SASCO ANNUAL REPORT 2019 ENG by Paul Dominic Raña

A YEAR OF GROWTH AND EXCELLENCE

2019

Custodian of the Two Holy Mosques

King Salman bin Abdul Aziz Al Saud

His Royal Highness

Prince Mohammad bin Salman bin Abdul Aziz Al Saud The Crown Prince Vice President of the Council of Ministers & Minister of Defence

Table of Contents

Board of Directors

Chairman’s Statement

Vice Chairman and Managing Director’s Statement

Chief Executive Officer’s Statement

Vision and Mission

SASCO Overview

Plans, Decisions, key Achievements and predictions

Board of Directors and Committees

Financial Statement at SASCO Level

Operation Sector

SASCO Palm Co.

SASCO Waha Co.

Ostool Al-Naqil Co.

Saudi Automobile & Touring Association, SATA

Auto & Equipment Investment Co.

100

Al-Nakhla Al-Oula Co.

104

SASCO Franchise Co.

106

Other Administrative and Operational Information

108

Risks Management

112

Internal Control

118

Corporate Governance

122

Conclusion

125

Board of Directors

The Board of Directors is pleased to present to you SASCO Annual Report for the fiscal year ending on December 31, 2019. It includes the Board of Directorsâ&#x20AC;&#x2122; Report on SASCO financial results, its various activities, as well as the achievements made thanks to Allah, and then to the efforts of all members of the Board, the executive management, and all staff members.

Annual Report 2019

Board of Directors Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman | Head of Executive Committee Qualifications and experience: A businessman, holding the Secondary school certificate with more than thirty eight years in corporate management. He occupied various positions including the deputy Chairman of the Saudi Chambers of Commerce. He also participated in the boards of CMA-listed and unlisted shareholding companies such as Al-Madaen Star Group, Akwan Real Estate Co., Ibrahim bin Mohammed Al-Hudaithi Investment Co., Zawaya Real Estate Co., Nahaz Investment Co. and other companies working in the fields of real estate, services, investment and financial services inside and outside the Kingdom of Saudi Arabia.

Mr. Sultan bin Mohammed Al-Hudaithi Vice Chairman | Managing Director | Member of Executive Committee Qualifications and experience: He holds the Bachelor’s Degree in Accounting with honour degree from King Saud University and Masters of Business Administration (MBA) from London Business School. He held leading positions in many public and private companies in Saudi Arabia. He enjoys experience in corporate restructuring, strategic planning and investment management in securities, private equity and real estate investment. He was a member of boards and committees in public and private companies including Saudi Chemical, Nahaz Investment Co., Zawaya Real Estate Co., Al-Madaen Star Group, Middle East Battery Company (MEBCO), Mulkia Investment Co. and United Wire Factories Company (ASLAK). Mr. Nasser bin Abdullah Al Awfi Board Member | Head of Audit Committee Qualifications and experience: He holds Master’s Degree in Accounting, Master’s Degree in Business Administration from Southern New Hampshire University in the USA and Bachelor’s Degree in Accounting from King Saud University. He enjoys more than thirty two years of experience in the management of joint stock companies as well as financial, administrative and strategic consultation. He also participated in various boards of shareholding companies and board committees (Audit Committee) such as Al Jouf Agricultural Development Company Taiba Holding Company and United Cement Industrial Company.

Mr. Suleiman Bin Ali Al Khudair Board Member | Member of Nomination and Remuneration Committee Qualifications and experience: He holds a university degree in sciences from the USA. He held many administrative positions, as he worked as a computer engineer in the Ministry of Defence. Then, he moved to the private sector where he worked as a technical director, a sales director and deputy general director in Nahil Computers Company and now he is its General Director. He participated in boards of many joint stock companies. Mr. Majid bin Muhammad Al Othman Board Member | Member of Nomination and Remuneration Committee Qualifications and experience: He is a businessman, holding Secondary school certificate and enjoying more than thirty one years in real estate, contracting and automobile services. He is the Managing Director of Al-Madaen Star Group and board member of Ibrahim bin Mohammed Al-Hudaithi Investment Co., Bilda Specialized Commercial Centers Co. and board member of Zawaya Real Estate Co.

`` `` `` `` `` `` `` `` `` ``

Present Occupations:

`` Board member and Head of Audit Committee of United Cement Industrial Company.

`` Board member and Head of Audit Committee of Takaful Alrajhi Company.

`` Head of Saudi Ceramics Audit Committee. Previous Occupations:

`` Head of Al Jouf Agricultural Development Company Audit Committee.

`` Member of Taiba Holding Company Audit Committee. `` Director of Financial, Administrative and Investment

Department of Saudi Pharmaceutical Industries & Medical Appliances Corporation. `` Deputy General Director for Financial and Administrative Affairs of Saudi Livestock Trading Co. `` Director for Financial and Administrative Affairs of Taiba Investment Company. Present Occupations:

` ` General Director of Nahil Computers Company. Previous Occupations:

` ` Technical Director of Nahil Computers Company. ` ` Sales Director of Nahil Computers Company. ` ` Deputy General Director of Nahil Computers Co.

`` `` `` `` `` `` `` `` ``

Present Occupations: SASCO Managing Director. Board member of Al-Madaen Star Group Vice Chairman Zawaya Real Estate Company. Board member of Mulkia Investment Company. Board member of Nahaz Investment Company. Previous Occupations: CEO of Ibrahim Modern Investment Company. Chief Executive Officer of Zaiti Petroleum Services. Deputy General Manager for Financial and Administrative Affairs at Al Madaen Star Group. Board member of Saudi Chemical Company. Board member of United Wire Factories Company (ASLAK)

Present Occupations: Managing Director of Al-Madaen Star Group. Board member Zawaya Real Estate Co. Board member Bilda Specialized Commercial Centers Co. Board member Ibrahim Mohammed Al-Hudaithi Investment Co. Chairman of Al-Masharea Star Contracting Company. Chairman of Fun Gate Company. Managing Director, Al-Madaen Stars Group Previous Occupations: General Director of Al-Madaen Star Group for Contracting. General Director of Al-Madaen Star Group for Automobile Services.

Present Occupations:

Previous Occupations:

`` `` `` `` `` ``

`` `` `` ``

Chairman of Al-Madaen Star Group. Chairman of Mulkia Investment Co. Board member of Nahaz Investment Co. Chairman of the board of Zawaya Real Estate Co. Chairman of the board of Balda Specialized Trading Centers Co. Chairman of the board of Akwan Real Estate Co.

Vice Chairman of the Saudi Chambers of Commerce. Chairman of Al Kharj Industrial Chambers of Commerce. Member of Al Kharj Governorate Local Council. Board member of Solidarity Company.

Mr. Riyad bin Saleh Al Malik Board Member | Member of Executive Committee | Chief Executive Officer Qualifications and experience: He holds the Bachelor’s Degree in Business Administration from King Abdulaziz University. He enjoys a vast experience in corporate management, particularly fuel station companies. He served as the General Director of Al Tas’helat Marketing Company Ltd., Deputy General Director of Riyadh Development Company and board member of the board of directors of many companies. Present Occupations:

`` SASCO Chief Executive Officer. `` Member of Customs Council of Federation Internatio-

nale de l’Automobile.

`` Member of the National Committee of Fuel Station `` `` `` `` `` ``

Companies in the Council of Saudi Chambers. Previous Occupations: General Director of Al Tas’helat Marketing Company Ltd. Deputy General Director of Riyadh Development Co. Director of Marketing Department of Saudi Real Estate Company (Al Akaria). Sales Director of Saudi Hotels & Resorts Company. Head of Customs Council of Federation Internationale de l’Automobile. Head of the National Committee of Fuel Station Companies in the Council of Saudi Chambers.

Mr. Ali bin Mohammed Aba Al Khail Board Member | Head of Nomination and Remuneration Committee Qualifications and experience: He holds Bachelor’s Degree in Political Sciences from the Faculty of Administrative Sciences, King Saud University and Master’s Degree in Government Management from Harvard University, United Sates of America. He was the secretary of the Head of the Royal Diwan, the Deputy Director of the Political Affairs Department of the Royal Diwan and secretary of Head of the Office of Prime Minister. He was appointed in the Office of the Second Deputy Prime Minister, Minister of Defence and

Aviation and Inspector General. He also worked as an administrative counsellor in the High Commission for Administrative Organization and Deputy Chairman of the Board of Directors of Sanad Investment Company. Present Occupations: `` Vice Chairman of the Board of Directors of Sanad Investment Company. Present Occupations: `` Deputy Director of the Political Affairs Department of the Royal Diwan. `` Administrative counsellor in the High Commission for Administrative Organization.

Mr. Fawaz bin Suleiman Al Rajhi Board Member | Member of Audit Committee Qualifications and experience: He holds the Bachelor’s Degree in Accounting and Information Systems Management from King Fahd University of Petroleum and Minerals (KFUPM) and also holds Master’s Degree in Business Management from Stanford University, USA. He is the Chairman of AlRajhi United Investment Holding Company; a company investing in capital markets and private transactions on the local, regional and international levels. He has been leading and directing the Company’s efforts since its inception based on the strategy of diversifying the investment portfolio through a deliberate choice of markets and industries in selected geographical locations, with focus being placed on emerging technology and income-generating real estates. He is also a board member and member of audit committees in a number of joint-stock companies. He spent more than a decade in banking. He held many positions in Corporate Financing Division of Al-Rajhi Bank.

He took part in establishing the department of corporate loans and financing subscription of large corporations. He was the person in charge of establishing the Share and Subscription Department of Al Rajhi Capital Company. He participates in many charitable initiatives in the Kingdom of Saudi Arabia and the developing world. He also offers investment, strategic and corporate governance consultation in favor of family companies and individual investors in the states of the Gulf Cooperation Council. Present Occupations: `` Chairman of AlRajhi United Investment Holding Co. `` Board member Raas Alkhaima Ceramic Company. `` Chairman of the board of Zaj Real Estate Co. `` CEO of AlRajhi United Investment Holding Company. Present Occupations: `` Chief Operating Officer of Al Rajhi Capital. `` Director of Sales and Distribution, Al Rajhi Capital. `` Head of Corporate Banking at Al Rajhi Bank. `` Chief Financial Analyst at Al Rajhi Bank. `` Systems analyst at Procter & Gamble.

Mr. Majid Bin Nasser Al Sabei›e Board Member | Member of Executive Committee Qualifications and experience: He holds Bachelor’s Degree in Economical Sciences from King Saud University and enjoys more than sixteen years in corporate governance. He held many leading positions such as the director of real estate projects at Nasser Bin Mohammed Alsubaei & Sons Investment Company, financial analyst and managing director of Morgan Stanley & Co. He is currently the Chief Executive Officer of Nasser Bin Mohammed Alsubaei & Sons Investment Company.

Present Occupations:

`` CEO of Nasser Bin Mohammed Alsubeaei & Sons Investment Company

`` Board member Riyadh Development Co. Previous Occupations:

`` Manager of real estate projects at Nasser Bin

Mohammed Alsubeaei & Sons Investment Company.

`` Financial Analyst of Morgan Stanley & Co. `` Managing Director of Morgan Stanley & Co.

Annual Report 2019

The company’s market value by the end of 2019

SR 1.76 Billion The company’s market value by the end of 2018

SR 1.01 Billion Chairman’s Statement Mr. Ibrahim bin Mohammed Al-Hudaithi

With an increase, of

74.26%

Messrs. / Shareholders of the Saudi Automotive Services Company (SASCO), the highly regarded, May Allah’s Peace, Mercy and Blessings be upon you, The Board of Directors of the Saudi Automotive Services Company (SASCO) is pleased to present to you the report of the Board of Directors for the fiscal year ended on December 31st, 2019. The report includes the performance and achievements of SASCO and its subsidiaries as well as the financial results and key financial indicators. Thanks to Allah and the efforts of all members of the Board, the executive management, and staff. SASCO achieved in 2019 net operating revenues of SAR 2,482,842,898 compared to SAR 2,056,081,002 in 2018, i.e. an increase of 20.76%. the increase in such revenues in addition to the amendment in profit margin of fuels led to increase in the gross profit and the operating profit with 91.02%, 170.64% consecutively, so that the gross profit reaches SAR 156,597,737 and net operating profit of SAR 101,987,313 by the end of 2019.

In addition, in 2019, SASCO recorded a net profit of SAR 121,810,982 compared to SAR 35,451,309 in the previous year, 2018, i.e. an increase of 243.60%. This, in turn, led to an increase in share profits from 0.59 to 2.03 than last year. At the end of 2019, Shareholders’ equity recorded SAR 851,445,860 compared to SAR 751,862,914 by the end of 2018 i.e. an increase of 13.24%. The company’s market value increased during 2019 to reach 1.76 Billion SAR compared to 1.01 Billion SAR during 2018, i.e. 74.26%.

Some of the key achievements during 2019 are as follows: ffCompleting the procedures of distributing the profits to shareholders for the fiscal year 2018 and deposit the same at their own accounts. ffStarting implementation of the company’s new headquarters building after its designs have been approved. ffAcquisition of several stations, some of which were received and operated, and some that are in the contracting stage. ffAdding (35) sites throughout the Kingdom so that the number of network of operating stations becomes (201) stations. ffContinuing the development of many existing sites inside and outside the cities according to the company’s brand, where (12) sites were developed with the company’s brand, and work is underway to develop the rest of the sites according to the established development plan. ffContinuing to develop automation of fuel pumps and tanks, and the use of smart cards “Control” and .RFID system ffAdding (13) sites for the SASCO Palm Stores at the various sites of the company, and developing (19) sites of SASCO Palm Stores. ffOperating a central warehouse of SASCO Palm in Riyadh city. ffPurchase of (12) new trucks and (10) fuel and water tanks in addition to (3) refrigerators in support of the company’s fleet. ffExpansion of dry transport by contracting with multiple clients and companies, while continuing to transfer fuel and water to others. ffActivating the Saudi Automobile & Touring Association, Ltd (SATA) for the customs agreement of international transport of goods according to the international road transport cards (TIR) ffThe establishment and development of (4) motels is completed throughout the Kingdom. ffThe First Palm Contracting Company contracts with a global company to supply electric vehicle charging devices, to be the first company in the Kingdom to provide such service. ffContinued periodic and basic maintenance of the company’s sites. ffUpdating the company’s articles of association after the shareholders ’general assembly agreed to amend it based on the amendments made to the companies’ law. ffContinuing to activate governance systems, increase transparency and disclosure, and update the company’s bylaws. ffContinue to recruit qualified employees and Saudization thereof to meet the company’s requirements for various administrative positions, especially leadership positions. ffContinue to localize jobs and maintain the classification of the company and its subsidiaries within the green domain. ffContinue to study the options available in the project for selling some sites owned by the company and re-renting them with longterm contracts. ffThe company’s assets have grown by 53.74% than the previous year to reach 2.5 billion riyals. ffSigning several facility agreements with local banks.

ffContinue developing the company’s accounting and operating systems. ffParticipation in many exhibitions and awareness campaigns to confirm the company’s contribution to social responsibility. At the level of operating revenues of subsidiaries, the operating revenues of SASCO Palm increased by 6.11% than the previous year, to reach SR 213,774,890, while the Transportation Fleet Company’s operating revenues increased by 10.61% than the previous year to reach 29,156,246 riyals, and the operating revenues of SASCO Oasis Company increased by 39.57% than the previous year to reach 5,459,311 riyal, while the operating revenues of the Saudi Automobile & Touring Association, Ltd (SATA) increased by 18.65%. This is in addition to the detailed achievements contained in this report at the level of SASCO and all its subsidiaries. The company will continue during the year 2020 to overcome all difficulties and challenges in order to achieve its goals according to its strategic plan and to consider acquisition and expansion opportunities in all its operational activities in line with the Kingdom’s 2030 vision. In conclusion, and on behalf of my fellow members of the Board of Directors, I extend my thanks and gratitude to all the shareholders of the Saudi Automotive and Equipment Services Company (SASCO) for their continued confidence in the management of the company, and I also thank the executive management of the company and all its employees for their efforts and dedication to perform their work as required, which helped in achieving the potential objectives during this year. We are confident that the strength of synergy will lead to continue achieving the aspirations of the company’s shareholders and achieve more successes in the coming years. I would also like to extend my sincere thanks and appreciation to the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, may Allah protect him, and His Royal Highness the Crown Prince, Mohammed bin Salman bin Abdulaziz, may Allah protect him, for all their great efforts and unlimited support in order to stimulate the business environment in the private sector and develop the economy of this country to achieve the Kingdom 2030 vision.

May Allah Grant Us All Success, Chairman Ibrahim bin Mohammed Al-Hudaithi

Annual Report 2019

Profit before interest, Zakat, Depreciation and Amortization (EBITDA) at the end of 2019

SR 208,541,555 Profit before Interest, Zakat, Depreciation and Amortization (EBITDA) at the end of 2018

SR 92,750,036 Vice Chairman and Managing Director’s Statement Mr. Sultan bin Mohammed Al-Hudaithi

124.84%

Messrs. / Shareholders of the Saudi Automotive Services Company (SASCO), the highly regarded

Following are some of the key achievements in different sectors of SASCO and its subsidiaries:

May Allah’s Peace, Mercy and Blessings be upon you,

Operations Sector It is one of the key sectors in the company, as it provides fuel services to clients in addition to the real estate rental service, and this sector continued to provide a bundle of distinguished services through the company’s sites scattered within cities and on highways throughout the Kingdom.

Thanks to Allah’s grace and continuous efforts and as the SASCO board of directors is seeking to meet its obligations before the company’s shareholders and clients, and preserve its pioneering position in the field of operating fuel stations and retail as well as all sectors in which it operates. The year 2019 has witnessed various achievements throughout the company and its subsidiaries. It gives me great pleasure to present to you a brief overview highlighting the key 2019 activities and developments on the operational and financial levels. SASCO achieved total operation revenues in 2019 of SR 2,482,842,898 compared to SR 2.056.081.002 in 2018, with an increase of 20.76%. This led to an increase of 2019 net profits at 243.60%. Such increase in operating revenues is attributed to the amendment in fuel profit margin, as the company’s net profit in 2019 reached 121,810,982 SAR compared with 35,451,309 SAR during 2018 , which resulted in increase in share profit for the previous year from 0.59 to 2.03 SAR. Earnings before interest, Zakat, depreciation and amortization (EBITDA) at the end of 2019 were SR 208,541,555 compared to SR 92,750,036 at the end of 2018, i.e. an increase of 124.84%.

With an increase, of

The total number of company sites reached (242) Compared to (208) sites for the previous year, including (201) operating sites by the end of 2019, compared to (166) operating sites by the end of 2018, i.e. an increase of (35) sites, while the rest of the sites are in the development stage or in the preparation stage for construction or suspended because they are not economical to operate. The operation sector offered its services to about 25,000,000 vehicles, with an increase of 20.29% compared to 2018, including and 129 million customers with increase of 18.01% compared to 2018, of which 10.8 million pilgrims and visitors whether inside or outside the Kingdom. By God’s grace, we concluded strategic partnerships with many international and local companies specialized in operating restaurants, coffee shops and automotive maintenance with the aim to rent and operate some SASCO facilities to offer high quality and integrated services. These efforts led to increasing clients nationwide and raising their satisfaction and loyalty.

SASCO Palm Stores SASCO Palm Stores include an integrated package of items that were carefully selected to meet the needs of our clients and achieve their satisfaction. During 2019, 13 new branches were added so that the total number of branches by the end of 2019 reached 80 branches, after excluding 2 branches that were operated by third parties. The change of client basket reached 6.6%, rising from SR 21 to 22.4 in 2019. SASCO Franchise “SASCO Franchise” company specializes in granting concession to others for fuel stations through the name and brand of SASCO, after the company launched the commercial franchising program for the two brands “SASCO stations” and “Palm Stores” which aims to create new investment opportunities for the company and increase its revenues and profitability by granting operating franchises to brands to other operators, which creates real opportunities for citizens to participate in pilot projects in line with the kingdom’s vision. In March 2019, the company participated in the franchise exhibition held in Jeddah under the slogan “Apply now and get the franchise application - the opportunity for your excellence”, where this participation aims to educate young businessmen about the franchise program provided by the company.

the past years have been affected by the political events experienced by some neighboring countries, in addition to the acquisition by parallel clubs (which do not have a license from the International Automobile Federation that operates in the Kingdom) of a market share of sales of customs transit books and international licenses. However, during the year 2019, the Saudi Automobile & Touring Association (SATA) issued more than (15) thousand customs passbooks for travelers, in addition to more than (50) thousand international driving licenses. Within the framework of the international road transport agreement signed by the Saudi Automobile & Touring Association (SATA) with the Saudi Customs Authority with the aim of activating the role of SATA and the transformation from a representative member of the International Road Transport Association to an active member representing the Kingdom of Saudi Arabia and a source of TIR books, the Saudi Automobile & Touring Association (SATA) started in late 2019 issuing TIR books and making experimental trips in coordination with the General Authority of Saudi Customs. The role of SATA was also activated and the transformation from a representative member of the International Road Transport Union to an effective member representing the Kingdom of Saudi Arabia and a source of TIR books

SASCO Waha Co. SASCO Waha Co. manages all the company’s motels distributed in its various locations through the kingdom, as the company’s strategy is to develop such motels to hold its brand “Waha Motel”. In 2019, one motel was opened. It is located on Riyadh / Taif Road, at Dhalam area. Other 3 motels were developed, located on Ola/Tabuk road, Taif/Riyadh road and another motel on Qasseem / Riyadh road. So, the total number of SASCO Waha brand carries (9) motels. SASCO Waha Company also obtained a license to operate and classify the accommodation facilities issued by the General Authority for Tourism and National Heritage, for the company’s motel in Al-Adeid area on Salwa / Al Batha International Road. In addition to the Super 8 hotel achieving success in the quality test applied by Windham, it achieved a score of 88.75%, which is the highest score achieved in the Kingdom.

Social Responsibility In conformity with the kingdom’s trend to activate the awareness programs in society, SASCO participated in many awareness-raising campaigns, including:

Ostool Al-Naqil Co. Ostool Al-Naqil Co. provides transport services of fuel, water and sewage to all SASCO sites, in addition to providing transport, fuel, goods services to other companies with the expansion that includes dry transport using multi-purpose vehicle carriers. By the end of 2019, the fleet number reached 127 trucks compared to 116 trucks by the end of 2018, and 143 trailers by the end of 2019 compared to 132 by the end of 2018.

In conclusion, we ask Allah, the Almighty, to bless these efforts and grant us success in continuously achieving SASCO plans and goals and the aspirations of shareholders as well as improving performance and strengthening efficiency. I extend thanks and appreciation to all shareholders and board members for their continued support, keenness and distinguished ideas. I also thank all brothers in the Executive Management and all SASCO employees for their great efforts, which contributed to achieving SASCO vision and goals and strengthening its pioneering position in the market.

Saudi Automobile & Touring Association (SATA) Saudi Automobile & Touring Association (SATA) has a license from the International Automobile Federation to issue customs transit books and works through various sales depots through the regions of the kingdom, in addition to a network of agents and distributors inside the Kingdom of Saudi Arabia that work under the international conditions, specifications and standards. The sales of the Saudi Automobile & Touring Association (SATA) over

ffContinuous cooperation with handicapped Child Association. ffProviding a lecture to the company’s female employees on the importance of early detection of breast cancer in cooperation with the Zahra Breast Cancer Association. ffParticipation in International Women’s Day. ffContinue to participate in the awareness campaign to celebrate the global month of Alzheimer’s disease, which aims to introduce the primary symptoms of the disease, the necessity of diagnosis and early intervention, and educate the community about the symptoms of the disease and its prevention.

May Allah Grant Us All Success, Vice-Chairman Managing Director Sultan bin Mohammed Al-Hudaithi

Annual Report 2019

Total Revenues by the end of 2019

SR 2,482,842,898

Total profit by the end of 2018

SR 2,056,081,002

Chief Executive Officer’s Statement Mr. Riyadh bin Saleh Al Malik

Messrs. / Shareholders of the Saudi Automotive Services Company (SASCO), the highly regarded

With an increase, of

20.76%

to 121,810,982 at the end of 2019 versus SR 35,451,309 at the end of 2018 i.e. 243,60% higher, resulting in higher stock profitability compared to the previous year from SR 0.59 to SR 2.03.

A Year of growth and excellence! Continuing realization of the Board of Directors’ strategy, stressing previous years’ accomplishments in all corporate activities and affiliate companies, and achieving plans and objectives of all sectors, by God’s Grace, the Board’s directives, and my colleagues’ efforts, SASCO managed to achieve several financial and operational accomplishments in 2019, mainly:

Financial Performance 2019 revenues amounted to SR 2,482,842,898 versus 2,056,081,002 in 2018 i.e. increasing by 20.76%. the change in fuels selling profit margin has had the positive impact of reducing revenue cost, subsequently increasing the year’s total and net profits from the core operations and net corporate profit. At the end of 2019, gross profit reached to SR 156,597,737 versus SR 81,981,605 at the end of 2018 i.e. an increase of 91.02%. The annual profit from core operations at the end of 2019 was raised at 170.64% higher than the previous year to be SR 101,987,313 versus SR 37,683,502 in 2018. The corporate net profit amounted

Operational Performance During the year 2019, the company opened (35) new sites according to its expansion plan and its strategy to acquire sites in various cities and regions of the Kingdom, bringing the number of operating sector sites operating at the end of 2019 to (201) sites compared to (166) sites by the end of 2018. To manage this sector in a way that facilitates monitoring and raising the quality of the provided service, it has been divided into (6) administrative regions in each of the central region, the eastern region, the western region, the Qassim region, the northern region and the southern region. There are also many sites in different regions that have not entered service yet, as they are still in the development stage or construction stage and are expected to enter within the operating sites during the next year, God willing. In addition, the company is continuing to develop many existing sites inside and outside the cities according to the company’s brand, where (12) sites were developed with the company’s brand and work is underway to develop the rest of the sites according to the established development plan.

As for the field of automating its operations, the company continued to activate the project for automating fuel pumps and tanks, using smart cards, RFID system, and control program, in addition to developing the payment methods.

and SATA’s role has been activated with the transformation from a member represented in the International Road Transport Union to an active member to represent the Kingdom of Saudi Arabia and issuer of TIR books.

The company has continued to sign strategic partnerships with food companies to provide their services through the company’s various sites in order to continue to be the first company in terms of quality and integrity of the service provided and to maintain its position in providing a package of integrated and distinguished services for vehicle drivers and travelers to satisfy its customers and to emphasize the company’s added value.

During the year 2019, (1) motel was established located on the Riyadh / Taif road in the Dhalam region, and a number (3) of motels located on the Al-Ula / Tabuk road, the Taif / Riyadh road and another was located on the Qassim / Riyadh road were developed, to bring the number of motels that bear the brand “Waha Motel”, (9) motels. Super 8 Hotel was honored by the Technical and Vocational Training Corporation (TVTC) and the General Sports Authority within the events of the National Heritage and Culture Festival (Al Janadriyah Festival 33).

In the context of expanding the grocery sites inside and outside the cities, by the end of 2019, the SASCO Palm branches reached (80) branches throughout the Kingdom through which an integrated basket of items is provided to fulfill the needs of our customers, whether traveling on the roads between cities or drivers and passengers within the cities. During 2019 , the company introduced many new items that led to a 6.6% increase in the customer basket, to increase from 21 Riyals in 2018 to 22.4 Riyals in 2019, in line with the expansion of cooperation with major retail goods suppliers, in order to raise the level of items provided to our customers to meet all requirements of visitors to the company sites of various categories. During 2019. the company has activated the commercial franchising program for the two brands, “ SASCO Stations” and “ SASCO Palm Stores”, with the aim of creating new investment opportunities for the company and creating real opportunities for citizens to participate in pioneering projects in line with the Kingdom’s vision. In continuation of the development of the transportation sector, Ostool Al-Naqil Co., Ltd expanded during the year 2019, especially in the field of dry transport and refrigerated transport, and it contracted with many customers and companies, along with its continuity in transporting fuel and water to all the company’s sites as well as to others, and to achieve this expansion its fleet was supported by a number of (12) new trucks, and (10) fuel and water tanks, in addition to (3) refrigerators, to reach the fleet size at the end of 2019 to (127) tankers and (143) trailers designated for all purposes through which the company provides transportation services to operation sector of SASCO to enable it to acquire additional market share In order to continue contracting with new customers.

The First Palm Contracting Company continued to devote its efforts to establish and develop many different sites of the company, where (12) sites were developed with a SASCO brand in addition to (19) sites affiliated to SASCO Palm supplies, and work has already begun in establishing the headquarters of SASCO in Riyadh located in King Abdullah quarter on Khurais Road. To this end, SASCO continued to attract qualified human cadres and create new job opportunities in favor of Saudis to support the Ministry of Labour’s programs to Saudize jobs, in addition to developing various administrative and operational programs, automation of operations and link the company’s sites. Many other achievements and plans, detailed in the Board’s 2019 Annual Report were implemented with the attempt to achieve SASCO goals and cope up with the developments witnessed by the Kingdom in its efforts to achieve Vision 2030.

In conclusion, I extend thanks and appreciation to all shareholders of the Saudi Automotive Services Company (SASCO) for their trust in SASCO management. I also extend thanks and appreciation to SASCO Board of Directors for their continued support to the Executive Management. I also thank all SASCO employees for their great efforts contributing to achieving SASCO goals. We hope more success and progress to all. May Allah Grant Us All Success,

Saudi Automobile & Touring Association, SATA, was largely affected by the events recently experienced by the Arab Region and accession of new parallel clubs unauthorized by Federation Internationale de l’Automobile, which acquired a market share of international driving licenses and customs transit (Trip-Tik).

Chief Executive Officer Riyadh bin Saleh Al Malik

Based on the International Road Transport Agreement concluded in 2012 by Saudi Automobile & Touring Association, SATA, with the International Road Transport Union (IRU), the Saudi Automobile & Touring Association, SATA, started by the end of 2019 to issue TIR books and make trial trips in coordination with Saudi Customs,

Annual Report 2019

Vision / Mission

Vision To become the premier company, in terms of service quality and integration, and an example in the field of automotive service, rest house and motel management, on the highways of the Kingdom of Saudi Arabia.

Mission To provide a range of integrated services to motorists and travellers, inside and outside the cities, to the highest domestic and international standards, always ensuring customer satisfaction with an emphasis on added value.

Annual Report 2019

Sasco Overview

SASCO Overview

(TIR), establishment, management, maintenance and operation

Formation

and motorbikes sports, participating in racing and events for cars

The Saudi Automotive Services Co. (SASCO) is a Saudi public shareholding company established under Ministerial Decision No.

of motorsports and motorcycles, holding races and events for Cars and motorcycles sport, and participating in races and events. ffImporting and selling foodstuff, beverage, refreshments,

563 dated 23/12/1402 AH corresponding to 12/10/1982.

equipment, coffee, hot drinks, sandwiches, bakeries, vegetables,

Activities

household utensils, tools, electronics, mobile accessories, mobile

ffEstablishing and operating auto and passenger service centres within cities and on the main and intercity roads, retail sales of fuel for vehicles and motorcycles and direct delivery to the customer location. ffEstablishing workshops to repair cars and heavy equipment, auto services stations and travellers on the main roads between the cities of the Kingdom to provide fuel, oil and maintenance for cars and heavy equipment, establishing restrooms, motels and restaurants, providing food, beverages and refreshments for travellers, washing and lubricating cars and equipment, importing and selling equipment and tools, establishing roads and bridges. ff Transporting and selling fuel, transporting petroleum products and their derivatives, kerosene, gasoline, diesel, gas, lubricants, liquid and dry chemical materials, sand, gravel, asphalt, and building materials, in addition to transporting cars and people at cost, opening branches for renting cars and public fare, and transporting supplies and goods at cost on land roads in the Kingdom and abroad, transporting water and sanitation, leasing trucks and trailers to others, and provide advertising services on tankers and vehicles. ffImport and export of various kinds of cars for the company’s business and trade after obtaining the approval of the competent authorities. ffManufacturing, re-manufacturing and renewing auto parts, equipment and auto batteries after getting the necessary licenses from the competent authorities. ffManufacture of light and heavy trailers, refrigerated and nonrefrigerated vehicle containers and all types of tanks after getting the necessary licenses from the competent authorities. ffImporting, selling and distributing spare parts and scrap of cars and equipment as well as parts, accessories and materials needed to provide the best maintenance and repair services of cars and equipment for the purpose of providing maintenance needs

fresh fruits and non-fireworks toys, travel supplies, clothes, devices, perfumes, cosmetics, auto accessories, and supplies. ffPurchase, sale, rental, and lease of land and real estate necessary to serve the company’s purposes and management of the property of others. ffMarketing services for third parties and granting the franchise to others with regard to the company’s trademarks. ffEstablish, manage, maintain, operate and clean residential and commercial buildings and fuel stations owned by the company and others. ffGeneral

contracting

demolition,

restoration),

buildings

(establishment,

construction,

repair,

management,

maintenance and operation of residential and commercial buildings and road works. ffProvide first aid means with the latest international means, including the use of helicopters, with the approval of the competent authorities. Capital SASCO’s capital is SR 600,000,000 (fully paid) divided into SR 60,000,000 shares, each with a value of SAR 10. The Fiscal Year SASCO fiscal year ends on December 31st of each calendar year. Auditor for the year 2019 Allied Accountants Office - Chartered Accountants and Auditors Investment Restrictions There are no restrictions on SASCO listed shares as stated in the Rules for Qualified Foreign Financial Institutions Investment in Listed Shares and instructions regulating foreign strategic investors equity in listed companies, according to the company’s bylaws and the instructions issued by the supervisory and control authorities to which the company is subject.

inside the workshops and service stations for the purpose of selling them directly to the public. ffCarrying out tenders for contracts of car and equipment maintenance for individuals, companies and institutions. ffInspection of cars to issue traffic validity certificates after obtaining the approval of the Ministry of Interior. ffParticipation in local and international auto and motorcycle clubs, associations and local and international bodies interested in auto and motorcycles affairs, issuance of customs transit books (Trip-Tec), international driving licenses and truck transit books

Annual Report 2019

Main Business Sectors

Operations Sector It is SASCO key sector that manage all its stations, including Zaiti Petroleum Services Company. It also provides fuel, renting, café and restaurant services.

SASCO Palm Company

SASCO Waha Company It manages of all SASCO motels spread nationwide in addition to super 8 hotels.

It provides supply services through managing all Sasco Palm Stores spread nationwide with the aim to meet all needs of motorists and travellers inside and outside the cities.

Saudi Automobile & Touring Association It possesses licenses from Fédération Internationale de l’automobile (FIA) to issue Customs Transit Books (Trip-Tik) and international licenses. It works through many sale outlets and network of clients in all parts of the Kingdom of Saudi Arabia. It is deemed the only guarantor of TIR books in Saudi Arabia under the Convention signed with the Saudi Customs and its convention with the International Road Transport Union.

Ostool Al-Naqil Company It provides transport services to Sasco and Zaiti locations (fuel, water, and sewage transport) in addition to provide transport services (fuel and cargo) to third parties.

‫إستثمارات السيارات والمعدات‬

Auto & Equipment Investment Company It was established with the aim to independently manage SASCO investment activities. It possesses 12.79% of the capital of Middle East Battery Company (MEBCO).

‫شركة النخلة األولى للمقاوالت‬ Al Nakhla Al Oula Contracting Company

Al Nakhla Al Oula Contracting Company It was established with the aim to carry out operation, maintenance and cleaning works for SASCO sites in order to improve the quality of services provided to clients. It specializes in public contracting works of buildings, and constructing, managing, maintaining and operating residential and commercial buildings as well as road works.

SASCO Franchise Company It grants franchise to other operators through concluding contracts to operate trademarks of (Sasco stations) and (Sasco Palm Stores)

Annual Report 2019

Plans and Decisions

Plans and Decisions The Strategic Plan During 2019, the company’s board of directors approved five-year strategic business development plans for all sectors of the company and its subsidiaries, including the financial, administrative and operational position, taking into account its priorities in achieving the goals set out in the plan, whether they are qualitative, quantitative, or administrative and organizational goals. The strategic business development plans included a list of those goals, with a mechanism to monitor them and measure the performance achieved periodically. This plan is an extension of the strategic plans adopted by the Board of Directors since the ninth cycle of the board in 2009, some specialized external parties have conducted reviews of these plans. Main considerations of SASCO strategy considered were as follows: ffTo identify the items in previous strategies that would remain appropriate and existing for the coming years. ffTo identify the items in the previous strategies that require updating or amendment, which fits with the coming years. ffTo define the way through which SASCO can manage its existing assets effectively. ffTo determine the human resources required to support growth. ffTo work towards providing excellent services in terms of value added and maintaining SASCO competitive position. ffTo identify strengths, weaknesses, opportunities, and threats. The most important objectives of the developmental plan are as follows: ffConducting a comprehensive market study for all sectors of SASCO and its subsidiaries. ffEnhance the financial efficiency of the company and its subsidiaries. ffReduce costs, improve profitability, and increase operational effectiveness. ffExpansion of the number of sites through the acquisition of distinctive station sites within cities and on highways in the Kingdom. ffContinue to develop the quality of services and the quality in providing them through expanding new alliances with international companies and leading companies operating in the services sectors related to the activity of the company and its subsidiaries. ffGovernment and future sales development. ffUtilize technology to facilitate service delivery and continue automating services. ffActivate self-services. ffProvide the necessary labor to cover the expansion of activities. ffEnhance operational oversight and quality of service. ffExpand the network of stores (SASCO Palm). ffIntroduce new products at the stores (SASCO Palm). ffProvide value-added services and innovative products. ffIncrease the size of the transport fleet to match the growth in

the number of SASCO sites and the transportation market in the Kingdom. ffExpansion in the field of dry and refrigerated transport and cars transport and attract distinguished customers. ffContinue developing stations, rest houses and service centers on highways. ffExpansion of the activities of Al-Nakhla Al-Oula Contracting Company to include business outside the SASCO system, including entering into tenders. ffImprove the level of service for maintenance and projects through Al-Nakhla Al-Oula Co. Contracting Company. ffOversee the development projects undertaken by station owners contracting with SASCO. ffCreate a workshop for maintenance and advertising. ffDevelop the services provided by the Saudi Automobile and Touring Association (SATA), and increase the market share in sales of TripTic and international licenses. ffExpansion of the activity of the Saudi Automobile and Touring Association (SATA) through the introduction of new activities. ffMaintain the competitive position of SATA . ffActivate the TIR system and expand customs clearance activities. ffAttract distinguished experiences and administrative competencies and increase the job-nationalization rate. ffContinue to distribute dividends to shareholders. ffFocus on customer satisfaction. ffFocus on social responsibility. The most important objectives achieved are as follows: ffContinue to distribute dividends to shareholders. ffAcquisition of many sites. ffExpansion of the stores network (SASCO Palm). ffDevelopment of debit sales. ffContinue to develop existing and acquired sites according to the company’s brand to keep pace with the aspirations of customers. ffContinue to perform general maintenance of all facilities in the company’s facilities. ffContinue to enter into strategic partnerships to raise the level of service provided to enhance customer satisfaction. ffBuild a distinctive brand for the services provided by the company inside its locations. ffBuild a distinguished team. ffSaudization of jobs and maintain the green classification for the company and its subsidiaries as per the classification of the ministry of labor. ffSupport the fleet of Ostool Al Naql Company with trucks and trailers. ffActivate the International Road Transport Agreement for TIR books sales. ffContinue to develop the company’s resource management system (ERP) ffDevelop operational and administrative systems for all business units in the company. ffMotivate employees and build a distinguished work environment.

Annual Report 2019

ffSign credit agreements in compliance with Islamic Sharia with local and international banks. ffSocial Partnership. Executive Plan: In light of SASCO developmental strategic business plan, SASCO management prepares an executive action plan annually through which it divides the basic activities and links them to an implementation timeline on an annual basis under the supervision of the Managing Director. The actual achievements are reviewed monthly to ensure the realization of the objectives set in the strategic plan. Most Important Future Expectations ffExpand SASCO sites according to well-studied plans with the aim to develop the network in sites of distinct investment income. This includes running the tenders offered by different government bodies in addition to investment opportunities available by non-governmental bodies (individuals, institutions, bodies and corporations). ffEstablish new sites in favor of SASCO Palm Stores inside and outside cities. ffContinue the development of all sites and establish new sites carrying SASCO brand. ffEstablish new strategic partnerships with service provision companies in the sites to continue to provide distinct services to customers. ffContinue to negotiate with local banks in order to conclude facility agreements of distinguished conditions to SASCO. ffExpand the field of transport to third parties (water transport, fuel transport, dry transport) and increasing the number of fleet trucks. ffOpen and develop motels carrying SASCO Waha Co. brand. ffFinding new sale outlets to customs transit books and international driving licenses. ffIncrease TIR book sales. ffGrant commercial franchises to third parties.

Annual Report 2019

Most Important Achievements in 2019

The most important achievements during the year 2019

`` Developing (19) sites of SASCO Palm Stores.

At the Level of Network Expansion and Development

`` Adding (13) SASCO Palm Stores at the company’s various sites.

cultural and tourist destination for camels and their heritage.

`` Continue to develop many existing sites inside and outside the

`` Completion of construction of (1) motel in the company’s

cities according to the company’s brand, where (12) sites were

station in Dhalam region, in addition to the development of (3)

developed with the company’s brand, and work is underway

motels in each of the Sail station in Qassim, Qulaibah station

to develop the rest of the sites according to the established

and Radwan station.

development plan.

`` Expansion of dry transport by contracting with multiple clients

`` Acquisition of many stations, including what was received and

and companies, while continuing to transfer fuel and water to

operated, and some that are in the contracting stage.

others.

`` Adding a number of (35) sites throughout the Kingdom to bring

`` Purchase of (12) new trucks in support of the company’s fleet.

the network of operating stations (201) stations.

`` Purchase of (10) fuel and water tanks, in addition to (3)

`` Entering in many governmental tenders for establishing and

refrigerators.

operating gas stations and service centers.

`` Operating the mobile station for visitors’ services at the annual

The following table shows a summary of the number of sites

King Abdulaziz Camel Festival, which aims to root and enhance

(operating and under construction) depending on the nature of

the heritage of camels in Saudi and Arab culture and provide a

ownership:

Statement

2015

2016

2017

2018

2019

Operating-Owned

Non-operating-Owned Sites

Non-Owned Sites

137

145

152

156

234

Total

189

197

204

208

286

The annual growth rate

56.20%

4.23%

3.55 %

1.96 %

37.50%

201

2019 166

2018

152

2017

140

2016

0 Operating & leased sites

12 20

20 24

136

2015

100

150

Stopped for Development

20 20 13 3

200

250

Under Construction Sites

300 Stopped

Annual Report 2019

Operating Site Distribution

21%

Eastern Province

37%

Central Province

6% Southern Province

19%

Qassim Province

Western Province

10% Northern Province

Owned Sites

2019 2018 2017 2016 2015 0 Purchase during year

Owned & Under Construction

Owned & Existing

At Business Development Level ffSASCO received the award (Most Innovative Gas Station Company of 2018) by the International Finance Awards. ffContinue to sign many agreements with international restaurants and coffee shop companies in order to improve the service provided to its customers and achieve a qualitative and quantitative shift to all the company’s sites inside and outside the cities and to achieve the company’s approach to develop the stations and rest houses sector in the Kingdom. ffContinuing to negotiate with a number of financial institutions and investment companies in order to reach offers that are in line with the company’s interest and goals regarding the sale of some

the fiscal year 2019 in accordance with agreed work procedures. ffThe Saudi Automobile & Touring Association, Ltd (SATA) activates the customs agreement for the international carriage of goods according to the international road transport cards (TIR). ffContinue to open new outlets for the Saudi Automobile & Touring Association, Ltd (SATA) ffDevelop the company’s ERP program to achieve the company’s goals. ffContinued development of automating fuel pumps and tanks, using smart cards “Control” and RFID system ffContinue to sign a number of forward supply agreements with agents and marketers of food and non-food supplies.

of the sites owned by the company and re-renting them with long-

ffContinued periodic and basic maintenance of the company’s sites.

term contracts.

ff(Super 8) Hotel honoured by the General Organization for Technical

ffConduct feasibility studies for projects that the company wants to enter in after these studies are finally approved. ffStart implementation of the new headquarters building of the

and Vocational Training and the General Sports Authority within the events of the National Festival for Heritage and Culture (Janadriyah Festival 33).

company after its designs were approved. ffContinue to update the website of the company and its subsidiaries.

At the level of organizational and administrative development

ffUpdate the company’s application on smartphones running (iOS

ffUpdate the company’s articles of association after the shareholders’

/ Android). ffLaunching “My Petrol Service” application in a number of the company’s stations. ffOperating a central warehouse of the SASCO Palm Company in Riyadh. ffSASCO Waha Company obtained a license to operate and classify

general assembly agreed to amend it based on the amendments made to the companies’ law. ffContinue to activate governance systems and increase transparency and disclosure. ffFollow up any new legislations issued by the official authorities to implement them.

the accommodation facilities issued by the General Authority for

ffUpdating the executive committee regulations.

Tourism and National Heritage for the company’s motel in Al Adeid

ffUpdate the bylaws of Nomination and Remuneration Committee

area on Salwa - Al Batha International Road. ffContinue contracting with many companies at the Super 8 Hotel in Riyadh. ffAl Nakhla Al Oula Contracting Company contracted with an international company to supply electric car charging devices to be the first company in the Kingdom to provide this service. ffA team from the Saudi Automobile & Touring Association, Ltd

and approve it by the general assembly. ffUpdate the corporate governance regulations. ffUpdate the working procedures policy document in the Board of Directors. ffUpdate the policy document for actual and potential conflicts of interests for both shareholders, members of the board of directors and executive management.

(SATA) in cooperation with the International Road Transport

ffApproval of bylaws of criteria for competition by a member of

Association (IRU) organized a workshop on TIR system for a number

the Board of Directors for the company’s business or one of its

of employees of the Saudi Customs Authority.

branches of activity, and recommend to submit the bylaws to the

ffAppointing a representative of the Saudi Automobile & Touring Association, Ltd (SATA) within the National Licensing Committee of the General Authority of Saudi Customs and signing a contract with the National Company for Customs Clearance as authorized by (SATA) to clear goods with TIR system.

shareholders’ general assembly for approval at the next meeting. ffPrepare the company’s occupational safety and health policy in addition to the environmental policy. ffContinue to localize jobs and maintain the classification of the company and its subsidiaries within the green domain. ffContinue to attract qualified employees and Saudization to meet

At the Level of Finance and Financial & Operational Control

the company’s requirements for various administrative jobs,

ffApproval of the company’s final accounts and report of the board

especially leadership positions.

of directors. ffContinue to apply the international accounting standards in line with the requirements of the international standards for financial reports approved in the Kingdom of Saudi Arabia. ffEntering into many governmental tenders to supply fuel. ffRenewal of the credit facility agreement signed with some local banks. ffCompleted procedures for distributing dividends for the fiscal year 2018 and depositing them in their accounts.

At the level of social responsibility ffContinuous cooperation with the Children with Disability Association and support for the 2019 Children’s Drawings and Creativity Program. ffParticipation of the Saudi Automobile & Touring Association, Ltd (SATA) in the third Saudi logistics conference as a strategic sponsor. ffSATA organized a workshop entitled (A qualitative shift to facilitate customs operations for transit and trade development from and

ffApprove the budget of 2020.

through the Kingdom) in cooperation with the Saudi Customs

ffCompleted a comprehensive inventory of the company’s sites for

Authority and the International Road Transport Association. Annual Report 2019

ffSASCO Marketing Department gave a lecture to the company’s female employees on the importance of early detection of breast cancer in cooperation with the Zahra Breast Cancer Association. ffParticipation in the International Women’s Day.

ffTips for safe driving during rain. ffEating while driving is a traffic violation and its danger is greater than you expect. ffTips to protect you from drowsiness while traveling.

ffContinue to participate in the awareness campaign to celebrate the global month of Alzheimer’s disease, which aims to introduce the

Constant update of the company’s website (www.sasco.com.sa) and

primary symptoms of the disease and the necessity of diagnosis

its subsidiaries, in addition to other social sites on the following

and early intervention, and educate and familiarize the community

links:

with the symptoms of the disease and its prevention.

ffwww.sataclub.com.sa

ffLaunch the campaign (prepare for winter) for all employees of the

ffhttps://twitter.com/sasco_ksa

company in cooperation with the Ministry of Health with the aim

ffhttps://twitter.com/SATAclub

of vaccination to prevent influenza.

ffhttps://twitter.com/sasco_palm

ffAt the level of social responsibility, the company continues also to provide many services, such as: ?? the mosques in various locations inside and outside cities and on highways. ?? Serving the pilgrims and Umrah performers. ?? Free toilets.

ffhttps://twitter.com/Super8R ffhttps://www.facebook.com/SaudiAutomotiveServicesCo/?fref=ts ff/https://www.facebook.com/Sataksa_ ff/https://www.facebook.com/sasco-palm-613438065491715_ ffhttps://www.facebook.com/Super-8-Hotel-/ Riyadh-1777669312470879

?? Care for health and hygiene.

ffhttp://instagram.com/sasco_ksa_

?? Caring for the environment.

ffhttp://instagram.com/sata_ksa_ ffhttp://instagram.com/sasco_palm_

At the Level of Marketing Activities and Social Media

ffhttp://instagram.com/super8.riyadh_

Continuous update of the website of SASCO and its subsidiaries

ffhttp://cutt.us/dxrT_

(www.sasco.com.sa), in addition to their accounts on social media

ffhttps://plus.google.com/117174656605659302922_

on the following links:

ffwww.youtube.com/sasasco

ffParticipation in the franchise exhibition.

ffwww.flickr.com/photos/sasco

ffThe marketing department launched Ramadan competition for customers. ffImplementing several awareness campaigns: ffThe Campaign of “Initiate it”.

ffhttps://appsto.re/sa/Hg1Ocb.i

ffSabbeh application. ffCampaign for the benefits of continuous inspection of cars.

To update SASCO application on (iOS / Android) smart phones. ffhttps://appsto.re/sa/BVIaH.i

Annual Report 2019

Board of Directorâ&#x20AC;&#x2122;s and Committees

Board of Director’s and Committees Board Formation The Board of Directors was entrusted with SASCO management it the twelfth session as of 30/6/2018 for a period of three years ending on 29/6/2021.

Members’ Classification No.

Name

Membership Category

Position

Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman – Head of Executive Committee

Non-Executive

Mr. Sultan bin Mohammed Al-Hudaithi

Vice Chairman – Managing Director - Member of Executive Committee

Executive

Mr. Nasser bin Abdullah Al-Awfi

Board Member – Head of Audit Committee

Non-Executive

Mr. Suleiman bin Ali Al-Khudair

Board Member – Member of Nomination and Remuneration Committee

Non-Executive

Mr. Majid bin Mohammed Al-Othman

Board Member – Member of Nomination and Remuneration Committee

Non-Executive

Mr. Riyadh bin Saleh Al-Malik

Board Member – Member of Executive Committee - CEO

Executive

Mr. Ali bin Mohammed Aba Al-Khail

Board Member –Head of Nomination and Remuneration Committee

Independent

Mr. Fawaz bin Suleiman Al-Rajhi

Board Member – Member of Audit Committee

Independent

Mr. Majid Bin Nasser Al Sabei’e

Board Member – Member of Executive Committee

Independent

Annual Report 2019

Allowances and Remunerations Paid to Board Members and Senior Executives Remuneration of the Board of Directors The following statement shows the payments to Board members in 2019:

Expenditure Allowance

Grand total

Indemnity

Total

Granted shares

Long-term incentive plans

Short-term incentive plans

Periodic remuneration

Profit ratio

Total

Changing Remuneration Remuneration of Chairman, managing Director or Secretary if he is a Board member

Remuneration of technical, administrative or consulting works

In kind benefits

Total allowance for attending committee meetings

Certain amount

Description

Allowance for attending Board meetings

Fixed Remuneration

221,000 230,000 218,000

669,000

221,000 230,000 218,000

669,000

12,000 39,000

9,000

6,000

Total

30,000

18,000

12,000

200,000

12,000

Mr. Majid Bin Nasser Al Sabeiâ&#x20AC;&#x2122;e

600,000

Mr. Fawaz bin Suleiman Al-Rajhi

200,000

Mr. Ali bin Mohammed Aba Al-Khail

200,000

First: Independent Members

227,000 233,000

224,000

224,00

908,000

227,000 233,000 224,000 224,00 908,000

12,000 60,000

15,000 21,000

12,000

Total

48,000

12,000

12,000 12,000

200,000

12,000

Mr. Majed bin Mohammed Al-Othman

800,000

Mr. Suleiman bin Ali Al-Khudair

200,000

Mr. Nasser bin Abdullah Al-Awfi

200,000

Mr. Ibrahim bin Mohammed Al-Hudaithi

200,000

Second: Non-Executive Members

227,000

* 3,654,329

3,881,329

26,797

227,000

76,418

454,000

3,654,329

4,108,329

103,215

15,000 30,000

12,000

Total

24,000

15,000

200,000

12,000

Mr. Riyadh bin Saleh Al-Malik

400,000

Mr. Sultan bin Mohammed Al-Hudaithi

200,000

Third: Executive Members

* Pursuant to Section Two (Article 3) of the regulatory controls and procedures issued in implementation of the Companies Act with respect to listed shareholding companies issued by the

Capital Market Authority and based on SASCO Remuneration Policy, an annual remuneration shall be cashed to the Managing Director (in consideration of works as well as executive and administrative positions entrusted to him in SASCO in his capacity as Managing Director) and shall be determined by a decision from the Board of Directors following a recommendation from the Remuneration Committee. The decision shall be renewed in each new session of the Board.

Remunerations Paid to Senior Executives The following statement shows the payments to Top Five Senior Executives who received Allowances and Remunerations, including the CEO and

Grand total 7,402,732

Indemnity 379,800

the Council if any

Total 1,885,732

Granted shares -

plans

Long-term incentive

plans

Short-term incentive

Profits -

Remunerations

Total 5,137,200

Periodic

In kind benefits -

1,885,732

Allowances

Changing Remuneration

1,297,200

Total

3,840,000

Statement

Salaries

Fixed Remuneration

Total reward executives for

CFO during 2019:

Remunerations Paid to Committee Members The following statement shows the payments to committee members in 2019: Statement

Fixed remunerations except meeting attendance allowance

Meeting attendance allowance

Total

Executive Committee Members Mr. Ibrahim bin Mohammed Al-Hudaithi

15,000

Mr. Sultan bin Mohammed Al-Hudaithi

15,000

Mr. Riyadh bin Saleh Al-Malik

15,000

Mr. Majid Bin Nasser Al Sabeiâ&#x20AC;&#x2122;e

12,000

Total

57,000

Audit Committee Members Mr. Nasser bin Abdullah Al-Awfi

50,000

21,000

71,000

Mr. Fawaz bin Sulieman Al Rajhi

50,000

18,000

68,000

Mr. Turki bin Muhamma Al Quraini

80,000

21,000

101,000

180,000

60,000

240,000

Total

Remuneration & Nomination Committee Members Mr. Ali bin Mohammed Aba Al-Khail

9,000

Mr. Suleiman bin Ali Al-Khudair

12,000

Mr. Majed bin Mohammed Al-Othman

12,000

33,000

Total

Annual Report 2019

Remuneration Policy According to the payments made to the Board members, formed

Incentives, Bonuses and Commissions Policy Manual in a

committees and senior executives, the most important clauses of the

manner that does not conflict with their employment contracts.

Remuneration Policy are as follows:

A remuneration shall be approved before being paid by the

ffpaying (3) thousand Saudi Riyals (per each member / per meeting ) for board meeting attendance.

Remuneration after obtaining the Board’s recommendation. The Remuneration Policy of Board members, formed committees and

ffPaying an annual remuneration to the Managing Director. It shall

senior executives, which was approved by the Thirty Sixth Ordinary

be determined by a board resolution upon a recommendation

General Meeting held on 24 Dec. 2017, can be accessed via SASCO

from the Remuneration Committee. The resolution is renewed at

website (www.sasco.com.sa).

the outset of each board session (3% of net profits at the end of each fiscal year, being not less than SR 1000,000).

Deviation from Remuneration Policy

ffPaying a meeting attendance allowance of SR (3) thousand (per each member/per one meeting) to committee members.

There is no deviation between the granted remunerations, whether paid to Board members, committees or senior executives, and the

ffPaying an annual remuneration of SR 80,000 to a non-board Audit

applicable Remuneration Policy.

Committee member. ffPaying an annual remuneration of SR 50,000 to a board Audit Committee member.

Board Meetings The Board Members dedicated a sufficient time to undertake their

ffPaying an annual remuneration to the CEO according to a

responsibilities and prepare for the Board meetings and committees.

mechanism that pays attention to quantitative and qualitative

The Board was keen on scheduling its meetings and preparing the

performance in accordance with his employment contract. Such

meetings in advance making sure that all board members attend the

mechanism shall be approved by the Remuneration Committee by

meetings and discuss all items of the proposed agenda.

a recommendation from the Managing Director.

The following table shows the attendance record of Board meetings

ffSenior Executives’ remuneration is paid according to the Staff

in 2019:

No. of meetings (4) No.

Member Name Meeting No. (2) 29/04/2019

Meeting No. (3) 28/10/2019

Meeting No. (4) 22/12/2019

By phone

Mr. Ibrahim bin Mohammed Al-Hudaithi

Mr. Sultan bin Mohammed Al-Hudaithi

100%

Mr. Nasser bin Abdullah Al-Awfi

100%

Mr. Suleiman Ali Al-Khudair

100%

Mr. Majed bin Mohammed Al-Othman

100%

Mr. Riyadh bin Saleh Al-Malik

100%

Mr. Ali bin Mohammed Aba Al-Khail

100%

Mr. Fawaz Suleiman Al-Rajhi

100%

Mr. Majid Bin Nasser Al Sabei’e

Attendance in person

Meeting No. (1) 19/03/2019

Attendance Ratio

Apologized

100%

50%

× Authorizing one of the Board members

The date of last meeting of the shareholders’ general assembly is 22/4/2019

No board member has submitted a written request to hold a board meeting in 2019 and no member has objected to the Board’s agenda and resolutions.

Number of SASCO requests for Shareholders Register The following table shows the number of SASCO requests for Shareholders Register as well as the dates and reasons for such requests: No.

Request Date

Request Reasons

1 8 / 3/ 2019

Following up the change in Shareholders Register

28 / 3/ 2019

13th Extraordinary meeting of the general assembly

25/ 4/ 2019

Entitled for dividends for 2018

9/ 7 / 2019

Following up the change in Shareholders Register

28 / 8 / 2019

Following up the change in Shareholders Register

29/ 9/ 2019

Following up the change in Shareholders Register

10/ 10/ 201 9

Following up the change in Shareholders Register

31/ 1 2/ 2019

Following up the change in Shareholders Register

Board Declarations

Procedures taken by the Board to familiarize its members

ffAccount records were properly prepared.

(non-executive in particular) with the shareholders’

ffThe Internal Control System was established on sound foundations

proposals and remarks about SASCO performance.

and implemented effectively. ffThere is no doubt in SASCO ability to continue its activities.

ffSASCO Investor Relation Department independently receives and submits shareholders’ proposals, if any, to the Board for discussion in its meetings and taking the appropriate resolution.

Board Confirmations

ffSASCO didn’t receive any proposals or remarks from shareholders

ffNo Board member or a senior executive waived any salary or

about its performance in the current fiscal year other than that has

remuneration under any arrangements or assignment agreement.

been discussed in the shareholders general meetings and included

No shareholder waived any rights to profit under any arrangements

in the minutes of meetings.

or assignment agreement. ffThere is no description of classes and numbers of transferable debt instruments, contractual securities, rights memorandum, or

ffIn case of any proposals or remarks on SASCO performance, such proposals and remarks shall be discussed as part of the periodic board meetings agenda.

similar rights issued or granted by SASCO during the current fiscal year. There is no compensation gained by SASCO in return for this. ffThere is no description of any transfer or underwriting rights

The means used by the board to evaluate its performance and the performance of its committees and members :

under transferable debt instruments, contractual securities, rights

During 2019, the board adopted the required method to evaluate its

memorandum, or similar rights issued or granted by SASCO.

performance and the performance of its committees and members,

ffSASCO did not recover, purchase, or cancel any recoverable debt instruments. ffSASCO did not establish any investments or reserves in the interest

based on the recommendation of remuneration and nomination committee. Performance shall be evaluated according to such method periodically as from the next year.

of its employees. ffSASCO did not receive from shareholders possessing 5% or more

This method includes external evaluation of the board, so that the

of its capital or account auditor any request for holding a general

board takes the required arrangements to obtain the evaluation by

meeting or for adding an item to the agenda of the meeting in the

a professional external agency every three years or when necessary.

current fiscal year.

Annual Report 2019

Transactions and Contracts in which Board Members and Executive Directors have an Interest There are interest-related transactions and contracts for some Board members as follows:

Agency

Contracts/Business

Nahaz Investment Co.

A site lease from Nahaz Investment Co. to use as headquarters and labour accommodation for Ostool Al-Naqil Co. (subsidiary)

DAKKIN Advertising and Design Consultancy

Mr. Ibrahim bin Mohammed Al-Hudaithi (possessing 33.34% of capital) Providing services in Mr. Majed bin Mohammed Al-Othman the field of promotion (possessing 33.33% of capital) and advertising Mr. Sultan bin Mohammed Al-Hudaithi (possessing 33.33% of capital)

Mr. Ibrahim bin Mohammed Al-Hudaithi (Board member possessing 0.02% of capital). Mr. Sultan bin Mohammed Al-Hudaithi (Board member possessing 0.02% of capital).

Mulkia Investment Co.

Managing an investment portfolio in Ahli Capital

Mr. Ibrahim bin Mohammed Al-Hudaithi (Board member possessing 17.67% of capital). Mr. Suleiman Ali Al-Khudair (possessing 0.67% of capital). Mr. Majid bin Mohammed Al-Othman (possessing 0.67% of capital). Mr. Sultan bin Mohammed Al-Hudaithi (Board member possessing 21.45% of capital).

Nahaz Investment Co.

Zaiti Petroleum Services Company rents stations No. 1 and 2 from Nahaz Investment Co.

Mr. Ibrahim bin Mohammed Al-Hudaithi Board member of Nahaz Investment Co. (possessing 0.02% of capital) Mr. Sultan bin Mohammed Al-Hudaithi Board member of Nahaz Investment Co. (possessing 0.02% of capital)

Zaiti Petroleum Services Company rents station No. 8 from Madaen Star Real Estate

Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman of Madaen Star Real Estate (possessing a direct and indirect share of 97.75% of capital) Mr. Majed bin Mohammed Al-Othman Board member of Madaen Star Real Estate Mr. Sultan bin Mohammed Al-Hudaithi Board member of Madaen Star Real Estate

Madaen Star Real Estate

Related Parties

Statement

Contract Value is SAR 576,000 annually

Publicity and advertising of SAR 71,200

A contract to manage a portfolio of SAR 50,000,000

Contract value is SR 1.1 million

Contract value is SR 300,000 on an annual basis

Contract Duration

One year

To be terminated by a 30-day written notice No transactions during 2019

For five renewable years as of 1/1/2018

One year

Reporting to Board

Reporting to General Meeting

Statement

Contract Duration

Zaiti Petroleum Services Company rents station No. 9 from Madaen Star Real Estate

Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman of Zawaya Real Estate Co. (possessing a direct and indirect share 42.96% of capital). Mr. Majid bin Mohammed Al-Othman Board member of Zawaya Real Estate Co. (possessing a share 0.29% of capital). Mr. Sultan bin Mohammed Al-Hudaithi Managing Director of Zawaya Real Estate Co. (possessing a share 1.8% of capital).

Contract value is SR 350,000

TThe contract term has been changed to be 3 months automatically renewable against 300,000 SR 25/6/2019

Zaiti Petroleum Services Company rents station No. 10 from Madaen Star Real Estate

Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman of Madaen Star Real Estate (possessing a direct and indirect share of 97.75% of capital). Mr. Majid bin Mohammed Al-Othman Board member of Madaen Star Real Estate. Mr. Sultan bin Mohammed Al-Hudaithi Board member of Madaen Star Real Estate.

Contract value is SR 800,000

Five renewable years from 29 April 2015

Madaen Star Real Estate

Zaiti Petroleum Services Company rents station No. 11 from Madaen Star Real Estate

Contract value is SR 250,000 on an annual basis

One year

Nahaz Investment Co.

Nahaz Investment Co. purchases fuel from Zaiti Petroleum Services Company

The value of 2019 fuel purchases was SR 56.700

One year

Agency

Zawaya Real Estate Co

Madaen Star Real Estate

Contracts/Business

Related Parties

Reporting to Board

Reporting to General Meeting

Annual Report 2019

Agency

Contracts/Business

Related Parties

Statement

Contract Duration

Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman of Madaen Star Real Estate (possessing a direct and indirect share of 97.75% of capital) Mr. Majed bin Mohammed Al-Othman Managing Director of Madaen Star Real Estate Mr. Sultan bin Mohammed Al-Hudaithi Board member of Madaen Star Real Estate

The value of 2019 fuel purchases was SR 154,200

One year

One Year

Madaen Star Real Estate

Madaen Star Real Estate purchases fuel from Zaiti Petroleum Services Company

Mr. Majed AlOthman

Mr. Majid Al-Othman purchases fuel from Zaiti Petroleum Services Company

Mr. Majid bin Mohammed Al-Othman

The value of 2019 fuel purchases was SR 10,000

Zawaya Real Estate Co. purchases fuel from Zaiti Petroleum Services Company

The value of 2019 fuel purchases was SR 8,483

One Year

Zawaya Real Estate Co. rents advertising boards at station No. (9)

2019 value was SR 12,500

One Year (evacuated on 25/6/2019)

Fun Gate Co. rents 10 residential rooms at station No. 2.

Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman of Fun Gate Co. (possessing a direct and indirect share of 97.75% of capital). Mr. Majid bin Mohammed Al-Othman Managing Director of Fun Gate Co. Mr. Sultan bin Mohammed Al-Hudaithi Board member of Madaen Star Real Estate.

2018 value was SR 50,000

One Year

Zawaya Real Estate Co.

Fun Gate Co.

Reporting to Board

Reporting to General Meeting

Reported. ?? All above business and contracts were approved for a coming year in the 13th extraordinary general meeting held on 22 April 2019. The renewal of the same shall be approved by the next shareholdersâ&#x20AC;&#x2122; general meeting. ?? These business and contracts have no preferential terms. ?? Except as stated above, no other transactions effected between the company and a related party.

Annual Report 2019

Executive Committee It comprises: Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman | Head of Executive Committee Qualifications & Experiences: A businessman, holding the Secondary school certificate with more than thirty eight years in corporate management. He occupied various positions including the deputy Chairperson of the Saudi Chambers of Commerce. He also participated in the boards of CMA-listed and unlisted shareholding companies such as Al-Madaen Star Group, Akwan Real Estate Co., Ibrahim bin Mohammed Al-Hudaithi Investment Co., Zawaya Real Estate Co., Nahaz Investment Co. and other companies working in the fields of real estate, services, investment and financial services inside and outside the Kingdom of Saudi Arabia.

Present Occupations: ff Chairman of Al-Madaen Star Group. ff Chairman of Mulkia Investment Co. ff Board member of Nahaz Investment Co. ff Chairman of Zawaya Real Estate Co. ff Chairman of Balda Specialized Malls Co. ff Chairman of Akwan Real Estate Co. Previous Occupations: ff Vice Chairman of the Saudi Chambers of Commerce. ff Chairman of Al Kharj Industrial Chambers of Commerce. ff Member of Al Kharj Governorate Local Council. ff Board member of Solidarity Company.

Mr. Sultan bin Mohammed Al-Hudaithi Vice Chairman | Managing Director | Member of Executive Committee Qualifications & Experiences: He holds the Bachelor’s Degree in Accounting with honour degree from King Saud University and Masters of Business Administration (MBA) from London Business School. He held leading positions in many public and private companies in Saudi Arabia. He enjoys experience in corporate restructuring, strategic planning and investment management in securities, private equity and real estate investment. He was a member of boards and committees in public and private companies including Saudi Chemical, Nahaz Investment Co., Zawaya Real Estate Co., Al-Madaen Star Group, Middle East Battery Company (MEBCO), Mulkia Investment Co. and United Wire Factories Company (ASLAK).

Present Occupations: ff SASCO Managing Director. ff Board member of Madaen Star Group. ff Vice chairman of Zaway Real Estate Co. ff Board member of Mulkia Investment Co. ff Board member of Nahaz Investment Co. Previous Occupations: ff Chief Executive Director of Ibrahim Al-Hudaithi Investment Co. ff Chief Executive Director of Zaiti Petroleum Services Company. ff Deputy Director General of Financial and Administrative Affairs, Al-Madaen Star Group. ff Board member of Saudi Chemical. ff Board member of United Wire Factories Company (ASLAK)

Mr. Riyadh bin Saleh Al-Malik Board Member | Member of Executive Committee | Chief Executive Officer Qualifications & Experiences: He holds the Bachelor’s Degree in Business Administration from King Abdulaziz University. He enjoys a vast experience in corporate management, particularly fuel station companies. He served as the General Director of Al Tas’helat Marketing Company Ltd., Deputy General Director of Riyadh Development Company and board member of the board of directors of many companies.

ff Member of the National Committee of Fuel

Present Occupations: ff SASCO Chief Executive Officer. ff Member of Customs Council of Federation Internationale de l’Automobile.

Mr. Majid Bin Nasser Al Sabei’e Board Member | Member of Executive Committee Qualifications & Experiences: He holds Bachelor’s Degree in Economical Sciences from King Saud University and enjoys more than sixteen years in corporate governance. He held many leading positions such as the director of real estate projects at Nasser Bin Mohammed Alsubeaei & Sons Investment Company, financial analyst and managing director of Morgan Stanley & Co. He is currently the Chief Executive Officer of Nasser Bin Mohammed Alsubeaei & Sons Investment Company.

Station Companies in the Council of Saudi Chambers. Previous Occupations: ff General Director of Al Tas’helat Marketing Company Ltd. ff Deputy General Director of Riyadh Development Company. ff Director of Marketing Department of Saudi Real Estate Company (Al Akaria). ff Sales Director of Saudi Hotels & Resorts Company. ff Head of Customs Council of Federation Internationale de l’Automobile. ff Head of the National Committee of Fuel Station Companies in the Council of Saudi Chambers.

Present Occupations: ff Chief Executive Officer of Nasser Bin Mohammed Alsubeaei & Sons Investment Company Previous Occupations: ff Manager of real estate projects at Nasser Bin Mohammed Alsubeaei & Sons Investment Company. ff Financial Analyst of Morgan Stanley & Co. ff Managing Director of Morgan Stanley & Co.

Competencies and Duties

ffTo consider SASCO strategic and operational plans and budgets to submit them to the Board. ffTo review feasibility studies for new economic projects and raise recommendations ffTo consider and present initial approvals to high importance issues that require Board decisions. ffTo make decisions on issues authorized to the Committee by the Board outside the competency of SASCO Managing Director and CEO. These issues may include topics related to investments, human resources (HR), remuneration, information technology (IT), capital expenses (CAPEX), procurements, and other issues authorized to the Committee. ffTo identify SASCO investment objectives and policies, including: ❖❖Assets subject to investment according to the adopted regulatory restrictions. ❖❖Asset types. ❖❖Investment-related long-term policies and objectives, risk appetite, asset diversification, investment currencies, and internal or external investments. ❖❖Nature of investment management arrangements and related controls. ❖❖Appointment of investment portfolio managers and trustees, and evaluating their performance periodically. ❖❖Method and frequency of performance analysis. ❖❖Approval of different investment processes as per the established investment policy. The Executive Committee can authorize their powers of approval within certain financial limits to the General Manager/FCO either jointly or severally according to the conditions of the authorization granted. ❖❖Reviewing and examining SASCO investment policies based on performance evaluation. ❖❖Evaluating investment outcomes to identify the success of implemented investment strategies, reporting investment outcomes to the Board as well as ensuring the adherence to the investment policy and key guidelines. ffTo enter into short and long term investment agreements, facilities and loans agreements within the limits of their powers. ffTo follow up the implementation and development of SASCO organizational structures and decisions that ensure the quick implementation and development thereof. ffTo review the administrative regulations with SASCO management and make decisions that enable the management to put them in place. ffTo contact senior officers at governmental and national bodies to facilitate the obstacles facing SASCO business and explain SASCO programs to them. ffTo assess technical designs and specifications and present proper recommendations thereon. ffTo make appropriate decisions on issues authorized by the Board to the Committee to discuss, address, and make appropriate decisions thereon.

ffTo perform all acts that would drive business and achieve SASCO objectives within the regulations, rules, and decisions issued by the Board. ffTo conduct purchases and acquisitions of existing stations or lands for constructing stations thereon within the limits of SASCO competencies. ffStudy the proposals submitted by the company management related to achieving the purposes of the company, admin, financial and operational activities and take the decision that enables the executive management to implement or refer to the board for matters deemed necessary by the committee. ffTo perform the activities referred by the Board or the Chairperson for consideration or execution.

Most Important Achievements

ffAmend the executive committee’s bylaws and get the board’s approval on the amendments. ffFollow up the company’s lands and sites with the concerned authorities. ffFollow up the acquisition process of new company websites. ffApprove the estimated budget of the company and its subsidiaries and submitting recommendations to the Board of Directors for approval. ffFollow up the financial and operational performance of the company and its subsidiaries. ffEvaluate the company’s investments and liquidity and submitting recommendations thereon to the Board of Directors. ffFollow up the project of selling some of the company’s sites and re-renting them. ffFollow up company’s lawsuits. ffFollow up the goals and recommendations of the company’s strategic plan. ffFollow up the operating and financial performance of the subsidiary companies. ffFollow up the implementation of the company’s projects. ffFollow up the implementation of the new headquarters of the company. ffFollow-up phases of communication with the concerned authorities to amend the fuel profit margin. ffStudy the operating sites and work to extend and reduce their rental contracts. ffSubmit recommendation on banking facility agreements. ffStudy the investment opportunities available to the company. ffApproving the committee’s plan for 2020 from the board of directors.

Meetings

The following table shows the meeting attendance record of the Executive Committee during the year 2019 as follows:

No. of meetings (5)

Attendance Ratio

No.

Member Name

Mr. Ibrahim bin Mohammed Al-Hudaithi Committee Head

Mr. Sultan bin Mohammed Al-Hudaithi Committee Member

100%

Mr. Riyadh bin Saleh Al-Malik Committee Member

100%

Mr. Majid Bin Nasser Al Sabei’e Committee Member

Meeting No. (1) 18/03/2019

Meeting No. (2) 28/04/2019

Meeting No. (3) 09/07/2019

Meeting No. (4) 28/10/2019

Meeting No. (5) 22/12/1209

By video phone

Apologized

100%

80%

Personal attendance Annual Report 2019

Audit Committee It comprises:

Mr. Nasser bin Abdullah Al-Awfi Board Member | Head of Audit Committee Qualifications & Experiences: He holds the Master’s Degree in Accounting, and Master’s Degree in Business Administration from Southern New Hampshire University in the USA and the Bachelor’s Degree in Accounting from King Saud University. He enjoys more than thirty two years of experience in the management of joint stock companies as well as financial, administrative and strategic consultation. He also participated in the many boards of shareholding companies and board committees (Audit Committee) such as Al Jouf Agricultural Development Company (JADCO), Taiba Holding Company and United Cement Industrial Company.

Present Occupations: ff Board member and Head of Audit Committee of United Cement Industrial Company. ff Board member, Audit committee head, Takaful Alrajhi Co. ff Head of Saudi Ceramics Audit Committee. Previous Occupations: ff Head of Al Jouf Agricultural Development Company Audit Committee. ff Member of Taiba Holding Company Audit Committee. ff Director of Financial, Administrative and Investment Department of Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO). ff Deputy General Director for Financial and Administrative Affairs of Saudi Livestock Trading Company. ff Director for Financial and Administrative Affairs of Taiba Investment and Real Estate Development Company.

Mr. Fawaz bin Suleiman Al-Rajhi Board Member | Member of Audit Committee Qualifications & Experiences: He holds the Bachelor’s Degree in Accounting and Information Systems Management from King Fahd University of Petroleum and Minerals (KFUPM) and also holds the Master’s Degree in Business Management from Stanford University, USA. He is the Chairperson of AlRajhi United Investment Holding Company; it is a company investing in capital markets and private transactions on the local, regional and international levels. He has been leading and directing the Company’s efforts since its inception based on the strategy of diversifying the investment portfolio through a deliberate choice of markets and industries in selected geographical locations, with focus being placed on emerging technology and income-generating real estates. He is also a board member and member of audit committees in a number of joint-stock companies. He spent more than a decade in banking. He held many positions in Corporate Financing Division of Rajhi Bank. He took part in establishing the department of corporate loans and financing subscription of large corporations. He was the person in charge of establishing the Share and Subscription Department of Al Rajhi Capital Company.

Present Occupations: ff Chairman of AlRajhi United Investment Holding Company. ff Board member, Raas Alkhaimah Ceramic Co. ff Chairman, Raj Real Estate Co. ff Chief Executive Officer of AlRajhi United Investment Holding Company. Previous Occupations: ff Head of Private Placement Operations in Al Rajhi Capital Company. ff Director of Sales and Distribution in Al Rajhi Capital Company. ff Head of Corporate Banking Services Team in Rajhi Bank. ff Senior credit analyst in Rajhi Bank. ff System Analyst of Procter & Gamble Co.

Mr. Turki bin Muhamma Al Quraini Non-Board Member Qualifications & Experiences: He holds the bachelor of accounting from King Saud University, M.A in financial management from Sydney University of Technology, Australia, and the Certificate of Capital Market Exam (CME-1). He enjoys experience in corporate governance, measurement of corporate compliance levels, development of corporate governance systems, organizational structures, organizational regulations of the government sector as well as listed and unlisted shareholding companies. He also has experience in internal audit and risk management.

Present Occupations: ff Governance and compliance counsellor and specialist in shareholding companies listed in the Saudi Capital Market (Tadawul). Previous Occupations: ff Director of Compliance with Corporate Governance Rules – Capital Market Authority. ff Director of Corporate Governance Standards Capital Market Authority. ff General Director of Governance and Board Secretary - Jabal Omar Development Co. ff General Director of Governance and Risks - National Housing Company.

Competencies and Duties ffTo review the preliminary and annual financial statements before submitting them to the Board and present opinions and make recommendations thereon to ensure integrity, accuracy and transparency. ffTo present technical opinions – upon request from the Board – whether the Board’s report and financial statements are fair, balanced and understood and contain the information that allows shareholders and investors to evaluate SASCO financial position, performance, business model and strategy. ffTo review any important or unfamiliar issue contained in the financial reports. ffTo accurately consider any issues raised by Chief Financial Officer, the persons assuming his duties, compliance officer or external auditor. ffTo verify accounting estimations in major issues of financial reports. ffTo review SASCO accounting policies and present opinions and make recommendations thereon to the Board. ffTo study and review systems of financial internal systems and risk management. ffTo consider internal audit reports and follow-up the implementation of corrective procedures regarding the remarks so raised. ffTo submit recommendation to the Board of the need to hire an internal auditor. ffTo submit recommendation to the Board concerning the appointment and remuneration of Internal Audit Department director or the internal auditor. ffTo monitor and supervise the internal auditor and Internal Audit Department’s performance and activities to verify their efficiency in undertaking their duties and responsibilities and the availability of the required resources. ffTo recommend to the Board the appointment of external auditors, dismiss them, set their fees, assess their performance, make sure of independence and review their scope of work and employment conditions. ffTo ensure that the external auditors is independent, just, fair and efficient, taking into account relevant rules and standards. ffTo review the account auditor’s plan and activities and make sure

he does not perform any works beyond the limits of audit tasks commissioned to him and present opinions in this regard. ffTo Respond to the auditor’s questions. ffStudy the auditor’s report and remarks on the financial statements and follow up the procedures taken in this regard. ffTo review the results of supervisory reports and ensure SASCO takes the required procedures. ffTo verify SASCO complies with the relevant laws, regulations and policies. ffReview contracts and transactions to be concluded by SASCO with related parties and present recommendations thereon to the Board. ffSubmit to the Board the issues and matters for which necessary actions should be taken and recommend proper procedures.

Most Important Achievements ffPrepare the annual audit committee report and submit it to the company’s shareholders general assembly. ffStudy the annual and quarterly financial statements and submit recommendations thereon. ffEnsuring the independence of the company’s external auditor. ffRecommend choosing the company’s external auditor accountants. ffReview the structure of the Internal Audit Department and make recommendations on it. ffFollow up the company’s internal audit work plan. ffReview the various internal audit reports and make recommendations on them. ffFollow up on risk assessment reports and give recommendations on them. ffGive recommendation on the application of International Accounting Standard No. (16) for lease contracts. ffGive recommendation regarding the appointment of director of the Internal Audit Department after the job holder resigns. ffApproving the committee’s plan for 2020 from the board of directors.

Meetings The following table shows the attendance record of Audit Committee meetings during 2019 as follows:

No. of meetings (7) No.

Member Name

Meeting No. (1) 19/03/2019

Meeting No. (2) 25/03/2019

Meeting No. (3) 29/04/2019

Meeting No. (4) 05/05/2019

Meeting No. (5) 24/7/2019

Meeting No. (6) 24/10/2019

Meeting No. (7) 01/12/2019

Mr. Nasser bin Abdullah Al-Awfi

100%

Committee Head

Mr. Fawaz bin Suleiman Al-Rajhi Committee member

Mr. Turki bin Mohammed Al Quraini Non-Board member

Attendance Ratio

By video phone

Apologized

85.71%

100%

Personal attendance Annual Report 2019

Nomination and Remuneration Committee It comprises:

Mr. Ali bin Mohammed bin Ali Aba Al-Khail Board Member | Head of Nomination and Remuneration Committee Qualifications & Experiences: He holds Bachelor’s Degree in Political Sciences from the Faculty of Administrative Sciences, King Saud University and the Master’s Degree in Government Management from Harvard University, United Sates of America. He is the secretary of the Head of the Royal Diwan, the Deputy Director of the Political Affairs Department of the Royal Diwan and secretary of Office of Presidency of Prime Minister. He was appointed in the Office of the Second Deputy of Prime Minister, Minister of Defence and Aviation and Inspector General. He also worked as an administrative counsellor in the High Commission for Administrative Organization and Deputy Chairperson of the Board of Directors of Sanad Investment Company.

Present Occupations: ff Vice Chairman of the Board of Directors of Sanad Investment Company. Previous Occupations: ff Deputy Director of the Political Affairs Department of the Royal Diwan. ff Administrative counsellor in the High Commission for Administrative Organization.

Mr. Suleiman bin Ali Al-Khudair Board Member | Member of Nomination and Remuneration Committee Qualifications & Experiences: He holds a university degree in sciences from the USA. He held many administrative positions, as he worked as a computer engineer in the Ministry of Defence. Then, he moved to the private sector where he worked as a technical director, a sales director and deputy general director in Nahil Computers and now he is its General Director.

Present Occupations: ff General Director of Nahil Computers. Previous Occupations: ff Technical Director of Nahil Computers. ff Sales Director of Nahil Computers. ff Deputy General Director of Nahil Computers.

He participated in boards of many joint stock companies.

Mr. Majid bin Mohammed Al-Othman Board Member | Member of Nomination and Remuneration Committee Qualifications & Experiences: He is a businessman, holding the Secondary school certificate and enjoying more than thirty one years’ experience in real estate, contracting and automobile services. He is the Managing Director of Al-Madaen Star Group and board member of Ibrahim bin Mohammed Al-Hudaithi Investment Co., Bilda Specialized Commercial Centers Co. and Zawaya Real Estate Co.

Present Occupations: ff Managing Director of Al-Madaen Star Group. ff Board member, Zawaya real estate co. ff Board member, Balda Trading Centers Co. ff Board member, Ibrahim Al Hudaithi Investment Co. ff Chairman of Al-Madaen Star Group. ff Chairman of Fun Gate Company. ff Managing Director of Al-Madaen Star Group. Previous Occupations: ff General Director of Al-Madaen Star Group for Contracting. ff General Director of Al-Madaen Star Group for Automobile Services.

Competencies and Duties ffTo develop clear policies for remunerations and rewards of Board members, board committees and senior executives and present

management in SASCO, as well as make recommendations regarding changes that can be made.

such policies to the Board for consideration and approval by the

ffTo ensure the independence of the independent members and the

General Meeting. Performance-related criteria when setting those

absence of any conflict of interest if the Board member is a member

policies should be employed.

of another company’s board on a regular basis.

ffTo define the relation between paid remunerations and the applicable remuneration policy and clarify any major deviation. ffTo conduct periodic review of the remuneration policy and assess to what extent it is efficient in achieving the desired outcomes. ffTo recommend to Board the remunerations and rewards of Board members, board committees and senior executives according to the approved policy.

ffTo develop a description of executive and non-executive members, independent members and senior executives. ffDevelop procedures for the case where one position of a board member or of a senior executive falls vacant. ffTo identify weaknesses and strengths in the Board and propose solutions in line with SASCO best interests. ff

ffTo propose clear membership policies and criteria in Board and

Most Important Achievements ffEnsure the independence of the Board of Directors members.

Executive Management. ffTo recommend nominations to Board membership in accordance with the approved policies and standards, considering not to nominate any person who has previously been convicted with a

ffPeriodic review of the structure of the Board of Directors. ffRecommendation regarding the payment of remuneration to the members of the Board of Directors. ffRecommendation to amend the regulations of the Remuneration

crime involving moral turpitude and dishonesty. ffTo prepare a description of capabilities and qualifications required for Board membership and occupying administrative management

Committee and the Nominations Committee. ffRecommendation regarding the appointment of some of the company’s leadership positions.

positions. ffTo set the time a member should devote to board works. ffTo conduct an annual review of the required needs in terms of adequate Board membership skills and executive management

ffApproval of the company’s rewards and incentives for the year 2018 AD. ffAmendments to the Employees’ Incentives, Rewards and Commissions Policy Manual.

functions. ffTo review the structure of the Board and senior executive

ffApproving the committee’s plan for 2020 by the board of directors.

Meetings The following table shows the attendance record of the Nomination and Remuneration Committee meetings in 2019:

No. of meetings (4)

No.

Member Name

Mr. Ali bin Mohammed bin Ali Aba Al-Khail Committee Head Mr. Suleiman bin Ali Al-Khudair Committee member Mr. Majed bin Mohammed Al-Othman Committee member

Meeting No. (1)

Meeting No. (2)

Meeting No. (3)

Meeting No. (4)

17/03/2019

05/05/2019

05/11/2019

15/12/2019

Apologized

Attendance Ratio

75%

100% .‫حضور أصالة‬

100%

Personal attendance

Annual Report 2019

Ownership of Substantial Shares The following table shows the entities holding substantial shares in SASCO and the changes made during 2019:

Ownership Percentage No.

Name Beginning of period

Mr. Ibrahim bin Mohammed Al-Hudaithi

Nahaz Investment Co.

11.56% (6,939,280 shares) 7.25% (4,350,000 shares)

Change*

December 31st, 2019

11.56% (6,939,280 shares) 7.25% (4,350,000 shares)

Change Ratio*

* Declaration: with respect to notices related to ownership of large shares and their change during the year, SASCO confirms that it did not receive any notice from shareholders of any change to their ownership during the year. In stocktaking of information, SASCO relies on the information provided by Saudi Stock Exchange (Tadawul).

Statement of Board Membersâ&#x20AC;&#x2122; Participations on other Boards The following table shows the names of the Board members on Boards of other companies:

Mr. Sultan bin Mohammed Al-Hudaithi

Mr. Ibrahim bin Mohammed Al-Hudaithi

Name

Companies in which Board member is on their current boards or of their directors

Name of Company

Inside/outside the Kingdom

Legal entity Listed/unlisted joint stock/limited liability company

Al-Madaen Star Group

Inside KSA

Unlisted shareholding company

Akwan Real Estate

Inside KSA

Unlisted shareholding company

Ibrahim bin Mohammed AlHudaithi Investment Co.

Inside KSA

Unlisted shareholding company

Zawaya Real Estate Co.

Inside KSA

Unlisted shareholding company

Nahaz Investment

Inside KSA

Unlisted shareholding company

Bilda Specialized Commercial Centers Co.

Inside KSA

Unlisted shareholding company

Mulkia Investment Co.

Inside KSA

Unlisted shareholding company

DAKKIN Advertising and Design Consultancy

Inside KSA

Limited liability company

Saudi Finance Company

Inside KSA

Limited liability company

Al-Madaen Star Group

Inside KSA

Zawaya Real Estate Co. Nahaz Investment Co.

Companies in which Board member was on their previous boards or of their directors

Name of Company

Inside/ outside the Kingdom

Legal entity Listed/unlisted joint stock/limited liability company

Solidarity Company

Inside KSA

Listed shareholding company

Unlisted shareholding company

Saudi Chemical Company

Inside KSA

Listed shareholding company

Inside KSA

Unlisted shareholding company

Projects Star Co.

Inside KSA

Limited liability company

Inside KSA

Unlisted shareholding company

National Real Estate Group

Inside KSA

Limited liability company

Mulkia Investment

Inside KSA

Unlisted shareholding company

Ibrahim bin Mohammed AlHudaithi Investment Co.

Inside KSA

Unlisted shareholding company

DAKKIN Advertising and Design Consultancy

Inside KSA

Limited liability company

United Wires Co.

Inside KSA

Listed shareholding co.

Mulkia Trading Co.

Inside KSA

Limited liability company

Maâ&#x20AC;&#x2122;areb Company for Investment and Real Estate Development

Inside KSA

Limited liability company

Middle East Battery Company (MEBCO)

Inside KSA

Limited liability company

Annual Report 2019

Mr. Nasser bin Abdullah Al-Awfi

Mr. Sultan bin Mohammed Al-Hudaithi

Name

Companies in which Board member is on their current boards or of their directors

Name of Company

Inside/outside the Kingdom

Legal entity Listed/unlisted joint stock/limited liability company

Mulkia Real Estate Investment Co.

Inside KSA

Limited liability company

Mulkia Gulf Real Estate REIT Fund

Inside KSA

Limited liability company

Mulkia Investment Co.

Inside KSA

Limited liability company

Mulkia Gulf Real Estate REIT Fund

Inside KSA

Limited liability company

Knowledge & Childhood Company for Investment

Inside KSA

Limited liability company

Tamadon Al Ola for Real Estate

Inside KSA

Limited liability company

ARZAQ AGRICULTURAL Company

Inside KSA

Limited liability company

Tamadon Al Hadeetha for Real Estate

Inside KSA

Limited liability company

Dur Al Kuttab Limited

Inside KSA

Limited liability company

Tamdeen Real Estate Company

Inside KSA

Limited liability company

Auto & Equipment Investment co., LTD

Inside KSA

Limited liability company

Ostool Al-Naqil Co.

Inside KSA

Limited liability company

SASCO Palm Co.

Inside KSA

Limited liability company

Al-Nakhla Al-Oula Co.

Inside KSA

Limited liability company

Saudi Automobile & Touring Association

Inside KSA

Limited liability company

Zaiti Petroleum Services Company

Inside KSA

Limited liability company

SASCO Waha Co.

Inside KSA

Limited liability company

SASCO Franchise Co.

Inside KSA

Limited liability company

United Cement Industrial Co. Takaful Al Rajhi Co.

Inside KSA

Unlisted shareholding company

Companies in which Board member was on their previous boards or of their directors

Name of Company

Al Jouf Agricultural Development Company (JADCO)

Inside/ outside the Kingdom

Legal entity Listed/unlisted joint stock/limited liability company

Inside

Listed shareholding

KSA

company

Listed shareholding

Food Products

Inside

Listed shareholding

company

Company

KSA

company

Mr. Suleiman bin Ali Al-Khudair

Name

Companies in which Board member is on their current boards or of their directors

Name of Company

Inside/outside the Kingdom

Nahil Computers

Inside KSA

Mr. Majed bin Mohammed Al-Othman

Al-Madaen Star Group

Zawaya Real Estate Co.

Bilda Specialized Commercial Centers Co. Ibrahim bin Mohammed Al-Hudaithi Investment DAKKIN Advertising and Design Consultancy

Inside KSA

Madaen Star Group

Inside KSA

FUNGATE Company

Inside KSA

Foroseya for Trading &

Name of Company

Inside/ outside the Kingdom

Unlisted shareholding

Zaiti Petroleum

Inside

company

Services Company

KSA

Unlisted shareholding

Al-Madaen Star Group

Inside

Limited Liability

company

for Automotive

KSA

company

Inside

Limited liability company

company

company Limited Liability company Limited Liability company Limited Liability company

Sahl Transportation

Inside

Company

KSA

Ostool Al-Naqil Co.

Inside KSA

Limited liability company

Sara Communications

Inside

Company.

KSA

SASCO Palm Co.

Inside KSA

Limited liability company

Al-Nakhla Al-Oula Co.

Inside KSA

Limited liability company

Inside KSA

Limited liability company

Zaiti Petroleum Services

Inside KSA

Limited liability company

SASCO Waha Co.

Inside KSA

Limited liability company

SASCO Waha Co.

Inside KSA

Limited liability company

Touring Association

company

Unlisted shareholding

Limited liability company

Saudi Automobile &

shareholding

company

Inside KSA

Investment Co.

Unlisted

Unlisted shareholding

Limited liability company

Auto & Equipment

Legal entity Listed/unlisted joint stock/limited liability company

Limited Liability

Inside KSA

Services Ltd.

Mr. Riyadh bin Saleh Al-Malik*

Inside KSA

Legal entity Listed/unlisted joint stock/limited liability company

Companies in which Board member was on their previous boards or of their directors

Al Tasâ&#x20AC;&#x2122;helat Marketing

KSA

Limited liability company Limited liability company

Annual Report 2019

Mr. Majid bin Nasser AlSubeaei

Mr. Fawaz bin Suleiman Al-Rajhi

Mr. Ali bin Mohammed Aba Al-Khail

Name

Companies in which Board member is on their current boards or of their directors

Companies in which Board member was on their previous boards or of their directors

Name of Company

Inside/outside the Kingdom

Legal entity Listed/unlisted joint stock/limited liability company

Sanad Investment Company

Inside KSA

Limited liability

Inside KSA

Unlisted shareholding company

Inside KSA

Unlisted shareholding company

Rak Ceramics

Outside KSA

Listed shareholding company

Al Rajhi Alpha Investments

Inside KSA

Limited liability

RAJ Real Estate

Inside KSA

Limited liability

Inside KSA

Unlisted shareholding company

Inside KSA

Listed shareholding company

Eskan Investment Company Al Rajhi United Investment Holding Co

Nasser Bin Mohammed Alsubeaei & Sons Investment Company

Riyadh Development Company

Name of Company

Inside/ outside the Kingdom

Legal entity Listed/unlisted joint stock/limited liability company

* A member shall not be given remunerations, benefits or profits when he is a board member in any of SASCO subsidiaries.

Board Members’ and Senior Executives’ Ownership of Shares The following table shows the Board members’ and senior executives’ ownership of SASCO shares (including that of their wives and minor children): Ownership No.

Name

December 31st, 2019

Change

6,939,280 shares

123,218 shares

273,843 shares

397,061 shares

222.24%

1,333 shares

Beginning of Period

Change

6,939,280 shares

Ratio

Mr. Ibrahim bin Mohammed Al-Hudaithi

Mr. Sultan bin Mohammed Al-Hudaithi

Mr. Nasser bin Abdullah Al-Awfi

Mr. Suleiman Ali Al-Khudair

220,731 shares

Mr. Majed bin Mohammed Al-Othman

74,721 shares

52,024 shares

126,745 shares

69.62%

Mr. Riyadh bin Saleh Al-Malik

123,242 shares

176,758 shares

300,000 shares

143.42%

Mr. Ali bin Mohammed Aba Al-Khail

1,333 shares

Mr. Fawaz Suleiman Al-Rajhi

1,111 shares

Mr. Majid bin Nasser AlSubeaei

395,791 shares

(62,030 shares)

333,761 shares

(15.67%)

Mr. Muhammad bin Abdullah Al Motlaq

Mr. David Whales

Mr. Islam Mohammed Khairi Ahmad

Mr. Saud bin Suleiman Al Otaiby

Annual Report 2019

Shareholdersâ&#x20AC;&#x2122; Meetings in 2019

Shareholders’ Meetings in 2019 Thirteenth Extraordinary General Meeting First meeting and second meeting (after an hour) on 22 April 2019.

Names of Attending Board Members

No.

Member Name

Capacity

Mr. Sultan bin Mohammed Al-Hudaithi

Vice Chairman – Managing Director, Member of the executive committee

Mr. Suleiman bin Ali Al-Khudair

Board Member, member of nomination and remuneration committee

Mr. Majed bin Mohammed Al-Othman

Board Member, member of nomination and remuneration committee

Mr. Riyadh bin Saleh Al-Malik

Board Member – CEO, Member of the executive committee

Mr. Ali bin Mohammed Aba Alkhail

Board Member, Head of nomination and remuneration committee

* The following persons apologized for not attending : No.

Member Name

Capacity

Mr. Ibrahim bin Mohammed Al-Hudaithi

Chairman – Member of the executive committee

Mr. Nasser bin Abdullah Al Oufi

Board Member, Head of Audit committee

Mr. Fawaz bin Suliman Al Rajhi

Board Member, member of audit committee

Mr. Majed bin Nasser Al Subaie

Board Member – Member of the executive committee

All agenda items were approved as follows:

Approve the Board’s report for fiscal year ending on 31 Dec. 2018. Approve Auditor’s report for fiscal year ending on 31 Dec. 2018. Approve SASCO consolidated financial statements for fiscal year ending on 31 Dec. 2018. Approve the appointment of the company’s auditor from among the candidates based on the recommendation of the audit committee, to examine, review and audit the financial statements for the second, third, fourth and annual quarter of the fiscal year 2019 and the first quarter of 2020, and determine its fees. Approve Board members’ discharge for fiscal year ending on 31 Dec. 2018. Approve the Board’s recommendation to distribute cash profits

2. 3. 4.

5. 6.

to shareholders for the fiscal year ending on 31 Dec. 2018 at SR 0,5 per each share equivalent to 5% of SASCO capital in a total amount of SR 30 million. The entitlement would be for shareholders registered with the Securities Depository Center Company (Idaa) by the end of the second trading day following the date on which the Extraordinary General Assembly convened. The date and method of distribution shall be announced later. Approve the payment of a remuneration to the Board members at a total amount of SR 1,8 million, with each member to receive SR 200,000 for the fiscal year of 2018. Approve authorizing the Board of Directors to distribute interim dividends to shareholders on a semi-annual or quarterly basis for the fiscal year 2019, and to determine the due and distribution date in accordance with the regulatory controls and procedures issued in implementation of

Annual Report 2019

10. 11.

12.

13.

14.

the corporate system in a manner commensurate with the financial position of the company and its cash flows and expansion and investment plans. Approve the amendment of Article (twenty-three) of the companyâ&#x20AC;&#x2122;s articles of association regarding the duties and obligations of the Board of Directors. Approving the amendment of Article (fifty-five) of the companyâ&#x20AC;&#x2122;s articles of association regarding the liability claim. Approve the works and contracts that will be concluded between SASCO and NAHAZ Investment Company, in which some members of the Board have a direct interest in them, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (nonexecutive member) and Mr. Sultan bin Mohammed AlHudaithi (executive member), where each of them holds a stake amounting to (0.02%) of its capital, and these transactions are for Ostool Al-Naqel company (a subsidiary company) renting a site from NAHAZ Investment Company against an amount of (368,000 SAR annually) for the purpose of using it as the headquarters of Ostool Al-Naqel company and housing for employees, and there are no Preferential conditions in this business and contracts. Approve the works and contracts that will be concluded between SASCO and DAKKIN Advertising, in which some members of the Board of Directors have a direct interest, where Mr. Ibrahim bin Mohammed Al-Hudaithi (a non-executive member) owns a share of (33.34%) of its capital and Mr./ Majid bin Mohammed Al Othman (non-executive member) has a share of (33.33%) of its capital and Mr. Sultan bin Mohammed Al-Hudaithi (executive member) owns a share of (33.33%) of its capital, and these transactions represent services and business in the field of advertising, noting that the amount of transactions during 2018 amounted to 139.65 thousand riyals, and there are no preferential conditions in these transactions and contracts. Approval of the works and contracts that will be concluded between SASCO and Mulkeya Investment Company, in which some members of the Board of Directors have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (non-executive member) who owns a share of (17.67%) of its capital and Mr. Sultan bin Mohammed Al-Hudaithi (Executive member) owns a share of (21.45%) of its capital, while Mr. Sulaiman bin Ali Al Khudhair (non-executive member) owns a share of (0.67%) of its capital, and Mr. Majid bin Mohammed Al Othman (non-executive member) owns A share of (0.67%) of its capital. These transactions represent an investment portfolio management agreement with AlAhli Capital, at a value of ( 50 million riyals), and there are no preferential terms in these transactions and contracts. Approval of the works and contracts that will be concluded between the Zaiti Petroleum Services Company (a subsidiary company) and the NAHAZ Investment Company, in which some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (non-executive member) and Mr. Sultan bin Mohammed Al-Hudaithi (executive member). Each of them owns a share of (0.02%) of its capital, and these transactions represent a lease contract by Zaiti Petroleum Services company for two stations No. (1 and 2) from

15.

16.

17.

18.

NAHAZ Investment Company with an amount of (1.1 million riyals annually), and there are no preferential terms in these transactions and contracts Approval of the works and contracts that will be concluded between the Zaiti Petroleum Services Company (a subsidiary company) and Al-Madaen Stars Real Estate Company, in which some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (a non-executive member) who owns a share of (97.75%) of the capital of Al Madaen Star Star Real Estate Company and is the Chairman of its Board of Directors, and Mr. Majid bin Mohammed Al Othman (non-executive member), a member of the Board of Directors of Al Madaen Star Star Real Estate Company, and Mr. / Sultan bin Mohammed Al Hudaithi (Executive Member) member of the Board of Directors of Al-Madaen Stars Group. These transactions represent a lease contract for the Zaiti Petroleum Services Co. for station No. (8) from Al-Madaen Star Real Estate Company, at an amount of (300,000 riyals annually), and there are no preferential terms in these transactions and contracts. Approve the works and contracts that will be concluded between Zaiti Petroleum Services Company (a subsidiary company) and Zawaya Real Estate Company, in which some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (a non-executive member) who owns a share of (42.96%) of the capital of Zawaya Real Estate Company and Chairman of its Board of Directors, and Mr. Majid bin Mohammed Al Othman (nonexecutive member) owns a share of (0.29%) of the capital of Zawaya Real Estate Company and is a member of its board of directors, and Mr. Sultan bin Mohammed Al-Hudaithi (executive member) owns a share of (1.8) % (Of the capital of Zawaya Real Estate Company and a member of its board of directors. These transactions represent a lease contract by Zaiti Petroleum Services Company for Station No. (9) from Al Madaen Star Star Real Estate Company at an amount of (400 thousand riyals annually), and there are no preferential conditions in these transactions and contracts. Approve the works and contracts that will be concluded between the Zaiti Petroleum Services Company (a subsidiary company) and Al-Madaen Star Real Estate Company, in which some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (a non-executive member) who owns a share of (97.75%) of the capital of Al Madaen Star Star Real Estate Company and is the Chairman of its Board of Directors, and Mr. Majid bin Mohammed Al Othman (non-executive member), a member of the Board of Directors of Al Madaen Star Star Real Estate Company, Mr. / Sultan bin Mohammed Al Hudaithi (Executive Member) member of the Board of Directors of Al-Madaen Star Group. These transactions represent a lease contract by Zaiti Petroleum Services Company for station No. (10) from AlMadaen Star Real Estate Company, at an amount of (800,000 riyals annually), and there are no preferential terms in these transactions and contracts. Approval of the works and contracts that will be concluded between the Zaiti Petroleum Services Company (a subsidiary company) and Al-Madaen Star Real Estate Company, in which

some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (a non-executive member) who owns a share of (97.75%) of The capital of Al Madaen Star Real Estate Company and is the Chairman of its Board of Directors, and Mr. Majid bin Mohammed Al Othman (non-executive member) member of the Board of Directors of Al Madaen Star Real Estate Company, and Mr. Sultan bin Mohammed Al Hudaithi (executive member) member of the Board of Directors of the Al Madaen Star Group Company. These transactions are a contract for the Zaiti Petroleum Services Company of station No. (11) from Al-Madaen Star Real Estate Company, at an amount of (250,000) riyals annually), and there are no preferential terms in these transactions and contracts. 19. Approval of the works and contracts that will be concluded between Zaiti Petroleum Services Company (a subsidiary company) and the NAHAZ Investment Company, in which some members of the Board have a direct interest , namely Mr. Ibrahim bin Mohammed Al-Hudaithi (non-executive member) and Mr. / Sultan bin Mohammed Al-Hudaithi (executive member) as each of them holds a share of (0.02%) of its capital, and these transactions represent fuel purchases from Zaiti Petroleum Services Co. by NAHAZ Investment Company, knowing that the amount of the deal during 2018 amounted to 78.7 thousand riyals, and there are no preferential conditions in these business and contracts. 20. Approve the works and contracts that will be concluded between Zaiti Petroleum Services Company (a subsidiary company) and Al-Madaen Star Group Company, in which some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi, a non-executive member (Chairman of the Board of Directors of the Al-Madaen Star Group Company), holds a direct and indirect share of 97.75% of its capital) and Mr. Majid bin Mohammed Al Othman (a non-executive member) the managing director of Al Madaen Star Group Company and Mr. Sultan bin Mohammed Al Hudaithi (an executive member) a member of the board of directors of the Al Madaen Star Group Company, and these transactions represent fuel purchases from Zaiti Petroleum Services Company by Al Madaen Star Group company, noting that the transaction amount during 2018 amounted to 188.06 thousand riyals, and there are no preferential terms in these transactions and contracts. 21. Approve the works and contracts that will be concluded between Zaiti Petroleum Services Company (a subsidiary company) and Mr. Majid bin Mohammed Al-Othman (a non-executive member). These transactions represent fuel purchases from the Zaiti Petroleum Services Company by Mr. Majid Bin Mohammed Al-Othman (non-executive member), knowing that the amount of transactions during 2018 amounted to 15.9 thousand riyals, and there are no preferential conditions in these transactions and contracts. 22. Approve the works and contracts that will be concluded between Zaiti Petroleum Services Company (a subsidiary company) and the Zaway Real Estate Company, in which some members of the Board of Directors have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (A non-

executive member) owns a share of (42.96%) of the capital of Zawaya Real Estate Company and the Chairman of its Board of Directors, and Mr. Majid bin Mohammed Al Othman (a nonexecutive member) who owns a share of (0.29%) of the capital of Zawaya Real Estate Company and is a member of the Board Its Directors, and Mr. Sultan bin Mohammed Al-Hudaithi (executive member) owns a share of (1.8%) of the capital of Zawaya Real Estate Company and a member of its board of directors, and this deal represents purchases of fuel from Zaiti Petroleum Services Company by the Zawaya real estate company, noting that the transaction amount during 2018 amounted to 10.7 thousand riyals, and there are no preferential terms in these transactions and contracts. 23. Approve the works and contracts that will be concluded between the Zaiti Petroleum Services Company (a subsidiary company) and Zawaya Real Estate, in which some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi (a non-executive member) who owns a share of (42.96%) of the capital of Zawaya Real Estate Company and is the Chairman of its Board of Directors, and Mr. Majid bin Mohammed Al Othman (non-executive member) owns a share of (0.29%) of the capital of Zawaya Real Estate Company and is a member of its Board of Directors, and Mr. Sultan Bin Mohammed Al-Hudaithi (executive member) owns a share of (1.8%) of the capital of Zawaya Real Estate Company and a member of its board of directors. These transactions represent lease of Zawaya real estate company of signboards at station No. 9, that is owned by Zaiti Petroleum Services under a contract for an amount of SR 25 thousand per year and there are no preferential terms in this business and contracts. 24. Approval of the works and contracts that will be concluded between Zaiti Petroleum Services Company (a subsidiary company) and Fun Gate Company, in which some members of the Board have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi, a non-executive member (Chairman of Fun Gate Company) who owns a direct and indirect share of 97.75% of its capital, and Mr. Majid bin Mohammed Al Othman a non-executive member, Managing Director of Fun Gate Company, and Mr. Sultan bin Mohammed Al-Hudaithi, Executive Member, a member of the Board of Directors of Fun Gate Company, and these transactions represent lease by Fun portal for residential rooms in Station No. (2) of Zaiti petroleum services company, noting that the transaction amount during 2018 amounted to SR 50 thousand, and there are no preferential terms in this business and contracts. 25. Approve the amendment of the audit committee’s bylaws, the controls and procedures of the committee’s work procedures, tasks, rules for selecting its members, term of their membership and remunerations. 26. Approve the amendment of the Nominations Committee’s bylaws, controls and procedures for the work of the Committee, its tasks, rules for selecting its members, term of their membership and remunerations. 27. Approve the amendment of the remuneration committee’s bylaws, controls and procedures for the committee’s work and tasks, rules for selecting its members, their membership term and remuneration.

Annual Report 2019

Recommendation Regarding the Auditor The Board or the Audit Committee has no observations or reservations regarding the current auditor, “Allied Accountants – Chartered Accountants and Auditors,” noting that 2019 was the fifth year for this auditor to deal with SASCO. The auditor’s activities include auditing SASCO financial statements for the fiscal year 2019 and the first quarter of the fiscal year 2020. The audit committee’s recommendation will be submitted to the upcoming shareholders ’general assembly to choose the company’s auditor from among the candidates to examine, review and audit the financial statements for the second, third fourth quarters and annual of the fiscal year 2020 and the first quarter of 2021, and determine its fees.

Executive Directors They are as follows:

Mr. Mohammed bin Abdullah Al-Mutlaq Assistant CEO Qualifications & Experiences: He holds Bachelor’s Degree in Business Management from King Saud University. He held many administrative positions in the private sector. He is a member of the National Committee of Fuel Stations Companies in the Council of Saudi Chambers of Commerce and a member of Audit Committee of

Present Occupations: ff Assistant CEO the Saudi Automotive Services Company (SASCO). Previous Occupations: ff General Director of Zaiti Petroleum Services Company.

Tabuk Fisheries Company (closed joint stock company).

Mr. Islam Muhammed Khairi Ahmad Finance Manager Qualifications & Experiences: He holds Bachelor’s Degree in Accounting from Ain Shams University, Egypt. He is a finance director for more than ten years, enjoying a wide experience in leading and developing successful financing teams in several finance and accounting activities, including the development of annual budgets and controlling major accounts. He is able to address functions and

lead working teams. Present Occupations: ff Director of Finance Management of the Saudi Automotive Services Company (SASCO). Previous Occupations: ff Head of Accounts Department in Al-Madaen Star Group. ff Chief Financial Officer of Zaiti Petroleum Services Company.

Mr. David Whales General Manager of SASCO Palm Co. Qualifications & Experiences: He holds the International General Certificate for Secondary Education (IGCSE). He worked for many British retailers and held many supplies jobs, including Director of Supplies Sector and Operations Manager at many British corporations. He acted as Deputy General Director of Operations at City Center Hypermarket.

Present Occupations: ff General Director of SASCO Palm Stores (subsidiary). Previous Occupations: ff Director of Supplies Sector at many British corporations. ff Regional Director of Operations at British corporations. ff Deputy General Director of Operations at City Center Hypermarket.

Mr. Saud Sulieman Al Otaiby Director of Operations Sector Qualifications & Experiences: He holds Bachelor’s Degree of Public Administration from King Abdulaziz University in Jeddah. He enjoys more than 15 years of experience in the field of fuel station companies. He held many administrative positions in the private sector.

Present Occupations: ff Director of Operations Sector of the Saudi Automotive Services Company (SASCO). Previous Occupations: ff Head of Western Province Operations, Al Tas’helat Marketing Company Ltd. ff General Director of Distributors in Kia Motors Saudi Arabia. ff Director of Western and Northern Provinces in the Saudi Automotive Services Company (SASCO).

Transactions and Contracts in which the Executive Directors have an Interest __ � There are no transactions or contracts in which the CEO, Chief Financial Officer, any executive director or

relevant person has interest.

Annual Report 2019

Financial Statements at SASCO Level

Financial Statements at SASCO Level Financial Position The following table summarizes the data of the financial position statement for the past five years:

Statement

2015

2016

2017

2018

2019

335,453,233

310,503,345

336,983,801

358,187,696

389,100,152

Non-current assets

946,464,664

1,182,055,527

1,169,679,455

1,242,554,192

2,071,807,256

Total Assets

1,301,917.897

1,492,558,872

1,506,663,256

1,600,741,888

2,460,907,408

Current Liabilities

233,134,630

364,594,629

415,126,524

458,879,874

522,735,370

Non-Current Liabilities

336,454,575

345,519,020

362,426,221

389,999,100

1,086,726,178

Total Liabilities

569,589,205

710,113,649

777,552,745

848,878,974

1,609,461,548

Current assets

Total assets and liabilities 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 2015

2016

Total Assets

2017

2018

2019

Total Liabilities

Annual Report 2019

Assets

2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 2015 Long term assets

Total assets

2016 Inventory

2017

2018

Commercial Receivables

2019 Cash and cash equivalents

Change in Net Fixed Assets 2,500,000,000 2,000ŮŤ000ŮŤ000 Growth rate in total assets 89.02%

1,500,000,000 1,000,000,000 500,000,000 0 2015 Net fixed assets

2016

2017

2018 Total assets

2019

Liabilities and Shareholders’ Equity

1,800,000,000 1٫600,000,000

Growth rate in shareholders’ equity 16.27%

1٫400,000,000 1٫200,000,000 1٫000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0 2015 Total Liabilities

2016 Capital

2017

2018

2019

Total Shareholders’ Equity

Income Statement The following table summarizes the data of the income statement for the past five years: Statement Sales

2015

2016

2017 “Amended”

2018

2019

665,048,902

1,094,122,754

1,212,329,807

2,056,081,002

2,482,842,898

(613,340,424)

(1,036,023,378)

(1,132,838,480)

(1,974,099,397)

(2,326,245,161)

51,708,478

58,099,376

79,491,327

81,981,605

156,597,737

General & Administrative Expenses

(35,285,668)

(38,686,162)

(47,575,585)

(44,298,103)

(54,610,424)

Other Revenue (Expenses)

5,584,757

10,222,617

(135,609)

542,811

23,070,875

(3,391,000)

(3,655,000)

(3,795,000)

(2,775,004)

(3,247,206)

18,616,567

25,980,831

27,985,133

35,451,309

121,810,982

Direct Costs Income Margin

Zakat Net Income

Annual Report 2019

2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 2015

2016

Sales

Direct Costs

2017

2018

Income Margin

2019 Net Income

60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 )10,000,000(

2016

2015

General & Administrative Expenses

2017

2019

2018

Other Revenue (Expenses)

Zakat

SASCO Geographic Revenues

Western Province

20.55%

Central Province

3.42%

Southern Province

Northern Province

21.81 %

Eastern Province

43.93 %

3.90% Qassim Province

6.39%

Analysis of Material Differences in Results The following table shows the most important differences in the financial results compared to the previous fiscal year:

Statement

2019

2018

Change + (-)

% of Change

Revenue

2,482,842,898

2,056,081,002

426,761,896

20.76%

Direct Costs

(2,326,245,161)

(1,974,099,397)

352,145,764

17.84%

Income Margin

156,597,737

81,981,605

74,616,132

91.02%

Sales and marketing expenses

(3,806,855)

(2,189,061)

1,617,794

73.90%

General & Administrative Expenses

(49,569,545)

(40,020,290)

9,549,255

23.86%

Structured Allowances

(1,234,024)

(2,088,752)

(854,728)

(40.92%)

Net Operating Income

101,987,313

37,683,502

64,303,811

170.64%

Investment Revenue (Loss)

22,070,826

6,745,277

15,325,549

227.20%

Financial Burdens

(33,242,357)

(8,070,599)

25,171,758

311.89%

Misc. Revenue

34,242,406

1,868,133

32,374,273

1732.97%

Net Income Before Zakat

125,058,188

38,226,313

86,831,875

227.15%

Zakat

(3,247,206)

(2,775,004)

472,202

17.02%

Net Income After Zakat

121,810,982

35,451,309

86,359,673

243.60%

The following is a description of the main justifications for substantial changes in SASCO business results: ff Increase of net income in the current period compared to the same period of last year is attributed to: ?? Increase of sales at 20.76%, and change in fuel profit margin, which in turn affected the rise in overall profit and operating profit, in addition to the increase in investment and other revenues, despite the increase in general and administrative expenses due to employment costs and the rise in financing expenses for the application of International Standard No. (16) related to the lease contracts as well as increase in Zakat expenses.

Annual Report 2019

Cash Flow Statement The following table summarizes the data of the cash flow statement for the past five years:

2015

2016

2017 “Amended”

2018

2019

Flows from Operating Activities

50,095,250

61,539,044

31,299,799

45,308,582

45,421,134

Flows from Investment Activities

(198,513,124)

(168,464,284)

(116,986,699)

(78,101,689)

(102,280,009)

141,373,640

66,933,168

65,280,554

9,752,789

47,642,319

Statement

Flows from Financial Activities

150,000,000 100,000,000 50,000,000 0 )50,000,000( )100,000,000( )150,000,000( )200,000,000( 2016

2019

Flows from Financial Activities

50,000,000

78٫868٫420

100,000,000

2018

100٫479٫758

150,000,000

137٫316٫422

200,000,000

Flows from Investment Activities

117٫203٫850

Flows from Operating Activities

2017

193٫415٫355

2015

0 2015

2016

2017

Capital Expenditure Volume

2018

2019

Earnings per Share The following table summarizes earnings per share for the past five years:

Statement

2015

2016

2017 â&#x20AC;&#x153;Amendedâ&#x20AC;?

2018

2019

Earnings per Share

0.34

0.48

0.47

0.59

2.03

2.50 02.00

2.03

1.50 1.00 0.50

0.34

0.48

0.59

0.47

0 2016

2015

2017

2018

2019

Earnings Per Share

Share Performance The following graph summarizes share performance for the past five years:

30.00 25.00 20.00 15.00 10.00 5.00 0

2016

2015

2018

2017

2019

Share Value in SAR

Share Book Value

The following graph shows the share book value (not including dividends):

20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0

Share book value (not including dividends)

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Annual Report 2019

Key Financial Indicators The following tables show the key financial indicators for the past five years:

Growth Indicators Statement

2015

2016

2017 “Amended”

2018

2019

Sales Growth

46.69%

64.52%

10.80%

69.60%

20.76%

Net Income Growth

(77.31%)

39.56%

7.71%

26.68%

243.60%

Asset Growth

15.04%

14.64%

0.94%

6.24%

53.74%

Equity Growth

(0.36%)

6.84%

(6.82%)

3.12%

13.24%

2015

2016

2017 “Amended”

2018

2019

Return on Sales

2.80%

2.37%

2.31%

1.72%

4.91%

Return on Capital

3.45%

4.81%

5.18%

5.91%

20.30%

Return on Investment

2.00%

2.20%

2.39%

2.85%

5.88%

Return on Total Assets

1.43%

1.74%

1.86%

2.21%

4.95%

Return on Equity

2.54%

3.32%

3.84%

4.72%

14.31%

Profit Indicators Statement

Profit Indicators

20.30%

25.00%

14.31%

20.00%

15.00%

4.95%

5.88%

4.91%

4.72%

2.21%

5.91%

2.85%

1.72%

3.84%

1.86%

5.18% 2.39%

2.31%

3.32%

1.74%

4.81%

2.20%

2.37%

2.54%

1.43%

3.45%

2.00%

5.00%

2.80%

10.00%

0.00% 2015 Return on Total Assets

2016 Return on Sales

2017 Return on Capital

2018 Return on Investment

2019 Return on Equity

Efficiency Indicators Statement

2015

2016

2017 “Amended”

2018

2019

Debtors Turnover

18.15

13.97

13.06

14.74

24.24

Inventory Turnover

22.15

37.92

31.18

38.56

47.02

Asset Turnover

0.51

0.73

0.80

1.28

1.01

Efficiency Indicators

38.56

37.92

40.00

47.02

50,00

18.31

35.00

15.00

14.74

13.06

13.97

18.15

20.00

22.15

25.00

24.24

30.00

2015 Debtors Turnover

2016

2017

2018

Inventory Turnover

1.01

1.28

0.80

0.00

0.73

5.00

0.51

10.00

2019

Asset Turnover

Liquidity & Indebtedness Indicators Statement

2015

2016

2017 “Amended”

2018

2019

Liquidity Ratio

1.52

0.85

0.81

0.78

0.74

Quick Liquidity Ratio

1.41

0.78

0.72

0.67

0.65

Ratio of Indebtedness to Equity

57.56%

65.74%

76.19%

78.88%

68.26%

Ratio of Indebtedness to Total Assets

32.38%

34.46%

36.87%

37.05%

23.62%

Annual Report 2019

Items of Income Statement as a Percentage of Revenue Statement

2015

2016

2017 â&#x20AC;&#x153;Amendedâ&#x20AC;?

2018

2019

100%

92.22%

94.69%

93.44%

96.01%

93.69%

Income Margin

7.78%

5.31%

6.56%

3.99%

6.31%

General & Administrative Expenses

5.31%

3.54%

3.92%

2.15%

2.20%

Other Revenue (Expenses)

0.84%

0.93%

(0.01%)

0.03%

0.93%

Zakat

0.51%

0.33%

0.31%

0.13%

Net Income

2.80%

2.37%

2.31%

1.72%

4.91%

Revenue Direct Costs

93.69%

96.01%

93.44%

92.22%

100.00%

94.69%

Items of Income Statement as a Percentage of Revenue

80.00% 60.00%

2015

Income Margin

2016 General & Administrative Expenses

2017

2019

2018 Other Revenue (Expenses)

Zakat

Net Income

4.91%

0.13%

0.93%

6.31%

2.20%

1.72%

0.13%

2.15%

0.03%

3.99%

2.31%

-0.01%

-20.00%

Direct Costs

0.31%

3.92%

6.56%

2.37%

0.33%

3.54%

0.93%

5.31%

2.80%

5.31%

0.51%

0.00%

0.84%

20.00%

7.78%

40.00%

Zakat and Regulatory Payments Zakat is calculated in accordance with the Zakat and Income Tax System applicable in the Kingdom of Saudi Arabia. The due Zakat is applied to the income statement and the amendments to the final Zakat assessment, if any, are recorded in the assessment period. During the year ending on December 31st, 2019, SASCO established an allowance for regulatory Zakat dues of (SAR 3,247,206).

SASCO also paid (SAR 1,852,480) from the Zakat allowance until 2019. SASCO follows up with the Department of Zakat and Income through a consulting office specialized in Zakat and tax services to settle all issues concerning Zakat assessments for the period from 2009 to 2018. The following table summarizes regulatory payments:

2019 Statement

Brief Description

Description of Reasons

822,158

Amount of Zakat paid during the year

Due for 2019

6,771,494

811,058

Paid amount of value added tax

The due amount belongs to December and is paid in January 2020

19,082

2,526

Paid amount of withholding tax

The due amount belongs to December and is paid in January 2020

General Organization for Social Insurance

4,754,629

459,748

Year dues

The due amount belongs to December and is paid in January 2020

Costs of visas, passports and labor office

9,675,285

Fees for visa, renewal of residence permit, exit and return

147,261

Customs fees of SASCO and Saudi Automobile & Touring Association

Paid

Due until end of annual financial period but not paid

Zakat

1,852,480

Value added tax

Withholding tax

Customs Fees

Total

23,220,231

2,095,490

ďż˝ These payments are within SASCO activity.

Penalties The following statement shows the punishments, sanctions, violations, precautionary measures or precautionary attachments, if any, imposed on SASCO during the year: Punishment / sanction / precautionary measure / precautionary attachment

Reasons for violation

Imposing body

How to address and avoid the same in the future

Fine

Operating some sites without license

Province Eamana - Ministry of Municipal and Rural Affairs (MoMRA)

Completing the requirements for issuing and renewing licenses for the operation of sites

Fine

Shortage of some civil defense requirements

General Directorate of Saudi Civil Defense

Completing and regularly verifying the civil defense requirements

Fine

Lack of license to operate Motel Al Adeed

Saudi Commission for Tourism and National Heritage (SCTH)

Efforts are exerted to issue it in coordination with the SCTH

Annual Report 2019

Loans Article (22) of SASCO Articles of Association defines the powers of the Board of Directors. Paragraph (8) of the same article state as follows: â&#x20AC;&#x153;The Board of Directors may contract loans with financing funds and institutions with whatever periods. It may also contract commercial loans, obtain loans and other credit facilities from government institutions, commercial banks, financial institutions and any other credit companies, issue guarantee letters in favor of any party if it sees it in SASCO interest, issue promissory notes and other tradable documents and enter into all types of agreements and banking transactions for any period of time not exceeding the expiry of SASCO duration. Loans of maximum three years shall meet the following conditions: a. The Board of Directors shall determine, in its resolution, ways of use of loans and method of repayment. b. Loan conditions and provided guarantees shall not prejudice SASCO, shareholders and general guarantees of creditors.â&#x20AC;? During 2012, SASCO signed a Sharia-compliant facilities agreement with Banque Saudi Fransi (BSF) of SAR (255,000,000) as a general credit ceiling. This included letters of guarantee facilities of SAR (70,000,000), real estate loan facilities of SAR (90,000,000), loans to finance and develop fuel stations of SAR (55,000,000), a short-term finance of up to SAR (20,000,000), and multi-purpose short-term import facilities of SAR (20,000,000). SASCO amended the agreement amount on April 28th, 2015, to be SAR (550,940,648). This included renewal of existing facilities of SAR (245,833,332) of which SAR (110,000,000) represent various credit facilities and SAR (135,833,332) represent medium-term finance facilities guaranteed by a promissory note and/or securities or a deposit and pledge of title deeds. This was in addition to new facilities of SAR (305,107,316), of which SAR (55,107,316) for various credit facilities and SAR (250,000,000) for long-term finance facilities guaranteed by a promissory note. The agreement aims to finance the purchase of new lands, building new stations, and improving and developing the existing stations. SASCO again amended the agreement amount on Feb. 17th, 2016, to be SAR (502,500,000). This included renewal of existing facilities of SAR (237,500,000) of which SAR (150,000,000) represent various credit facilities and SAR (87, 500,000) represent medium and long-term finance facilities guaranteed by a promissory note and/or securities or a deposit and pledge of title deeds. This was in addition to new facilities of SAR (265,107,316), of which SAR (39,000,000) for various credit facilities and SAR (226,000,000) for long-term finance facilities guaranteed by a promissory note. The agreement aims to finance the purchase of new lands and building new stations. SASCO amended the agreement amount on April 16th, 2017, to be SAR (439,273,664). This included renewal of existing facilities of which SAR (169,107,000) represent various credit facilities and SAR (270,166,664) represent medium and long-term finance facilities guaranteed by a promissory note and/or securities or a deposit and pledge of title deeds. SASCO was given an additional grace period of one year and payment will be effective as of 1 June 2018. The agreement aims to finance the purchase and building of new stations. SASCO again amended the agreement amount on May 22nd, 2018, to be SAR (391,107,316). This included the renewal of existing facilities of which SAR (140,107,316) represent various credit facilities and SAR (251,000,000) represent short, medium and long-term finance facilities guaranteed by a promissory note. The agreement aims to finance the purchase and building of new stations. The company also renewed and amended the agreement on November 28, 2019 to become for an amount of (523,200,000 SAR), and this agreement includes the renewal of existing facilities including (145,000,000 SAR) various credit facilities and (178,200,000 SAR) long and short term financing facilities, in 72

addition to the new long-term financing of (200,000,000 Saudi riyals), agaomst promissory note guarantee, and this agreement aims to finance the purchase and construction of stations in addition to supporting the needs of working capital. During 2013, SASCO signed a Shariah-compliant credit facilities agreement with the National Commercial Bank (NCB) of SAR (90,000,000) in the form of a long-term commercial loan to expand construction or acquisition of fuel stations. The agreement was renewed on May 1st, 2014 and its value became SAR (91,125,000) as a general credit ceiling, including long-term loan facilities of SAR (90,000,000) and profit margin swap of SAR (1,125,000) according to the needs of ordinary course of business. On August 25th, 2015, SASCO signed a new Shariah-compliant facilities agreement with NCB of SAR (151,825,000), including long-term loans of SAR (101,125,000), bank letters of guarantee of SAR (25,000,000), short-term loans of SAR (25,700,000). The agreement aims to expand SASCO projects, support its core activities, and purchase new sites to build fuel stations as well as to finance the working capital. The agreement was renewed on May 1st, 2016 and its value became SAR (201,325,000), including long-term loan facilities of SAR (150,625,000) and bank letters of guarantee of SAR (25,000,000) and short-term loans of SAR (25,700,000). The agreement aims to expand SASCO projects, support its core activities, and purchase new sites to build fuel stations. The agreement was amended on April 30st, 2017 and its value became SAR (200,700,000), including long-term loans of SAR (150,700,000) and bank letters of guarantee of SAR (25,000,000) and short-term loans of SAR (25,000,000). The agreement aims to expand SASCO projects, support its core activities, and purchase new sites to build fuel stations. The agreement was amended on 26 September 2018 and its value became SAR (25,000,000) in the form of short-term commercial facility guaranteed by a promissory note. The agreement aims to support the needs of working capital. On September 3, 2019, the company terminated the old agreement and signed a new agreement with a total value of (166,250,000 SAR) which is a long and short-term trade facilitation of (155,000,000 SAR) in addition to a hedge of (11,250,000 SAR) against promissory note guarantee for a value of 110% of the total value of the agreement, this agreement aims to finance the purchase and construction of stations in addition to support the working capital needs. On May 25th, 2015, SASCO signed a new Shariah-compliant facilities agreement with the Saudi-British Bank (SABB) of SAR (150,000,000) effective from the date of signing thereof, provided the use thereof before January 31st, 2016, and guaranteed by a promissory note. This agreement includes a long-term loan of SAR (100,000,000) and bank letters of guarantee of SAR (50,000,000). The agreement aims to partially finance capital expenses, purchase land, and build new fuel stations. The agreement was amended on Dec. 7th, 2017 and its value became SAR (177,967,726), guaranteed by a promissory note, including a long-term loan of SAR (47,967,726) in addition to SAR (80,000,000) as bank letters of guarantee and short-term loans of SAR (50,000,000). The agreement aims to partially finance capital expenses, purchase of land, and build new fuel stations as well as to finance the working capital. This agreement will expire on January, 31th, 2019. The agreement was amended on Dec. 10th, 2018 and its value became SAR (400,000,000), guaranteed by a promissory note, including a long-term loan of SAR (150,000,000) in addition to SAR (200,000,000) as bank letters of guarantee and short-term loans of SAR (50,000,000). The agreement aims to partially finance

capital expenses, purchase land, and build new fuel stations as well as to finance the working capital. It will expire on January, 31th, 2020. Signature procedures are being completed for renewing and amending the agreement to be worth (557,638,482 SAR) against a promissory note guarantee, this agreement includes the amount of (159,138,482 SAR) long-term loan in addition to (287,500,000 SAR) bank guarantee letters In addition to (111,000,000 Saudi riyals) short-term loans, this agreement aims to partially finance capital expenditures, purchase of land and build new stations in addition to working capital financing, and this agreement also includes the remaining part of SASCO’s agreement with AlAwal Bank On December 13th, 2015, SASCO signed a (Shariah-compliant) Murabaha facilities agreement with the Gulf International Bank (GIB) (a Bahraini joint-stock Corporation) of SAR (150,000,000) guaranteed by a promissory note. This agreement includes a medium-term loan of SAR (50,000,000) with a finance period of five (5) years (2-year grace period), provided the repayment of loan shall be at equal quarterly instalments. This is in addition to issuing letters of guarantee of SAR (100,000,000). The agreement aims to expand SASCO projects, support its core activities, purchase new sites to build fuel stations as well as to finance the working capital. The agreement was renewed and amended on Sep. 6th, 2018 and its value became SAR (48,000,000) in the form of payment guarantees in favor of Aramco, guaranteed by a promissory note. On December 21st, 2015, SASCO signed a (Shariah-compliant) facilities agreement with the Riyad Bank (a Saudi joint-stock company). This agreement includes a general facility limit of SAR (150,000,000) in the form of a medium-term loan of SAR (100,000,000) for a financing period of 54 months (18-month grace period), provided the repayment of loan at equal semi-annual successive instalments. This is in addition to letters of guarantee of SAR (50,000,000). The agreement aims to expand SASCO projects, support its core activities, purchase new sites to build fuel stations as well as to finance the working capital. On 24 October 2016, the guarantees clause was amended and the value of total guarantees was SAR (40,000,000) in addition to documentary credits of SAR (10,000,000). The agreement was renewed on Dec. 28st, 2017 and its total value became SAR (98,528,114) and the value of total guarantees became SAR (50,000,000) including medium-term loans of SAR (48,528,114).

On 31 October 2018, the agreement was renewed and amended and the value of total guarantees became SAR (104,574,298) and the value of total guarantees became SAR (750,000,000) including mediumterm loans of SAR (29,574,298), guaranteed by a promissory note. On December 21st, 2015, SASCO signed a (Shariah-compliant) facilities agreement with Riyadh Bank (a Saudi joint-stock company). The agreement includes bank letters of guarantee of SAR (50,000,000), aiming at expanding SASCO projects and supporting its core activities. The agreement was amended on March 8th, 2018 through adding SR 320,000,000 in the form of long-term finance of 235,000,000, shortterm finance of SR 20,000,000, documentary credits of SR 20,000,000 and a hedge to set interest rates at SR 45,000,000 in addition to bank guarantees of SR 50,000,000 with the final value of the agreement to be 370,000,000, guaranteed by a promissory note in addition to pledging real estate deeds. On December 12, 2019, the company renewed and amended the agreement with a total value (569,943,000 Saudi riyals) representing (long-term financing of 334,643,000 Saudi riyals, short-term financing of 120,000,000 Saudi riyals, documentary credits of 20,000,000 riyals, and hedging for fixed Interest rates amounting to 15.300,000 Saudi riyals (in addition to 80 million riyals of existing bank guarantees with a bond guarantee for an order in addition to mortgaging real estate deeds. On January 29, 2019, the company entered into a Sharia’h compliant Murabaha facility agreement with Bank Al Jazira in the amount of (150,000,000 Saudi riyals) against a promissory not guarantee, and this agreement includes a long-term loan of (100,000,000 SAR), and a Short-term loan of (SAR 5,000,000) in addition to issuing bank guarantee letters of (SAR 45,000,000). This agreement aims to expand SASCO projects, support its main activities, buy new sites to build petrol stations, and finance working capital against promissory note guarantee. On December 3, 2019, the company entered into a Sharia compliant Murabaha facility agreement with SABB Bank in the amount of (190,000,000 Saudi riyals) in order to finance 90% of the company’s entry into Aramco subscription under the condition that the amount of the financing is determined based on shares that will be allocated to the company after subscription and it has already been determined with a value of (26,951,587 SAR) against a promissory note guarantee in addition to pledging the stock portfolio.

150,000,000

155,600,000

200,000,000

172,717,382

250,000,000

237,851,539

Balance of loans at the end of year

15,000,000

100,000,000 50,000,000 0 BSF

National Commercial Bank (NCB)

Saudi British

Riyadh Bank

Bank (SABB) Annual Report 2019

Loan Statement

Bank

Loan Date

Balance at the end of 2019

Balance at the end of 2018

BSF

31/05/2013

10,924,000

56,124,000

BSF

30/06/2016

39,735,709

39.735.709

BSF

29/08/2016

24,654,233

BSF

13/12/2016

23,274,737

BSF

28/12/2016

12,305,262

BSF

28/12/2016

6,252,169

BSF

12/01/2017

3,966,562

BSF

29/03/2017

13,235,873

BSF

24/08/2017

1,251,455

BSF

02/10/2019

20,000,000

NCB

08/12/2019

15,000,000

25,000,000

Riyad Bank

18/03/2018

153,214,287

181,071,429

Riyad Bank

08/05/2018

31,428,573

37,142,857

Riyad Bank

21/03/2019

20,000,000

Riyad Bank

12/03/2019

11,989,200

Riyad Bank

28/05/2019

2,369,463

Riyad Bank

28/05/2019

7,650,016

Riyad Bank

24/06/2019

7,200,000

Riyad Bank

22/07/2019

4,000,000

Alawwal Bank

31/12/2015

16,666,667

Alawwal Bank

13/12/2016

2,264,022

Alawwal Bank

20/12/2016

1,166,702

SABB

10/11/2018

50,000,000

SABB

30/12/2019

10,000,000

SABB

24/12/2019

10,000,000

SABB

01/12/2019

10,000,000

SABB

26/11/2019

20,000,000

SABB

12/08/2019

26,951,587

SABB

19/12/2018

56,000,918

58,962,882

SABB

24/12/2019

1,406,108

SABB

18/12/2019

2,808,974

SABB

15/12/2019

34,406,220

SABB

29/12/2019

1,143,575

Total

581,168,921

593,074,559

Loan Maturity 2019

2018

Less than 1 Year

193,267,282

215,688,892

1 Year to 2 Years

105,414,776

86,700,386

2 Years to 5 Years

237,006,382

222,935,643

More than 5 Years

45,480,481

67,749,638

Statement

Loan Movement Term

Period in Months

Paid during year

Due Date

101,324,000

Long-term

56,124,000

45,200,000

31/12/2022

30/06/2016

39,735,709

Long-term

39,735,709

31/12/2022

BSF

29/08/2016

24,654,233

Long-term

24,654,233

31/12/2022

BSF

19/08/2018

20,000,000

Short-term

20,000,000

19/08/2019

BSF

02/10/2019

20,000,000

Short-term

24/09/2020

BSF

13/12/2016

23,274,737

Long-term

23,274,737

31/12/2022

BSF

28/12/2016

18,557,431

Long-term

18,557,431

31/12/2022

BSF

12/01/2017

3,966,562

Long-term

18,453,890

31/12/2022

NCB

10/12/2018

25,000,000

Short-term

25,000,000

11/04/2019

NCB

29/04/2019

10,000,000

Short -term

10,000,000

30/08/2019

NCB

07/08/2019

15,000,000

Short -term

15,000,000

07/10/2019

NCB

08/10/2019

15,000,000

Short -term

15,000,000

08/12/2019

NCB

08/12/2019

15,000,000

Short -term

06/02/2020

SABB

10/11/2018

50,000,000

Short -term

50,000,000

10/02/2019

SABB

23/03/2019

15,433,431

Short -term

15,433,431

17/06/2019

SABB

21/03/2019

10,000,000

Short -term

10,000,000

21/04/2019

SABB

15/04/2019

10,455,882

Short -term

10,455,882

14/07/2019

SABB

28/04/2019

24,015,306

Short -term

24,015,306

14/07/2019

SABB

17/06/2019

15,000,000

Short -term

15,000,000

14/07/2019

SABB

27/06/2019

527,709

Short -term

527,709

14/07/2019

SABB

05/08/2019

20,000,000

Short -term

20,000,000

08/10/2019

SABB

28/07/2019

30,000,000

Short-term

30,000,000

25/11/2019

SABB

26/11/2019

20,000,000

Short -term

25/03/2020

SABB

01/12/2019

10,000,000

Short -term

30/03/2020

SABB

24/12/2019

10,000,000

Short -term

22/04/2020

SABB

30/12/2019

10,000,000

Short -term

28/04/2020

SABB

08/12/2019

26,951,587

Long-term

08/12/2024

SABB

19/12/2018

58,962,882

Long-term

58,962,882

2,961,964

31/08/2025

SABB

24/12/2019

1,406,108

Long-term

31/08/2025

Bank

Date of Issue

BSF

31/05/2015‫م‬

BSF

Loan Value

Balance at year beginning

Annual Report 2019

Loan Movement (Continued) Term

Period in Months

Paid during year

Due Date

2,808,974

Long-term

31/08/2025

15/12/2019

34,406,221

Long -term

31/08/2025

SABB-Al Awal

29/12/2019

1,143,575

Long-term

29/12/2020

Riyadh Bank

12/03/2019

11,989,200

Long-term

12/03/2026

Riyadh Bank

28/05/2019

2,369,463

Long-term

28/05/2026

Riyadh Bank

28/05/2019

7,650,019

Long-term

28/05/2026

Riyadh Bank

24/06/2019

7,200,000

Long-term

24/06/2026

Riyadh Bank

22/07/2019

4,000,000

Long -term

22/07/2026

Riyadh Bank

18/03/2018

195,000,000

Long -term

181,071,429

27,857,142

18/03/2025

Riyadh Bank

08/05/2018

40,000,000

Long -term

37,142,857

5,714,284

08/05/2025

Riyadh Bank

04/06/2018

20,000,000

Short -term

20,000,000

21/03/2019

Riyadh Bank

21/03/2019

20,000,000

Short -term

16/03/2019

Alawal Bank

31/12/2015

50,000,000

Medium -term

16,666,666

31/12/2019

Alawal Bank

13/12/2016

4,528,044

Medium -term

2,264,022

28/06/2020

Alawal Bank

20/12/2016

2,333,403

Medium -term

1,166,703

28/06/2020

593,074,559

382,263,109

Bank

Date of Issue

SABB

18/12/2019

SABB

Total

Loan Value

1,047,694,476

Debt Instruments

Pledged Assets Site

Entity

Guarantee

Periodical Inspection Station in Riyadh

Riyadh Bank

Pledge

Jubail Station in Dammam

Riyadh Bank

Pledge

Takhassusi Station in Riyadh

Riyadh Bank

Pledge

Jubail Station 2 in Dammam

Riyadh Bank

Pledge

Uthman Bin Affan Station in Riyadh

Riyadh Bank

Pledge

SASCO and its subsidiaries did not issue debt instruments.

Profit Distributions Pursuant to Article 50 (Profit Distribution) of SASCO Articles of Association, SASCO annual net profits shall be distributed as follows: ffTen (10%) of net profit shall be retained to form a statutory reserve. The Ordinary General Assembly may stop retention when the said reserve reaches 30% of the capital. ffThe Ordinary General Assembly may, by proposal from the Board of Directors, retain a certain ratio of profits to form a consensual reserve to be allocated to supporting SASCO financial position.

Other Guarantees Bank

Balance at year beginning

ffThe Ordinary General Assembly may decide to form other reserves Guarantee

BSF

A promissory note of SAR 523,200,000

NCB

A promissory note of SAR 182,875,000

SAAB

A promissory note of SAR 400,000,000

GIB

A promissory note of SAR 48,000,000

Aljazira Bank

A promissory note of SAR 165,000,000

Riyadh Bank

A promissory note of SAR 235,300,000

Riyadh Bank

A promissory note of SAR 389,274,000

to the extent that achieves SASCO interests or ensures the distribution of fixed profits to shareholders as much as possible. The Assembly may also deduct some amounts of net profits to establish social institutions in favor of SASCO workers or to assist the existing social institutions. ffThe rest is then distributed to shareholders at no less than (3%) of the paid capital. ffIn accordance with the provisions of Article (28) of SASCO Articles of Association, after that, no more than (10%) of the rest is allocated to Board remuneration. The entitlement would be determined proportionately by the number of sessions attended by a member.

According to Article (51) of SASCO Articles of Association (Interim Profits): ffThe Board of Directors shall have the authority to approve interim profit disbursement to shareholders on a quarterly or biannual basis if SASCO financial position so permits and liquidity is available according to the rules and procedures developed by competent authorities. According to Article (52) of SASCO Articles of Association (Profit Entitlement): ffA shareholder shall be entitled to receive his share of profits

Deviations from Applying Accounting Standards

Accounting Standards applicable in the Kingdom of Saudi Arabia SASCO applies the accounting standards issued by the Saudi Organization for Certified Public Accountants, and there is no deviation from the application of those standards.

decision shall set the dates of entitlement and distribution.

International Financial Reporting Standards (IFRS)

Entitlement to profits shall be for shareholders registered with the

With reference to the CMA letter No. S/1/12231/15 dated 27/10/1436 AH,

shareholdersâ&#x20AC;&#x2122; records at the end of day established for entitlement.

corresponding to 12/8/2018, regarding the CMA Circular No. 4/2978

According to Article (53) of SASCO Articles of Association (Profit

dated 25/3/2014, concerning the application of the International

Distribution to Preferred shares):

Financial Reporting Standards (IFRS) to the financial statements of

ffIn case the profits of any fiscal year are not distributed, the profits of

listed companies as of 1/1/2017 in accordance with the international

next years may be distributed only after disbursing the percentage

standards adopted by the Saudi Organization for Certified Public

stated in Article (10) of SASCO Articles of Association to preferred

Accountants, SASCO issued all its preliminary and annual financial

shareholders for that year.

statements during 2017 and 2018 according to the IFRS.

according to the General Meetingâ&#x20AC;&#x2122;s decision in this regard. The

ffIn case SASCO fails to pay such percentage of profits for three successive years, the Special Meeting of Preferred Shareholders may decide to attend the General Meetings and vote or appoint representatives in the Board pro rata with their value of shares of capital. This shall apply until SASCO can pay all profits allocated to those shareholders for previous years. ffSASCO Articles of Association and Policy of Share Profit Distribution are available on this link: www.sasco.com.sa ffThe following table shows the profits distributed to shareholders since 2010:

Treasury Stocks There are no treasury stocks retained by SASCO.

Auditorâ&#x20AC;&#x2122;s Report The auditor issued its report on SASCO financial statements for the period ending on December 31st, 2019, he indicated in the report an attention as follows: As shown in Note No. (29) of the notes attached to the consolidated financial statements, we would like to draw attention to the fact that on October 01, 2019, the Ministry of Energy approved the increase in the profit margin for gas stations and service centers of companies qualified by the Ministry of Municipal and Rural Affairs so that the

Cash Disbursements

new profit margin to become (15 halalas for gasoline instead of 9 Year

(SR/Share)

2010

0.50

2011

0.50

2012

0.50

2013

0.75

2014

1.50

2015

0.50

2017

0.50

2018

0.50

halalas per liter and 5 halalas per diesel instead of 3.5 halalas per liter), confirming that retail selling prices at stations shall not affect the final consumer, and then notification of the start of the date for applying the new margin that will be from August 23, 2018, and according to the best estimate, the Group management reduced the sales costs for the fiscal year ended December 31, 2019 by SAR 75,163,532 in addition to recognizing SAR 24,191,073 as other income for the compensation period for the profit margin difference for the previous periods (August 23, 2018 until December 31, 2018) according to the International Financial Reporting Standards approved in the Kingdom of Saudi Arabia and other standards and publications approved by the Saudi Organization for Certified Public Accountants. Up to the date of issuance of the financial statements ending on December 31, 2019 the company is still awaiting approval and the right compensation amount by the Saudi Arabian Oil Company (Saudi Aramco) due to not completing the audit work of the

ffUp to the date of this report, the board of directors did not recommend any dividends for 2019.

documents submitted to them by the group about the due amount of compensation. Therefore, the management used these assumptions through the data available to it objectively and accurately, and our opinion was not modified according to this matter.

Annual Report 2019

Operation Sector

Operation Sector It is one of SASCO key sectors. All SASCO sites have been merged with

or under construction, (19) sites under pre-construction procedures,

Zaiti Company sites in this sector. It contains SASCO basic products

as well as (6) sites stopped because the roads deviated away from

offered to clients through (242) sites, divided into (198) operating

them or for lack of economic feasibility from operating them at the

stations and rest houses operated by SASCO and (3) sites operated by

present.

third parties. This is in addition to (16) sites stopped for development

Covering more than 4,500 km

More than 126 mosques

Mosques with a total capacity of more than 12,000 Salat performers

In 2019, Operation Sector offered its services to about 25 million vehicles, with an increase of 20.29% over the previous year, and 129 million customers, with an increase of 18,01% over the previous year.

Statistics of Company Site Visitors

100,000

40,000 20,000

Growth Ratio 20.29 % 17,777

60,000

21,040

80,000

25,309

We cover more than 129 million customers

92,465

129,039

120,000

109,344

Growth Ratio 18.01 %

140,000

0 Number of Vehicles

We serve more than 25 million vehicles

2017

2018

Number of Customers

2019

The Operation Sector manages all fuel stations and provides the following services:

Fuel Services

Diesel

Gasoline

Annual Report 2019

According to the pricing approved by the Ministry of Commerce for

Aramco, fares of transport from the nearest reservoir supposed to

the sale of fuel to consumers in cities and governorates that have

supply fuel is added to the retail sale prices specified to consumers,

reservoirs of Saudi Aramco, and within a radius of 50 km from these

by adding SAR 0.01395/litre/km for paved roads and SAR 0.01815/litre/

reservoirs, prices are as shown in the following table. As for the cities,

km for non-paved roads, from the nearest reservoir of Saudi Aramco,

provinces and other centres where there are no reservoirs of Saudi

provided that this is done by competent local committees.

Fuel prices during the year in the kingdom in Riyals

2.05 0.47

0.47

1.50

2.05 1.50

2.18 0.47

0.47

1.53

1.44 0.47

1.37

1.00

2.10

2.02

2.00

0 Start of Year

14 April 2019

14 July 2019

20 Oct. 2019

End of Year

Diesel

On October 01, 2019, the company announced that it had received

in the Kingdom and to stimulate the fuel stations companies and

a notification from the National Committee for Gas Stations

service centers to raise the level of the quality of services provided in

Companies (one of the committees of the Council of Saudi Chambers)

this sector and to confirm the role of the National Committee for fuel

that the Ministry of Energy agreed to increase the profit margin for

stations companies in the Council of Saudi Chambers in raising the

gas stations and service centers of companies holding a qualification

level of service and commitment to the highest quality standards in

certificate from the Ministry of Municipal and Rural Affairs to make

services provided at gas stations and service centers.

the new profit margin (15 halalas for petrol instead of 9 halalas per

The profit margin includes many of the expenses and costs borne by

liter, and 5 halalas for diesel instead of 3.5 halalas per liter) stressing

the company, including:

that retail prices in the stations shall not affect the final consumer. This notification did not specify the beginning of the date of applying

ffTransportation cost related directly to increasing diesel prices.

the new margin , where the Ministry of Energy made clear in its

ffOperating costs of the stations as a result of the continued increase

letter to the Council of Chambers Saudi Arabia stated that Aramco

in the value of energy prices for services such as electricity and the

will implement the new profit margin for gas stations and service

ffWater cost.

the Ministry of Municipal and Rural Affairs, and that the ministry will

ffCosts of developing and improving the level of services in

coordinate with the Ministry of Municipal and Rural Affairs regarding

accordance with the requirements of the Ministry of Municipal and

any amendment or addition to the list of eligible companies issued

Rural Affairs for companies qualified to manage gas stations.

by the Ministry of Municipal and Rural Affairs, as the companies that

ffIncreased labor cost.

qualify in the future will be granted the new profit margin starting

ffCost of evaporation during transportation from Aramco to the

from the Gregorian month following their obtaining a qualification

plantâ&#x20AC;&#x2122;s discharge site.

certificate from the Ministry of Municipal and Rural Affairs, and the

ffThe cost of evaporation losses in the fuel tank of the plant.

new margin for the companies whose qualification was withdrawn

ffThe costs of bank guarantees issued to Aramco.

will be suspended by the Ministry of Municipal and Rural Affairs. This amendment in the profit margin assures the keenness of the Ministry of Energy to continue developing the fuel stations sector

related logistical, maintenance and labor related services.

centers that comply with the qualification requirements issued by

Number of sold litres - SASCO

Gasoline 95

Gasoline 91

2019

355,976,099

463,365,798

258,443,751

93,266,803

Change % of 11.08% 82,936,866

500,000,000

Change % of 10.39%

663,324,664

1,000,000,000

997,971,241

1,236,252,811

Change % of 23.88%

419,735,635

1,500,000,000

Diesel

2018

2017

Gasoline 95

Gasoline 91

2019

2018

29,664,675

34,977,970

38,613,817

7,772,234

6,911,406

50,000,000

21,536,979

100,000,000

55,277,055

150,000,000

83,164,270

103,021,068

Average sales Liter / Month

Diesel

2017

Fuel sales in Liters 200,000,000 150,000,000 100,000,000 50,000,000 0 Jan

Feb

Mar

Apr

May

Jun

2018

July

Aug

Sep

Oct

Nov

Dec

2019

Annual Report 2019

Rental Sector

Dining

Through competent departments in all areas, Retail Sector leases

According to the priorities of SASCO strategy to attract companies

some facilities that SASCO authorizes third parties to manage, such

specialized in restaurant management and reduce the number of

as restaurants, car maintenance workshops, oil and tire services, as

restaurants SASCO operates to improve service, provide a unique

well as other shops serving clients and passengers.

experience, achieve a quantum shift, enhance customer satisfaction, assume leadership in this field, and advance the Stations and Rest Houses Sector in the Kingdom, SASCO continued to sign several

Rental

agreements with global and local restaurant companies, which have already begun providing services in many SASCO sites inside and outside cities and at border crossing posts, through restaurants that provide suitable services to the company’s customers of different tastes.

Rental areas of more than exceeding 138,000 m2

Pilgrims’ Services SASCO provides these services through its rest houses and stations

SASCO also continued to sign strategic partnership agreements with

at the Saudi border crossing posts, in addition to SASCO site network

several international and local competent companies specialized

spreading on all highways, especially those linking the holy lands

in operating restaurants, cafes, and car maintenance workshops to

(Mecca and Medina).

manage some of SASCO site facilities. This has had a positive impact in

Al-Hijra Road (Mecca/Medina)

providing integrated and high-quality service, leading to an increase

Mecca/Jeddah Highway.

in number of customers in SASCO sites throughout the Kingdom.

Mecca/Taif Road (Al Hoda/Al Sail)

Café

Riyadh/Taif highway

Palm Café offers all types of coffee and hot drinks, in addition to a

Riyadh/Dammam Road

range of snacks and pastries. Palm Café had (10) branches by the end

Halat Amar/Tabuk/Medina Road

of 2019.

During 2019, SASCO served more than 10.8 million Pilgrims and

To offer a better service in this field, SASCO contracted with major

visitors whether from inside or outside the kingdom.

international café companies to provide their services through SASCO sites spread throughout the Kingdom.

Pilgrims 15,000

8,300

1,000

1,100

1,270

5,000

9,900

10,850

10,000

0 Numbers of Vehicles

Numbers of Persons

2018

2019

2017

The following table shows the key financial results at the Retail Sector level as well as the contribution ratio in income margin compared to the previous fiscal year:

Direct Revenue

Contribution Ratio (in revenue)

Direct Costs

Total Income

Contribution Ratio (Income Margin)

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2,275,470,751

1,851,348,389

91.65%

90.05%

(2,148,009,320)

(1,798,497,107)

127,461,431

52,851,282

81.39%

64.47%

500٫000٫000

52,851,282

1,000,000٫000

127,461,431

1,500,000٫000

1,851,348,389

2,275,470,751

2,000,000٫000

2,148,009,320

2٫500٫000٫0000

1,798,497,107

‫قطاع العمليات‬

0 Operating revenues

Operating costs

2019

Total Income

2018

The following table shows revenue analysis of Retail Sector for the past five years: 2015

2016

2017

2018

2019

645.234.638

939.405.052

1.034.959.662

1.851.348.389

2.275.470.751

Revenue Growth of Retail Sector

2٫500٫000٫000

Annual Compound Growth rate 28.67%

2٫000٫000٫000 1٫500,000,000 1٫000,000,000 500,000,000 -

2016

2015

2018

2017

2019

Total Sector Revenue

Geographical Revenue of Retail Sector

The following table shows province-level revenue analysis: Sector

2019

2018

Central Province

918,547,868

40.37%

813,495,006

43.93%

Northern Province

138,992,048

6.11%

118,231,379

6.39%

Eastern Province

492,918,188

21.66%

403,712,322

21.81%

Western Province

557,195,629

24.49%

380,384,808

20.55%

Southern Province

77,634,545

3.41%

63,344,155

3.42%

3.96%

Qassim Province

90,182,473

3.96%

72,180,719

3.90%

Total

2,275,470,751

100%

1,851,348,389

100%

Qassim Province

Western Province

24.49%

6.11%

Northern Province

21.66%

Eastern Province

40.37% Central Province

3.41%

Southern Province Annual Report 2019

SASCO Palm Co.

SASCO Palm Co. SASCO Palm Co. is a limited liability company, with a capital of SAR 500,000 divided into 50,000 equal cash shares, each of SAR 10. SASCO possesses 99% while Auto & Equipment Investment Co., Ltd possesses the remaining 1%. SASCO offers supply service through (SASCO Palm Stores), for which SASCO opened (13) branches during 2019, bringing the total number of (SASCO Palm Stores) branches to (80) in various regions of the Kingdom at the end of the year after excluding two branches in 2019.

Number of SASCO Palm Stores Branches

60 30 0 2019

2018

2017

Revenue of SASCO Palm Stores square meters in 2019 rose to SR 47.60 for all sites. Client basket change was 6,56% rising from SR 21.04 in 2018 to SR 22.42 in 2019.

Geographical Distribution of Branches Northern Province

Western Province

Central Province

Eastern Province

Southern Province

(SASCO Palm Stores) contains an integrated basket of carefully

Instruments, tools, and accessories.

selected products to meet the needs of our customers, whether

Trip supplies.

travellers on intercity roads, vehicle drivers, and passengers inside

Prepaid communication cards.

cities. The following are the classifications of these items:

Electronics.

Food supplies.

Mobile phone accessories.

Non-food supplies.

Perfumes and cosmetics.

Dairy products and cold drinks.

Annual Report 2019

The following table shows the key financial results at SASCO Palm Stores level as well as the percentage of contribution and income margin compared to previous fiscal year: % of Contribution (in revenues)

Direct Revenue

Direct Costs

% of Contribution (Income Margin)

Total Income

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

213,774,890

201,456,232

8.61%

9.80%

(200,395,749)

(190,488,260)

13,379,141

10,967,972

8.54%

13.38%

13,379,141

100,000,000

10,967,972

150,000,000

190,488,260

200,000,000

200,395,749

250,000,000

201,456,232

213,774,890

Sasco Palm Company

50,000,000 0 Operating revenue

Total income

Operating costs

2019

2018

Growth of SASCO Palm Stores Revenue

250,000,000 Annual Compound Growth rate 9.03%

200,000,000 150,000,000 100,000,000 50,000,000 0

2015

2016

2017

2018

Total Sector Revenue

2019

The following table shows province-level revenue analysis: Sector

2019

2018

Central Province

131,978,891

61.73%

126,231,352

62.66%

Northern Province

10,872,620

5.09%

10,794,365

5.36%

Eastern Province

28,851,653

13.50%

28,988,690

14.39%

Western Province

41,208,753

19.28%

35,441,825

17.59%

Southern Province

862,973

0.40%

Total

213,774,890

100%

201.456.232

100%

SASCO Palm Stores Geographical Revenue Northern Province

5.09%

Western Province

19.28%

61.73% Central Province

13.50%

Eastern Province

0.40%

Southern Province

Annual Report 2019

SASCO Waha Co.

SASCO Waha Co. SASCO Waha Co. is a limited liability company with a capital of SAR 5000,000, divided into 50,000 equal cash shares, each of SAR 100. SASCO holds 99% of its capital while Auto & Equipment Investment Co., Ltd holds the remaining 1%. SASCO Waha Co. was established to manage this activity independently to achieve the best returns from it. SASCO Waha Co. manages all SASCO motels spread all over the Kingdom. SASCO integrated in its strategy the development of these motels to carry its own brand “Waha Motel”. During 2019, one motel was opened on Riyadh / Taif Road at Dhalam area, and 3 motels were developed on Al-Ola / Tabuk road, Taif / Riyadh road and on Qassim / Riyadh road, bringing the number of motels carrying the brand of “Waha Motel” to 9. SASCO Waha Co. also obtained a license to operate and classify the accommodation facilities issued by the General Authority for Tourism and National Heritage, for the company’s motel in Al- Adid area on Salwa Al Batha International Road. “Super 8” Hotel achieved success in the quality test applied by Windham Company, and obtained 88.75% which is the highest score achieved around the Kingdom.

Annual Report 2019

Number of Motels

3 1

0 SASCO Waha Co.

Super 8

2019

2018

2017

Super 8 Hotel, located on Thumamah road, Riyadh city, includes high standard rooms, a restaurant, conference room, in addition to a sports hall. The following table shows the most important financial results at SASCO Waha Co. level as well as the percentage of contribution to revenues and income margin compared to previous fiscal year:

Direct Revenue

% of Contribution (in revenues)

Direct Costs

% of Contribution (Income Margin)

Total Income

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

5,459,311

3,911,567

0.22%

0.19%

(4,908,776)

(3,760,683)

550,535

150,884

0.35%

0.18%

550,535

2,000,000 1,000,000

150,884

3,000,000

3,760,683

4,000,000

4,908,776

5,000,000

3,911,567

6,000,000

5,459,311

SASCO Waha Co.

0 Operating revenue

Operating costs

2019

2018

Total income

The following table shows revenue analysis at the region level : Sector

2019

2018

Central Province

3,438,613

62,99%

2,493,474

63.75%

Northern Province

455,180

8,34%

311,929

7.97%

Eastern Province

1,286,350

23,56%

1,106,164

28.28%

Western Province

162,826

2,98%

Southern Province

116,342

2,13%

Total

5,459,311

100%

3,911,567

100%

SASCO Al-Waha Co Geographical Revenue Northern Province

8.34%

2.98% Western Province

62.99% Central Province

23.56% Eastern Province

2.13%

Southern Province

Annual Report 2019

Ostool Al-Naqil Co.

Ostool Al-Naqil Co. Ostool Al-Naqil Co. is a limited liability company with a capital of SAR

compared to (132) trailers in 2018.

5,000,000 , divided into 50,000 equal cash shares each of SAR 100.

The company provides transportation service to SASCOâ&#x20AC;&#x2122;s operations

SASCO holds 99% while Auto & Equipment Investment Co., Ltd holds

sector sites (fuel transportation, water transport, sanitation) in

the remaining 1%. Moreover, both the National Water Company and

addition to providing transportation services (fuel, goods) to a

the Saudi Electricity Company have qualified Ostool Al-Naqil Co..

number of major retail and distribution companies, in addition to

An integrated headquarters was prepared for Ostool Al-Naqil Co.

expanding its activity to include dry transport through refrigerators

in Riyadh, including fleet management buildings and integrated

and flat trailers allocated to all purposes.

workshop for tankers maintenance, in addition to two branches, one

The total mileage of the tankers of Ostool Al-Naqil Co. during the

in the Eastern Province and the other is in the Western Province, that

current year in order to provide service to its customers reached

are considered the launch point of the companyâ&#x20AC;&#x2122;s trucks.

more than 15 million km compared to 14 million km in 2018, with an

At the end of 2019, the fleet size reached (127) tankers, compared to

increase of 7.14%.

(116) tankers at the end of 2018, and (143) trailers at the end of 2019,

Fleet Size 150

143 132

100 89

101

109

121

116

127

0 2015

2016 Number of trailers

To offer service to our clients, we went a long drive of more than 15 million km.

2017

2018

2019

Number of tankers

More than 56 thousand trips through our fleet.

Annual Report 2019

The following table shows the key financial results at Ostool Al-Naqil Co. level as well as the percentage of contribution and income margin compared to previous fiscal year: % of Contribution (in revenues)

Direct Revenue

Direct Costs

% of Contribution (Income Margin)

Total Income

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

29,156,246

26,359,082

1.17%

1.28%

(21,384,722)

(18,011,444)

7,771,524

8,347,638

4.96%

10.18%

Ostool Al-Naqil Co.

5,000,000

8,347,638

10,000,000

7,771,524

15,000,000

18,011,444

20,000,000

21,384,722

29,156,246

25,000,000

26,359,082

30,000,000

Operating revenue

Total income

Operating costs

2019

2018

1,400,000,000

800,000,000 600,000,000

932,274,000

1,000,000,000

1,116,003,000

1,200,000,000

1,516,967,000

1,377,300,000

1,600,000,000

1,488,539,000

The following chart shows the number of litres transported by Ostool Al-Naqil Co. during the past five years:

108

116

127

2016

2017

2018

2019

200,000,000

400,000,000

2015

Number of trucks

Liters transported

Revenue Growth of Ostool Al-Naqil Co. 35,000,000 30,000,000 25,000,000

Annual Compound Growth rate 13.72%

20,000,000 15,000,000 10,000,000 5,000,000 2015

2016

2017

2018

2019

Total revenue of Ostool Al-Naqil Co.

ï¿½ Ostool Al-Naqil Co. revenues are geographically interrelated with the Retail Sector.

Annual Report 2019

Saudi Automobile & Touring Association - SATA

Saudi Automobile & Touring Association - SATA Saudi Automobile & Touring Association SATA was established as a limited liability company with a capital of SR 500,000 divided into 50,000 equal cash shares, each of SAR 10. SASCO possesses 99% while Auto & Equipment Investment Co., Ltd possesses the remaining 1%.

Through this Convention, SASCO aims to activate SATA role to change from a member represented in the International Road Transport Union to an active member to represent the Kingdom of Saudi Arabia and issue TIR books.

Saudi Automobile & Touring Association has a license from the Fédération Internationale de l’automobile (FIA) to issue Trip-Tik customs books and works through many sale outlets widespread throughout all regions of the Kingdom, in addition to a network of agents and distributors in the Kingdom. All of them adopt world-class terms, specifications, and performance standards.

The Saudi Automobile & Touring Association, SATA began in late 2019 to issue TIR books and make trial trips in coordination with the Saudi Customs Authority. The role of SATA has also been activated, and transformation from a representative member of the International Road Transport Association to an active member representing the Kingdom of Saudi Arabia and issuer of the TIR books.

The most important services offered by Saudi Automobile & Touring Association include the following: ff Issuing Trip-Tik customs books. ff Issuing international driving licenses. ff Issuing TIR books. ff Organizing sport activities for cars and motorcycles as well as holding, operating, and managing various categories of motorracing tracks The number of passengers benefitting from customs transit books during 2019 was more than 15.8 thousand, and more than 50,000 passengers were issued international driving licenses. The sales of Saudi Automobile & Touring Association SATA were affected over the past years because of political events experienced by some neighbouring countries in addition to the existence of parallel clubs that do not have a license from the FIA to practice their business in the Kingdom but took a market share of sales of Trip-Tik customs books and international driving licenses. SATA launched a campaign to support the sales of international license sales during 2019 in coordination with the company’s marketing department. As part of Saudi Automobile & Touring Association’s agreement of 2012 with the International Road Transport Union (IRU), “an international body concerned with serving the interests of road transport industry worldwide and operators of buses, taxis and trucks to ensure economic growth and prosperity through sustainable movement of passengers and goods and reduce immaterial barriers crippling trade, tourism and road transport through reducing long waiting times on borders, simplifying customs procedures, harmonizing border control, applying information systems and common border and ensuring integrity”, the Saudi Automobile & Touring Association, SATA, signed on October 3, 2018 with the Saudi Customs an agreement to activate the Customs Convention on the International Transport of Goods under international carriage of goods by rail (TIR); a simplified system making trade easier and cheaper, being the only international transit and guarantee system. Under the Convention, the Saudi Automobile & Touring Association, SATA, is considered the issuer of TIR books and the guarantor of trucks exporting under the TIR system in Saudi Arabia.

The Saudi Automobile & Touring Association, SATA participated in the third Saudi logistical conference as a strategic sponsor during the month of October 2019, which was inaugurated by His Excellency the Minister of Transport in the presence of His Excellency the Chairman of the SATA Board of Directors and His Excellency the President of the club, where SATA held its exhibition accompanying the conference and organized a workshop entitled “A quantum shift to facilitate customs operations for transit and trade development from and through the Kingdom” in cooperation with the Saudi Customs Authority and the International Federation of Road Transport with the aim of contributing to raising the level of knowledge through access to the latest developments in all parts of the world and seeking to integrate this development in operations that are designed to simplify the movement of products and information in the supply chain and logistics services and to identify the mechanisms that aim to reduce costs and improve efficiency through the integration of the supply chain and logistics management. In order to enhance its role in international federations, the Saudi Automobile & Touring Association, SATA participated in the General Assembly of Land Transport in Geneva, during which the SATA efforts were praised for committing to applying best practices as a guarantor association, and SATA also participated in The Arab Council of Automobile and Tourism Clubs (ACTAC) meeting in Cairo. During the meeting, the latest updates on electronic transformation ( e-CPD application) were discussed, in addition to participating in the meetings of the General Assembly of the Fédération Internationale de l’automobile (FIA) in Paris . SATA seeks through the management of sports activities related to motor sports and motorcycles, and in coordination with the relevant authorities, to obtain a license for sports activities to practice this sport professionally

Annual Report 2019

15.8

More than thousand passengers traveling via Trip-Tik books.

More than Thousand passengers issued international licenses. The following table shows the most important financial results at the level of Saudi Automobile & Touring Association - SATA as well as the percentage of contribution to revenues and income margin compared to previous fiscal year:

% of Contribution (in revenues)

Direct Revenue

Direct Costs

% of Contribution (Income Margin)

Total Income

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

14,252,082

12,012,231

0.57

0.58%

(8,167,116)

(2,348,402)

6,084,966

9,663,829

3.89%

11.79%

Saudi Automobile & Touring Association

Operating revenue

Operating costs

2019

9,663,829

6,084,966

2,348,402

50,000,000

8,167,116

100,000,000

12,012,231

14,252,082

150,000,000

Total income

2018

The following table shows the revenue analysis for Saudi Automobile & Touring Association for the past five years:

Statement

2015

2016

2017

2018

2019

Sales

20,292,812

20,471,234

22,723,350

12,012,231

14,252,082

ďż˝ SATA sales are centralized from its headquarters in Riyadh according to the nature of its activity.

SATA Revenues 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 2015

2016

2017

2018

2019

SATA sales per site

Association Sales Per Type

0.11 % Trip-Tik Yemen

43.88% 37.94%

Trip-Tik Sudan

Trip-Tik International

18.07% International licenses

TIR book is the solution for transporting goods and moving better around the world

Annual Report 2019

Auto & Equipment Investment Co.

100

‫إستثمارات السيارات والمعدات‬

Auto & Equipment Investment Co. Auto & Equipment Investment Co. was established with a capital

of SAR 500,000, fully owned by SASCO, divided into 50,000 cash

Build car and heavy equipment maintenance workshops as well as car and passenger service centres.

shares each of SAR 10. The company was established to provide

Build rest houses, motels, and restaurants.

infrastructure, human resources, and expertise required to manage

Import and sell equipment and tools and construct roads and

SASCO investments independently and impartially and, thus,

bridges.

increase SASCO diversity of income sources and enable it to manage

SASCO operates most of its investments in its subsidiaries through

its operational and investment processes efficiently and effectively.

Auto & Equipment Investment Co., since the latter holds 1% of the

The most important activities of Auto & Equipment Investment Co.

capital of Ostool Al-Naqil Co., 1% of the capital of Saudi Automobile

include:

& Touring Association, 1% of the capital of SASCO Palm Stores Co., 1 %

Manufacturing industries.

of the capital of SASCO Waha Co., 1% of the capital of SASCO Franchise

Construction.

Co., and 1% of the capital of SASCO Al-Nakhla Al-Oula Co.

Trade.

Finance, business and other services.

SASCO holds equity in other companies, and the following table

Possess land and real estate and erect buildings thereon for

shows the details of these investments:

operation, sale, or lease.

No.

Company Name

Middle East Battery Company (MEBCO)*

National Company of Tourism (Syahya)

United Racing Company

No. of Shares

Value of Nominal Share

Total

Ownership Ratio

1,279

5,750

7,354,250

12.79%

500,000

1,500,000

0.36%

125

1,000

125,000

25%

Total

8,979,250

ďż˝ The share in the Middle East Battery Company (MEBCO) is registered in the name of Auto & Equipment Investment Co. (a subsidiary).

Illustration of Investment Ratios of Total Investment Portfolio

16.71%

National Company of Tourism (Syahya)

81.90% Middle East Battery Company (MEBCO)

1.39%

United Racing Company

Annual Report 2019

101

Dividends Received from Investments 25,000,000 21,712,472 20,000,000 15,000,000 10,000,000 5,710,088

500,000,00

0,000,000

0,000,000 Investments in companies

2019

1,287,190

Investments in securities

2018

Investment Portfolios according to Investment Regulations issued by CMA There is an investment portfolio management agreement with a Mulkia Investment Company, and all shares in this portfolio were liquidated during 2019. Entity

Investment Amount

Amount invested as of 31/12/2019

Accounting Treatment

Mulkia Investment Co.

Securities for trading

Investment Portfolios On December 03, 2019, an investment portfolio was opened with HSBC Saudi Arabia for the purpose of subscription in Saudi Aramco shares and management thereof. This portfolio is accounted for as available-for-sale securities and the financial impact of it is addressed at the end of each financial period in the shareholders â&#x20AC;&#x2122;equity at the financial statement and the differences between periods on the statement of comprehensive income when evaluating the portfolio.

102

Entity

Investment Amount

Amount invested as of 31/12/2019

Accounting Treatment

HSBC Saudi Arabia

SAR 29,946,208

Securities held for sale

Annual Report 2019

103

Al-NakhlaAl-Oula Co.

104

‫شركة النخلة األولى للمقاوالت‬ Al Nakhla Al Oula Contracting Company

Al-Nakhla Al-Oula Co. A limited liability company, established to carry out the operation, maintenance, and cleaning of SASCO sites to improve the quality of service provided to customers, with a capital of SAR 500,000 divided into 50,000 equal cash shares each of SAR 10. SASCO possesses 99% while Auto & Equipment Investment Co., Ltd possesses the remaining 1%. Al-Nakhla Al-Oula is specialized in: ff

General contracting (construction, repair, demolition, and restoration).

Construction, management, maintenance, and operation of residential and commercial buildings.

Road works.

The company also supervises the establishment and development of some stations that are created or developed by the owners. The table below shows the key financial results at the level of Al-Nakhla Al-Oula Contracting Company and the percentage of its contribution to the revenue and income margin compared to the previous fiscal year as follows: Direct Revenues

Shareholding Percentage (in revenues)

Direct Costs

Shareholding Percentage (income margin)

Total Income

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

4,420,373

0.18%

(3,070,233)

1,350,140

0.86%

Annual Report 2019

105

SASCO Franchise Co.

106

SASCO Franchise Co. After a specialized company completed the project of granting

Program aims to create new investment opportunities for SASCO and

franchise to operate “SASCO fuel stations” and “Palm Stores”, the

increase its revenues and profitability through granting the franchise

establishment of “SASCO Franchise Co.” was completed with a capital

of operating commercial brands to other operators, resulting in

of SAR 500,000 divided into 50,000 equal cash shares each of SAR

creating real opportunities for citizens to participate in pioneering

10. SASCO possesses 99% while Auto & Equipment Investment Co.,

projects in line with the Kingdom’s vision.

Ltd possesses the remaining 1%. “SASCO Franchise Co.” grants third

In March 2019, the company participated in the commercial

parties a franchise to operate “SASCO fuel stations” and “Palm Stores”.

franchise exhibition held in Jeddah under the slogan “Apply now and get the franchise application - an opportunity for excellence),

SASCO launched the Commercial Franchise Granting Program to

as this participation aims to educate young businessmen about the

operate the brands of “ SASCO Stations” and “Palm Stores”. The

commercial franchise program offered by the company.

Annual Report 2019

107

Other Administrative & Operational Information

108

Other Administrative and Operational Information Lawsuits

United Racing Company Lawsuit

of the ruling in the interest of the company in its capacity as the competent authority to implement the rulings issued against government agencies.

The partners of the United Racing Company filed lawsuit before

On 23/03/1441H, the Ministry of Housing filed a lawsuit requesting

the Administrative Judicature Court in Jeddah versus SASCO.

an explanation of the court ruling issued in favor of the company and

They demanded the liquidation of their company. After the Panel

determining whether it was for the equivalent fee of the market value

considering the case ordered compulsory liquidation. it appointed

of the site where the lawsuit was postponed to 29/04/1441H.

Osama Abdullah Al-Khuraiji & Partner - Chartered Accountants and

On 17/11/2019, the company filed a lawsuit before the Administrative

Business Consultants, to carry out the liquidation procedures, and

Court in Riyadh in which it requests the Ministry of Housing to pay

execution is still underway with the chartered accountant’s office.

the value of the area taken and the case is still in study before the

As per the latest report of SASCO Law Firm, liquidation is subject to

competent department.

the following:

ffThe case filed by SASCO against the Industrial Cities Authority and

I. Completing the requirements for opening United Racing

the Tabuk City Municipality before the Public Court in Tabuk, which

Company Zakat file at the Department of Zakat.

was transferred to the Public Court in Riyadh, regarding interference

II. Approval of debt balances.

with the land of the company owned by it in the industrial area of

III. SASCO Law Firm’s obtaining of the details and documents of

Tabuk City and demanding compensation for the value of the land

lawsuits filed by or against SASCO.

if it is not possible to receive it. After several sessions, the case is

The Administrative Judicature Court in Jeddah passed a judgement

still with the Public Court in Riyadh for consideration.

binding the United Racing Company to pay to one of the creditors an

ffThe case filed by the company against Al-Khaldi Establishment,

amount of SR 2 million. For lack of liquidity in United Racing Company

the tenant of the company’s site on Dammam-Riyadh road at km

balances, the liquidator requested partners to proportionately (each

205 for not delivering the station after the expiry of the contract

as per his shares of capital) pay the amount. A lawsuit was filed by

in 2014, and after a verdict was issued by Al-Khobar Court obliging

the liquidator before Jeddah Commercial Court this regard. As the

the defendant to vacate the property, the defendant filed on

liquidator’s law firm was absent, the lawsuit was cancelled. Then, the

09/03/1441H an appeal against the ruling and awaiting the appeal

case was brought again to the court and an appointment was fixed

outcomes.

on December 4, 2019, and due to the absence of the liquidator’s office,

ffThe case filed by the company against the governorate of Jubba,

the case was cancelled again. SASCO Law Firm still follows up the case.

for cancelling contracts and releasing letters of guarantee and

Other Miscellaneous Lawsuits

compensation for damages incurred due to the company not

SASCO filed some suits related to amounts due to it from some

receiving the sites. The company on 03/08/1432H contracted with

tenants and debtors to collect its dues for previous years. There are

the municipality of Jubbah to rent sites on the international road

some other financial and labour lawsuits versus SASCO and its Legal

Hail - Al-Jouf, and the company did not finally receive any of the

Department follows up these financial rights and collection thereof,

aforementioned sites because these sites did not fit the purpose

either by amicable or judicial means.

for which they were contracted. A ruling was issued in favor of

Following are some of the key lawsuits:

SASCO obligating the municipality of Jubbah to pay an amount of

ffOne important case is the one SASCO filed before the Board of

(1,027,750 Riyals) to the company, and it was approved by issuing

Grievances versus both the Ministry of Municipal and Rural Affairs

a support order by the Municipality of Hail to the municipality of

and the Ministry of Housing. SASCO possesses land in Hafr Al-

Jubbah to pay the amount, and the company is still following to

Batin area and the Ministry of Housing, through Hafr Al-Batin

receive the amount with the relevant authorities

Municipality, took part of this land. The lawsuit was referred to

ffThe case filed by the company against the Municipality of Jeddah,

Riyadh Public Court and, then, to the Review Board, which in turn

where the company rented a plot of land from the Municipality

referred it to Hafr Al-Batin Municipality to check the site and

of Jeddah in the Al-Hijrah quarter with an area of (20164.66 m2)

determine the overlap between the two plots. Consequently, Hafr

and paid the rent for the first year, and since the Municipality was

Al-Batin Municipality issued its letter stating that the Ministry of

unable to hand over the site due to the Ministry of Transport’s

Housing had infringed upon 41,713 m2 of SASCO plot. Therefore,

refusal to allow an entrance and exit for the station and the failure

the assessment was referred to an authorized assessor. Based on

of the municipality to return the amounts paid by the company,

its assessment, a judgment was passed in favor of SASCO, and a

the company filed a lawsuit against the Municipality of Jeddah

reasonable compensation for the usurped land was determined.

Governorate before the Administrative Court in Jeddah registered

The judgment was challenged by the Ministry of Housing. On

with No. 203 for 1439H in order to compel the municipality to pay

February 25, 2019, the company received a final court ruling from

the amounts it received. In the Session dated 22/12/1439H, a ruling

the Department No. (41) of the Public Court in Riyadh, which

was made in favor of the company in the amount of (831,000 riyals),

stipulates that the Ministry of Housing (the defendant) is required

and the municipality appealed before the Administrative Court in

to pay an amount of 8,217,461 Riyals as equivalent fee, in exchange

Jeddah, but the court issued a decision to support the judgment

for encroaching on the company’s land located on Hafer Al-Batin

and we received the amount and deposited it to the Company

/ Riyadh road, and accordingly, the company sent a letter to the

account.

municipality of Riyadh region requesting the implementation

Annual Report 2019

109

Human Resources The following table shows human resources analysis of SASCO and its subsidiaries:

No.

Category

2019

2018

Senior Management

Middle & Executive Management

339

264

Workers and Technicians

1741

1457

2081

1722

Total

110

Subsidiaries The following table shows the summary of (limited liability) subsidiaries and their status of incorporation.

Core Business

Headquarters Foundation Country

Auto & Equipment Investment Co., Ltd (SAR 500,000)

Build car and equipment repair workshops – car services stations and travellers on the main roads between the cities of the Kingdom to provide fuel, oils and maintenance for cars and heavy equipment, establish holiday buildings, motels and restaurants, provide meals, drinks and refreshments for travellers, wash and lubricate cars and equipment, and import Selling equipment and tools, and constructing roads and bridges