTION OF THE SHARES; ARTICLES OF ASSOCIATION

20. TRANSFER AND SELLING RESTRICTIONS

21. QATAR EXCHANGE (QE)

22. QATAR FINANCIAL MARKETS AUTHORITY (QFMA)

23. QATAR CENTRAL SECURITIES DEPOSITORY (QCSD)

24. TAXATION

25. GENERAL INFORMATION

26. COMPLIANCE WITH SHARIA

27. DEFINITIONS

APPENDIX 1

1416283642668183

8592161179180182191192194197

198202205206207208209213215

ContentsPage

14


1. SUMMARY

WarningsThis summary should be read as an introduction to this Prospectus. Any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the Investor, including in particular the Risk Factors section.

Legal and commercial name Baladna Q.P.S.C. (under incorporation)

Company’s subsidiary

The Company will have one fully owned subsidiary, Baladna Food Industries W.L.L. (BFI) which was established in 2014.BFI focuses on the production of dairy, juice and related products and the company is discussed in detail in Part 5 of this Prospectus.

Company’s current operations and principal activities

The Company’s principal activity is to provide overall management, supervision and strategic support to its subsidiary, BFI. The complete objects of the Company are set out in Part 4(b) of this Prospectus.

Currency The Shares will be denominated in Qatari Riyal.

Issued share capital

Upon final incorporation and issuance of the Company’s commercial registration certificate, the Company will have an issued share capital of QAR 1,901,000,000, comprising 1,901,000,000 Shares.

Securities Offered The Offering comprises an offering to Strategic Investors and Individual and Corporate Investors of 1,425,750,000 Shares in the Company, being the Offer Shares.

Amount and percentage of Offering

1,425,750,000 Shares will be issued pursuant to the Offering. The Offer Shares will represent 75% of the issued share capital of the Company.

Reasons for Offer and use of proceeds

The net proceeds of the Offering will be used to repay debt incurred by BFI during its recent expansion.

The Company will receive approximately QAR 1,425,750,000 of net proceeds from the Offering (after estimated Offering and Listing Expenses of approximately QAR 14,257,500). To the extent that the Offering and Listing Expenses collected by the Company are insufficient to cover the actual costs associated with the Offering, the Company will bear the remaining costs in connection with the offering and listing of the Shares of the Company.

Offering restrictions and jurisdictions

Under the Offering, the Offer Shares are being offered for subscription to Strategic Investors and Individual and Corporate Investors. None of the Offer Shares may be offered for subscription, sale or purchase, or be delivered, subscribed for, sold or delivered, and this Prospectus and any other offering material in relation to the Offering and the Shares may not be circulated, in any jurisdiction where to do so would breach any securities laws or regulations of any such jurisdiction or give rise to an obligation to obtain any consent, approval or permission, or to make any application, filing or registration in any such jurisdiction.

Rights attached to the Shares

With the exception of the Special Share, the Shares will rank pari passu in all respects with each other, including for voting and dividend rights and rights on return of capital.

15


Special Share

The State of Qatar, represented by the Ministry of Commerce and Industry, will be allotted one Special Share, and the Special Share will have specific rights to appoint some Directors, veto certain decisions of the Company, and other rights as described in Part 19 (Description of the Shares) of this Prospectus.

Special Shareholder

The holder of the Special Share, The State of Qatar, represented by the Ministry of Commerce and Industry or other entity holding the Special Share on behalf of the State of Qatar

Founders Upon final incorporation of the Company, the Founders will hold 475,250,000 Shares, constituting 25% of the issued share capital of the Company (the “Founders’ Shares”).

Restrictions on Transferability

Except for the restriction on the Founders being unable to transfer their Shares until the second anniversary of the Company’s incorporation, the Shares are freely transferable and there are no restrictions on transfer.

Offering and Listing Expenses

The net proceeds of the Offering will be received by the Company. The Offering and Listing Expenses of approximately QAR 14,257,500 shall be applied by the Company towards advisors’ fees and other legal and governmental fees and expenses. To the extent the actual costs exceed QAR 14,257,500, the Company shall bear the remaining costs.

Estimated expenses charged to investors

Other than the Offering and Listing Expenses, there are no commissions, fees or expenses to be charged to Investors by the Company under the Offering.

Related party transactions

The Company’s Subsidiary, BFI, is a party to certain related party agreements, as described in greater detail in Part 17 of this Prospectus.

16


2. RISK FACTORS

Investing in and holding Shares involves substantial risks. Investors should carefully review all of the information contained in this Prospectus and should pay particular attention to the risks associated with an investment in the Shares, the Company’s business and the industries in which the Company participates. The aforementioned risks should be considered together with all other information contained in this Prospectus.

The risks and uncertainties described below are not an exhaustive list and do not necessarily comprise all, or explain all, of the risks associated with the Company, the industries within which it operates or any investment in the Shares and the risks and uncertainties referred to below should therefore be used as guidance only. For the avoidance of doubt, the risks and uncertainties set out in Part 2 of this Prospectus comprise the material risks and uncertainties in this regard that are known to the Founders and Senior Management at the time of offering the Shares. Additional risks and uncertainties relating to the Company, its business or the Shares that are not currently known to the Founders and Senior Management, or which the Founders and Senior Management currently deem immaterial, may arise or may become (individually or collectively) material in the future and may have a material adverse effect on the Company’s business, results of operations or financial condition and, if any such risk or risks should occur, the price of the Shares may decline and Investors could lose part or all of their investment.

Investors should consider carefully whether an investment in the Shares is suitable for them based on the information in this Prospectus and their personal circumstances. Investors should consult a legal adviser, an independent financial adviser and/or a tax adviser for legal, financial or tax advice if they do not understand this Prospectus (or any part of it). Additionally, this Prospectus includes forward-looking statements and predictions which involve risks and uncertainties and may not be achieved or realised, partially or completely, or the results may materially vary due to the below risks and uncertainties.

All of the risks highlighted below could potentially have a material adverse effect on the Company’s business operations, revenue, profitability, financial position, prospects or share price. To avoid repetition, these potential adverse effects will not be referred to in each separate paragraph.

(a) Risks relating to the Company’s business and operations2.a.i No prior operating historyThe financial performance of the Company will depend on the financial performance of BFI, which is an existing entity with a trading history. The success and profitability of the Company will depend on its ability to successfully monitor and manage the independent operations of BFI and to ensure that BFI carries out its business plan, expansion plans and long term strategy. Following the Offering, the Company will hold all of the shares of BFI and, as such, BFI will be treated as a wholly owned subsidiary.

2.a.ii Special Share and exercise of related rights by the Special ShareholderThe Special Shareholder owns the Special Share in the Company. The Special Share, in addition to other rights afforded to Shareholders, provides the Special Shareholder with additional rights as set out in full in Part 19 (Description of the Shares) of this Prospectus (with such rights including the ability to veto certain decisions of the Board and to appoint a number of directors to the Board). The Special Shareholder may use the rights afforded by the Special Share to direct the business and operations of the Company and the Special Shareholder may take into account considerations apart from the success

17


and profitability of the Company. Additionally, the interests of the Special Shareholder may have specific considerations for making a decision on voting and in such circumstances, this may impact the way the Special Shareholder votes or uses the rights afforded to it as the holder of the Special Share.

2.a.iii Risks relating to the Company not paying dividends or paying less dividends than anticipatedPayment of dividends is approved by the General Assembly upon the recommendation of the Board. The Board may recommend not paying any dividends or paying less dividends than anticipated by Investors. Additionally, the General Assembly may reject the recommendation of the Board in relation to the payment of dividends.The amount of dividends may vary from year to year. Availability of dividends may be impacted by a number of factors including the profitability of the Company, capital expenditures, the financial standing of the Company, statutory and optional reserve requirements, the indebtedness of the Company, the condition of the economy and any other factors that the Board may consider when making a recommendation. There is no guarantee that dividends will be paid in any given year or the amount of dividends which will be paid in any given year. The Company will not distribute dividends for the year 2019 but does plan to distribute dividends for the year 2020 (if profitable), which would be paid to shareholders in 2021.

2.a.iv Changes in the financial regulations applicable to the Company including taxesAs at the date of this Prospectus, based on the prevailing tax regulations for listed companies on the Qatar Exchange, the Company’s profits would be exempt from corporate income tax following its listing. However, there can be no assurance that the State of Qatar will not in the future introduce additional taxes, charges, or levies on the Company or that the current tax laws and regulations in Qatar will not be amended. If any changes in financial regulation or tax laws occur, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.a.v Interruption or failure of the Company’s IT systemsThe efficient operation and management of the Company’s business depends, in part, on the operation, performance and development of its IT systems and processes. New IT systems and changes to management systems may not be successfully implemented and managed. This may lead to an IT environment that is inadequate to support the needs and objectives of the Company’s business. A significant performance failure of the Company’s IT systems could lead to a loss of control over critical business information and/or systems. If this occurs, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

(b) Risks relating to BFI’s business and operations2.b.i Resumption of imported suppliesAs a result of the diplomatic situation since 5 June 2017 between Qatar and the four blockading countries (KSA, UAE, Bahrain and Egypt), fresh dairy products were in limited supply due to the perishability of such products. BFI benefited from the limited competition to enhance its market share and improve its sales. If the current diplomatic situation changes, resulting in the resumption of imports from the four blockading countries, there is a risk that BFI may suffer a reduction in its current market share of dairy products and juices. As a result, BFI may be prevented from achieving its sales targets and if this occurs, the could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

18


2.b.ii Government protection of Qatari dairy industry and producersAs at the date of this Prospectus, the Government of Qatar has in place certain measures that are designed for public safety but may incidentally offer some advantage to local dairy producers. For example, effective 21 March 2019 the Government of Qatar banned the importation of UHT milk produced from powder, which is generally considered to be less healthy than powder-free milk. In addition, the validity of UHT milk imported and sold in Qatar cannot be more than three (3) months and must have at least 80% of its validity period remaining at the time of entry into Qatar. Such measures are not unique to Qatar, and many jurisdictions throughout the world (including the US, EU, Canada, and other leading dairy producers) also have public safety protections in place. These public safety protections include sanitary, packaging, transportation, labelling, or minimum/maximum ingredient regulations. These public safety protections sometimes have the indirect effect of increasing the cost of exporting products into market, which in turn results in the foreign product being substantially more expensive than locally produced products. The Company, being a part of the dairy industry community in Qatar, understands that current government measures regarding the importation of dairy products will be maintained and strengthened. To the extent these assumptions prove to be incorrect, this could reduce the market share of the Company and BFI’s products, and this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.iii BFI and the Company need to comply with certain conditions to receive financial support from the State of QatarBFI entered into an agreement (the “Support Agreement”) with the State of Qatar, represented by the Ministry of Finance and the Ministry of Commerce and Industry, pursuant to which BFI will receive support in the form of fixed payments over a period of ten years in consideration of its significant investments in the Qatari dairy industry and its support of Qatar’s national food security program. The Support Agreement stipulates certain conditions that must be met by BFI and the Company to receive the support payments. These include, among others, BFI and the Company maintaining certain annual production volumes of fresh milk to meet specific local market demand levels for fresh milk and other dairy products; complying with any requests by the Ministry of Commerce and Industry to increase production levels to meet seasonal local demand for dairy products; exporting products as long as BFI and the Company ensure that any local market deficit of fresh dairy is covered and only after obtaining the necessary approvals by the Ministry of Commerce and Industry; using the Company’s IPO proceeds to repay debt incurred by BFI; ensuring continuous compliance with the applicable Qatari health and safety laws; and ensuring that BFI’s products are affordable and in compliance with the pricing levels determined by the Ministry of Commerce and Industry.

Failure by BFI or the Company to comply with any of these or other conditions stipulated in the Support Agreement may lead to a cessation, wholly or partially, of the support payments and potential termination of the Support Agreement, which could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

For more information on the Support Agreement, please refer to Part 25(m) (Material Contracts), as well as Part 11 (Management Discussion and Analysis) – ‘Other Income’.

2.b.iv Strong competition from existing and potential new entrants in the dairy sectorThere are currently a number of companies operating in the dairy sector and it is expected that further new companies will enter into this sector in the future. Existing companies may increase their production capacity and gain further market share and new entrants may take up part of BFI’s market share. An increase in competition may potentially cause a reduction in BFI’s market share, or may result in BFI not increasing its market share as quickly and to such an extent as it had anticipated. The

19


increased competition may also put pressure on sales prices, thus negatively impacting profitability. Strong competition from existing companies and new competitors could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.v Difficulties in meeting production targetsBFI’s success largely depends on its ability to produce large quantities of milk on a consistent and cost-effective basis. A potential risk to BFI’s business is if its herd size decreases or fails to grow as expected. This could be a result of increased mortalities or a decrease in pregnancy rates. A similar risk is that BFI’s cows produce less milk on average than anticipated. BFI imported thousands of cows in mid-2017 and in 2018, but has largely increased its herd size organically since then. As at the date of this Prospectus, 30-35 baby calves/heifers are born each day on BFI’s facilities. In terms of milk production per cow, BFI has increased the milk yield per cow from approximately 15 litres per day in July 2017 to 27 litres per day in June 2018 to 32 litres per day in June 2019). If yields per cow, or the overall herd size, decrease or fail to grow as projected, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.vi BFI may be unable to obtain or maintain the required licencesIn order to carry out and expand its business, BFI needs to obtain or maintain a variety of licences, permits, approvals and consents from regulatory, legal, administrative and other authorities and agencies. The processes for obtaining these permits and approvals are often lengthy, complex, unpredictable, costly and involve examinations or verifications by relevant authorities. Such licences are also valid only for a fixed period of time, subject to renewal and accreditation. If BFI is unable to obtain or maintain the relevant permits and approvals, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

The activities of BFI are highly regulated and changes to applicable laws or regulations, the interpretation or enforcement of such laws or regulations or the failure to comply with such laws or regulations could have a material adverse effect on its aforementioned activities. These regulations include, among other things, food standards, labelling and packaging, animal welfare, fair trading and consumer protection, employment, health and safety, property and the environment. Specifically, the environmental regulations relate to waste disposals, noise and odour regulations, and associated matters.Furthermore, BFI requires new approvals, licenses and permits for its expanded and developed dairy farms under its expansion plan. BFI may not be able to expand its business to the planned scale if these licences and permits are not issued.

New rules and regulations may also be enacted to strengthen the legal and regulatory framework and raise the quality and safety standards of dairy products and juices. Such future laws and regulations may require the improvement or amendment of the methods in place by BFI for the production, processing and transportation of dairy products and juices. BFI may also incur additional costs in order to comply with the current or future legal or regulatory requirements.

If BFI is unable to obtain or renew required licences and approvals, or if new laws are issued requiring further licensing and approval that BFI is unable to obtain, this may impact the ability of BFI to undertake its activities, which in turn, could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.vii BFI’s operations or sales may be impacted by the outbreak of a material disease or similar disturbance or the perception thereofOutbreak of illness or disease across the animal livestock at BFI’s farms, or the perception thereof, would have a significant adverse impact on the production capacity and volume of sales of BFI’s products and may also severely damage its brand and reputation. BFI has put in place disease control systems to

20


ensure that the farms’ production capacity is not affected by such outbreak of illness or disease. However, no assurance can be given that such incidents will not occur in the future. There is the possibility that certain disease strains could be resistant to vaccinations and antibiotics and that neighbouring farms, beyond the control of BFI, could experience an outbreak of disease. BFI has insurance against illness outbreak but cannot assure that the insurance policies in place to cover losses related to animal diseases will be sufficient to cover the total losses incurred by BFI in the event of such an outbreak. Additionally, disease outbreak in Qatar, or the perception of disease outbreak in Qatar, may severely impact the reputation of the dairy industry and could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.viii Loss of, or reduction in, access to distribution channelsOne of the key challenges that businesses in the food production industry face is securing sufficient and reliable distribution channels. BFI has from the 1st of January 2019 assumed full responsibility for the direct distribution of its products and has significantly increased its market coverage and call frequency to fully service all of its retail and HORECA (hotel, restaurant, and catering) customers in Qatar. (BFI previously operated under a distribution agreement with Ali bin Ali & Partners (“ABAP”), under which ABAP exercised significant control over the distribution of BFI’s products.) There is a risk that BFI, managing its distribution directly, will not be as successful in the long term as it would have been under its previous arrangement with ABAP, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.ix BFI may be affected by a food safety eventA significant food safety event could include food poisoning as a result of contaminated or damaged dairy products, which may have been contaminated or damaged throughout the production, supply or storage processes. As a result, BFI’s products may become unsafe or be perceived to be unsafe by customers, who may lose confidence in BFI products. This could result in reduced demand for BFI’s products.

Furthermore, upon the instruction of competent Government authorities, BFI may be asked to recall products. Such product recalls may affect customer perception of the quality, safety and/or reliability of the products and may also entail monetary compensation payments and penalties. If BFI is penalised, or if regulatory action is taken against BFI for any reason, the reputation and brand of BFI and the Company may be damaged and this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.x Shortage of quality animal feed and beverage ingredients at stable pricesAs a producer of animal products, BFI requires high quality animal feed to ensure that the animals reach their full physical and biological potential, which in turn leads to a higher standard of end products being available to consumers. Although BFI adopts partially mitigating measures by maintaining an adequate reserve of feed inventory and by purchasing from multiple regions around the world, various factors beyond its control may adversely affect BFI’s ability to obtain animal feed in the volume, at the standard and at the price it desires. Suppliers of animal feed can be impaired by adverse weather conditions and natural disasters which result in lower crop yields. In addition, general business problems may cause a reduction in supply or an increase in prices. A short-term or long-term shortage of quality animal feed at stable prices could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

Additionally, certain flavoured dairy and juice products and yoghurts contain imported ingredients. Even though BFI maintains an average of three month’s stock of ingredients and sources from multiple companies and countries, there is a potential risk that some ingredients may not be available, which might affect BFI’s ability to produce certain flavoured dairy and juice products and yoghurts which use

21


stabilizers, and this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xi Failure to anticipate and respond to changes in consumer preferences, demand for BFI’s products could decline.The success of BFI depends on its ability to anticipate, identify, interpret and react to the evolving tastes, dietary habits and nutritional needs of its consumers and to offer products that appeal to them. Sales of BFI products could be affected by nutritional and health-related concerns about BFI products, such as fat, cholesterol, calories, sodium, lactose, sucrose, bacteria and other ingredients contained in the products. Consumer trends in the dairy industry are constantly changing and BFI’s failure to anticipate, identify, interpret and react to these changes, or its failure to generate consumer acceptance or recognition of its new products, could lead to, among other things, reduced demand for and/or price reductions of BFI’s products, which could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

Even in the event that BFI does correctly anticipate, identify, interpret and react to these changes, there can be no assurance that BFI will be able to successfully compete in these new businesses, or that demand for these new products will grow to the extent that BFI and the Company expect, or that these new businesses and products will provide the returns that BFI and the Company expect. If BFI is unable to respond to rapid changes in consumer preferences (either at all or in a timely manner), this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xii Interruption or failure of IT systemsThe efficient operation and management of BFI’s business depends, in part, on the operation, performance and development of its IT systems and processes. New IT systems and changes to management systems may not be successfully implemented and managed. This may lead to an IT environment that is inadequate to support the needs and objectives of BFI’s business. A significant performance failure of BFI’s IT systems could lead to a loss of control over critical business information and/or systems, resulting in a material adverse effect on the ability of the business affected to operate effectively or to fulfil its contractual obligations, and this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xiii Interruption, failure or breakdown of production lines or machineryThere is a potential risk that BFI may have periods when equipment fails, and production is affected. For the majority of products BFI can switch production to alternative lines in Plants 1, 2 and 3. However, a few products, such as UHT milk, have a higher vulnerability due to having only one production line. To address this risk, BFI maintains a minimum of one month’s stock on UHT, which would reduce the risk of market disruption.BFI also operates preventive maintenance schedules to minimize the likelihood of breakdowns and maintains a stock of a critical spare parts for all lines at all times. The majority of production lines are linked directly to the original manufacturers’ online diagnostic systems.

2.b.xiv Dependence on concession agreements with the Ministry of Municipality and EnvironmentBFI currently rents two parcels of land in Umm Alhawaya for the purposes of livestock and production of agricultural products. The concession agreements are for a term of fifty years, ending in 2067. There can be no assurance that the concession agreements will be renewed upon expiry, or if renewed, that such renewals will be on similar terms. Furthermore, there is no guarantee that the concession agreements will not be terminated as a result of breach by the Company of its obligations or as a result

22


of expropriation. Any of the foregoing events could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xv Natural disasters may impact the business or operations of BFINatural disasters such as earthquakes, floods, severe weather conditions or other catastrophic events may severely affect the territory where BFI operates or its main markets. Natural disasters could cause a material economic downturn in the affected area as well. Although BFI has had very limited exposure thus far to any catastrophic event, any future disasters in the territories in which BFI operates or in BFI’s main markets could have a material adverse effect on BFI’s business, financial condition, cash flow and results of operations. Similarly, war, terrorist activity, threats of war or terrorist activity, social unrest, geopolitical uncertainty or international conflict and tension could affect international or regional economic development. In addition, BFI may not be adequately prepared in terms of contingency planning or have recovery capabilities in place to deal with a major incident or crisis. These events could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xvi BFI’s products are currently primarily for local consumption and no guarantee BFI will be able to export substantiallyBFI currently has limited export markets. The priority of BFI is to supply the Qatari market and the brand of BFI may not be recognizable outside of Qatar. If there is an event or a series of events that impact BFI’s reputation in Qatar, or its ability to sell products in Qatar, BFI may have to sell the majority of its volume at lower prices than those currently available in Qatar. If BFI is unable to substantially and successfully export to new markets, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xvii Difficulty in managing new export marketsIn April 2019, BFI made its first sales outside of Qatar and shipped UHT long-life ‘Baladna’ milk to Afghanistan and Yemen and is currently in the process of exporting to new markets. In May 2019, BFI established an export/distribution entity in Oman and began selling its UHT long-life dairy products in that country as well. Exporting to new markets carries risks and challenges relating to logistical and regulatory issues, which may be easier to manoeuvre in BFI’s home market. Although BFI has taken several measures to manage these risks, if BFI is unable to properly manage those risks, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xviii Potential inability of BFI to develop new business or keep up with new marketing trendsA key objective of BFI for its business development is to enhance and grow its businesses. Since 2017, BFI has grown its herd substantially, increased its daily production across various product lines, begun exporting products overseas, and grown its portfolio of food and beverage products. There is no guarantee that BFI will be able to continue to develop new business and do so profitably. Additionally, there is no guarantee with the continuous development of new marketing trends and mediums that BFI will be able to keep up with such trends and developments or have the capacity or capability to do so. BFI’s inability to continue developing new business or keep up with new marketing trends and developments could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xix BFI’s workforce is exposed to hazards.The Company’s operations rely on the workforce of BFI, which is exposed to a range of operational

23


hazards typical for the dairy industry. These hazards arise from working on production sites, managing the farms, operating heavy machinery and performing other hazardous activities. BFI provides its workforce with occupational health and safety training and believes that its safety standards and procedures are adequate, however, accidents at its production sites or facilities may occur as a result of unexpected circumstances, failure of employees to follow proper safety procedures, human error, equipment failure or otherwise. If any of these circumstances were to occur, they could result in personal injury, business interruption, possible legal liability, damage to the Company’s business reputation and corporate image and, in severe cases, fatalities. Any of these risks could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xx BFI may not be able to successfully retain existing and/or attract and recruit qualified and experienced personnel and key managementAlthough BFI seeks to retain its personnel through compensation plans and other human resources policies and succession plans where appropriate, there can be no assurance that BFI will always be able to retain all members of its Senior Management team and other key staff or replace the same people within an adequate timeframe. There might be detrimental effects to BFI’s business resulting from the loss or dismissal of key personnel and there is no guarantee that it will be able to attract and retain key personnel that will help it to achieve its business objectives. Should BFI not be able to retain or replace qualified key personnel, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xxi Interest Rate RiskBFI is a borrower under several financing arrangements, and it is anticipated that it will continue to avail of bank facilities, including facilities which may be subject to interest. If the applicable interest rates increase significantly, then this could have a material adverse effect on BFI’s financial condition and in turn, this could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xxii Liquidity RiskCompanies in BFI’s industry may face liquidity risks. There is a risk that BFI will not be able to meet obligations as they fall due. BFI’s approach to managing liquidity risk is to ensure that, as far as possible, it will always have sufficient liquidity to meet its liabilities when due (under both normal and stressed conditions) without incurring unacceptable losses or risking damage to BFI. If BFI is unable to retain sufficient liquidity, this may adversely affect its ability to continue its operations, which in turn could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xxiii Credit RiskBFI is exposed to credit risk on its bank balances, trade receivables and staff receivables (such as advance salary payments, petty cash, advances for expenses). There is a risk that counterparties to BFI’s receivables will fail to discharge an obligation and cause BFI to incur a financial loss, which could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.b.xxiv Exchange Rate Risk / Foreign Currency RiskIn 2019, BFI began exporting its products to other countries, including Afghanistan, Yemen, and Oman. BFI intends to enter additional markets. There is a risk that changes in exchange rates between applicable currencies could result in some transactions producing less revenue than anticipated. BFI purchases some goods and services from overseas, and there is a risk that changes in exchange rates between applicable currencies could result in some transactions costing more than anticipated. If

24


exchange rates substantially change to the disadvantage of BFI, this might cause BFI to sustain losses which in turn could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

(c) Risks relating to Qatar2.c.i Unstable diplomatic situation and trade restraints affecting QatarOn 5 June 2017, several countries, including Saudi Arabia, the UAE, Bahrain and Egypt, abruptly severed diplomatic relations with Qatar. In addition to withdrawing their ambassadors from Qatar, these countries imposed further measures that may negatively impact Qatar’s economy on a broad scale. Saudi Arabia closed its land border with Qatar, leaving Qatar without its only trade route by land. This has resulted in increased import costs, difficulty in procuring some materials, and other challenges. All aircraft registered in Qatar have also been banned from flying through the airspace of Saudi Arabia, the UAE, Bahrain and Egypt.

Mediation efforts have been led by Kuwait and Kuwait and Oman have thus far remained neutral throughout the dispute. Many influential nations on the global political stage, including the USA, have expressed their encouragement for both sides of the dispute to resolve the situation through dialogue and diplomatic means.

2.c.ii Qatar’s economic dependence on oil and gas revenuesBFI primarily operates within its home market of Qatar. Gas revenues in particular underpin the Qatari economy as a whole and to an extent facilitate the development of other sectors of the economy and the national infrastructure. Deterioration in the price of oil and gas, or any developments which limit the ability of Qatar to freely export its oil and gas products, would reduce revenues flowing to the State and may impede its ability to implement its development strategy. This could potentially cause wider problems in the Qatari economy, which could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.c.iii Prior to 2009, Qatar had a high rate of inflation and a return of high rates of inflation in the future could adversely affect the economyPrior to 2009, Qatar had a high rate of inflation. Qatar had high levels of inflation and the overall annual inflation rate was 15.2%, 13.6% and 11.8% in 2008, 2007 and 2006, respectively. The high levels of inflation prior to 2009 were primarily accounted for by the rapid and sustained increase in real estate prices, as well as an increase in international food and raw material prices. In 2009 and 2010, inflation rates were negative as a result of the decrease in housing costs.In 2011, Qatar made an exit from the deflation phase of the previous two years by recording positive inflation at a rate of 1.9%. The inflation situation was, however, favorable compared to major GCC countries and global trends where inflationary pressures were higher in the wake of rising international food and hydrocarbon prices.

Consumer price inflation steadily increased with the general index in the years 2012, 2013 and 2014, with the general index increasing by 2.32%, 3.20% and 3.36%, respectively (in contrast to global trends where inflation pressures eased considerably, especially in advanced economies), before moderating in 2015. In 2016, consumer price inflation rose by 2.7%, compared to a rise of 1.8% in 2015. Inflation in 2016 was driven by increases in housing and utilities prices after electricity and water prices were raised at the end of 2015, as well as increases in recreation and culture and transportation prices. This was offset slightly by lower food prices, which fell in 2016 due to the lagged effects from low international food prices.

25


In 2017 and 2018, consumer price inflation rose by 0.4% and 0.2%, respectively. Overall, moderation of population growth, expanded capacity in the non-traded sector and restraint in Government spending plans are all expected to contain domestic price pressures.

Although the Government and the QCB can use various monetary instruments to address price stability, including moving interest rates independently of the U.S. Federal Reserve despite the currency peg, there can be no guarantee that the Government or the QCB will be able to achieve or maintain price stability and thus control inflation. If Qatar were to face high rates of inflation in the future, this could adversely affect its economy.

2.c.iv Changes to Qatari Riyal, or other regional currencies, pegging against US Dollar or floating of Qatari Riyal may lead to currency instabilityThe Qatari Riyal has been formally pegged against the US Dollar at a fixed exchange rate of 3.64 Qatari Riyals per 1 U.S. Dollar since 2001. Several GCC countries also have their currencies pegged to the U.S. Dollar. In response to the ongoing volatility of oil prices internationally, oil producing countries with currencies that have been traditionally pegged to the U.S. Dollar have faced pressure to de-peg and, in certain cases, have de-pegged their currencies. There is a risk that, in response to the developments in oil prices or for other reasons, additional countries may choose to unwind their existing currency peg to the U.S. Dollar, both in the GCC and the wider region. Any future de-pegging could adversely affect Qatar’s economy, which could also indirectly have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

2.c.v The current insolvency regime in Qatar has not been tested by the Qatari courtsInvestors should be aware that the Commercial Law came into force in May 2007 and addresses commercial affairs and entities, competition, commercial obligations and contracts, and commercial paper. The Commercial Law also provides comprehensive provisions addressing bankruptcy matters, permitting creditors to file claims against any corporate entity, except for certain professional companies and other companies that are at least majority owned by the Qatari state. To the knowledge of the Company, this new insolvency regime remains untested to date and it is uncertain how it would be implemented by the courts of Qatar. There can also be no assurance that a Qatari court would compel a bankruptcy administrator to perform any of the Company’s obligations during an administration period. The Commercial Law also enables Qatari courts to defer adjudication of a company’s bankruptcy if the court decides that it is possible to improve that company’s financial position during a period (such period to be specified by the court) or if judged to be in the interest of the national economy. In the event of an insolvency situation to be determined under Qatari law, the Shareholders and other equity holders generally rank last behind creditors of the company concerned.

2.c.vi Dynamic legislative environment in Qatar and potential of changes to laws or regulationsBFI is subject to a number of laws that govern its operations including, among others, those relating to industrial affairs, environment, health and safety and licensing laws and regulations. As a growing economy, Qatar has been witnessing a continuous process of updating and renewing its laws and regulations. This may be driven by the desire to improve such laws or regulations or the need to comply with certain international treaties and conventions. New laws and regulations may impose additional obligations on companies operating in Qatar and specifically in the dairy industry including BFI. There is a possibility that new laws and regulations may impose obligations on BFI that BFI may not be able to comply with or that will burden BFI financially.

Specifically, there is a risk that laws may be issued that limit BFI’s ability to control the price of its products. BFI’s projections assume an increase in the price of its products, and if the Government of

26


Qatar were to impose strict maximum pricing regulations, this could have a material adverse effect on BFI’s business, cash flow, financial condition, results of operations, and future prospects.

2.c.vii Operating in a challenging economic environmentThe economic outlook for Qatar and the wider Middle East and North Africa (the “MENA”) region remains uncertain. Global concerns over issues such as inflation, geopolitical issues, terrorism, energy costs, commodity costs, the availability and cost of credit and sovereign debt levels have contributed to and diminished expectations for national and global economies in the medium to long term.

The current level of uncertainty surrounding economic recovery and the pace of growth may also negatively affect the level of demand in the market, which in turn could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects.

(d) Risk relating to the Offering and the Offer Shares2.d.i The Shares may not be a suitable investment for all investorsEach potential Investor must determine the suitability of that investment in light of his, her or its own circumstances. In particular, each potential Investor should:

• have sufficient knowledge and experience to make a meaningful evaluation of the Shares, the merits and risks of investing in the Shares and the information contained in this Prospectus;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of his, her or its particular financial situation, an investment in the Shares and the impact the Shares will have on his, her or its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in the Shares; and

• be able to evaluate (either alone or with the help of a financial advisor) possible scenarios for economic and other factors that may affect his, her or its investment and his, her or its ability to bear the applicable risks.

2.d.ii Absence of prior trading market and potential volatility of share priceThe Company is under incorporation. Therefore, prior to the Offering, there has been no public market for the Shares. Furthermore, there can be no assurance that an active trading market for the Shares will develop or be sustained after the Offering. If no active trading market for the Shares develops, the liquidity of the Shares will be affected, and this may negatively affect the market price of the Shares. Investors may in this case find it difficult or impossible to exit from their investment in the Offer Shares.

2.d.iii The dividend policy, and its implementation, may be adversely affectedThe Company’s dividend policy is described in Part 13 (Dividends and Distribution Policy) of the Prospectus but should not be construed as a dividend forecast. The Company’s ability to pay dividends in the future is affected by a number of factors, principally the Company’s generation of distributable profits. The Company may be precluded from paying dividends by various factors, such as its financial condition, restrictions in existing or future financing documents to which it is a party or as a result of applicable law. Under Qatari law, a company can only pay cash dividends to the extent that it has distributable reserves and cash available for this purpose. In addition, the Company may not pay dividends if the Board of Directors believe this would cause the Company to be inadequately capitalised or if, for any other reason, the Board of Directors conclude that it would not be in the best interests of the

27


Company and does not recommend to the General Assembly of the Company to distribute dividends or to distribute minimal dividends. Any of the foregoing considerations and other factors could limit the payment of dividends to Shareholders or the amount of such dividends.

2.d.iv The issue of additional Shares in the Company may dilute all other shareholdingsThe Company may decide to offer additional Shares in the future. Future offerings could dilute the holdings of Shareholders in the Company and impair the Company’s ability to raise capital through future offerings of equity securities.

2.d.v Potential for legal proceedings due to the nature of the Company’s businessAs a result of dealing with customers with various risk profiles, BFI may be party to legal proceedings. Any future legal proceedings may have a significant effect on BFI’s operations and financial position. However, the Company is not able to predict the ultimate outcome of any future claims that may be brought against it, which may be in excess of its existing reserves.

2.d.vi Market volatilityThe market price of securities fluctuates and it is impossible to predict whether the price of such securities will rise or fall. An individual security may experience upward or downward movements, and may even lose its entire value. There is an inherent risk that losses may be incurred, rather than profits being made, as a result of buying and selling securities. Additionally, the market price for the Shares may not reflect the fair value of the Company’s assets.

Historical price performance is not a guide for future price performance and there may be a big difference between the purchase price of the securities and the eventual price at which such securities are sold. The market price of the Offer Shares will be influenced by, among other factors, the Company’s financial position, results of operations, overall stock market conditions and economic, political and other factors.

2.d.vii Significant future sales of Shares may negatively impact their priceSales of substantial amounts of Shares in the public market following the completion of the Offering, particularly after the end of the lock up period applicable to the Founders which is two years from the date of final incorporation of the Company, or the perception that these sales will occur, could adversely affect the market price of the Shares.

2.d.viii Emerging markets deemed to be more volatile and riskier compared to developed countries and financial marketsThe majority of BFI’s assets, supply chain components and customer base is situated in Qatar. Investments in securities of issuers from emerging markets such as Qatar generally involve a higher degree of risk than investments in securities of issuers from more developed economies.

2.d.ix Qatar Exchange is an emerging market with no guarantee of consistent liquidityThe QE is substantially smaller in size and trading volume than established securities markets. The QE has been open for trading since 1997 but its future success and liquidity in the market for the Shares cannot be guaranteed. Although QE was upgraded by the Morgan Stanley Capital Index from frontier market to emerging market status, it remains a developing market. Brokerage commissions and other transaction costs on the QE can be higher than those on other stock exchanges. In addition, the QE and securities listed thereon, such as the Shares, have in the past been, and may in the future be, subject to a high degree of volatility with limited liquidity.

28


3. THE OFFERING

(a) The Offering3.a.i The CompanyThe legal and commercial name of the Company is Baladna Q.P.S.C. The Company is under incorporation in Qatar as a Qatari public shareholding company. The Company’s principal activity is to provide overall management, supervision and strategic support to its Subsidiary, BFI. The Company will hold all of the shares in BFI. The Company’s objectives, as set out in its Articles, also comprise the activities listed in Part 4(b) in this Prospectus.

3.a.ii Share capital of the CompanyThe Company is under incorporation and upon final incorporation the issued share capital of the Company will be QAR 1,901,000,000, divided into 1,901,000,000 Shares. Each Share has a nominal value of QAR 1 which will be fully paid.

3.a.iii Founders’ SharesAll Founders’ Shares will be paid up through causing an in-kind contribution of 100% of the shares of BFI. The Founders’ Shares will equal 475,250,000 Shares, corresponding to 25% of the issued share capital of the Company.

3.a.iv Number of Offer Shares; Offering SplitThe Offer Shares consist of 1,425,750,000 Shares, representing 75% of the issued share capital of the Company.

Subject to the allocation strategy set out below, the Offer Shares are offered as follows:

(a) Individual and Corporate Investors: 988,520,000 Shares (representing 52% of the issued share capital of the Company), are offered solely to, and are only capable of acceptance by, Individual and Corporate Investors, subject to the terms of the Offering as set out in this Prospectus; and

(b) Strategic Investors (which shall consist of certain selected institutions, such as the Qatari government, governmental institutions, public corporations and other entities, and may include natural persons): 437,230,000 Shares (representing 23% of the issued share capital of the Company). The selection of the Strategic Investors and any allocation made to them will be made at the discretion of the Company. After the Listing Date, all institutions and individuals will be allowed to purchase Shares from Qatar Exchange in accordance with applicable laws and the regulations of the QFMA, the QE and the Articles. Furthermore, non-Qatari shareholders (individuals and legal entities) may be allowed to own up to a maximum of 49% of the Shares listed on the Qatar Exchange or any other regulated market.

Offering Statistics

Offer Price (per Share) QAR 1.01

Nominal Value (per Share) QAR 1.00

Number of Shares subject to the Offering 1,425,750,000

Expected capitalisation of the Company at the Offer Price QAR 1,901,000,000

Estimated net proceeds of the Offering receivable by the Company QAR 1,425,750,000

29


3.a.v Offer PriceThe Offer Shares are offered at an Offer Price of QAR 1.01 per Offer Share, representing a nominal value of QAR 1.00 per Offer Share plus the Offering and Listing Expenses of QAR 0.01 per Offer Share.

3.a.vi Offering and Categories of InvestorsThe Offer Shares are offered to the following categories of Investors:

• Individual and Corporate Investors (consisting of Individual Investors and Corporate Investors); and

• Strategic Investors (consisting of either natural persons or certain selected institutions such as Qatari Government, governmental institutions, public corporations and other entities)

3.a.vii Applications by Individual and Corporate Investors (and Strategic Investors); LimitsThe minimum application by an Individual and Corporate Investor is set at 500 Offer Shares (“Minimum Application”). No application by an Individual and Corporate Investor for less than 500 Offer Shares (the “Minimum Amount”) shall be accepted. Any application exceeding the Minimum Application shall be in multiples of 100 Offer Shares. The maximum application by an Individual and Corporate Investor is set at 475,250,000 Offer Shares (“Maximum Application”). Any Application received from an Individual and Corporate Investor exceeding the Maximum Application will be scaled back and treated as an Application for 475,250,000 Offer Shares (the “Maximum Amount”) only. Applications by Strategic Investors to subscribe for Offer Shares in the Offering will be handled by the Company and the Listing Advisor and Offering Manager separately to applications received from Individual and Corporate Investors.

The minimum application size and minimum amount of subscribed Shares, respectively, applicable to Strategic Investors are greater than those applicable to Individual and Corporate Investors.Moreover, the Articles restrict any person, whether legal or natural, from owning more than 25% of the Shares, directly or indirectly. Furthermore, non-Qatari shareholders (individuals and legal entities) may be allowed to own up to a maximum of 49% of the Shares listed on the Qatar Exchange or any other regulated market.

Multiple subscription applications in the name of the same Individual and Corporate Investor are prohibited. In the event of multiple applications being received in the name of the same Individual and Corporate Investor, only one application will be processed (at the absolute discretion of the relevant Receiving Bank or Lead Receiving Bank), and any other applications will be rejected in their entirety.

Notwithstanding the above, an application by (i) a parent or legal guardian on behalf of a minor; or (ii) a duly authorised person on behalf of a first degree relative (parent, child, spouse), does not prevent such person from also submitting an application in his or her own name under a separate Application Form.

3.a.viii Allocation StrategyThe number of shares allocated to any Individual and Corporate Investor may be reduced as per the number of received Subscription Applications.

Offer Shares will be allocated to Individual Investors as follows:

The allocation of Offer Shares to Individual Investors will be made in whole numbers of Shares only (no fractions). In excess of the Minimum Amount, and subject to the allocation of Offer Shares to Strategic

30


Investors as described herein, Offer Shares will be allocated to Individual Investors in three (3) tranches, as follows:

• In the “First Allocation Tranche”, subscriptions of between 500 and 2,500 Offer Shares (inclusive) will be allotted in full.

• In the “Second Allocation Tranche”, subscriptions above 2,500 Offer Shares will be allotted in multiples of 100 Offer Shares, provided and to the extent that the number of remaining Offer Shares available for subscription is sufficient to satisfy all such subscriptions in full and equally.

• In the event that, following the First Allocation Tranche and the Second Allocation Tranche, there remains available a number of Offer Shares not divisible by 100 (ignoring fractions) or multiples thereof to satisfy subscriptions in full and equally, then such remaining Offer Shares may be allocated to investors at the direction of the Company in its absolute discretion (the “Third Allocation Tranche”). It is intended that any such Offer Shares remaining be allocated equally (or as near as equally as is reasonably practicable) among subscribers who, following completion of the First Allocation Tranche and the Second Allocation Tranche, have not yet received the total number of Offer Shares for which they applied in the Offering.

If, following the Third Allocation Tranche, there remain Offer Shares not allocated to Individual Investors, those remaining Offer Shares shall be allocated to the Corporate Investors in accordance with the procedures and tranches applied above to Individual Investors.

It should be noted that 23% of the Shares will be allocated to the Strategic Investors. The Strategic Investors will be allocated up to a total of 437,230,000 Offer Shares. Any allocation to the Strategic Investors above such amount will be dependent on subscriptions received from Individual and Corporate Investors and will be made at the discretion of the Company.

In the event that at the end of the Subscription Period a number of Offer Shares remain available, the Company and the Listing Advisor and Offering Manager reserve the right to allocate such Offer Shares to investors at their joint discretion.

It is proposed that allotment of Offer Shares and refunds of excess application amounts, if any, will occur by 21 November 2019.

3.a.ix Listing and TradingThe Company will submit an application to the QFMA and the QE to list the Shares on the QE in accordance with the listing requirements of the QFMA and the procedural rules of the QE. Trading in the Shares will be effected on an electronic basis through the Company’s share registry maintained by the Qatar Central Securities Depository.

Prior to the Offering, there has been no market for the Shares. This Prospectus has been prepared in connection with the public offering of the Shares in Qatar. It is anticipated that Admission will occur during December 2019 after obtaining approval of the QFMA and QE.

3.a.x Application for Offer SharesDuring the Offer Period (as described below in paragraph 3.a.xii), Individual and Corporate Investors may apply for Offer Shares by completing the Application Form and complying with the instructions set out in the Application Form and this Prospectus. Any Application Form in connection with the Offer

31


Shares that is completed without fully complying with the requirements indicated in such Application Form may be rejected without any right to damages or any other recourse.

3.a.xi Multiple Subscription ApplicationsMultiple applications in the name of the same Individual and Corporate Investor are prohibited. In the event of multiple applications being received in the name of the same Individual and Corporate Investor, only one application will be processed and any other application will be rejected in its entirety. Notwithstanding the above, with respect to Individual Investors, an application by (i) a parent or legal guardian on behalf of a minor; or (ii) a person duly authorised on behalf of a first degree relative (parent, child, spouse), does not prevent such person from also submitting an application in his or her own name under a separate Application Form.

3.a.xii Offer PeriodThe Offering will be open for two weeks during the Offer Period which starts from the morning of Sunday 27 October 2019 (the “Opening Date”) and ends at the close of business (Doha time) on Thursday 7 November 2019 (the “Closing Date”) as per the schedule below in 3.a.xxvi (extendable for up to 2 weeks).

3.a.xiii Use of ProceedsThe net proceeds of the Offering will be used by the Company to pay debts of BFI. For more details see sub section headed “Use of Proceeds” in this Prospectus.

3.a.xiv TaxationFor discussion of certain Qatari tax consequences of purchasing and holding the Offer Shares, see Part 24 headed “Taxation” in this Prospectus.

3.a.xv DividendFor details of the Company’s dividend policy see Part 13 (Dividends and Distribution Policy) in this Prospectus.

3.a.xvi Transfer and Selling RestrictionsThe Shares will be subject to certain restrictions as described under the section headed “Transfer and Selling Restrictions” in Part 20 of this Prospectus.

3.a.xvii Founders Lock Up PeriodFounders Shares will be subject to a lock up period of two years from the date of final incorporation of the Company.

3.a.xviii Voting RightsFor the details of the voting rights attributable to the Shares please see Part 19(a) headed “Voting Rights” in this Prospectus.

3.a.xix Locations to obtain the ProspectusOffices of the Company, the Lead Receiving Bank throughout its branch network, selected Receiving Banks, and the website of the Company (www.baladna.com).

32


3.a.xx Business hours of the Receiving BanksOpening hours vary from branch to branch of each Receiving Bank and should be announced on the website of each Receiving Bank.

3.a.xxi National Investor NumberIt is not necessary for an applicant to have a National Investor Number (NIN) as part of the application process.

3.a.xxii The Receiving BanksThe only persons authorised to distribute Application Forms to Individual and Corporate Investors on behalf of the Founders are the Receiving Banks. Distribution and collection of all Application Forms and orders and collection of proceeds during the Offer Period shall be solely performed by and processed through the Receiving Banks. Notification of final allocation of Offer Shares and refunds of proceeds for unallocated Offer Shares (if any) shall be solely performed by and processed through the Lead Receiving Bank.

3.a.xxiii Trading AccountIt is not a requirement that an applicant has a trading account. However, if the applicant wishes to be able to trade his or her Shares after the Offering, he or she must have a trading account established with a Qatar Central Securities Depository (the “QCSD”) licensed broker to operate in the QE. An applicant who does not have a trading account will not be able to trade his or her Shares on the QE after the Listing and Offering. Guidance on opening a trading account may be obtained from the offices of the QE in Doha or from participating branches of the Receiving Banks throughout Qatar.

3.a.xxiv Listing and trading of SharesPrior to the Closing Date, the Company will submit an application to the QFMA and to the QE to list all of the Shares on the QE in accordance with the Listing requirements and rules of the QFMA and QE. Trading in the Shares will be effected on an electronic basis, using the trading system administered by QE. It is anticipated that Admission will occur during December 2019 after obtaining approval of the QFMA and QE.

After the Closing Date, and following commencement of trading in the Shares on the QE, all eligible Investors will be allowed to purchase shares on the secondary market of the QE in accordance with the applicable rules and law of the QE. The Shares may be freely traded and transferred in accordance with the rules and regulations of the QE and in compliance with applicable laws in Qatar.

3.a.xxv Allocation of Offer Shares and refund of any excess application amounts, if anyIndividual Investors who have duly completed and submitted their Application Forms and deposited the corresponding funds (Offer Price multiplied by the number of Offer Shares applied for) with the Receiving Banks during the Offer Period are expected to obtain information with regard to their allocations and refund of excess applications, if any, within two weeks of the Closing Date. Corporate Investors are expected to obtain information with regard to their allocations and refund of excess application, if any, within two (2) weeks of the Closing Date.

3.a.xxvi Indicative timetable of key eventsThe dates set out below are indicative only of the expected timing of certain key events relating to the Offering. The Founders and the Company reserve the right to change any dates or times and/or shorten or extend the time periods (in accordance with applicable rules and regulations).

33


Sunday 20 October 2019Intention to Float / Offering Invitation published in newspapers

Sunday 27 October 2019Subscription Period opens

Thursday 7 November 2019Subscription Period ends

Thursday 21 November 2019Allotment of Offer Shares

Thursday 21 November 2019Refund of excess application amounts, if any

Tuesday 26 November 2019Constitutive General Assembly

Tuesday 26 November 2019Issuance of the commercial registration certificate of the Company

Tuesday 26 November 2019Finalization of Transfer of the shares of Baladna Food Industries WLL to the Company

Wednesday 4 December 2019 Approval of QFMA on the Listing of Shares on Qatar Exchange

Wednesday 11 December 2019First day of trading of the Shares on the Qatar Exchange

(b) Use of Proceeds

Use of Net ProceedsIt is expected that the net proceeds of the Offering will be QAR 1,425,750,000 (equal to the total proceeds of the Offering (QAR 1,440,007,500) less the expected Offering and Listing Expenses collected from the investors which will amount to QAR 14,257,500). The Company will receive all of the net proceeds in relation to the Offering. The proceeds will be applied by the Company primarily to repay debts incurred by BFI during the recent growth of the business.

Offering and Listing ExpensesIn addition to the nominal value of QAR 1.00 per Offer Share, Offering and Listing Expenses in the amount of QAR 0.01 per Offer Share (i.e. total Offer Price of QAR 1.01 per Offer Share) will be payable by Investors. The Offering and Listing Expenses charged in connection with the Offering will be applied towards:

• the costs and fees associated with the solicitation, distribution and processing of the Offer Shares by, and the opening and maintaining of bank accounts with, the Receiving Banks in connection with the Offering;

• the settlements of the costs of professional advisors relating to the structuring and preparation of the Offering (including, without limitation, the Listing Advisor and Offering Manager, the Independent Auditors, and the legal advisors listed on the first page of this Prospectus);

• other costs associated with the Offering (including, but not limited to, public relations, Offering launch events, advertising, printing and publishing costs); and

• the regulatory costs and fees of listing the Shares on the QE.

To the extent that the Offering and Listing Expenses collected are insufficient to cover the costs listed above, the Company shall bear the remaining costs.

34


(c) Allocation under the OfferingExcept for the Special Share, rights attaching to the Shares will be uniform in all respects and they will form a single class for all purposes.

Allocations under the Offering will be finally determined by the Company and the Listing Advisor and Offering Manager in accordance with an allocation policy to be determined by the Company and Listing Advisor and Offering Manager.

Upon accepting any allocation, Investors will be contractually committed to acquire the number of Shares allocated to them at the Offer Price and, to the fullest extent permitted by law, will be deemed to have agreed not to exercise any rights to rescind or terminate, or otherwise withdraw from such commitment. A number of factors have been considered in determining the Offer Price and the basis of allocation, including the prevailing market conditions and the level and nature of demand for the Offer Shares. The Offer Price and the number of Offer Shares have been established at a level determined in accordance with these arrangements, taking into account indications of interest received from prospective investors.

35


(d) Directors, Secretary, Registered and Head Office, and Advisors

Directors

Mr. MohamadMoataz Mhd Ruslan AlKhayat, Chairman (Non-Executive)Mr. Mohammed Badr Al Sada, Vice Chairman (Non-Executive)Sh. Faleh Bin Nasser Bin Ahmad Al-Thani, Non-Executive DirectorMr. Hamad Bin Abdullah Bin Khalid Al-Attiya, Non-Executive DirectorMr. Ramez Mhd Ruslan AlKhayyat, Executive DirectorMr. Mazen Alsbeti, Non-Executive DirectorMr. Aidan Tynan, Independent Director (Non-Executive)

Senior Management

Dr. Kamel Abdallah, Chief Executive Officer (Baladna Q.P.S.C.)Mr. Malcolm Jordan, Chief Executive Officer (BFI)Mr. Saifullah Khan, Chief Financial Officer (BFI)Mr. Thomas White, Chief Operating Officer (BFI)

Company secretary Ms. Taghrid Hamieh

Registered and head office

Baladna FarmNorth RoadExit 44Umm Al-Hawaya AreaAl Khor & Al-ThakiraQatar

Listing Advisor and Offering Manager to the Company

QNB Capital LLCQNB Building, Level 3 Msheireb Doha, QatarPO Box 1000

Lead international legal advisors to the Company

Addleshaw Goddard (GCC) LLPTornado Tower 44th floorWest Bay, Doha, QatarPO Box 22194

Auditors to the Company

Ernst & Young (Qatar Branch)Burj Al-Gassar, 24th Floor, Doha, QatarP.O. Box 164

Joint international legal advisors to the Company

Eversheds Sutherland (International) LLPOffice 120112th floor, Qatar Financial Centre, West Bay, Doha, QatarPO Box 24148

Qatari legal advisors to the Company

Sharq Law FirmAlfardan Office Tower Level 17Al Funduq Street, West BayDoha, QatarPO Box 6997

36


4. INFORMATION ON THE COMPANY (BALADNA Q.P.S.C.)

(a) OverviewThe Company, upon incorporation, will acquire and hold all of the shares of BFI. It will be set up in connection with the Offering and currently has no contemplated business other than owning 100% of the shares in BFI, a premium branded dairy and beverage company with a dominant market share of the Qatari dairy market. A complete list of the objects of the Company is set out in its Articles and in Part 4(b) of this Prospectus.

The Company will be incorporated under the Companies Law as a Qatari public shareholding company. The Company’s legal and commercial name will be Baladna Q.P.S.C. and it will be incorporated for an initial period of 50 years.

On 11 April 2019, the Founders received pre-approval on the formation of the Company when the MOCI approved the application to incorporate. At the time of this Offering, the Company remains under incorporation. The incorporation will be completed following the meeting of the Constitutive General Assembly (the “CGA”) and issuance by the MOCI of the commercial registration of the Company. The Founders, as the direct owners of the current owner of BFI (which is Power International Holding) and as such the current indirect owners of BFI, have undertaken to transfer, or cause the transfer of, 100% of the shares of BFI to the Company upon the approval of the CGA and prior to the issuance of the Company’s commercial registration. The Company will acquire the Transfer Shares of BFI on terms that have been agreed between the Company and Power International Holding, the owner of BFI, in an Instrument of Transfer. The transaction will be disclosed to the Shareholders at the CGA and must be approved by the Shareholders in accordance with the Articles and the Companies Law.

All economic rights (including the right to dividends) attaching to the Transfer Shares will accrue to the account of the Company from the date of transfer of the Transfer Shares to the Company.

In order to reduce costs and redundancies, management and supervision of BFI will, to the greatest extent possible, be performed at the Company level. The Founders believe that this efficient structure will enable the Company to manage BFI on behalf of the Company’s Shareholders at minimal expense and with minimal disruption to BFI’s operations. By streamlining the relationship between BFI and the Company, overheads and others costs may be minimised.

The share capital of the Company following final incorporation will be QAR 1,901,000,000, divided into 1,901,000,000 Shares with a nominal value of QAR 1 each. All Shares will be fully paid up. The Founders shall subscribe for the Founders’ Shares via their in-kind contribution of the entire share capital of BFI.

The Founders of the Company are as set out in Section 15 of this Prospectus. MOCI, or any other entity designated by the Government, will hold a Special Share in the Company. The Founders and MOCI, along with the Strategic Investors, will constitute a strong shareholder base with an established reputation and history of commercial success in Qatar.

(b) Objectives and activitiesThe Company’s primary objective is to manage, supervise and set the business strategy of BFI.

The objects and activities of the Company under the Articles are:

37


1. to establish, own, hold, buy, sell, subscribe for, transfer and allot or redeem shares, loan notes, bonds and any interests in itself, any affiliate and / or any company or undertaking;

2. to invest any of the Company’s assets in funds, shares, bonds and financial instruments;

3. to participate in the management, co-ordination, operation and financing of the Company, any affiliate, and/or any company or person in which it holds shares or has an interest or commitment;

4. to provide support for affiliates;

5. to own patents, commercial businesses, franchises and any other rights, and the exploitation and lease thereof to or for affiliates or otherwise

6. to own movable assets, personal and real property necessary or conducive for the furtherance of its objects;

7. to enter into contracts, agreements and arrangements with any person which the Company deems beneficial to its business or to be in furtherance of its objects;

8. to establish, acquire, undertake, manage and carry on the whole or any part of the business, property and liabilities of any person carrying on any business, which may in the opinion of the Directors be capable of being conveniently carried on, or calculated directly or indirectly to enhance the value of or make profitable any of the Company’s or any affiliate’s property or rights, or any property suitable for the purposes of the Company or its affiliate;

9. to borrow, mortgage, guarantee, incur liability, raise and secure the payment of money in any way the Directors think fit, including, without limitation, by the issue of debentures and other securities (including derivatives), perpetual or otherwise, charged on all or any of the Company’s property (present and future) or any of its uncalled capital, and to purchase, redeem and pay off those securities;

10. to do all things that are in the opinion of the Directors incidental or conducive to the attainment of all or any of the Company’s objects, or the exercise of all or any of its powers. The Board may enter into financing agreements and transactions, and issue or acquire bonds, Islamic bonds, sukuks, securities (other than shares) and other financial instruments, and may sell or mortgage Company’s assets, or release creditors of the Company from their liabilities;

11. to carry on any other business or activities that are usual to, or may be carried on by, holding companies involved in a business similar to that of the Company and/or its affiliates;

12. to carry any business or investment activities that would, in the opinion of the Directors, achieve a benefit to the Company and its shareholders;

13. trading in food;

14. trading in dairy and dairy products;

15. producing milk, yoghurt, and their products; and

16. to do any other act as if a natural person.

38


In general, the Company shall have the right to carry out all business, actions and arrangements necessary to achieve its objectives and may carry out its business inside and outside the State of Qatar.

The Company may also pursue any other objects which the Company deems beneficial to its business, diversification or expansion from time to time, as reflected in the Articles.

(c) StrategyThe Company will attempt to maximise Shareholder value by capitalizing on BFI’s position as a leading brand owner and domestic producer of dairy and beverage products, and by enhancing customer recognition in respect of the high quality and variety of BFI’s product offerings. This would result in value for the Shareholders being maximised. Pursuing this vision supports Qatar’s National Food Security Program, which itself is a key component of Qatar National Vision 2030.

The Company intends to improve the overall value and return to Investors by:

1. monitoring implementation plans and results of BFI throughout discussions and reviews between the Board of the Company and the management of BFI; and

2. monitoring the cash management operations of BFI and providing input on optimal cash allocation and cash utilization.

Employees

The Company will operate primarily as a holding company for BFI and, accordingly, the majority of employees will remain employed directly by BFI.

Services Arrangement

Because the Company will be primarily a holding company without a significant number of employees or human resources of its own, the majority of its administrative functions are performed on its behalf by employees of BFI. These include certain administrative, legal, HR, IT, record-keeping, marketing, public relations, secretarial, reporting, compliance with the requirements of QFMA and securities exchange market and other day-to-day back office functions on behalf of the Company. As BFI will be a wholly-owned subsidiary of the Company, such services as necessary will be done free of charge.

Litigation

The Company is under establishment and has therefore not been involved in any governmental, legal or arbitration proceedings.

Independent Auditors

On 14 July 2019, the Founders appointed Ernst & Young (Qatar Branch) as the first independent auditors of the Company.

39


(d) Key initiativesThe Company intends to continue BFI’s transformation by significantly expanding and diversifying its product offering. Development of the infrastructure on the dairy farm has allowed for a sizeable yet natural increase in the number of cows, and the completed dairy processing plant will increase the production capacity and range of available products. The initiatives will also result in higher yield of milk per cow leading to direct improvement in costs and competitiveness. This will allow the Company to support BFI as the primary dairy producer in Qatar.

The Company has identified synergistic benefits that it envisages BFI will enjoy by moving from being a dairy company to a dairy and beverage company, through, among other things, juice production at BFI’s current facilities and further developing the existing packaging plant and water treatment facilities within BFI’s operations. The juice production, which began in the first half of 2019, as well as the dairy operations, will both benefit from the intra-group water supply. Similar self-sufficiency is intended to be achieved through the packaging plant, and the plant’s production may be sufficient to create an external sales business for plastic bottles. The Company will also develop BFI’s synergistic production and sale of beef and compost.

The Company has identified the following key initiatives in order to achieve its strategic vision:

1. Emphasise BFI’s status as a domestic producer and building Baladna brand

In light of the regional political situation and the significant reduction in imports from the four blockading countries (KSA, UAE, Bahrain and Egypt), the Company intends to position BFI as a leading producer of dairy and juice products to provide food security to the residents of Qatar. Promoting BFI’s status as a Qatari producer is likely to be positively perceived by customers whose sentiments and decision-making may have been influenced by the ongoing political situation.

2. Corporate Governance and Company oversight of BFI

Although certain day-to-day and operational decisions will be taken independently by the appropriate employees of BFI, the Board will have the ultimate decision making responsibility for, and oversight of, BFI. This will provide the necessary scrutiny and monitoring of the overall business and performance of BFI to ensure that the Company retains effective control over the entire business operations. The Company’s Articles provide for several governance committees, including: audit committee, nominations committee, and remuneration committee.

3. Establish progressive dividend rates

Through increased production capacity at BFI, controlled production costs and other initiatives at BFI, the Company expects to generate a level of profitability which would allow regular dividends to be distributed. In achieving this, the Company will adopt a disciplined financial strategy with sustainable growth at the forefront of its operations. The Company will not distribute dividends for the year 2019 but does plan to distribute dividends for the year 2020, which would be paid to shareholders in 2021.

40


(e) Competitive Strengths The Company believes that it is characterised by the following competitive strengths and that these will enable the Company to successfully implement its strategy and vision:

1. Access to capital and Founders’ support

As the parent of BFI, the Company has good access to capital and credit facilities which provide it with a stable base to pursue projects that are initially capital intensive. With the increased production capacity and conducive market conditions, BFI should have significant cash generation capabilities. It is also expected that the Company will benefit from the ongoing support of the Founders, who will be statutorily locked in as Shareholders for two years from the date of the Company’s incorporation.

2. Strong shareholder base

The Company will have a strong Shareholder base being made up of the Founders, including the Special Shareholder, Strategic Investors (with their established reputation and history) and the public shareholders. This could create, among other things, depth of knowledge, resourcing, funding, management and control. A strong shareholder base may also encourage additional investors to invest in the Company.

3. Advantageous regulatory framework

As the Government is determined for Qatar to achieve the targets set under the National Food Security Program, which include domestically producing 40% of the country’s food consumption to establish national food security by 2030, the Company (and BFI) may benefit from certain Government policies to be issued in order to assist in the country’s vision. Such policies are in line with policies in developed economies including Canada and the EU, where governments protect the agricultural sectors and promote local production. Government protection measures in Qatar may assist local producers to become more competitive with foreign producers.

(f) Process of the Company’s acquisition of BFIStructure charts of the Company and its subsidiaries, both before and after successful subscription of the Offer Shares in accordance with this Prospectus, are set on the following page.

The Founders, as indirect owners of BFI, have undertaken to transfer, or cause the transfer of, the entire issued and outstanding share capital of BFI by way of an instrument of transfer with the Company (as a company under incorporation), having effect following the incorporation of the Company and on completion of all required legal formalities. The share capital of the Company will be issued with effect from the date of registration of the Company at the commercial register of MOCI in Qatar and the issuance of the first commercial registry extract of the Company, which should occur around 26 November 2019. Simultaneously with, or immediately following, incorporation, the Instrument of Transfer shall be registered before the Ministry of Justice. Upon registration of the Instrument of Transfer, the Company will hold 100% of the issued share capital of BFI. Simultaneously, the indirect owners of BFI (who are also the Founders) will receive, as consideration for the transfer of the BFI shares, 25% of the Shares of the Company.

41


Corporate Structure (post-IPO)

Baladna Q.P.S.C.

Founders

25% 23% 52% 1 share

Baladna Food Industries W.L.L.

Baladna Foodstu�Trading W.L.L. (Qatar)

Baladna Business andTrading L.L.C. (Oman)

Power International Holding W.L.L.

Mr. MohamadMoatazMhd Ruslan AlKhayat

50%

Mr. Ramez MhdRuslan AlKhayyat

50%

Corporate Structure (pre-IPO)

Baladna Food Industries W.L.L.

Baladna Foodstu�Trading W.L.L. (Qatar)

Baladna Business andTrading L.L.C. (Oman)

SpecialShareholder

Individual andCorporate Investors

Strategic Investors

100%

100%

100%

100%

1%

1%

99%

99%99%

42


5. INFORMATION ON BALADNA FOOD INDUSTRIES W.L.L.

(a) Overview and HistoryBFI is a premium brand dairy and beverage company with a dominant market share of the Qatari dairy market.

It was incorporated in the State of Qatar on 16 March 2014 as a limited liability company under commercial registration number 64756 for an initial period of 10 years, which was later amended to become 25 years, renewable for additional periods. This period will be automatically renewed each year until its owner resolves to dissolve and liquidate it.

The official objects of BFI as listed in its commercial registration are set out in Appendix 1 of this Prospectus.

(b) Opportunity – June 2017In June 2017, an economic blockade was imposed on Qatar by the KSA, the UAE, Egypt, and Bahrain, presenting a threat to the security of Qatar’s food imports, especially as the KSA was the largest exporter of dairy and juice products into Qatar. In the early stages following the blockade, and in order to address Qatar’s pressing demands for milk and dairy products, BFI immediately embarked on a program of importing Holstein cows from Europe and the USA, followed by substantial investments in infrastructure development, plant and machinery. BFI imported approximately 4,000 Holstein cows in the 2017 financial year to capitalise on the gap in the fresh milk market which was created as a result of the blockade.

Although the State of Qatar took certain steps to minimise the blockade’s impact on its residents, the cost of imports from new markets remained higher. The situation provided BFI with an excellent opportunity to replace the fresh dairy, long-life dairy, and juice products that were historically imported from the blockading countries. This, in turn, accelerated and enhanced BFI and others contribution towards Qatar’s food security in line with Qatar’s 2022 National Food Security Program and 2030 Vision.

BFI intends to adopt the following strategies in order to realise its vision and to optimise Shareholder value:

1. assume responsibility for the overall management and performance of the Company, BFI as a whole and any other subsidiaries that may be incorporated in the future;

2. develop revenue growth and profitability;

3. assess and evaluate potential new products, new markets and future business opportunities;

4. evaluate the capital investment requirements of BFI;

5. enhance BFI’s relationships with existing customers by ensuring BFI meets customer requirements and maintains the highest standards of quality, health and safety;

6. exploit favourable market conditions to increase brand recognition through brand

43


building, targeted public relations initiatives, product differentiation, and category and shopper marketing initiatives; and

7. nurture a working environment that is conducive to professional development and the retention of skilled employees through targeted training and competitive compensation packages; and

8. maintain corporate governance policies to ensure the Company is managed optimally and for the benefit of its Shareholders.

By centralising the ownership structure at the Company level (and not BFI), the Founders intend for the key strategic oversight and responsibility for all major business decisions of BFI to rest with the Board of the Company.

(c) Current State As of September 2019, the herd size is approximately 18,000 cows, including approximately 12,000 cows currently being milked. The herd is housed in two farms spread over a total area of more than 2 million square meters.

BFI began producing dairy products derived from sheep and goats in 2014. However, since 2014, the business has grown and evolved, particularly from the middle of 2017, when BFI purchased thousands of cows and shut down the sheep and goat related business entirely. Throughout 2018, an additional 8,000 cows were imported from abroad. Since then, the BFI herd has grown organically. As at the date of this Prospectus, the cows onsite give birth to approximately 30-35 baby calves per day. In terms of milk production per cow, BFI has increased the milk yield per cow from approximately 15 litres per day in July 2017 to 27 litres per day in June 2018 to 32 litres per day in June 2019), representing a doubling of average daily output per cow in a span of two years.

BFI currently only produces dairy products from cows; it does not currently produce almond, soy, or other types of non-dairy ‘milk’ and currently has no plans to enter these markets. BFI’s dairy products include yoghurt, laban, ultra-high temperature long-life milk, cheese, labneh, fresh cream, desserts and ghee. In April 2019, BFI began selling non-dairy products, namely juices.

BFI owns and operates facilities in Qatar that are producing fresh cow’s milk and other dairy products for sale to the Qatari market under the ‘Baladna’ brand, in addition to other products (compost, plastics, beef ). BFI has expanded its operations significantly since 2017 by adding more cows to its herd, acquiring additional farmland, and building additional plants for converting raw milk into finished dairy products. In early 2019, BFI shifted some production to a newly-built facility (‘Plant 3’), which has a maximum daily capacity of 500-600,000 litres/day, approximately double the production capacity of the existing facilities (‘Plant 1’ and ‘Plant 2’), which have a combined maximum daily capacity of 200-300,000 litres/day. BFI’s production increased substantially from 2017 to 2019, and in April 2019, BFI exported its products for the first time, selling UHT long-life milk to the Afghanistan, and later Yemen, markets. Baladna Oman was incorporated in the first half of 2019 to provide on-the-ground distribution services supporting the export of BFI’s products into Oman. As of 31 August 2019, exports made up 0.80% of BFI’s total sales year to date.

Currently, the entire water needs of the production facilities are satisfied through onsite water treatment facilities that have been established and operated by BFI. Additionally, the plastic packaging requirements in respect of the majority of dairy and juice products are met through a more recently established packaging factory that will be fully operational in the second half of 2019. This self-sufficiency of key supplies should improve security to the supply chain and predictability of production output.

44


A map of BFI’s facilities, comprising two (2) cow grazing farms, six (6) milking areas, forty (40) barns, three (3) dairy and juice factories, a plastics factory, an animal feed processing facility, a water treatment facility, a compost processing facility, and other areas, is set out below:

Farm��

Farm��

��

��

��

�

�

�

��

�

��

�

��

Farm �

��

Farm �

��

�� Milk & Juice Factory�� Plastic Factory

Plastic Factory

Milk & Juice Factory��

45


The management structure of this location is illustrated in the chart below:

(d) Segment Description – Farms

FacilitiesAs of September 2019, the herd size is approximately 18,000 cows (mature and young stock), with approximately 12,000 cows being milked, spread over two separate farms on a total area of more than 2 million square meters in Al Khor, Qatar. In addition, the 40 barns ranging in area from 7,565m² to 15,130m² which house the milking cows are central to BFI’s recent expansion. Milking parlours with technologically advanced systems and processes should ensure that milking yields, cost efficiencies and production times are optimised. An onsite animal feed processing facility provides a source of locally mixed feed (using imported ingredients) for the herd and reduces BFI’s reliance on external sources of prepared feed. As of July 2019, three (3) reverse osmosis (RO) water treatment facilities capable of producing over 30,000 cubic meters per day from 35 boreholes, produces the entire water needs of the farms and production facilities. The plastic factory produces some of the plastics used to package BFI’s products before they are distributed to customers in Qatar and abroad. All of the products are packaged onsite. BFI recently entered into two (2) rental contracts in the Industrial Area of Doha which will assist in optimizing routing and distribution of products.

HSSE DirectorGeneral Manager

Maintenance Manager SlaughterhouseManager Compliance Manager

Animal Health Feed andCommodity Manager

Laboratory Manager Herds Manager

The management of the farms is led by the General Manager-Farms and a team of specialised managers who are all experts in their specific area of responsibility. The role of each manager is described below.

General Manager – FarmsThe general manager – farms is responsible for all farm operations and the achievement of BFI’s operational and financial objectives. This involves implementing and achieving short- and long-term business goals, including the achievement of all farm-related KPIs.

Laboratory ManagerThe laboratory manager is responsible for effectively and efficiently managing the quality control team by ensuring that all physical, chemical and microbiological tests are conducted consistently and accurately according to the sampling and testing regime.

46


Animal Health Compliance ManagerThe animal health compliance manager leads a team of vets who provide veterinary care for the entire herd, including delivery of newborns and medical treatment of sick animals as well as proper vaccinations and herd health management. The position also assists in developing, advancing, and implementing all veterinary protocols. He is also a member of the bio-security taskforce.

Herd ManagerThe herd manager is responsible for ensuring the daily operations at the farms are efficiently performed on a daily basis, including feeding, milking, animal comfort and health and waste management.

Slaughterhouse ManagerThe slaughterhouse manager is responsible for overseeing the operations of slaughterhouse including deboning, processing, quality control and packaging. The Slaughterhouse Manager reports to the Chief Commercial Officer.

Feed & Commodity ManagerThe feed manager is responsible for overseeing the feed program for the herd on both farms. Working closely with the farm managers as well as the consulting nutritionist, the feed manager implements rations to deliver the best possible average milk production.

Maintenance ManagerThe maintenance manager is responsible for ensuring that the facilities, layout and machinery operate to their maximum efficiency and output. This includes total preventative maintenance, managing breakdowns of mechanical, electrical and Includes people management and budgetary/cost reporting.

HSSE DirectorThe HSSE Director implements the corporate Health, Safety, Security and Environmental (HSSE) vision and culture for BFI. The position provides oversight, guidance, and support to all initiatives by effective implementation of the HSSE policy and procedures. He is also a member of the bio-security taskforce.

47


A map of the farms, barns, and nearby areas of the BFI premises, as set out below:

Farm��

Farm��

��

�

�

�

��

�

��

�

��

Farm �

��

Farm �

��

3

By the end of 2020, the total herd is expected to reach over 24,000 cows mainly through the natural herd growth cycle. This increased herd will benefit from six (6) rotary milking parlours that can milk up to 100 cows at a time per parlour. It is expected that up to 200 tons per day of animal feed will be fed to the herd, with much of the 200 tons mixed onsite. Furthermore, each generation of Holstein cows born onsite should be progressively more acclimated to the Qatari climate than the first wave of cows that were imported from overseas. Heifers (female baby cows) are kept and reared as replacement cows to produce milk for BFI. The heifers are bred at 12-15 months of age and give birth at 21-24 months of age when they begin their productive lives. On average, each cow will produce milk for 3-4 years before she is replaced with a younger and more productive replacement.

Cow NutritionBFI’s cows are fed with a total feed mix containing essential nutrients for dairy cows. These nutrients are needed for the daily intake of each type and age of cows (young stock, calves and milking cows) to support their immune system and health to produce the best quality milk. All BFI feed is sourced from certified producers from various countries, including the USA and other northern and southern hemisphere countries. With the supervision of a specialised nutritionist, feed recipes are formulated to ensure optimised productivity (milk yield and cost). BFI is achieving high standards for fresh dairy

48


farming in the region, with good levels of animal nutrition, comfort, and veterinary care. Apart from providing the cows with nutritious feed, BFI also aims for each cow on the farm to live contentedly.

Animal ComfortAnimal comfort is a key driver of cow productivity. This is ensured by the barns being equipped with proper air ventilation and cooling systems, misters, soakers and flushing systems to create a comfortable environment for the cows in order for them to produce more milk. The farm utilises advanced technologies to monitor animal comfort at all times.

By-productsThe BFI farms produce typical by-products of the dairy industry—namely beef and compost. The milking cows in the herd are impregnated via artificial insemination and they give birth to calves (males) or heifers (females) after a nine-month pregnancy. Newborns typically weigh 40kg and cows typically weigh 200kg at six months old. Heifers are kept as replacement cows to produce milk for BFI. Male calves are sold as beef.

Beef Male calves born on the farm are reared for approximately six (6) months and then slaughtered onsite and sold to third parties as beef. Aside from male calves, other cows that can no longer produce milk are also slaughtered onsite and sold to third parties.

Fertiliser Compost At BFI’s facilities, raw cow manure provides an organic source to be composted and converted into a product for sale. Raw cow manure is gathered from under screen separators and placed into windrows. It is then mixed with vegetable rejects. Once windrowed, it is turned using a compost turner which introduces air and water to enhance the composting and pasteurizing process. Regular turning results in compost free of pathogens and weed seeds. Once mature the compost is bagged in specialty plastic bags using a fully automated system. Raw manure can be converted into a stable product (free of disease, pathogens and weed seeds) to be used to enrich the poor infertile soils typically found in Qatar.

Compost and organic fertilisers are versatile products that can be used on all types of planted areas. In Qatar, the main uses are: landscaping and beautification, in particular in developed areas; palm trees located throughout the country; and outdoor and indoor farming.

Product Offering and CustomersThe main product of the farms is raw milk. The raw milk is transferred for processing (details of milk related products can be found below under “Segment Description – Dairy – Process”). By-products of the dairy production business (namely beef and compost) are expected to represent approximately 3-5% of total revenue of BFI.

(e) Segment Description – Dairy

Facilities In addition to the farm which contains the herd, feed and related infrastructure, BFI has a dairy production facility.

49


ProcessA diagram visualizing the milk production process at BFI is set out below:

Standardization Pasteurization

Homogenization Adding Vitamins

Milk Testing Clari�er

Rotary Milking Parlor Raw Milk Tanker2.1.

4.3.

6.5.

8.7.

5

� ��

50


Cow MilkingAt BFI, cows are milked three times a day at eight-hour intervals. BFI’s milking rotaries, which are state-of-the art utilizing advanced milking technologies, can milk up to a 100 cows simultaneously.

Milk Storage and TransportationMilk is cooled immediately upon milking and stored in chilled milk tankers at 3 degrees Celsius or below, after which it is sent to BFI’s onsite silos in the same milk tankers. BFI’s facilities have more than 15 milk storage silos, distributed between its farms and dairy plants which are approximately 1 kilometre away from the farms, with the capacity to store a total of approximately 950,000 litres of raw milk. Milk is stored for no more than 24 hours. Chilled silos with automated timed agitation ensures that the entire volume remains cold and the milk composition remains uniform.

Laboratory and Testing Samples of milk are tested for all necessary organoleptic, chemical and microbial quality standards before entering the factory processing area. Upon approval, milk is further processed and pumped into raw milk storage silos.

PasteurizationEvery particle of milk is pasteurized. Pasteurization is the process of heating milk or juice concentrate to kill pathogenic bacteria to make food safe to drink. The pasteurization process is set out below:

Pasteurizer Block Diagram

Hot Water

Steam Steam

Chiller

Heating Heat Exchanger Cooling

MILK IN

PASTEURIZED MILK OUT

Feed Pump (Peristaltic)

6

51


Homogenization and StandardizationPasteurized milk is homogenized to ensure fat globules become smaller and are uniformly distributed throughout the milk. Standardization ensures that milk has specified composition as per the regulatory requirements.

SeparationFat is removed in case of low-fat milk and skimmed milk by using a centrifugal separator to bring down the fat content. Fat is kept above 3% for full fat milk, below 2% for low fat milk and below 0.5% for skimmed milk.

Milk FillingFollowing separation, the milk is ready for packaging and store delivery. BFI manufactures some of its bottles/packages at its facility and purchases bottles/packages from other manufacturers. Regardless of origin of bottles and packages, the entire filling process is carried out onsite at BFI’s facilities in Qatar.

The milk passes to the automatic packaging machines that fill and seal the milk into food grade plastic bottles. A sticker with a tracking code provides information to track packaging, equipment and processing used during the entire food chain.

The whole process—from milking of cows to milk processing and delivery to market—is typically done on the same day. This allows fresh milk to reach consumers on a daily basis.

Long-Life Milk ProductionThe paragraphs above describe the production of fresh milk, which has a shelf life of six days. In order to produce long-life milk (shelf life of 3 months), the process is similar except for a couple of steps. Raw milk is heated to a higher temperature—this is known as ultra-high-temperature processing (“UHT”). The raw milk is then packaged in special aseptic packaging. BFI’s long-life dairy products are usually made in a single day, similar to fresh dairy milk. As of June 2019, BFI was producing an average of 100,000 litres of UHT milk per day.

52


Set Yoghurt

Laban (Drink)

��

��

��

��

��

��

7

8

��

��

�

� �

�

��

��

��

��

��

��

� ��

� ��

��

��

� ��

��

� ��

Other dairy productsThe diagrams below provide a visual representation of the production of other BFI dairy products:

53


Product Offering and CustomersThe market in Qatar for long-life milk products is similar to the fresh milk market. BFI reached dominance in the fresh milk segment but did not begin selling long-life products until 2019.

The customer base for dairy products in Qatar is comprised of two main categories: retail and HORECA. The retail market is very competitive with three major groups accounting for approximately 50% of the sales: Al Meera, Carrefour, Lulu. Other sizeable groups include SPAR, Monoprix, Mega Mart etc. The majority of retail outlets in Qatar (approximately 2,000) are small traditional grocery outlets with a limited range of products and typically one or two cashiers.

The HORECA segment comprises approximately 30% of the total market, with caterers accounting for the largest share due to the high number of labour camps in Qatar which is extremely price sensitive with 25 kg powder milk and 10 kg yogurt the dominant dairy product formats.

In July 2019 BFI launched a second brand called Awafi. Awafi will be positioned as BFI’s value brand to provide price-sensitive consumers living in Qatar with lower priced fresh dairy products and to maintain Baladna’s premium brand positioning. The Awafi brand portfolio will include 1L UHT milk (made from 100% cow’s milk) in both full fat and low fat formats. BFI may consider manufacturing under private label depending on market needs. The first Awafi-branded products (namely UHT milk) hit shelves in July 2019 and BFI expects other Awafi- products (such as yoghurt and laban) to be launched before the end of the year 2019.

54


(f) Segment Description – Juice

FacilitiesBFI’s juice products are produced within the existing facilities used to produce dairy products to utilize synergies in the production and distribution processes. Within these facilities, certain lines, pipes and tanks are reserved for the juice production.

ProcessFruit juice is produced using concentrate which is mixed onsite with water. Specialist companies create concentrate in short-life and long-life varieties, with long-life concentrate going through a UHT process similar to long-life milk. After the concentrate is approved by the BFI quality control team, it is then pasteurized to ensure its one-month shelf life. After heat treatment (pasteurization) the juice is sent to the filling machine where it is filled into PET bottles, labelled and date coded. From the filling line the product is transferred directly to a cold store to preserve its freshness. BFI launched its short-life juice products in April 2019.

A diagram of the juice production process is set out below:

Storage

Pre-thawing

Truck frozen Drum Emptying Bu�er Blending Tanks

Pasteurizer

Filling Machines

Drums fromfrozen storage

Juice Production from Concentrate

9

55


Product Offering and CustomersFor juice products is similar to the market for dairy products; both beverages can reach a broad cross-section of customers in both retail and HORECA channels.

In terms of shelf-life, juice comprises two main categories: chilled and long-life.

Chilled juice is normally sold in PET bottles and has a shelf life of up to 30 days. Distribution is carried out through the same sales trucks and to the same outlets as milk. Long-life juice is made up of three categories, depending on the juice concentration: juice, nectars, and juice drink. (See Part 6(b) of this Prospectus for a description of each category.) The average shelf life for long-life juice is nine (9) months, and it is normally sold in carton packs of 1 litre or 200ml.

Juice demand is seasonal, with higher demand in the hotter months of the year. Most chilled brands have up to 14 flavours, normally in single serve (e.g. 180ml or 330ml) or family size formats (1.5L). The best-selling flavours (orange, apple, mango, strawberry, mixed cocktail) typically account for 60% of the overall volume of juice products sold. As of September 2019, BFI is producing and selling 6 flavours of chilled juice: apple, orange, pineapple, pomegranate, tropical and mixed fruit. BFI sells these flavours in a 1.5L family-size format and a single serve portion pack (180ml). The daily production capacity in the 1.5L format is up to 160,000L per day divided over 3 flavours. BFI are planning to launch an additional 5 flavours in the last quarter of 2019: lemon mint, ginger lemon, kiwi lime, 100% pomegranate, and green apple. BFI is also planning to sell juices in additional serving sizes.

(g) Segment Description – Other segments (packaging)

FacilitiesIn early 2019 BFI developed a plastic packaging factory to support its in-house plastic packing requirements and potentially sell packaging materials to external parties. The resultant import substitution of bottles and caps has resulted in lower costs of packaging and more consistent stock availability. The plant has been scoped to have sufficient spare capacity to allow for both external sales in Qatar and exports. For example, BFI has studied potential export markets for packages, beginning with Kuwait. As of September 2019, BFI is in contact with potential customers in Kuwait.

ProcessThe packaging plant mainly supplies the packaging requirements for the dairy and juice units, ensuring that there is self-sufficiency built into the supply chain for those operations. It is also expected that external sales will be made to satisfy the market’s demand for high-density polyethylene, polypropylene and PET bottle requirements once the internal needs are met. The plant is equipped with a capacity of 1 million packages per day. Possibilities of growth and expanded products internally and externally are identified as key drivers going forward.

Much of the packaging materials of BFI (60% as at the date of this Prospectus) are manufactured through a packaging facility constructed on site. The remaining 40% is filled by packaging materials purchased externally, which generally are in raw state such as preforms, labels, sleeves, and other materials are brought on site and used in adding to the packaging of all BFI dairy products.

56


A diagram of the plastic production process at BFI is set out below:

Bottles Bagger Finished Goods

Labeling Machine Filling & Caps Applying

Preform Heat Stretch and Blow

PET Resin PET Preform

Injection Molding Process

2.1.

4.3.

6.5.

8.7.

10

57


Product Offering and Customers

BFI intends to be selling excess packaging material (not used internally) to third parties as an additional revenue stream. Additionally, the security of supply sources for key components, like packaging, will minimize the impact of many external risks relating to overall production and reduce dependency on third party supply chains.

(h) StrategyThe BFI board has approved a strategy based on a clear mission and vision direction.

• Mission: to ensure consumers’ wellness through providing fresh, natural, nutritious and tasty food and beverage offerings while maintaining rigorous food safety and bio-security protocols.

• Vision: to build BFI brands recognised by consumers as the preferred natural and fresh food and beverage provider in its target markets.

BFI’s competitive advantage is built on its synergistic integration of three main strengths: (i) livestock dairy farms and manufacturing factories built using state-of-the-art technologies; (ii) flexible best practices that minimise business interruption risks; and (iii) support for new product development and timely launching of new products, and deep knowledge of the Qatar consumer market and understanding of emerging food and beverage trends. BFI’s integrated food supply chain, in which BFI produces raw milk, processes it as its own manufacturing facilities, and distributes using its own trucks and routes, ensures that BFI controls all the critical elements to execute its strategy.

The Company has identified objectives to achieve over an upcoming 4-year plan. These objectives would be achieved as follows:

1. Expand into additional product categories and products, in particular products with higher margins and value-additionBFI intends to continue expanding into additional beverage and product categories, including the recently added juice line. Examples of contemplated new products include long-life juices and a comprehensive range of cheeses, some of which are already in production. For more information, refer to the paragraph (i) below in this Part 5 (Information on BFI).

2. Expand existing markets and develop new markets for productsAs at the date of this Prospectus, BFI has a dominant position (with more than 90% market share) in the Qatar retail segment for its main product - fresh cow’s milk. The development of other products naturally followed in 2018 and will continue in 2019 and beyond.

Notwithstanding the saturation of the retail market with Baladna fresh milk, BFI is planning to expand to trade in new markets in Qatar for its key product and others. BFI’s share of the non-retail market (the HORECA market, which comprises hotels, restaurants, and catering) has steadily increased from 2017 to the date of this Prospectus, and the Company believes that BFI will continue to increase its HORECA revenues. Throughout early 2019, BFI has been expanding its distribution to HORECA clients (including, among others, fast-food chains and hospitals) and expects to cater to up to 3,000 individual outlets by the end of 2019.

BFI began exporting in April 2019 to Afghanistan and Yemen. Since then it has also exported to Oman.

58


As at the date of this Prospectus, BFI has identified Libya, Kuwait, Jordan, Mauritania, and Iraq as future target export markets, and is already in the process of executing its entry strategy in those markets.

3. Capitalize on the expansion and development of infrastructureIn early 2019, BFI completed an extensive infrastructure project which allowed for an increase in the production capacity of its operations. Central to the project is a new plant (‘Plant 3’) for processing raw milk from BFI’s milking cow herd and then converting it into finished dairy products. (BFI can also use Plant 3 to produce juice products.)

The housing of the cows in 40 barns ranging in area from 7565m² to 15,130m² is also central to the expansion plans. The barns are built to ensure maximum animal comfort during the harsh summer climates. Milking parlours with the most technologically advanced systems and processes will ensure that milking yields, cost efficiencies and production times are optimised. Successfully completing this infrastructure on time is a priority for BFI and it will be assisted by the fact that the main contractor, Urbacon, is a subsidiary of Power International Holding W.L.L. (“Power International”). Please see Part 17 of this Prospectus for further details in relation to related party relationships with Power International.

As at the date of this Prospectus, BFI estimates that its facilities (Plants 1, 2, and 3), operating at maximum output, can process 700-900,000 litres of beverages per day, which is enough to cover the entire daily demand for dairy products in the State of Qatar. BFI does not operate at full capacity and does not intend to (its highest daily production volume for dairy in 2019 was 350,000 litres; for juices, 20,000 litres), but its actual average daily output, as at April 2019, was approximately 3 times greater than its average daily output in April 2018.

BFI’s infrastructure is capable of processing multiple products (fresh milk, juice and UHT long-life milk) at the same time. This will enable BFI to adjust output of each product in order to meet the demand for each.

Additional sales infrastructure was put in place in the first half of 2019 with the acquisition of 120 additional sales trucks and vehicles, the deployment of technical infrastructure to support route optimisations, merchandising, and product sales optimisation.

BFI’s sale revenues increased from an average of QAR 18 million per month in 2018 to an average of QAR 25 million per month in the first quarter of 2019 and QAR 36 million per month in the second quarter of 2019.

The recent and significant expansion in BFI’s output capacity has led to a substantial increase in revenue, and BFI intends to continue this trend and ultimately maximize profitability.

4. Establish and maintain reliable suppliesSecuring its own supply of four (4) essential components in the production cycle is a strategic aim for BFI. Quality raw milk supply is a major and critical component in the production of dairy products. BFI owns and controls the largest livestock dairy farms in Qatar. The internal water consumption of BFI will be sourced from the newly established water treatment facility. Finally, the majority of BFI’s plastic packaging requirements are intended to be satisfied through its packaging factory. Once these supply sources are fully established, BFI should have a reliable flow to satisfy its own demands on production along with the potential to sell any surplus to external markets. The animal feed requirements, which are mainly imported, are stored in silos and onsite which have a storage capacity for six months. This will allow for hedging against temporary price increases. BFI has built an animal feed processing facility and uses nutritional recipes/feed mixes to ensure high milk yields with the required fat and nutritional content.

59


5. Exploit favourable market conditions and customer sentiment The current trade blockade that has restricted the importation of food and beverages products from the UAE, KSA, Egypt and Bahrain, has presented a clear opportunity for BFI. When accounting for the lost supplies of dairy products from the blockading countries, a substantial quantity of such products have had to be sourced from other markets. Overall, the total dairy market is estimated to grow at a CAGR of 3.6% between 2016 and 2022. Although a lifting of the blockade would pose certain challenges, BFI has secured brand recognition and equity for its products and has locked shelf space in key accounts. Management expects that customer loyalty to fresh, locally produced food products will remain strong, which in turn will benefit BFI and the Company.

6. Develop positive relationships with the Government and relevant authorities The Government is actively encouraging investments in domestic agriculture and food production as it promotes the National Food Security Program with the aim of making Qatar as self-sufficient as possible. There is also a possibility that the Government will introduce certain measures that will enhance consumer health and wellness, which may have the effect of assisting domestic dairy producers in protecting and supporting local production. As it is clear that supporting domestic food producers is a strategic goal for the Government, BFI will seek to develop close and positive working relationships with the appropriate authorities. BFI has established direct collaborative relationships with government authorities, local universities and innovation centres, and the NGO community. Those relationships ensure that BFI has goodwill in the community and is considered in policy subject matter on food and beverages when new regulations are being discussed.

7. Improve OperationsBFI aims to continue improving efficiencies across its existing core activities.

One fundamental metric—productivity per cow—has improved by approximately 20% over a recent 12-month period, with the average milking cow producing approximately 27 litres per day in June 2018 and producing approximately 32 litres per day in June 2019. It has improved by approximately 100% over a 24-month period from July 2017 (15 litres/day) to July 2019 (32 litres/day). BFI intends to continue improving this metric by focusing on animal health and comfort.

In addition to output per cow, BFI will attempt to increase output by continuing to grow its herd organically through animal reproductivity initiatives. Innovations in process can also allow BFI to benefit from economies of scale. Manufacturing production optimisation, including full introduction of preventive maintenance programs, production scheduling systems, inventory management systems, and full supply chain solutions will continue to drive costs per unit down. Finally, sales channel optimization can assist successful penetration of all sales channels, including retail, out-of-home, and direct distribution.

8. Ensuring Full Biosecurity and Food Health Safety PracticesBFI has put systems in place to ensure that full biosecurity and food health & safety is implemented. Those systems include establishing health & safety, quality, and compliance departments with trained and experienced staff, using established protocols and procedures. Preventive measures (vaccinations), ongoing quality product testing and periodic external checks are conducted to ensure compliance with these protocols. This has been evidence by BFI receiving HCCAP and ISO certifications, as well as passing the strict food audit standards of international customers.

60


(i) Health & Safety and Quality Assurance

The farm is achieving high standards for fresh dairy farming in the region, with a high level of animal nutrition, comfort, and veterinary care. The barns are equipped with proper air ventilation and cooling systems, misters, soakers and flushing systems. This creates a comfortable environment for the cows to allow them to produce more milk.

BFI aims to improve the safety and well-being of its employees and the environment in which it operates. BFI enforces safe operations, which results in less downtime and more reliable and productive operations in a safe and secure environment.

All BFI facilities are equipped with the latest fire-fighting equipment, including sprinklers, fire hoses, fire extinguishers, centralized smoke alarms and twenty-four-hour CCTV monitoring. A dedicated health and safety Director manages a health and safety team. The health and safety director is also a member of the bio-security taskforce. In addition, BFI is currently working towards achieving ISO 45001 (Occupational Health and Safety) and ISO 14001 (Environmental) management system certification.

(j) Product Development

Product development plays an important role in safeguarding the future success and sustainability of a business. Between 2017 and 2019, BFI significantly increased its product offering, and BFI expects to continue to do so in 2019 and beyond.

At BFI, product development is a core function which is staffed with a team of experts with previous experience in leading regional and multinational food and beverage companies. BFI benchmarks its products against local and international competitors in order to strive for continuous improvement. In addition, BFI is building an in-depth knowledge of the food culture in Qatar and will partner with local universities and key ingredient suppliers to further enhance its capabilities.

As the dairy market continues to evolve, BFI will focus its product development and creating new product categories centred on wellness, health and nutrition.

(k) Employees

BFI employs an experienced, highly qualified and technically competent staff.

As of September 2019, BFI has approximately 1,400 employees, broadly split into administration (450 employees) and labour duties (950 employees).

The Senior Management of BFI, as at the date of this Prospectus, is as follows:

61


(l) Distribution

Since its incorporation, BFI’s products have been distributed through ABAP, Qatar’s leading distribution company. However, with effect from January 2019, BFI retained ABAP’s salesforce that serviced BFI previously. This change in distribution control, in line with business practices in the industry, should improve sales, market coverage, and overall efficiencies. ABAP will no longer act as sole distributor but will provide key account advisory services.

The decision to assume full control over the sales distribution team was taken to ensure that ABAP sales and merchandising teams were solely focused on distribution and in-store merchandising of BFI’s product range, to ensure that BFI achieved maximum market coverage for both the retail and the HORECA channels and to achieve higher overall sales. ABAP will continue to advise BFI on key account relationships until the expiry of the distribution agreement in 2022.

BFI is also currently developing a mobile application to enable retailers and HORECA customers to directly order BFI products for next day delivery. Additionally, BFI is utilizing an eCommerce platform which will allow for optimizing sales planning, merchandizing and routes.

The total market universe is approximately 5000 retail and HORECA outlets. The retail channel which comprises approx. 2,000 outlets in Qatar is heavily dependent on larger food retailers, with the top 100 outlets accounting for approximately 70% of BFI retail sales. The top three groups, Almeera, Lulu and Carrefour alone are responsible for 50% of BFI retail sales. BFI has allocated 115 routes to service the retail channel in Qatar with all large food retail outlets receiving a daily delivery, smaller outlets receive products on a day after day basis. BFI has also invested in a large number of fridges to ensure it has enough shelf space to display its products in retail outlets.

The HORECA channel comprises over 3,000 individual outlets. BFI is servicing this sector with a dedicated team of sales professions with experience in the food service industry. As a starting point, 25 routes will be used to deliver to this channel.

In June 2019, BFI moved its retail distribution centre from Al Khor to Doha in order to reduce the distance between its distribution centre and most destinations in Qatar. This decision is intended to improve efficiencies, increase call rates, and lower costs in the distribution chain.

In the first half of 2019, Baladna Oman, a limited liability company that is 99% owned by BFI and 1% by Baladna Foodstuff Trading (a fully owned subsidiary of BFI), was incorporated to perform distribution services to support the sale of BFI’s products in Oman.

Name Title

Kamel Abdallah CEO of Baladna Q.P.S.C.

Malcolm Jordan CEO of BFI

Saifullah Khan CFO

Thomas White COO

62


BFI’s distribution strategy centres on:

• route call plans to ensure daily and/or day-after-day deliveries for all retailers;• servicing its top 100 outlets at store opening time, with double deliveries for major

customers during weekends and during the month of Ramadan;• assigning dedicated merchandizers to the top 100 outlets that account for 70% of retail

channel sales;• mid-haul trucks with tailgates to speed up deliveries for large customers;• a distribution centre located in Doha to ensure earliest possible daily deliveries

(m) Litigation

BFI is not, and has not been since incorporation, involved in any material governmental, legal or arbitration proceedings, and BFI is not aware of any such proceedings pending or threatened by or against BFI during the 12 months preceding the date of this Prospectus which may have, or have had in the recent past, a significant effect on the financial position or profitability of BFI.

(n) Market Share

The pie charts below show BFI’s market share, as of each of June 2019 and August 2019, respectively, in Qatar across four key product categories.

Baladna

Rawa Other

Ghadeer

1%8% 91%

Baladna Dandy

Rawa Other Ghadeer

1%

5%

5%

40%

7%

4%5%

5%

36%

49%

Baladna Dandy Ghadeer

Rawa Fage Other

43%

33%

12%

4%

FRESH MILK FRESH LABAN FRESH YOGHURT UHT MILK

Baladna KDD Rainbow

Lulu Lactel Other

10%

28%

13%

Baladna

Rawa Other

Ghadeer

0.4%8.4% 91.3%

Baladna Dandy

Rawa Other Ghadeer

0.3%

4.9%

5.5%

37%

6.6%

4.8%4.1%

6.9%

35.1%

52.2%

Baladna Dandy Ghadeer

Rawa Fage Other

42.5%

82.6%

3.0%2.1%

FRESH MILK FRESH LABAN FRESH YOGHURT UHT MILK

Baladna KDD Rainbow

Awa� Arla Other

2.9%

5.0%

4.2%

August 2019

June 2019

63


Based on sales figures obtained from different points of sale, as of August 2019, BFI’s estimated market share for its main product, fresh dairy milk, is approximately 90% in the State of Qatar. As of August 2019, other dairy products include laban (drink) (approximately 50%) and yoghurt (approximately 40%), and UHT milk (approximately 80%, up from 33% in June 2019).

With respect to juice products, as of May 2019, BFI estimates that Baladna-branded chilled juice products claim approximately 30% of the Qatar market, based on sales figures obtained from different points of sale for the month of May 2019.

(o) Business Development (and opportunities)

BFI will continue to explore opportunities for growth in the Qatar market. This may take the form of new consumers for BFI’s existing products (e.g. HORECA customers) or the development of entirely new products (e.g. a significant range of natural cheeses).

Within the Qatar market, BFI has a vertical and horizontal expansion strategy anchored at targeting different consumer tastes, purchasing efforts and usage occasions. As discussed above, in the first half of 2019, BFI rolled out new products and will continue to do so in the second half of 2019. Introduction of the lower-cost Awafi brand demonstrates BFI’s two-tier brand strategy. Finally, BFI is exploring new channels like HORECA or smaller retailers, where there is a big cluster of outlets reaching a significant consumer group.

Outside of Qatar, in the first half of 2019 BFI began exporting to Afghanistan and Yemen as its first external markets. This is part of BFI’s long-term strategy of extending its foot print beyond Qatar in a range of long-life products (both dairy and non-dairy).

(p) Outlook

On the basis of developments in the fiscal period ended June 30, 2019, the Founders and Senior Management currently expect higher revenue growth to be in the range of 150-170% for the fiscal year ending 31 December 2019 compared to the fiscal year ended 31 December 2018. Expected EBITDA margin (calculated by dividing the EBITDA by revenue) for the fiscal year ending 31 December 2019 to be in the range of 40-50%, including Government support. Government support for the full year 2019 equals QAR 248.7 million.

In the medium term (i.e. FY 2020 and 2021), the Company currently targets annual comparable revenue growth of 20-30% and 3-10% for FY 2020 and 2021, respectively, for BFI, driven primarily by the planned launch of new products lines, segments and expansions into new markets. EBITDA margins are expected to be in the range of 30-45%, including Government support.

In preparing the targets described above, the Company generally assumed that there will be no significant changes in existing political, legal, fiscal, market or economic conditions, or in applicable legislation, regulations or rules (including, but not limited to, accounting policies, accounting treatments and tax rules and interpretative guidance) and that foreign exchange rates will not change materially, in each case except as described in the Prospectus; and that the Company will not become party to any litigation or administrative proceeding or proceedings that might have a material impact on BFI of which the Founders and Senior Management are not currently aware.

64


In preparing the medium-term targets, the Company has assumed that, among other things, BFI will be able to:

• maintain or grow its market share in its market segments;• maintain its technology leadership and adapt to industry and technological changes,

including the introduction of new products;• continue to expand into adjacent markets; and • implement, or continue to implement, its strategies

Certain statements in this section, including, in particular, the targets described above, constitute forward-looking statements. These forward-looking statements are not guarantees of future financial performance, and BFI’s and/or the Company’s actual results could differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including but not limited to those described under the ‘Forward-looking Statements’ section of this Prospectus and in Part 2 (Risk Factors) of this Prospectus. Investors are urged not to place undue reliance on any of the statements set forth above.

The Company believes that BFI is characterised by the following competitive strengths and that these will enable the Company to successfully implement its strategy and vision:

1. First mover advantageIn mid-2017, BFI was proactive and invested heavily in order to establish itself as the dominant local producer of fresh dairy products—and fresh milk, in particular—in Qatar. As at the date of this Prospectus, BFI has no comparable competitors in this market segment. BFI has quickly gained specialised, institutional knowledge in the fresh dairy industry. With the extensive size of its herd and the first mover advantage BFI has in the market it may be reasonably difficult for new players to enter this market.

2. ‘Fresh’The milk produced by BFI is completely fresh, with no powdered ingredients or reconstitution processes being used during production. As society becomes more health conscious, the availability of fresh products from BFI should appeal to consumers looking for healthier, better tasting and more nutritious dairy and juice products. BFI is the only major dairy company in Qatar that has a local herd of cows and produces dairy products made from fresh milk. This has served and should continue to serve as a competitive strength in the local market.

3. ‘Made in Qatar’ and the ‘Baladna’ brandAll of BFI’s products are produced in Qatar, which provides BFI with local advantage be it from a public perception, regulatory requirements or efficiency (freshest product to market).

4. Economies of scaleIn light of the significant infrastructure development undertaken in respect of dairy operations and plastic production, BFI expects to benefit from increased economies of scale as production volumes grow, owing to lower costs and greater efficiencies in the process. BFI has the largest livestock dairy farm in Qatar, which supports a continuous self-sufficiency and supply of milk. Multi-site operations within BFI’s premises allow for business continuity, especially in the unlikely event that an issue arises with cows or equipment at one part of the BFI facilities.

65


5. Supply of feed, water and packagingBFI will benefit from its own supply of three essential components in the production cycle. A water treatment facility has been established to meet the internal consumption needs of the dairy farms’ operations. A storage facility with capacity to store animal feed requirements for six months has been installed, which will allow temporary hedging against price volatility in imported feed. Much of the packaging materials of BFI are manufactured through a packaging facility constructed on site. The remaining is filled by packaging materials purchased externally, which are brought on site and used to package all BFI beverage products.

6. Technical expertise and operational experienceBFI has recruited and will continue to recruit highly qualified individuals to Senior Management, as well as other technical and operational roles. The experience developed by these individuals working at large scale operations in different countries will enable BFI to benefit from industry best practices. This will allow BFI to identify appropriate opportunities, mitigate business risks and successfully implement projects.

7. Financial strength and Company’s supportWith the increased production capacity and conducive market conditions, BFI should have a strong financial base and expected cash generation capabilities. BFI will also benefit from the ongoing support of the Company, which will, in its role as the strategic manager and supervisor of BFI, provide the necessary management oversight and financial support to facilitate BFI’s operations.

8. Favourable supply-demand dynamics and demographic projectionsCompared to the rest of the region, Qatar has a higher per capita drinkable dairy consumption of approximately 50.3 litres per annum in 2017 (for more information, see references to IMES research study in the Information on the Dairy and Juice Industry in this Prospectus). There is no reason to suggest that this level of consumption should decrease. The average per capita of milk consumptions in western countries is higher, at approximately 75 litres per annum indicating a potential opportunity for milk consumption. The total dairy market is estimated to grow going forward based on recent trends as it has grown between 2014 to 2018 (CAGR of 2.8%) and the population of Qatar is expected to increase at a CAGR of approximately 1.2% between 2018 and 2022. These forecast demands and demographic projections indicate that there is a market to consume an increased supply of dairy products.

(q) Recent DevelopmentsOther than the investments that were already planned and budgeted, no material investments have been made by BFI since the publication of unaudited interim condensed consolidated financial statements for the fiscal period ended 30 June 2019. Except as otherwise disclosed in Part 11 of this Prospectus, there are no new events related to BFI which are material in evaluating its financial position.

(r) Independent AuditorsBy virtue of BFI’s shareholder’s resolution dated 14 July 2019, Ernst & Young (Qatar Branch) was appointed as the independent auditor of BFI for the financial year ending 31 December 2019.

66


6. INFORMATION ON THE DAIRY INDUSTRY AND THE JUICE INDUSTRY

BFI has operated in the dairy industry since 2014 (initially with goat and sheep and in 2017 with only cows), and in 2019 began operating in the juice industry.

(a) The Dairy Industry

The dairy market consists primarily of fresh milk and long-life dairy products. Long-life dairy products are further split between long-life milk and other dairy products (cheese, evaporated milk, long-life cream, etc.).

The Regional (GCC) Dairy Market – by numbersThe dairy market in Qatar is comprised of five main product categories, namely fresh milk, long life UHT milk, laban (drink), cheese and yoghurt.

The single biggest category in respect of consumption in Qatar at about 130,000 litres per day is long life plain and flavoured UHT milk, followed by fresh milk at 120,000 litres, and laban and yoghurt at about a combined 130,000 litres per day. Until BFI’s recent launch of its long life UHT milk range, all UHT in Qatar was 100% imported. Recent health and safety regulations passed in Qatar may indirectly support local producers such as BFI in capturing a significant portion of this market segment. These health and safety regulations include: a regulation issued on 30 May 2019 imposing standards on long-life milk and cheese products (no use of powder, mandatory addition of vitamins A and D, maximum validity period of 3 months for UHT milk and 45 days for cheese products, no imports from countries affected by foot-and-mouth disease outbreaks); a March 2019 circular imposing requirements on all long-life milk products; an October 2018 resolution imposing caps on retailer rebates/commissions; and regulations issued in early 2018 imposing a variety of health and sanitary measures on milk production.

Potential for Per Capita Consumption Growth of Dairy ProductsThe income levels in terms of gross domestic product (“GDP”) per capita of all GCC countries compares very favourably to other developed economies. However, while per capita consumption of dairy products in the GCC is growing, it remains relatively low compared to other developed markets with similar income levels. On a global level, from 2014-2017, milk consumption has increased at a compounded annual growth rate (CAGR) of 2.0%, outpacing the global population CAGR of 1.1% over the same period. Table 4 below compares the per capita consumption of drinkable dairy products in litres, and the per capita consumption of cheese in kilograms in the GCC with other developed economies.

67


Source: IMES Consulting, Canadian Dairy Information Centre, International Monetary Fund, World Economic Outlook Database, October 2018

*For GCC countries, drinkable dairy includes liquid milk and fermented milk drinks. However, for developed economies, drinkable dairy includes only liquid milk since consumption of fermented milk drinks is not significant in these countries.

From the above table, it is believed that there is room for growth in per capita (and total) consumption of dairy products in Qatar. As countries with higher per capita incomes generally can (and do) consume more dairy products per capita, and as Qatar has higher per capita income than these countries, a growing awareness of and appreciation for fresh dairy products could lead to increased consumption.

Table 2 below shows the total consumption of dairy products in the GCC. Consumption of dairy products in the GCC is estimated at 9.1 billion litres in liquid milk equivalent (“LME”) terms in 2018 and it has grown at an average rate of 2.5% per annum between 2014 and 2018.

Country GDP per capita, current prices Drinkable Dairy* Cheese

US Dollar Litres Kg

Developed Economies

Canada 45,100 66.4 13.7

United States 59,800 65.2 17.0

France 39,900 46.0 26.4

United Kingdom 39,800 101.6 11.8

Australia 55,700 100.4 13.5

New Zealand 41,600 103.2 9.6

GCC Countries

Saudi Arabia 21,100 45.2 5.7

United Arab Emirates 37,700 41.1 3.4

Kuwait 27,400 34.6 7.3

Oman 17,100 29.5 3.7

Qatar 61,000 50.3 4.0

Bahrain 24,300 41.2 4.2

68


Unit 2014 2015 2016 2017 2018 CAGR2014-2018

GCC Milk Consumption Billion Litres 8.265 8.745 9.035 9.000 9.115 2.5%

Growth Rate Percent - 5.8% 3.3% -0.4% 1.3% -

GCC Population Million 51.4 52.4 53.9 55.4 56.7 2.5%

Tons (000s) 2014 2015 2016 2017 2018 CAGR2014-2018

Liquid Milk 1,467 1,571 1,647 1,640 1,624 2.6%

Fresh Milk* 826 896 955 945 949 3.5%

Recombined Milk** 641 675 692 695 675 1.3%

Fermented Milk Drinks 682 715 741 718 717 1.3%

Yoghurt 357 381 405 415 428 4.6%

Labneh 34 36 38 40 42 5.4%

Cream 62 67 69 69 69 2.7%

Dairy Desserts 36 38 39 40 42 3.9%

Evaporated Milk 166 172 172 163 167 0.2%

Condensed Milk 17 20 22 21 24 9.0%

Retail Milk Powder 76 79 78 77 77 0.3%

Butter Ghee 13.1 13.9 14.1 14.1 13.7 1.1%

Table 2: GCC Dairy Consumption in LME terms, 2014-2018

Source: IMES Consulting, IMF World Economic Outlook Database

Table 2 above demonstrates that dairy consumption in the GCC has largely mirrored population growth. If population growth continues in Qatar the dairy market in Qatar could continue to grow without a per capita increase in dairy consumption by residents.

Structure of Dairy Consumption and TrendsMilk is an extremely versatile product and may be used in a variety of ways. As a food, it is typically consumed in liquid form. It can also be used as follows: transformed into a fermented milk drink (such as laban); converted into yoghurt or a dairy dessert; concentrated in the form of evaporated milk, sweetened condensed milk or milk powder; used as a cooking ingredient in the form of cream, butter or butter ghee; or consumed as labneh or cheese. Table 3 shows the consumption of dairy products in terms of volume in the GCC from 2014 to 2018:

Table 3: Consumption of Dairy Products in the GCC, Thousand Tons, 2014-2018

69


US$ Million 2014 2015 2016 2017 2018 CAGR2014-2018

Liquid Milk 2,012 2,171 2,273 2,158 2,212 2.4%

Fresh Milk 1,133 1,238 1,317 1,243 1,293 3.4%

Recombined Milk 879 933 956 915 919 1.1%

Fermented Milk Drinks 794 831 863 836 876 2.5%

Yoghurt 595 637 683 706 760 6.3%

Labneh 230 237 241 229 251 2.2%

Cream 391 422 442 428 437 2.8%

Dairy Desserts 133 142 156 161 173 6.8%

Evaporated Milk 531 550 573 502 544 0.6%

Condensed Milk 77 88 103 99 118 11.3%

Retail Milk Powder 607 636 564 557 586 -0.9%

Butter Ghee 133 144 143 141 137 0.7%

Tons (000s) 2014 2015 2016 2017 2018 CAGR2014-2018

Butter 22 24 25 26 27 5.3%

Processed Cheese 160 168 172 172 175 2.3%

White Cheese 70 73 75 74 75 1.7%

Natural Cheese 30 33 36 37 39 6.8%

Total 3,192.1 3,390.9 3,533.1 3,506.1 3,519.7 2.5%

Growth Rate (%) 6.2% 4.2% -0.8% 0.4%

Source: IMES Consulting

*Fresh milk is defined as pasteurised raw cow’s milk**Recombined milk is milk produced by recombination of imported milk powder with water on a commercial scaleBoth fresh milk and recombined milk can be packed in either long-life or short-life packaging

As evidenced from Table 3 above, consumption of products such as yoghurt, labneh, dairy desserts, sweetened condensed milk, butter and natural cheese (some of which will be produced by BFI) is growing at a healthy pace, whereas consumption of evaporated milk and milk powder (which BFI does not produce) has stagnated.

Dairy Market ValueTable 4 shows the consumption of dairy products in terms of value in the GCC from 2014 to 2018. The total GCC dairy market in 2018 amounted to over US$ 8.83 billion, valued at retail selling prices. Market value has grown at an average of about 2.8% per annum since 2014.

Table 4: Market Value of Dairy Products in the GCC, US$ Million, 2014-2018

Table 1: Per Capita Consumption of Selected Dairy Products in 2017 and GDP Per Capita, Current Prices, GCC and Developed Economies

70


US$ Million 2014 2015 2016 2017 2018 CAGR2014-2018

Butter 226 238 257 279 300 7.3%

Processed Cheese 1,341 1,360 1,392 1,378 1,490 2.7%

White Cheese 471 494 511 497 459 -0.6%

Natural Cheese 359 400 439 469 487 7.9%

Total 7,900 8,350 8,640 8,440 8,830 2.8%

Growth Rate (%) 5.7% 3.5% -2.3% 4.6%

Country 2014 2015 2016 2017 2018 CAGR2014-2018

Saudi Arabia 4,740 4,950 5,030 4,650 4,750 0.1%

UAE 1,340 1,460 1,550 1,650 1,780 7.4%

Kuwait 750 780 820 850 900 4.7%

Oman 430 470 500 520 560 6.8%

Qatar 450 490 530 550 600 7.5%

Bahrain 190 200 210 220 240 6.0%

GCC 7,900 8,350 8,640 8,440 8,830 2.8%


Liquid milk and processed cheese are the most valuable sectors of the dairy market in the GCC, accounting for 25% and 17% of total spend respectively. Value growth in 2018 was largely driven by higher prices on account of the implementation of 5% valued added tax (“VAT”) in Saudi Arabia and the UAE since January 1, 2018.

Dairy Consumption by CountryTable 5 shows the market value of dairy products consumed by country from 2014 to 2018. As can be seen from the table, the largest market in the region, Saudi Arabia, is currently experiencing negligible growth in consumption as compared to 2014. Net growth in the second largest market in the GCC, the United Arab Emirates, is also low when the effect of 5% VAT is discounted from the 2018 values. In contrast, Qatar, Oman, Bahrain and Kuwait are showing moderate to high levels of growth in consumption.

Table 5: Market Value of Dairy Products by Country, US$ Million, 2014-2018


Table 6 shows the per capita spend on dairy products by market. Qatar and Kuwait lead other GCC markets in terms of annual per capita spend on dairy. Oman is significantly less lucrative in terms of annual per capita spend on dairy products.

71


Country 2014 2015 2016 2017 2018 CAGR2014-2018

Saudi Arabia 154 160 158 143 143 -1.8%

UAE 144 152 157 163 171 4.3%

Kuwait 185 184 191 194 200 2.0%

Oman 116 124 125 127 132 3.1%

Qatar 202 201 204 200 218 1.9%

Bahrain 147 148 149 154 159 2.0%

GCC 154 159 160 152 156 0.3%

Country 2014 2015 2016 2017 2018 CAGR2014-2018

Saudi Arabia 5,075 5,332 5,455 5,263 5,192 0.6%

UAE 1,282 1,386 1,448 1,533 1,605 5.8%

Kuwait 751 788 820 855 890 4.3%

Oman 540 575 602 625 649 4.7%

Qatar 411 448 487 492 538 7.0%

Bahrain 206 216 223 232 241 4.0%

GCC 8,265 8,745 9,035 9,000 9,115 2.5%

Table 6: Per Capita Spend on Dairy Products by Market, US Dollars, 2014 – 2018


Table 7 shows the consumption of dairy products by country in terms of LME. As can be observed from the table, Saudi Arabia has declined for a second consecutive year since 2016. All other markets have maintained a growth in overall dairy consumption as measured in terms of LME. Qatar is the fastest growing market, followed by the UAE.

Table 7: Consumption of Dairy Products by Country in terms of LME, Million Litres, 2014 – 2018


Table 8 shows the per capita consumption of dairy products by country in the GCC in terms of LME per head of population. Kuwait and Qatar lead the GCC markets in terms of per capita dairy consumption in terms of LME litres. All other GCC markets have very similar consumption patterns. Overall per capita dairy consumption in the GCC stands at 161 litres in the year 2018.

72


Table 8: Per Capita Consumption of Dairy Products by Country, LME Litres/Head, 2014 - 2018


Operational Aspects of Dairy Farming in the GCCDairy is an indigenous industry in many countries. However, some countries are unable to fully satisfy the demand for local dairy products due to various factors. The GCC region, with its hot desert climate, is one of a number of regions which is significantly dependent on imports of dairy products.

Until the 1960s, GCC dairy markets were dependent on imported milk powder. Dairy products were prepared at home using imported milk powder. ‘Recombining dairies’ were established in the region during the 1960s. Initially they focused on liquid milk, but later expanded into yoghurt and other products. Fresh dairies began operations from the mid-1970s onwards. The establishment of large-scale commercial dairy farming in the region provided consumers with the option of fresh products made with locally produced raw milk. Since the 1980s, there has been a steady movement in all product categories towards fresh products. Such products are preferred due to taste, quality and competitive pricing.

Dairy farming in the GCC is characterised by a small number of large-scale producers. This is in contrast with dairy processing companies outside the GCC region that typically source their milk from a large number of independent farmers.

In the GCC, integrated dairy processing companies maintain their own dairy herds and only purchase a small proportion of their total milk requirement. This gives the large dairy processing companies direct control over the quality, composition and timing of their milk supply.

GCC dairy farms do not have fields of grass pastures on which cows graze. The farms consist of milking parlours and animal housing, with adjacent sand-yards. Animal feed is brought to the cows. High ambient temperatures require a temperature-controlled environment during part of the year to ensure cow comfort and avoid stress to the cows. In areas of high humidity, key aspects of animal husbandry (particularly breeding), are more difficult and this results in a negative impact on milk yield.

The cost of establishing and operating farms and keeping healthy animals of good genetics in comfortable conditions on a high-quality diet results in a relatively high cost structure when compared to pasture farming practiced in traditional dairy farming countries. Locally produced raw milk is therefore principally used for fresh products, which require a continuous milk supply throughout the year in order to match market demand. The milk must be produced relatively close to market—in terms of distance and time—and be of consistently high quality and appropriate composition.

Country 2014 2015 2016 2017 2018 CAGR2014-2018

Saudi Arabia 165 172 172 162 156 -1.3%

UAE 138 145 147 151 154 2.8%

Kuwait 186 186 191 194 197 1.4%

Oman 145 152 150 151 152 1.2%

Qatar 185 184 186 180 194 1.1%

Bahrain 157 158 157 160 163 1.0%

GCC 161 167 168 162 161 0.0%

73


Milk production in the GCC is heavily dependent on imported animal feed. There is some local production of animal fodder, but this is constrained by the usage by such animals of scarce local water resources. Alternative sources of fodder are available, including importation of dehydrated alfalfa silage.

Margins throughout the GCC dairy industry have tightened in recent years due to increasing competition amongst producers, higher costs, and challenges in increasing consumer prices. As a result, only the most efficient producers experience relatively high margins. Rationalisation of the industry has resulted in the emergence of a smaller number of highly efficient dairy food companies or alliances.

Countries which produce milk at competitive costs, regardless of when it is needed, are the most active traders in dairy commodity markets. These countries tend to have low input, low output, grass-based dairy farming systems. New Zealand, the European Union, the United States of America, Canada and Australia are some of the largest exporters of dairy products in the world.

International trade in dairy products tends to focus on longer life dairy commodity products such as milk powder, butter and hard cheeses. These products can be produced in bulk at relatively low cost, particularly during periods of milk surpluses, and can be stored for long periods.

Government Support of the Dairy IndustryMany governments throughout the world (including the US, EU, Canada, and other leading dairy producers) have legal measures in place to protect their dairy industries from foreign competition. Table 9 below quantifies the value of government subsidies in leading global dairy markets, as well as the largest dairy market in the GCC. These protections typically take the form of tariffs on imports or the use of non-tariff barriers, such as sanitary, packaging, transportation, labelling, or minimum/maximum ingredient regulations. Tariffs and non-tariff barriers increase the cost of exporting products into a protected market, which sometimes results in the foreign product being substantially (and prohibitively) more expensive than locally produced products. The GCC governments have, to some extent, imposed measures that have the effect of supporting local producers at the expense of foreign producers (see paragraph(a) (Regional (GCC) Dairy Market – by numbers) above in this Section 6 (Information on the Dairy Industry and the Juice Industry).

Table 9: Direct Subsidy of Milk in Selected Countries, 2018


In 2018, the monthly weighted average price of raw milk in the EU-28 was US$ 38.22/100 kg of raw milk. At times the subsidy paid to the EU/American farmers is the only factor ensuring profitable operations. This enables farmers from these regions to produce surplus milk, which is then exported to other countries in the world.

Country Subsidy (US$/ 100 Kg Milk)

United States 3.5

France 4.6

Germany 3.0

Saudi Arabia 4.0

74


Opportunity in the Qatar Dairy MarketIn the early stages following the announcement of the blockade in June 2017, and in order to address Qatar’s pressing demands for milk and dairy products, BFI immediately embarked on a program of importing Holstein cows from Europe and the USA and, thereafter, invested substantially in infrastructure development, plant and machinery. BFI imported approximately 4,000 Holstein cows in the 2017 financial year to fill the gap of fresh milk market demand which was created as a result of the blockade.

Key Domestic and Regional CompetitionTraditionally, absent the blockade, BFI would face the following competition in the regional and local dairy market:

Domestic competitionIn Qatar, the dairy market is led by four brands: Baladna, Dandy Company Limited (“Dandy”), Arab Qatari Company for Dairy Production (“Ghadeer”) and Rawa. Unlike Baladna, the other three brands produce dairy products from a combination of fresh milk and milk powder.

Dandy Dandy was founded in 1973 and is privately owned.

Dandy’s dairy products are produced using imported milk powder. According to sales figures obtained from a leading retail store in Qatar, Dandy is currently the market leader in laban, yoghurt, ice cream and fresh juice. Dandy has a strong retail and HORECA presence and usually sells at a price discount to Baladna yoghurt and laban.

Ghadeer Ghadeer was established in Qatar in 1986 as a joint venture between (1) the State of Qatar, (2) the Arab Company For Livestock Development, and (3) the Gulf Investment Corporation. This joint venture was the first fully integrated agriculture and livestock project.

Following the commencement of the blockade in June 2017, Mohammed Hamad Al Mana Group purchased the non-Qatari share in Ghadeer and the company is now a 100% nationally owned Qatari company.

The Ghadeer farm has a capacity to host a relatively small herd of cows. Products produced include fresh milk, laban and yoghurts. Both fresh milk and powdered milk are used to produce laban and yoghurt products. Ghadeer also has a range of chilled juices produced from concentrate.

Rawa This Qatari brand is involved in the production and sale of milk, flavoured milk, and juice. The Rawa brand is owned by the Gulf Food Production Company and its primary focus is on a range of dairy desserts.

Regional competition Almarai Company (“Almarai”) Founded in 1977, Almarai is the world’s largest vertically integrated dairy company with over 200,000 cows and the region’s largest food and beverage manufacturing and distribution company. Headquartered in Riyadh, Almarai is ranked as the number one fast-moving consumer goods (“FMCG”) brand in the MENA region and is a market leader in all of its categories across the GCC.

75


Almarai has a diversified product portfolio comprising juices, bakery products, poultry and infant formula under the brand names “Almarai”, “L’Usine”, “7 Days”, “Alyoum” and “Nuralac”. In 2009, Almarai and Pepsi formed a joint venture named International Dairy and Juice Limited (known as “IDJ”), which acquired dairy and juice companies in Egypt and Jordan. In 2018, Almarai reported profit of SAR 2.007 billion on revenues of SAR 13.7 billion.

NadaThe Nada brand (owned by Al Othman Agriculture Production and Processing Company) is a family owned business, founded in 1982 by Sheikh Mohammed Bin Abdullah Al Othman in the Eastern Province of Saudi Arabia. The herd size of Nada is over 20,000 cows, however, it has a substantially smaller market share of the Saudi dairy market compared to Almarai. Nada’s product range consists of fresh dairy, fresh juice, long life milk and juice products covering Saudi Arabia, Bahrain, UAE and Kuwait, and Oman.

The National Agricultural Development Company (“Nadec”)Nadec was founded in 1981 and is 20% owned by the Saudi Government, with the rest publicly traded on the Saudi Stock Exchange. Its product range consists of fresh dairy, UHT milk cheeses, fresh juice and long life juice covering Saudi Arabia, Bahrain, UAE and Kuwait. It had a turnover of approximately SAR 2.3 billion and a herd size of approximately 75,000 cows in 2016.

Saudia Dairy & Foodstuff Company (“Sadafco”) Sadafco is the market leader for long life UHT milk (made from powder), tomato paste and ice cream in Saudi Arabia. Sadafco’s sales exceeded SAR 1.5 billion in the financial year ending March 2018. The company has an extensive distribution network in the GCC.

Dairy Industry TrendsBFI’s management believes that there are several important trends in the dairy industry, as set out in the paragraphs below.

Dairy products with higher protein and calcium levels (Greek style yoghurt, drinking yoghurts, etc.), together with all natural dairy products that consumers consider to be tastier, are enjoying high growth rates.

There is a global trend towards consuming more whole-fat milk than any other category of traditional cow milk, as part of a shift to more natural and wholesome ingredients. In the US market, cow’s milk represents the largest segment of the milk industry, and whole-fat milk was the only option to see unit consumption growth year-on-year (according to a Nielsen research article titled ‘A Showdown in the US Milk Aisle Continued at the End of July’ published on 3 August 2018). BFI is on trend here as all of its cheeses are made from 100% whole-fat fresh. The use of clean label products, which do not contain additives, artificial preservatives, or chemicals, is also growing in popularity. In contrast to its local competitors in Qatar who are using powder-based recipes, all BFI products are made solely from 100% fresh milk. The consumer trend of preferring natural and fresh products is therefore an advantage to BFI, and consumer trust in the Baladna brand should increase as public awareness amongst Qatari consumers on the benefits of fresh versus powdered milk grows.

Current dairy consumers are demanding a higher level of transparency from dairy and food companies. Consumers want access to a variety of information—from sourcing policies to product nutritional information and to onsite visits. BFI considers the Baladna visitor centre located at Baladna Park as

76


an essential element of BFI’s communication strategy. For consumers, the ability to watch cows being milked in a clean and comfortable environment is an advantage.

(b) The Juice Industry

Most dairy companies expand into the juice industry, and BFI has done the same in the first half of 2019. As at the date of this Prospectus, BFI is producing the following juice products: apple, pineapple, orange, mixed berry, pomegranate, fruit mix and tropical mix, which hit shelves in Qatar in April 2019. It is likely that BFI will continue to extend its juice range throughout 2019 by adding additional flavours and pack sizes.

The juice market comprises three main categories: freshly squeezed, fresh chilled, and long-life (UHT). Freshly squeezed juice is typically associated with juice and smoothie shops and normally has a shelf life of three days.

Within the fresh chilled category there are two (2) main formats:

• Juice, made from 100% natural fruit content with no additional ingredients; and • Nectar, made from fruit juice that is too thick to drink (mango, apricot, pear, etc.). To make it

drinkable it must first be diluted with water at a percentage not exceeding 75%.

Fresh chilled juices are normally made from juice concentrate with a shelf life of 30 days and need to be continuously refrigerated.

Long-life juice are juices which are UHT-treated to provide extended shelf life, normally ranging between six months to nine months. Long-life juices do not need to be refrigerated.

In addition to the currently-produced fresh chilled juices, BFI intends to enter the long-life (UHT) juice market.

Local competitionBFI launched its chilled juice line in April 2019. The management of BFI believes that it is too early to benchmark the market share of BFI. However, from early sales figures obtained from different points of sale for the month of May 2019, the management estimates the market share of Baladna-branded chilled juice products to be approximately 30%, exceeded only by Dandy at approximately 37%, and followed by Ghadeer and Rawa. (It should be noted that this information has not been scientifically collected and might not be an entirely accurate reflection of the current market.)

The long-life (UHT) juice market is very competitive, with a wide range of multinational brands available in Qatar.

Juice, Nectar & Drink Consumption - Globally and in the GCCGlobal consumption of commercially packaged Juice, Nectar & Drink (JND) is estimated at 195 billion litres in 2018, and it has grown at an average rate of 1.6% per annum between 2014 and 2018.

77


Table 1 below summarises global packaged JND consumption in billions of litres from 2014 to 2018:

Table 2: GCC Juice, Nectar & Drink Consumption, Million Litres, 2014-2018

Source: IMES Consulting, IMF World Economic Outlook Database

From Table 1 and Table 2, it is clear that per capita consumption of packaged JND in the GCC is significantly higher than the global average. Consumption of JND in the region is mainly driven by the following six factors:

1. The hot climatic conditions2. Higher disposable income of consumers in the region3. Widespread availability of JND products4. High quality product offerings5. Affordable price points6. Consumer’s need for convenience

Unit 2014 2015 2016 2017 2018 CAGR2014-2018

GCC JND Consumption Million Litres 2,347 2,472 2,527 2,499 2,450 1.1%

Growth Rate Percent - 5.3% 2.2% -1.1% -2.0%

GCC Population Million 51.4 52.4 53.9 55.4 56.7 2.5%

GCC JND Per Capita Consumption Litres 45.7 47.2 46.9 45.1 43.2 -1.4%

Unit 2014 2015 2016 2017 2018 CAGR2014-2018

GCC JND Consumption Billion Litres 183 186 189 192 195 1.6%

World Population Million 7,298 7,383 7,467 7,550 7,633 1.1%

Global Per Capita Consumption Litres 25.1 25.2 25.3 25.4 25.5 0.5%

Table 1: Global Packaged Juice, Nectar & Drink Consumption, Billion Litres, 2014-2018

Table 2 below shows the total consumption of commercially packaged JND in the GCC. Consumption of packaged JND in the GCC is estimated at 2.45 billion litres in 2018 and it has grown at an average rate of 1.1% per annum between 2014 and 2018. A pronounced slowdown in consumption growth has been witnessed since 2016 as consumers have been impacted by deteriorating economic conditions following the sharp decline in international crude oil prices since mid-2014. Compared to staples such as milk or yoghurt, consumption of juices, nectars & drinks is more sensitive to economic conditions as these products are not considered as necessities by consumers. Therefore, under the current difficult economic conditions, juices, nectars & drinks have experienced a sharp decline in consumption.

78


In contrast, in countries with high fruit production coupled with low-income levels, consumption of costlier packaged JND is low, as consumers often consume higher quantities of fruits and/or higher volumes of unpackaged juices sold by street vendors. These practices are not prevalent in the GCC as sale of unpackaged juices is highly regulated due to health and hygiene reasons.

Juice, Nectar & Drink Market Value in the GCCTable 3 below shows the size of the JND market in terms of value in the GCC from 2014 to 2018. The total GCC JND market in 2018 amounted to just under US$ 3.56 billion, valued at retail selling prices. Market value has grown at an average of about 2.4% per annum since 2014.

Market value here is calculated as the total estimated spend by consumers on juices, nectars & drinks. This value is therefore inclusive of any value added tax (VAT) paid by consumers. It is also inclusive of distributor and retailer margins. Industry revenues, which is the total revenue earned by all producers in the market, will be typically 15% to 20% lower than consumer spend.

Table 3: Size of Juice, Nectar & Drink Market in the GCC, US$ Million, 2014-2018


Juice, Nectar & Drink Consumption Trends in the GCCTable 4 shows the Consumption of Juices, Nectars & Drinks in terms of Volume in the GCC from 2014 to 2018:

Table 4: Consumption of JND in the GCC, Million Litres, 2014-2018


As can be seen from the preceding table, the average growth in consumption of drinks has exceeded the average growth in consumption of juices & nectars during the period 2014 to 2018. This is mainly driven by the current economic scenario. It has been observed that premium products tend to perform well in periods of economic prosperity, whereas low-cost value-for-money products tend to perform better in periods of economic stress.

US$ Million 2014 2015 2016 2017 2018 CAGR2014-2018

JND Market Value 3,236 3,417 3,509 3,504 3,559 2.4%

Growth Rate (%) 5.6% 2.7% -0.1% 1.6%

Million Litres 2014 2015 2016 2017 2018 CAGR2014-2018

Juice & Nectar 1,051 1,121 1,132 1,105 1,082 0.7%

Growth Rate (%) 6.7% 1.0% -2.4% -2.1%

Drink 1,296 1,351 1,395 1,394 1,368 1.4%

Growth Rate (%) 4.2% 3.3% -0.1% -1.9%

Total JND 2,347 2,472 2,527 2,499 2,450 1.1%

79


Value growth in 2018, in the face of declining volume, is largely driven by higher prices on account of the implementation of 5% VAT in Saudi Arabia and the UAE since January 1, 2018.

Table 5 below shows the segmentation of Juices, Nectars & Drinks by shelf-life:

Table 5: Consumption of Juice, Nectar & Drink in the GCC by Shelf-life, Million Litres, 2014-18


Long-life JND dominates consumption by volume in the GCC. It accounts for more than 71% of total JND consumption. Longer shelf-life products are preferred by consumers due to their obvious advantages of ambient storage, widespread availability, typically lower average prices and longer shelf-life. In countries such as Saudi Arabia, which has a vast geographical area, or Oman, which has a sparsely distributed population, ambient products are more dominant as they are more economical to distribute.

Juice, Nectar & Drink Consumption by CountryTable 6 below shows the market value of JND consumed by country from 2014 to 2018. As can be seen from the table, the largest market in the region, Saudi Arabia, is currently seeing almost negligible growth in consumption as compared to 2014. In contrast, the other GCC markets are showing moderate to high levels of growth in consumption.

Table 6: Market Value of Juice, Nectar & Drink by Country, US$ Million, 2014-2018


Country 2014 2015 2016 2017 2018 CAGR2014-2018

Saudi Arabia 1,902 2,001 2,020 1,947 1,916 0.2%

UAE 705 736 771 800 857 5.0%

Kuwait 255 274 286 300 314 5.3%

Oman 201 216 227 237 244 5.0%

Qatar 104 117 128 138 145 8.7%

Bahrain 69 74 78 82 84 5.0%

GCC 3,236 3,418 3,510 3,504 3,560 2.4%

US$ Million 2014 2015 2016 2017 2018 CAGR2014-2018

Long-life JND 1,651 1,739 1,791 1,785 1,746 1.4%

Growth Rate (%) 5.3% 3.0% -0.3% -2.2%

Short-life JND 696 733 736 714 704 0.3%

Growth Rate (%) 5.3% 0.4% -3.0% -1.4%

Total JND 2,347 2,472 2,527 2,499 2,450 1.1%

80


Demographic factors such as age profile of consumers is a major driving force in the consumption of juices, nectars & drinks, apart from higher income levels of consumers. The population of the GCC, approximately 56.7 million people in 2018, is large and growing, with a relatively high proportion of young people. This demographic profile is a major plus for the JND industry, as its products are geared towards consumption by children and youth.

Likewise, consumption of JND tends to reduce among consumers in the middle and higher age brackets. Consumers above the age of 40 years tend to reduce consumption of JND due to high prevalence of diabetes among the population in the region.

Qatar, partly due to having the lowest percentage of population under 25 years of age (25%) (according to the CIA World Factbook 2017), has the lowest annual per capita spend on JND products. Oman, which has the highest percentage of population under 25 years (50%), is the second highest amongst the GCC countries in terms of annual per capita consumption of JND products in volume terms. However, it also has the lowest average price per litre for JND products in the region due to the low income level profile of its consumers.

Reduction in added sugarsThe Middle East has one of the highest levels of diabetes in the world. As awareness grows and as Government-imposed sugar taxes take effect, it is expected that consumers will increasingly switch to healthier dairy and natural fresh juice products. Recent sugar taxes imposed across the GCC may have a positive impact on the demand for healthier beverages such as water, milk, and fruit juices.

In line with dairy and juice producers globally, BFI is focused on producing healthier products containing zero or very low added sugar content.

Table 7 below shows the per capita spend on JND by market. As seen in the following table, the UAE and Kuwait lead other GCC markets in terms of annual per capita spend on JND products:

Table 7: Per Capita Spend on Juice, Nectar & Drink by Market, US Dollars, 2014 – 2018


Country 2014 2015 2016 2017 2018 CAGR2014-2018

Saudi Arabia 61.8 64.5 63.6 59.8 57.7 -1.7%

UAE 75.8 76.8 78.2 78.9 82.1 2.0%

Kuwait 63.2 64.5 66.7 68.1 69.4 2.4%

Oman 54.0 57.2 56.5 57.3 57.3 1.5%

Qatar 46.8 47.8 49.0 50.6 52.1 2.7%

Bahrain 52.1 53.9 54.9 56.3 56.4 2.0%

81


7. ECONOMY OF QATAR

GENERALQatar is one of the most prosperous countries in the world, with a nominal GDP per capita of QAR 235,526 (U.S. $64,705) (at current prices) in 2017, according to the Planning and Statistics Authority. For most of the past two decades, Qatar was one of the fastest growing economies in the world and its growth was driven by the development of its large natural gas reserves. Following the completion of its LNG projects in 2011, the rate of economic growth has slowed and this has been compounded more recently by lower revenues from hydrocarbon exports due to lower hydrocarbon production and prices. As a result, the contribution of the oil and gas sector to nominal GDP has declined from 55.7% in 2013 to 32.3% in 2017. However, the non-oil and gas sector is becoming stronger with the contribution of the non-oil and gas sector to total nominal GDP increasing from 44.3% in 2013 to 67.7% in 2017. In the nine months ended September 30, 2018, the oil and gas sector accounted for 35.9% of total nominal GDP, while the non-oil and gas sector accounted for 64.1%. In 2016 and 2017, Qatar’s real GDP grew by 2.1% and 1.6%, respectively. In the nine months ended September 30, 2018, real GDP grew by 2.0% (year-on-year).

Virtually all of Qatar’s proven reserves of natural gas and condensate are located in the North Field, which is estimated by the U.S. Energy Information Administration to be part of the largest non-associated gas field in the world as at January 2015. According to the U.S. Energy Information Administration, Qatar had the third largest natural gas deposits after Iran and Russia and owned 14% of the total gas reserves in the world in 2015. As of September 30, 2018, Qatar’s proven reserves of crude oil and natural gas (including condensate) amounted to approximately 172 billion barrels of oil equivalent. These hydrocarbons consist of proven reserves of approximately 846 trillion standard cubic feet of natural gas (including condensate) and 1.56 billion barrels of crude oil.

In recent years, Qatar has focused on diversifying its economy, through increased spending on infrastructure, social programs, healthcare and education, in an effort to reduce its historical dependence on oil and gas revenues. Nominal GDP for the non-oil and gas sector reached QAR 411,639 million (U.S. $113,088 million), or 67.7% of Qatar’s total nominal GDP in 2017, compared to QAR 320,338 million (U.S. $88,005 million), or 44.3% of Qatar’s total nominal GDP in 2013. The construction and real estate sectors have recently made substantial contributions to Qatar’s economic growth. In addition, significant investments have been made to increase economic returns from, in particular, financial services, infrastructure development and tourism. Qatar’s economic growth has also enabled it to diversify its economy through domestic and international investments into different classes of assets via QIA. With its growing portfolio of international and domestic long-term strategic investments, the QIA has contributed to the State’s financial stability and diversified its sources of fiscal revenue for the future.

Throughout a period characterised by rapid growth and development, Qatar has aimed to demonstrate fiscal responsibility by managing its budget and public finances prudently. The State has historically had low levels of indebtedness but there has been an increase in indebtedness since 2009 mainly due to the support given by the State to the commercial banking sector during the global financial crisis in 2009. As at September 30, 2018 Qatar’s total indebtedness stood at QAR 347,001 million (U.S. $95,330 million).

The country has an organised set of institutions supporting the growth in trade and commerce, both internally and externally, including the Qatar Financial Centre Authority, the Qatar Exchange (the “QE”) and regulators, namely the QCB, the Qatar Financial Markets Authority (the “QFMA”) and the Qatar Financial Centre Regulatory Authority (the “QFCRA”).

82


Qatar has significant trade and investment ties with the major Asian countries and Qatar also has strong ties with the West, notably the United States, which maintains a significant military presence in the country. Qatar is a member of, among other international organizations, the UN and the WTO. Qatar is also a signatory to the GATT and a number of other conventions and protocols. In addition to its membership in international organizations, Qatar has hosted numerous economic, political and financial summits and conferences over the past several years.

Qatar has low levels of corruption and has established a National Committee for Integrity and Transparency in relation to implementing its obligations as a member of the UN. The 2017 Corruption Perceptions Index published by Transparency International ranks Qatar 29th out of 180 countries with a score of 63%.

As at the date of this Prospectus, Qatar’s long term credit rating by Moody’s is Aa3 with a stable outlook, AA- by S&P with a stable outlook and AA- by Fitch with a stable outlook.

The Quartet Blockade and Qatar’s ResponseQatar has historically had good relations with other members of the GCC and the wider Middle East and North Africa region in general. However, on June 5, 2017, Bahrain, Egypt, Saudi Arabia and the United Arab Emirates took steps to cut trade, transport and diplomatic ties with Qatar. The measures adopted included a sudden and unprecedented closure of sea and air routes with Qatar and a closure of the land border between Qatar and Saudi Arabia (Qatar’s only land border) which created logistical challenges for Qatar. The blockade disrupted historical trade routes that Qatar had depended on for the import of key consumer goods, food staples and industrial materials. In particular, a significant percentage of Qatar’s dairy and other food staples had been imported through the land border crossing with Saudi Arabia before the Quartet Blockade. The blockade also affected Qatar’s ability to receive imports from larger international cargo ships.

In response to the Quartet Blockade, Qatar has taken certain proactive steps to address the potential impact that the situation may have on Qatar’s economy, including by establishing alternative sources for imports, diversifying sources of external financing, enhancing domestic food processing, bolstering trade in the region and injecting liquidity into the banking system. In relation to trade, the Quartet Blockade primarily presented a logistical challenge (rather than a supply challenge) as it disrupted the normal land and sea trade routes for imports to Qatar, as in 2016, imports from the Quartet only represented slightly over 15% of Qatar’s overall imports. To address the logistical challenge, Qatar immediately chartered cargo planes to import food staples, including dairy and fresh produce, from alternative countries such as Turkey and Iran. In parallel, domestic food production was increased, aided by the Government’s introduction of incentives for the private sector, including agricultural subsidies and concessional lending by the Qatar Development Bank.

In addition, taking advantage of increased capacity made available by the recently completed Hamad Port and Hamad International Airport, Qatar has opened, at a nominal cost, new trade routes through Oman and Iran, including by rerouting the delivery of goods previously imported via Dubai’s re-export Jebel Ali hub. Qatar continues to focus on strengthening relationships, trade and otherwise, with other countries in the region including Turkey, Kuwait, Oman and India. Additionally, in August 2017, it was announced that Qatar had restored diplomatic relations with Iran. Although imports initially contracted immediately following the Quartet Blockade, they had returned to normal monthly levels by the end of 2017, with total monthly imports in December 2017 amounting to QAR 11 billion, an increase of 28.8% compared to December 2016. To date, the Quartet Blockade has had a negligible impact on Qatar’s exports.

83


8. INDEPENDENT PRACTIONER’S ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA CONSOLIDATED FINANCIAL INFORMATION INCLUDED IN THE PROSPECTUS

84


85


9. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

86


87


88


89


90


91


92


10. HISTORICAL FINANCIAL INFORMATION

93


94


95


96


97


98


99


100


101


102


103


104


105


106


107


108


109


110


111


112


113


114


115


116


117


118


119


120


121


122


123


124


125


126


127


128


129


130


131


132


133


134


135


136


137


138


139


140


141


142


143


144


145


146


147


148


149


150


151


152


153


154


155


156


157


158


159


160


161


11. MANAGEMENT DISCUSSION AND ANALYSIS

The following discussion and analysis of the operating and financial results of BFI is based on, and should be read in conjunction with, the pro forma financial information. Prospective investors should read the following discussion together with the whole of this Prospectus, including the sections entitled “Risk Factors”, and should not rely solely on the information set out in this section. The following discussion includes certain forward-looking statements that, although based on assumptions that the Founders and Senior Management of the Company consider to be reasonable, are subject to risks and uncertainties that could cause actual events or conditions to differ materially from those expressed or implied in this Prospectus. Among the important factors that could cause the Company’s or BFI’s actual results, performance or achievements to differ materially from those expressed in such forward-looking statements are those factors that are discussed in the “Forward-Looking Statements” and “Risk Factors” sections in this Prospectus. All statements other than statements of historical fact, such as statements regarding the future financial position and risks and uncertainties related to the Company’s or BFI’s business, plans and objectives for future operations, are forward-looking statements.

The following is a discussion of BFI’s results of operations and financial condition. As the Company is an entity under incorporation and with no previous operating history, the discussion and analysis focuses on BFI only, which will be acquired by the Company following the successful completion of the Offering and the meeting of the Constitutive General Assembly and the issuance of the Company’s commercial registration. References to financial performance, information and prospects are solely based on the audited financial statements for the fiscal years ended 31 December 2016, 31 December 2017, 31 December 2018, and the unaudited interim condensed consolidated financial statements for the fiscal period ended 30 June 2019. The business has changed significantly in 2017 and 2018 and continued to do so in 2019. Prospective investors should read the following discussion, together with the whole of this Prospectus, including Part 10 (Historical Financial Information) of this Prospectus and should not rely solely on the key or summarised information contained in this Part 11.

In the financial statements of BFI as at and for the year ended 31 December 2017, BFI made certain reclassifications to the comparative financial information as at and for the year ended 31 December 2016. No equivalent changes were made in the financial statements of BFI as at and for the year ended 31 December 2016, and investors should be aware that, to the extent identified above, the financial information contained in the financial statements as at and for the year ended 31 December 2016 is not comparable with that contained in the financial statements of BFI as at and for the year ended 31 December 2017. All financial information as at and for the year ended 31 December 2016 relating to BFI has been extracted from the financial statements of BFI as at and for the year ended 31 December 2017.

In the financial statements of BFI as at and for the year ended 31 December 2018, BFI made certain reclassifications to the comparative financial information as at and for the year ended 31 December 2017. No equivalent changes were made in the financial statements of BFI as at and for the year ended 31 December 2017, and investors should be aware that, to the extent identified above, the financial information contained in the financial statements as at and for the year ended 31 December 2017 is not comparable with that contained in the financial statements of BFI as at and for the year ended 31 December 2018. All financial information as at and for the year ended 31 December 2017 relating to BFI has been extracted from the financial statements of BFI as at and for the year ended 31 December 2018.

162


This Part 11 contains “forward-looking statements”. Those statements are subject to risks, uncertainties and other factors that could cause BFI’s or the Company’s future results to differ materially from the results of operations or cash flows expressed or implied in such forward-looking statements.

OverviewBFI was incorporated in the State of Qatar on 16 March 2014 as a limited liability company under commercial registration number 64756 for an initial period of 10 years. BFI initially dealt in the trading of livestock and production of dairy products derived from sheep and goats. However, since 2014, the business has changed considerably, particularly from the middle of 2017 onwards. Since then, BFI’s principal activities have involved the production and sale of cow-based dairy products and juice. All sheep and goats have been removed from BFI’s facilities and no longer form a part of the business.

In the early stages of the blockade, and in order to address Qatar’s pressing demands for milk and dairy products, BFI immediately embarked on a program of importing Holstein cows from Europe and the USA, followed by substantial investments in infrastructure development, plant and machinery. This entailed substantial investment by BFI in capital expenditure and infrastructure development in a short period of time. BFI imported approximately 4,000 Holstein cows in the 2017 financial year to capitalise on the gap in the fresh milk market which was created as a result of the blockade.

Although the State of Qatar took certain steps to minimise the blockade’s impact on its residents, the cost of imports from new markets remained higher than pre-blockade prices. The situation provided BFI with an excellent opportunity to replace the fresh dairy, long-life dairy, and juice products that were historically imported from the blockading countries. This, in turn, encouraged BFI and others to contribute towards Qatar’s 2022 National Food Security program and 2030 Vision.

BFI owns and operates facilities in Al Khor, Qatar, with a herd of approximately 18,000 cows spread over two farms, as at the date of this Prospectus. BFI also has three factories that produce fresh cows’ milk and other dairy products for sale, primarily to the Qatari market, under the Baladna and Awafi brands. Additional factories/plants on the premises include a plastics factory, a compost processing facility, water treatment facilities, and a feed processing facility. Key self-sufficiencies are built into the operational model in terms of feed supply, water supply and packaging. In addition to fresh milk, BFI produces and sells other dairy products, including long-life milk, flavoured milk and cheese, and began selling juices in April 2019.

BFI has undergone a significant change in activities and scale of operations since incorporation, and this shift is reflected in its financial statements. The following table presents key financial figures for each of the years ending on 31 December 2018, 31 December 2017 and 31 December 2016.

163


Amount in QAR-2018

Amount in QAR-2017

Amount in QAR-2016

Revenue 216,454,745 88,506,483 114,600,671

Cost of Sales (315,649,764) (112,547,085) (112,051,006)

Gross (Loss) / Profit (99,195,019) (24,040,602) 2,549,665

Other Income 237,406,432 13,944,386 17,238,089

General and administrative expenses (64,612,671) (26,178,755) (15,645,777)

Marketing and distribution expenses (34,780,335) (4,648,666) (1,429,353)

Operating Income / (Loss) 38,818,407 (40,923,637) 2,712,624

Finance Cost (37,544,477) (1,656,591) (511,867)

Net Profit / (Loss) for the year 1,273,930 (42,580,228) 2,200,757

Other Comprehensive Income - - -

Total Comprehensive Income / (Loss) for the year 1,273,930 (42,580,228) 2,200,757

EBITDA* 115,217,995 (19,974,949) 17,956,821

(*EBITDA refers to earnings before interest, tax, depreciation and amortisation and consists of BFI’s net profit / (loss) for the period/year, net finance costs, and depreciation and amortisation. EBITDA is not a measurement of performance under IFRS or generally accepted accounting principles.)

Note: EBITDA Computation

Amount in QAR-2018

Amount in QAR-2017

Amount in QAR-2016

Net Profit / (loss) 1,273,930 (42,580,228) 2,200,757

Added back :

Depreciation 76,228,078 20,825,787 15,095,986

Amortization 171,510 122,901 148,211

Finance Cost 37,544,477 1,656,591 511,867

EBITDA 115,217,995 (19,974,949) 17,956,821

164


Total Investment 2017 - 30 June 2019

Amount in QAR

Investment for H1 2019Amount in QAR

Investment during 2017 & 2018

Amount in QAR

Total 2,876,199,393 205,648,853 2,670,550,540

KEY FACTORS AFFECTING BFI’S RESULTS OF OPERATIONSBFI believes that the following factors have had and/or will have a significant effect on BFI’s business and the results of its operations:

Capital expenditureFrom 2017 to 30 June 2019, BFI spent close to QAR 2.9 billion on importation of cows, infrastructure development, and manufacturing equipment.

Capital expenditure has been incurred mainly for the following:• biological assets (cows)• cow barns• milking parlours• plant and machinery for dairy, juice, plastic, feed, and composting facilities• distribution (vehicles, systems, storage)• other infrastructure (building, water treatment, feed silos, civil works, utilities infrastructure,

IT equipment, vehicles, etc.)

Expansion PlanDue to the nature of the industry, considerable investments have been made in assets and infrastructure since the middle of 2017. Going forward, BFI does not foresee significant incremental capital expenditures other than maintenance and replacement, as applicable. BFI will continue to assess potential business opportunities. Any substantial new investments would be evaluated and approved by the Company in accordance with the Articles.

Animal HealthBFI’s business is heavily dependent on availability of biological assets (i.e. cows), which represent the only source of fresh milk. Historical financial results have been affected by initial mortality rates, disposals and sales of livestock. BFI has made significant progress in improving the health status of the cows by investing in animal health specialists and systems, standard operating procedures, vaccination programs and cooling facilities to increase animal health and productivity.

Cost of Commodities Animal feed and packaging materials comprise the major costs of production. Any variation in the purchase price of these commodities can have a significant impact on the cost of operations and financial results. BFI employs a strategy involving purchasing from both Northern and Southern hemisphere countries, in order to minimise the risk of business interruption and price escalation due to adverse seasonality or weather conditions in targeted supply countries. BFI has ensured the availability of feed stocks by maintaining strategic minimum quantities of key ingredients. BFI manufactures most of its packaging materials onsite.

165


Factory availability and productivityManufacturing facilities have been expanded by adding new infrastructure and plants to increase production capacity in 2019. BFI operates three factories which produce the full range of dairy and juice products. Business interruption is reduced as there is, to a certain degree, flexibility among its factories for producing fresh milk, juices, yogurt and cheeses. Preventive maintenance programs are in place to ensure continuous production throughout the year.

Biosecurity and Quality Assurance BFI maintains strict biosecurity measures, including preventive measures. This demonstrates that the company is well prepared to react to any outbreaks of disease that might affect BFI’s dairy herd. BFI’s expertise in this area is crucial to ensure effective quality assurance given the challenging climate of Qatar and the regional risks of various animal diseases. BFI has two separate animal farms, and this, to a certain extent, provides an additional level of biosecurity and business continuation in the event of one farm being unable to operate. The herd is spread between two farms, with approximately 6,000 cows on one farm and approximately 12,000 cows on a second, much larger farm. The larger farm is spacious, and this reduces the risk that an outbreak affecting some cows on that farm will reach all of the others. But in the event that the larger herd is temporarily unable to produce, the herd of 6,000 cows on the smaller farm is capable of meeting Qatar’s daily fresh milk demand.

The quality assurance department has been strengthened in terms of equipment, manpower and by implementing best quality standards.

Maintenance of FacilitiesBFI has in-house, dedicated maintenance facilities for its farms and factories to ensure timely and regular maintenance of all critical equipment. Industry-standard maintenance programs are in place to facilitate business continuity and functioning of equipment and infrastructure.

Distribution CostsUntil the end of 2018, the distribution of BFI’s products was being managed through a third party distributor, ABAP. Since January 2019, BFI has taken control over its distribution activities in order to have better control of the distribution process and to ensure that its products reach all categories of customers. Better control of the distribution process is expected to result in improved customer service, distribution depth and efficiencies. BFI started moving its retail distribution centre from Al Khor to Doha in August 2019 and this is intended to improve efficiencies and lower costs by reducing the distribution distance.

Consumer PreferencesBFI’s premium products are aligned with emerging consumer preferences for products that include fresh, natural and healthy ingredients. BFI’s fresh and premium dairy products have proven to be well positioned within the dairy sector.

The management believes that there is a global trend towards locally produced and labelled dairy products over imported ones, as consumers seek freshness and the shortest time span from production to consumption.

166


Product DevelopmentAs consumer tastes constantly evolve, BFI has had to invest heavily in developing its product offering in order to maintain and grow its customer base. Over the course of 2018, BFI’s portfolio grew from 43 SKUs to 102 SKUs, including juices and lactose-free milk. BFI will continue delivering innovative branded products in order to benefit from evolving consumer preferences. Long life milk was launched by BFI on 12 February 2019.

With the launch of 100% natural chilled juices in April 2019, BFI continues focusing on product development as it believes this will drive increased sales of its products. BFI’s product development will consist of producing increasingly popular global dairy products (such as vitamin-enriched fresh milk, lactose-free milk, etc.). In this sense, BFI will cater to corresponding needs and emerging consumer trends across the globe but will be able to be first to market in Qatar at what may be considered a higher level of quality than its competitors.

New Sales ChannelsAs at the date of this Prospectus, most of BFI’s revenues are in retail markets. The HORECA market presents a large opportunity, and BFI, as a new market entrant, did not have substantial HORECA accounts prior to 2019.

In 2019, BFI increased its sales channels from almost purely retail channels to include HORECA channels, including airlines. The HORECA market presents an opportunity for BFI to increase its revenues domestically. During Q2 2019, BFI captured several key corporate accounts and intends to reach an industry benchmark of revenues from HORECA.

Related Party Relationships with Power International Holding W.L.L.Until the incorporation of the Company and the associated share transfer following the Constitutive General Assembly, BFI’s share capital has been wholly owned by Power International, a company incorporated in the State of Qatar.

Power International has been continuously supporting the operations of BFI by providing funding support, when required, through a partner’s current account. BFI has benefitted from a close and supportive relationship with Power International. Ongoing interactions between the two companies will be subject to the Company’s corporate governance. BFI has engaged in sales and purchases from the affiliates of Power International as set out in note 23 to the audited financial statements for the year ended 31 December 2018. Related party transactions mainly included construction works performed by Urbacon, rentals of property and equipment, sales of finished goods to various affiliated companies (which are relatively insignificant) and logistics services from Joury Logistics W.L.L. All of the transactions undertaken with affiliated companies were on an arm’s length basis.

Basis of PresentationBFI’s historical financial statements for the financial year ended 31 December 2018, which are discussed below, were prepared in accordance with IFRS as issued by the International Accounting Standards Board and applicable requirements of Companies Law.

As a result of the significant changes in BFI’s business model, it is unlikely that the historical financial information included in this Prospectus is a reasonable indicator of BFI’s or the Company’s future financial performance.

167


For example, the following significant factors render the current operations incomparable in relation to previous years:

• Historically, BFI was involved in the business of rearing and selling sheep and goats and their milk products and irregular trading in animal feed, medicines etc. However, the business has completely transformed to focus mainly on cow related dairy products and incremental sources of revenues such as juice and organic fertilisers (compost). Accordingly, since the blockade, BFI is following a new and enhanced business model, concentrating on substantial expansion and capital investments in the dairy segment alongside the new establishments of juice and plastic operations to fulfil consumers’ needs.

• BFI has historically purchased the packaging material from third party vendors to package its finished products. However, the installation of its own machinery has enabled BFI to produce its own packaging material for both its internal needs and in order to sell such packaging material to third parties.

• BFI has significantly expanded its organisation and will continue to do so to achieve the ambitious growth plans for the remainder of 2019.

Going concernBFI had accumulated losses amounting to QR 94,427,609 as at 30 June 2019 which represent 16.21% (in absolute terms) of total equity as at 30 June 2019, QR 60,822,856 as of 31 December 2018 which represent 9.72% (in absolute terms) of total equity as at 31 December 2018, QR 62,018,350 as of 31 December 2017 which represent 10.02% (in absolute terms) of total equity as at 31 December 2017 and QR 19,438,122 as of 31 December 2016 which represents 7.17% (in absolute terms) of total equity as at 31 December 2016 which exceed 50% of its capital respectively. Management has prepared the financial statements on a going concern basis as Power International has resolved to continue operations and has committed to providing adequate funds for BFI to meet its liabilities as they fall due.

RESULTS OF OPERATIONSThe following table presents the selected information from BFI’s unaudited interim condensed consolidated financial statements as at and for the period ended 30 June 2019, as well as its audited financial statements as at and for the year ended 31 December 2018, regarding the results of operations:

Amount in QAR-30 JUN

2019

Amount in QAR-2018

Amount in QAR-2017

Revenue 185,266,483 216,454,745 88,506,483

Cost of Sales (235,312,681) (315,649,764) (112,547,085)

Gross Loss (50,046,198) (99,195,019) (24,040,602)

Other Income 125,929,858 237,406,432 13,944,386

General and administrative expenses (18,772,881) (64,612,671) (26,178,755)

Marketing and distribution expenses (38,220,063) (34,780,335) (4,648,666)

168


Amount in QAR- 30 JUNE

2019

Amount in QAR-2018

Amount in QAR-2017

Net Profit / (loss) (33,604,753) 1,273,930 (42,580,228)

Added back:

Depreciation 82,662,491 76,228,078 20,825,787

Depreciation right of use 208,839 - -

Amortization 242,639 171,510 122,901

Finance Cost 52,495,469 37,544,477 1,656,591

EBITDA 102,004,685 115,217,995 (19,974,949)

(*EBITDA refers to earnings before interest, tax, depreciation and amortisation and consists of BFI’s net profit / (loss) for the period/year, net finance costs, and depreciation and amortisation. EBITDA is not a measurement of performance under IFRS or generally accepted accounting principles.)

Operating Income / (Loss) 18,890,716 38,818,407 (40,923,637)

Finance Cost (52,495,469) (37,544,477) (1,656,591)

Net (Loss) / Profit for the period/year (33,604,753) 1,273,930 (42,580,228)

Other Comprehensive Income - - -

Total Comprehensive (Loss) / Income for the period/year (33,604,753) 1,273,930 (42,580,228)

EBITDA 102,004,685 115,217,995 (19,974,949)

169


Principal Components of Results of Operations

Revenue The primary source of revenue in the past has been animal sales, which included sheep and goats and their milk products. Other sources of revenue in year 2017 included sale of animal feed and medicines, Arabic sweets and frozen food products. However, following the blockade, BFI has successfully been able to produce and sell cow-based milk and its related products, and these products now constitute the main revenue stream.

Sheep sales represented the highest component of revenue in year 2017. Dairy sales represented the second highest as BFI started its fresh cow milk operations post blockade, followed by revenue from an oil tender (i.e. trading of goods) and sale of feed.

In 2018, the primary source of revenue was dairy sales (QAR 191 million), followed by livestock sales (QAR 24 million) and other sources (QAR 2 million). Dairy sales increased by QAR 162 million from 2017 to 2018 due to diversification and expansion of the dairy portfolio.

BFI achieved significant growth in Dairy sales, followed by start of Juice as well as Compost sales for the period ended 30 June 2019. BFI projects that its revenues in 2019 will be generated predominantly from dairy and juice products. Beef sales will continue to provide another source of revenues.

Cost of salesCost of sales mainly consisted of the cost of rearing the animals (including cows, sheep and goats), which is compensated by appreciation/fair value gain due to biological transformation of the related animals. Rearing costs mainly included feed cost, medicines, labour and other directly attributable overheads.

Other significant components of cost of sales include costs of raw materials and ingredients in the manufacture of products, packaging costs, labour costs, utilities and factory overheads.Increase in the cost of sales for the year ended 31 December 2018 compared to the year ended 31 December 2017 is mainly attributable to increased cost in the following categories:

• feed and packaging cost which is in line with increase in dairy operation and higher prices paid for air shipping materials to ensure product availability in the market;

• cost of livestock due to sales of sheep and goats as part of exit strategy;• incremental depreciation because of new infrastructure and facilities; and• livestock mortalities and disposals due to animal health issues faced by BFI, particularly in

the earlier period of 2018.

Cost of sales for the period ended 30 June 2019 remained on the higher side due to full year and incremental impact of depreciation of facilities under development in the prior periods.

Going forward, ratio of cost of sales to revenue is expected to decline due to economies of scale owing to better price strategies, optimal capacity utilisation and better health management.

170


Gross LossGross loss represented, in absolute terms, 45.83% of the revenue in year 2018 (an increase from 27.16% in 2017) mainly due to lower selling prices of animals, discounted fresh milk products, higher mortality rates of animals and a higher fixed cost base (mainly depreciation).

Gross loss for the period ended 30 June 2019 remained, in absolute terms, 27.01% being lower than previous full year mainly due to growth in sales despite of higher amount of depreciation.

The gross margin is expected to improve due to higher yields of milk production per cow, higher capacity utilisation, enhanced production efficiencies and improved margins.

Other IncomeAccording to the Support Agreement signed between Government of Qatar and BFI, BFI is entitled to receive an aggregate amount of up to QAR 1,269,620,438 over a 10 year period. The individual payments are split as per the following details: Payment for year 2018 is QAR 233,660,874.30 to be paid after the initial approval to incorporate Baladna Q.P.S.C. Payment for year 2019 is QAR 248,743,706.20 to be paid in 2020. Payment for year 2020 is QAR 143,715,225.50 to be paid in 2021. Payment for year 2021 is QAR 122,425,030.20 to be paid in 2022. Payment for year 2022 is QAR 110,883,057.50 to be paid in 2023. Payment for year 2023 is 110,079,177.10 to be paid in 2024. Payment for year 2024 is QAR 104,933,491.20 to be paid 2025. Payment for year 2025 is QAR 83,752,374.50 to be paid in 2026. Payment for year 2026 is QAR 63,375,343.70 to be paid in 2027. Payment for year 2027 is QAR 48,052,157.90 to be paid in 2028. Other income, apart from support from Government, includes income from sale of organic fertiliser (compost). Such income arises from manure sales and rental income charged to associated companies for the usage of Baladna Park, Baladna Restaurant and open land areas used by the associated companies. BFI has recently invested in upgrading the organic fertiliser as an additional line of business that will use manure produced by cows.

BFI has established a family entertainment park which includes third party-operated restaurants, a Baladna-branded restaurant, a Baladna-branded mart and a park. This is aimed at introducing agriculture and the “Baladna” brand to the wider public. This is intended to encourage brand recognition and loyalty.

General and administrative expensesGeneral and administrative costs consist primarily of staff costs, repairs and maintenance, utilities, legal and professional fees, transportation expenses, depreciation and amortization and other miscellaneous costs. General and administration expenses have increased due to increased manpower and administrative set up to support substantial increase in the level of operations in line with growth intended by BFI.

During the year 2019, BFI has had several changes in the organization to optimally use the resources. Accordingly, general and administrative costs have been reduced after considering the full year impact.

Marketing and Distribution ExpensesMarketing and distribution expenses primarily consist of advertisement and promotions and salaries and benefits of the sales force. Distribution expenses, for the prior period, during which ABAP acted as BFI’s distributor, were included as part of distributor commission.

A major portion of marketing expenses represented advertisement and promotions due to launching of Baladna products in the market.

171


From 2019, BFI started its own distribution operations. Accordingly, there’s an increasing trend as compared to prior periods.

Operating Income / (Loss)Operating income in 2018 is positive mainly because of support from the Government and increased yields of milk produced per cow. In 2017, operating loss represented, in absolute terms, 46.24% of the revenue mainly because of lower gross margin on sheep and goats, animal feed and oil tender sales.

Operating income for the period ended 30 June 2019 remained 10.20% of revenue, in absolute terms. Although revenues have increased but at the same time operating income is affected by higher depreciation as explained above.

Finance Cost Finance costs for the year ended 31 December 2018 and for the period ending 30 June 2019 mainly comprised interest on the bank loans obtained to finance capital expenditure, working capital and enhanced operational needs of BFI.

Net (Loss) / Profit Net loss for the period ended 30 June 2019 represented, in absolute terms, 18.14% of revenue mainly due to higher depreciation due to capitalization of facilities and finance cost due to higher utilization of loans.

Net Profit for the year ended 31 December 2018 was, in absolute terms, 0.59% of revenue. Despite high operating costs as mentioned in the section above, BFI was able to generate net profit because of support from the Government.

Net loss represented, in absolute terms, 48.11% of revenue for the year ended 31 December 2017 as a result of the following: the lower gross margin on sheep and goats; higher animal mortality rates; discounted milk prices; lower capacity utilisation and start-up operational costs of the new businesses; and costs spent on administration and marketing expenses.

2017 and 2016 financial resultsThe following table presents the selected information of BFI’s results of operations for the years ended 31 December 2017 and 31 December 2016.

172


Amount in QAR-2017 Amount in QAR-2016

Revenue 88,506,483 114,600,671

Cost of Sales (112,547,085) (112,051,006)

Gross (Loss) / Profit (24,040,602) 2,549,665

Other Income 13,944,386 17,238,089

General and administrative expenses (26,178,755) (15,645,777)

Marketing and distribution expenses (4,648,666) (1,429,353)

Operating (Loss) / Income (40,923,637) 2,712,624

Finance Cost (1,656,591) (511,867)

Net (Loss) / Profit for the year (42,580,228) 2,200,757

Other Comprehensive Income - -

Total Comprehensive (Loss) / Income for the year (42,580,228) 2,200,757

EBITDA (19,974,949) 17,956,821

Amount in QAR-2017 Amount in QAR-2016

Net Profit / (loss) (42,580,228) 2,200,757

Added back :

Depreciation 20,825,787 15,095,986

Amortization 122,901 148,211

Finance Cost 1,656,591 511,867

EBITDA (19,974,949) 17,956,821

Note: EBITDA Computation

173


Principal Components of Results of Operations

RevenueRevenue in 2016-2017 comprised of livestock sales (sheep and goats) and dairy and incidental sales of oil tender and animal feed. The drop in revenues in 2017 was mainly due to the lower amount of oil tender sales (by QAR 41.64 million), while dairy revenues increased due to commencement of new cow dairy business.

Cost of salesAlthough there have been changes in the operations of BFI during the period of 2016-2017, total cost of sales remained in line with the previous year. Decreasing sales in 2017 did not result in equal proportion of decline in costs due to higher depreciation and lower margins on livestock.

Gross (Loss) / ProfitGross loss represented, in absolute terms, 27.16% of the revenue for the year ended 31 December 2017 (compared with a gross profit of 2.22% in 2016) mainly as a result of higher manpower, depreciation and maintenance costs resulting from the initial set up of the cow dairy business.

Other IncomeOther income mainly comprises rental income from the open space and warehouses. Decline in the other income streams for 2017 is mainly due to one off consultancy income earned by BFI and provided to a third party in year 2016.

General and administrative expensesGeneral and administrative expenses in 2017 increased due to increase in the level of operations in anticipation of activities for future years. Increase in expenses was mainly attributable to manpower, depreciation and maintenance costs.

Marketing and Distribution ExpensesIncrease in marketing expenses resulted from advertisement and promotions necessary for the launching of Baladna products in the market in line with enhanced operation in 2017.

Operating (Loss) / Income BFI remained in operating losses mainly due to the reasons mentioned above, which included higher fixed cost owing to increased level of anticipated operations.

Finance CostFinance costs mainly comprised interest cost on the loan facilities obtained to finance working capital and enhanced operational needs of BFI.

Net (Loss) / Profit Net loss for the year ended 31 December 2017 represented, in absolute terms, 48.11% of revenue (compared to a net profit for the year ended 31 December 2016 of 1.92%) due to the reasons mentioned above.

174


Cash FlowsFor the years ended 31 December 2018 and 31 December 2017 The following table summarizes BFI’s cash flows from operating, investing, and financing activities:

Cash and cash equivalents consist of cash-in-hand, bank balances and bank overdraft. For full details, please refer to note 15 to the audited financial statements for the year ended 31 December 2018.

Operating ActivitiesCash flows from operating activities of BFI for the year ended 31 December 2017 were negative mainly due to higher costs incurred on cost of sales compensated by sales. Gross receipts collected from customers have been comparatively less than the actual cost mainly due to discounts on dairy products and lower margins on livestock. BFI’s relatively low pricing reflected a decision made by management to focus on establishing market share for BFI’s products.

Investing ActivitiesCash flows from investing activities mainly represents the amount spent on the purchase of cows and building machinery relating to farm and dairy operations.

Financing ActivitiesCash flows from financing activities have been positive mainly due to bank facilities obtained to finance BFI’s operations, and partially due to contribution by the partners of Power International to finance BFI’s capital expenditure and working capital needs.

Category of Cash Flows Amount in QAR-2018 Amount in QAR-2017

Net cash flows generated from / (used in) operating activities

19,496,377 (206,243,910)

Net cash flows used in investing activities (908,882,260) (1,256,807,469)

Net cash flows generated from financing activities 807,735,416 1,467,445,858

Cash and Cash Equivalents as at 01 Jan. (6,426,878) (10,821,357)

Total Cash and Cash Equivalents as at 31 Dec. (88,077,345) (6,426,878)

175


For the years ended 31 December 2017 and 31 December 2016The following table summarises BFI’s cash flows from operating, investing, and financing activities:

Cash and cash equivalents consist of cash-in-hand, bank balances and bank overdraft.

Operating ActivitiesCash flows from operating activities of BFI were negative for the year ended 31 December 2017 mainly because of the high amount of advances paid to suppliers for purchase of materials, which were required as a result of expansion in BFI’s business.

Investing ActivitiesCash flows from investing activities mainly represent the amount spent on the purchase of cows and building machinery relating to farm and dairy operations

Financing ActivitiesCash flows from financing activities have been positive mainly due to bank facilities obtained to finance BFI’s operations, and partially due to contribution by the partners of Power International to finance BFI’s capital expenditure and working capital needs.

Financing StructureBFI has obtained banking facilities to fund its working capital and its ongoing construction plans. BFI is planning to utilise the proceeds of the Offering to repay a certain portion of the long term liabilities relating to such banking facilities. The below table illustrates the loan structure as at 30 June 2019, 31 December 2018 and 31 December 2017.

Category of Cash Flows Amount in QAR-2017 Amount in QAR-2016

Net cash flows (used in) / generated from operating activities

(206,243,910) 43,829,867

Net cash flows used in investing activities (1,256,807,469) (81,901,684)

Net cash flows generated from financing activities 1,467,445,858 32,707,823

Cash and Cash Equivalents as at 01 Jan. (10,821,357) (5,457,363)

Total Cash and Cash Equivalents as at 31 Dec. (6,426,878) (10,821,357)

176


Loan Facility Amount in QAR – 30 June 2019

Amount in QAR-2018

Amount in QAR-2017

Qatar National Bank (QNB) 2,528,995,563 2,075,496,707 1,204,178,504

Qatar Development Bank (QDB) 8,598,399 10,208,215 13,538,549

Total Debt 2,537,593,962 2,085,704,922 1,217,717,053

Equity 582,445,402 626,015,131 619,149,861

Total Debt and Equity 3,120,039,364 2,711,720,053 1,836,866,914

Debt to Equity Ratio (Times) 4.36 3.33 1.97

The loan from QNB was obtained to finance BFI’s expansion and to provide working capital. The loan was secured by personal guarantees of Power International’s individual shareholders. The loan from QDB was obtained to finance the purchase of raw material, livestock and fixed assets and was secured against guarantees by Power International.

Key Sources of Estimation and Uncertainty

The preparation of financial statements in conformity with International Reporting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed regularly. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future estimates.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. BFI based its assumptions and estimates on parameters available when the financial statements were prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of BFI. Such changes are reflected in the assumptions when they occur.

Useful life of property, plant and equipmentBFI’s management determines the estimated useful life of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation charge would be adjusted, where the management believes the useful lives differ from previous estimates.

Provision for expected credit losses (ECLs) of trade receivables BFI uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by

177


type of product, customer type and rating, and coverage by letters of credit and other forms of credit insurance). The provision matrix is initially based on BFI’s historical observed default rates. BFI will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next years which can lead to an increased number of defaults in the consumer products sector, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. BFI’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The information about the ECLs on BFI’s trade receivables is disclosed in Note 14 and 25 to the financial statements for the year ended 31 December 2018.

Provision for slow moving inventoriesInventories are held at the lower of cost or net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the degree of ageing or obsolescence.

At 31 December 2018, gross inventories were QAR 124,161,930 (2017: QAR 25,076,965), with provision for slow-moving inventories amounting to QAR 1,188,045 (2017: Nil). Any difference between the amounts realised in future periods and the amounts expected will be recognised in the statement of comprehensive income.

Measurement of biological assetsBiological assets are measured at fair value less cost to sell, with any change therein recognised in the statement of comprehensive income. The fair value of immature livestock is determined by reference to meat price of veal, adjusted to reflect the age of the calves and to the landed cost of a heifer by reference to the recent purchases of the Company. The fair value of mature cows is determined by reference to landed cost of a heifer by reference to the recent purchases adjusted to reflect the decline in productivity through the lactation cycles, the meat price at the point of slaughter.

Where the fair value cannot be measured reliably, in such a case, that biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses. Once the fair value of such a biological asset becomes reliably measurable, an entity shall measure it at its fair value less costs to sell.

Recent Accounting PronouncementsNew accounting guidance that BFI has recently adopted, as well as accounting guidance that has been recently issued but not yet adopted, are included in notes 3.2 and 3.3 to the audited financial statements for the year ended 31 December 2018.

178


FINANCIAL RISK MANAGEMENT

BFI’s principal financial liabilities comprise of trade payables, accrued expenses, other payables due to related parties, bank overdraft and short-term borrowings. The main purpose of these financial liabilities is to raise finance for BFI. BFI’s financial assets comprise of trade receivables, staff receivables, due from related parties, government support receivables, cash and bank balances, which arise directly from its operations. BFI does not trade or enter into derivative financial instruments.

The main risks arising from BFI’s financial instruments are interest rate risk, credit risk, liquidity risk and foreign currency risk. The management reviews and agrees on policies for managing each of the risks which are summarised below:

Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

BFI’s interest rate risk is limited to its loans, term borrowing and bank overdraft. Bank borrowings are secured against mortgages as well as irrevocable personal guarantees given by Power International and its shareholders.

Credit riskCredit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. BFI is exposed to credit risk on its bank balances, and trade receivables and staff receivables, and receivables due from related parties. BFI seeks to limit its credit risk by only dealing with reputable banks and by setting credit limits for individual customers and monitoring this on a timely basis.

With respect to credit risk arising from the other financial assets of BFI, including bank balances and cash, BFI’s exposure to credit risk (which may arise due to default of the counterparty) is limited to the carrying amount of the financial instruments.

Liquidity riskLiquidity risk is the risk that BFI will not be able to meet obligations as they fall due. BFI’s approach to managing liquidity risk is to ensure that, as far as possible, it will always have sufficient liquidity to meet its liabilities when due (under both normal and stressed conditions) without incurring unacceptable losses or risking damage to BFI.

BFI’s liquidity risk is managed through monthly cash flow forecasts. BFI has secured its short term liquidity by entering into working capital facility arrangements with local banks.

Currency riskCurrency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is not exposed to material foreign currency risk as the Company’s assets and liabilities are not denominated in foreign currencies as at 31 December 2018.

179


12. LEGAL COUNSEL’S CERTIFICATIONWe, the undersigned, hereby confirm and certify that the offering of Baladna Q.P.S.C. shares for public subscription by the Company is in accordance with the Companies Law and with the rules and regulations of the QFMA and the QE and the Company’s constitutional documents. We further confirm that all procedures undertaken in this respect are in accordance with applicable laws, rules and regulations.

Sharq Law FirmAdvocate: Rashid Saad Al SaadDoha, Qatar9 October 2019

180


13. DIVIDENDS AND DISTRIBUTION POLICY

1. DIVIDEND POLICY1.1 General provisions relating to profit allocation and dividend payments Each Shareholder’s share of the Company’s profits shall be determined based on their respective shareholdings in the Company’s share capital. Under Qatari law, a Qatari public shareholding company’s distribution of dividends for a given fiscal year and the amount and payment date thereof are resolved by a resolution of the Shareholders at the annual general meeting. Shareholders may vote to approve the proposal adopted by the Board of Directors for the distribution of profits.

Dividends may only be distributed from the distributable profit of the Company. The distributable profit is calculated based on a company’s annual financial statements prepared in accordance with IFRS as laid out in the its annual report.

When determining the amount available for distribution, net profit for the fiscal year must be adjusted for profit/loss carry-forwards from the prior fiscal years and release of or allocations to statuary reserves requirements in accordance with the Qatari Commercial Companies Law.

All dividends and distributions of the Company shall be distributed in Qatari Riyals. No dividend or distribution shall exceed the amount recommended by the Board and the Board shall not be obliged to recommend an amount of dividend or distribution. Shares acquired by investors in the Offering will be eligible for dividends and distributions in line with the constitutional documents of the Company, policies and recommendations of the Board, and requisite General Assembly approvals.

1.2 Dividend PolicyAs at the date of this Prospectus, the Company is under incorporation and has not conducted any business. Nor has the Instrument of Transfer been effected, and the contribution in kind resulting in the 100% share ownership of Baladna Food Industries (BFI) has not occurred as at the date of this Prospectus. Accordingly, no distributions in the form of dividends or otherwise have been made to date. BFI, since its incorporation in 2014, has not distributed any dividends to its shareholders; any available profits and/or reserves were reinvested into the operations of BFI.

The Company expects that, in the future, the principal source of funds for the payment of dividends will be dividends and other payments received from current and future direct and indirect subsidiaries, including, but not limited to, BFI and their respective subsidiaries. The determination of each subsidiary’s ability to pay dividends is made in accordance with Applicable Law.

The Company intends to pay an annual dividend to its shareholders in the amount of 50-70% of the Company’s net profit of the respective prior fiscal year calculated in accordance with IFRS. The Company can provide no assurance that it will pay dividends in future years. Apart from dividends and other payments received from current and future direct and indirect subsidiaries (as set out above), the Company’s ability to pay dividends will depend on its financial position (particularly the amount of distributable profit that is available), its results of operations, capital requirements, investment alternatives and other factors that the Board of Directors may deem relevant.

181


1.3 2019 Dividend As at the date of this Prospectus, the Company’s Founder and Senior Management do not intend to propose a dividend distribution for the fiscal year 2019 to the Company’s Shareholders during its next general meeting in 2020. The Founders and Senior Management intend to retain all available funds and earnings attributable to the fiscal year 2019, if any, to support operations and to finance the growth and development of the business. In addition, the Company intends to use its proceeds from the Offering predominantly to reduce a proportion of BFI’s outstanding debts, as well as for general corporate purposes.

The Founders and Senior Management intend to follow its dividend policy from the following year onwards subject to the conditions as described in “1.2 Dividend Policy”.

The financing agreements of the Company do not contain any significant restrictions on the distribution of profits by the Company to its Shareholders.

The Company shall decide the nature and percentage of dividends based on the aforementioned factors that change from year to year, according to the data or the circumstances prevailing at the time. In the years when the Company has surplus cash, it may adopt cash dividends. In the years in which the Company has opportunities to grow and expand, the Company may resort to either the retention of profits, or capitalising them, in part or in whole. It may also distribute a mixture of cash profits and bonus shares or bonus shares alone, whilst raising the capital by the amount of issued shares.

The ability of the Company to pay dividends is dependent on a number of factors and there is no assurance that the Company will pay dividends or, if a dividend is paid, what the amount of such dividend will be. See the section entitled “Risk Factors” for further details. Consequently, investors may not receive any return on their investment unless they sell their Shares for a price greater than that which they paid for them.

182


14. MANAGEMENT AND CORPORATE GOVERNANCE

The business address of all the designated Directors is the Company’s registered office. It has been agreed that Dr. Adnan Steitieh will serve as an advisor to the Board.

The management expertise and experience of each of the designated Directors is set out below:

Mr. MohamadMoataz Mhd Ruslan AlKhayat (Chairman)Mr. MohamadMoataz is a prominent Qatari businessman based in Doha. A self-made entrepreneur, Mr. MohamadMoataz constantly explores new business frontiers and provides clients with innovative and ingenious business solutions.

He is the Group Chairman of Power International Holding (the current holding company of BFI) and Urbacon Trading & Contracting (UCC), one of GCC’s leading, grade one licensed building and contracting companies in Qatar. Mr. MohamadMoataz is an experienced and proven leader who continues to set up companies world-wide—investing in construction, real-estate development, hospitality, food & beverage, retail, and facility management.

Mr. Mohamed Badr Al Sada, Vice Chairman (Hassad Food Company)

Mohamed Badr Al Sada holds an engineering degree from the University of Arizona. He had worked in different sectors like Oil & Gas, Investments, and Telecom. Then he recently moved to the food sector, where he became the CEO of Hassad Food, which is owned by Qatar Investment Authority and which invests only in the food sector.

Mr. Al Sada is currently working in the capacity of Chief Executive Officer of Hassad Food since June 2017. Prior to that, Mr. Al Sada served as the Chief Operating Officer in Vodafone Qatar and chief business development for the same company as well. Before that he was working in one of the senior roles in Qatar Investment Authority. He also started his career as an engineer for one of the major companies in the gas sector in Qatar where he had to spend two years in Japan during the development of this project (Dolphin Energy).

Mr. Al Sada serves on the boards of several companies. Currently, he is Chairman of Widam Food Company QSC and Deputy of Chairman of International Sea Food Company (SAOC) and a board member of Arab Qatari for Poultry Production QSC (Al Waha), Qatar Development Bank (QDB), and Arab Co for Livestock Development (ACOLID).

Name Position

Mr. MohamadMoataz Mhd Ruslan AlKhayat Chairman (non-Executive)

Mr. Mohammed Badr Al Sada Vice Chairman (non-Executive)

Sheikh Faleh Bin Nasser Bin Ahmad Al-Thani Non-Executive Director

Mr. Hamad Bin Abdullah Bin Khalid Al-Attiya Non-Executive Director

Mr. Ramez Mhd Ruslan AlKhayyat Executive Director

Mr. Mazen Alsbeti Non-Executive Director

Mr. Aidan Tynan Independent Director (Non-Executive)

183


Sheikh Faleh Bin Nasser Bin Ahmad Al-Thani (National Food Security Program)Dr. Sheikh Faleh Bin Nasser Bin Ahmad Al Thani is the head of the Qatar National Food Security Program. He has 19 years of experience in the agricultural and environmental sectors, as well as in the management of water resources. He is also experienced in investment projects with the Ministry of Municipality and Environment (MME). Dr Sheikh Faleh has served as undersecretary of Agricultural and Fisheries Affairs at the MME since 2005. From 2011 onwards, he has acted as the head of the Qatar’s permanent committee for the protection of underwater life. Since 2006, he has acted as the head of the permanent committee for farms and wells affairs. Additionally, since 2005 he has also acted as the Chairman of the Board of Directors of Hassad Foods Company.

Throughout his career, he has represented the government in various delegations and missions, both in regional and international forums, relating to the agricultural sector. He has represented the government before leading organizations and during events, such as the FAO ASIAN, AOAD, ICARDA, IFAD and ACSAD. Furthermore, he has presented academic research papers at international conferences, workshops and conventions relating to water desalination through use of solar energy as well as increasing agricultural productivity.

Dr. Sheikh Faleh holds two PhDs, one in Water Resources Management and another in Solar Water Desalination, both from the University of Hertfordshire in the United Kingdom.

Mr. Hamad Bin Abdulla Bin Khalid Al-Attiya, Board Member (GRSIA)Mr. Hamad is a Senior Investment Analyst with an overall experience of 13 years in investment, pension funds investments, corporates and banking, listed equities, local and global portfolios.

He started in Qatar Central Bank in 2007 in the Provision and Control Department as a Bank Monitor and later joined the General Retirement & Social Insurance Authority’s Investment Department, where he specialized in investment analyses and covered all local and global portfolios listed equities.

Mr. Hamad is a University of Wales Graduate in Business Administration and is also an HEC Paris Executive Master holder, majoring in Innovation and Social Business.

Mr. Ramez Mhd Ruslan AlKhayyat (Executive Director)Mr. Ramez is a well-known entrepreneur and proven leader with significant experience in operations, risk management, and development.

He is the vice chairman and CEO of Urbacon Trading & Contracting (UCC). UCC has successfully delivered some of the largest projects and developments in Qatar, the Middle East, North Africa, and Europe.

Mr. Al-Khayyat is Vice Chairman and Group CEO of Power International Holding (the current holding company of BFI), a conglomerate of real estate development and investment, industrial, food & beverage, retail, dairy production, and service firms.

184


Mr. Mazen Alsbeti (Director)Mr Alsbeti has twenty five years of extensive and successful experience in management, and is very well networked in the Levant area, the GCC, and internationally, with strong business building orientation and proven experience in setting strategic direction and initiating growth strategies as a senior executive. He is a seasoned professional with outstanding planning, execution, monitoring, and resource balancing skills and with the ability to support multiple projects in a matrix of organizational structure. He excels at communicating with stakeholders to provide accurate reporting and information regarding ongoing projects and initiatives.

Mr. Aidan Tynan (Independent Director)Aidan Tynan is a Middle East dairy industry expert, having held senior managerial roles with Almarai Plc, Sadafco Plc, SafiDanone, Al Othman Group and more recently Baladna Food Industries.

He joined Baladna Food Industries at a pivot point in its development and played a major role in its subsequent development. He has an exceptional track record in business turnarounds, brand building, packing redesign, sales productivity and bottom line profit growth.

In addition, he is currently a non-executive Board Director in two Construction related companies in Ireland and was previously a Board Director of Al Safi Danone in Iraq. He has worked in both commercial and government sector organisations. He is a Graduate Member of both the Chartered Institute of Marketing (UK) and the Marketing Institute of Ireland and holds a Masters Degree in Management from the University of York (UK).

Dr Adnan Steitieh (Advisor to the Board)Dr. Adnan is an independent board member of Power International Holding, Assets Real Estate Development Co., and Nehme Group. Additionally, he is an independent board member of Arab Jordan Investment Bank and Palestine Investment Bank.

He is also an Advisor and Secretary to the Board of Directors to both Salam International Investment Limited and Salam Bounian Development. Dr. Adnan has held several managerial and leadership positions in different companies and countries.

Dr. Adnan is an International Arbitrator accredited by Qatar International Center for Conciliation and Arbitration, an Assistant Professor at the College of Management & Economics - Qatar University and a member of Award Committee of Social Responsibility.

Dr. Adnan holds a doctorate (Ph.D.) in Management and Economics from HHL Leipzig Graduate School of Management – Germany and a bachelor’s degree in Law & Political Sciences from Arab University of Beirut – Lebanon in addition to various diplomas and other advanced qualifications in International Relations, Sustainable Development, Reserve Management, and Public Policy. Dr. Andan has cumulative operational experience of circa 40 years.

185


The management expertise and experience of some of the Senior Management team members is set out below:

Dr. Kamel Abdallah, Chief Executive Officer (Baladna Q.P.S.C.)Dr. Kamel Abdallah was appointed Chief Executive Officer of BFI in October 2018. Additionally, Dr Kamel, as a Board member, will serve as the head of the Executive Committee.

Prior to joining the Company, Dr. Kamel Abdallah served as Executive Vice Chairman/CEO of Aujan Industries/Rani Investment (now Aujan-Coca Cola), the largest private beverage business in the Middle East. Aujan-Coca Cola includes brands such as Rani, Vimto and Barbican and has 3 beverage factories and 2 can making factories. He was also the CEO of Exeed Industries, an Abu Dhabi family office industrial/agriculture group with 17 companies. Part of the group’s operations include farms and feed mills. Dr. Kamel was also the Managing Director of AATCO Food Industries in Oman, the largest GCC manufacturer of wet condiments food in the region.

Dr. Kamel remains involved in academia, where he has been an Assistant Vice President of the American University of Beirut and Professor of Strategy and Finance, in addition to holding tenure in leading academic departments in the USA.

Dr. Kamel holds a Ph.D in Strategic Management from the Ohio State University, a Master’s Degree in International Trade and Finance from the American University in Washington D.C. and Ohio State University and a BA in Economics from the American University of Beirut. He has been awarded the honorary title of Colonel by the Governor of Indiana, as well as numerous awards in the US and the region. He is considered a subject matter expert on regional food security programs and is a frequent speaker at investment and agriculture conferences in the GCC.

Name PositionDate appointed as

an employee of the Company

Dr. Kamel Abdallah CEO of Baladna Q.P.S.C. 14 October 2018 (BFI)

Mr. Malcolm Jordan CEO of BFI 9 September 2019

Mr. Saifullah Khan CFO 21 July 2019

Mr. Thomas White COO 1 July 2019

Mr. Mohamad Kheir HR Director 30 October 2017

Mr. Alfred Mouawad Strategy and Budget Planning Director 11 Aug. 2018

Mr. Christopher Blakeney General Managers Farms 18 April 2018

Ms. Taghrid Hamieh Legal Counsel / Board Secretary 22 June 2019

Mr. Flemming Christensen Manufacturing Director – Beverage 2 March 2019

Mr. Martin Buissine Manufacturing Director – Plastic 20 February 2018

Mr. Wissam Coosah General Manager Organic Fertilizers 5 November 2018

Mr. Firas Khalil IT Director 15 September 2014

Mr. Charles Stevens HSE Director 2 February 2019

186


With his proven leadership and expertise, Dr. Kamel will lead the strategic growth of BFI by helping Baladna to be an innovative brand, seeking to penetrate relevant sections of the market and supporting the transformation of the national food security program in the region.

Mr. Malcolm Jordan, Chief Executive Officer (BFI)As CEO, Mr. Jordan will lead the development and execution of both short and long term strategies, supporting the achievement of the national food security programme.

Prior to joining Baladna, Mr. Jordan held a number of executive positions within the leadership team of Almarai, the largest food manufacturer and distributor in the Middle East and the largest integrated dairy company in the world. Posts included Executive Vice President-New Business, CEO-IPNC, General Manager-Marketing, General Manager-Quality, Product Development and Innovation.

Having worked in the region for the past 25 years, Mr. Jordan has a proven track record of delivering superior commercial results, building highly motivated teams and leading business transformation, value chain optimisation and major innovation projects.

Mr. Jordan is a graduate in Food Technology from the West of Scotland Agricultural College in Scotland and holds a Certificate in Leadership Development from IMD in Switzerland.

Mr. Saifullah Khan, Chief Financial OfficerMr. Saifullah Khan was appointed as Chief Financial Officer of BFI in July 2019.

He has nearly 20 years of experience in finance, across industries including construction, contracting, manufacturing, services and dairy. Mr. Khan has multinational experience and knowledge of diverse finance regulations, system and procedures. He has demonstrated the ability to scale finance operations during both explosive growth and organizational restructuring.

He has Pakistani nationality and holds a bachelor’s degree in accounting, an MBA degree in finance and a CPA certification. Mr. Khan began his professional career with BKR International. He has also worked with multinational companies including NLC Pakistan and Qatar Power in senior level positions. In 2014, he joined Power International Holding (BFI’s parent company), and in his capacity as cluster CFO at Power International, BFI become part of his portfolio along with other group companies.

His key areas of responsibility as CFO of BFI include strategic management, financial planning, policies and compliance, financing arrangements, credit control, risk and internal control, feasibilities and due diligence, capex/opex management, legal and other statutory interface, and relationship building.

Mr. Thomas White, Chief Operating Officer Thomas White is the Chief Operating Officer of BFI. He is a graduate of the Marketing Institute of Ireland with a Degree in Business Studies (Marketing) and holds a Professional Certificate in Management from the Open University London.

Mr. White is an accomplished senior management professional, with more than 32 years’ experience in the areas of sales and commercial management, supply chain management, general management and continuous improvement starting in his native country, Ireland, as well as across the entire GCC region for the past seventeen years.

Before joining BFI, Mr. White was the VP Commercial and VP Supply Chain in Al Safi Danone KSA. Previous roles with Almarai include Head of Business Improvement & Planning (Almarai Group Executive), Head of Group Supply Chain, General Manager (Almarai Sales & Distribution Division).

187


Mr. Mohamad Kheir, HR Director As HR Director, Mr. Kheir is responsible for managing and driving BFI’s strategic human resource objectives, with a focus on talent development, talent acquisition, compensation and benefits, and building an effective performance management system. Mr. Kheir is a dynamic HR professional with more than 10 years of industry experience. Prior to the joining the company in 2012, he worked in similar roles in Lebanon and Saudi Arabia. Mr. Kheir holds a Masters Degree in Management Information Systems and is a Certified Human Resource Manager.

Mr. Alfred Mouawad, Strategy and Budget Planning DirectorMr. Mouawad has more than 14 years of experience in developing performance matrix for leading organizations across the Middle East. At BFI, he leads the company’s corporate strategy, and holds accountability for risk management, performance management and budget planning. His previous experience includes an assignment with Deloitte Qatar, providing advisory services on Mergers & Acquisitions, and he has also worked with the Jaidah Group to drive their Strategy and Business Planning efforts. Mr. Mouawad graduated in Economics from Saint Joseph University in Lebanon and completed an Executive Masters in Investment Banking from Rotterdam School of Management in the Netherlands.

Mr. Christopher Blakeney, General Manager – Farms Chris joined BFI as Farms General Manager in April 2018. Prior to this, Chris was Head of Agriculture with Sama Jordan Investment Group. Other positions include Farm Manager with Almarai and Farms Director with NADA as well as numerous consultancy assignments in UK, Europe, Asia and Africa. Chris graduated from Lackham College, in the UK and is a Nuffield Scholar.

Ms. Taghrid Hamieh, Legal Counsel and Board SecretaryMs. Taghrid is a seasoned Legal professional with more than 17 years of experience in legal counselling and corporate litigation. She is a Law graduate from Beirut Arab University and has several certifications including Certificate in International Arbitration from Qatar Chamber of Commerce and Certificate in International Arbitration from Beirut Arab University and Certification from Carnegie Mellon University Qatar for attending Advanced Negotiation workshop. She is also a member of the Beirut Bar Association and Arab Chamber of Conciliation and Arbitration A.C.C.A. She has worked with few prominent business groups in Qatar and Lebanon, including the Abuissa Holding and Vision V Holding.

Mr. Flemming Christensen, Manufacturing Director – BeverageMr. Flemming has 25 years’ experience in the dairy industry, with the last 15 years in the Middle East, working in Saudi Arabia, Kuwait, the U.A.E and Qatar with leading companies. He is a food technologist and holds a diploma in management.

Mr. Martin Buissine, Manufacturing Director – PlasticMr. Martin has over 35 years of experience in the dairy and plastic packaging industry. Hailing from the United Kingdom, he moved to Africa when he was 8, where he lived in Zimbabwe. At age 18, he moved to South Africa where he qualified as a mechanical engineer, with a post graduate diploma in plastic technologies. In Saudi Arabia he also completed a BBA from Ashford University in the United Kingdom. Martin has been involved with several large multinational companies within the Middle East over the 15 years, traveling worldwide to gain experience and exposure within the industry. He joined BFI in February 2018.

188


Mr. Wissam Coosah, General Manager – Organic FertilizersMr. Wissam is currently the general manager of organic fertilizers and environmental compliance at BFI. He is a graduate of the American University of Beirut and holds a BSC degree in agriculture and the title of Ingenieur Agronome. Mr. Wissam began his career as a branch manager in Magnon for Agriculture in Lebanon and then moved to be a regional manager in Albion Laboratories, covering the MENA region for almost 10 years. He then occupied several positions in the UAE, such as branch manager in Citiscape Landscaping. Mr. Wissam has vast experience in all agricultural domains, including crop production, irrigation, landscaping, procurement, transportation and logistics, and sales and trading of agricultural products and fertilizers.

Mr. Firas Khalil, IT DirectorPrior to joining BFI, Mr. Firas had also played major roles for leading IT services providers in France, handling major deployments in different segments of business for top-ranking companies like Automative Valeo, Aeronautic Snecma and Dassault, Energy EDF. Firas holds a Masters degree in ERP Project Management from EI-CESI, Paris and a Bachelors degree in Mechanical and Production Engineering from Paris XI University.

Mr. Charles Stevens, HSSE DirectorMr. Charles is a Registered Lead Auditor (Occupational Health and Safety Management Systems) in addition to being an Environmental Management System Lead Auditor with 18 years’ experience in diverse industries including aviation, bulk fuel installations, civil construction and the built environment. He specializes in developing, implementing and managing effective and efficient management systems with the objective to demonstrate continual improvement in HSE performance within BFI.

Corporate governanceThe Board is committed to the highest standards of corporate governance and to maintaining a sound framework for the control and management of the Company.

The Board

The Board is responsible for leading and controlling the Company and has overall authority for the management and conduct of the Company’s business, strategy and development. The Board is also responsible for ensuring the maintenance of a thorough system of internal controls and risk management (including financial, operational and compliance controls) and for reviewing the overall effectiveness of systems in place. The Board is also responsible for approving any changes to the capital, corporate and/or management structure of the Company.

Board committees

The Board has established the following committees as described in further detail below: an Audit Committee; a Remuneration Committee; and a Nomination Committee.

Audit CommitteeThe Audit Committee assists the Board in discharging its responsibilities with regard to financial reporting and external and internal controls, which includes: reviewing and monitoring the integrity of the Company’s annual and interim financial statements; advising on the appointment of external auditors; supervising the internal control of the Company; overseeing the Company’s relationship with its external auditors; reviewing the effectiveness of the external audit process; and reviewing the effectiveness of the Company’s internal control and review function. The ultimate responsibility for

189


reviewing and approving the annual report and accounts and the half yearly reports remains with the Board. The Audit Committee will give due consideration to applicable laws and regulations.

The Audit Committee has taken appropriate steps to ensure that the Company’s external auditors are independent of the Company and that the Company has obtained written confirmation from the auditors that they comply with the guidelines on independence issued by the relevant accountancy and auditing bodies.

Appointments to the Audit Committee will be made by the Board, on recommendation by the Nomination Committee. The Chairman of the Audit Committee shall be an Independent Member of the Board of Directors of the Company.

When appropriate, the Audit Committee will meet with the Company’s Senior Management in attendance. The Audit Committee will also meet separately at least once a year with the Company’s external and internal auditors without management present.

Remuneration CommitteeThe Remuneration Committee will assist the Board in determining its responsibilities in relation to remuneration by making recommendations to the Board on the Company’s policy on executive remuneration and determining the individual remuneration and benefits package of each of the Directors, provided that the annual remuneration of the Board of Directors does not exceed 5% of the net profit of the Company after deducting the reserves and legal deductions and distributing cash and in-kind profits to its Shareholders. The Remuneration Committee will also ensure compliance with any applicable laws and regulations in relation to remuneration wherever possible.

Appointments to the Remuneration Committee will be made by the Board, on recommendation by the Nomination Committee. The Chairman of the Remuneration Committee shall be a member of the Board of Directors of the Company. The Remuneration Committee and Nominations Committee may be combined into a single committee.

Nomination CommitteeThe function of the Nomination Committee is to provide a formal, rigorous and transparent procedure for the appointment of new Directors to the Board. In carrying out its duties, the Nomination Committee is primarily responsible for the following: identifying and nominating candidates to fill Board vacancies; evaluating the structure and composition of the Board with regard to the balance of skills, board diversity, knowledge and experience of the Board and making recommendations accordingly; advising the Board on succession planning; and submitting an annual report to the Board which includes an analysis of the Board’s performance.Appointments to the Nomination Committee will be made by the Board. The Nominations Committee and the Remunerations Committee may be combined into a single committee.

Conflicts of interestThere are no potential conflicts of interest between any duties owed by the Directors or Senior Management to the Company and their private interests or other duties. The Company has in place an effective policy to address any potential conflicts of interest between any duties owed by the Directors or Senior Management to the Company and their private interests or other duties. Where transactions constitute related party transactions, they are conducted on an arm’s length basis and approved by the General Assembly.

190


No Director or Senior Manager has at any time within the previous five years:• had any convictions in relation to fraudulent offences; • been declared bankrupt; • been a director of any company which, while he was a director, went into liquidation,

creditors voluntary liquidation or made any composition or arrangement with its creditors generally or with any class of its creditors;

• been a partner of any partnership which, while he was a partner, went into liquidation; • has had any public criticism and/or sanction by statutory or regulatory authorities; or• has been disqualified from acting as a director of a company or from acting in the

management or conduct of the affairs of any company.

So far as the Founders and Senior Management are aware, there are no arrangements the operation of which may at a later date result in a change of control of the Company.

There are no loans made or guarantees granted or provided by any member of the Company to or for the benefit of any Senior Manager.

No Senior Manager is or has been interested in any transaction which is or was unusual in its nature or conditions or significant to the business of the Company and which was effected by any member of the Company during the current or immediately preceding financial year or which was effected by any member of the Company during any earlier financial year and remains in any respect outstanding or unperformed.

In respect of the Senior Managers, there are no conflicts of interest between any duties they have to the Company and their private interests and/or other duties they may have.

191


15. FOUNDERS

Founders' names

Shareholding percentage

(of total post-Offering

Sharess

Total number of

sharesNationality

Mr. MohamadMoataz Mohamad Ruslan AlKhayat 12.49% 237,475,000 Qatari

Mr. Ramez Mhd Ruslan AlKhayyat 12.49% 237,475,000 Qatari

Ms. Alaa Mhd Reslan AlKhaiat 0.01% 100,000 Qatari

Mr. MohamadRaslan Mhd Ezzat AlKhayat 0.01% 100,000 Qatari

Mr. Mohamad Mhd Reslan AlKhaiat 0.01% 100,000 Qatari

192


16. CAPITALISATION AND INDEBTEDNESS

The following tables should be read together with Part 11 (Management Discussion and Analysis) and Part 10 (Historical Financial Information). The following tables do not reflect the impact of the Offering on the Company’s capitalisation and indebtedness (including receipt of the net proceeds of the Offering by the Company).

(a) Capitalisation and indebtednessThe following table sets out BFI’s capitalisation and indebtedness as at 31 December 2017, 31 December 2018, and 30 June 2019. The capitalisation and indebtedness of BFI has been extracted without material adjustment from the audited financial statements of BFI as at and for the year ended 31 December 2018 and unaudited interim condensed consolidated financial statements of BFI as at and for the period ended 30 June 2019.

As at 31 December 2017

(QAR ‘000)


(QAR ‘000)

As at 30 June 2019(QAR ‘000)

Total current debt

Secured * -- -- 2,456,211

Guaranteed 43,524 196,522 166,283

Total current debt 43,524 196,522 2,622,494

Total non-current debt (Excluding Current portion of long-term debt)

Secured * 1,172,667 1,968,338 --

Guaranteed 10,266 10,208 8,598

Total non-current debt 1,182,933 1,978,546 8,598

Total debt 1,226,457 2,175,068 2,631,092

Shareholders’ Equity (excluding retained earnings)

Capital 1,000 1,000 1,000

Legal Reserve 422 500 500

Owner's current account 679,747 685,338 675,373

Total Shareholders’ Equity (excluding retained earnings) 681,169 686,838 676,873

Total capitalisation and indebtedness (Sum of Total Debt and Total Shareholders’ Equity (excluding retained earnings))

1,907,626 2,861,906 3,307,965

* Interest bearing loans and borrowings which are secured as well as guaranteed are classified as 'secured' in the above table.

193


There has been no material change to BFI’s total capitalisation or indebtedness since 30 June 2019, except for QAR 233,660,874.30 received in connection with the Support Agreement (as defined in Part 25(m) of this Prospectus), which was used to reduce BFI’s debt. This amount represents approximately 8.9% of BFI’s total debt.

(b) Net financial indebtednessThe following table sets out the total net financial indebtedness of BFI as at 31 December 2017, 31 December 2018, and 30 June 2019, which has been extracted without material adjustment from the historical financial information in Part 10 (Historical Financial Information).


(QAR ‘000)


(QAR ‘000)

As at 30 June 2019

(QAR ‘000)

Cash & Cash Equivalents (6,427) (88,077) (88,657)

Liquidity (includes Cash and Cash Equivalents) (A) (6,427) (88,077) (88,657)

Other current financial debt 34,784 107,158 2,528,996

Current financial debt (includes other current financial debt) (B) 34,784 107,158 2,528,996

Net current financial funds (C= B - A) 41,211 195,235 2,617,653

Other non-current debts 1,182,933 1,978,546 8,598

Non-current financial indebtedness (includes other non-current loans) (D) 1,182,933 1,978,546 8,598

Net financial indebtedness (E = C + D) 1,224,144 2,173,781 2,626,251

194


17. RELATED PARTY TRANSACTIONS

Save as set out below and in Part 10 (Historical Financial Information), there are no related party transactions that were entered into by the Company or the Subsidiary during the period covered by the financial information contained in Part 10 (Historical Financial Information) and during the period from 30 June 2019 to the date of this Prospectus. Some of the agreements described below are ongoing and may be subject to modification in terms of scope and fees.

(Note that the subsequent License Agreement dated 30 March 2019 between BFI (as licensor) and Aura Lifestyle WLL (as licensee) provides for a license fee of 2% of daily sales, payable quarterly by Aura to BFI in consideration for the right to use the Baladna name and marks in three Baladna-branded restaurants in Qatar);

(a) Construction Agreement between BFI and Urbacon Trading & Contracting LLC dated 16 July 2017 for the design and construction of Baladna Dairy Farm Phase 1. The project works commenced on 25 May 2017 and were completed on 30 December 2017. The total contract value is QAR 203,959,981 excluding taxes

(b) Construction Agreement between BFI and Urbacon Trading & Contracting LLC dated 12

July 2017 for the design and construction of Baladna Dairy Farm Phase 2. The project works commenced on 17 July 2017 and were completed on 16 April 2018. The total contract value is QAR 1,322,961,488 as per Amended Contract No 01 dated 30 October 2017

(c) On 17 July 2019 the Founders of Baladna Q.P.S.C. (under incorporation), on the one hand, entered

into an agreement with Power International Holding, on the other hand, whereby following the IPO, Power International Holding shall have certain management and operational duties to the Company. Such duties include: (i) determining or changing operating and financing policies; and (ii) establishing operating and capital budgets (that would be ratified by the Board and General Assembly of the Board of the Company (as needed). The Founders, on behalf of the Company, agreed to cause a Company board resolution to be issued, acknowledging and approving the contents of this agreement. The term of the agreement is for a period of five years from the date of incorporation of the Company, coinciding with the length of the term of the first Board of Directors. The parties agreed to observe all applicable laws and regulations in the State of Qatar in carrying out their obligations under the agreement

(d) Agreement between BFI and Aura Lifestyle WLL dated 1 January 2018 whereby BFI wishes to expand its activities related to the food industry by opening a number of restaurants, cafes and family entertainment park within the Umm Al-Hawaya plot to be operated by Aura Lifestyle W.L.L. The agreement provides for the opening of Baladna Restaurant, Karaki Café and Baladna Park. The agreement is valid for 15 years with an expiry date of 31 December 2033. The following are the agreed fees that Aura Lifestyle W.L.L. shall pay to BFI on a sales commission basis

• Baladna Restaurants: 7% of the total daily sales during the first and second years. For subsequent years, this percentage shall be raised to 10%. (Note that the subsequent License Agreement dated 30 March 2019 between BFI (as licensor) and Aura Lifestyle WLL (as licensee) provides for a license fee of 2% of daily sales, payable quarterly by Aura to BFI in consideration for the right to use the Baladna name and marks in three Baladna-branded restaurants in Qatar)

• Karaki Café: 5% of the total daily sales in the first year and 7% for the second year. For subsequent years, this percentage shall be raised to 10% from 1 January 2020; and

195


• Baladna Park: 20% of the total daily sales starting from 1 January 2018

Licence agreement between BFI and Aura Lifestyles WLL dated 30 March 2019 whereby Aura Lifestyle will use Baladna name and logo in three branches Baladna Restaurants (in Baladna Park, Mall of Qatar & Pearl) and in return 2% of daily sales to be payable quarterly to BFI. Term of the contract is five years renewed automatically. Term of the agreement is for five years commencing from 30 March 2019 and automatically renewable for same period.

(e) Memorandum of Agreement between BFI and Joury Logistics WLL dated 14 January 2018 for shipping, customs, clearance, transportation and delivery services. The agreement is valid for one year. The total contract value is QAR 32,704,660

(f ) Contract for Annual Supervision Services between BFI and Urbacon-Facility Management Department-WTD, dated 1 March 2018 for the operation, maintenance and services for the reverse osmosis plant and sewage treatment plant system installed in Baladna Farm at Umm Al Hawaya. The agreement is valid from 1 July 2018 to 30 June 2020 with a monthly fee of QAR 116,000 payable to Urbacon

(g) Memorandum of Agreement between BFI and Urbacon Trading & Contracting WLL (PMV) dated 10 January 2018 for vehicle rental and purchases, generators and equipment rental, FA purchases and water treatment services. The agreement is valid for one year. The total contract value is QAR 4,999,892

(h) Credit Facility Agreement between BFI and Joury Tour & Travels WLL dated 12 June 2018 for credit facilities offered by Joury Tour & Travels WLL to BFI in connection with travel booking services. The agreement has an indefinite duration with the credit limit being QAR 500,000

(i) Memorandum of Agreement with Challenger Trading WLL dated 3 January 2018 for manpower supply services. The agreement is valid for one year. The total contract value is QAR 1,292,060

(j) Memorandum of Agreement between BFI and Stark Security Services WLL dated 24 January 2019 for manned guarding services and full service private security. The agreement is valid for three months. The total contract value is QAR 643,322.14 within the first quarter of 2019

(k) Contract Agreement for the Landscaping Maintenance Services between BFI and Palmera Agricultural Business WLL dated 1 January 2019 for manned gardening services including site wide soft landscaping and irrigation system works and maintenance services at Baladna farm. The agreement is valid for twelve months. The contract value is QAR 54,000 per month

(l) Contract between BFI and Urbacon-Facility Management Department dated 1 January 2019 for leasing of 16,500 square meter area with steel hanger building to use as Store from Umm Al Hawaya Central Complex with a monthly payment of QAR 318,815. This contract is for one year, starting 1 January 2019 and ending 31 December 2019, and this period is renewable automatically for another similar period.

(m) Contract made between BFI and Urbacon-Facility Management Department dated 1 May 2019 for leasing of 8 blocks containing 276 rooms from UCC Umm Al Hawaya Central Complex for using as housing for Baldana Food Industries employees. Contract term is five years commencing on 15 July 2019 and ending on 14 July 2024 for a monthly payment of QAR 1,203,200 to Urbacon.

196


(n) Contract made between BFI and Urbacon-Facility Management Department dated 1 March 2018 for operation and maintenance for RO (reverse osmosis) plant & STP (sewage treatment plant) system installed in Farm Phase 1, 2 and 3 at Umm Al Hawaya, which is owned by BFI. Contract term beings 1 July 2018 and ends on 30 June 2020 with a monthly payment of QAR 116,000.

(o) Memorandum of Agreement between BFI and Urbacon Trading & Contracting WLL (PMV) dated 2 January 2019 for vehicle rental, generators and equipment rental and maintenance, fixed asset purchases and water treatment services. The agreement is valid for three months ending 31 March 2019. The total contract value is QAR 565,017.29.

Financial terms and other key provisions of material related party transactions are reviewed and approved by the Board to ensure that related party transactions are conducted on an arm’s length commercial basis in the best interests of the Company.

The relationship between the related parties abovementioned and Power International Holding (the current owner of BFI) are set out in detail in the table below:

Company Name Ownership

Urbacon Trading and Contracting W.L.L. 100% owned by the owners of Power International Holding W.L.L.

Aura Lifestyle W.L.L. 100% owned by Power International Holding W.L.L.

Joury Logistics W.L.L. 100% owned by Joury Tours and Travel WLL, which is under common control and ownership as Power International Holding W.L.L.

Facility Management Services W.L.L.

Under Urbacon, which is 100% owned by owners of Power International Holding W.L.L.

Urbacon Plant, Machinery and Vehicles

Under Urbacon which is 100% owned by the owners of Power International Holding W.L.L.

Joury Tours and Travel W.L.L. Under common control as Power International Holding W.L.L.

Challenger Trading W.L.L. 50% owned by Power International Holding W.L.L.

Stark Security W.L.L. 100% owned by the owners of Power International Holding W.L.L.

Palmera Agricultural Business W.L.L. 100% owned by Power International Holding W.L.L.

Printshop for Printing Services W.L.L. 100% owned by Power International Holding W.L.L.

197


18. UNDERTAKINGS BY THE FOUNDERS AND SENIOR MANAGEMENT OF THE COMPANY

The Founders and the Senior Management undertake to promptly inform the QFMA and the QE about any information that might affect the Company’s Share price on the QE, and to cause the Company to publish this information clearly and accurately in daily newspapers in collaboration and coordination with the MOCI, the QFMA and the QE. The Founders and the Senior Management further undertake to cause the Company to provide the QFMA and QE with all periodic information and reports issued by the Company in the future.

The Founders and the Senior Management, acting jointly and severally, confirm that the information provided in this Prospectus is true and accurate and that no facts were omitted from this Prospectus which would render any statement in this undertaking or in this Prospectus misleading.

198


19. DESCRIPTION OF THE SHARES; ARTICLES OF ASSOCIATION

The Company is a company under establishment as at the date of this Prospectus. The Company’s issued share capital will be 1,901,000,000 Shares, to be divided into 1,900,999,999 ordinary shares of QAR 1 each, and one Special Share. The information below in this Part 19 (Description of the Shares) constitutes a summary of the Articles and the provisions describing the rights of Shareholders in the Company. The company received approval from MOCI on 14 October 2019 on the Articles.

The material provisions of the Articles are set out below. This is a description of significant rights and does not purport to be complete or exhaustive.

(a) Voting rightsWhen voting for the election of the members of the Board, each Share shall have one vote given by the Shareholder in favour of such candidates as he, she or it chooses. A Shareholder may divide his voting shares between more than one candidate, but an individual Share may not vote for more than one candidate. Voting for the election of members of the Board shall be subject to the corporate governance rules of the QFMA.

(b) Shareholders’ RightsIn accordance with the Articles, and with exception to the Special Share, all Shares are of equal value and enjoy equal voting and other inherent rights, which, in accordance with the Companies Law, include:

• the right to receive dividends declared in the general meeting;• preferential rights to subscribe for any new Shares, except as provided for under law;• the right to share in the distribution of the proceeds of the Company’s assets on

liquidation; • the right to be invited to attend the general meeting and to vote in such meetings

personally or by proxy in accordance with the Articles; and

(c) Alteration of capitalThe share capital of the Company may be increased by issuing new Shares with the same nominal value as the original Shares by virtue of a decision of the Extraordinary General Assembly (the “EGA”) in accordance with the provisions of articles (190 to 200) of the Companies Law. However, the Extraordinary General Assembly may resolve to add a premium to the value of the Shares and to determine their amount, subject to the approval of MOCI. The value of this premium shall be added to the legal reserve of the Company. The increase should be based upon the Extraordinary General Assembly resolution after the approval of MOCI.

Also, without prejudice to the provisions of articles (201) and (204) of the Companies Law, the share capital of the Company may not be decreased, except by virtue of a resolution of the Extraordinary General Assembly after hearing the auditor’s report and receiving the approval of MOCI, in one of the following two cases: (i) if the share capital is in excess of the Company’s needs; or (ii) if the Company is suffering losses.

(d) Transfer of sharesFollowing the Listing, the issuance, transfer, sale, donation, pledge and attachment of the Shares (and

199


any other transaction or disposal thereof ) shall be in accordance with the instructions, regulations and policies promulgated by the QFMA and the QE.

(e) DividendsThe decision to pay dividends is taken by the Ordinary General Assembly of Shareholders (the “OGA”) of the Company based on the recommendation of the Board.

The Company’s dividend policy is aimed at striking a balance between the interests of Shareholders and the Company’s business needs. A number of factors therefore have an impact on the decision to pay a dividend and the amount and form of any dividend.

(f) Pre-emption rightsThe Shareholders shall have pre-emptive rights over the subscription for new Shares. However, it is possible to waive the pre-emption right in favour of third parties by virtue of a resolution of the Extraordinary General Assembly issued by a two-thirds majority of the holders of the issued share capital of the Company. Such waiver shall only be permitted after the approval of MOCI.

(g) Shareholders’ meetingsEvery shareholder shall have the right to attend the Shareholders’ meetings. The Board shall send invitations to the Shareholders to attend a Shareholders’ meeting by publishing such invitation in two local newspapers. At least one such invitation should be published in Arabic and on the website of the Company, if available, fifteen days at least prior to the date of the General Assembly meeting.

The Board of Directors will prepare an annual statement for the Shareholders’ consideration before the OGA meeting, which will include the following information (to be submitted at least one week ahead of the OGA meeting):

i. all of the amounts obtained by the Chairman and each member of the Board during the fiscal year, such as salaries, wages, allowances, and attendance fees, expenditures and any other amounts;

ii. the benefits in kind and in cash enjoyed by the Chairman or any member of the Board for the fiscal year;

iii. the bonuses that the Board proposes to distribute to members of the Board;iv. the amounts allocated for each current Board member;v. the transactions in which one of the Board members or managers has an interest

conflicting with the Company’s interests;vi. the amounts actually spent on advertising in any manner, together with details for each

amount; andvii. the donations together with information on the beneficiary parties, reasons, and details of

each donation.

The OGAThe Board of Directors will extend an invitation to all Shareholders to attend the ordinary general meeting within four months of the end of the financial year. The OGA will be responsible for:

i. hearing and ratifying the Board’s report and the auditors’ report concerning the Company’s activities and its financial position during the current year;

ii. discussing and ratifying the Company’s budget and the profit and loss account;

200


The invitation will be sent as described above and must be annexed with the agenda and all statements and documents pertaining to the matters to be deliberated at such OGA. When calling for a meeting of the OGA, the Chairman shall publish the invitation along with the balance sheet, profit and loss account, an adequate summary of the Board’s report and the full text of the auditors’ report in two newspapers one of which at least will be in the Arabic language. A copy of all the above documents shall be sent to the MOCI at the same time as they are sent to Shareholders. Furthermore, the Board of Directors shall invite the OGA to convene upon the Auditor’s request, if the Board of Directors fails to invite the OGA within fifteen (15) days from the date of the request, the Auditor may invite the OGA directly after the approval of the competent administrative department at MOCI.

A Shareholder may appoint in writing another Shareholder to be his proxy to attend and vote on his, her or its behalf at the general assembly meeting but a Shareholder may not appoint a Director as his proxy and the number of Shares detained by the attorney should not exceed 5% of the Company’s entire issued share capital.

The OGA meeting shall not be deemed to have been duly convened unless attended by a number of Shareholders representing at least half of the entire issued share capital of the Company. If such quorum is not met, an invitation shall be sent for a second meeting to be held within fifteen days following the first meeting by way of publication in two daily local newspapers. At least one such publication should be in Arabic and on the website of the Company and should be made available at least fifteen days prior to the meeting date. The second meeting shall be considered valid regardless of the number of Shares represented.

The resolutions of the OGA shall be passed by absolute majority of the votes represented at such meeting.

Each Shareholder shall have a number of votes equal to his number of Shares. However, a Shareholder may not hold, either in person or by proxy, a number of votes exceeding 25% of the number of deciding votes represented at the meeting.

The EGAAn EGA will be convened to decide on the following issues:

Nonetheless, this EGA meeting is not entitled to make amendments to the Articles which may increase the burden on Shareholders or amend the basic objectives of the Company or change its nationality or transfer its location from Qatar to any other state. Any attempt to do so will be null and void.

iii. discussing and adopting the corporate governance report; iv. considering the Board’s suggestions with regard to the approval and distribution of profits; v. (considering the discharge and release of Board members from liability and payment and

determining their remuneration;vi. considering the appointment or re-appointment of the auditors and agreeing their fees;

andvii. electing Board members, when necessary.

i. the amendment of the Company’s Articles and memorandum;ii. the increase or decrease of the Company’s share capital;

iii. the extension of the Company’s term;iv. the dissolution, liquidation, transformation or merger with another Company or the

acquisition of the Company; andv. the sale of the project for which the Company was created, or disposing of such project in

any manner.

201


The Board shall call for an EGA whenever necessary or upon a written request by a Shareholder or any number of Shareholders representing at least 25% of the Company’s issued share capital and within 15 days from the submission of the request.

The EGA will not be valid unless the meeting is attended by Shareholders and proxies representing at least two-thirds (2/3) of the Company’s issued share capital. If such quorum is not met, an invitation shall be sent for a second meeting to be held within 30 days following the first meeting. The second meeting shall be considered valid if attended by a number of Shareholders representing 50% of the Company’s issued share capital. If such quorum is not met, an invitation shall be sent for a third meeting to be held within thirty days following the first meeting. The third meeting shall be considered valid regardless of the number of Shareholders present.

If the matter to be considered is the dissolution of the Company, its liquidation, its transformation or its merger or the sale of the project which the Company was set up for, or disposing of the project by any means, the meeting will be considered valid only if it is attended by a number of Shareholders representing at least three quarters (3/4) of the Company’s issued share capital.

In any event, for resolutions to be validly passed at an EGA, an absolute majority of the Shares represented at such EGA is required.

(h) DirectorsThe Company shall be managed by a Board consisting of nine (9) Directors, provided that the members shall not be less than five (5) and not exceed eleven (11) members, all of whom shall be elected by the OGA by way of a secret ballot. Notwithstanding the foregoing, the first Board of Directors shall consist of the seven (7) Directors named in this Prospectus and will serve an initial term of five (5) years. Subsequent Boards will be elected by the Constitutive General Assembly for a period of 5 years. The Board elects a Chairman and a Vice Chairman by way of a secret ballot for a period of 3 years. The members of the Board shall be elected for a maximum term of 3 years and members may be re-elected more than once. The Board shall appoint a Board secretary in compliance with the QFMA requirements.

(i) Special Share and Special ShareholderThe Special Shareholder, as holder of the Special Share, shall enjoy the rights attached thereto as set out in the Articles, in particular Article 28. The Special Share gives the Special Shareholder veto rights over decisions taken by the Company, by the Ordinary General Assembly or Extraordinary General Assembly, or the Board of Directors. The following acts may not be taken by the Company unless approved by the Special Shareholder: any merger or amalgamation involving the Company, or a material sale of its assets; the dissolution of the Company; and some amendments to the Company’s Articles.

(j) Non-Qatari shareholdingThe Articles allow for non-Qataris (individuals and legal entities) to own up to 49% of the Shares of the Company.

202


20. TRANSFER AND SELLING RESTRICTIONS

The distribution of this Prospectus and the Offering in certain jurisdictions may be restricted by law and therefore persons receiving the Prospectus should consider and observe any relevant restrictions, including those set out in the paragraphs below. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

No action has been or will be taken in any jurisdiction that would permit a public offering of the Shares, or possession or distribution of this Prospectus or any other offering material in any country or jurisdiction where action for that purpose is required. Accordingly, the Shares may not be offered or sold, directly or indirectly, and neither this document nor any other offering material or advertisement in connection with the Shares may be distributed or published in or from any country or jurisdiction, except under circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction.

This Prospectus does not constitute an offer to subscribe for or purchase any of the Shares offered hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

(a) QatarThis Prospectus has been approved by the Qatar Financial Markets Authority and is being made available to eligible investors in the State of Qatar (outside of the Qatar Financial Centre).

(b) Qatar Financial Centre This Prospectus does not, and is not intended to, constitute an invitation or offer of securities from or within the Qatar Financial Centre (the “QFC”), and accordingly should not be construed as such. This Prospectus has not been reviewed or approved by or registered with the QFC Authority, the QFC Regulatory Authority, or any other competent legal body in the QFC. This Prospectus is strictly private and confidential and may not be reproduced or used for any other purpose, nor provided to any person other than the recipient hereof. The Company has not been approved or licensed by or registered with any licensing authorities within the QFC.

(c) United StatesThe Shares have not been and will not be registered under The Securities Act of 1933 (“The Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be, directly or indirectly, offered or sold within the United States or to or for the account or benefit of any US persons, except under an exemption from or in a transaction not subject to the registration requirements of The Securities Act.

Each Receiving Bank has agreed that:

i. it has not solicited and will not solicit offers for, or offer to sell, Shares by means of any general solicitation or advertising in the United States or otherwise in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act;

203


ii. none of it, its affiliates or any person acting on its or their behalf, has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Shares;

iii. such Receiving Bank, or any person acting on its behalf, will offer or sell or solicit offers for the Shares as part of their initial distribution only in offshore transactions within the meaning and meeting the requirements of Rule 903 under the Securities Act.

Terms used above in this paragraph (c) have the meanings given to them under Regulations of the Securities Act.

(d) European Economic AreaIn relation to each member state of the EEA which has implemented the Prospectus Directive (each a “Relevant Member State”) no Shares have been offered or will be offered to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that offers of Ordinary Shares may be made to the public in that Relevant Member State at any time under the following exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State:

provided that no such offer of Shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a Relevant Member State.

For the purposes of this provision, the expression an “offer to the public” in relation to any Ordinary Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Ordinary Shares to be offered so as to enable an investor to decide to purchase any Ordinary Shares, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state. “Prospectus Directive” means Directive 2003/71/EC as amended including by Directive 2010/73/EU and includes any relevant implementing measure in each Relevant Member State

(e) United KingdomNeither this Prospectus nor any other document issued in connection with the Offering may be passed on to any person in the United Kingdom. All applicable provisions of the Financial Services and Markets Act of 2000, as amended, must be complied with in respect of anything done in relation to the Offer Shares in, from or otherwise involving the United Kingdom.

(f) AustraliaThis Prospectus does not constitute a disclosure document under Part 6D.2 of the Corporations Act 2001 of the Commonwealth of Australia, as amended (the “Corporations Act”), and will not be lodged with the Australian Securities and Investments Commission. The Shares will not be offered to persons who receive offers in Australia other than with the prior approval of the Listing Advisor and Offering Manager and on a basis that such offers of Shares for issue or sale do not require disclosure to investors

i. to any legal entity which is a qualified investor as defined under the Prospectus Directive; ii. to fewer than 150 natural or legal persons (other than qualified investors as defined in the

Prospectus Directive) subject to obtaining the prior consent of the Receiving Banks for any such offer; or

iii. in any other circumstances falling within Article 3(2) of the Prospectus Directive,

204


under Part 6D.2 of the Corporations Act. Any offer of Shares received in Australia is void to the extent that it requires disclosure to investors under the Corporations Act. In particular, offers for the issue or sale of Shares will only be made in Australia in reliance on various exemptions from such disclosure to investors, as provided for by section 708 of the Corporations Act. Any person to whom Shares are issued or sold pursuant to an exemption, as provided for by section 708 of the Corporations Act, must not (within 12 months after the issue or sale) offer those Shares in Australia unless that offer is itself made in reliance on an exemption from disclosure provided by that section.

(g) JapanThe Shares have not been, and will not be, registered under the Financial Instruments and Exchange Law, as amended (the “FIEL”). This Prospectus is not an offer of securities for sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or entity organised under the laws of Japan) or to others for reoffer or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan. No such offer of securities for sale will be made except with the prior approval of the Listing Advisor and Offering Manager and unless made pursuant to an exemption from the registration requirements under the FIEL. Any such offer of securities for sale shall be in compliance with the FIEL and other relevant laws and shall also be in compliance with such law and any other applicable laws, regulations or ministerial guidelines of Japan.

(h) Other jurisdictionsThe Offer Shares have not been and will not be registered under the applicable securities laws of the Kingdom of Saudi Arabia, the Kingdom of Bahrain, the United Arab Emirates, the Sultanate of Oman, and the State of Kuwait.

205


21. QATAR EXCHANGE (QE)

The Doha Securities Market, as the predecessor to the QE, was established in 1995 and officially commenced operations in 1997.

In June 2009, Qatar Holding (the strategic investment arm of the Qatar Investment Authority) and New York Stock Exchange Euronext signed agreements to form a strategic partnership to establish the exchange as a world-class market. In October 2013, New York Stock Exchange Euronext exited the QE with Qatar Holding acquiring the entire share capital of the QE.

The primary aim of the QE is to support Qatar’s economy by providing a venue for capital raising for Qatari companies and to give Investors a platform through which they can trade a variety of products in a transparent and efficient manner. The QE also provides the public with access to market information and ensures correct disclosure of information. In addition, the Qatari market has been upgraded by the Morgan Stanley Capital Index from having a frontier market status to now holding an emerging market status. This clearly reflects the recognition of the positive steps made by the QE over the years to meet requirements in terms of development of market infrastructure and the implementation of a number of important projects and initiatives. These were welcomed by international financial and investment institutions.

206


22. QATAR FINANCIAL MARKETS AUTHORITY (QFMA)

The QFMA is the capital markets authority in the State of Qatar. It was established as an independent regulatory and supervisory authority pursuant to Law No. 33 of 2005 and subsequently replaced by Law No. 8 of 2012. The primary mission of the QFMA is to implement a robust regulatory framework for the securities markets in addition to conducting effective and responsible market oversight and supervision.

In accordance with its mandate, the QFMA is the licensing authority for the securities industry and relevant associated activities. The QFMA is also the listing authority in charge of overseeing and monitoring the issue of securities in the listing process on the QE. The QFMA also has the responsibility of ensuring market integrity and transparency by enforcing market rules and regulations on market participants and by conducting necessary surveillance and supervision activities.

207


23. QATAR CENTRAL SECURITIES DEPOSITORY (QCSD)

QCSD was established as a Qatari private shareholding company in 2014 and is owned by both the Qatar Central Bank and the QE. It has obtained all necessary licences from the competent authorities in Qatar, including the QFMA.

QCSD’s functions include safekeeping, management, ownership, clearing and settlement of securities and other financial instruments. It also provides related financial services, including registration, acceptance and transfer of government bonds and treasury bills (known as T-bills). Moreover, it offers additional services including DvP implementation (Delivery vs. Payment), securities lending and borrowing settlement, management and follow-up of the non-Qatari shareholders’ equity, registration and authorisation of Exchange-Traded Funds (ETFs) and participation in IPOs.

QE’s systems are linked to QCSD’s systems to enforce the transfer of listed companies’ shares at QE between sellers and buyers. QCSD will also process all off-market transfers, either by inheritance or by court order. QCSD is responsible for pledging and unpledging shares, among other operations.

208


24. TAXATION

The following comments are general in nature and are based on the current applicable tax regime in Qatar, which is comprised of the Income Tax Law and the current practice of the Qatar authorities as at the date of this document. Taxation Laws in Qatar are based upon: (a) Law No. 24 of 2018 (“Income Tax Law”); (b) the Executive Regulations of the Income Tax Law issued in June 2011 (the “Executive Regulations”); (c) Circular No.2 of 2011; and (d) the published practices that have been adopted and applied by the Director of Public Revenues and Taxes Department at the Ministry of Finance in Qatar.

Although the Income Tax Law contemplates the issuance of new executive regulations, no such regulations have been issued to date. Until such executive regulations are issued, the existing executive regulations issued by Decision of the Minister of Economy and Finance No. 10 of 2011 under the old Income Tax Law (Law No. 21 of 2009) shall apply to the extent that they are not inconsistent with the provisions of the new Income Tax Law.

The summary is not to be regarded as advice on the tax position of any Shareholder or of any person acquiring, selling or otherwise dealing with Shares of the Company or on any tax implications arising from the acquisition, sale or other dealings in respect of the Shares.

The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of relevant Shares and does not purport to deal with the consequences applicable to all categories of Investors, some of which may be subject to special rules. You should consult your own tax advisor concerning the application of the Income Tax Law to your particular situation, as well as any consequences of the purchase, ownership and disposition of relevant shares arising under the laws of any other jurisdiction.

Income tax issues for Qatari nationalsThe income (including dividend income) and capital gains of Qatari natural persons or corporate entities resident in Qatar and wholly-owned by Qatari nationals are exempt from tax. In addition, capital gains of natural persons (of whatever nationality) arising from the sale of securities is exempt from tax, provided that the securities sold do not form part of the assets of a taxable activity.

Income tax issues for non-Qatari nationalsHolders of Shares in the Company who are non-Qatari Shareholders will be potentially subject to tax in Qatar in respect of those shares to the extent that the Shares, or any contract or activities involving the Shares, constitute or give rise to income or profits for the purposes of the Income Tax Law.

The income of the Company is exempt from payment of tax and, once listed, dividends paid by the Company are not subject to tax in the hands of Shareholders.

Investors and Shareholders that are nationals or residents in jurisdictions outside Qatar, as well as Investors and Shareholders resident in Qatar that are subject to taxation in jurisdictions outside Qatar (both corporate and individual) should consult their own tax advisors as to the taxation or tax implications of the Listing and dividend income under the applicable local laws in those jurisdictions.

VATThe introduction of VAT may also have some implications for both the Company and Investors. While it is too early to assess any impact VAT may have on the Company, Investors should consult their tax advisors for any implications VAT may have on them.

209


25. GENERAL INFORMATION

(a) Ernst & Young (Qatar Branch) has given and has not withdrawn its written consent to the inclusion in this Prospectus of its ‘Independent Practitioner’s Assurance Report on the Compilation of Pro Forma Financial Information’.

(b) The expenses of, and incidental to, the Offering are estimated to amount to approximately QAR 14,257,500 and will be payable by the Company. The estimated net cash proceeds of the Offering accruing to the Company are QAR 1,425,750,000 and will be used for the purposes described in Part 3b’.

(c) There are no arrangements under which future dividends are waived or agreed to be waived.

(d) The financial statements of BFI as at and for the year ended 31 December 2018, have been audited, in each case, in accordance with the International Standards on Auditing, by Ernst & Young - (Qatar Branch), P.O. Box 164, Burj Al-Gassar, 24th Floor, Doha, as stated in their audit reports appearing herein.

The financial statements of BFI as at and for the period ended 30 June 2019, have been reviewed in accordance with the International Standard on Review Engagements 2410, ‘Review of interim financial information performed by the independent auditor of the entity’, by Ernst & Young - (Qatar Branch), as stated in their review report appearing herein. With respect to the financial statements of BFI as at and for the period ended 30 June 2019, Ernst & Young – (Qatar branch) has reported that they have applied limited procedures in accordance with International Standard on Review Engagements 2410, ‘Review of Interim Financial Information Performed by the Auditor of the Entity’. However, their review report dated 6 August 2019, included in this Prospectus, states that they did not audit and they do not express any audit opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied.

Each of these audit and review reports contain an emphasis of matter paragraph related to going concern. Refer section 11 Management Discussion and Analysis – Going Concern for further details

(e) Documents available for inspection Copies of the following documents may be inspected at the offices of the Company from

Sunday 27 October 2019 during usual business hours on any weekday (excluding Fridays and Saturdays) and for a period of 3 months following the date of this Prospectus:

25.e.i the Articles;

25.e.ii the historical financial information of BFI, for the financial years ending 31 December 2018, 31 December 2017, 31 December 2016 and for the period ending 30 June 2019; and

25.e.iii this Prospectus.

(f ) External Auditors’ Declaration Ernst & Young (Qatar Branch) has been appointed as the independent auditors of the Company from the date of the incorporation of the Company until 31 December 2019.

210


(g) Litigation Neither the Company nor its Subsidiaries have been involved in any governmental, legal or arbitration proceedings and the Company is not aware of any such proceedings pending or threatened by or against the Company or the Subsidiaries during the period of 12 months preceding the date of this Prospectus which may have, or have had in the recent past, a significant effect on the financial position or profitability of the Company.

(h) Significant Change As of 1 July 2019 until the date of this Prospectus, there are no significant changes in the financial position of the Company since it has not been incorporated.

(i) Working Capital In the opinion of the Company, taking into account the bank facilities available to BFI, the working capital available to BFI is sufficient for its present requirements, allowing BFI to meet its needs for the period of 12 months following the date of this Prospectus.

(j) Investments and Principal Establishments 25.j.i Other than as disclosed in this Prospectus, the Company currently has no principal

investments in progress or planned for the future, on which the designated Directors have made firm commitments or otherwise.

25.j.ii The principal establishments of the Company as at the date of this Prospectus are set out in Part 4 (Information on the Company).

(k) Listing and Settlement Prior to the Closing Date, the Company will submit an application to the QFMA and the QE to list the Shares on the QE in accordance with the QFMA Listing Rules and the QE Rule Book. Trading in the Shares will be effected on an electronic basis, through the applicable trading system administered by the QE. It is anticipated that Admission will occur in December 2019 (after obtaining the approval of the regulatory authorities). After the Closing Date, and following commencement of trading of the Shares on the QE, all institutions and individuals will be permitted to purchase Shares on the QE secondary market in accordance with the applicable laws of Qatar and the QE Rule Book. The Shares may be freely traded and transferred in accordance with the Articles of the Company, the laws of the State of Qatar, the QFMA Listing Rules, the rules and regulations of the QE, and in compliance with the applicable laws of the State of Qatar. Transactions in Shares admitted to trading on the QE will be governed by a 3-day settlement cycle (T+3) as per the QCSD Rules and delivery-versus-payment (DvP) procedures in accordance with the procedures of the exchange whereon shares are listed.

(l) National Food Security Program and Support to BFI In recent years, Qatar has focused on diversifying its economy, through increased spending on infrastructure, social programs, healthcare and education, in an effort to reduce its historical dependence on oil and gas revenues. This approach is outlined in the Qatar National Vision 2030, which was launched in 2008, and the National Development Strategy 2011-2016 that establishes targets to achieve the goals set out in the Qatar National Vision 2030. The State’s long-term economic objectives include developing Qatar’s infrastructure and strengthening its private sector.

One of the key pillars of the Qatar National Vision 2030 is to increase self-sufficiency in the food & beverages sector.

211


On 5 June 2017, four Arab countries took steps to cut trade, transport and diplomatic ties with Qatar, leading to a temporary shortage of dairy products among other predominantly imported goods. While the State of Qatar took immediate actions to provide sufficient supply of dairy products in the country through other providers, the State of Qatar considered the specific situation an opportunity to further develop the local production of dairy goods.

After assessing various options, the State of Qatar requested, and BFI agreed, to undertake certain significant investments in order to help address the temporary shortage of fresh dairy products and support the Qatar National Food Security Program as a part of the Qatar 2030 National Vision. The Government of the State of Qatar has developed multiple programs as part of the national food security program to support local manufacturers. BFI as an important pillar in the food security program and should receive support in multiple ways including the Support Agreement.

In addition to a number of conditions and requirements, the Support Agreement stipulates that BFI and the Company may not account for the income from the support agreement for the purpose of valuating the Company and BFI for the Initial Public Offering.

In consideration of the support payments to BFI, the Government, represented by the Ministry of Commerce and Industry, shall receive and hold a Special Share, which entitles the Government to certain rights as detailed in the Articles of Association. Furthermore, the agreement entitles the Government, as holder of the Special Share, to appoint three representatives on the Company’s board of directors, one of whom should be vice-chairman. The term of the First Board of Directors and the following Boards of Directors shall be as set in the Articles of Association.

In the interest of the Food Security program, the Ministry of Commerce and Industry undertakes and agrees to monitor and verify on an ongoing basis as to whether BFI is complying with each of the Conditions to be eligible to receive the respective support in each year. Please refer to “Risk Factors” for more information.

(m) Material Contracts The Company (or its subsidiary BFI) is a party to several material contracts with unrelated

third parties, as discussed below. The Company (or its related entities) is also a party to certain related-party contracts, which are described in Part 17 (Related Party Transactions) of this Prospectus.

Support Agreement with Government of Qatar BFI entered into an agreement (the “Support Agreement”) with the State of Qatar, represented

by the Ministry of Finance and the Ministry of Commerce and Industry, pursuant to which BFI will receive support in the form of fixed payments over a period of ten years in consideration of its significant investments in the Qatari dairy industry and its support of Qatar’s national food security program. The Support Agreement stipulates certain conditions that must be met by BFI and the Company to receive the support payments. These include, among others, BFI and the Company maintaining certain annual production volumes of fresh milk to meet specific local market demand levels for fresh milk and other dairy products; complying with any requests by the Ministry of Commerce and Industry to increase production levels to meet seasonal local demand for dairy products; exporting products as long as BFI and the Company ensure that any local market deficit of fresh dairy is covered and only after obtaining the necessary approvals by the Ministry of Commerce and Industry; using the Company’s IPO proceeds to repay debt incurred by BFI; ensuring continuous compliance with the applicable Qatari health and safety laws; and ensuring that BFI’s products are affordable and in compliance with the pricing levels determined by the Ministry of Commerce and Industry.

212


Failure by BFI or the Company to comply with any of these or other conditions stipulated in the Support Agreement may lead to a cessation, wholly or partially, of the support payments and potential termination of the Support Agreement, which could have a material adverse effect on the Company’s business, cash flow, financial condition, results of operations, and future prospects

Distribution Agreement with Ali Bin Ali and Partners BFI and ABAP are parties to an Amendment and Restatement Agreement dated 1st January

2019, which amends and restates the Distribution Agreement dated 8 May 2018, to which BFI and ABAP are parties. BFI has, since its incorporation, distributed its products through ABAP. Under the terms of the Amendment and Restatement, ABAP transferred control of the distribution of Baladna products to BFI (including control of vehicles and salesforce), and additionally provided distribution advice and consulting services to BFI, in consideration for guaranteed payments from BFI to ABAP in the amounts of QAR 21.5 million (minimum) to QAR 32 million (maximum) for the period beginning 1st January 2019 and ending 7th March 2022.

(n) Financing Agreements

QNB Loan BFI entered into a loan agreement with Qatar National Bank, dated 12 July 2017, with an initial

amount of QAR 1.3 billion. The purpose of the loan included: finance of BFI facilities construction and expansion, development of infrastructure, and provision of working capital. This loan is secured against irrevolcable personal guarantees by PIH and some of the Founders. The loan imposes a mortgage over the farm, inlcuding capital work in progress and any completed portions of buildings, machineries, equipment and all other asstes. The parties to this loan later entered into a number of addenda (with the latest being 30 June 2019) by virtue of which the interest rate was decreased to 5.25% and the loan amount was increased. As of 30 June 2019, the outstanding debt is QAR 2.45 billion, which is due to be repaid before 31 December 2019. The loan will be partially settled through the proceeds of the Offering, with the rescheduling of the remainder to be renegotiated following the Offering.

QNB Credit Facility BFI entered into a credit facility agreement with Qatar National Bank, dated 13/8/2015, for

an initial amount of QAR 15 million. This later increased to total facility of QAR 225 million in addenda dated 20/6/2018, 3/4/2018, and the latest being 9/6/2019, by virtue of which the interest rate was decreased to 5.25%. The facility includes certain forms of security, including personal guarantees, POS rights, undertakings to pledge property rights, and assignment of insurance policies. As of 30 June 2019, the balance on this facility was QAR 72,784,370.

QDB banking master agreement BFI entered into a banking master agreement with Qatar Development Bank dated 15/10/2015

in the original amount of QAR 30 million, which was later amended on 14 June 2017. Under this agreement, BFI is obligated to, in addition to paying off the remaining debt, make certain pledges and provide other forms of security for the benefit of the lender. As of 30 June 2019, the balance on this loan was QAR 8,598,399.

213


26. COMPLIANCE WITH SHARIA

On 10 October 2019, Sheikh Dr. Ali Mohy Addin Ali Al-Qaradaghi and Sheikh Dr. Walid Bin Hadi issued a Fatwa stating that there is no Sharia objection on the ownership of shares in the Company, as indicated in the Fatwa text hereinafter quoted.

In the name of Allah, the most merciful, the most compassionate,

Islamic advisory opinion (Fatwa) on the subscription for Baladna shares

Praise be to Allah, and prayers and peace be upon His messenger, his family and his companions and those who follow him.

As the Company has committed to following the rules of Sharia, and to forming of a Sharia committee, it is permissible to subscribe for the shares of Baladna, with the blessings of Allah.

(Signed)Sheikh Dr. Walid Bin Hadi

(Signed)Sheikh Dr. Ali Al-Qaradaghi

214


215


27. DEFINITIONS The following definitions apply throughout this Prospectus, unless the context otherwise requires:

“ABAP“ Ali Bin Ali and Partners

“Articles” or “Articles of Association” the articles of association of the Company (as amended from time to time)

“Admission” the admission of the Company’s Shares to trading on the main market of the QE

“Application Form” an application form pursuant to which Investors may apply to subscribe for Offer Shares

“Audit Committee” the audit committee of the Board

“Board” or “Directors” the board of directors of the Company

"Baladna Foodstuff Trading" Baladna Foodstuff Trading W.L.L, a Qatari limited liability company with commercial no. 133592 that is wholly owned by BFI

"Baladna Oman" Baladna Business & Trading LLC, an Omani limited liability company with commercial registration no. 1343623, whose shares are 99% owned by BFI and 1% owned by Baladna Foodstuff Trading

“BFI” Baladna Food Industries W.L.L. (formerly known as Baladna Livestock Production W.L.L.), a limited liability company established in Qatar and holding commercial registration number 64756, and its branches

“BFI Financial Statements” the audited financial statements of BFI for the fiscal year ended 31 December 2018 and the unaudited interim condensed consolidated financial statements of BFI for the fiscal period ended 30 June 2019

“CAGR” Compound Annual Growth Rate

"CGA" the Constitutive General Assembly of the Company

“Chairman” the chairman of the Board

“Commercial Law” Commercial Law No. (27) of 2006

“Companies Law” Commercial Companies Law No. (11) of 2015

“Company” Baladna Q.P.S.C., a public shareholding company under incorporation in Qatar, together with its Subsidiaries where appropriate

216


“Constitutional Documents” the Articles and the Memorandum of the Company

"Corporate Investors" eligible Individual and Corporate ¬Investors, consisting of legal entities incorporated in the State of Qatar, with a commercial registration certificate issued by the Ministry of Commerce and Industry

"Drink" a type of JND beverage made from less than 25% fruit sources, with the remainder consisting of water, sugar and other minor ingredients

"EGA" an extraordinary general assembly of the Company as constituted by the Articles

“Executive Directors” the executive directors of the Company, being Directors on the Board who are also employed by the Company or its subsidiary on a full-time basis to perform executive work

“Founders' Shares” 475,250,000 Shares, equal to 25% of the issued share capital of the Company, to be owned by the Founders

“Founders” the five (5) shareholders who hold the Founders' Shares

"FMCG" fast-moving consumer goods

“General Assembly” a general assembly of the Company as constituted by the Articles

“GCC” Cooperation Council for the Arab States of the Gulf

“Government” the government of Qatar

"IASB" International Accounting Standards Board

“IFRS” International Financial Reporting Standards

“Individual Investors" eligible Individual and Corporate Investors, consisting of Qatari citizens

"Individual and Corporate Investors" eligible Investors, consisting of either Individual Investors or Corporate Investors, for whom certain Offer Shares, comprising 52% of the Shares in the Company, have been set aside as at the date of this Prospectus, and who shall subscribe to those shares in accordance with the terms of this Prospectus

"Instrument of Transfer" has the meaning set out between pages 2-6 of this Prospectus

“Investor” a natural or legal person who is eligible to subscribe for Shares in the Offering pursuant to the terms and conditions set out in this Prospectus and to whom the Offering is being made

"IPO" the initial public offering

"JND" juice, nectar, and drink

217


"Juice" a JND beverage made 100% from fruit sources, with no additional water or sugar or other ingredients added.

“KSA” the Kingdom of Saudi Arabia

“Lead Receiving Bank” Qatar National Bank (Q.P.S.C.)

“Listing” the listing of the Company’s Shares on the QE

“Memorandum” the memorandum of association of the Company (as amended from time to time)

“MENA” the Middle East and North Africa

"Ministerial Resolution" the resolution of the Minister of Commerce and Industry approving the incorporation of the Company

“MOCI” Ministry of Commerce and Industry

"Nectar" a type of JND beverage consisting 25-99% of fruit sources, with the remainder consisting of water, sugar and other minor ingredients.

“Nomination Committee” the nomination committee of the Board

“Non-Executive Directors” the non-executive directors of the Company, being Directors on the Board who are not employed by the Company or its subsidiary on a full-time basis to perform executive work

“Offering” the public offering of the Offer Shares to Individual and Corporate Investors and Strategic Investors in Qatar as described in Part 3 (The Offering)

“Offer Price” QAR 1.01 per Share, representing the nominal value of QAR 1 per Offer Share and Offering and Listing Expenses of QAR 0.01 per Offer Share

“Offer Shares” 1,425,750,000 Shares, equal to 75% of the issued share capital of the Company, to be offered by the Company at the Offer Price pursuant to the Offering and this Prospectus

“Offering and Listing Expenses” QAR 0.01 per Offer Share

"OGA" the Ordinary General Assembly of Shareholders

“PET” Polyethylene terephthalate

“Power International” Power International Holding W.L.L., a limited liability company established in Qatar and holding commercial registration number 67274, which is 50% owned by Mr. Ramez Mhd Ruslan AlKhayyat and 50% owned by Mr. MohamadMoataz Mhd Ruslan AlKhayat

“Prospectus” this document

“QAR” or “Qatari Riyal” the lawful currency from time to time of Qatar

218


“Qatar” or “the State” The State of Qatar

"QCB" Qatar Central Bank

“QCSD” Qatar Central Securities Depository

“QE” Qatar Exchange

“QE Rule Book” The Qatar Exchange Rule Book

“QFMA” Qatar Financial Markets Authority

“QFMA Corporate Governance Code” Governance Code for Companies & Legal Entities listed on the Main Market issued by the QFMA’s Board pursuant to Decision No. (5) of 2016

“Receiving Banks” Ahli Bank Q.P.S.C., Doha Bank Q.P.S.C., Masraf Al Rayan Q.P.S.C., Qatar Islamic Bank Q.P.S.C., Qatar International Islamic Bank Q.P.S.C., Arab Bank PLC, Barwa Bank Q.S.C., The Commercial Bank Q.P.S.C., and Al Khalij Commercial Bank (Al Khaliji) Q.P.S.C.

“Remuneration Committee” the remuneration committee of the Board

“SEC” the United States Securities and Exchange Commission

“Securities Act” US Securities Act 1933, as amended

“Senior Management” the senior management of the Company

“Shareholders” the holders of Shares from time to time

“Shares” ordinary shares of QAR 1.00 each in the capital of the Company, consisting of the Founders' Shares, the Offer Shares, and the Special Share

"Special Share" the share held by the Special Shareholder, which carries certain rights as described in the Prospectus

"Special Shareholder" State of Qatar, represented by the Ministry of Commerce and Industry

"Strategic Investors" certain eligible Investors, which shall consist of certain selected institutions and may also include natural persons, for whom certain Offer Shares comprising 23% of the Shares in the Company have been contractually reserved

"Strategic Shares" the Shares to be held by the Strategic Investors

“Subscription Application” an application by an Investor on an Application Form

“Subsidiary” BFI

"Transfer Shares" the entire issued share capital of BFI

219


“UAE” United Arab Emirates

“United States” or “US” the United States of America, its territories and possessions, any state of the United States and the District of Columbia

“Urbacon” Urbacon Trading & Contracting W.L.L., a limited liability company established in Qatar and holding commercial registration number 50788

220


APPENDIX 1

BFI’s Commercial Registration objects

1. Production of refrigerated meat (beef / sheep meat)

2. Producing fresh meat, minced meat

3. Producing and packaging fresh and cut vegetables, chick-pea with tahini and spiced with eggplant, fresh fruits which are cut, fresh natural fruit-juice, fresh sandwiches which include cheese, meat, chicken and vegetables

4. Meat and chicken packaging

5. Producing cut and minced chilled meat and meat balls

6. Producing meat products (hamburger, sausage and mortadella)

7. Meat products industry 8. Production of Frankfurters or sausage from the meat of animals and birds (chicken, etc.)

9. Trading in meat and meat products 10. Preserving and preparing meat and its products by way of drying, fumigating, salting, dipping into salty solutions or packing in cans

11. Producing mortadella, processed meat in the form of pastrami and sausages, canned meals processed

12. Producing, processing and preservation meat and its products

13. Producing minced cows meat, fresh and chilled sheep meat without bones, chilled and minced meat of cheep

14. Producing hotdog and sausages, chilled and spiced burger meat, spiced meat

15. Preparing various kinds of Arabic sweets 16. Pies and confectionery industry

17. Producing French sweets -cakes 18. Producing Western sweets

19. Producing sweets, gateaux, petit four and pastries in different types

20. Producing oriental sweets

21. Trading in animal feed 22. Producing pastries, biscuits, oriental pastry, oriental sweets and other baked items with dates and without

23. Stores refrigerated and frozen goods (cooling warehouses)

24. Trading in food

25. Producing milk, yoghurt and their products

26. Trading in washing machines, refrigerators, electrical appliances and their spare parts

27. Production, packing and packaging Pasteurized sour milk and yoghurt.

28. Producing various cheese

29. Production of cream, natural butter, ghee and cheese

30. Production, packing and packaging Dry Cheese and maggot Cheese

221


31. Administration of gardens 32. Restaurant

33. Trading in dairy and dairy products 34. Parks entertainment and amusement activities (cities recreational amusements)

35. Breeding milk-producing cattle, horses, donkeys, mules, camels, sheep and goats

36. Trading in meat and meat products

37. Activities of butchering, slaughtering and processing cattle, sheep, goats meat etc.

38. Trading in live animals, birds, fish and their requirements

39. Trading in domestic animals food and fodder

40. Trading in veterinary medicine (including veterinary equipment)

41. Production of Polycarbonate bottle – plastic cover- bottles

42. Producing and packaging desalinated drinking water in different sizes

43. Producing refilling bags and coating from aluminium

44. Plastic containers of bottled water and plastic sheeting for water refills

45. Production (nylon bags of different sizes) 46. Producing plastic fill caps in different sizes

47. Production of soft drinks bottles - Non Alcoholic beverages bottles- Juices bottles- drinking cups

48. Production of bottles and capsules, plugs and caps and capsules and plastic roll sheets

49. Production of plastic containers 50. Various sizes plastic bags

51. Producing and packaging drinking water in different packaging sizes

52. The production of PET inflatable containers "bottles"

53. Producing drinking water in different sizes (from 100 ml to 19 l)

54. Producing plastic refills

55. Producing plastic bags 56. Trading in containers of all kinds

57. Producing and packaging water in different packaging sizes

58. Producing bottle cap/lids

59. Production of refined plastic granules and degradable plastic bags and rolls

60. Production of plastic cans

61. Producing drinking water and packaging it in packages of 5 gallon sizes

62. Manufacture of plastic containers for milk product packaging

63. Production and mobilization of mineral water bottles of various sizes

64. Producing water refill of different sizes

65. The production of plastic bags, film rolls, plastic containers and plastic recycling

66. Production of plastic containers and the lids of plastic containers

67. Producing (drinking water in containers of various sizes)

68. Production of carton boxes for various packaging "printed, compressed "

69. Producing plastic cups and bags 70. Plastic bottles and containers industry

222


71. Manufacturing Plastic Bags, cans, boxes, flasks and bottles

72. Production and package of (bottled drinking water in containers of various sizes)

73. Producing "pet preform", plastic flasks covers/lids

74. Producing plastic bags

75. Trading in plastics tools and materials (including bags)

76. Producing plastic bags and rolls, home appliances, refills and bottles, various types of pipes

77. Producing plastic containers and bottles, high density ethylene

78. Production of plastic containers

79. Desalination and the mobilization of desalinated water and health in different size containers

80. Water packed in containers of various sizes

223


224
