Capital Allocation

Capital Allocation

Ghitha's revenue base was assembled rather than bought in the open market. The parent injected businesses under common control (Apex among them) at nominal or par-value prices, then the group expanded through third-party acquisitions funded by external debt and, in its largest deal, by issuing shares in its own best subsidiary. Over four years the group deployed roughly AED 2.1bn while paying the public float nothing. This is the mechanism that routes economic value to non-controlling interests and lenders before minorities see it.

Sources: investing and operating cash flows are the sum of FY2022–FY2025 as reported [1]; non-controlling interests from the FY2025 balance sheet [2]; dividends to owners per the FY2023–FY2025 share-capital notes [3].

Assembled, not bought

The group that trades today as Ghitha was put together by its controller, not acquired by its managers. In December 2021 the group acquired Tamween Group LLC — holding Al Ajban Poultry, a seafood business and Agrinv — for a stated consideration of AED 2, a common-control transfer accounted for by pooling of interests [4]. Four months later, in April 2022, it acquired Tamween Companies Management LLC — which held Apex Investment PSC among other businesses — by issuing 141,600,000 new shares at AED 1 par [5].

Both transfers sat outside IFRS 3 because the same party controlled the businesses before and after. The Apex stake that now anchors book value entered the group this way — not through a priced, arm's-length purchase, but through a par-value share issuance directed by the parent. The consequence is that the composition of Ghitha's balance sheet reflects the controller's portfolio decisions more than any capital-allocation judgment a minority holder could vote on.

The acquisition engine

From 2023 the group began genuine third-party acquisitions, mostly in dairy and poultry, and the funding form is where the interests of the float and the controller diverge. The two largest recent deals were paid for in opposite ways.

Sources: FY2022 common-control share issuance [6]; FY2024 Marmum/USP and IFI consideration [7]; FY2025 cash acquisitions [8].

In 2024 the group's dairy subsidiary Al Ain Farms acquired Marmum Dairy and United Sales Partners for AED 697.5m — settled entirely in 3,181,868 new Al Ain Farms shares allocated to a third party, not in cash [9]. Because Marmum's net assets were fair-valued at AED 769.3m, above the shares issued, the group booked a AED 71.8m gain on bargain purchase [10]. The mechanism carries a cost the headline price hides: issuing Al Ain Farms shares to a third party diluted the group's holding in that subsidiary by 14.7% and lifted non-controlling interests by AED 246.2m, with a further AED 90.8m gain routed directly to retained earnings rather than through profit or loss [11]. The group grew the dairy business it consolidates while owning less of it.

In 2025 the pattern reversed to cash. The group acquired Arabian Farming Investment and Al Jazira Poultry (effective January and May 2025) for AED 495m, plus a small third deal — AED 496.4m of cash across the three [12]. Of the AED 495m paid for the two poultry businesses, AED 263.6m — more than half — was allocated to intangibles and goodwill above the tangible net assets acquired: customer relationships of AED 153.6m, brand names of AED 26.6m, and goodwill of AED 83.4m, the excess of price over identifiable net assets [13].

Source: FY2025 Annual Report, Independent Auditor's Report — Business acquisitions and purchase price allocation [14].

Goodwill and intangibles on the balance sheet rose from AED 369.1m to AED 611.4m over the year, almost entirely from these deals [15]; the AED 256.7m goodwill balance survived its annual discounted-cash-flow impairment test at year-end 2025 [16]. That paying above net assets is not, by itself, evidence of overpayment — these are operating dairy and poultry businesses with real capacity. But it does mean a rising share of book value now rests on management's own cash-flow projections rather than on tangible plant.

The funding gap

The acquisition programme has run faster than the business generates cash. In three of the four years since the roll-up began, cash used in investing exceeded operating cash flow, and the gap was filled by external financing.

Source: Consolidated statements of cash flows, FY2022 and FY2023 [17] and FY2024–FY2025 [18].

Cumulative investing outflow of about AED 2.07bn over FY2022–FY2025 outran cumulative operating cash of AED 1.59bn by roughly AED 480m, closed by borrowing and other financing inflows. The borrowing has a specific structure worth noting for its claim on the group's best assets: an AED 500m facility taken to finance a subsidiary acquisition was secured by a mortgage over subsidiary shares and an assignment of future dividend proceeds from the associate [19], and the FY2025 term loans remain secured against assigned dividend proceeds and pledges of shares in certain subsidiaries and associates [20]. Apex's dividend stream — the asset the Sum-of-the-Parts values most highly — is partly pledged to lenders before it can reach shareholders. Leverage is still modest against equity (the three-year financials set net bank debt near one turn of EBITDA), so this is a claim-priority point, not a solvency alarm.

Nothing for the float

For all the capital deployed, the public float has received no cash return. Ghitha has never paid a dividend to its shareholders. The only dividends the group pays flow to the non-controlling interests inside its partly-owned subsidiaries: AED 66.5m declared to NCI in 2025 (AED 47.2m paid), AED 63.3m declared in 2024, and AED 13.8m paid in 2023 — every dirham of it to minority holders of the subsidiaries, none to the holders of Ghitha itself [21], [22].

Source: FY2025 dividend note (FY2024 comparative) [23] and FY2023 dividend note [24].

This is why the discount cannot be bridged by yield. With no dividend to the float and the associate's dividend stream partly assigned to lenders, the main path from price to asset value runs through the corporate action the realisation chapter examines — not a stream of cash the float can collect while it waits.

The read

The evidence points to a capital allocator whose priorities are the controller's, not the minority's. Capital is deployed at scale into real operating businesses, but the form of deployment — par-value common-control injections that stock the balance sheet, share-funded acquisitions that dilute the group's ownership of its best subsidiary and lift non-controlling interests, external debt secured on the associate's dividends, and no cash to the float — routes economic value to NCI and lenders ahead of the public shareholder. That is consistent with the leakage the three-year financials measured, where owners take only 41% of group profit: it follows from how the group is built and funded, recurring across the four years rather than in any single one.

The strongest fact against a purely critical read is that the acquisitions look like value creation at the group level, not empire-building for its own sake. The businesses bought are genuine dairy and poultry operations; Marmum came in at a bargain-purchase gain rather than an inflated price; goodwill has survived annual impairment testing; and gross profit has grown with the deals. A reader who cares about a founder-operator with skin in the game will not find one here — the allocator is a state-linked parent — but the parent has so far grown the pie rather than shrunk it.

What would change the read, in either direction: a first cash dividend to the float or a buyback at the discount would signal the controller intends minorities to share the returns; continued growth funded by diluting Al Ain Farms, or a related-party use of proceeds like the Apex-share loan settlement noted in the control chapter, would confirm the opposite. Until one of those appears, the capital-allocation record is best read as competent portfolio-building by a controller that has paid the float no cash and leaves it with 41% of group profit while making the strategic decisions itself.