Ebro Foods S A : Auditors’ Report on the 2021 Consolidated Accounts of Ebro Foods, S.A. and Subsidiaries

Audit Report on the Consolidated Financial Statements issued by an Independent Auditor

EBRO FOODS, S.A. AND SUBSIDIARIES

Consolidated Financial Statements and Management Report for the year ended

December 31, 2021

Ernst & Young, S.L.	Tel: [phone]
Calle de Raimundo Fernández Villaverde, 65	Fax: [phone]
28003 Madrid	ey.com

AUDIT REPORT ON THE CONSOLIDATED FNANCIAL STATEMENTS ISSUED BY AN INDEPENDENT AUDITOR

Translation of a report and annual accounts originally issued in Spanish. In the event of discrepancy, the Spanish-language

version prevails

To the shareholders of EBRO FOODS, S.A.:

Report on the consolidated financial statements

Opinion

We have audited the consolidated financial statements of EBRO FOODS, S.A. (the parent) and its subsidiaries (the Group), which comprise the consolidated balance sheet at December 31, 2021, the consolidated income statement, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement, and the notes thereto, for the year then ended.

In our opinion, the accompanying consolidated financial statements give a true and fair view, in all material respects, of consolidated equity and the consolidated financial position of the Group at December 31, 2021, and of its financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union (IFRS-EU), and other provisions in the regulatory framework for financial information applicable in Spain.

Basis of the opinion

We conducted our audit in accordance with prevailing audit regulations in Spain. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

We are independent of the Group in accordance with the ethical requirements, including those related to independence, that are applicable to our audit of the consolidated financial statements in Spain as required by prevailing audit regulations. In this regard, we have not provided non-audit services nor have any situations or circumstances arisen that might have compromised our mandatory independence in a manner prohibited by the aforementioned regulations.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Domicilio Social: C/ Raimundo Fernández Villaverde, 65. 28003 Madrid - Inscrita en el Registro Mercantil de Madrid, tomo 9.364 general, 8.130 de la sección 3ª del Libro de Sociedades, folio 68, hoja nº 87.690-1, inscripción 1ª. Madrid 9 de Marzo de 1.989. A member firm of Ernst & Young Global Limited.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon, and we do not provide a separate opinion on these matters.

Sale of the dry pasta and other businesses in the US, Canada, and France

Description: As explained in notes 5 and 25 to the accompanying consolidated financial statements, at year- end 2020 the Group reached agreements to sell its dry pasta business in the US and Canada. The sale of part of the related assets was completed in 2021. In addition, at year-end 2021, the Group sold its dry pasta, semolina flour, couscous, and sauces businesses in France.

Group management derecognized the assets and liabilities related to the businesses sold during the reporting period (part of which were recorded under "Non-current assets held for sale" and "Liabilities held for sale" at year-end 2020), classifying the related income and expenses under "Gains (loss) on discontinued operations" on the consolidated statement of profit or loss.

Due to the qualitative and quantitative significance of the transactions described above, and their impact on the consolidated financial statements, we determined this to be a key audit matter.

Information on the applicable measurement standards and the related disclosures are provided in notes 5 and 25 to the accompanying consolidated financial statements.

Our

response Our audit procedures related to this matter included:

• Understanding Group management's process for recording and valuing the sale of the dry pasta and other businesses in the US, Canada, and France.
• Reviewing and analyzing the terms and conditions included in the corresponding sale agreements entered into by Group management.
• Performing specific analyses and tests on the net assets sold, including an assessment of the reasonableness of the allocation of goodwill to the businesses to ensure that the assets were correctly classified and recognized in the Group's accounting records.
• Analyzing the reasonableness of gains and losses and the cash flow derived from discontinued operations.
• Checking that the sale transaction carried out during the period was correctly recorded and presented in the consolidated financial statements.
• Reviewing the disclosures made in the notes to the consolidated financial statements and assessing whether they are in conformity with the applicable financial reporting framework.

Measurement of goodwill, other intangible assets, and property, plant and equipment.

Description At December 31, 2021, the Group recorded goodwill, other intangible assets (primarily brands), and property, plant and equipment for a carrying amount of 809,359 thousand euros, 434,348 thousand euros, and 788,681 thousand euros, respectively, under "Goodwill", "Intangible assets", and "Property, plant and equipment" on the consolidated statement of financial position.

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At least once a year, the Group management analyzes the recoverable amounts of each significant cash-generating unit (CGU). The goal of this analysis is to determine whether it is necessary to recognize an impairment loss against the goodwill associated with these CGUs or against any other intangible asset or PP&E belonging to them. For purposes of this analysis, Group management determines, in collaboration with an independent expert, the impairment tests using the cash flow method at a risk-free rate.

Since determining the recoverable amount requires the use of complex estimates, for which Group management must make judgments to establish the assumptions underlying those estimates, and due to the significance of the amounts involved, we determined this to be a key audit matter.

The information on the applicable measurement standards and key assumptions for determining the impairment loss on the abovementioned assets and the related disclosures are provided in notes 15, 8, and 9 to the consolidated financial statements.

Our

response Our audit procedures related to this matter included:

• Understanding the process designed by Group management to determine whether there are indications of impairment as well as the recoverable amount of goodwill, other intangible assets, and property, plant and equipment, in addition to assessing the design and implementation of the related relevant controls.
• Reviewing the methodology used by the independent expert engaged by Group management to determine the recoverable amount, with the involvement of our valuation specialists, paying particular attention to the methodology's mathematical coherence and the reasonableness of the cash flow projections of each material CGU, discount rates, and long-term growth rates.
• Reviewing the projected financial information in each CGU's business plan by understanding and analyzing historical and budgetary financial information, the CGU's business, its operating markets, and other information provided by parent company management.
• Assessing the sensibility of the analyses used to evaluate changes in the main assumptions used.
• Reviewing the disclosures made in the notes to the consolidated financial statements and assessing whether they are in conformity with the applicable financial reporting framework.

Revenue recognition - discounts and incentives

Description The Group recognizes revenue in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU), net of sales discounts, incentives, and rebates accrued by its customers.

In certain markets, recognizing discounts and incentives for accounting purposes entails the use of estimates that may be significant, requiring Group management to make complex judgments. As a result, contractual terms that give rise to adjustments to sales may be incorrectly recorded and thus, revenue recognized in the consolidated financial statements may be incorrectly measured.

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Due to the variety of discounts and incentives offered, as well as the potential complexity associated with the estimates that Group management must make to record some of them at year-end, we determined this to be a key audit matter.

Information on the applicable measurement standards and the disclosures for revenue are provided in notes 3 r) and 6 to the accompanying consolidated financial statements.

Our

response Our audit procedures related to this matter included:

• Understanding Group management's process for recognizing revenue and assessing the design and implementation of the related relevant controls for the Group's key components.
• Carrying out analytical procedures for the Group's key components, analyzing the performance of revenue, discounts and incentives, cost of sales, and real margins as compared with budgeted data.
• Analyzing, through meetings held with Group management, the contractual terms and conditions related to discounts and incentives included in significant contracts, and assessing the reasonableness of the assumptions underlying the most relevant related estimates.
• Reviewing the most relevant estimates made in connection with discounts and incentive schemes at year-end via customer confirmation letters and alternative procedures.
• Performing cut-off procedures for a sample of revenue transactions carried out near the reporting date to ensure that they are correctly recorded.
• Analyzing other adjustments and credit notes issued after the reporting date.
• Performing analytical procedures on revenue-related daily ledger entries for the Group's key components, paying special attention to accounting entries recorded near or after the year-end closing, as well as those deemed unusual due, among other reasons, to their nature, amount, date of occurrence, user, the item itself or its balancing entry.
• Reviewing the disclosures made in the notes to the consolidated financial statements and assessing whether they are in conformity with the applicable financial reporting framework.

Other information: Consolidated Management Report

Other information refers exclusively to the 2021 consolidated management report, the preparation of which is the responsibility of the Parent's directors and is not an integral part of the consolidated financial statements.

Our audit opinion on the consolidated financial statements does not cover the consolidated management report. Our responsibility for the consolidated management report, in conformity with prevailing audit regulations in Spain, entails:

1. Checking only that the consolidated non-financial statement and certain information included in the Corporate Governance Report and in the Board Remuneration Report, to which the Audit Law refers, was provided as stipulated by applicable regulations and, if not, disclose this fact.

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