2017 - Home | SASCO Annual Report 201… · ` Head of Corporate Banking at Al Rajhi Bank. ` Chief Financial Analyst at Al Rajhi Bank. ` Systems analyst at Procter & Gamble. 10 Annual

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Annual Report

2017

Annual Report 20172

3Annual Report 20172

Custodian of the Two Holy Mosques

King Salman bin Abdul Aziz Al Saud

( May Allah protect him )

His Royal Highness

Prince Mohammad bin Salman bin Abdul Aziz

CrownDeputy Prime Minister & Minister of Defense

( May Allah protect him )


Table of Contents

76 Retail Sector

108 SASCO franchise Co.

106 Al-Nakhla Al-Oula Co.

88 SASCO Palm Co.

92 SASCO Oasis

84 Zaiti PetroleumServices Company

94 Ostool Al-Naqil Co.

98 Saudi Automobile& Touring Association - SATA

102 Auto & EquipmentInvestment Co.

110 Other Administrativeand Operational Information

124 Corporate Governance

128 Financial Statements

120 Internal Control

114 Risks Management

8 Board of Directors

18 SASCO Overview

10 Chairman’s Statement

20 Main Business Sectors

12 Vice Chairman andManaging Director’s Statement

22 Plans and Decisions

14 Chief Executive Officer’s Statement

16 Vision

17 Mission

26 The Most ImportantAchievements During 2017

32 Board of Director’sand Committees

54 Shareholders’Meetings in 2017

58 Consolidated Financial Statements


Board of Directors

The Board of Directors is pleased to present to you SASCO Annual Report for the fiscal year ending on December 31st, 2017. It includes the Board of Directors’ Report on SASCO financial results, its various activities, as well as the achievements that achieved thanks to Allah, and the efforts of all members of the Board, the executive management, and all staff.


Board of Directors

Mr. Sultan bin Mohammed Al-HudaithiVice Chairman | Managing Director | Member of Executive CommitteeQualifications and experience:He holds the Bachelor’s Degree in Accounting with honour degree from King Saud University and Master of Business Administration from London Business School. He held leading positions in many public and private companies in Saudi Arabia. He has experience in corporate restructure, strategic planning and investment management in securities, private ownership and real estate investment. He was a member of boards and committees in public and private companies including Saudi Chemical Co., 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 AwfiBoard Member | Chairman of Audit CommitteeQualifications and experience:He holds the Master’s Degree in Accounting, 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 has more than thirty years of experience as well as in the joint stock companies management as well as financial, administrative and strategic consultation. He also participated in many shareholding companies’ board and board committees (Audit Committee) such as Al Jouf Agricultural Development Company (JADCO), Taiba Holding Company and United Cement Industrial Company.

Mr. Suleiman Bin Ali Al KhudairBoard Member | Member of Audit CommitteeQualifications 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 techni-cal director, a sales director and deputy general director in Nahil Computers and now he is its General Director.

He participated in boards of many joint stock companies.

Mr. Ajlan bin Abdulrahman Al AjlanBoard Member | Chairman of Nomination andRemuneration CommitteeQualifications and experience:He holds the Bachelor’s Degree in Industrial Manage-ment from Central Washington University. He enjoys more than twenty five years of experience in the field of industrial investment. He participated in boards of many joint stock companies such as Drake & Scull International KSA and Fawaz Abdulaziz Al Hokair Co.

Current Jobs:`` SASCO Managing Director.`` Board member of United Wire Factories Company

(ASLAK)`` Board member of Mulkia Investment Co.`` Board member of Nahaz Investment Co.

Previous Jobs:`` 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 Co.

Current Jobs:`` Board member and Head of Audit Committee of

United Cement Industrial Company.`` Head of Al Jouf Agricultural Development Company

Audit Committee.`` Head of Saudi Ceramics Audit Committee.`` Member of Taiba Holding Company Audit Committee.

Previous Jobs:`` Director of Financial, Administrative and Investment

Department of Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO).

`` Vice General Director for Financial and Administrative Affairs of Saudi Livestock Trading Company.

`` General Director for Financial and Administrative Affairs of Taiba Investment and Real Estate Development Company.

Current Jobs:`` General Director of Nahil Computers Co.

Previous Jobs:`` Technical Director of Nahil Computers Co.`` Sales Director of Nahil Computers Co.`` Deputy General Director of Nahil Computers Co.

Current Jobs:`` Board member in Fawaz Abdulaziz Al Hokair Co.`` Board member in Drake & Scull International KSA.`` Board member in Gulf Insulation Group “GIG”.

Previous Jobs:`` Board member in Saudi Lamino Co. Ltd.`` Board member in Olayan Food Services Company.`` Board member in Rana Investment Company (RIC).`` Board member in Indian Company For Co-Operative

Insurance.

Mr. Ibrahim bin Mohammed Al-HudaithiChairman | Head of Executive Committee

Qualifications and experience:He is a businessman, holding the Secondary school certificate and having more than 36 years in corporate management. He occupied many 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.

Current Jobs:

`` Chairman of Al-Madaen Star Group.`` Chairman of Mulkia Investment Co.`` Board member of Nahaz Investment Co.``

Previous Jobs:

`` 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. Majid bin Muhammad Al OthmanBoard Member | Member of Nomination and Remuneration CommitteeQualifications and experience:He is a businessman, holding the Secondary school certificate and having more than thirty 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 Zawaya Real Estate Co.

Mr. Riyad bin Saleh Al MalikBoard Member | Member of Executive Committee | Chief Executive OfficerQualifications and experience:He holds the Bachelor’s Degree in Business Administration from King Abdulaziz University. He has a vast experience in corporate management, particularly fuel stations. He served as the General Director of Al Tas’helat Marketing Company Ltd., Deputy General Director of Riyadh Development Company and board member of many companies. He is now the Head of Customs Council of Federation Internationale de l’Automobile and Head National Committee of Fuel Station Companies in the Council of Saudi Chambers.

Mr. Ali bin Mohammed Aba Al KhailBoard Member | Member of Nomination and Remuneration CommitteeQualifications and experience:He holds the 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 Defense 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.

Mr. Fawaz bin Suleiman Al RajhiBoard Member | Member of Audit CommitteeQualifications 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 the Master’s Degree in Business Management from Stanford University, USA. He is the Chairman 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

Current Jobs:`` Chairman of Al-Madaen Star Group.`` Chairman of Fun Gate Company.`` Managing Director of Al-Madaen Star Group.

Previous Jobs:`` General Director of Al-Madaen Star Group for

Contracting.`` General Director of Al-Madaen Star Group for

Automobile Services.

Current Jobs:`` SASCO Chief Executive Officer.

Previous Jobs:`` General Director of Al Tas’helat Marketing Company Ltd.`` Deputy General Director of Riyadh Development

Company.`` Director of Marketing Department of Saudi Real Estate

Company (Al Akaria).`` Sales Director of Saudi Hotels & Resorts Company.

Current Jobs:`` Vice Chairman of the Board of Directors of Sanad

Investment Company.Previous Jobs:

`` Deputy Director of the Political Affairs Department of the Royal Diwan.

`` Administrative counsellor in the High Commission for Administrative Organization.

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.

Current Jobs:`` Chairman of the Board of Directors of Union Al Rajhi.`` Chief Executive Officer of Al Rajhi Union.

Previous Jobs:`` 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.


Capital increase shall be done through capitalizing SR 60 million of the retained profits. The aim of this was to strengthen SASCO financial ability to meet the current and future expansions in all its activities to achieve better growth rates in the coming years and preserve financial solvency. 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; provided that such recommendation is conditional upon the approval of the official bodies and shareholders' Extraordinary General Assembly.

Some of the most important achievements during 2017 are as follows:`f Issuing all 2017 quarterly and annual financial statements according to the International Financial Reporting Standards (IFRS).`fCompared to last year, SASCO assets rose to SR 1,5 billion at 2,90%.`fUpdating, preparing and approving the regulations, policies and standards required by the supervisory bodies.`fDeveloping SASCO accounting and operating systems to cope up with the value added tax and applying the same as of 2018.`fCompleting the construction of (6) sites according to SASCO identity and (1) site according to Zaiti Petroleum Services Company identity. The most important sites of these is SASCO Plus on Mecca-Jeddah highway (El-Zaidy District) in Mecca and SASCO Plus station on King Fahd International Airport-Dammam road inside the airport campus.`fCompleting the development of (7) sites according to SASCO identity and (4) sites according to Zaiti Petroleum Services Company identity.`f Expanding dry transport though contracting with various clients and companies.`f Purchasing 15 new trucks to support fleet in addition to purchasing 6 fuel tanks and 15 containers to transport goods.`f Saudi Automobile & Touring Association (SATA) started to issue international driving license through its website.`fOpening Abu Hadreya, Al Adeed, Shalalha and Akhal motels for SASCO Al-Waha Co`fContinuing to develop SASCO information technology systems and monitoring inventory using the state-of-the-art technologies.`fContinuing to attract qualified cadres to meet SASCO need of various administrative functions, especially in leadership positions.`fContinuing Saudization of jobs according to the Ministry of Labour’s requirements.`fContinuing to study the options of selling some of SASCO owned sites and leasing them for long periods. Negotiations are still underway with a number of financial institutions and investment companies with the aim to obtain offers matching SASCO interests and goals.`f Participating in many awareness campaigns confirming SASCO contribution to social responsibility.`fWhen it comes to the operating revenues of subsidiaries, SASCO

Palm Co.' operating revenues rose by 17% compared to last year to reach SR 63,719,373. The operating revenues of Ostool Al-Naqil Co. increased by 16% compared to last year to SR 22,759,754. The operating revenues of Zaiti Petroleum Services Company increased by 7% compared to last year to SR 282,941,455. As for the Saudi Automobile & Touring Association, SATA, although its sales were affected by the political events experienced by some Arab countries, its operating revenues increased by 11% compared to last year to SR 22,723,350.

This is in addition to the achievements across SASCO and all subsidiaries indicated in this report.

In 2018, SASCO will continue to achieve its objectives according to its strategic plan developed by the Board of Directors, consider the horizontal and vertical acquisition opportunities at all operating levels in consistency with Saudi Vision 2030 and work toward overcoming all obstacle and challenges.

In conclusion, on behalf of the members of the Board of Directors, I extend thanks and appreciation to all shareholders of the Saudi Automotive Services Company (SASCO) for their trust in SASCO management. I also thank all SASCO executive management and staff for their efforts and dedication in performing their jobs in the required manner, helping achieve the desired goals throughout this year. We are fully confident that the power and concerted efforts of the working team will result in achieving continuous success, God Willing. We look forward to achieving further successes in the coming years.

I would also like to direct my sincere thanks and appreciation to the Custodian of the Two Holy Mosques, King Salman bin Abdul Aziz, may Allah protect him, His Highness the Crown Prince, His Royal Highness Prince Mohammed bin Salman bin Abdul Aziz, may Allah protect him, for all of the great efforts and unlimited assistance to develop this country, support its economy and stimulate the business environment in favor of Saudi Vision 2030.

May Allah Grant Us All Success,

ChairmanIbrahim bin Mohammed Al-Hudaithi

Messrs. / Shareholders of the Saudi Automotive Services Company (SASCO), the highly regarded,May Allah’s Peace, Mercy and Blessings be upon you,

On behalf of the Board of Directors of the Saudi Automotive Services Company (SASCO) and my own, I am pleased to present to you SASCO Annual Financial Report for the fiscal year ended on December 31st, 2017. It 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 2017 net operating sales of SAR 1,212,329,807 compared to SAR 1,094,122,754 in 2016, i.e. an increase of 10.8%, which reflected positively on the increase in gross and operating profit and net profit. In addition, in 2017, SASCO recorded a net profit of SAR 29,820,145 compared to SAR 25,980,831 in the previous year, 2016, i.e. an increase of 14.78%. This, in turn, led to an increase of 0.55 in share profits compared to 0.48 of last year.

As a result, the Board recommended to distribute to SASCO shareholders a dividend of SAR 0,50 per share for the fiscal year ending on 31 Dec. 2017 with a total amount of SR 27,000,000 representing 5% of SASCO capital. The entitlement to these dividends would be for shareholders registered with the Securities Depository Center (Tadawul) by the end of the second day on which the General Assembly convened.In the Extraordinary General Assembly, the Board recommended to increase SASCO capital to SAR 600,000,000 through bonus shares to SASCO shareholders, by one share for every 9 shares.

Chairman’s StatementMr. Ibrahim bin Mohammed Al-Hudaithi

Net operating income during the year 2017

SR 1,212,329,807Net operating income during the year 2016

SAR 1,094,122,754With an increase, of

10.8%


Following are some of the most important achievements in different sectors of SASCO and its subsidiaries:`fRetail Sector: This sector provides a set of excellent services to clients through SASCO sites spread nationwide. The sites have increased to 220 sites compared to 213 in 2016, i.e. an increase of 7 sites. Operating sites and stations rose to 158, of which 94 are according to SASCO identity and 54 are operating according to Zaiti Petroleum Services Company identity. Other sites are under development or preparation and construction or stopped for lack of economic feasibility from operating them.`f The Retail Sector offered its services to about 12,700,000 vehicles, with an increase of 11.8% compared to 2016, including 8,300,000 pilgrims whether inside or outside the Kingdom.`f By God’s grace, we concluded strategic partnerships with many international and local companies specialized in operating restaurants and café 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.`f Supply Sector (SASCO Palm Co.): 6 new branches were added in 2017. At the end of 2017, the total number of branches was 67. SASCO Palm Stores contains a full basket of items that were carefully studied to meet clients› needs and achieve their satisfaction. Change of client basket reached 18,75%, rising from SR 16 to 19 in 2017.`fAccommodation Sector (SASCO Al-Waha Co.): In 2017, two motels carrying Motel Al-Waha brand were opened. The first one is located on Abu Hadreya-Dammam Road and the second is located near Al Adeed outlet on Batha›a-Salwa road in addition to Motel Waha on Riyadh-Dammam highway at Kilo 154. So, the total number of SASCO Al-Waha motels rose to 3.`f Transport Sector (Ostool Al-Naqil Co.): SASCO increased its truck fleet in 2017 to 108 compared to 95 trucks in 2016. The number of trailers rose to 121 in 2107 compared to 101 in 2016.`fOstool Al-Naqil Co. provides transport services of fuel, water and sewage to SASCO and Zaiti and transport services of fuel and cargo to other companies. It also expanded its business to include dry transport using multi-purpose containers. It also received qualification from the National Water Company and the Saudi Electricity Company.`f Saudi Automobile & Touring Association SATA: In spite of the events experienced by the region which led to large depression in issuing transit books among the Arab countries, more than 32,000 customs transit books were issued to passengers in addition to 62,000 internal driving licenses. According to the Agreement on International Road Transport, SATA continued to encourage the official authorities in the Kingdom and in Gulf Cooperation Countries to activate the Agreement under the supervision of the International Road Transport Union (IRU). It also participated in some relevant seminars within the Gulf Cooperation Countries.

`f SOCIAL RESPONSIBILITY: Based on its belief in its active role in the community and in highlighting our homeland›s achievements, SASCO participated in many awareness-raising campaigns, including:`f “Express Your Homeland Campaign” in the Kingdom’s National Day. The Campaign highlighted the major achievements of our beloved homeland under the wise leadership of the Custodian of the Two Mosques and his Crown Prince.`f Learn Early Campaign, in consistency with the Royal Decree of Women Driving. An infographic was posted on SASCO social media website.`fMinutes Equal Years Campaign. It is an awareness campaign on the benefits of breast cancer early testing.`f This comes in addition to several awareness campaigns and other communal participations.

`f 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.


Managing DirectorSultan bin Mohammed Al-Hudaithi

Messrs. / Shareholders of the Saudi Automotive Services Company (SASCO), the highly regarded,May Allah’s Peace, Mercy and Blessings be upon you,

It is thanks to Allah›s grace that 2017 witnessed SASCO continued achievements and expansions according to its approved strategic plan. The Board seeks to keep its promise and commitment to SASCO shareholders and customers and preserve its pioneering position in the field of operating fuel stations and retail as well as all sectors in which it operates.It gives me pleasure to present to you a brief overview highlighting the most important 2017 activities and developments on the operational and financial levels. SASCO achieved total operation revenues of SR1,212,329,807 compared to SR 1,094,122,754 in 2016, with an increase of 10,80%. This led to an increase of 2017 net profits which were SR 29,980,831 compared to SR 25,980,831 in 2016, i.e. increase of 14,78%. Such increase in operating revenues is attributed to many reasons, notably the continued expansion plan and opening a number of new sites.Earnings before interest, Zakat, depreciation and amortization at the end of 2017 were SR 84,508,044 compared to SR 68,439,549 at the end of 2016, i.e. an increase of 23%. As a result, share profit increased compared to last year and was SR 0,55 in 2017 compared to SR 0,48 IN 2016, with an increase of 12,7%.

Vice Chairman and ManagingDirector’s StatementMr. Sultan bin Mohammed Al-Hudaithi

Profit before interest, Zakat, amortization and amortization (EBITDA) at the end of 2017

SR 84,508,044

Profit before Interest, Zakat, Depreciation and Amortization (EBITDA) at the end of 2016

SR 68,439,549With an increase, of

23%


Operational Performance:During fiscal year 2017, SASCO opened and developed a number of service stations according to the plan for increasing the number of stations operating in station sector including the owned and long-term leased stations. Among the most important 2017-opened stations were SASCO Plus on Mecca-Jeddah road (El-Zaidy District) in Mecca, SASCO Plus station on King Fahd International Airport in Dammam and SASCO Plus station on Riyadh-Dammam road in Al Wasee’a area about 100 km2 away from Riyadh. These stations have all services a passenger needs with the best level of service to customers.

We continued to sign new strategic partnerships with food companies to offer their services using SASCO sites. We also proceeded with introducing mechanization programs in our stations through using modern technology to automate all SASCO stations. At present, we work to introduce the online loading system through payment by Mada card or other payment cards.

SASCO continued to achieve growth in supplies sector, which witnessed a remarkable progress thanks to SASCO Palm Stores. In the same regard, it expanded the scope of cooperation with major retail suppliers and made several alliances with different corporations to raise the level of items to ensure the quality and availability of services needed by those frequenting stations and rest houses.

When it comes to hospitality sector which manages all SASCO motels, two motels carrying SASCO Al-Waha Co. brand were opened. The first one is located in Abu Hadreya on Dammam-Khafji road and the second is located in Al Adeed area on Batha’a-Salwa road. This came in addition to Super 8 Hotel at Riyadh, which won many excellence awards.

In the transport sector, SASCO contracted with many commodity transport companies and consequently increased its truck fleet to 108 and trailers rose to 121 in 2107. Through these, SASCO provides transport services of fuel, water and sewage to SASCO and Zaiti sites. It also expanded its services to include dry transport using multi-purpose containers.

Saudi Automobile & Touring Association, SATA, was largely affected in its sales by the events recently experienced by the Arab Region. It largely relies on offering the service of issuing customs transit books and international licenses to the Arab region particularly Yemen and Levant states which are all related to such events. SASCO endeavours to strengthen the business of this sector through exploring other growth-contributing activities.

Based on the International Road Transport Agreement concluded in 2012 by SASCO with the International Road Transport Union (IRU) and Saudi Automobile & Touring Association’s accession as a union member, SASCO continued to encourage the official authorities in the Kingdom to activate the Agreement under the supervision of the International Road Transport Union (IRU). To this end, we participated in relevant local, regional and international road transport conferences and seminars and urged the competent authorities to enter into this international agreement.

SASCO is currently placing final touches on launching a project for granting franchise to SASCO Franchise Co. to run its stations. By so doing, SASCO aims to increase its revenues and improve its profitability by granting franchise to other operators under agreements it concludes with them to benefit from SASCO brands in light of successful development of its sites according to its identity and its distinguished position in the fuel station sector in the Kingdom. In addition, it developed another alternative to station owners wishing not to sell or lease them.Many of the plans and achievements detailed in the Board’s annual report were implemented with the attempt to 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 in the recent period to improve all SASCO and subsidiaries’ activities, provide excellent services to its clients and contribute to strengthening the level of the national economy; a matter which would benefit to all shareholders.


Chief Executive OfficerRiyadh bin Saleh Al Malik

Messrs. / Shareholders, the highly regarded,May Allah’s Peace, Mercy and Blessings be upon you.

Based on its efforts to implement the Board›s strategy and highlight the achievements recently accomplished, SASCO could in this fiscal year produce many achievements through its business including station and rest house sector and the business of its subsidiaries. In addition to qualitative and quantitative in all activities, greatest interest was paid to quality, safety and professional health standards and preservation of environment being one of the most important international development and growth standards. SASCO was also keen on different social participations and awareness campaigns such as «Express Your Homeland Campaign» in the Kingdom›s National Day and «Learn Early Campaign» in consistency with the Royal Decree of Women Driving in addition to many traffic safety campaigns and competitions offered to our clients.

Financial Performance:In 2017, SASCO achieved an increase of net profits at 14,78% compared to 2016, raising the net income to SR 29,820,145. Total gross profit also increased at 36,82% due to to opening many sites and were SR 79,491,327. In addition, net operating profits scored an increase of 68,73% due to reducing the general and administrative expenses and recorded SR 32,751,403. Net sales recorded SR 1,212,329,807 compared to SR 1,094,122,754 last year scoring an increase of 10,80%. Shareholders› equity recorded SR 783 million compared to SR 782 million in 2016, i.e. an increase of 0,13%.

Chief Executive Officer’s StatementMr. Riyadh bin Saleh Al Malik

Total profit by the end of 2017

SAR 79,491,327

Total profit by the end of 2016

SR 58,099,376With an increase, of

36.82%


MissionTo 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.

Vision To be the first company in terms of the quality of the service and its integration, and to be the ideal model to be followed in the field of the service of vehicles, the equipment, and the management of guest houses and motels on highways in the Kingdom of Saudi Arabia.


خلفية عامة عنSASCO Overviewساسكو

SASCO Overview

The Formation Saudi Automotive Services Co. (SASCO) is a Saudi joint stock company established under Ministerial Decision No. 563 dated 23/12/1402 AH corresponding to 12/10/1982 AD.

The Activities `f Establishing and operating auto and passenger service centres within cities and on the main and intercity roads.`f Establishing and operating rest houses, motels, and restaurants on highways.`f Providing first-aid means using the latest international methods, including the use of helicopters, with the approval of competent authorities.`f Importing, selling and distributing spare parts, car hardware, and equipment as well as parts, accessories, and materials necessary to provide best maintenance and repair services for cars and equipment and to meet the needs of maintenance operations in workshops and service stations, and to sell them directly to the public.`f Buying, selling, renting, and leasing lands and real estate properties required to serve SASCO purposes, and managing third parties’ properties.`f Submitting contracting tenders on car and equipment maintenance for individuals, companies, and institutions.`fChecking cars to issue the road ability certificates upon the approval of the Ministry of Interior.`f Providing an automobile club to issue international driving licenses and customs transit (Trip-Tik) books and supporting motor sport and tourism.`f Importing and exporting all types of vehicles for SASCO business as well as trading in them after obtaining the approval of the competent authorities.

`fManufacturing, re-manufacturing, and renewing auto parts, equipment, and car batteries after obtaining the necessary licenses from the competent authorities.`fManufacturing light and heavy trailers, vehicles refrigerated and non-refrigerated boxes, and all kinds of tankers after obtaining the necessary licenses from the competent authorities.`fGranting franchise to third parties in respect of SASCO trademarks.`f Establishing, managing, maintaining, operating, and cleaning residential and commercial buildings and third parties’ and SASCO-owned fuel stations.

CapitalSASCO capital amounts to five hundred forty million Saudi Riyals (SAR 540,000,000) (fully paid up) divided into 54,000,000 shares, each with a nominal value of SAR 10.

The Fiscal YearSASCO fiscal year ends on December 31st of each calendar year.

Auditor for the year 2017Office Allied Accountants - Chartered Accountants and Auditors

Investment RestrictionsThere are no restrictions on SASCO listed shares as stated in Article (14), sub-paragraphs (A/3) and (A/4) of the Rules for Qualified Foreign Financial Institutions Investment in Listed Shares amended by CMA Board of under Resolution No. (1-3-2018), dated 22/4/1439 AH, corresponding to 9/1/2018 AD.

Additional Information`f Please visit SASCO website: (www.sasco.com.sa)`f Please read SASCO profile on Tadawul website:(www.tadawul.com.sa) under code (4050)`f SASCO International Code (SA0007870070).


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Main Business Sectors

Main Business Sectors

Retail sector is the main sector manging all its stations. It also provides fuel, renting, café and restaurant services.

SASCO Palm CompanyIt 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.

SASCO Al-Waha CompanyIt manages of all SASCO motels spread nationwide in addition to super 8 hotels.

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.

Saudi Automobile & Touring AssociationIt 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.

Auto & Equipment Investment CompanyIt was established with the aim to independently manage SASCO investment activities. It possesses 7,94% of the capital of Middle East Battery Company (MEBCO).

Al Nakhla Al Oula Contracting CompanyIt 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)

Zaiti Petroleum Services CompanyIt builds, manages and operates fuel stations. It also possessing and manages many stations spread in the Central and Southern Provinces.


Plans andDecisions

Plans and Decisions

The Strategic Plan

Proceeding from the strategic plans adopted by the Board of Directors in its ninth session (June 30th, 2009 - June 29th, 2012) and tenth session (June 30th, 2012 - June 29th, 2015), and after a specialized third party reviewed the strategic plan within SASCO Governance and Strategy Evaluation Project, as well as restructuring posts and job descriptions and setting the powers of each function, the Board of Directors in its eleventh session (June 30th, 2015 - June 29th, 2018) adopted a comprehensive development business strategy that includes SASCO financial, administrative, and operational position.

The Board considered the priorities in achieving the goals set in the plan, whether they are qualitative, quantitative, administrative, or regulatory. The development strategic business plan included a list of these goals in addition to a mechanism to control it and measure the achieved performance periodically.

Main considerations of SASCO strategy considered were as follows:`f To identify the items in previous strategies that would remain appropriate and existing for the coming years.`f To identify the items in the previous strategies that require updating or amendment, which fits with the coming years.`f To define the way through which SASCO can manage its existing assets effectively.`f To determine the human resources required to support growth.`f To work towards providing excellent services in terms of value added and maintaining SASCO competitive position.`f To identify strengths, weaknesses, opportunities, and threats.

The most important objectives of the developmental plan are as follows:`f Conducting a comprehensive market study for all sectors of SASCO and its subsidiaries. `f Accelerating the decentralization plan to reduce costs, improve profitability, and increase operational efficiency.`f Expanding and penetrating the market through strategic partnerships and acquisitions.`f Providing logistics services and a comprehensive distribution network.`f Concentrating on customer satisfaction.`f Providing value-added services and innovative products.`f Taking advantage of technology to facilitate service provision.`f Concentrating on social responsibility.`f Continuing the development of the quality of services provided.`f Building a network of stations inside and outside cities so that SASCO be among the three largest companies operating in this field.`f Continuing the development of stations, rest houses, and service centres on highways.`fDeveloping the transport fleet in line with the increasing number

of SASCO sites and the transport market in the Kingdom.`f Establishing new alliances with international and leading companies operating in service sectors associated with the activities of SASCO and its subsidiaries.`f Applying the concept of total quality (TQ) to all SASCO sectors.`fDeveloping services provided by Saudi Automobile and Touring Association, increasing market share in Trip-Tik and international licenses sales, and activating its activity in the field of motor sport.`f Activating the role of subsidiaries.`f Strengthening control over operation and service quality.`fMaintaining the competitive position of Saudi Automobile and Touring Association.`f Enhancing SASCO financial efficiency.`fDisassociating from unexploited assets.`f Continuing distribution of dividends to shareholders.`f Continuing the utilization of technology and service automation.`f Attracting distinctive administrative expertise and competencies.

The most important objectives achieved are as follows:`f Increasing the number of stations as per SASCO expansion policy.`f Continuing to develop the existing sites according to SASCO identity to cope with customer expectations.`f Continuing to conduct general maintenance of all facilities at SASCO installations.`f Continuing the establishment of strategic partnerships to raise the level of service provided to enhance customer satisfaction.`f Branding the services offered by SASCO within its sites.`f Continuing the distribution of dividends to shareholders.`f Building a distinct work team.`f Saudizing jobs and maintaining the green zone of SASCO and its subsidiaries according to the rating of Nitaqat Program issued by the Ministry of Labour.`f Continuing to develop SASCO Enterprise Resource Planning (ERP) System.`fDeveloping the operational and administrative systems for all SASCO business units.`fMotivating employees and creating a distinguished work environment.`f Continuing the dissociation from some untapped assets to enhance profitability and provide funding sources.`f Signing Sharia-compliant credit facility agreements with local and international banks.`f Social engagement.

The 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

`f Expanding SASCO sites according to well-studied plans with the

aim to develop the network in sites of distinct investment income.

This includes running the competitions offered by different

government bodies in addition to investment opportunities

available by non-governmental bodies (individuals, institutions,

bodies and corporations).

`f Establishing new sites in favor of SASCO Palm Co. inside and

outside cities.

`f Continuing the development of all sites and establishing new sites

carrying SASCO identity.

`f Establishing new strategic partnerships with service provision

companies in the sites to continue to provide distinct services to

customers.

`f Continuing to negotiate with local banks in order to conclude

facility agreements of distinguished conditions to SASCO.

`f Expanding the field of transport to third parties (water transport,

fuel transport, dry transport) and increasing the number of fleet

trucks.

`fOpening and developing motels carrying SASCO Al-Waha Co.

trademark.

`f Finding new sale outlets to customs transit books and international

driving licenses.

`fDeveloping the services provided by Saudi Automobile and Touring

Association (SATA) and expanding its business.

`f Activating the granting of commercial franchise to diffrent sites.


Most Importantالخطط والقراراتAchievements in 2017

Statement 2013 2014 2015 2016 2017

Operating-Owned 23 31 35 32 34

Non-operating-Owned Sites 20 16 17 20 18

Non-Owned Sites 87 90 153 161 168

Total 130 137 205 213 220

The annual growth rate 2.36% 5.38% 49.64% 3.90% 3.29%

0

2013

50

2014

100

2015

150

2016

200 250

2017

Operating & leased sitesUnder Construction SitesStopped Stopped for Development

89 38

34

37

34

15

18

20

85

147

146

3

3

3

13

The most important achievements during the year 2017At the Level of Network Expansion and Development

`❖ Completing the establishment of (6) sites according to SASCO

identity, and (1) site according to Zaiti Petroleum Services

Company identity. Following are the most important sites:

`❖ SASCO Plus station on Mecca-Jeddah highway (El-Zaidy District)

in Mecca City.

`❖ SASCO Plus station on King Fahd International Airport in

Dammam inside the airport campus.

`❖ A station in Zalim area on Riyadh-Taif Road.

`❖ Continuing to develop many existing sites inside and outside

cities according to SASCO. (11) 7 sites were developed according

to SASCO identity and (4) sites according to Zaiti Petroleum

Services Company identity while work is underway to develop

the rest of sites according to the established development plan.

Following are the most important sites:

`❖ SASCO Plus station on Al Huda-Mecca road (Remal District).

`❖ SASCO Plus station on Al Qasim-Riyad road in Qasim area at the

beginning of the road leading to Riyadh City.

`❖ A station on Sail Road (Taif/Mecca).

`❖ A station in Rafha’a Governorate on Hafr Al Batin/Rafha’a road.

`❖ Running many government competitions related to

establishing and operating fuel stations and service centers.

`f Acquiring (1) site in the Central Province.

`f Acquiring (8) sites in in the Western Province.

`f Acquiring (2) sites in the Central Province and (1) site in the Southern

Province in favor of Zaiti Petroleum Services Company.

`f Expanding dry transport through contracting with several

customers and companies and continuing to transport fuel and

water to third parties.

`f Purchasing (15) new trucks supporting SASCO fleet.`f Purchasing (6) fuel tanks in addition to (15) containers to transport

goods.

`fOpening Abu Hadreya, Al Adeed, Shalalha and Akhal motels for SASCO Al-Waha Co.

The following table shows a summary of the number of sites

(operating and under construction) depending on the nature of

ownership (including Zaiti sites):

3012158 20


Site Distribution

(SASCO & Zaiti)

Northern Province

Central Province

Western Province

Eastern Province

Southern Province

8 %

57 %

13%

18%

4%

0

2013

10

2014

20

2015

30

2016

40 50 60

2017

Purchase during year Owned & Under Construction Owned & Existing

24 19

15

16

15

15

37

37

28

34

4

2

Owned Sites

At Business Development Level`f Continuing to study the options of selling some of SASCO owned

sites and leasing them for long periods. Negotiations are still

underway with a number of financial institutions and investment

companies with the aim to obtain offers matching SASCO interests

and goals.

`f Renewing SASCO qualification certificate to manage, operate and

maintain fuel stations and service centers on the regional roads.

`f Preparing feasibility studies for the projects SASCO wants to

undertake after the final approval of these studies.

`f Following-up with the Consulting Office to develop the designs

necessary for SASCO new headquarters.

`f Continuing to sign many agreements with international restaurant

and café companies to enhance services provided to SASCO clients

and to achieve a qualitative and quantitative shift for all its sites

inside and outside cities towards the realization of SASCO approach

to develop the station and rest house sector in the Kingdom.

`f Continuing the update of the website of SASCO and its subsidiaries.

`fDeveloping SASCO application on smart phones (Apple and

Android).

`f Starting Saudi Automobile & Touring Association, SATA, to issue

international driving licenses via its website.

`f Contracting with more companies and tourist companies at “Super

8” hotel in Riyadh.

`f

At the Level of Finance, Service Quality, andFinancial & Operational Control`f Approval of SASCO final accounts and Board of Directors’ Report.

`f Finalizing all stages of shifting to the International Financial

Reporting Standards (IFRS) and issuing financial statements in

consistency with such standards.

`f Registering and its subsidiaries in the value-added tax and issuing

a VAT Group Registration Certificate.

`f Continuing in Al Ahli Capital portfolio which is run by Mulkia

Investment Co. within the limits of the agreement previously

concluded with it.

`f Renewing and amending the credit facility agreement concluded

with the Saudi British Bank (SAB).

`f Approval of the 2016 budget.

`f Finalizing the procedures of increasing SASCO Al-Waha Co. from SR

500,000 to SR 5000,000.

`f Continuing to develop SASCO ERP system to achieve SASCO

objectives.

`f Following up the implementation of fuel pump and tank

automation project and using smart cards and RFID system Project

with an international company specialized in fuel stations.

`fOpening new sale outlets for the Saudi Automobile and Touring

Association (SATA).

`f Continuing preventive and periodic maintenance of SASCO sites in

a way that does not hinder the planned development works within

Corporate Identity Application Project.

`fUnderwriting in several companies that offered their shares for

subscription through SASCO investment portfolio managed by

Saudi Fransi Capital Company under the CMA-approved Portfolio

Management Agreement.

`f Following up the evaluation of SASCO risks by a third party that

submits periodic follow-up reports to the concerned bodies.

`f Improving the electrical recommendation and redistributing loads

in SASCO sites to reduce electricity costs and limit electrical faults.

`fUsing LED lighting to lower the consumption of electrical power

and reduce operating expenses.

`f Establishing two water desalination plants in Halban rest house

and Batha’a rest house to reduce water import costs.

`fDigging and operating 14 water wells to reduce purchase costs.

`fGranting “Super 8” Hotel Riyadh the Excellence Certificate Prize

provided by Booking website for being one of the best hotels in

terms of guest satisfaction for the year 2016.

`fHonouring “Super 8” Hotel from the Technical and Vocational

Training Corporation (TVTC) on the margin of the Annual Heritage

& Culture Festival (Janadriyah Festival 31).


this is the Green Time

`f Learn Early Campaign, in consistency with the Royal Decree of Women Driving. An infographic was posted on SASCO twitter website in the form

of an educating photograph along with a competition.

`fMinutes Equal Years Campaign. It is an awareness campaign on the benefits of breast cancer early testing posted on SASCO twitter account.

`f An awareness campaign on traffic safety vi twitter account of Saudi Automobile & Touring Association.

At the Level of Organizational and Administrative Development`f Approval of the General Assembly to amend SASCO Articles of

Association in accordance with the new Companies Law.

`f Appointing a vice chairman in implementation of Article 24 of

SASCO Articles of Association which provides that the Board of

Directors shall appoint, from among its members, a Vice Chairman.

`f Continuing to activate governance regulations and increasing

transparency and disclosure.

`fUpdating, preparing and approving the required regulations,

policies and standards from the supervisory authorities.

At the Level of Corporate Social Responsibility (CSR):SASCO provides many services including:`fMosque service in different sites inside and outside cities and on

highways.

`fHajj and Omra service.

`f Free toilet service.

`f Paying attention to health and cleanliness.

`f Paying attention to environment.

`f Providing camps during Hajj in some of its sites on the highways.

At the Level of Marketing Activities and Social MediaContinuous update of the website of SASCO and its subsidiaries

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

on the following links:

`fwww.sataclub.com.sa

`f https://twitter.com/sasco_ksa

`f https://twitter.com/SATAclub

`f https://twitter.com/sasco_palm

`f https://twitter.com/Super8R

`f https://www.facebook.com/SaudiAutomotiveServicesCo/?fref=ts

`f /https://www.facebook.com/Sataksa_

`f /https://www.facebook.com/sasco-palm-613438065491715_

`f https://www.facebook.com/Super-8-Hotel-/

Riyadh-1777669312470879

`f http://instagram.com/sasco_ksa_

`f http://instagram.com/sata_ksa_

`f http://instagram.com/sasco_palm_

`f http://instagram.com/super8.riyadh_

`f http://cutt.us/dxrT_

`f https://plus.google.com/117174656605659302922_

`fwww.youtube.com/sasasco

`fwww.flickr.com/photos/sasco

`fUpdating all Articles of Association of subsidiaries according to the

Companies Law.

`f Following up and applying any new legislations issued by the

competent bodies.

`f Continuing to attract qualified cadres to meet SASCO need of

various administrative functions, especially in leadership positions.

`fDeveloping training programs for all administrative levels.

`f Continuing Saudization of jobs and preserving SASCO and its

subsidiaries classification within the green zone.

To update SASCO application on (iOS / Android) smart phones.

`f https://appsto.re/sa/BVIaH.i

`f https://appsto.re/sa/Hg1Ocb.i

Organizing many marketing campaigns and competitions for SASCO

customers and granting prizes to winners.

`f SASCO Thursday Competition.

`fNew Reasons for Stopping Campaign.

`f SASCO Plus Campaign.

`f Best Moment Competition.

`f Captain Kareem Competition.

`f SASCO Fawazeer in Ramadan.

`f Express Your Homeland Competition.

`f Learn Early Campaign.

`f Breast cancer early testing.

`f Your Speed is Waste Campaign.


Board of Director’sالخطط والقراراتand Committees

Board of Director’s and Committees

Board FormationThe Board of Directors was entrusted with SASCO management it the eleventh session as of 30/6/2015 for a period of three years ending on 30/6/2018. Members’ Classification

No. Name Position Membership Category

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

2 Mr. Sultan bin Mohammed Al-Hudaithi Vice Chairman – Managing Director - Member of Executive Committee Executive

3 Mr. Nasser bin Abdullah Al-Awfi Board Member – Head of Audit Committee Non-Executive

4 Mr. Suleiman bin Ali Al-Khudair Board Member – Member of Audit Committee Non-Executive

5 Mr. Ajlan bin Abdulrahman Al-Ajlan Board Member – Chairman of Nomination and Remuneration Committee Independent

6 Mr. Majid bin Mohammed Al-Othman Board Member – Member of Nomination and Remuneration Committee Non-Executive

7 Mr. Riyadh bin Saleh Al-Malik Board Member – Member of Executive Committee - CEO Executive

8 Mr. Ali bin Mohammed Aba Al-Khail Board Member – Member of Nomination and Remuneration Committee Independent

9 Mr. Fawaz bin Suleiman Al-Rajhi Board Member – Member of Audit Committee Independent


Description

Fixed Remuneration Changing Remuneration

Inde

mni

ty

Gra

nd to

tal

Expe

ndit

ure

Allo

wan

ce

Cert

ain

amou

nt

Allo

wan

ce fo

r att

endi

ng B

oard

m

eeti

ngs

Tota

l allo

wan

ce fo

r att

endi

ng

com

mit

tee

mee

ting

s

In k

ind

bene

fits

Rem

uner

atio

n of

tech

nica

l, ad

min

istr

ativ

e or

cons

ulti

ng

wor

ks

Rem

uner

atio

n of

Cha

irm

an,

man

agin

g D

irec

tor o

r Sec

reta

ry

if he

is a

Boa

rd m

embe

r

Tota

l

Profi

t rat

io

Peri

odic

rem

uner

atio

n

Shor

t-te

rm in

cent

ive

plan

s

Long

-ter

m in

cent

ive

plan

s

Gra

nted

shar

es

Tota

l

First: Independent Members

Mr. Ajlan bin

Abdulrahman Al-Ajlan

-

12,0

00

9,00

0

- - -

21,0

00 - - - - - - -

21,0

00 -

Mr. Ali bin Mohammed

Aba Al-Khail

-

6,00

0

6,00

0

- - -

12,0

00 - - - - - - -

12,0

00 -

Mr. Fawaz bin Suleiman

Al-Rajhi

-

9,00

0

3,00

0

- - -

12,0

00 - - - - - - -

12,0

00 -

Total -

27,0

00

18,0

00 - - -

45,0

00 - - - - - - -

45,0

00 -

Second: Non-Executive Members

Mr. Ibrahim bin

Mohammed Al-Hudaithi

-

12,0

00

9,00

0

- - -

21,0

00 - - - - - - -

21,0

00 -Mr. Nasser bin Abdullah

Al-Awfi

-

12,0

00

18,0

00 - - -

30,0

00 - - - - - - -

30,0

00 -

Mr. Suleiman bin Ali Al-

Khudair

-

12,0

00

18,0

00 - - -

30,0

00 - - - - - - -

30,0

00 -

Mr. Majid bin

Mohammed Al-Othman

-

9,00

0

6,00

0

- - -

15,0

00 - - - - - - -

15,0

00 -

Total -

45,0

00

51,0

00 - - -

96,0

00 - - - - - - -

96,0

00 -

Third: Executive Members

Mr. Sultan bin

Mohammed Al-Hudaithi

-

12,0

00

9,00

0

- - -

21,0

00

1,000

,000

- - - - - -

1,021

,000

32,8

95

Mr. Riyadh bin Saleh

Al-Malik

-

12,0

00

12,0

00 - - -

24,0

00 - - - - - - -

24,0

00

30,2

52

Total -

24,0

00

21,0

00 - - -

45,0

00

1,000

,000

- - - - - -

1,045

,000

63,14

7

Statement

Fixed Remuneration Changing Remuneration

Inde

mni

ty

Tota

l rew

ard

exec

utiv

es fo

r

the

Coun

cil i

f any

Gra

nd to

tal

Sala

ries

Allo

wan

ces

In k

ind

bene

fits

Tota

l

Peri

odic

Rem

uner

atio

ns

Profi

ts

Shor

t-te

rm in

cent

ive

plan

s

Long

-ter

m in

cent

ive

plan

s

Gra

nted

shar

es

Tota

l

Total

3,43

3,57

2

1,050

,552

-

4,48

4,12

4

1,025

,418

- - - -

1,025

,418

384,

750

-

5,89

4,29

2

Remunerations Paid to Committee Members

The following statement shows the payments to committee members in 2017:

Statement Fixed remunerations except

meeting attendance allowance

Meeting attendance

allowanceTotal

Executive Committee Members

Mr. Ibrahim bin Mohammed Al-Hudaithi - 9,000 9,000

Mr. Sultan bin Mohammed Al-Hudaithi - 9,000 9,000

Mr. Riyadh bin Saleh Al-Malik - 9,000 9,000

Total 27,000 27,000

Audit Committee Members

Mr. Nasser bin Abdullah Al-Awfi 50,000 18,000 68,000

Dr. Abdulrahman bin Ibrahim Al-Hamid 80,000 18,000 98,000

Mr. Suleiman bin Ali Al-Khudair 50,000 18,000 68,000

Mr. Fawaz bin Suleiman Al-Rajhi 37,500 3,000 40,500

Total 217,500 57,000 274,500

Remuneration & Nomination Committee Members

Mr. Ajlan bin Abdulrahman Al-Ajlan - 9,000 9,000

Mr. Majid bin Mohammed Al-Othman - 6,000 6,000

Mr. Ali bin Mohammed Aba Al-Khail - 6,000 6,000

Mr. Riyadh bin Saleh Al-Malik

Membership to expire on 6 June 2017- 3,000 3,000

Total - 24,000 24,000

Allowances and Remunerations Paid to Board Members and Senior

ExecutivesThe following statement shows the payments to Board members in 2017:

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 CFO during 2017:


No. Member Name

Number of Meetings (4)Attendance

RatioMeeting No. (1) 08/03/2017

Meeting No. (2)30/05/2017

Meeting No. (3) 10/10/2017

Meeting No. (4)26/12/2017

1Mr. Ibrahim bin Mohammed Al-

Hudaithi✔ ✔ ✔ ✔ 100%

2Mr. Sultan bin Mohammed Al-

Hudaithi✔ ✔ ✔ ✔ 100%

3 Mr. Nasser bin Abdullah Al-Awfi ✔ ✔ ✔ ✔ 100%

4 Mr. Suleiman Ali Al-Khudair ✔ ✔ ✔ ✔ 100%

5 Mr. Ajlan Abdulrahman Al-Ajlan ✔ ✔ ✔ ✔ 100%

6Mr. Majid bin Mohammed Al-

Othman✔ ✔ ✔ Apologized 75%

7 Mr. Riyadh bin Saleh Al-Malik ✔ ✔ ✔ ✔ 100%

8 Mr. Ali bin Mohammed Aba Al-Khail Apologized Apologized ✔ ✔ 50%

9 Mr. Fawaz Suleiman Al-Rajhi Apologized ✔ ✔ ✔ 75%

No. Request Date Request Reasons

1 11/01/2017 Following up the change in Shareholders Register

2 07/05/2017 Eleventh Extraordinary General Meeting (first meeting)

3 06/06/2017 Eleventh Extraordinary General Meeting (second meeting)




7 24/12/2017 Thirty sixth Ordinary General Meeting

Remuneration PolicyAccording to the payments made to the Board members, formed committees and senior executives, the most important clauses of the Remuneration Policy are as follows:`f paying (3) thousand Saudi Riyals (per each member / per meeting ) for board meeting attendance. `f Paying an annual remuneration to the Managing Director. It shall be determined by a board resolution upon a recommendation from the Remuneration Committee. The resolution is renewed at the outset of each board session (3% of net profits at the end of each fiscal year, being not less than SR 1000,000).`f Paying a meeting attendance allowance of SR (3) thousand (per each member/per one meeting) to committee members.`f Paying an annual remuneration of SR 80,000 to a non-board Audit Committee member.`f Paying an annual remuneration of SR 50,000 to a board Audit Committee member.`f Paying an annual remuneration to the CEO according to a mechanism that pays attention to quantitative and qualitative performance in accordance with his employment contract. Such mechanism shall be approved by the Remuneration Committee by a recommendation from the Managing Director.`f Senior Executives’ remuneration is paid according to the Staff

Board Declarations`f Account records were properly prepared.

`f The Internal Control System was established on sound foundations

and implemented effectively.

`f There is no doubt in SASCO ability to continue its activities.

Board Confirmations`fNo Board member or a senior executive waived any salary or

remuneration under any arrangements or assignment agreement.

No shareholder waived any rights to profit under any arrangements

or assignment agreement.

`f There is no description of classes and numbers of transferable

debt instruments, contractual securities, rights memorandum, or

similar rights issued or granted by SASCO during the current fiscal

year. There is no compensation gained by SASCO in return for this.

`f There is no description of any transfer or underwriting rights

under transferable debt instruments, contractual securities, rights

memorandum, or similar rights issued or granted by SASCO.

`f SASCO did not recover, purchase, or cancel any recoverable debt

instruments.

`f SASCO did not establish any investments or reserves in the interest

of its employees.

`f SASCO did not receive from shareholders possessing 5% or more

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

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

current fiscal year. ❖ No member has submitted a written request to hold a board meeting in 2017 and no member has objected to the Board’s agenda and

resolutions (including resolutions passed by circulation).

Incentives, Bonuses and Commissions Policy Manual in a manner that does not conflict with their employment contracts. A remuneration shall be approved before being paid by the Remuneration after obtaining the Board’s recommendation.

The Remuneration Policy of Board members, formed committees and senior executives, which was approved by the Thirty Sixth Ordinary General Meeting held on 24 Dec. 2017, can be accessed via SASCO website (www.sasco.com.sa).

Deviation from Remuneration PolicyThere is no deviation between the granted remunerations, whether paid to Board members, committees or senior executives, and the applicable Remuneration Policy.

Board MeetingsThe Board Members dedicated a sufficient time to undertake their responsibilities and prepare for the Board meetings and committees. The Board was keen on scheduling its meetings and preparing the meetings in advance making sure that all board members attend the meetings and discuss all items of the proposed agenda.The following table shows the attendance record of Board meetings in 2017 (eleventh session):

Procedures taken by the Board to familiarize its members (non-executive in particular) with the shareholders’ proposals and remarks about SASCO performance.`f SASCO Investor Relation Department independently receives and

submits shareholders’ proposals, if any, to the Board for discussion

in its meetings and taking the appropriate resolution.

`f SASCO didn’t receive any proposals or remarks from shareholders

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

been discussed in the shareholders general meetings and included

in the minutes of meetings.

`f In case of any proposals or remarks on SASCO performance, such

proposals and remarks shall be discussed as part of the periodic

board meetings agenda.

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:


Agency Contracts/Business Related Parties StatementContract Duration

Reporting to Board

Reporting to General

Meeting

Nahaz In-vestment

Co.

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

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).

Contract Value is SAR

368,000 annually

One year ✔ ✔

DAKKIN Advertis-ing and Design Consul-tancy

Providing services in the field of promotion and advertising

Mr. Ibrahim bin Mohammed Al-Hudaithi(possessing 33.34% of capital).Mr. Majid bin Mohammed Al-Othman(possessing 33.33% of capital).Mr. Sultan bin Mohammed Al-Hudaithi(possessing 33.33% of capital).

Promotion and

advertising of SAR 63.9 thousand

One year ✔ ✔

Mulkia Invest-ment 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).

A contract to manage a portfolio

of SAR 50,000,000

To be termi-

nated by a 30-day written notice

✔ ✔

Nahaz In-vestment

Co.

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

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

Contract value is SR

800,000

For five renewable years as of 01/01/2013

✔ ✔

Madaen Star Real

Estate

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

Mr. Ibrahim bin Mohammed Al-HudaithiChairman of Madaen Star Real Estate (possessing a direct and indirect share of 97.75% of capital).Mr. Majed bin Mohammed Al-OthmanBoard member of Madaen Star Real Estate.Mr. Sultan bin Mohammed Al-HudaithiBoard member of Madaen Star Real Estate.


300,000One year ✔ ✔

Zawaya Real

Estate Co.


Mr. Ibrahim bin Mohammed Al-HudaithiChairman of Zawaya Real Estate Co. (possessing a direct and indirect share 42.96% of capital).Mr. Majid bin Mohammed Al-OthmanBoard member of Zawaya Real Estate Co.(possessing a share 0.29% of capital).Mr. Sultan bin Mohammed Al-HudaithiManaging Director of Zawaya Real Estate Co.(possessing a share 1.8% of capital).


400,000One year ✔ ✔


Reporting to Board


Meeting

Madaen Star Real

Estate


Mr. Ibrahim bin Mohammed Al-HudaithiChairman of Madaen Star Real Estate (possessing a direct and indirect share of 97.75% of capital).Mr. Majid bin Mohammed Al-OthmanBoard member of Madaen Star Real Estate.Mr. Sultan bin Mohammed Al-HudaithiBoard member of Madaen Star Real Estate.


800,000

Five renewable years from

29 April 2015

✔ ✔

Madaen Star Real

Estate




250,000One year ✔ ✔

Madaen Star Real

Estate


Mr. Ibrahim bin Mohammed Al-HudaithiChairman of Madaen Star Real Estate (possessing a direct and indirect share of 97.75% of capital).Mr. Majid bin Mohammed Al-OthmanBoard member of Madaen Star Real Estate.Mr. Sultan bin Mohammed Al-HudaithiBoard member of Madaen Star Real Estate.


150,000

Ten renewable years from

1 August 201

✔ ✔

Nahaz In-vestment

Co.

Nahaz Investment Co. purchases fuel from Zaiti Petroleum Services Company

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

The value of 2017 fuel purchases

was SR 98,600

One year ✔ ✔

Madaen Star Real

Estate

Madaen Star Real Estate purchases fuel from Zaiti Petroleum Services Company

Mr. Ibrahim bin Mohammed Al-HudaithiChairman of Madaen Star Real Estate (possessing a direct and indirect share of 97.75% of capital).Mr. Majid bin Mohammed Al-OthmanManaging Director of Madaen Star Real Estate.Mr. Sultan bin Mohammed Al-HudaithiBoard member of Madaen Star Real Estate.


was SR 199,700

One year ✔ ✔

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



Reporting to Board


Meeting

Mr. Majed Al-Othman

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

Mr. Majid bin Mohammed Al-Othman


was SR 9,400

One Year ✔ ✔

Zawaya Real Estate Co.

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



was SR 6,600

One Year ✔ ✔

Zawaya Real Estate Co.

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


2017 value was SR 25,000

One Year ✔ ✔

Fungate Co.

Fungate Co. rents 10 residential rooms at station No. 2.

Mr. Ibrahim bin Mohammed Al-HudaithiChairman of Fungate Co. (possessing a direct and indirect share of 97.75% of capital).Mr. Majid bin Mohammed Al-OthmanManaging Director of Fungate Co.Mr. Sultan bin Mohammed Al-HudaithiBoard member of Madaen Star Real Estate.

2017 value was SR 50,000

One Year ✔ ✔

✔ Reported.

`❖ All above contracts and business were approved for a coming year in the eleventh extraordinary general meeting held on 6 June 2017. The

renewal of the same shall be approved by the next shareholders’ general meeting.

`❖ These contracts and business have no preferential terms.

Executive Committee Includes:

Mr. Ibrahim bin Mohammed Al-HudaithiChairman | Head of Executive Committee Qualifications & Experiences:He is a businessman, holding the Secondary school certificate and having more than 36 years in corporate management. He occupied many 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-HudaithiVice 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 Master of Business Administration from London Business School. He held leading positions in many public and private companies in Saudi Arabia. He has experience in corporate restructure, strategic planning and investment management in securities, private ownership and real estate investment. He was a member of boards and committees in public and private companies including Saudi Chemical Co., 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. Riyadh bin Saleh Al-MalikBoard Member | Member of Executive Committee | Chief Executive OfficerQualifications & Experiences:He holds the Bachelor’s Degree in Business Administration from King Abdulaziz University. He has a vast experience in corporate management, particularly fuel stations. He served as the General Director of Al Tas’helat Marketing Company Ltd., Deputy General Director of Riyadh Development Company and board member of many companies. He is now the Head of Customs Council of Federation Internationale de l’Automobile and Head National Committee of Fuel Station Companies in the Council of Saudi Chambers.

Present Occupations: f Chairman of Al-Madaen Star Group. f Chairman of Mulkia Investment Co. f Board member of Nahaz Investment Co.

Previous Occupations: f Vice Chairman of the Saudi Chambers of

Commerce. f Chairman of Al Kharj Industrial Chambers of

Commerce. f Member of Al Kharj Governorate Local

Council. f Board member of Solidarity Company.

Present Occupations: f SASCO Managing Director. f Board member of United Wire Factories

Company (ASLAK) f Board member of Mulkia Investment Co. f Board member of Nahaz Investment Co.

Previous Occupations: f Chief Executive Director of Ibrahim bin

Mohammed Al-Hudaithi Investment Co. f Chief Executive Director of Zaiti Petroleum

Services Company. f Deputy Director General of Financial and

Administrative Affairs, Al-Madaen Star Group.

f Board member of Saudi Chemical Co.

Present Occupations: f SASCO Chief Executive Officer.

Previous Occupations: f General Director of Al Tas’helat Marketing

Company Ltd. f Deputy General Director of Riyadh

Development Company. f Director of Marketing Department of Saudi

Real Estate Company (Al Akaria). f Sales Director of Saudi Hotels & Resorts

Company.


No. Member NameNumber of Meetings (3)

Attendance RatioMeeting No. (1)

29/5/2017Meeting No. (2)

9/10/2017Meeting No. (3)

25/12/2017

1Mr. Ibrahim bin Mohammed Al-HudaithiHead of Committee

✔ ✔ ✔ 100%

2Mr. Sultan bin Mohammed Al-HudaithiCommittee member

✔ ✔ ✔ 100%

3Mr. Riyadh bin Saleh Al-MalikCommittee member

✔ ✔ ✔ 100%

✔`Personal attendance

Competencies and Duties`f To consider SASCO strategic and operational plans and budgets to submit them to the Board. `f To review and follow up the implementation of all SASCO projects, make decisions under Committee authorized powers, and to discuss the obstacles facing the implementation of different projects to examine their reasons and remedies and recommend proper solutions.`f To consider and present initial approvals to high importance issues that require Board decisions.`f To 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.`f To 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.

`f To follow up the implementation and development of SASCO

organizational structures and decisions that ensure the quick implementation and development thereof.`f To review the administrative regulations with SASCO management and make decisions that enable the management to put them in place.`f To contact senior officers at governmental and national bodies to facilitate the obstacles facing SASCO business and explain SASCO programs to them.`f To amend technical designs and specifications and present proper recommendations thereon.`f To make appropriate decisions on issues authorized by the Board to the Committee to discuss, address, and make appropriate decisions thereon.`f To perform all acts that would drive business and achieve SASCO objectives within the regulations, rules, and decisions issued by the Board.`f To conduct purchases and acquisitions of existing stations or lands for constructing stations thereon within the limits of SASCO competencies.`f To perform the activities referred by the Board or the Chairman for consideration or execution.

Most Important Achievements`f Following up the financial and operational performance of SASCO and its subsidiaries.`f Following up the acquisition of new sites for SASCO.`f Approving the estimated budgets of SASCO and its subsidiaries and submitting recommendations to the Board for approval.`f Evaluating SASCO investments and liquidity and submitting recommendations thereon to the Board.`f Coordinating with SASCO Management to find ways to reduce costs.`f Following the project of selling some sites and releasing them.

`f Following up the implementation of SASCO projects.`f Following up the approval of the Headquarters design.`f Following up SASCO lawsuits.`f Following up the governmental bodies concerned with SASCO lands and sites and submitting recommendations thereon.

MeetingsThe following table shows the attendance record of Executive Committee meetings during 2017 (eleventh session):

Mr. Nasser bin Abdullah Al-AwfiBoard Member | Chairman of Audit CommitteeQualifications & Experiences:He holds the Master’s Degree in Accounting, the 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 has more than thirty years of experience as well as in the joint stock companies management as well as financial, administrative and strategic consultation. He also participated in many shareholding companies’ board and board committees (Audit Committee) such as Al Jouf Agricultural Development Company (JADCO), Taiba Holding Company and United Cement Industrial Company.

Dr. Abdulrahman bin Ibrahim Al-HamidMember of Audit Committee (Non-Board member)Qualifications & Experiences:He holds PhD in financial accounting and audit from Louisiana State University, USA. He has experience of more than 37 in accounting and auditing. He worked as a professor of accounting and auditing and was then appointed head of the Accounting Division in King Saud University. He is a member of Saudi Organization for Certified Public Accountants. He was member of many boards and committees and member of several local, regional and international professional societies.

Mr. Suleiman bin Ali Al-KhudairBoard Member | Member of Audit CommitteeQualifications & 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 Defense. 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.He participated in boards of many joint stock companies.

Mr. Fawaz bin Suleiman Al-RajhiBoard Member | Member of Audit CommitteeQualifications & 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 Chairman 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

Present Occupations: f Board member and Head of Audit Committee of

United Cement Industrial Company. f Head of Al Jouf Agricultural Development Company

Audit Committee. f Head of Saudi Ceramics Audit Committee. f Member of Taiba Holding Company Audit

Committee.Previous Occupations:

f Director of Financial, Administrative and Investment Department of Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO).

f Deputy General Director for Financial and Administrative Affairs of Saudi Livestock Trading Company.

f General Director for Financial and Administrative Affairs of Taiba Investment and Real Estate Development Company.

Present Occupations: f Board member of several joint stock companies. f Member of many committees (Audit Committee) f Member of several local, regional and international

professional societies.Previous Occupations:

f Professor of accounting and auditing in King Saud University.

f Head of Accounting Division in King Saud University.

f Member of Saudi Organization for Certified Public Accountants.

Present Occupations: f General Director of Nahil Computers Co.

Previous Occupations: f Technical Director of Nahil Computers Co. f Sales Director of Nahil Computers Co. f Deputy General Director of Nahil Computers Co.

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:

f Chairman of AlRajhi United Investment Holding Company.

f Chief Executive Officer of AlRajhi United Investment Holding Company.

Previous Occupations: f Head of Private Placement Operations in Al Rajhi

Capital Company. f Director of Sales and Distribution in Al Rajhi

Capital Company. f Head of Corporate Banking Services Team in Rajhi

Bank. f Senior credit analyst in Rajhi Bank. f System Analyst of Procter & Gamble Co.

Audit Committee Includes:


No. Member Name

Number of Meetings (6)Attendance

RatioMeeting

No. (1)17/1/2017

Meeting No. (2)

8/3/2017

Meeting No. (3)

9/5/2017

Meeting No. (4)

26/7/2017

Meeting No. (5)

18/10/2017

Meeting No. (6)

26/12/2017

1Mr. Nasser bin Abdullah Al-Awfi

Committee Head✔ ✔ ✔ ✔ ✔ ✔ 100%

2Dr. Abdulrahman bin Ibrahim Al-Hamid

Non-Board Member✔ ✔ ✔ ✔

By

telephone✔ 100%

3Mr. Suleiman bin Ali Al-Khudair

Committee member✔ ✔ ✔ ✔ ✔ ✔ 100%

4Mr. Fawaz bin Suleiman Al-Rajhi

Committee member

Date of committee membership:

6/6/2017

By

telephoneApologized ✔ 66.67%

Competencies and Duties`f To 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.

`f To 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.

`f To review any important or unfamiliar issue contained in the

financial reports.

`f To accurately consider any issues raised by Chief Financial Officer,

the persons assuming his duties, compliance officer or account

auditor.

`f To verify accounting estimations in major issues of financial

reports.

`f To review SASCO accounting policies and present opinions and

make recommendations thereon to the Board.

`f To study and review systems of financial internal systems and risk

management.

`f To consider internal audit reports and follow-up the implementation

of corrective procedures regarding the rema rks so raised.

`f To submit recommendation to the Board of the need to hire an

internal auditor.

`f To submit recommendation to the Board concerning the

appointment and remuneration of Internal Audit Department

director or the internal auditor.

`f To 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.

`f To recommend to the Board the appointment of account auditors,

dismiss them, set their fees, assess their performance, make sure

of independence and review their scope of work and employment

conditions.

`f To ensure that the account auditor is independent, just, fair and

efficient, taking into account relevant rules and standards.

`f To 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.

`f To Respond to the auditor’s questions.

`f Study the auditor’s report and remarks on the financial statements.

`f To review the results of supervisory reports and ensure SASCO takes

the required procedures.

`f To verify SASCO complies with the relevant laws, regulations and

policies.

`f Review contracts and transactions to be concluded by SASCO with

related parties and present recommendations thereon to the

Board.

`f Submit to the Board the issues and matters for which necessary

actions should be taken and recommend proper procedures.

Most Important Achievements`f Approval and follow-up of SASCO internal audit action plan.

`f Reviewing the different internal audit reports and submit

recommendations thereon.

`f Following up risk assessment report with a consulting office and

submit recommendations thereon.

`f Examination of annual and quarterly financial statements and

submit recommendations thereon.

`f Reviewing reports of Zakat declarations.

`f Ensuring the independency of SASCO external auditor.

`f Recommending SASCO chartered accountants.

`f Examining the structure of Internal Audit Department and submit

recommendations thereon.

`f Following up opening balances related to shifting to the

International Accounting Standards.

MeetingsThe following table shows the attendance record of Audit Committee

meetings during 2017 (eleventh session):


Mr. Ajlan bin Abdulrahman Al-AjlanBoard Member | Chairman of Nomination andRemuneration CommitteeQualifications & Experiences:He holds the Bachelor’s Degree in Industrial Management from Central Washington University. He has more than twenty five years of experience in the field of industrial investment. He participated in many joint stock companies’ board such as Drake & Scull International KSA and Fawaz Abdulaziz Al Hokair Co.

Mr. Majid bin Mohammed Al-OthmanBoard Member | Member of Nomination and Remuneration CommitteeQualifications & Experiences:He is a businessman, holding the Secondary school certificate and having more than thirty 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 Zawaya Real Estate Co.

Mr. Ali bin Mohammed bin Ali Aba Al-KhailBoard Member | Member of Nomination and Remuneration CommitteeQualifications & Experiences:He holds the 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 Chairman of the Board of Directors of Sanad Investment Company.

Present Occupations: f Board member in Fawaz Abdulaziz Al Hokair Co. f Board member in Drake & Scull International KSA. f Board member in Gulf Insulation Group “GIG”.

Previous Occupations: f Board member in Saudi Lamino Co. Ltd. f Board member in Olayan Food Services Company. f Board member in Rana Investment Company (RIC). f Board member in Indian Company for Co-Operative

Insurance.

Present Occupations: f Chairman of Al-Madaen Star Group. f Chairman of Fun Gate Company. f Managing Director of Al-Madaen Star Group.

Previous Occupations: f General Director of Al-Madaen Star Group for

Contracting. f General Director of Al-Madaen Star Group for

Automobile Services.

Present Occupations: f Vice Chairman of the Board of Directors of Sanad

Investment Company.Previous Occupations:

f Deputy Director of the Political Affairs Department of the Royal Diwan.

f Administrative counsellor in the High Commission for Administrative Organization.

Nomination and Remuneration CommitteeIncludes:


No. Member Name

Number of meetings ( 3 )

نسبة الحضورMeeting No. (1)

23/5/2017Meeting No. (2)

20/9/2017Meeting No. (3)

13/12/2017

1Mr. Ajlan Abdulrahman Al-Ajlan

Chairman of the Committee✔ ✔ ✔ 100%

2Mr. Majid bin Mohammed Al-Othman

Committee member

Date of

membership

7/6/2017

✔ ✔ 100%

3Mr. Riyadh bin Saleh Al-Malik

Committee member✔ Membership to expire on 6/6/2017 100%

4Mr. Ali bin Mohammed Aba Al-Khail

Committee member✔ Apologized ✔ 66.67%

No. Name

Ownership Percentage

Beginning of period Change December 31st, 2017 Change Ratio

1 Nahaz Investment Co.11.75%

(6,348,046 shares)-

11.75%(6,348,046 shares)

-

2 Mr. Ibrahim bin Mohammed Al-Hudaithi11.56%

(6,245,352 shares)-

11.56%(6,245,352 shares)

-

❖ Declaration: with respect to notices related to ownership of large shares and their change during the year according to Article 43 and

Article 45 of Registration and Listing Rules issued by the Capital Market Authority (CMA), SASCO would like to advise you 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).

Competencies and Duties`f To develop clear policies for remunerations and rewards of Board

members, board committees and senior executives and present

such policies to the Board for consideration and approval by the

General Meeting. Performance-related criteria when setting those

policies should be employed.

`f To define the relation between paid remunerations and the

applicable remuneration policy and clarify any major deviation.

`f To conduct periodic review of the remuneration policy and assess

to what extent it is efficient in achieving the desired outcomes.

`f To recommend to Board the remunerations and rewards of Board

members, board committees and senior executives according to

the approved policy.

`f To propose clear membership policies and criteria in Board and

Executive Management.

`f To 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

crime involving moral turpitude and dishonesty.

`f To prepare a description of capabilities and qualifications required

for Board membership and occupying administrative management

positions.

`f To set the time a member should devote to Board works.

`f To conduct an annual review of the required needs in terms

of adequate Board membership skills executive management

functions.

`f To review the structure of the Board and senior executive

management in SASCO, as well as make recommendations

regarding changes that can be made.

`f To ensure the independence of the independent members and the

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

of another company’s board on a regular basis.

`f To develop a description of executive and non-executive members,

independent members and senior executives.

`fDevelop procedures for the case where one position of a board

member or a senior executive falls vacant.

`f To identify weaknesses and strengths in the Board and propose

solutions in line with SASCO best interests.

Most Important Achievements`f Approval of policies and regulations according to governance

requirements.

`f Periodical review of Board structure.

`f Ensuring the independence of Board members.

`f Looking at the reporting of transactions and contracts in which a

Board member may have an interest.

`f Approval of 2016 remunerations and incentives.

`f Adopting the 2017 quarterly incentives and remunerations

according to the approved policies.

`fObtainment of Board approval of the Committee’s 2018 plan.

MeetingsThe following table shows the attendance record of the Nomination

and Remuneration Committee meetings in 2017 (eleventh session):


Ownership of Substantial SharesThe following table shows the bodies holding substantial shares in SASCO and the changes made during 2017:


Nam

e

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

Companies in which Board member was ontheir previous boards or of their

Name of CompanyInside/outside the Kingdom

Legal entityListed/unlisted joint

stock/limited liability company

Name of Company

Inside/outside

the Kingdom

Legal entityListed/unlisted

joint stock/limited liability company

Mr.

Ibra

him

bin

Moh

amm

ed A

l-Hud

aith

i

Al-Madaen Star Group Inside KSAUnlisted joint stock

companySolidarity Company

Inside KSA

Listed joint stock company

Akwan Real Estate Inside KSAUnlisted joint stock

company

Ibrahim bin Mohammed Al-Hudaithi Investment

Co.Inside KSA

Unlisted joint stock company

Zawaya Real Estate Co. Inside KSAUnlisted joint stock

company

Nahaz Investment Inside KSAUnlisted joint stock

company

Bilda Specialized Commercial Centers Co.

Inside KSAUnlisted joint stock

company

Mulkia Investment Co. Inside KSAUnlisted joint stock

company

DAKKIN Advertising and Design Consultancy

Inside KSA Limited liability

Saudi Finance Company Inside KSA Limited liability

Mr.

Sulta

n bi

n M

oham

med

Al-H

udai

thi

United Wire Factories Company

Inside KSAListed joint stock

companySaudi Chemical Company

Inside KSA



companyMadaen Star Group

Inside KSA

Limited liability


companyReal Estate National

GroupInside

KSALimited liability

Nahaz Investment Co. Inside KSAUnlisted joint stock

company


Co.

Inside KSA


Mulkia Investment Inside KSAUnlisted joint stock

company



Mulkia Investment Co. Inside KSA Limited liability

Ma'areb Company for Investment and Real Estate Development


Middle East Battery Company (MEBCO)


Statement of Board Members’ Participations on other BoardsThe following table shows the names of the Board members on Boards of other companies:

Nam

e






Name of Company

Inside/outside

the Kingdom



Mr.

Sulta

n bi

n M

oham

med

Al-H

udai

thi

Mulkia Investment Co. Inside KSA Limited Liability

Mulkia GulfReal Estate REIT Fund

Inside KSA Limited Liability

Mulkia Investment Co. Inside KSA Limited Liability

Mulkia GulfReal Estate REIT Fund


Knowledge & Childhood Company for Investment


Tamadon Al Olafor Real Estate


ARZAQ AGRICULTURAL Company


Tamadon Al Hadeethafor Real Estate


Dur Al Kuttab Limited Inside KSA Limited Liability

Tamdeen Real Estate Company


Auto & Equipment Investment co., LTD


Ostool Al-Naqil Co. Inside KSA Limited Liability

SASCO Palm Co. Inside KSA Limited Liability

Al-Nakhla Al-Oula Co. Inside KSA Limited Liability

Saudi Automobile & Touring Association


Zaiti Petroleum Services Company


SASCO Al-Waha Co. Inside KSA Limited Liability

SASCO Franchise Co. Inside KSA Limited Liability


Nam

e






Name of Company

Inside/outside

the Kingdom



Mr.

Nas

ser b

in

Abdu

llah

Al-A

wfi United Cement

Industrial Co.Inside KSA


Al - Jouf Agricultural Company

Inside KSA


Food Products CompanyInside

KSAListed joint stock

company

Mr.

Sule

iman

bin

Ali

Al-K

huda

ir

Nahil Computers Inside KSA Limited Liability

Mr.

Ajla

n bi

n Ab

dulra

hman

Al-A

jlan Fawaz Abdulaziz Al

Hokair Co.Inside KSA


Saudi Lamino Co. Ltd.Inside

KSAUnlisted joint stock

company

Drake & Scull International KSA


companyOlayan Food Services

Company (OFS)Inside


company

Gulf Insulation Group “GIG”

Inside KSA Limited LiabilityRana Investment

CompanyInside


company

Indian Company For Co-Operative Insurance

Inside KSA


Mr.

Maj

id b

in M

oham

med

Al-O

thm

an


companyZaiti Petroleum Services

CompanyInside


company


companyAl-Madaen Star Group

for AutomotiveInside

KSALimited Liability

Bilda Specialized Commercial Centers Co.


company



company



Madaen Star Group Inside KSA Limited Liability

FUNGATE Company Inside KSA Limited Liability

Nam

e






Name of Company

Inside/outside

the Kingdom



Mr.

Riya

dh b

in S

aleh

Al-M

alik

*

Foroseya for Trading & Services Ltd.

Inside KSA Limited Liability Al Tas'helat Marketing Inside


Auto & Equipment Investment Co.

Inside KSA Limited LiabilitySahl Transportation

CompanyInside


Ostool Al-Naqil Co. Inside KSA Limited LiabilitySara Communications

Company.Inside


SASCO Palm Co. Inside KSA Limited Liability

Al-Nakhla Al-Oula Co. Inside KSA Limited Liability



Zaiti Petroleum Services Inside KSA Limited Liability

SASCO Al-Waha Co. Inside KSA Limited Liability

SASCO Franchise Co. Inside KSA Limited Liability

Mr.

Ali b

in

Moh

amm

ed A

ba

Al-K

hail

Sanad Investment Company


Eskan Investment Company


company

Mr.

Faw

az b

in S

ulei

man

Al-R

ajhi

Al Rajhi United Investment Holding Co


company

Rak Ceramics Outside KSAListed joint stock

company

Al Rajhi Alpha Investments


RAJ Real Estate Inside KSA Limited Liability

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


No. NameOwnership

Beginning of Period

ChangeDecember 31st,

2017Change

Ratio

1 Mr. Ibrahim bin Mohammed Al-Hudaithi 6,245,352 shares - 6,245,352 shares -

2 Mr. Sultan bin Mohammed Al-Hudaithi 62,448 shares 342,000 shares 404,448 shares 547.66%

3 Mr. Nasser bin Abdullah Al-Awfi 1,200 shares - 1,200 shares -

4 Mr. Suleiman Ali Al-Khudair 198,658 shares - 198,658 shares -

5 Mr. Ajlan Abdulrahman Al-Ajlan 1,200 shares - 1,200 shares -

6 Mr. Majid bin Mohammed Al-Othman 67,249 shares - 67,249 shares -

7 Mr. Riyadh bin Saleh Al-Malik 1,200 shares - 1,200 shares -

8 Mr. Ali bin Mohammed Aba Al-Khail 1,200 shares - 1,200 shares -

9 Mr. Fawaz Suleiman Al-Rajhi 1,000 shares - 1,000 shares -

10 Mr. Mohammed bin Abdullah Al-Mutlaq - - - -

11 Mr. David Wiles - - - -

12 Mr. Islam Mohammed Khairi Ahmad - - - -

Board Members’ and Senior Executives’ Ownership of SharesThe following table shows the Board members’ and senior executives’ ownership of SASCO shares (including that of their wives and minor children):


No. Member Name Capacity

1 Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman

2 Mr. Sultan bin Mohammed Al-Hudaithi Vice Chairman – Managing Director

3 Mr. Nasser bin Abdullah Al-Awfi Board Member

4 Mr. Majid bin Mohammed Al-Othman Board Member

5 Mr. Riyadh bin Saleh Al-Malik Board Member - CEO

`f Second Meeting on 6 June 2017 where all agenda items were approved as follows:

1. Approve the Board’s report for fiscal year ending on 31 Dec. 2016.

2. Approve Auditor’s report for fiscal year ending on 31 Dec. 2016.

3. Approve SASCO consolidated financial statements for fiscal year ending on 31 Dec. 2016.

4. Approve Board members’ acquittance for fiscal year ending on 31 Dec. 2016.

5. Approve and set the fees of the Audit Committee’s nominated auditor “Allied Accountants – Chartered Accountants and Auditors,” to

audit the financial statements of fiscal year 2017 and the quarterly financial statements including the first quarter of fiscal year 2018.

6. Approve the contracts and business to be undertaken between SASCO and some Board members having direct and indirect interest

in SASCO for a period of one year.

7. Approve the Audit Committee’s formation, functions, business controls and remunerations of its members for completion of the

current session ending on 29 June 2018.

8. Approve Audit Committee’s business regulation, controls and procedures, functions, rules of member selection, way of member

nomination, term of membership and members’ remunerations in accordance with the Corporate Governance Regulation.

9. Approve Nomination Committee’s business regulation, controls and procedures, functions, rules of member selection, way of

member nomination, term of membership and members’ remunerations in accordance with the Corporate Governance Regulation.

10. Approve Remuneration Committee’s business regulation, controls and procedures, functions, rules of member selection, way of

member nomination, term of membership and members’ remunerations in accordance with the Corporate Governance Regulation.

11. Approve the amendment of SASCO Articles of Association in accordance with the new Companies Law.

’Shareholdersالخطط والقراراتMeetings in 2017

Shareholders’ Meetings in 2017

Eleventh Extraordinary General Meeting`f First meeting on 7 May 2017

Names of Attending Board Members




1 Mr. Ibrahim bin Mohammed Al-Hudaithi Chairman



4 Mr. Suleiman bin Ali Al-Khudair Board Member

5 Mr. Ajlan bin Abdulrahman Al-Ajlan Board Member

6 Mr. Riyadh bin Saleh Al-Malik Board Member – CEO

7 Mr. Ali bin Mohammed Aba Al-Khail Board Member




3 Mr. Suleiman bin Ali Al-Khudair Board Member

4 Mr. Riyadh bin Saleh Al-Malik Board Member – CEO


6 Mr. Fawaz bin Suleiman Al-Rajhi Board Member


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 2017 was the third year for this auditor to deal with SASCO. The auditor’s activities include auditing

the financial statements of the Company for the fiscal year 2017 and the first quarter of the fiscal year 2018.

Transactions and Contracts in which Board Members and 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.

Executive DirectorsIncludes:

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

Mr. Mohammed bin Abdullah Al-MutlaqGeneral Director of Zaiti Petroleum Services Company Qualifications & Experiences:He holds the Bachelor’s Degree in Business Management from King Saud University. He held many administrative positions in the private sector. He is a member of National Committee of Fuel Stations Companies in the Council of Saudi Chambers of Commerce and a member of Audit Committee of Tabuk Fisheries Company (closed joint stock company).

Mr. David WilesGeneral 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 Vice President of Operations at City Center Hypermarket.

Present Occupations: f SASCO Director of Finance Management.

Previous Occupations: f Accounts Manager in Al-Madaen Star Group. f Chief Financial Officer of Zaiti Petroleum

Services Company.

Present Occupations: f General Director of Zaiti Petroleum Services

Company (SASCO subsidiary).Previous Occupations:

f General Director of Zaiti Petroleum Services Company (before acquisition).

Present Occupations: f General Manager of SASCO Palm Co.

Previous Occupations: f Director of Supplies Sector at many British

corporations. f Regional Director of Operations at British

corporations. f Vice President of Operations at City Center

Hypermarket.

Thirty Sixth Ordinary General Meeting`f First meeting on 24 December 2017 where all agenda items were approved as follows:

1. Approve to authorize the Board to distribute interim cash profits to shareholders until the end of fiscal year 2018.

2. Approve the Remuneration Policy of Board members, Board committees and Executive Management.

3. Approve the update of Board’s and Executive Management’s membership policies, criteria and procedures.



Statement 2013 2014 2015 2016 “Amended” 2017

Current assets 245,936,445 340,172,790 335,453,233 310,503,345 335,818,060

Non-current assets 839,560,351 791,550,290 946,464,664 1,182,055,527 1,200,103,273

Total Assets 1,085,496,796 1,131,723,080 1,301,917,897 1,492,558,872 1,535,921,333

Current Liabilities 148,098,913 242,486,686 233,134,630 364,594,629 389,998,524

Non-Current Liabilities 208,735,650 163,195,676 336,454,575 345,519,020 362,426,221

Total Liabilities 356,834,563 405,682,362 569,589,205 710,113,649 752,424,745

Total assets and liabilities

2013 2014 2015 2016 2017

1,600,000,000

1,400,000,000

1,200,000,000

1,000,000,000

800,000,000

600,000,000

400,000,000

200,000,000

-

Total assets Total liabilities

Consolidatedالخطط والقراراتFinancial Statements

Consolidated Financial Statements

Balance SheetThe following table summarizes the data of the financial position statement for the past five years:


Assets

2013 2014 2015 2016 2017

1,600,000,000

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

InventoryCash and cash equivalents Total AssetsCommercial Receivables Long-Term Assets

Change in Net Fixed Assets

Net Fixed Assets Total Assets

1,800,000,000

1,600,000,000

1,400,000,000

1,200,000,000

1,000,000,000

800,000,000

600,000,000

400,000,000

200,000,000

02013 2014 2015 2016 2017

Growth rate in total assets 41.49%

Income StatementThe following table summarizes the data of the income statement for the past five years:


Sales 368,906,614 453,370,500 665,048,902 1,094,122,754 1,212,329,807

Direct Costs (335,843,969) (416,105,976) (613,340,424) (1,036,023,378) (1,132,838,480)

Income Margin 33,062,645 37,264,524 51,708,478 58,099,376 79,491,327

General & Administrative Expenses

(24,621,845) (28,717,195) (35,285,668) (38,686,162) (46,739,924)

Other Revenue (Expenses) 35,687,812 76,539,300 5,584,757 10,222,617 863,742

Zakat (4,328,983) (3,036,000) (3,391,000) (3,655,000) (3,795,000)

Net Income 39,799,629 82,050,629 18,616,567 25,980,831 29,820,145

Liabilities and Shareholders’ Equity

2013 2014 2015 2016 2017

800,000,000

700,000,000

600,000,000

500,000,000

400,000,000

300,000,000

200,000,000

100,000,000

0

Total Shareholders’ EquityTotal Liabilities Capital

Growth Rate in Shareholders’ Equity 7,53%


2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

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

Income MarginSales Net IncomeDirect Costs

80,000,000

60,000,000

40,000,000

20,000,000

0

ZakatGeneral & Administrative Expenses Other Revenue (Expenses)

Statement 2017 2016 “Amended” Change + (-) % of Change

Revenue 1,212.329,807 1,094,122,754 118,207,053 10.80%

Direct Costs (1,132,838,480) (1,036,023,378) 96,815,102 9.34%

Income Margin 79,491,327 58,099,376 21,391,951 36.82%

General & Administrative Expenses (42,643,241) (32,194,256) 10,448,985 32.46%

Provision Allowances (4,096,683) (6,491,906) (2,395,223) (36.90%)

Net Operating Income 32,751,403 19,413,214 13,338,189 68.71%

Investment Revenue (Loss) 3,603,408 9,689,273 (6,085,865) (62.81%)

Capital Profit (Loss) 379,202 1,605,256 (1,226,054) (76.38%)

Financial Charges (5,631,383) (2,405,799) 3,225,584 134.08%

Other Income 2,512,515 1,333,887 1,178,628 88.36%

Net Income Before Zakat 33,615,145 29,635,831 3,979,314 13.43%

Zakat (3,795,000) (3,655,000) 140,000 3.83%

Net Income After Zakat 29,820,145 25,980,831 3,839,314 14.78%

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

The following is a description of the main justifications for fundamental changes in SASCO business results:`f Increase of net income in the current period compared to the same

period of last year is attributed to:

`❖ Increase of total income in the current period at 36.82% thanks

to the increase of net sales at 10.80%. This increase is due to

opening new SASCO sites in addition to the increase of profit

margin due to the change of sale prices of customs transit books.

`❖ Increase of net operating profit at 68.71% in spite of the increase

of general and administrative expenses, increase of sale and

marketing expenses, the same period of last year’s investment

revenues at a value of SR 11,29 million compared to investment

revenues of SR 3,98 million this year due to SASCO disassociation

from share of two full investment portfolios in the Saudi stocks,

decrease of distributions from current investments and increase

of financing costs and Zakat expenses.

`❖ The total income of the current period was SR 1,05 compared to

SR 12,23 million for the same period of last year at a decrease of

91.41% due to a decrease in reassessing investments.

`❖ Shareholders’ equity recorded SR 783 million compared to SR 782

million for the same person, i.e. an increase of 0.13% (there is no

minority equity).


Statement 2013 2014 20152016

“Amended”2017

Flows from Operating Activities 24,004,616 13,749,624 50,095,250 61,539,044 35,450,736

Flows from Investment Activities (67,067,998) 116,172,277 (198,513,124) (168,464,284) (116,986,699)

Flows from Financial Activities 83,220,510 (78,098,773) 141,373,640 66,933,168 65,280,554

150,000,000

100,000,000

50,000,000

-

50,000,000

100,000,000

150,000,000

200,000,000

Flows from Financial ActivitiesFlows from Operating Activities Flows from Investment Activities

2013 2014 2015 2016 2017

200,000,000180,000,000160,000,000140,000,000120,000,000100,000,00080,000,00060,000,00040,000,00020,000,000

-

2013 2014 2015 2016 2017

106,

274,

385

130,

462,

199

137,

316,

422

193,

415,

355

117,

203,

850

Volume of Capital Spending

Share Performance

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

Statement 2013 2014 2015 2016 2017

Earnings per Share 0.74 1.52 0.34 0.48 0.55

2013 2014 2015 2016 2017

2.00

1.50

1.00

0.50

-

Earnings Per Share

0.74

1.52

0.34

0.48

0.55

Share Value in SAR

30.00

25.00

20.00

15.00

10.00

5.00

02013 2014 2015 2016 2017

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

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



Sales Growth 6.94% 22.90% 46.69% 64.52% 10.80%

Net Income Growth (11.67%) 106.16% (77.31%) 39.56% 14.78%

Asset Growth 16.31% 4.26% 15.04% 14.64% 2.91%

Equity Growth 5.00% (0.36%) (0.36%) 6.84% 0.13%


Return on Sales 10.79% 18.10% 2.80% 2.37% 2.46%

Return on Capital 8.84% 18.23% 3.45% 4.81% 5.52%

Return on Investment 4.74% 10.37% 2.00% 2.20% 2.48%

Return on Total Assets 3.67% 7.25% 1.43% 1.74% 1.94%

Return on Equity 5.46% 11.30% 2.54% 3.32% 3.81%

Return on InvestmentReturn on Sales

Return on Total Assets

Return on Capital

Return on Equity

20.00%

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

2013 2014 2015 2016 2017

10.7

9%

2.80

%

2.37

%

2.46

%

18.10

%

8.84

%

3.45

% 4.81

%

5.52

%

18.2

3%

4.74

% 2.00

%

2.20

%

2.48

%

10.3

7%

3.67

% 1.43%

1.74%

1.94%7.25

%

5.46

% 2.54

%

3.32

%

3.81

%11.3

0%


Debtors Turnover 17.09 13.00 18.15 13.97 11.58

Inventory Turnover 19.47 19.53 22.15 37.92 31.18

Asset Turnover 0.34 0.40 0.51 0.73 0.79


Liquidity Ratio 1.66 1.40 1.52 0.85 0.86

Quick Liquidity Ratio 1.54 1.32 1.41 0.78 0.77

debt / Equity 48.97% 55.88% 57.56% 65.74% 70.90%

debt / Total Assets 32.87% 35.85% 32.38% 34.46% 36.17%

Asset TurnoverDebtors Turnover Inventory Turnover

2013 2014 2015 2016 2017

40.00

35.00

30.00

25.00

20.00

15.00

10.00

5.00

0.00

17.0

9

13.0

0

18.15

13.9

7

11.5

8

19.4

7

19.5

3 22.15

37.9

2

31.5

8

0.34

0.40

0.51

0.73

0.79

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

Growth Indicators

Profit Indicators

Profit Indicators

Efficiency Indicators

Liquidity & Indebtedness Indicators

Efficiency Indicators


Fines SASCO complies with all requirements of control bodies. CMA, or any other supervisory, regulatory or judiciary body did not impose any sanction on SASCO. No punishment, sanction, precautionary measure or precautionary attachment is imposed on SASCO.

Statement 2013 2014 2015 2016 2017

Revenue 100% 100% 100% 100% 100%

Direct Costs 91.04% 91.78% 92.22% 94.69% 93.44%

Income Margin 8.96% 8.22% 7.78% 5.31% 6,56%


6,67% 6.33% 5.31% 3.54% 3.86%

Other Revenue (Expenses) 9.67% 16.88% 0.84% 0.93% 0.07%

Zakat 1.17% 0.67% 0.51% 0.33% 0.31%

Net Income 10.79% 18.10% 2.80% 2.37% 2.46%


Direct Costs Other Revenue (Expenses)

Net IncomeIncome Margin Zakat

2013 2014 2015 2016 2017

100.00 %

90.00 %

80.00 %

70.00 %

60.00 %

50.00 %

40.00 %

30.00 %

20.00 %

10.00 %

0.00 %

8.96

%6.

67%

9.67

%

10.7

9%1.1

7%

8.22

%

7.78

%

5.31

%

6.56

%

6.33

%

5.31

%

3.54

%

2.86

%

16.8

8%

0.84

%

0.07

%

18.10

%

2.80

%

2.37

%

2.46

%

0.67

%

0.51

%

0,33

%

0.31

%

91.7

8%

91.0

4%

92.2

2%

94.6

9%

93.0

0%

93.4

4%

Statement

2017

Brief Description Description of Reasons

PaidDue until end of annual

financial period but not paid

Zakat 8,072,242 3,795,000Amount of Zakat paid during

the year

Tax 3,647,450 - Paid amount of excise taxPayment of amount due by

SASCO

General Organization for Social Insurance

3,694,556 299,644 Year duesThe due amount belongs

to December and is paid in January

Costs of visas, passports and labor office

1,730,762 -Fees for visa, renewal of

residence permit, exit and return

Customs Fees 74,826 -

Customs fees of Saudi Automobile & Touring

Association and clearance of other books

Total 17,219,836 4,094,644

Items of Income Statement as a Percentage of Revenue

Items of Income Statement as a Percentage of Revenue

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, 2017, SASCO established

an allowance for regulatory Zakat dues of SAR (3,795,000). SASCO

also paid SAR (4,378,030) from the Zakat allowance until 2017.

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

2017.

During fiscal year 2017, Zakat assessments outstanding with the

Department of Zakat from 2000 to 2008 have been concluded

with the payment of a settlement amount of SR 3,694,215. Bank

guarantees of SR 4,730,935 have been released and the remaining

guarantee is about to be released.

The following table summarizes regulatory payments:

`❖ These payments are within SASCO activity.


Bank Loan Date Balance at the end of 2017 Balance at the end of 2016

BSF 23/12/2012 - 30,000,000

BSF 22/03/2013 - 9,166,664

BSF 31/05/2013 101,324,000 101,324,000

BSF 30/06/2016 39,735,709 39,735,709

BSF 29/08/2016 24,654,233 24,654,233

BSF 29/08/2016 - 20,000,000

150,000,000

100,000,000

50,000,0000

200,000,000

250,000,000

BSF

National Commercial Bank (NCB)

Saudi British Bank (SABB)

Gulf International Bank (GIB)

Alawwal Bank

246,000,000

122,500,000

97,967,724

50,000,000

39,051,206

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: “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.

During the fiscal year 2010, SASCO signed a Sharia-compliant credit facilities agreement with ANB for SAR (140,000,000) as a general credit ceiling. This included letters of guarantee facilities of SAR (40,000,000) and real estate loan facilities of SAR (100,000,000). The agreement amount was amended on December 2nd, 2013 to be SAR (120,000,000) as a general credit ceiling, including letters of guarantee facilities of SAR (50,000,000) and real estate loan facilities of SAR (70,000,000). The agreement amount was again amended on November 10th, 2016, to be SAR (98,758,575) as a general credit ceiling, including letters of guarantee facilities of SAR (50,000,000) and real estate loan facilities of SAR (48,758,575). On November 24th, 2017, SASCO completed the early repayment procedures of the loan by paying the outstanding amount of SAR (20,025,000) originally scheduled until February 28th, 2017. The rest of the facilities agreement remained unchanged. During 2012, SASCO signed a Sharia-compliant facilities agreement with BSF of SAR (225,000,000) 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. During 2013, SASCO signed a Shariah-compliant credit facilities agreement with NCB of SAR (90,000,000) in the form of a long-term commercial loan to expand construction and 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 regular course of business.

On August 25th, 2017, 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.On May 25th, 2015, SASCO signed a new Shariah-compliant facilities agreement with 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 (150,700,000) 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 land, and build new fuel stations as well as to finance the working capital. It will

expire on January, 31th, 2019 On December 13th, 2015, SASCO signed a (Shariah-compliant) resales for profit 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 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.

On December 21st, 2015, SASCO signed a (Shariah-compliant) resales for profit facilities agreement with the Alawwal 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 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.

Balance of loans at the end of year

Loan Statement


Statement 2017 2016

Less than 1 Year 204,479,080 178,638,617

1 Year to 2 Years 114,479,080 111,543,808

2 Years to 5 Years 224,894,103 221,723,801

More than 5 Years 11,666,667 2,500,000

Bank Loan Date Balance at the end of 2017 Balance at the end of 2016

BSF 13/12/2016 23,274,737 23,274,737

BSF 28/12/2016 12,305,262 12,305,262

BSF 28/12/2016 6,252,169 6,252,169

BSF 12/01/2017 3,966,562 -

BSF 29/03/2017 13,235,873 -

BSF 24/08/2017 20,000,000 -

BSF 24/08/2017 1,251,455 -

NCB 03/12/2013 5,000,000 37,500,000

NCB 05/12/2015 Zero Zero

NCB 30/12/2014 Zero Zero

NCB 26/10/2015 22,500,000 27,500,000

NCB 31/10/2016 - 24,594,800

NCB 05/05/2017 70,000,000 -

NCB 15/10/2017 25,000,000 -

SABB 01/06/2015 13,181,625 25,173,556

SABB 19/04/2016 2,928,793 2,928,793

SABB 19/04/2016 11,846,787 11,846,787

SABB 03/05/2016 1,183,076 1,183,076

SABB 23/05/2016 2,313,569 2,313,569

SABB 07/06/2016 7,791,424 7,791,424

SABB 20/03/2017 5,147,780 -

SABB 28/03/2017 3,574,670 -

SABB 21/12/2017 50,000,000 -

GIB 27/12/2015 50,000,000 50,000,000

Alawwal Bank 28/12/2015 33,333,333 50,000,000

Alawwal Bank 13/12/2016 3,773,370 4,528,044

Alawwal Bank 20/12/2016 1,944,503 2,333,403

Total 555,518,930 514,406,226

Bank Date of Issue Term Loan ValuePeriod in Months

Balance at year beginning

Paid during year

Due Date

BSF 23/12/2012 90,000,000 Long-term 60 30,000,000 30,000,000 30/09/2017

BSF 31/05/2015 101,324,000 Long-term 72 101,324,000 - 31/12/2022

BSF 22/03/2013 55,000,000 Medium-term 36 9,166,664 9,166,664 30/06/2017

BSF 30/06/2016 39,735,709 Long-term 78 39,735,709 - 31/12/2022

BSF 29/08/2016 24,654,233 Long-term 76 24,654,233 - م31/12/2022

BSF 29/08/2016 20,000,000 Short-term 6 20,000,000 20,000,000 28/02/2017

BSF 26/02/2017 20,000,000 Short-term 6 - - 24/08/2017

BSF 13/12/2016 23,274,737 Long-term 72 23,274,737 - 31/12/2022

BSF 28/12/2016 18,557,431 Long-term 72 18,557,431 - 31/12/2022

BSF 12/01/2017 3,966,562 Long-term 72 - - 31/12/2022

BSF 29/03/2017 13,235,873 Long-term 69 - - 31/12/2022

BSF 24/08/2017 20,000,000 Short-term 12 - - 24/08/2018

BSF 24/08/2017 1,251,455 Long-term 64 - - 31/12/2022

NCB 03/12/2013 90,000,000 Long-term 60 37,500,000 32,500,000 30/04/2018

NCB 26/10/2015 30,000,000 Long-term 84 27,500,000 5,000,000 26/04/2022

NCB 05/12/2015 25,000,000 Short-term 1 - - 05/01/2016

NCB 29/02/2016 25,000,000 Short-term 4 - 25,000,000 27/06/2017

NCB 27/06/2016 25,000,000 Short-term 4 - 25,000,000 27/10/2017

NCB 31/10/2016 24,594,800 Short-term 4 24,594,800 24,594,800 27/02/2017

NCB 30/09/2014 10,000,000 Long-term 4 - - 29/01/2015

NCB 29/12/2014 14,695,616 Long-term 4 - - 28/04/2015

NCB 15/05/2017 70,000,000 Long-term 77 - - 12/10/2023

Loan Maturity

Loan Movement


Pledged AssetsThere are no pledged assets.

Other Guarantees

Bank Guarantee

BSF A promissory note of SAR 502,500,000

NCB

A promissory note of SAR 200,700,000, deposit pledge of 17,281,000 (deposit was

discharged at the end of year) and a promissory note of SAR 20,70,000

NCB A promissory note of SAR 201,325,000

SAAB A promissory note of SAR 177,967,726

GIB A promissory note of SAR 150,000,000

Alawwal Bank A promissory note of SAR 98,528,114

Riyadh Bank A promissory note of SAR 50,000,000

Bank Date of Issue Term Loan ValuePeriod in Months

Balance at year beginning

Paid during year

Due Date

NCB 27/10/2017 25,000,000 Short-term 4 - - 27/02/2018

SABB 01/06/2015 25,173,556 Long-term 72 25,173,556 11,991,931 28/11/2021

SABB 19/04/2016 2,928,793 Long-term 67 2,928,793 - 28/11/2021

SABB 19/04/2016 11,846,785 Long-term 67 11,846,787 - 28/11/2021

SABB 03/05/2016 1,183,076 Long-term 66 1,183,076 - 28/11/2021

SABB 23/05/2016 2,313,569 Long-term 66 2,313,569 - 28/11/2021

SABB 07/06/2016 7,791,424 Long-term 65 7,791,424 - 28/11/2021

SABB 20/03/2017 5,147,785 Long-term 53 - - 03/11/2021

SABB 28/03/2017 3,574,670 Long-term 53 - - 03/11/2021

SABB 21/12/2017 50,000,000 Short-term 3 - - 03/21/2018

GIB 27/12/2015 50,000,000 Medium-term 59 50,000,000 - 24/11/2020

Alawwal Bank 31/12/2015 50,000,000 Medium-term 48 50,000,000 16,666,667 12/31/2019

Alawwal Bank 13/12/2016 4,528,044 Medium-term 42 4,528,044 754,674 06/28/2020

Alawwal Bank 20/12/2016 2,333,403 Medium-term 42 2,333,403 388,901 06/28/2020

Total 987,111,521 514,406,226 201,063,637

Debt InstrumentsSASCO and its subsidiaries did not issue debt instruments.

Dividend DistributionsPursuant to Article 50 (Profit Distribution) of SASCO Articles of Association, SASCO annual net profits shall be distributed as follows:`f Ten (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.`f The 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.`f The Ordinary General Assembly may decide to form other reserves 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.`f The rest is then distributed to shareholders at no less than (5%) of the paid capital.`f In 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):`f The Board of Directors 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.`f According to Article (52) of SASCO Articles of Association (Profit Entitlement):`f A shareholder shall be entitled to receive his share of profits according to the General Meeting's decision in this regard. The decision shall set the dates of entitlement and distribution. Entitlement to profits shall be for shareholders registered with the shareholders' records at the end of day established for entitlement.`f According to Article (53) of SASCO Articles of Association (Profit Distribution to Preferred shares):`f In case the profits of any fiscal year are not distributed, the profits of next years may be distributed only after disbursing the percentage stated in Article (10) of SASCO Articles of Association to preferred shareholders for that year.`f In 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.

SASCO Policy of Share Profit Distribution is available on this link:

www.sasco.com.sa

`f In its session held on March 13th, 2018, SASCO Board of Directors

recommended to distribute cash dividends to shareholders for

the fiscal year ending on December 31th, 2017, with a total of SAR

(27,000,000), equivalent to (5%) of the nominal value of share

and at a rate of SAR (0.50) per share. The entitlement to these

dividends would be for shareholders registered with the Securities

Depository Center (Tadawul) by the end of the second day on which

the General Assembly convened; the date of convening will be later

announced.

`f In the Extraordinary General Assembly dated March 13th, 2018, the

Board recommended to increase SASCO capital to SAR 600,000,000

through bonus shares to SASCO shareholders, by one share for every

9 owned shares. Capital increase shall be done through capitalizing

SR 60 million of the retained profits. The aim of this is to strengthen

SASCO financial ability to meet the current and future expansions

in all its activities to achieve better growth rates in the coming

years and preserve financial solvency. 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;

provided that such recommendation is conditional upon the

approval of the official bodies and shareholders' Extraordinary

General Assembly.

Deviations from Applying Accounting StandardsAccounting 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.

International Financial Reporting Standards (IFRS)With reference to the CMA letter No. S/1/12231/15 dated 27/10/1436 AH,

corresponding to 12/8/2017, regarding the CMA Circular No. 4/2978

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

Financial Reporting Standards (IFRS) to the financial statements

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

standards adopted by the Saudi Organization for Certified Public

Accountants, SASCO issued all its preliminary and annual financial

statements according to the IFRS and the comparison figures of 2016.

Treasury Stocks There are no treasury stocks retained by SASCO.

Auditor’s ReportThe auditor issued its report on SASCO financial statements for the

period ending on December 31st, 2017, without any reservations.

Loan Movement (Continued)

Cash Disbursements

Year (SR/Share) Year (SR/Share)

2010 0.50 2013 0.75

2011 0.50 2014 1.50

2012 0.50 2015 0.50


Retail SectorIt is one of SASCO key sectors. It contains SASCO basic products offered

to clients through (220) of which (57) are Zaiti Company (subsidiary)

and (104) are SASCO sites divided into (94) operating stations and rest

houses and (6) quick service centers as well as (4) sites operated by

third parties. This is in addition to (9) sites stopped for development

or under construction, (30) sites under pre-construction procedures,

as well as (3) sites stopped because the roads deviated away from

them and for lack of economic feasibility from operating them at

present.

In 2017, Retail Sector offered its services to about 12,7 vehicles, with an increase of 10,43% over the previous year, and 66,000,000 customers, with an increase of 6.45% over the previous year.

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

Fuel Services

0

2017 2016 2015

20,00 40,00 60,00 80,00

Number of Vehicles

Thousand

Number of Customers

66,000

62,000

56,000

12,700

11,500

10,000

Growth Ratio 10.43%

Growth Ratio 6.45%

Mosques with a total area of more

than 24,000 km

More than 90 mosques

Covering more than 4,000 km

DieselGasoline

91Gasoline

95

Retail Sectorالخطط والقرارات

Statistics of Company Site Visitors


Increase as of 1 January 2018 (without value-added tax)

Product Sale Price Cost from Aramco Profit Margin Profit Margin Ratio

Gasoline 91 1.30 Halalah 1.21 Halalah 9 Halalah 6.92%

Gasoline 95 1.94 Halalah 1.85 Halalah 9 Halalah 4.64%

Diesel 45 Halalah 41.55 Halalah 3.45 Halalah 7.67%

Before 2015

Product Sale Price Cost from Profit Margin Profit Margin Ratio

Gasoline 91 45 Halalah 36 Halalah 9 Halalah 20 %


Diesel 25 Halalah 21.5 Halalah 3.5 Halalah 14 %

Amendment in 2015

Product Sale Price Cost from Profit Margin Profit Margin Ratio



Diesel 45 Halalah 41.55 Halalah 3.45 Halalah 7.67 %

The profit margin includes various expenses and costs borne by SASCO, most important of which are:

`f Transport cost in direct relation with the increase in diesel prices.

`f Costs of operation of stations due to the continued increase of power prices for services including electricity, logistics, maintenance and labour.

`fWater cost.

`f Costs of developing and improving the level of services according the requirements of the Ministry of Municipal and Rural Affairs in relation to

companies qualified to manage fuel stations.

`f Increasing labour cost.

`f Costs of evaporation resulting during transport from Aramco to discharge site in the station.

`f Costs of bank guarantees issued to Aramco.

Lease SectorThrough competent departments in all areas, Retail Sector leases

some facilities that SASCO authorizes third parties to manage, such

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

well as other shops serving clients and passengers.

SASCO also signed strategic partnership agreements with several

international and local competent companies specialized in operating

restaurants, cafes, and car maintenance workshops to manage some

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

integrated and high-quality service, leading to an increase in number

of customers in SASCO sites throughout the Kingdom.

Café

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

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

of 2017.

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

international café companies to provide their services through SASCO

sites throughout the Kingdom.

100,000,000

200,000,000

0

0

Gasoline 91

Gasoline 91

2017

SASCO

2016

Zaiti

2015

200,000,000

400,000,000

300,000,000

600,000,000

400,000,000

800,000,000

500,000,000

Gasoline 95

Gasoline 95

Diesel

Diesel

Change % of 18.61 %

Change % of (0.25 %)

Change % of (5.55 %)

470,986,872

470,986,872

191,839,875

191,839,875

251,222,185

66,603,876

104,753,914

251,222,185

397,089,800

192,337,792

192,316,655

265,985,213

298,952,411

214,009,586

261,841,685

Rental

According to the pricing approved by the Ministry of Commerce for

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

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

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

provinces and other centres where there are no reservoirs of Saudi

Aramco, fares of transport from the nearest reservoir supposed to

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

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

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

provided that this is done by competent local committees.

Number of sold liters - SASCO

Number of sold liters - SASCO & Zaiti Petroleum Services Company

Leasing spaces exceeding 100,000 m2


SASCO also signed strategic partnership agreements with several

international and local competent companies specialized in operating

restaurants, cafes, and car maintenance workshops to manage some

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

integrated and high-quality service, leading to an increase in number

of customers in SASCO sites throughout the Kingdom.

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

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

of 2017. To offer a better service in this field, SASCO contracted with

major international café companies to provide their services through

SASCO sites throughout the Kingdom.

2,0000

2017 2016 2015

4,000 6,000 8,000 10,000

Number of buses

Number of persons

2017 2016

1,000

1,200

1,000

8,300

9,700

8,700

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

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

Direct RevenueContribution Ratio

(in revenue)Direct Costs Gross Profit

Contribution Ratio(Income Margin)

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

752,018,207 674,643,116 62.03% 61.66% (714,273,623) (651,561,382) 37,744,584 23,081,734 47.48% 39.73%

2013 2014 2015 2016 2017

327,228,376 416,266,722 523,058,172 674,643,116 752,018,207

200,000,0000 400,000,000 600,000,000 800,000,000

674,643,116

651,561,382

23,081,734

752,018,207

714,273,623

37,744,584

Total Sector Revenue

800,000,000

700,000,000

600,000,000

500,000,000

400,000,000

300,000,000

200,000,000

100,000,000

02013 2014 2015 2016 2017

Annual Compound Growth rate 18%

DiningSASCO restaurants offers convenient services to customers with

different tastes.

SASCO restaurants offer the following meals:

`f Breakfast

`f Appetizers

`f Main courses

`f Beverages

According to the priorities of SASCO strategy to attract companies

specialized in restaurant management and reduce the number of

restaurants SASCO operates to improve service, provide a unique

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

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.

Pilgrims’ ServicesSASCO provides these services through its rest houses and stations at the Saudi border crossing posts (Salwa, Al-Adeed, Al-Hudaitha, Halat Amar,

and Al-Batha), in addition to SASCO site network spreading on all highways, especially those linking the holy lands (Mecca and Medina).

During 2017, SASCO served more than 8,300,000 pilgrims, whether inside or outside the Kingdom. SASCO most important stations and rest

houses spread over the following highways:

`f Al-Hijra Road (Mecca/Medina)

`f Riyadh/Taif highway

`f Riyadh/Dammam Road

`f Halat Amar/Tabuk/Medina Road

Pilgrims

Retail Sector

Revenue Growth of Retail Sector

Operating revenues

Operating costs

Gross Profit


Sector 2017 % 2016 %

Central Province 276,631,388 36.79% 256,702,362 38.05%

Northern Province 38,660,546 5.14% 42,017,956 6.23%

Eastern Province 242,785,661 32.28% 231,120,557 34.26%

Western Province 193,940,612 25.79% 144,802,241 21.46%

Total 752,018,207 100% 674,643,116 100%

Geographical Revenue of Retail Sector

Northern Province

Central Province

Western Province

Eastern Province

36.79%

25.79%

5.14%

32.28%

Performance at Geographical Level (Retail Sector)The following table shows province-level revenue analysis:


50,000,0000

Gasoline 91

2017 20152016

100,000,000 150,000,000 200,000,000

Gasoline 95

Diesel

Central Province

Southern Province

192,337,792

66,603,876

104,753,914

171,580,286

61,355,101

107,524,774

89,629,468

53,093,250

63,623,748

48

6

2

1

500

Operating and Leased Sites Sites under Development

Zaiti Petroleumالخطط والقراراتServices Company

Zaiti Petroleum Services CompanyThe capital of Zaiti Petroleum Services Company - “a limited liability

company” - is SAR 37,500,000 divided into (3,750,000) cash shares each

of SR 10. This company specializes in the establishment, management,

and operation of fuel stations.

By the end of 2017, the number of Zaiti stations was (57), of which (54)

were operating stations, as well as (3) stations under development.

These sites spread in the Central Province (50 sites) and Asir (7 sites).

Number of sold liters

Site Distribution


Direct Revenue% of Contribution

(in revenues)Direct Costs Gross Profit

% of Contribution (Income Margin)

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

282,941,455 264,761,936 23.34% 24.20% (270,983,387) (252,751,876) 11,958,068 12,010,060 15.04% 20.67%

Site OwnershipZaiti Petroleum Services Company


Geographical Revenues of Zaiti Petroleum Services Company

Leased

Owned

534

2017 2016

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

0

Operating Revenue Operating Costing Gross Profit

282

,941

,455

270

,983

,387

11,9

58,0

68

264

,716

,936

252

,751,8

76

12,0

10,0

60

Sector 2017 % 2016 %


Southern Province 40,579,767 14.34% 41,668,574 15.74%

Total 282,941,455 100% 264,761,936 100%

14.34%

85.66%

The following table shows the most important financial results at Zaiti Petroleum Services Company level as well as the percentage of contribution and income margin compared to previous fiscal year:

The following table shows revenue analysis at province level:

Southern Province

Central Province





2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

163,719,373 139,506,664 13.50% 12.75% (157,234,487) (135,276,186) 6,484,886 4,230,478 8.16% 7.28%

Northern

Central

Western

Eastern

39

12

7

9

.SASCO Palm Coالخطط والقرارات

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), for which SASCO

opened (6) branches during 2017, bringing the total number of (SASCO

Palm) branches to (67) in various regions of the Kingdom at the end

of the year.

Revenue of SASCO Palm Co. square meters rose to SR 12,300 compared

to SR 11,600 in 2017, i.e. an increase of 6.3% for all sites. Client basket

change was 18.75% rising from SR 16 in 2016 to SR 19 in 2017.

Geographical Distribution of Branches

(SASCO Palm) contains an integrated basket of carefully selected

products to meet the needs of our customers, whether travellers

on intercity roads, vehicle drivers, and passengers inside cities. The

following are the classifications of these items:

`f Food supplies.

`f Non-food supplies.

`f Dairy products and cold drinks.

`f Instruments, tools, and accessories.

`f Trip supplies.

`f Prepaid communication cards.

`f Electronics.

`f Mobile phones accessories.

`f Perfumes and cosmetics.

The following table shows the most important financial results at

SASCO Palm level as well as the percentage of contribution and

income margin compared to previous fiscal year:



20162017

200٫000٫000

150٫000٫000

100٫000٫000

50٫000٫000

0

200٫000٫000

150٫000٫000

100٫000٫000

50٫000٫000

0

163.7

19.3

73

139٫

506٫

664

157٫

234٫

487

135٫

276٫

186

6٫48

4٫88

6

4٫23

0٫47

8

Total Sector Revenue

2015 2016 2017

Sector 2017 % 2016 %


Northern Province 10,539,418 6.44% 12,293,205 8.81%

Eastern Province 24,333,262 14.86% 24,085,357 17.26%

Western Province 32,093,448 19.60% 29,335,906 21.03%

Total 163,719,373 100% 139,506,664 100%

Northern Province

Central Province

Western Province

Eastern Province

59.10%

19.60%

6.44%14.86%

SASCO Palm Co.

Growth of SASCO Palm Stores Revenue

Operating Revenue Operating costs Gross Profit

❖ SASCO Palm accounts have been separated from the Retail Sector as of 2015.

The following table shows province-level revenue analysis:

SASCO Palm Co. Geographical Revenue





2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

2,651,845 2,488,626 0.22% 0.23% (3,150,188) (2,744,235) (498,343) (255,609) (0.63%) (0.44%)

20162017

4٫000٫000

3٫000٫000

2٫000٫000

1٫000٫000

0

-1٫000٫0000

2٫65

1٫845

2٫48

8٫62

6 3,15

0,18

8

2٫74

4٫23

5

(498

٫343

)

(255

٫609

)

SASCOالخطط والقراراتAl-Waha Co.

SASCO Al-Waha Co. is a limited liability company with a capital of

SAR 5000,000 (it was increased this year) divided into 50,000 equal

cash shares, each of SAR 100. SASCO possesses 99% while Auto &

Equipment Investment Co., Ltd possesses the remaining 1%. SASCO Al-

Waha Co. was established to manage this activity independently to

achieve the best returns from it.

SASCO Al-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 2017, two motels

were opened; the first is located on Dammam/Abu Hadreya and the

second is located at Adeed border crossing with Qatar in addition to

“Waha Motel” on Riyadh/Dammam Highway at kilometre 154.

When it comes to the exclusive franchise agreement signed between

SASCO and “Wyndham Hotel Group”, owner of “Super 8” hotels, the

agreement was terminated on 31 December 2016 as the parties don’t

wish to renew it. The brand of “Super 8” Hotel was retained and it

was opened on Thumama road in Riyadh. It includes meeting rooms,

a gym, and a restaurant.

The following table shows the most important financial results at

SASCO Al-Waha Co. level as well as the percentage of contribution and

income margin compared to previous fiscal year:

SASCO Al-Waha Co.



To offer service to our clients, we went a long drive of more than 12

million km2

2013 2014 2015 2016 2017

140

120

100

80

60

40

20

0

5561 64

6888

91 95 101108

121

Ostool Al-Naqilالخطط والقراراتCompany

Ostool Al-Naqil Co.

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

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

possesses 99% while Auto & Equipment Investment Co., Ltd possesses

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

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

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

in Riyadh, including fleet management buildings and integrated

workshop for tankers maintenance. Ostool Al-Naqil Co. has two

branches, one in the Eastern Province and the other is in the Western

Province.

Thanks to the expansion of business, the fleet size increased at the

end of 2017 to (108) tankers and (121) trailers through which the

company provides transportation service to SASCO and Zaiti sites

(fuel, water, and sewage transport). Ostool Al-Naqil Co. continued to

provide transport services (fuel and cargo) to a number of large retail

and distribution companies and expanded its business to include

dry transport using multi-purpose containers. Distance passed by

Ostool Al-Naqil Co. tankers during 2017 in order to provide service to

its clients exceeded 12 million km2 compared to 9,5 million in 2016, i.e.

an increase of 26.32%.

Fleet Size

Tankers No. Trailers No.


2013 2014 2015 2016 2017

1٫400٫000٫000

1٫200٫000٫000

1٫000٫000٫000

800٫000٫000

600٫000٫000

400٫000٫000

200٫000٫000

0 458٫

997٫

000

572٫

113٫

400

932٫

724٫

000

1٫116

٫003

٫000

1٫377

٫300

٫000

55 64 88 95 108




2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

22,759,754 19,663,545 1.88% 1.80% (15,375,734) (13,390,332) 7,384,020 6,273,213 9.29% 10.80%

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

2017 2016

22,75

9,75

4

19,6

63,5

45

15,3

75,73

4

13,3

90,3

32 7,384

,020

6,27

3,21

3

25٫000٫000

20٫000٫000

15٫000٫000

10٫000٫000

5٫000٫000

0

2013 2014 2015 2016 2017


The following table shows the most important financial results at Ostool Al-Naqil Co. level as well as the percentage of contribution and income margin compared to previous fiscal year:

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

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

Ostool Al-Naqil Co.

Transported Litres


Transported in Liters Tankers No.

Total Revenue of Ostool Al-Naqil Co.

Revenue Growth of Ostool Al-Naqil Co.

❖ Ostool Al-Naqil Co. revenues are geographically interrelated with the Retail Sector.


As part of Saudi Automobile & Touring Association's agreement

with the International Road Transport Union (IRU), an international

body concerned with serving the interests of road transport industry

worldwide, it has continued to urge the concerned authorities in KSA

and the Gulf Cooperation Council states to enter into this agreement

to be effective in the Kingdom. In this context, several meetings were

held with these authorities in the presence of a representative of IRU.

The most important objectives of international transport system

include:

`f Facilitate harmonization of trade and customs procedures.

`f Improve cost level.

`f Facilitate border crossing.

`f Transport goods from door to door under international control.

Through managing car and motorcycle sports-related activities, and

in coordination with concerned authorities, SATA seeks to obtain

sport activities license to engage in this sport professionally.

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 and income margin compared to previous

fiscal year:

Direct Revenue% of Contribution (in

revenues)Direct Costs Gross Profit


2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

22,723,350 20,471,234 1.87% 1.87% (6,305,238) (7,711,734) 16,418,112 12,759,500 20.65% 21.96%

More than 62 thousand

passengers issued aninternational license

More than 32 thousand passengers through the books of

the terrestrial

& Saudi Automobileالخطط والقرارات

Touring Association - SATA

Saudi Automobile & Touring Association - SATASaudi 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%.

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 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 most important services offered by Saudi Automobile & Touring

Association include the following:

`f Issuing Trip-Tik customs books

`f Issuing international driving licenses

`f Organizing sport activities for cars and motorcycles as well as

holding, operating, and managing various categories of motor-

racing tracks

The number of passengers benefitting from customs transit books

during 2017 was more than 32,000, and 62,000 passengers were

issued international driving licenses.

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

sales and international driving licenses.

Saudi Automobile & Touring Association SATA plays a prominent role

in the FIA represented in reappointing its Chairman in December 2016

as the Head of International Customs Committee in the FIA for a term

of two years starting from appointment.


Statement 2013 2014 2015 2016 2017

Trip-Tik Book Sales 23,350,990 21,592,590 18,814,150 18,441,204 20,509,672

International DrivingLicense Sales

1,332,544 1,591,705 1,478,662 2,030,030 2,213,678

Total 24,683,534 23,184,295 20,292,812 20,471,234 22,723,350

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

2017 2016

22,

723,

350

6,3

05,2

38

16,4

18,11

2

20,

471,2

34

7,71

1,734

12,75

9,50

0

26.90%31.04%

32.32%9.74%



International Driving Licenses

Trip-Tik Sudan

Trip-Tik Yemen

Trip-Tik International

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

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

Association Sales Per Type


No. Company Name Investment Amount Ownership Ratio

1 Middle East Battery Company (MEBCO)* 4,565,500 7.94%

2 National Company of Tourism (Syahya) 1,500,000 0.36%

3 United Racing Company 125,000 25%

Total 6,190,500

SASCO holds equity in other companies, and the following table shows the details of these investments:

24.23%2.02%73.75%

Auto & Equipmentالخطط والقراراتInvestment Co.

Auto & Equipment Investment Co.

Auto & Equipment Investment Co. was established with a capital

of SAR 500,000 divided into 50,000 cash shares each of SAR 10. The

company was established to provide infrastructure, human resources,

and expertise required to manage SASCO investments independently

and impartially and, thus, increase SASCO diversity of income sources

and enable it to manage its operational and investment processes

efficiently and effectively. SASCO possesses 99% while Auto &

Equipment Investment Co., Ltd possesses the remaining 1%.

The most important activities of Auto & Equipment Investment Co.

include:

`f Establish and own shares and stocks in subsidiary and associate

companies.

`f Possess land and real estate and erect buildings thereon for

operation, sale, or lease.

`f Build car and heavy equipment maintenance workshops as well

as car and passenger service centres.

`f Build rest houses, motels, and restaurants.

`f Import, export, and trade in wholesale and retail spare parts,

equipment, and others.

`f Execute general contracting.

SASCO operates most of its investments in its subsidiaries through

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

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

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

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

1% of the capital of SASCO Al-Nakhla Al-Oula Co., as well as 5% of the

capital of Zaiti Petroleum Services Company.

When it comes to investment in other companies, Auto & Equipment

Investment Co. holds 794 shares, i.e. 7.94% of the capital of Middle East

Battery Company (MEBCO), a company specialized in the production

of ACDelco batteries in the Middle East.

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

National Company of Tourism (Syahya)

Middle East Battery Company (MEBCO)*

United Racing Company

Illustration of Investment Ratios of Total Investment Portfolio


Agency Investment Amount 31/12/2017 Accounting Treatment

Mulkia Investment Co. SAR 50,000,000 SAR 50,000,000 Securities held for sale

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

2017 2016

3,60

3,40

8

7,669

,741

0

3,62

4,78

8

Dividends Received from Investments

Companies Investments Securities Investments

Investment Portfolios according to Investment Regulations issued by CMAAs of 2 Oct. 2016, the Balance of Al Ahli Capital portfolio has been transferred to the portfolio run by Mulkia Investment Co. in accordance with the

agreement previously signed with them. This shall be undertaken in the same accounting treatment as securities held for sale, which financial

impact is processed at the end of each financial period in shareholders’ equity in financial position statement, and difference of change between

periods on comprehensive income statement when assessing the portfolio.


Al-Nakhlaالخطط والقراراتAl-Oula Co.

Al-Nakhla Al-Oula Co.

It is 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:

`f General contracting (construction, repair, demolition, and

restoration).

`f Construction, management, maintenance, and operation of

residential and commercial buildings.

`f Road works.


.SASCO Franchise Coالخطط والقرارات

SASCO Franchise Co.

After a specialized company completed the project of granting

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

establishment of “SASCO Franchise Co.” was completed 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 Franchise Co.” grants third

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

Through this subsidiary, SASCO aims to increase its revenues and

improve its profitability by granting franchise to other operators

under agreements it concludes with them to benefit from SASCO

brands in light of successful development of its sites according to its

identity and its distinguished position in fuel station sector in the

Kingdom.

One of the goals of SASCO Franchise Co. is to be another alternative to

station owners who do not wish to sell or rent their stations.


No. Category 2017 2016

1 Senior Management 1 1

2 Middle & Executive Management 253 218

3 Workers and Technicians 1244 1226

Total 1498 1445

& Other Administrativeالخطط والقرارات

Operational Information

Other Administrative and Operational InformationLawsuitsUnited Racing Company LawsuitThe partners of the United Racing Company filed lawsuit No. 5475/2/k

before the Administrative Judicature Court in Jeddah versus SASCO.

They demanded the liquidation of their company. The Court ordered

a stay of proceedings upon SASCO request until SASCO case versus

one of the said partners regarding the sale of SASCO share, has

been decided. The Panel reviewing the case ordered compulsory

liquidation. It appointed Osama Abdullah Al-Khuraiji & Partner -

Chartered Accountants and Business Consultants, to carry out the

liquidation procedures, and execution is still underway with the

chartered accountant’s office.

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

the following:I. Completing the requirements for opening United Racing Company Zakat file at the Department of Zakat.II. Approval of debt balances.III. SASCO Law Firm’s obtaining of the details and documents

of lawsuits filed by or against SASCO.

The Administrative Judicature Court in Jeddah passed a judgement

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

an amount of SR 2 million. On 19 Nov. 2017, the Firm stated that a

judgment effecting the amount was passed. For lack of liquidity, the

liquidator requested partners to pay proportionately (each as per his

shares of capital) pay the amount. SASCO Law Firm still follows up

the case.

Other Miscellaneous LawsuitsSASCO filed some suits related to amounts due to it from some

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

some other financial and labour lawsuits versus SASCO and its Legal

Department follows up these financial rights and collection thereof,

either by amicable or judicial means.

Following are some of the most important lawsuits:`f One important case is the one SASCO filed before the Office of

the Public Defender (Ombudsman) No. 6972/1/k on 12/5/1433 AH versus both the Ministry of Municipal and Rural Affairs and the Ministry of Housing. SASCO possesses land in Hafr Al-Batin area and the Ministry of Housing, through Hafr Al-Batin Municipality, took part of this land. The lawsuit was referred to Riyadh General Court and, then, to the Review Board, which in turn referred it to Hafr Al-Batin Municipality to check the site and determine the overlap between the two plots. Consequently, Hafr Al-Batin Municipality issued its letter stating that the Ministry of Housing had infringed upon (41,713 m2) of SASCO plot. Therefore, the assessment was referred to an authorized assessor. Based on its assessment, a judgment was passed in favor of SASCO, and a reasonable compensation for the usurped land was determined. The judgment was challenged by the Ministry of Housing. We are waiting for the confirmation or rejection of judgment by Riyadh Court of Cassation.

`f SASCO is also following lawsuit No. 2136385/34 filed on 7/9/1434 AH before the General Court in Tabuk versus the Saudi Industrial Property Authority (Modon) and the Secretariat of the City of Tabuk regarding the nullification of Modon title deed in relation to the overlap with SASCO-owned land in Tabuk Industrial Zone, as well as claiming a compensation for the value of land if SASCO cannot receive it. The case is still under review before Riyadh General Court.

`f The lawsuit filed by SASCO versus Al Khaldi Holding Company, lessor of SASCO site on Dammam-Riyadh road at 205 km because Al Khaldi failed to hand over the station after the expiry of contract in 2014. The case is still under review before Khobar Court to pass a judgment of site evacuation.

`f The lawsuit filed by SASCO versus Jubbah Municipality for terminating contracts, releasing letters of guarantee and compensating SASCO against the damages it incurred due to non-handover of sites. In brief, on 3/8/1432 SASCO contracted with the Municipality to lease sites on Ha'el-Al Jouf International Road, while SASCO did not finally receive the said sites as they are not fit for the purposes of contracting. A judgment was passed in favor of SASCO, binding Jubbah Municipality to pay SR 1,027,750 to SASCO, and execution of judgment is underway.

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


No. Subsidiary Name Core BusinessHeadquarters

Foundation Country

% of Direct

& Indirect Ownership

Remarks

1

Auto & Equipment Investment Co., Ltd

(SAR 500,000)

Build car and equipment repair workshops – wash and lubricate cars - import and export spare parts - establish training centres - import and sell tools -buy and invest in lands.

Kingdom ofSaudi Arabia

Riyadh100 % SASCO

Incorporated in 2010

2Ostool Al-Naqil Co., Ltd

(SAR 5,000,000)

Transport goods and equipment - transport petroleum products - import, export, and wholesale – establish, operate, and rent maintenance workshops – provide advertising services on tankers and vehicles.


Riyadh100 % SASCO


3

Saudi Automobile & Touring Association, Ltd

SATA(SAR 500,000)

Subscribe in local and international car and motorcycle clubs as well as local and international societies and bodies interested in car and motorcycle affairs, issue Trip-Tik customs books and international driving licenses, build, manage, maintain and operate car & motorcycles sports tracks - hold races and car & motorcycle sport events - participate in races and motorsport events.


Riyadh100 % SASCO


4Al-Nakhla Al-Oula Co.

(SAR 500,000)

General contracting for buildings, establish, maintain and operate residential and commercial buildings and road works.


Riyadh100 % SASCO


5SASCO Palm Co.(SAR 500,000)

Import and sale of foods.Kingdom of

Saudi Arabia Riyadh

100 % SASCOIncorporated in

2014

6SASCO Al Waha Co.

(SAR 5,000,000)Provide accommodation services.


Riyadh100 % SASCO


No. Subsidiary Name Core BusinessHeadquarters

Foundation Country

% of Direct

& Indirect Ownership

Remarks

7SASCO Franchise Co.

(SAR 500,000)Grant franchise to operate “SASCO fuel stations” and “Palm Stores”.


Riyadh100 % SASCO


8


(SAR 37,500,000)

Build, manage, and operate fuel stations.


Riyadh100 % SASCO

Incorporated in 2007 and

acquired in 2015

Subsidiaries

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


Risks Managementالخطط والقراراتRisks Management

SASCO Risk Management ConceptRisk management is the process of measuring and assessing possible

risks as well as developing strategies to manage them to ensure

addressing mitigation and redressing thereof. It also means early

detection of actual problems to reduce their negative impacts on

SASCO.

In the ideal risk management scenario, SASCO adopts prioritization,

i.e. to address more likely and profoundly serious risks/ loss first.

Risk management should integrate with SASCO culture as well as

senior management effective policies and programs. SASCO risk

management translates its strategy to measurable objectives,

and SASCO determines policies and responsibilities towards risk

management as part of job description of its entire staff.

SASCO Risk Management Objectives

`f Achieve close control and monitoring of risks in activities and

business.

`f Identify specific treatment for each type of risk at all levels.

`f Prevent and minimize losses through immediate control or by

transferring them to external parties.

`f Identify actions and procedures to be taken in terms of certain risks

to control incidents and monitor losses.

`f Prepare studies before and after losses to prevent or minimize

likely losses, identify which risks are to be controlled, and use tools

that help prevent recurrence of such risks.

`f Provide shareholders, creditors, and customers with confidence to

protect the ability to generate profit despite any occasional losses

that may lead to minimize profit or non-achievement thereof.

SASCO Techniques to Address Risks

■ Assessment:An assessor focuses on the method the management adopts to

set objectives, analyse risks, and manage change, including their

relevance and adequacy to SASCO activities

SASCO-Wise Objectives:

`fHow far SASCO objectives provide profound data and guidance in

terms of SASCO aims while sufficiently specific to be directly linked

to SASCO.

`f Effectiveness of communicating objectives to staff and the Board.

`f Links between strategies and their consistency with SASCO

objectives.

`f Consistency of business plans and budgets with SASCO objectives,

strategic plans, and current conditions.

Activity-Wise Objectives:

`f Link between activity objectives, SASCO objectives, and strategic

plans.

`f Consistency of the activity objectives.

`f Adequacy of activity objectives with all important operations.

`f Idiosyncrasy of the activity objectives.

Sufficiency of Objective-Related Resources:

`f Identifying important objectives (important success factors) to

achieve SASCO objectives.

`f Involvement of all management levels in setting objectives and the

extent of their interest in achieving these objectives.

■ Risk:`f Sufficiency of mechanisms to identify risks originating from

external sources.

`f Sufficiency of mechanisms to identify risks originating from

internal sources

`f Identifying important risks of every important activity.

`f Analysing risks at SASCO level and activity level and changing the

method of risk analysis since many risks are difficult to quantify.

Analysis includes:

1. Asses risk significance.

2. Asses the possibility of risk occurrence (recurrence).

3. Impact of risk.

4. Consider how to manage risks and evaluate steps to be

taken.

SASCO addresses risks within four key groups:

1. Avoidance of Risks:This means to attempt to avoid activities that lead to certain risks,

such as not purchasing a property or not engaging in a certain work.

2. Minimization of Risks:By reducing investments facing a certain risk, which an investor

does not like to take, or by involving others in risks.

3. Transfer of Risks:This consists of means that help another party accept risk, usually

through contracts or financial hedging. Insurance is an example of

risk transfer through contracts.

4. Acceptance:This means to accept losses when they happen. This method is

an acceptable strategy in case of small risks in which the cost of

insurance against risk by time is higher than total losses (accepted

should be all risks that are not preventable or transferrable).

Based on the Board belief in the importance of risk management

being one of management foundations to protect shareholders’

investments and related parties’ rights, the Board continually

develops risk management, policies, and procedures consistent with

governance and internal control policies through setting a general


strategic plan for SASCO to face these risks and ensure expeditious treatment thereof and providing necessary solutions in a manner that reduces their impacts. The most important risks SASCO may face and their mitigations are classified as follows:

Most Important Risks SASCO may Face and their MitigationsOperational Risks

■ Retail SectorRetail Sector is one of the sectors characterized by easy entry by new competitors or expansion of existing ones, increasing the total competition therein, in addition to price fluctuations that affect land price, property lease, construction costs, or supply. Moreover, this sector mainly depends on providing petroleum services. Since the sector is linked to supplies received from the Arab Oil Company “Saudi Aramco”, any change in contract provisions negatively affects SASCO activity.To manage competition risks in the Retail Sector, parameters for internal control were set as follows:1. Requiring the development of accurate studies for every site that include fixed standards to ensure the investment feasibility of these sites.2. Conducting a comprehensive developmental program for the existing sites to ensure quality service and availability of all services the customer needs. This is in addition to approval of increase in market share inside cities and focus on acquiring relatively important sites, whether in terms of population density or traffic.3. Setting financial goals and enforcing monthly control thereon to address or benefit from deviations.4. Setting operational goals and enforcing the oversight role by supervisors in stations, provinces, and sectors, as well as by paying surprise periodical visits and monitoring customer complaints to address them through allocating a toll-free phone number to raise specific quality of services.

■ Ostool Al-Naqil Co. (Subsidiary)Ostool Al-Naqil Co. started its business as a SASCO sector in 2009. Following restructuring this sector, its name changed to “Ostool Al-Naqil Co.”. SASCO increases its operational capacity continually in line with providing human cadres to manage and supervise the fleet in a manner that ensures maximum benefit from transportation services to SASCO sites, lowers the internal transport costs, and provides other customers with transport services. Ostool Al-Naqil Co. offers the following services:`f Transportation services of all types of fuel.`fWater and sewerage transport services.`fDry transport services.

The most prominent risks faced by Ostool Al-Naqil Co. is the renewal of its license periodically from the Ministry of Transport. Although it does not encounter any difficulties in renewing the license, it does not guarantee to renew it in the future, which would affect its ability to continue operation in this field. In addition, any change in systems and regulations related to company business in terms of loading, transporting, unloading, and storing petroleum products as well as

environment protection requirements shall increase its costs and financial burdens.

To manage risks related to Ostool Al-Naqil Co., parameters have been developed for internal control through:`f Covering operational objectives of transportation sector and helping officers improve, develop, and schedule supply.`f Following up adherence to security and safety laws and procedures and recommending rectifications to violations.`f Checking quality assurance procedures and complying with specific quality standards.`f

■ Saudi Automobile & Touring Association (Subsidiary)Business of Saudi Automobile & Touring Association, which works under the umbrella of UN- controlled international bodies, is an essential cornerstone of SASCO operational business. Profit from its business, arising from sales of international driving licenses and Trip-Tik customs books, represents a material share of SASCO operating revenue. This activity depends on holding an international license from the FIA to issue those documents for several years now in return for international financial obligations and burdens that greatly add to the cost of selling the document.Political events in some neighbouring countries, activities of some local competitors (parallel clubs) and the emergence of new organizations affect the financial performance of Saudi Automobile & Touring Association.

To minimize competition risks and increase its market share, Saudi Automobile & Touring Association is in the process of developing an expansion plan to increase its branches and products, enhance its integration, and deal with strategic dealers. Parameters have been developed for the internal control through:1. Holding periodical meetings with strategic dealers to increase coordination in terms of market shares.2. Developing a plan to increase points of sale to market some products and follow up on them monthly.3. Setting financial objectives and following them up monthly.4. Conducting periodic monitoring of customs claims and trying to reduce them.

ERP-Related RisksAll departments of SASCO and its subsidiaries depend mainly on the use of Enterprise Resource Planning (ERP) system in all their operational and financial processes. The ERP system may serve more than one department. SASCO departments use the following systems:`f Finance Department: AX 2012.`fHuman Resources Management: AX 2012.`f SASCO Palm Stores sales: NCR Aloha.`f Fuel Sales: Gilbarco.`f SASCO Al-Waha Co. Sales: Opera and Nazeel system for motels.`fMaintenance Department: reporting system BMC.

As SASCO is eager to avoid any expected problems, it monitors the

updating of department systems periodically through a specialized office. Moreover, SASCO concluded a contract with a company specialized in storing information to create a backup copy of SASCO data.

Risks of Issuing New Regulations on Fuel Stations and Service CentresThe new Regulations on Fuel Stations and Service Centers, issued by the Ministry of Municipal and Rural Affairs, includes stringent standards for the geographical distribution of fuel stations and service centres so that they would not cause any disturbance, traffic jams, or damage to nearby facilities. It also sets the area of stations inside cities, design standards, and safety and environment preservation conditions.SASCO business may be affected in the future if it fails to obtain the necessary construction and operation licenses, whether for the existing or new stations.

Legislative Environment RisksSASCO operates in a dynamic legislative environment, and changes to systems and laws applicable in the Kingdom of Saudi Arabia may affect SASCO business positively or negatively. To reduce the negative effect of these changes, if any, SASCO always gets timely access to amendments to regulations and studies their impact on its business. Accordingly, SASCO takes the necessary steps to minimize the impact of these amendments or attempt to exploit them to serve its business.

The most prominent existing risks include the fact that SASCO should obtain/renew the license to practice its business from the Ministry of Municipal and Rural Affairs and Civil Defence periodically; this is connected with the property insurance policy. SASCO business may be affected in the future if it fails to obtain or renew such licenses.

Legal RisksIn addition, SASCO faces legal risks in relation to financial claims due for it from some tenants and debtors, namely collecting amounts due for it for previous years. Moreover, there are some labour lawsuits filed versus SASCO, and its Legal Department follows up these financial rights to collect them, either by amicable or judicial means.

HR-Related RisksLegislations in the Kingdom require a Saudization ratio of total staff in companies through Nitaqat Program. SASCO has achieved the required Saudization ratio and continually seeks to Saudize various administrative functions in line with its expansion plan that requires many workers in its different sites.

SASCO signed an agreement with the Human Resources Fund to support the Saudization plan in accordance with the regulations and laws issued in this respect. Although SASCO believes in the importance of Saudization as a national development requirement, it faces difficulties and challenges because of the nature of its business, inadequacy of its works to national jobseekers, and its

main dependence on expatriate workforce. Therefore, it is difficult to achieve the Saudization ratio. Accordingly, risks in this regard continue, particularly the higher cost of labour and recruitment.

Parameters have been developed for internal control through:1. Continuous follow up of updates and requirements of Labour Office in relation to Saudization and Nitaqat Program.2. Making sure that the staff get sufficient training to perform their duties effectively.3. Ensuring the periodical monitoring and assessment of performance.4. Following up Saudization of supervisory functions in all sectors to increase Saudization ratio.Market-Related RisksThey comprise:

■ Growth and Expansion-Related Risks:Since SASCO growth depends to opening and adding new sites, SASCO, to realize its expansion policies, selects sties and review them comprehensively to make proper decisions of purchase or rent.SASCO ability to continue its growth relies on the availability of human resources, such as administrative competencies, operational expertise, and labour on time. SASCO exerts necessary efforts to provide these resources.Delay in construction and development projects because of contractors’ non-abidance by the set completion schedule leads to delay in operating sites according to the operational plan. SASCO concerned departments continually follows up the contractors’ works and implementation procedures.

■ Competitive Environment Risks:Station and rest house sector witnesses fierce competition to provide best services. SASCO growth and profit levels depends on its ability to compete successfully and maintain a leading position among other companies.

■ Risks Related to Highway Network Development

(Transport Alternatives)The State develops highway networks continuously, which may change routes on which SASCO rest houses and stations are located. This is in addition to starting the execution of public transport projects, subway network, and railway lines to link the Kingdom regions with each other, which can adversely affect SASCO level of operational profit.In this regard, SASCO develops control in this regard through:`f Studying new road and railway line projects and the road network expansion plans in the Kingdom periodically to strategically plan SASCO sites, examine options and solutions for existing sites, and check whether they are vulnerable due to the development of road networks.

■ Risks Related to Issuance of Auto and Motorcycle Club Act


The Act includes some points that would affect the business of

Saudi Automobile & Touring Association. SASCO studies the Act and

identifies the expected impact on the Association works to take the

necessary measures towards addressing the Act requirements.

■ Risks Related to Customs Claims of the Association

covered by the FIA Insurance PolicyThere are customs claims not covered by the FIA insurance policy since

some countries are not included in the insurance coverage. Saudi

Automobile & Touring Association checks all supporting documents

when issuing Trip-Tik customs books, and forms a provision in the

form of a percentage of monthly sales of books to cover this claim.

■ Risks Related to Granting Land and Land Handed over by

StateOn 18/5/1401 AH, Royal Decree No. 11499 was issued to hand over to

SASCO the necessary lands while keeping its ownership to the State.

Moreover, Royal Decree No. 214/M was issued on 8/2/1405 AH to grant

SASCO (34) sites handed over to it. Therefore, SASCO requested the

receipt of the sites to build rest houses thereon.

In relation to grants that have title deeds already received, SASCO

assessed them by a number of specialized companies, and listed them

in accounting records. As for lands granted with no title deeds, SASCO

coordinates with the concerned authorities to get its title deeds and

receive these sites.

In addition to the granted lands, SASCO received some sites from

the State against receipt minutes. SASCO has built fuel stations on

some of these sites and is seeking to receive others to utilize them.

Royal Decree No. 1315/M issued on 24/11/1420 AH limited SASCO sites

to those previously granted and lease out those already handed over

or will be handed over to it in the future at an adequate fare while

emphasizing utilization of sites for the purpose for which they are

allocated. Currently, SASCO is working with government agencies to

receive and determine the rent value of land. SASCO may be adversely

affected in case of delayed handover of these sites by relevant

government authorities, or because of higher rent value. SASCO

assesses the site and rent value initially before deciding whether to

invest in the site.

■ Insurance-Related RisksInsurance policies cover all employees and properties of SASCO and its

subsidiaries. SASCO financial results or subsidiaries may be affected

by any future losses not covered under the insurance policies.

■ Credit-related RisksThe credit-related risks comprise of the inability of one party to fulfil

its obligations, resulting in a financial loss to the other party. In order

to reduce the impact of these risks, SASCO policy states that all post-

paid customers are subject to credit due diligence and their ability to

meet the obligations.

■ Financing RisksSASCO obtained financing from several banks to expand its projects,

support its core activities, purchase new sites to build fuel stations,

and finance the working capital and, thus, make profits and maximize

shareholders’ equity in the future.

In this respect, SASCO developed controls by setting financial and

operational objectives and activating controls on them on a monthly

basis to address deviations or take advantage of them, including but

not limited to:

`fMonitoring the achievement of expansion targets - numerically.

`fMonitoring the achievement of financial performance targets.

`f Conducting, analysing, and comparing budgets with the actual

results and reasons for deviations.

`f Reviewing and improving cash flows continually.

`f Scheduling expansions.

■ Investment RisksSASCO has investment portfolios in other companies, which may be

vulnerable to financial, operational, or administrative risks related

to those companies or the market where they operate. To minimize

the impact of these risks, SASCO conducts in-house or outsourced

studies by specialist consultants on the status of these investments

to assess the feasibility of keeping them. SASCO also gets continually

and periodically familiarized with the results of investee companies

to determine their conditions in general.

Although SASCO focuses on its core business, in case of an untapped

cash surplus, SASCO invests it by entering into new investment

portfolios or real estate investment funds or depositing it as a short-

term bank deposit.

SASCO also possesses several investment portfolios in securities in the

Saudi market managed by specialized companies. These investments

are vulnerable to fluctuations in stock prices according to the

prevailing market variables.

To reduce the impact of these risks, SASCO:

`f Examines the financial position of the investee companies and

assesses their performance quarterly and annually.

`fWorks to dissociate from some investments to focus on its SASCO

core business whenever the opportunity comes.

■ Risks Related to Increased Energy PricesThe increased sale tariff of electrical energy products and the rise in

prices of fuel and water affect the margin of income from operations.

The issuance of a ministerial decision to increase tariffs in the future

may lead to low income margin.

In this context, SASCO always gets timely access to amendments and

resolutions and studies their impact on its business. Accordingly,

SASCO takes the necessary steps to minimize the impact of these

resolutions.


Internal Control

Internal ControlSASCO Internal Control ConceptInternal control is one of the basic pillars of the oversight system of any organization to assist it to evaluate management risks. It is considered an objective and independent business of a consultative nature designed to increase the value of an organization, enhance its operations, and achieve its goals. External parties can provide internal control services to ensure high quality of this service.Internal control is a series of procedures and processes conducted by the Board, management, and employees to provide a reasonable confirmation with regard to achieving the following objectives:`f Effectiveness and efficiency of operations.`f Reliability of financial reports.`f Compliance with the related laws and instructions.

SASCO Roles and Responsibilities`f Everyone in SASCO is responsible for part of internal control. However, the Board is the body responsible for SASCO internal control system. The CEO is the person finally responsible for the oversight system.`f A number of parties provides internal control, each of whom has important responsibilities. The Board (either directly or through its committees), management, internal auditors, and other staff all submit important contributions to an effective internal control system.

Most Important Tools and Methods used in Annual Audit of Internal Control EffectivenessDepartments’ Monthly Report includes Key Performance Indicators (KPIs)1. An analysis to compare budget with the actual results and reasons for deviations.2. Ratio of sites achieving the budget.3. Fuel interruptions.4. Service-related customer complaints.5. Surprise field visits.6. Operation licenses.7. Daily deposits.8. Staff training.9. Correct the views of products.10. Supplies interruptions.11. Develop supply plan.12. Design and implement periodic maintenance program.13. Achieve expansion targets -numerically.14. Achieve financial performance targets.15. Develop a marketing plan.16. New products and alliances 17. Attraction and appointment.18. Security and safety.19. Inventory and property monitor.

Periodic Audit of Financial and Accounting Procedures and Financial ReportingIn coordination with the external auditor, SASCO periodically ensures the integrity of the financial and accounting procedures and that they are consistent with the widely accepted professional standards and the related laws governing financial and accounting practices and reporting.

Internal AuditSASCO management contracted a specialized office to carry out the internal audit based on risk assessment. SASCO works with the Internal Audit Department to develop a risk-based plan in coordination with the Audit Committee, SASCO management, and department officials. Based on this plan, an action internal audit plan was developed. The plan aims to describe how to deal with these risks and determine how and when their consequences will be avoided or reduced.

The internal (risk-based) audit plan included the following objectives:`f Evaluate the effectiveness and efficiency of the internal control system and processes.`fUnderstand policies and procedures.`f Ensure compliance with laws and regulations as well as SASCO contracts and policies.`f Ensure the preservation of SASCO assets.`f Ensure the reliability and integrity of financial and operational information.`f Compare the current SASCO practices with the best practices followed.`f Identify the opportunities available to enhance the internal control of activities and operations.

All (field and periodic) audit reports filed to the Board, senior management, and various departments included observations and weaknesses of internal control procedures in the audited departments or operations along with their potential impact on the integrity of SASCO business processes and transactions with a focus on high-value activities because of the increasing volume of risks. The reports also focused on the effectiveness of internal control system, since a weak control system increases the prospects of loss and the volume of risk, while an effective control system reduces the probability of such risks. In addition, every report included all recommendations on how to deal with these observations to raise the level of internal control procedures.

The most important focus points in internal audit reports included the following:`f Ensure that the department plans are consistent with the overall SASCO objectives.`f Verify that fixed assets represent actual values owned by SASCO.`f Ensure the provision of the necessary and adequate resources and skills to support business.`f Ensure that the IT facilities and services both support SASCO strategic objectives and preserve its competitive features.


`f Follow up inventory mechanism and the failure of current automated software.`f Ensure scheduling of operations to guarantee sufficient quantities of stock.`f Ensure that the available cash covers the continuity of planned operations.`f Announce SASCO bylaws, instructions, and policies conspicuously.`f Check the training of current employees to perform multiple tasks.`f Create periodic/preventative maintenance programs for equipment and vehicles.`f Follow up expiry dates of operational licenses periodically.`f Check security and safety procedures.`f Ensure the availability of financial analysis of the cash flow statement to make adequate financial and administrative decisions.`f Avoid supply stoppage to the minimum.`f Ensure the existence of registered contracts for all tenants compatible with the conditions and objectives of SASCO plan.

Procedures undertaken by the Audit CommitteeIn the light of the internal audit risk assessment and the recommendations raised by the Audit Committee regarding the development of SASCO internal control system and given the contents of chartered auditor’s letter to the management, SASCO is going to develop its internal control systems and risk management. Based on the reports received, the Committee did not note any important observations affecting the effectiveness of SASCO internal control system.

Following are the most important recommendations raised by the Audit Committee:1. Disclose the investment portfolios opened in the note of unrealized loss from the re-evaluation of investments in the financial position statement.2. Work towards collection of the amounts due for SASCO.3. Enforce the internal control systems in SASCO Palm Stores.4. Consider the feasibility to convert current investments to available-for-sale investments.5. Revise the constituent appropriations to ensure their efficiency.6. Extend the term of SASCO Zakat Advisor.7. Apply the International Accounting Standards (IAS) by the Finance Department and hire a consultant if required.8. The need to provide functional competencies to cope up with the progress witnessed by SASCO.9. The need for SASCO to cope up with the technological progress and the use of technology and all its applications.10. The importance of considering and following up the observations of Internal Audit Department, particularly the specific ones having relation to enforcing the internal control system.On its part, SASCO works to close off all recommendations by the Audit Committee in a timely manner.

Conflict with Audit Committee’s RecommendationsThere are no Audit Committee recommendations in conflict with the Board’s Resolutions or the Board refused to take into account with respect to the appointment, dismissal, fee determination or performance assessment of the internal auditor.


No. Regulation Article No. Paragraph Article/Paragraph Text Reasons of Non-Application

1 Forty-oneA

Guiding

The Board shall develop, based on the proposal of the Nomination Committee, the necessary mechanisms to annually assess the performance of the Board, its members and committees and the Executive Management using key performance indicators linked to the extent to which the strategic objectives of the Company have been achieved, the quality of the risk management and the efficiency of the internal control systems, among others, provided that weaknesses and strengths shall be identified and a solution shall be proposed for the same in the best interests of the Company.

Guiding Article: the mechanism shall be developed and approved during 2018.

2 Fifty-fourB

GuidingThe Chairman of the Audit Committee shall be an independent director.

Guiding Article: The Chairman of the Audit Committee in the current session ending on 29 June 2018 has passed 9 years in SASCO. This is not consistent with independence and SASCO will address the matter in the future.

3 Seventy Guiding

The Company's Board shall, by resolution therefrom, form a committee to be named the “Risk Management Committee.”. Chairman and majority of its members shall be Non-Executive Directors. The members of that committee shall possess an adequate level of knowledge in risk management and finance.

Guiding Article: the formation of the committee shall be subsequently considered.

4 Seventy-four a, b

a) For the purposes of implementing the approved internal control system, the Company shall establish units or departments for the assessment and management of risks and for internal auditing. b) The Company may utilize external entities to perform the duties and competencies of the units or departments of risk assessments and management and internal control without prejudice to the Company's responsibility for those duties and competencies.

The Internal Audit Department is already existing. It has been assigned with carrying out risk management in consistency with the Company's contracting with an external office to conduct the same.

Corporate Governance

Corporate Governance

Regulation and Adopted ProceduresDuring the fiscal year 2009, SASCO developed “Corporate Governance

Regulation”, which includes the rules, standards, and controls of

managing SASCO to enhance and ensure the application of the best

governance practices towards the protection of shareholders and

stakeholders’ rights. In 2013, SASCO developed the said Regulation in

accordance with the Corporate Governance Regulations issued by the

CMA.

In 2017, SASCO developed the said Regulation in accordance with the

Corporate Governance Regulations issued by the CMA under Decision

No. 8-16-2017 dated 16/05/1438 AH, corresponding to February 13th,

2017 pursuant to Companies Law passed by Royal Decree No. M/3

dated 18/01/1437. SASCO Board approve the updated Corporate

Governance Regulations on 1 August 2017.

Application of Governance RegulationSASCO applies all articles of its Corporate Governance Regulations

issued by the CMA Board except the following:


No. Regulation Article No. Paragraph Article/Paragraph Text Reasons of Non-Application

5 Eighty-five1, 2 and 3Guiding

The Company shall establish programs for developing and encouraging the participation and performance of the Company’s employees. The programs shall particularly include the following:1. Forming committees or holding specialized workshops to hear the opinions of the Company’s employees and discuss the issues and topics that are subject to important decisions;2. Establishing a scheme for granting Company shares or a percentage of the Company profits and pension programs for employees, and setting up an independent fund for such programs; and3. Establishing social organizations for the benefit of the Company’s employees.

Guiding Article: it shall be subsequently considered.

6 Eighty-seven Guiding

The Ordinary General Assembly, based on the Board recommendation, shall establish a policy that guarantees a balance between its objectives and those of the community for purposes of developing the social and economic conditions of the community.


7 Eighty-eight1, 2, 3 and 4

Guiding

The Board shall establish programs and determine the necessary methods for proposing social initiatives by the Company, which include: 1. Establishing measurement indicators that link the Company's performance with its social initiatives and comparing it with other companies that engage in similar business; 2. Disclosing the objectives of the Company's social responsibility to its employees and raising their awareness and knowledge of social responsibility; 3. Disclosing plans for achieving social responsibility in the periodical reports on the activities of the Company; and 4. Developing awareness programs to the community to familiarize them with the Company's social responsibility.


8 Ninety-five Guiding

If the Board forms a corporate governance committee, it shall assign to it the competences stipulated in Article (94) of these Regulations (Corporate Governance Regulations). Such committee shall oversee any matters relating to the implementation of governance and shall provide the Board with its reports and recommendations at least annually.

Guiding Article: the formation of the committee shall be subsequently considered.

Note:With reference to paragraph 9 of Article (22) the Corporate

Governance Regulations issued by the CMA, which stipulates “Among

the main functions and competencies of the Board are the following:

preparing the Company’s interim and annual financial statements

and approving them before publishing them; and whereas paragraph

(a/1) of Article (55) the Corporate Governance Regulations states

“the duties of the Audit Committee shall particularly include the

following: analyzing the Company’s interim and annual financial

statements before presenting them to the Board and providing its

opinion and recommendations thereon to ensure their integrity,

fairness and transparency”;

the Board adopted a mechanism to approve the interim financial

statements. The Audit Committee has the mandate to authorize

interim financial statements and approve publication thereof on

Tadawul website, provided these interim financial statements be

approved and signed by the Managing Director. After this approval,

they shall be sent to the Board members to review in the meeting

following the announced interim financial period.

ConclusionIn conclusion, the Chairman, Board members and the executive

management extend their thanks and appreciation to the

shareholders of the Saudi Automotive Services Company (SASCO), its

employees and all those who contributed to achieving its objectives

and vision. They also extend heartfelt thanks and appreciation to the

Custodian of the Two Holy Mosques, King Salman bin Abdul Aziz, may

Allah protect him, His Highness the Crown Prince, His Royal Highness

Prince Mohammed bin Salman bin Abdul Aziz, Vice President of

the Council of Ministers, Minister of Defence and Chairman of the

Council of Economic and Development Affairs, may Allah protect him,

for all great efforts and unlimited assistance to develop this country,

support its economy, and stimulate the business environment.

The Board of Directors is looking forward to the participation of its

shareholders in the General Assembly, and welcomes any suggestions

and views enhancing the Company’s business performance.


Board of Directors


Financial Statements

Consolidated Accountants RSMDr. Abdelgadir Bannaga & Partners Company

King Abdllah RoadAl Saif Center-3rd floorP.O.Box 2227 Riyadh12253-7749Tel: +966 114562974Fax: +966 114940587KSAwww.rsmksa.com

Independent Auditors’ ReportTo: Messrs/ Shareholders Saudi Automotive Services Co. (SASCO) (Saudi joint-stock company)

Opinion

We audited the consolidated financial statements of the Saudi Automotive Services Company (SASCO) “Saudi joint-stock company”. They include the consolidated financial position statement as at 31 December 2017, statement of profit or loss and other comprehensive income, changes in consolidated shareholders› equity, consolidated cash flows for the year ending on that date, notes attached to consolidated financial statements and brief of important accounting policies.

In our opinion, the attached consolidated financial statements fairly demonstrate, from all major aspects, the consolidated financial position of Saudi Automotive Services Company (SASCO) as at 31 December 2017, its financial performance and its consolidated cash flows for the year ending on that date according to the International Financial Reporting Standards (IFRS) approved in the Kingdom of Saudi Arabia and other standards issued by Saudi Organization for Certified Public Accountants.

Grounds of Opinion

Our audit was conducted according to the International Financial Reporting Standards (IFRS) approved in the Kingdom of Saudi Arabia. Our responsibility according to the IFRS is detailed in this report in the paragraph titled “Auditor’s Responsibility for auditing consolidated financial statements”. We are independent from SASCO pursuant to the Professional Ethics approved in the Kingdom of Saudi Arabia relevant to our audit of these consolidated financial statements. We also met the requirements of other professional ethics. We believe that audit grounds we obtained are sufficient to constitute a basis for our opinion about the audit.

Core Audit Issues

As per our professional assessment, core audit issues refer to such matters that had utmost importance in our audit of financial statements of the current year. Such matters have been addressed in the context of our audit of financial statements as a whole and in developing our opinion. We do not present a separate opinion about such matters. Following is a description of each separate audit issue and how it is addressed:

Core Audit IssueHow it is addressed in auditing

Adoption of IFRS for first timeAs a result of legal and regulatory requirements in the Kingdom of Saudi Arabia an as of 1 January 2017, SASCO must develop the consolidated financial statements according to the IFRS adopted in Saudi Arabia and other standards issued by Saudi Organization for Certified Public Accountants.

With respect to shifting to the IFRS adopted in Saudi Arabia, we took the following steps: • We assessed to what extent it is consistent to apply

the IFRS adopted in Saudi Arabia according to Standard No. 1 “First-time Adoption of International Financial Reporting Standards”.

• We assessed the adequacy of adopted accounting policies.




Core Audit Issue How it is addressed in auditing

Adoption of IFRS for first time (continued)With respect to all previous years including that ending on 31 December 2016, SASCO developed its consolidated financial statements according to the professional standards widely accepted in Saudi Arabia and issued by Saudi Organization for Certified Public Accountants. The consolidated financial statements for the year ending on 31 December 2017 are the first to be developed according to the International Financial Reporting Standards (IFRS) approved in Saudi Arabia and other standards issued by Saudi Organization for Certified Public Accountants.Therefore, SASCO, for the first time, adopted the International Financial Reporting Standards (IFRS) approved in Saudi Arabia in developing its consolidated financial statements for the year starting on 1 January 2017. As per the requirements of Standard No. 1 “Adoption of IFRS for first time”, SASCO consolidated financial position statement was development as at 1 January 2016 after introducing the required settlements to reflect the shift to IFRS approved in Saudi Arabia.We deemed this a core audit issue as the adoption of the IFRS for the first time is very important for consolidated financial statements in terms of validation, measurement and disclosure. Please refer to Note No. 6 on consolidated financial statements for more details about shifting and settlements between financial statements prepared according to the accounting standards widely accepted in Saudi Arabia and issued by Saudi Organization for Certified Public Accountants and financial statements prepared according to the IFRS approved in Saudi Arabia.

• We assessed action papers related to technical matters, detailed application plans and differences according to the accounting standards widely accepted in Saudi Arabia and issued by Saudi Organization for Certified Public Accountants which SASCO identified.

• We selected a sample of settlements (including calculation and registration) made to different balances and transactions in order to be in consistency with IFRS approved in Saudi Arabia.

• We assessed the consistency of disclosures related to the impact of shifting from the accounting standards widely accepted in Saudi Arabia and issued by Saudi Organization for Certified Public Accountants to the IFRS approved in Saudi Arabia.

Revenue RealizationRevenues are a major and determinant factor of a company’s performance and profits. Here arises a risk when revenues are recorded higher than their real value to increase profits. Due to the importance of reporting and the risk of recording revenues higher than their real values, we see that realization of revenues are an important aspect of audit.

With respect to revenues, we took the following steps:• In our audit, we paid attention to what extent the

accounting policies are consistent with generating revenues in favor of SASCO and assessing to what extent such policies are consistent with the IFRS.

• We examined the internal control procedures with respect to revenue realization and studying the procedures taken by SASCO for purposes of completing the factors of revenue realization.

• We conducted a substantive analysis on important revenue flows through developing expectations based on sizes and rates. We also got explanations of major differences.

• We examined a sample of recorded revenue transactions and compared them to supporting documents to verify the registered revenues.

Core Audit Issue How it is addressed in auditing

Investments held for saleSASCO possesses fair value investments through items of consolidated other comprehensive income statement with a total value of SR 96 million as at 31 December 2017.The fair value of investments held for sale, not circulating in an active market, is determined through applying assessment methods which often include practicing discretions by the Management and the use of assumptions and estimates.The state of uncertainty of investments, not circulating in an active market, is estimated using the techniques of the following internal models:• Important observable assessment inputs (i.e.

investments classified as per Level 3).• Important unobservable assessment inputs (i.e.

investments classified as per Level 3).Investments at fair value are assessed through the items of consolidated other comprehensive income statement at fair value with registering profit or loss compared to difference of fair value within items of consolidated other comprehensive income statement to be added as part of reassessing investments held for sale with shareholders’ equity.Investments at fair value through consolidated other comprehensive income items are considered a core audit issue for being affected by price fluctuation of Capital Market Authority.Assessment of investments at fair value was considered in 2 and 3 Levels as a core audit issue due to the complexity of assessing these financial instruments and the importance of judgments and estimates conducted by the Management.

With respect to investments held for trading, we took the following steps:• Verify the fair value of listed investments and

matching it to the prices announced by Capital Markets in the date of consolidated financial position and prices of units for funds.

• Verify the calculation of difference in the fair value and adding it to the items of consolidated other comprehensive income as well as adding it to the reserve of reassessing investments held for trading.

• Assess the sufficiency of SASCO disclosures towards these investments.

• We assessed the design and application of Management’s control over the investments classified as held for trading and not traded in an active market. We also tested the efficiency of major procedures of these transactions.

• We evaluated the methodology and consistency of assessment methods and inputs used in determining the value of investments held for trading.

• We tested samples of operations used in assessing investments held for trading and not traded in an active market. As part of audit procedures, we assessed major inputs and assumptions used in determining values such as the anticipated cash flows, risk free rates, credit margins through comparing them with external data.

Other Information

The Management is responsible for other information, including information stated in SASCO Annual Report, but not including the consolidated financial statements and our audit report about them. It is expected to have access to the annual report after the date of this report.

Our opinion does not cover the consolidated financial statements of other information and we have no confirmation about them.

When it comes to our audit of consolidated financial statements, our responsibility is to read the other information stated above when made accessible. When doing so, we taken into account whether such information is fundamentally inconsistent with the consolidated financial statements or our knowledge which we obtained during audit or it appears that it contains significant errors. When we read the annual report and find significant errors in such information, we are required to report these facts to Governance officers.




Management’s & Governance Officers’ Responsibility for Consolidated Financial StatementsManagement is responsible for developing and fairly presenting consolidated financial statements as per the IFRS adopted in Saudi Arabia, the other standards issued by Saudi Organization for Certified Public Accountants, the provisions of Companies Law and the Company’s Articles of Association. It is also responsible for internal control systems that are deemed necessary for developing consolidated financial statements free from significant errors, whether such errors are arising from fraud or omission.

The Management’s responsibility for developing consolidated financial statements includes an assessment of the company’s ability to continue business, disclosure, as the case may be, of matters related to company’s continuity and use of continuation basis in accounting unless the Management wishes to dissolve the company or cease its operations or no logical alternative is available.

Governance officers are responsible for supervising the development of financial reports.

Auditor’s ResponsibilityWe aim to get a reasonable confirmation whether the consolidated financial statements as a whole are free from significant errors - whether such errors are arising from fraud or omission – and to issue the audit report that includes our opinion about such statements. A reasonable confirmation is a high level of confirmation. Our audit, which was conducted according to the IFRS adopted in Saudi Arabia, does not always guarantee the detection of significant errors, if any. Errors may arise out of fraud or omission. They are deemed significant if, individually or collectively, reasonably affecting the economic decisions of the users of consolidated financial statements.

As part of the audit process, undertaken according to the IFRS adopted in Saudi Arabia, we practice professional judgment and apply the principle of professional scepticism in all aspects of audit in addition to the following:

• Identify and assess the risks of significant errors of consolidated financial statements, whether are arising from fraud or omission, design and implement audit procedures responding to such risks and obtain sufficient evidences that provide a ground for our opinion. The risk of failing to detect significant errors arising out of fraud is higher than that arising out of omission. This is because fraud may include collusion or counterfeiting, deliberate deletion or misstatements, or intrusion of internal audit systems.

• Understand audit-related internal control systems for the purpose of developing proper audit procedures according to the circumstances and not for raising an opinion about the efficiency of corporate internal control systems.

• Assess the consistency of applicable accounting policies and the reasonability of relevant Management-prepared accounting estimates and notes.

• Obtain a conclusion as to the consistency of Management’s use of the principle of continuity in accounting based on audit evidences we obtained. We work to know if there is a significant uncertainty in relation to events or circumstances that may raise big doubts about the Company’s ability to continue to run business as a continuous establishment. If it comes to our knowledge that there exists a significant uncertainty, we are required to attract attention in our audit report to the relevant notes outlined in the consolidated financial statements. If disclosure of such information is not sufficient, we will amend our opinion. Our deductions rely on audit evidences obtained until the date of our audit report. However, future events or circumstances may cause company’s discontinuity to run business as a continuous establishment.

• Assess general presentation as well as structure and content of consolidated financial statements, including notes, and whether consolidated financial statements represent transactions and events in a manner that achieves fair presentation.

We communicated with governance officers with respect to planned audit scope, timing and important notes, including any internal control system failure identified in our audit.We also provided them with a statement that we complied with independence-related ethical requirements, made them familiar with all matters that may reasonably affect our independence and present relevant commitment parameters if necessary.

The issues reported to governance officers include such issues that had utmost importance when auditing consolidated financial statements of the current year. Therefore, they are considered core audit issues. We are going to highlight such issues in our report unless this is prohibited by a disclosure law or regulation. However, in very rare circumstances, we decide not to report the same as it is reasonably expected that negative consequences would overcome the public interest of reporting.

Report on Legal & Regulatory RequirementsArticle 135 of Companies Law requires an auditor to include in its report the established violations of provisions of Law or company’s Articles of Association. In the course of our audit of consolidated financial statements, it has been established to us that SASCO has violated the provisions of Law or its Articles of Association.

Allied Accountants Dr. Abdelgadir Bannaga & Partners Company

Mohammed bin Farhan bin NadirLicense No. (435)Riyadh, Kingdom of Saudi Arabia 8 Rajab 1439 AH, corresponding to 25 March 2018


Saudi Automotive Services Co. (SASCO)(Saudi joint-stock company)Notes to the consolidated financial statements For the year ended 31 December 2017________________________________________________________________________________________________________________


Note 31 Dec. 2017

(SR) 31 Dec. 20161 Jan. 2016 (SR)

(Amended – Note 6)

AssetsNon-current assets

Net properties and equipmentNet intangible assetsProjects under executionInvestments held for tradingRecorded cash

78910

1,068,977,53610,064,60025,000,01796,061,120

-

(SR)873,569,463

8,599,160150,783,566124,829,90024,273,438

823,586,4805,914,719

48,002,427138,580,89924,273,438

Total non-current assets 1,200,103,273 1,182,055,523 1,040,357,930

Current assets

Net receivables, advance payments, and other receivablesNet inventoryInvestments held for tradingCash and balances with banks

11121314

203,386,10636,337,406

879,202,95,215,346

171,708,59127,323,999

-111,470,755

125,767,13527,696,79021,520,881

151,462,827

Total current assets 335,818,060 310,503,345 326,446,633

Total assets 1,535,921,333 1,492,558,872 1,366,804,563

Shareholders’ equity and liabilities

CapitalStatutory reserveRetained earningsReserve for reassessing investments held for trading

119

10

540,000,00040,852,236147,158,41155,485,941

540,000,00037,870,221

120,320,28184,254,721

540,000,00035,255,166

123,954,50598,005,687

Total Shareholders’ equity 783,496,588 782,445,223 797,215,358

Non-current liabilities

Financing of resale for profit and long-term loansEnd of service gratuity

15 351,039,85011,386,371

335,767,6089,751,412

328,146,8628,307,713

Total non-current liabilities 362,426,221 345,519,020 336,454,575

Current liabilities

Financing of resale for profit and short-term loanscurrent portion of financing of resale for profit and long-term loansDividends Payable to shareholdersPayables and other creditorsProvision for Zakah

1515171618

95,000,000109,479,08038,718,206142,974,7683,826,470

44,594,800134,043,81738,823,795142,722,7174,409,500

25,000,00068,350,69237,799,29898,021,7183,962,922

Total current liabilities 389,998,524 364,594,629 233,134,630

Total liabilities 752,424,745 710,113,649 569,589,205

Total shareholders’ equity and liabilities 1,535,921,333 1,492,558,872 1,366,804,563

*Notes from No. 1 to 31 constitute an integral part of these consolidated financial statements.

Note 2017(SR)

2016(SR)

(Amended – Note 6)

Revenues Costs of revenues

20 1,212,329,807(1,132,838,480)

1,094,122,754(1,036,023,387)

Total revenues 79,491.327 58,099,376

Sale and marketing expensesGeneral and administrative expenses 21

(3,799,225)(42,940,699)

(1,030,495)(37,655,667)

Net year profit from core operations Financing costsProfit costsProfit from selling investments held for tradingProfit from assessing investments held for tradingOther revenues

1322

32,751,403(5,631,383)3,603,408

369,9919,211

2,512,515

19,413,214(2,405,799)9,689,2731,605,256

-1,333,887

Net year profit before ZakahZakah 18

33,615,145(3,795,000)

29,635,831(3,655,000)

Net annual profit 29,820,145 25,980,831

Other comprehensive incomeItems to be subsequently reclassified into income statement

Fair value movement for investments held for trading 10 (28,768,780) (13,750,966)

Total year comprehensive income 1,051,365 12,229,865

Share profitability

Actual dividend per share from core operations 26 0.61 0.36

Actual year dividend per share 25 0.55 0.48




Capi

tal (

SR)

Stat

utor

yre

serv

e (S

R)La

nd g

rant

s and

do

nati

ons (

SR)

Reta

ined

prof

its (

SR)

Unr

ealiz

ed lo

sses

fr

om in

vest

-m

ents

reva

lua-

tion

(SR)

Tota

l(S

R)

Bala

nce

on 1

Jan.

201

6 as

pre

viou

sly

disc

lose

dIm

pact

of a

dopt

ing

Inte

rnat

iona

l Fin

anci

al

Repo

rtin

g St

anda

rds (

IFRS

)

540,

000,

000

-

35,2

55,16

6

-

111,3

37,5

78

(111

,337

,578

)

59,3

94,4

71

64,5

60,0

34

(13,

608,

523)

111,6

64,2

10

732,

3286

92

64,8

86,6

66

Bala

nce

on 1

Jan.

201

6 as

am

ende

d54

0,00

0,00

035

,255

,166

-12

3,95

4,50

598

,005

,687

797,2

15,3

58

Net

ann

ual p

rofit

s as p

revi

ousl

y di

sclo

sed

Impa

ct o

f ado

ptin

g In

tern

atio

nal F

inan

cial

Re

port

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Stan

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s (IF

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mpr

ehen

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inco

me

Tran

sfer

to st

atut

ory

rese

rve

Prof

it d

istr

ibut

ions

- - - -

- - - 2,61

5,05

5-

- - - -

26,15

0,55

3

(169

,722)

- (2,6

15,0

55)

(27,0

00,0

00)

- - (13,7

50,9

66)

- -

26,15

0,55

3

(169

,722)

(13,7

50,9

66)

- (27,0

00,0

00)

Bala

nce

on 3

1 Dec

. 201

654

0,00

0,00

037

,870

,221

-12

0,32

0,28

184

,254

,721

782,

445,

223

Bala

nce

on 1

Jan.

201

7 as

pre

viou

sly

disc

lose

dIm

pact

of a

dopt

ing

Inte

rnat

iona

l Fin

anci

al

Repo

rtin

g St

anda

rds (

IFRS

)

540,

000,

000

-

37,8

70,2

21

-

111,3

37,5

78

(111

,337

,578

)

55,9

29,9

69

64,3

90,3

12

(16,

620,

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100,

874,

754

728,

517,7

35

53,9

72,4

88

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nce

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7 as

am

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-12

0,32

0,28

184

,254

,721

782,

445,

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Tran

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to st

atut

ory

rese

rve

Net

ann

ual p

rofit

Oth

er co

mpr

ehen

sive

inco

me

- - -

2,98

2,01

5- -

- - -

(2,9

82,0

15)

29,8

20,14

5-

- - (28,

768,

780)

- 29,8

20,14

5(2

8,76

8,78

0)

Bala

nce

on 3

1 Dec

. 201

754

0,00

0,00

040

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,236

-14

7,158

,411

55,4

85,9

4178

3,49

6,58

8

* The

att

ache

d no

tes f

rom

No.

(1) t

o (2

7) fo

rm a

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f the

se co

nsol

idat

ed fi

nanc

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tate

men

t

Saud

i Aut

omot

ive

Serv

ices

Co.

(SAS

CO)

(Sau

di jo

int-

stoc

k co

mpa

ny)

Not

es to

the

cons

olid

ated

fina

ncia

l sta

tem

ents

For

the

year

end

ed 3

1 Dec

embe

r 201

7__

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

__31 Dec. 2017

(SR)31 Dec. 2016

(SR)(As amended)

Operating activities

Net annual profitAmendments to settle net profit to net cash available from operating activities:Component of customs claims provision Component of dead stock provision Component of doubtedly-collected provision Profits of assessing investments held for tradingProfits of sale of investments held for tradingClosing of projects under executionAmortizationsExtinguishmentsComponent of end of service gratuity provisionComponent of Zakah provisionProfits of selling properties and equipment

29,820,145

4,096,683-

177,491(9,211)

(369,991)140,826

44,096,2941,165,222

2,835,6803,795,000

(5,607)

25,980,831

6,491,90698,535

875,200(1,605,256)

--

35,869,852528,067

2,297,1263,655,000(256,061)

85,742,532 73,935,200

Changes in operating assets and liabilities

Receivables, advance payments, and other receivablesInventoryPayables and other creditorsPaid part of Zakah provision Paid part of end of service gratuity

(35,951,689)(9,013,407)

252,051(4,378,030)(1,200,721)

(53,308,562)273,256

44,700,999(3,208,422)

(853,427)

Net cash available from operating activities 35,450,736 61,539,044

Investment activities

Net change in investments held for tradingPurchase of properties and equipmentAdditions of projects under execution Sums collected from sale of properties and equipment

(500,000)(38,060,939)(79,142,911)

717,151

23,126,137(37,664,607)(155,750.748)

1,824,934

Net cash used in investment activities (116,986,699) (168,464,284)

Financing activities

Paid distributions of shareholders’ profitsNet change in shareholders’ entitlementsNet change in loans and profits for saleRegistered cash

-(105,589)41,112,705

24,273,438

(27,000,000)1,024,497

92,908,671-

Net cash available from operating activities 65,280,554 66,933,168

Net deficit in cash and balances with banksCash and balances with banks at the beginning of year

(16,255,409)111,470,755

(39,992,072)151,462,827

Cash and balances with banks at the end of year 95,215,346 111,470,755

Non-cash transactionsItems changed from projects under execution to properties and equipmentUnrealized loss from reassessing investments held for tradingProperties and equipment changed into Intangible assets

204,785,634(28,768,780)

2,630,662

52,969,609(13,750,966)

3,212,508





1. Composition & Business

Saudi Automotive Services Company (SASCO) is a Saudi shareholding company established by the Ministerial Decree No. 563 dated 23/12/1402 H corresponding to 10/12/1982. It is headquartered in Riyadh under Commercial Register No. 1010054361 dated 28/07/1404 H corresponding to 30/4/1984.SASCO provides a variety of services which include car and passenger services through establishing central workshops for the highest level of maintenance and establishing car service stations. It also provides motels, restaurants, the import and sale of equipment, along with the provision of food, beverages, soft drinks and the raw materials required. It imports and trades in cars and all types of spare parts after obtaining the required licenses, implements all kinds of contacting with respect to constructing, managing, maintaining and operating residential and commercial buildings, undertakes contacting activities of car and equipment maintenance for individuals and corporations and contracts with institutions or corporations practicing similar business or merge with them or establishes subsidiaries possessed by SASCO or with third parties.SASCO’s capital is SR 540,000,000 divided into 54,000,000 shares, each with a value of SAR 10.

Consolidated financial statements as at 31 Dec. 2017 include the financial statements of the following subsidiaries and branches:

Name of Company Core Business% of direct & indirect ownership

Ostool Al-Naqil Co.Saudi Automobile & Touring Association, Ltd SATAAuto & Equipment Investment Co., LtdAl-Nakhla Al-Oula Co.

SASCO Palm Co.SASCO Al Waha Co.Zaiti Petroleum Services CompanySASCO Franchise Co.

Transporting oil products and derivativesIssuing transit books and international driving licensesEstablishing car and heavy equipment repair workshopsUndertaking general contracting for buildings, establishing, maintaining and operating residential and commercial buildingsImport and sale of food, beverages, soft drinks and equipmentAccommodation services (motels)Establishing, managing and operating fuel stationsMarketing services for third parties

100%100%100%100%

100%100%100%100%

Attached consolidated financial statements include the accounts of SASCO and the following subsidiaries and branches:

No. Commercial Register No. Core Business City

1.2.3.4.5.6.7.8.9.10.11.

1018000425205009362840302547751131030559

58500295305850064608585006460911280102831011012857

20550256422050112261

SASCO branchSASCO branchSASCO branchZaiti branchZaiti branchZaiti branchZaiti branchZaiti branchZaiti branchSASCO Palm Co. branchSASCO Palm Co. branch

RiyadhDammam

JeddahBuraidah

AbhaAbhaAbha

UnaizahAl KharjAl Jubail

Dammam

2. Grounds on which consolidated financial statements are developed

These consolidated financial statements were developed according to the International Financial Reporting Standards (IFRS) approved in the Kingdom of Saudi Arabia and other standards approved by Saudi Organization for Certified Public Accountants.

These consolidated financial statements were the first consolidated financial statements to be developed according to IFRS and included under the first annual consolidated financial statements according to the IFRS, particularly the first standard stating “Adoption of IFRS for first time” approved in the Kingdom of Saudi Arabia and other standards approved by Saudi Organization for Certified Public Accountants.

Financial statements of subsidiaries were prepared according to the accounting standards widely accepted in Saudi Arabia.According to the Saudi Capital Market Authority (CMA), options of using reassessment model of properties, machinery, equipment and intangible assets in IFRS No. 16 and IFRS No. 38 and option of using fair value model for real estate investments in IFRS No. 40 will not be available in the first three years as of the date of transformation beginning from 2017 till 2019 for listed companies.

Development of consolidated financial statements The attached consolidated financial statements were developed on the basis of historical costs according to maturity principle with the exception of investments held for sale at fair value.

Items of consolidated financial statements appear in Saudi Riyal (SR). It is the currency of operation and disclosure.

3. New standards & issued amendments, not yet effected

There is a number of new standards and amendments to standards and explanations applied to years starting from 1 Jan. 2018, which have not been applied when developing these consolidated financial statements as follows:

3-1 IFRS No. 15 - Revenue from Contracts with Customers

IFRS No. 15 establishes a comprehensive concept framework to determine the amount and timing of revenue recognition. This Standard replaces the guidelines for demonstrating current revenues. IFRS No. 18 includes revenues while IFRS No. 11 includes construction contracts and international explanation No. 13 “customer loyalty programs”.

It is not expected that the adoption of this Standard in subsequent periods will have a significant financial impact on company’s financial statements.

3-2 IFRS No. 9 – financial instruments (versions amended in 2009, 2010, 2013 and 2014).

3-2-1 Classification of financial assets

IFRS No. 9 includes three main classification categories of financial assets: financial assets measured by amortized cost, fair value through other comprehensive income, fair value through profit or loss and consolidated other comprehensive income. This Standard excludes the current categories of International Accounting Standard No. 39, which are retained till date of maturity as well as loans and receivables held for trading.

As per IFRS No. 9, contract-embedded derivatives in which the core instrument is financial assets within the standard scope are not divided. Instead, mixed financial instrument is assessed as a whole for classification purposes.




3-2-2 DepreciationThe IFRS 9 replaces the incurred loss model of International Accounting Standard No. 39 with expected future credit loss model. This requires a major appreciation of how changes of economic factors affect the expected future credit loss model, which will be determined on the basis of weighted probability.The new depreciation model will be applied to financial assets measured by amortized cost or fair value through consolidated other comprehensive income with the exception of investments in equity instruments and also applied to contract assets.

As per IFRS No. 9, loss appropriations will be measured according to one of the following principles: 1. ) Credit loss expected throughout 12 months. Such loss arises from payment default events which are likely to occur within 12 months after the report date.2. ) Credit loss expected throughout the lifetime of a financial instrument. Such loss arises from all payment default events which occur throughout the expected lifetime of a financial instrument.

As for credit loss expected throughout the lifetime, measurement is applied in case credit risks of financial assets largely increase on the report date since initial recognition thereof. Credit loss expected throughout 12 months in case these credit risks do not largely increase. An establishment may determine that credit risks do not largely increase if the instrument is subject to low credit risks at the report date. However, measurement of credit loss expected throughout the lifetime is always applied to commercial receivables and contract assets without any significant financing components. An establishment may choose to always apply this policy to commercial receivables and contract assets without significant financing components.

3-2-3 Classification of Financial LiabilitiesIFRS No. 9 largely retains the current requirements of IAS No. 39 with the aim to classify financial liabilities. However, IAS No. 39 signifies that all changes to fair value of liabilities classified by fair value through statement of profit or loss and other comprehensive income are recognized in statement of profit or loss and other comprehensive income. According to IFRS No. 9, the change to fair value related changes in credit risks of liabilities is demonstrated in the statement of profit or loss and other comprehensive income, while the remaining amount of change in fair value is presented in the statement of profit or loss and other comprehensive income.

3-2-4 Hedge AccountingIFRS No. 9 presents a new hedge accounting model designed to closely cope up with how the establishment practices risk management activities when hedging against financial and non-financial risks.

3-2-5 DisclosureIFRS No. 9 requires new special inclusive disclosures with respect to accounting at hedging, credit risks and expected credit risks.It is not expected that the adoption of this Standard during subsequent periods will have a major impact on company’s financial statements.

3-3 IFRS No. 16 – Lease ContractsIFRS No. 16 identifies the way a developer of consolidated financial statements according to the IFRS recognizes, measures, presents and discloses lease contracts. This Standard provides lessees with a single accounting model, which requires them to recognize assets and liabilities of lease contracts unless the lease term is 12 months or less or if the asset is of a little value.While lessors continue to classify lease contracts as operating or financing lease contracts, the approach of IFRS regarding lessor accounting did not significantly change from the previous one, namely IAS No. 17.

4. Basics of Consolidation

These consolidated financial statements include the consolidated financial position statement, the statement of profit or loss and other comprehensive income consolidated shareholders’ equity change statement, consolidated cash flow statement, and notes complementing the consolidated financial statements of the group. They include assets, liabilities and results of and subsidiaries’ business as indicated in Note No. 1. Subsidiaries are those companies controlled by the group. The group controls the company when it is entitled with different revenues due to participating in the company and its ability to affect these revenues through controlling the company. Subsidiaries are consolidated as of the date of group’s acquisition over subsidiaries until ceasing to practice such control. The group uses the purchasing method to account for gathering operations when transferring control to the group. Acquisition cost is measured by fair value of obtained assets. The increased cost of acquisition is registered in addition to the fair value of non-controlling equity in the net assets specified and acquired as reputation in the consolidated financial position statement. Non-controlling equity is measured by its share of company’s net controlled assets at the date of acquisition. The group presents share of profit or loss and net non-controlled assets as an independent item in the statement of profit or loss and other comprehensive income and within the shareholders’ equity in the statement of profit or loss and other comprehensive income. All unrealized transactions, balances, profits and losses arising from dealings among the group’s companies. Subsidiaries’ accounting policies are amended when necessary to ensure they are consistent with the group’s policies. SASCO and its subsidiaries develop their financial statements for the same reporting periods.

5. Summary of Major Accounting Policies

Following is a summary of SASCO major accounting policies:

Use of estimates

The development of consolidated financial statements according to IFRS’s approved in Saudi Arabia requires the Management to set judgments, estimates and assumptions that affect the application of accounting policies and disclosed amounts of assets, liabilities, revenues and expenses. These estimates and their related assumptions are based on previous experience and other factors believed to be reasonable in the current circumstances; which results constitute a basis for taking judgments related to the book value of assets and liabilities not easily made clear from their sources. Actual results may differ from these estimates.

Estimates and their related assumptions are continuously audited. Amendments to accounting estimates are recognized with a future effect.

Properties, machinery and equipment

Properties, machinery and equipment appear in costs after entering accumulated amortizations. They include costs to expenses directly ascribed to acquisition of assets. When parts of one item of properties, machinery and equipment have different productive lives, they are counted as separate items (main components) of properties, machinery and equipment. Expenses of repair and maintenance are revenue expenses while improvement expenses are capital expenses. Amortizations are counted on the basis of their estimated productive life using the straight-line method. Sold or excluded assets and their accumulated amortization are deleted from accounts on the date of selling or exclusion.




Following is the amortization percentage of main items of these assets:

Statement % before re-estimation % after re-estimation

Buildings Furniture Cars and trucksMachinery, equipment, trailers and transport mechanismsCommunication devices and phonesComputer and softwareElectrical devicesAdvertising boardsImprovements to buildings

2-3%10%

20-10%10%25%15%10%15%

10-3%

2-3%10%

20-7%10%25%15%10%15%4%

Productive life and consumption method are periodically reviewed to make sure that method and period of consumption are consistent with the economic benefits expected from properties and equipment.

Depreciation

a. ) Financial assetsEach financial position statement has a specific date. Values of financial assets are reviewed to know if there is something to indicate any depreciation. Financial assets are like receivables and assets that are individually assessed as not depreciating. They are assessed for depreciation on a collective basis. A substantive proof of depreciation of receivables portfolio may include the company’s previous experience with respect to payment collection and increase of late payments which may exceed the period of debt. It may also include remarkable changes in local and international economic conditions related to default of receivables. The listed value of a financial asset is directly reduced by the amount of depreciation loss for all financial assets with the exception of commercial receivables. A listed value is reduced through creating a provision account. When one of receivables are considered uncollectable, the amount of receivable and the corresponding amount are deleted in the provision account.

Changes to the value listed in the provision account are recognized in the statement of profit or loss and other comprehensive income.When it comes to instruments of shareholders’ equity held for sale, the previously acknowledged losses of depreciation are not reflected in the statement of profit or loss and other comprehensive income. Any increase in fair value comes after a depreciation loss that is directly recognized in the consolidated statement of change in shareholders’ equity.

b. ) Non-financial assetsOn the date of each financial position statement, the company reviews the listed values of its assets to find any evidence that these assets have incurred depreciation losses. In case such evidence exists, the asset redeemable value is estimated to determine the depreciation loss, if any. In case it is not possible to estimate the redeemable value of a certain asset, the company estimates the redeemable value of cash generating unit to which the assets affiliates. When reasonable and fixed distribution bases are identified, joint assets are distributed to specific cash generating units or distributed to the smaller group of cash generating units for which it is possible to determine reasonable and fixed distribution bases.

A redeemable value is the fair value of the asset minus selling cost or value of use, whichever higher.

In case the redeemable value of an asset (cash generating unit) is estimated lower than the listed value, the listed value of asset (cash generating unit) is reduced to the redeemable value. Depreciation losses are directly recognized in the statement of profit or loss and other comprehensive income, unless the asset is reassessed, then the depreciation losses are recorded as a reduction from reassessment provision.

Cancellation of Recognition

Each financial position statement has a specific date. Values of financial assets are reviewed to know if there is something to indicate The company cancels recognition of a financial asset only at the expiry of contractual rights related to receipt of cash flows from the financial asset, substantially the transfer of all ownership risks and benefits to another establishment. In company fails to transfer or chooses to substantially retain ownership risks and benefits and continuously control the transferred asset, the company recognizes its retained share in the transferred asset and related liabilities within limits of amounts expected to be paid. In case all ownership risks and benefits of a transferred asset are substantially retained by the company, it continues to recognize the financial asset.

Financial InstrumentsFinancial assets and liabilities are recognized when the company becomes a party to contractual provisions of these instruments. Financial assets and liabilities are initially assessed by fair value. Costs of transaction directly related to purchasing or issuing financial assets and liabilities (other than financial assets and liabilities with fair value through statement of profit or loss and other comprehensive income) are added to the fair value of financial assets and liabilities or deducted from the same, when necessary, at initial recognition. Costs of transaction directly related to purchasing financial assets and liabilities, which are measured by fair value through statement of profit or loss and other comprehensive income, are directly recognized in the statement of profit or loss and other comprehensive income.

First: Financial AssetsFinancial assets are classified into the following categories: financial assets at fair value through statement of profit or loss and other comprehensive income, investments retained until maturity date, financial assets held for sale and loans and receivables. Classification depends on the nature and objective of financial assets and is determined at the time of initial recognition. Recognition of all financial asset sale and purchase operations is conducted by normal means on the basis of dealing date. Operations of sale or purchase by normal means are purchases and sales of financial assets requiring the delivery of assets within definite time framework pursuant to regulations or market norms.

a. ) Financial Assets Retained for TradingFinancial assets retained for trading are classified through statement of profit or loss and other comprehensive income when they are retained for trading purposes or selected to be so classified.

Financial assets retained for trading are classified if they:- Are acquired mainly for being sold in the near future.

- Represent a part of well-known financial instruments portfolio run by the company and includes a real pattern of a financial instrument that achieves profits on the short term.

- Represent a financial derivative but not classified or active as a hedging instrument.Financial assets not retained for trading can be classified as financial assets determined at fair value through statement of profit or loss and other comprehensive income at initial registration in the following cases:

- Such classification cancels or largely reduces any inconsistent measurement or calculation that may result unless classification is done this way.

- A financial asset represents a part of a set of financial assets or liabilities or both, which are run and their performance is assessed on fair value basis as per the company’s risk management or documented investment strategy. Information about the set of financial assets or liabilities is internally obtained on this basis.




- The financial asset represents a part of a contract that contains a derivative including one or more, and that IAS No. 39 related to financial instruments allows a turnkey compound contract to be classified as financial assets with fair value through statement of profit or loss and other comprehensive income.

Financial assets determined by fair value through statement of profit or loss and other comprehensive income appear with their fair value. Any profit or loss resulting form reassessing through statement of profit or loss and other comprehensive income is recognized.

Net profit or loss includes any profit or interest distributions that are due from the financial asset and is included in the statement of profit or loss and other comprehensive income.

b. ) Financial Assets Determined by Fair Value through other comprehensive income statementSASCO owned listed shares – circulated in an active financial market as financial assets – are classified as held for trading and included at fair value. It also possesses investments in unlisted shares not traded in active markets but classified as financial assets held for trading and registered at fair value as Management sees it is possible to measure their fair value in an authentic manner. Profits and losses arising out of change in fair value are included within other comprehensive income items, which are added to the item of accumulated changes in fair value of investments within equity with the exception of depreciation losses. Such depreciation losses are included in the statement of profit or loss and other comprehensive income in case of excluding investment or there is a depreciation in its value. Profits or losses resulting from previous assessment and recorded in the reserve for reassessing investments are included in the other comprehensive income statement.Any revenues from distribution of profits of investments held for trading are recognized when the company has an emerging right to receive payments for profits of these investments.

c. ) ReceivablesReceivables are underivative financial assets of fixed or identifiable payments, not listed in any active market. Receivables, including commercial and other receivables, bank balances and cash with amortized cost are measured using the actual interest method without any loss or depreciation, which is determined in profits or losses.Interest revenues are identified by applying the actual interest rate, with the exception of short-term receivables when the impact of deduction is not significant.

Second: Financial LiabilitiesFinancial liabilities (including loans and receivables) are initially and subsequently measured by amortized cost using actual interest method. SASCO ceases to recognize financial liabilities when an obligation is complied with, canceled or terminated. Difference between book value of excluded financial liabilities and paid amount is recorded in the statement of profit or loss and other comprehensive income.

Method of Actual Interest RateThe method of actual interest rate is a means to calculate the amortized cost of debt instrument and distribute revenues of interests on the relevant year. The actual interest rate is the one that exactly discounts estimated future cash payments (including all fees and paid or received points, that constitute an integral part of actual interest rate, transaction costs, installments or other discounts) through the expected life of debt instrument or a short period – when necessary – to net book value at initial recognition.

Cash and balances with banksCash and balances with banks include balances with banks, resales for profit and other high liquidity investments transferrable into known cash amounts and payable within three months or less as of the date of purchase.

SASCO has long-term financial obligations for which cash amounts have been credited. Such amounts are classified as cash recorded in non-current assets.

InventoryInventory is valued by cost or net realizable value, whichever is less. Cost is determined by weighted average method. Provision of stagnant goods is recorded in the statement of profit or loss and other comprehensive income according to SASCO Policy.

Reputation Reputation represents increase of investment costs on fair value of acquired assets at business combination. Reputation is annually assessed to determine depreciation and is recorded with costs minus depreciation losses. Depreciation losses are not reflected after being recorded. Profits or losses of establishment exclusion include the book value of reputation related to sold establishment.In case the cost of acquired investment is less than its fair value in the acquisition date, such difference is settled by reducing the fair value of non-current assets of acquired company on pro rata basis with their book value with the exception of long-term investments in securities.

Realization of RevenuesSales are realized when performing service or delivering goods and issuing invoices. Other revenues are recoded when realized.

Lease ContractsLease contracts are classified as financing leases when risks and ownership benefits are substantially transferred to the lessee under lease contract terms and conditions. Other types of lease contracts are classified as operational lease contracts.

Expenses All expenses that are direct and related to realization of business revenues consist of salaries, wages and commodity costs that are indirect and credited on sales costs. Expenses of selling and marketing include sales staff salaries and any other expense related to selling and marketing in the company’s favor. Other expenses are classified within administrative and general expenses. Joint expenses are distributed between sales costs and administrative and general expenses. Joint expenses are distributed as per constant rules.

Zakat ProvisionDiscretionary Zakat is an obligation on the company. It is set right in the attached consolidated financial statements by allocating it to the statement of profit or loss and other comprehensive income according to Zakat Standard and opinion of Saudi Organization for Certified Public Accountants. It is credited by estimation to the year as per principle of maturity.

Zakat is calculated at the end of year based on the amended net consolidated profit or loss or Zakat Base, whichever is larger, pursuant to the laws applicable in the General Authority for Zakat and Tax. SASCO obtained General Authority for Zakat and Tax’s approval to submit a consolidated Zakat declaration for both SASCO and its subsidiaries. Differences between provision and final assessment are addressed in the year in which assessment is received.

Staff Remuneration- End of Service GratuityEnd of service gratuity is determined using expected unit cost method along with conducting an actuarial evaluation at the end of each annual financial period. Remeasurement, which includes actuarial gains and losses, is included in the consolidated financial position statement. However, expenses or credit amounts are included in the statement of profit or loss and other comprehensive income of the period in which they were incurred. Recognized remeasurement is immediately included in other comprehensive income within retained profits and not reincluded in profit or loss.

- Retirement BenefitsSASCO pays retirement subscriptions in favor of its Saudi employees to the General Organization for Social Insurance, representing a certain contribution plan. Payments are considered expenses when incurred.

- Short Term Staff RemunerationCommitment to benefits payable to employees in terms of wages, salaries, annual leave and sick leave is recognized in the year in which the relevant service is provided in the undiscounted amount for benefits expected to be paid in consideration of this service.




- Actuarial StudySASCO conducted an actuarial study to staff end of service benefits as at 31 December 2107. There was no substantial difference between the end of service balance according to the actuarial study and the end of service balance recorded in 31 December 2016 and 2017 in SASCO consolidated financial statements.

- Intangible AssetsIntangible assets, except reputation, are measured in costs minus accumulated amortization and depreciation losses. Intangible assets were amortized on a straight-line basis throughout the economic life.

- Sector InformationBusiness Sector represents a set of assets and operations both jointly provide products or services subject to risks and revenues different from that related to sectors of other activities, which are measured as per reports employed by the Chief Executive Director and senior decision maker in the company.The geographical sector provides products in a certain economic environment subject to risks and revenues different from that related to business sectors in economic environments.

- Transfer of foreign currencyTransactions conducted in foreign currency are transferred into Saudi Riyal at the exchange rates prevailing at the time of transaction. Cash assets and liabilities undertaken in foreign currency as at the date of the consolidated financial position statement are transferred into Saudi Riyal at the exchange rates prevailing at the end of year. Profits and losses arising out of payments or foreign currency exchange are included in the statement of profit or loss and other comprehensive income.

6. Application of new and amended International Financial Reporting Standards (IFRS)

6-1 Application of IFRS for the first timeAs indicated in Note No. 2 and Note No. 3, consolidated financial statements of the year ending on 31 December 2017 were developed by SASCO according to IFRS. For the year ending on 31 December 2016, SASCO developed its consolidated financial statements according to the accounting standards issued by Saudi Organization for Certified Public Accountants.

Therefore, SASCO developed its consolidated financial statements to comply with the IFRS as at 31 December 2017, along with the comparative consolidated financial position statement as at 1 January 2016 which is the date for SASCO transformation to the IFRS and the consolidated financial position statement as at 1 January 2016 and 31 December 2016. Notes from 6-2 to 6-6 explain the amendments introduced by SASCO to amend the previously issued consolidated financial statements according to the accounting standards issued by Saudi Organization for Certified Public Accountants including the consolidated financial position statement as at 1 January 2016 and 31 December 2016 and consolidated financial statements as at 31 December 2016.

6-2 Impact of adopting IFRS on consolidated financial position statement as at 31 December 2016:

Amounts previously recorded as per

standards issued by Saudi Organization for Certified Public

Accountants(31 Dec. 2016)(Saudi Riyal)

Impact of converting to IFRS

(Saudi Riyal)

According to IFRS31 Dec. 2016(Saudi Riyal)


Net properties and equipmentNet intangible assetsProjects under executionInvestments held for saleRecorded cash

902,592,9488,131,256

150,783,56637,613,669

-

(29,023,485)467,904

-87,216,23124,273,438

873,569,4368,599,160

150,783,566124,829,90024,273,438

Total non-current assets 1,099,121,439 82,934,088 1,182,055,527

Current assets

Net receivables, advance payments, and other receivablesNet inventoryCash and balances with banks

176,441,75327,323,999135,744,193

(4,733,162)-

(24,273,438)

171,708,59127,323,999111,470,755

Total current assets 339,509,945 (29,006,600) 310,503,345

Total assets 1,438,631,384 53,927,488 1,492,558,872


Shareholders’ equityCapitalStatutory reserveLand grantsRetained earningsReserve for reassessing investments held for sale

540,000,00037,870,221111,337,57855,929,969

(16,620,033)

-

(111,337,578)64,390,321100,874,754

540,000,00037,870,221

-120,320,28184,254,721



Financing of resales for profit and long-term loansEnd of service gratuity

335,767,6089,751,412

--

335,767,6089,751,412

Total non-current liabilities 345,519,020 - 345,519,020

Current liabilities

Financing of resales for profit and short-term loansCurrent portion of financing of resales for profit and long-term loansDividends Payable to shareholdersPayables and other creditorsProvision for Zakat

44,594,800134,043,817

38,823,795142,722,7174,409,500

--

---

44,594,800134,043,817

38,823,795142,722,7174,409,500

Total current liabilities 364,594,629 - 364,594,629

Total liabilities 710,113,649 - 710,113,649

Total shareholders’ equity and liabilities 1,438,631,384 53,927,488 1,492,558,872



6-3

Impa

ct o

f ado

ptin

g IF

RS o

n co

nsol

idat

ed sh

areh

olde

rs’ e

quit

y st

atem

ent a

s at 1

Janu

ary

2017

:

Capi

tal

(Sau

di R

iyal

)

Stat

utor

y Re

serv

e(S

audi

Riy

al)

Land

Gra

nts

(Sau

di R

iyal

)

Reta

ined

ea

rnin

gs(S

audi

Riy

al)

Rese

rve

for

reas

sess

ing

inve

stm

ents

hel

d fo

r sal

e(S

audi

Riy

al)

Tota

l(S

audi

Riy

al)

Bala

nce

on 1

Janu

ary

2017

acc

ordi

ng to

stan

dard

s iss

ued

by S

audi

O

rgan

izat

ion

for C

erti

fied

Publ

ic A

ccou

ntan

tsIm

pact

of a

dopt

ing

IFRS

540,

000,

000

-

37,8

70, 2

21

-

111,3

37,5

78

(111

,337

,578

)

55,9

29,9

69

64,3

90,3

12

(16,

620,

033)

100,

874,

754

728,

517,7

35

53,9

27,4

88

Bala

nce

on 1

Janu

ary

2017

acc

ordi

ng to

IFRS

540,

000,

000

37,8

70,2

21-

120,

320,

281

84,2

54,7

2178

2,44

5,22

3

Sett

lem

ent o

f Sha

reho

lder

s’ E

quit

yAs

at 1

Janu

ary

2017

(Sau

di R

iyal

)

Bala

nce

on 1

Janu

ary

2017

acc

ordi

ng to

stan

dard

s iss

ued

by S

audi

O

rgan

izat

ion

for C

erti

fied

Publ

ic A

ccou

ntan

tsRe

tain

ed e

arni

ngs

Land

gra

nts

Reta

ined

ear

ning

sAm

orti

zati

on a

nd co

nsum

ptio

n O

ther

rece

ivab

le p

rovi

sion

Asse

t dep

reci

atio

n O

ther

- th

an –

tem

pora

ry im

pair

men

t of i

nves

tmen

ts h

eld

for s

ale

Prof

its o

f rea

sses

sing

inve

stm

ents

hel

d fo

r sal

e in

stoc

ks a

nd sh

ares

of

non

- tr

adin

g co

mpa

nies

728,

517,7

3511

1,337

,578

(111

,337

,578

)(1

3,65

8,52

3)(1

,681

,751)

(4,73

3,16

2)(2

6,87

3,83

0)13

,658

,523

87,2

16,2

31

Tota

l sha

reho

lder

s’ e

quit

y ac

cord

ing

to IF

RS78

3,44

5,22

3

Saud

i Aut

omot

ive

Serv

ices

Co.

(SAS

CO)

(Sau

di jo

int-

stoc

k co

mpa

ny)

Not

es to

the

cons

olid

ated

fina

ncia

l sta

tem

ents

For

the

year

end

ed 3

1 Dec

embe

r 201

7__

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

6-4 Impact of adopting IFRS on statement of profit or loss and other comprehensive income on 31 December 2016:



Accountants(31 Dec. 2016)(Saudi Riyal)


(Saudi Riyal)

According to IFRS31 Dec. 2016(Saudi Riyal)

Revenues Costs of revenues

1,094,122,754(1,035,882,720)

-(140,658)

1,094,122,754(1,036,023,378)

Total profit 58,240,034 (140,658) 58,099,376

Selling and marketing expensesGeneral and administrative expenses

(1,030,495)(37,626,603)

-(29,064)

(1,030,495)(37,655,667)

Net profit from core operations 19,582,936 (169,722) 19,413,214

Financing costsProfits of selling investments held for saleRevenues of financial investments and assets (dividends)Other revenues

(2,405,799)1,605,2569,689,2731,333,887

----

(2,405,799)1,605,2569,689,2731,333,887

Net annual profit before ZakatZakat

29,805,553(3,655,000)

(169,722)-

29,635,831(3,655,000)

Net annual profit 26,150,553 (169,722) 25,980,831

Items of comprehensive incomeItems to be subsequently reclassified into profit and loss statement

Movement from fair value to investments held for sale - (13,750,966) (13,750,966)

Net annual comprehensive income 26,150,553 (13,920,688) 12,229,865




6-5 Impact of adopting IFRS on consolidated financial position statement as at 1 January 2016:



Accountants(1 Jan. 2016)(Saudi Riyal)


(Saudi Riyal)

According to IFRS(1 Jan. 2016)(Saudi Riyal)


Net properties and equipmentNet intangible assetsProjects under executionInvestments held for saleRecorded cash

849,397,4578,489,601

48,002,42740,575,179

-

(25,810,977)(2,574,882)

-98,005,68724,273,438

823,586,4805,914,719

48,002,427138,580,86624,273,438

Total non-current assets 946,464,664 93,893,266 1,040,357,930

Current assets

Net receivables, advance payments, and other receivablesNet inventoryInvestments held for saleCash and balances with banks

130,500,29727,695,79021,520,881

175,736,265

(4,733,162)--

(24,273,438)

125,767,13527,695,79021,520,881

151,462,827

Total current assets 355,453,233 (29,006,600) 310,503,345

Total assets 1,301,917,897 64,886,666 1,366,804,563


Shareholders’ equityCapitalStatutory reserveLand grantsRetained earningsReserve for reassessing investments held for sale

540,000,00035,255,166111,337,57859,394,417(13,658523)

--

(111,337,578)64,560,034111,664,210

540,000,00035,255,166

-123,954,50598,005,687



Financing of resales for profit and long-term loansEnd of service gratuity

328,146,8628,307,713

--

328,146,8628,307,713

Total non-current liabilities 336,454,575 - 336,454,575

Current liabilities

Financing of resales for profit and short-term loansCurrent portion of financing of resales for profit and long-term loansDividends Payable to shareholdersPayables and other creditorsProvision for Zakat

25,000,00068,350,692

37,799,29898,021,7183,962,922

--

---

25,000,00068,350,692

37,799,29898,021,7183,962,922

Total current liabilities 233,134,630 - 233,134,630

Total liabilities 569,589,205 - 569,589,205

Total shareholders’ equity and liabilities 1,301,917,897 64,886,666 1,366,804,563

6-6 Notes on settlements

- Grants and government lands were reclassified at an amount of SR 111,337,578 as at 1 January 2016 as part of the retained profits

according to the requirements of Accounting Standard No. 20 (Accounting for Government Grants and Disclosure of Government

Assistance).

- A provision of other - than – temporary impairment was formed in investments held for sale at an amount of SR 13,658,523 as

at 1 January 2016 as part of retained profits according to the requirements of Accounting Standard No. 39 (Financial Instruments:

Recognition and Measurement).

- Intangible assets were reclassified under properties and equipment at an amount of SR 2,346,917 as at 1 January 2016 according to

the requirements of Accounting Standard No. 1 (Presentation of Financial Statements).

- Properties and equipment were reclassified under the intangible assets at an amount of SR 1,284,083 as at 1 January 2016 according

to Accounting Standard No. 1 (Presentation of Financial Statements).

- Investments held for sale in unlisted companies were reassessed. This resulted in an increase of these investments at an amount of

SR 98,005,687 as at 1 January 2016 as part of consolidated shareholders’ equity as profits unrealized from investments held for sale.

On 31 December 2016, the value of these investments increased to SR 87,216,231. The profits unrealized from investments held for sale

as part of shareholders’ equity were decreased according to the requirements of Accounting Standard No. 39 (Financial Instruments:

Recognition and Measurement).

- The value of no-future-benefit assets was decreased according to the consolidated future cash flows as at 1 January 2016 at an

amount of SR 26,873,830 as part of retained profits according to Accounting Standard No. 36 (Impairment of Assets).

- Other receivables provision was formed as at 1 January 2016 at an amount of SR 4,733,162 as part of retained profits according to

Accounting Standard No. 39 (Financial Instruments: Recognition and Measurement).

- Restricted cash was reclassified at an amount of SR 24,273,438 as at 1 January 2016 into an independent item under non-current

assets according to the requirements of Accounting Standard No. 1 (Presentation of Financial Statements).

- Accounts of receivables, prepaid expenses and other liabilities were classified into the receivables, prepaid payments and other

receivables with the aim to apply the view requirements stated in the Accounting Standard No. 1 (Presentation of Financial

Statements).

- Accounts of receivables, prepaid revenues, performance bond amounts and other liabilities were reclassified into payables and

other creditors with the aim to apply the view requirements stated in the Accounting Standard No. 1 (Presentation of Financial

Statements).


Saud

i Aut

omot

ive

Serv

ices

Co.

(SAS

CO)

(Sau

di jo

int-

stoc

k co

mpa

ny)

Not

es to

the

cons

olid

ated

fina

ncia

l sta

tem

ents

For

the

year

end

ed 3

1 Dec

embe

r 201

7__

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

Saud

i Aut

omot

ive

Serv

ices

Co.

(SAS

CO)

(Sau

di jo

int-

stoc

k co

mpa

ny)

Not

es to

the

cons

olid

ated

fina

ncia

l sta

tem

ents

For

the

year

end

ed 3

1 Dec

embe

r 201

7__

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

7. N

et P

rope

rtie

s & E

quip

men

t

Land

s(S

R)Bu

ildin

gs(S

R)Fu

rnit

ure

(SR)

Vehi

cles

&

truc

ks(S

R)

Mac

hine

s eq

uipm

ent

trai

lers

tr

ansp

orta

tion

eq

uipm

ent

(SR)

Com

mun

icat

ion

devi

ces a

nd

tele

phon

es(S

R)

Com

pute

rs

and

soft

war

e(S

R)

Elec

tric

al

equi

pmen

ts(S

R)

Adve

rt.

Sign

s(S

R)

Impr

ovin

gbu

ildin

gs(S

R)To

tal

(SR)

Cost

1 Jan

uary

201

7 (a

men

ded)

Addi

tion

s Ite

ms C

onve

rted

to

pro

ject

s (N

ote

9) Excl

usio

nsIte

ms C

onve

rted

to

inta

ngib

le

asse

ts (N

ote

8a)

419,

803,

172

- - - -

441,5

20,9

75

3,99

7,828

180,

712,

287

(31,0

00)

-

20,75

0,31

9

2,07

1,921

593,

213

(193

,034

)-

37,2

22,6

68

5,85

7,965

- (1,2

18,17

5)-

59,2

00,4

06

3,90

6,13

87,0

11,4

58

(777

,581

)-

1,765

,182

18,0

17- - -

12,2

33,4

86

2,58

7,344

56,11

0

(43,

259)

(4,6

00,0

12)

28,8

01,9

13

4,77

2,47

91,2

74,9

16

(546

,205

)-

17,3

34,6

09

2,33

1,908

93,0

51

(107

,697

)-

84m

729,

077

12,5

17,3

4015

,044

,599

(326

,179)

-

1,123

,360

,807

38,0

60,9

3920

4,78

5,63

4

(3,2

43,13

0)(4

,600

,013

)

31/1

2/20

1741

9,80

2,17

262

6,20

0,09

023

,222

,419

41,8

62,4

5869

,340

,421

1,783

,199

10,2

33,6

6934

,303

,103

19,6

51,8

7011

1,964

,837

1,358

,364

,238

Accu

mul

ated

co

nsum

ptio

ns

1 Jan

uary

201

7 (a

men

ded)

Addi

tion

s Ex

clus

ions

Ite

ms C

onve

rted

to

inta

ngib

le

asse

ts (N

ote

8a)

- - - -

149,

476,

890

19,6

90,2

36(1

2,90

2)-

14,9

86,6

40

1,019

,213

(146

,037

)-

15,13

7,075

2,90

9,02

0(8

51,8

99)

-

22,9

77,4

80

5,167

,624

(766

,573

)-

1,447

,528

59,10

7- -

5,54

2,63

8

1,447

,111

(39,

761)

(1,9

69,3

50)

13,2

53,4

21

2,53

3,93

9(4

06,8

90)

-

8,61

5,80

0

1,934

,581

(87,5

71)

-

18,3

53,8

72

8,33

5,46

3(2

19,9

53)

-

249,

791,3

44

44,0

96,2

94(2

,531

,586

)(1

,969

,350

)

31/1

2/20

17-

196,

154,

224

15,8

59,8

1618

,194,

196

27,3

78,5

311,5

06,6

354,

980,

638

15,3

80,4

7010

,462

,810

26,4

69,3

8228

9,38

6,70

2

Net

boo

k va

lue

At 3

1/12

/201

741

9,80

2,17

245

7,045

,866

7,362

,603

23,6

68,2

6241

,961

,890

276,

564

5,25

3,03

118

,922

,633

9,18

9,06

085

,495

,455

1,068

,977

,536

7. N

et P

rope

rtie

s & E

quip

men

t (Co

ntin

ued)

Land

s(S

R)Bu

ildin

gs(S

R)Fu

rnit

ure

(SR)

Vehi

cles

&

truc

ks(S

R)

Mac

hine

s eq

uipm

ent

trai

lers

tr

ansp

orta

tion

eq

uipm

ent

(SR)

Com

mun

icat

ion

devi

ces a

nd

tele

phon

es(S

R)

Com

pute

rs

and

soft

war

e(S

R)

Elec

tric

al

equi

pmen

ts(S

R)

Adve

rt.

Sign

s(S

R)

Impr

ovin

gbu

ildin

gs(S

R)To

tal

(SR)

Cost

1 Jan

uary

201

7 (a

men

ded)

Addi

tion

s Ite

ms C

onve

rted

to

pro

ject

s (N

ote

9) Excl

usio

nsIte

ms C

onve

rted

to

inta

ngib

le

asse

ts (N

ote

8a)

419,

802,

172

- - - -

411,5

73,5

25

2,17

1,625

27,7

75,8

25

- -

19,4

97,9

69

997,6

2331

5,01

8

(60,

291)

-

34,4

23,6

04

601,8

03,3

04- (3

,309

,240

)-

50,9

28,74

6

9,64

2,03

61,6

09,3

59

(2,9

79,73

5)-

1,444

,584

240,

225

84,0

00

(3,6

27)

-

11,9

54,6

51

5,20

3,56

1- (7

,058

)(4

,917

,668

)

25,6

43,6

60

2,01

4,14

41,2

24,2

39

(80,

130)

-

1431

9,08

7

2,89

4,16

212

1,360

- -

54,5

24,3

42

8,39

2,92

721

,839

,808

(28,

000)

-

1,044

,112,

340

37,6

64,6

0752

,969

,609

(6,4

68,0

81)

(4,9

17,6

68)

31/1

2/20

1641

9,80

2,17

244

1,520

,975

20,7

50,3

1937

,222

,668

59,2

00,4

061,7

65,18

212

,233

,486

28,8

01,9

1317

,334

,609

84,7

29,0

771,1

23,3

60,8

07

Accu

mul

ated

co

nsum

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ns

1 Jan

uary

201

6 (a

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Addi

tion

s Ex

clus

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Ite

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to

inta

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le

asse

ts (N

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- - - -

134,

569,

328

14,9

13,4

58(5

,896

)-

14,15

3,01

2

893,

570

(60,

042)

-

14,17

1,528

2,86

4,37

8(1

,898

,831

)-

20,8

02,6

31

5,02

2,47

4(2

,847

,625

)-

1,425

,616

25,5

36(3

,624

)-

5,53

9,40

4

1,710

,670

(2,2

76)

(1,70

5,160

)

11,5

95,8

67

1,737

,672

(80,

118)

-

6,82

2,20

9

1,793

,591

- -

11,4

46,2

65

6,90

8,40

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96)

-

220,

525,

860

35,8

69,8

52(4

,899

,208

)(1

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60)

31/1

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16-

14,4

76,8

9014

,986

,640

15,13

7,075

22,9

77,4

801,4

47,5

285,

542,

638

13,2

53,4

218,

615,

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18,3

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9,79

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419,

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172

292,

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5,76

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36,2

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7,654

6,69

0,84

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,492

8,71

8,80

966

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873,

569,

463

At 3

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6(a

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419,

802,

172

277,0

04,19

75,

344,

967

20,2

52,0

7630

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115

18,9

686,

415,

247

14,0

47,7

937,4

96,8

7843

,078

,077

823,

586,

480




Sensitivity towards assumption changesWith respect to estimating the current value, Management believes there are no reasonable possible changes in any of the above assumptions, that may lead to a major increase in unit book value including reputation compared to its redeemable value. Following are assumptions originating from changes to key assumptions:

a. ) Sales growth-related assumptionsb. ) Sales costc. ) Final value ratio

9. Projects under execution

Following is the movement of projects under execution for year ended:

31 Dec. 2017(Saudi Riyal)

31 Dec. 2016 (Saudi Riyal)

1 Jan. 2016(amended)

(Saudi Riyal)

Beginning of period balanceAdditions during the yearItems converted from properties and equipment (Note 7)Closing of projects under execution

150,783,56679,142,911

(204,785,634)(140,826)

48,002,427155,750,748

(52,969,609)-

41,813,07797,324,204(91,134,854)

-

25,000,017 150,783,566 48,002,427

10. Investments held for sale


31 Dec. 2016(amended)

(Saudi Riyal)


(Saudi Riyal)

Investments held for sale in stocks and shares of non - trading companies (10b)Investments held for sale in stocks of trading companies (10a)

65,637,302

30,423,818

93,406,731

31,423,169

104,196,187

34,384,679

96,016,120 124,829,900 138,580,866

Following is the movement on reserve of reassessing investments held for sale:



(Saudi Riyal)


(Saudi Riyal)

Balance at the beginning of yearFair value movement for investments of stocks and shares of non - trading companiesFair value movement for investments of stocks of trading companiesProvision of other - than – temporary impairment

84,254,721(27,769,429)

(999,351)

-

98,005,687(10,789,456)

(2,961,510)

-

(13,658,523)98,005,687

-

13,658,523

55,485,941 84,254,721 98,005,687

8. Net intangible assets

Following is the movement of projects under execution for year ended:



(Saudi Riyal)


(Saudi Riyal)

Software licenses (Note 8-a)Reputation (Note 8-b)

5,755,6074,308,993

4,290,1674,308,993

1,605,7264,308,993

10,064,600 8,599,160 5,914,719

8-a- Software licenses

2017(Saudi Riyal)

2016(amended)

(Saudi Riyal)

Cost at the beginning of year (amended)Items converted from properties and equipment (Note 7)

12,069,1214,600,012

7,151,4534,917,668

Cost at the end of year 16,669,133 12,069,121

Accumulated amortization at the beginning of year (amended)Year amortization Items converted from properties and equipment (Note 7)

(7,778,954)(1,165,222)(1,969,350)

(5,545,727)(528,067)

(1,705,160)

Accumulated amortization at the end of year (10,913,526) (7,778,954)

As at 31 Dec. 5,755,607 4,290,167

As at 1 Jan. 4,290,167 1,605,726

8-b- Reputation

Reputation was obtained thanks to acquiring Zaiti Petroleum Services Company in 2015 as follows:



(Saudi Riyal)


(Saudi Riyal)

Zaiti Petroleum Services Company 4,308,993 4,308,993 4,308,993

A reputation test is conducted on an annual basis. Assets are tested to make sure of any depreciation through comparing book value with redeemable value, which is determined on the basis of information used in calculating the present value that uses expected cash flows that are based on financial expectations approved by Senior Management for a period of five years.

Key assumptions used in present value calculationThe Management relied, in its expectations regarding sales growth and total margin, on previous performance and its expectations with respect to market developments. Discount rates reflect Management’s expectations of sector-related specified risks. The relevant estimations relied on published information and movement of raw material prices in previous periods, which were used as indicators on future prices movement. Growth rates relied on average industry rates.Calculation of present value is largely impacted by assumptions related to sales growth rates and inflation in cost of sales used in extracting cash flows for the period following budget for a period of five years and other factors used for calculation of final value. A final value is calculated using the price-to-earnings ratio.




Following is SASCO share:

As at 31 January 2016:

Statement SASCO shareValue of

Assessment(Saudi Riyal)

SASCO share at purchase

cost(Saudi Riyal)

SASCO share at fair value(Saudi Riyal)

(loss) / profit of

reassessment(Saudi Riyal)

Middle East Battery Company (MEBCO)National Company of Tourism (Syahya)United Racing Company

7.94%0.36%

25%

1,144,000,000680,036,3888

-

4,565,5001,500,000

125,000

90,833,6002,448,131125,000

(10,798,400)8,944

-

1,824,036,388 6,190,500 93,406,731 (10,789,456)

As at 1 January 2016:




cost(Saudi Riyal)


(loss) / profit of



7.94%0.36%

25%

1,280,000,000677,551,944

-

4,565,5001,500,000

125,000

101,632,0002,439,187125,000

97,066,500939,187

-

1,957,551,944 6,190,500 104,196,187 98,005,687

11. Net receivables, advance payments, and other receivables




(Saudi Riyal)

Client debtsDoubtedly-collected debts provision

109,925,246(5,214,808)

83,362,013(5,037,317)

4,162,117-

Net receivablesCustoms claimsPrepaid leasesPayments to providersPayments to contractorsStaff advance payments and loansGuarantee letters (Note 27)Deposits with third partiesOther

104,710,43841,017,076

38,766,89416,545,49915,657,8636,113,0084,560,5973,718,9385,797,612

78,324,69637,214,84641,402,22617,976,0728,771,9624,841,4697,530,181603,523

4,502,752

36,566,52634,566,52639,385,37623,949,0432,169,6503,416,2715,112,851304,236

3,188,029

Customs claims provisionOther receivables provision

236,941,925(28,822,657)(4,733,162)

201,167,727(24,725,974)(4,733,162)

148,734,465(18,234,068)

(4,733,162)

203,386,106 171,708,591 125,767,135

a. ) Investments held for sale in stocks of trading companiesInvestments held for sale are represented in stocks of Saudi shareholding companies listed in the Saudi Capital Market. Following is the movement of these investments during the year ending on:



(Saudi Riyal)


(Saudi Riyal)

Balance at the beginning of year (amended)Provision of other - than – temporary impairmentUnrealized loss from reassessing investments *

31,423,169-

(999,351)

34,384,679-

(2,961,510)

48,043202(13,658,523)

-

Balance at the end of year 30,423,818 31,423,169 34,384,679

During the year ending on 31 December 2014, an agreement was signed for managing an investment portfolio with Al Ahli Capital portfolio which is run by Mulkia Investment Co. The aim was to diversify SASCO investments and sources.

* These losses were recorded in a separate item in equity. SASCO does not believe that the year of depreciation is sufficient to decide on the continuity of depreciation. SASCO periodically considers and studies this depreciation and conducts necessary settlements, if any, when it is clear that such depreciation is not temporary.

b. ) Investments held for sale in stocks of non-trading companiesSASCO possesses stocks and shares in non-trading companies. During 2017, SASCO contracted with ALDUKHEIL FINANCIAL GROUP, a company licensed by the Capital Market Authority, practicing its business in investment banking and consulting services. The aim of contract was to assess and valuate the market value of companies on the basis of future cash flows, financial analysis and expected growth rates. The market value of Middle East Battery Company (MEBCO) was SR 794,190,000 (2016: SR 1,144,000,000), while the market value of National Company of Tourism (Syahya) was SR 681,560,000 (2016: SR 680,036,372). SASCO did not assess investment in United Racing Company. Therefore, investment is processed by fair value method. As it was not possible to determine its fair value, the best way to determine fair value was the cost.

As at 31 December 2017:




cost(Saudi Riyal)


(loss) / profit of



7.94%0.36%

25%

794,190,000681,560,000

-

4,565,5001,500,000

125,000

63,058,6862,453,616125,000

(27,774,914)5,485

-

1,475,750,000 6,190,500 65,637,302 (27,769,429)




13. Investments held for trading



1 Jan. 2016 (Saudi Riyal)

Investments held for trading 879,202 - 21,520,881

Following is the movement of investments held for trading during the year:

Purchases during the

year

Change of fair value

Fair value31 Dec. 2017

* Investment funds 869,991 9,211 879,202

869,991 9,211 879,202

*They are investments in Al Rajhi Commodities Mudaraba Fund – Saudi Riyal. It is an open investment fund run by Al Rajhi Capital Company. SASCO owns a number of 5,821,35 units, with a nominal value of SR 149,448 per each.

14. Cash and balance with banks




(Saudi Riyal)

Cash with the fundBalances with banks

339,71294,875,634

752,368110,718,387

-151,462,827

95,215,346 111,470,755 151,462,827

15. Financing of resales for profit and long-term loans

a. ) Banque Saudi Fransi (BSF)On 13 August 2012, SASCO signed a Sharia-compliant facilities (profit for sale) agreement with BSF of SAR (255,000,000). The agreement 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 documentary credits of SAR (20,000,000). The agreement expired on 31 July 2015. SASCO amended the agreement amount on April 28th, 2015, to be SAR (550,900,000). This included renewal of existing facilities of SAR (245,800,000) (of which SAR 110,000,000 represent various credit facilities and SAR 135,800,000 represent medium-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 on Feb. 17th, 2016, signing the same on 20 June 2016, amended the agreement amount to SAR (502,500,000). This included short-term financing of SAR (20,000,000), issuing letters of guarantee and documentary credits of SAR (120,000,000), long-term financing of SAR (338, 500,000) medium-term financing of SAR 24,000,000 guaranteed by a promissory note and/or securities or a deposit and pledge of title deeds. The agreement aims to finance the purchase of new lands, building new stations and improving stations. SASCO renewed and amended the agreement amount on April 16th, 2017, to be SAR (439,200,000). This included renewal of existing facilities of which SAR (169,100,000) represent various credit facilities and SAR (270,100,000) represent finance facilities.

11. Net receivables, advance payments, and other receivables

The movement of doubtedly-collected debts provision during the year was as follows:




Balance at the beginning of year Component during the year

5,037,317177,41

4,162,117875,200

4,162,117-


Lives of receivables were as follows:




From 1 day – 90 daysFrom 91 days – 180 daysFrom 180 days – 360 daysMore than 360 days

56,105,95336,887,9059,860,9977,070,391

36,546,85229,177,9656,762,530

10,874,666

16,064,4366,730,7617,134,637

10,784,666

109,925,246 83,362,013 40,804,500

12. Net inventory




Commodity and petroleumInventory of spare partsCustoms transit books and international driving licensesOther

27,275,8766,310,0431,321,2151,430,272

23,960,3891,250,5121,338,957872,676

26,643,167484,9921,719,175

-

TotalStagnant goods provision

36,337,406-

27,422,534(98,535)

28,847,334(1,151,544)

36,337,406 27,323,999 27,690,790

Following is a statement of stagnant goods provision:

Purchases during the

year

Change of fair value

Fair value31 Dec. 2017

Balance at the beginning of year Component during the yearProvision no longer required

98,535-

(98,535)

1,151,54498,535

(1,151,544)

-1,151,544

-

- 98,535 1,151,544




f. ) Riyadh BankOn 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, supporting its core activities, purchasing new sites to build fuel stations as well as to finance the working capital.

Following is the loan movement:




(Saudi Riyal)

Balance at the beginning of yearAmounts received during the yearAmounts paid during the year

514,406,225192,176,340

(151,063,635)

421,497,554233,742,005

(140,833,334)

278,643,448281,497,556

(138,643,450)

Balance 555,518,930 514,406,225 421,497,554

Financing of resales for profit and short-term loansTrading portion from financing of resales for profit and long-term loansFinancing of resales for profit and long-term loans

95,000,000109,479,080351,039,850

44,594,800134,043,817335,767,608

25,000,00068,350,692328,146,862

16. Payables and other creditors




(Saudi Riyal)

Petroleum providersRevenue received in advanceCommodity and service providersPerformance bond guaranteeDue expensesDeposits with third partiesOther

49,632,84436,856,49726,215,74213,220,6478,653,1802,471,5695,924,289

64,154,93533,926,4358,428,718

11,468,6439,575,5479,768,0685,400,371

36,363,31724,405,73615,352,3926,426,4467,041,3674,477,8163,954,644

142,974,768 142,722,717 98,021,718

17. Distributions payable to shareholders




(Saudi Riyal)

Shares sold by auctionDividendsSubscription surplus – at incorporation Surplus of capital decreaseSubscription surplus – second installment

16,838,22015,959,3662,262,9502,199,7781,537,892

16,869,68816,020,7872,275,6502,199,7781,537,892

16,939,35014,870,5782,331,7002,199,7781,537,892

38,718,206 38,823,795 37,799,298

b. ) NCBSASCO signed a Shariah-compliant credit facilities agreement with NCB of SAR (92,000,000) guaranteed by local share pledge with the aim to expand construction and acquisition of fuel stations. The agreement is valid until 1 June 2019.On August 25th, 2015, SASCO signed a new Shariah-compliant facilities agreement with NCB of SAR (151,800,000), including long-term loans of SAR (101,100,000), 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 (201,300,000), including long-term loan facilities of SAR (150,600,000) and bank letters of guarantee of SAR (25,000,000) and short-term loans of SAR (25,700,000). The agreement is valid until 1 June 2019.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.

c. ) SABBOn May 25th, 2015, SASCO signed a new Shariah-compliant facilities agreement with 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. It expired on 31 January 2016 and was extended to be valid until 31 January 2017.The agreement was amended on Dec. 7th, 2017 and its value became SAR (177,900,000), guaranteed by a promissory note, including a long-term loan of SAR (47,900,000) 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 land, and build new fuel stations as well as to finance the working capital. It will expire on January, 31th, 2019

d. ) Gulf International Bank (GIB)On December 13th, 2015, SASCO signed a (Shariah-compliant) resales for profit 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 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.

e. ) Alawwal BankOn December 21st, 2015, SASCO signed a (Shariah-compliant) resales for profit facilities agreement with the Alawwal 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 (40,000,000) and documentary credits of SAR (10,000,000). 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 on Dec. 28st, 2017 and its total value became SAR (98,500,000) and the value of total guarantees became SAR (50,000,000) including medium-term loans of SAR (48,500,000).




20. Revenues

Revenues of two years ending on 31 December are as follows:

2017(Saudi Riyal)

2016 (Saudi Riyal)

Fuel operation revenuesGrocery revenues Lease revenuesOther

892,673,753163,719,373129,165,76526,770,916

832,623,098139,506,66490,046,81731,946,175

1,212,329,807 1,094,122,754

21. General and administrative expenses

2017(Saudi Riyal)

2016 (Saudi Riyal)

Staff salaries, wages and benefitsCustoms claims provisionAmounts paid during the year against Zakat ConsumptionProfessional fees and consultationLeases Bank expensesAmortizations Electricity and waterDoubtedly-collected debts provision (Note 11)Maintenance expensesStationery and publicationsStagnant goods provision (Note 12)InsuranceOther

22,820,1174,096,6833,694,2152,973,6891,609,7081,016,682 973,989650,001187,867177,491175,252130,971

--

4,434,034

19,539,7976,491,906

-1,661,7732,129,896530,709

2,509,6991,474,265139,168875,200242,025119,00098,53596,122

1,747,572

42,940,699 37,655,667

22. Other revenues

2017(Saudi Riyal)

2016 (Saudi Riyal)

Delay finesDeposit revenuesProfits of property and equipment saleOther

1,521,291270,685

5,607 714,932

381,677293,456 256,061402,693

2,512,515 1,333,887

18. Zakat Provision

Following are the main elements of Zakat Base




(Saudi Riyal)

Shareholders’ equityNet amended incomeAdditionsDeductions

782,445,22337,892,954411,286,283

(1,106,591,205)

720,273,78639,011,026

360,002,304(996,552,300)

695,397,96629,066,791

340,210,056(948,195,660)

Total 125,033,255 122,734,816 116,461,153

Zakat base 125,033,255 122,734,816 116,461,153

Following is the movement of Sharia Zakat provision during the year ending on 31 December:




(Saudi Riyal)

Balance at the beginning of yearAmounts paid during the yearAmounts transferred from Zaiti Petroleum Services CompanyComponent during the year Component by increase over Zakat base during the year

4,409,500(4,378,030)

-3,125,831669,169

3,962,922(3,208,422)

-3,655,000

-

4,333,155(3,801,233)

40,0003,391,000

-


During 2013, SASCO obtained the General Authority for Zakat and Tax’s approval to submit a consolidated Zakat declaration for both SASCO and its subsidiaries according to letter No. 19181/16-1437. SASCO submitted its Zakat declarations and paid the amounts due until the year ending on 31 December 2016 and was given a final Zakat certificate for 2014 and a restricted Zakat certificate for 2016. SASCO received final Zakat assessments from the General Authority for Zakat and Tax for years 2000 – 2008 according to Tax Appeals Commission’s Decision No. 1656 for 1438 AH approved by the Minister of Finance under Letter No. 2293 dated 19/3/1438 AH issued in the appeal submitted by SASCO against Decision No. 10 of 1435 AH issued by the First Instance Committee on Zakat and Tax Objection in Riyadh regarding Zakat assessment conducted by the General Authority on SASCO for year from 2002 to 2005 and appeal Decision No. 1669 of 1438 AH approved by the Minister of Finance under Letter No. 2832 dated 9/4/1438 AH issued in the appeal submitted by SASCO against Decision No. 11 of 1435 AH issued by the First Instance Committee on Zakat and Tax Objection in Riyadh regarding Zakat assessment conducted by the General Authority on SASCO for year 2008. Total Zakat differences were SR 3,694,215. SASCO paid the amount in full during the second quarter of 2017. The amount was included in Zakat item in the profit or loss and consolidated other comprehensive income statement.

19. Statutory ReserveIn accordance with the Saudi Companies Law, SASCO transfers Ten (10%) of annual net profit to the statutory reserve. Such transfer shall continue until reserve reaches 30% of capital. The statutory reserve in no distributable as dividends for shareholders.



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26,5

29,3

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,266

22,72

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33,4

48,8

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,618

22,75

9,75

45,1

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42,0

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(746

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(596

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(34,

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1,535

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,333

752,

424,

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1,212

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32,75

1,403

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Net

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1,648

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32,0

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1,492

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13,2

14

23. Sector InformationA sector is a main part of SASCO. It sells/provides specific services (business sector) or sells/provides services in a certain economic environment (geographical sector). Its profits and losses are different that of other sectors. In reporting its sector information, SASCO submits to the business sector.

Following are SASCO sectors:• Retail and Operation Sector: it includes station operation activities, including selling fuel, foods, drinks and operation of

residential and commercial buildings.• Investment Sector: it includes investment in other companies and investments in securities. • Saudi Automobile & Touring Association Sector: It issues customs transit books and international driving licenses and runs sport

activities.• Transport Fleet Services Sector: it is the one that provides services of transporting dry and liquid materials.Franchise Sector: it grants franchise for using SASCO trademark.




24. Financial instruments and risk management

Fair valueA fair value covers financial assets and liabilities. Financial assets include cash, the like, receivables and securities. However, financial liabilities include payables, loans and other payable balances.

Level One: market prices announced in active markets for the same financial instruments.

Level Two: assessment methods depending on inputs affecting fair value and can be directly or indirectly noticed in the market.

Level Three: assessment methods depending on inputs affecting fair value and cannot be directly or indirectly noticed in the market.

As at 31 December 2017 Level One Level Two Level Three Total

Investments held for saleInvestments retained for trading

30,423,818879,202

65,512,302-

125,000-

96,061,120879,202

31,303,020 65,512,302 125,000 96,940,322

As at 31 December 2017 Level One Level Two Level Three Total

Investments held for sale 31,423,16931,423,169

93,281,73193,281,731

125,000125,000

124,829,900124,829,900

The value indicated in Level Three reflects the purchase cost of these assets and not their fair value due to lack of active market. Therefore, SASCO Management sees that the purchase cost is the ideal method to calculate the fair value of these assets, and their value is not depreciating.

Capital Risk ManagementSASCO manages its capital to ensure its durability. It gets the highest revenue from the ideal limit of debt and equity balances. SASCO total strategy of 2016 did not change.

The structuring of SASCO capital includes shareholders’ equity which consists of capital, reserves, fair value reserve and retained profits as listed in shareholders’ equity change statement.

Financial Risk ManagementSASCO business may be substantially affected by financial risks arising out of the following:

- Foreign currency risk management

SASCO is not subject to significant risks related to foreign currency exchange. Therefore, there is no need to efficiently manage this issue.

- Interest rate risk management

The financial instruments in the consolidated financial position statement are not subject to interest rates and risks.

- Other price risks

SASCO is subject to price risks arising out of its equity investments in other companies. It retains investments in title deeds of other companies for strategic but not trading purposes. In addition, it does not actively trade in such investments.

- Credit risk management

A credit risk exists when one party to a financial instrument contract fails to comply with its contractual obligations. This leads SASCO to incur financial losses.

SASCO is subject to credit risks on its bank balances and receivable as follows:

2017(Saudi Riyal)

2016 (Saudi Riyal)

Cash and balances with banksNet receivables

95,215,346104,710,438

111,470,75578,324,696

199,925,784 189,795,451

- Liquidity risk management

Liquidity risks are represented in difficulties an establishment faces in providing funds to meet obligations related to financial instruments. Liquidity risks may result from inability to sell certain financial assets rapidly and at an amount equal to their fair value.Liquidity risks are managed by regularly controlling them to ensure the availability of funds necessary for fulfilling the company’s future obligations.

25. Debt RatioThe Board of Directors periodically reviews capital structuring. As part of this review, the Board takes into account the cost of capital and risks related to each category of capital and debt. SASCO capital structure includes debts through borrowing. It hasn’t determined maximum debt ratio and does not expect an increase in debt ratio through issuing new debt releases in 2017.

Following is the debt ratio at the end year:

2017(Saudi Riyal)

2016 (Saudi Riyal)

LoansCash and balances with banks

555,518,930(95,215,346)

514,406,225(111,470,755)

Net debts Shareholders’ equity

460,303,584783,496,588

402,935,470782,445,223

Net debt / shareholders’ equity 58.87% 51.50%

26. Earnings per shareEarnings per share are calculated from net profits of core operations by dividing net annual profit of core operations on weighted average of existing number of shares as at the end of year, being 54 million shares. Earnings per share are calculated from net annual profits by dividing net annual profit on weighted average of existing number of shares as at the end of year, being 54 million shares.



27. Possible ObligationsSASCO and its subsidiaries have capital commitments related to establishing assets and properties as at 31 December 2017 at a total amount of SR 24,9 million (2016: SR 63 million). SASCO and its subsidiaries have possible obligations related to bank guarantees as at 31 December 2017 at an amount of SR 259,2 million (2016: SR 282,6 million).

There are some lawsuits filed against SASCO, during the ordinary business session. They are currently before the court and the final award cannot be certainly maintained. The Management does not expect that the results of these lawsuits shall have substantial impact on the consolidated financial statements.

28. Dealings with related partiesRelated parties are non-executive board members and senior management staff. Senior management staff, including directors, are those practicing authority and responsibility in planning, managing and directly or indirectly controlling SASCO business.

Their dealings during the year were as follows:

Nature of dealing 2017(Saudi Riyal)

2016 (Saudi Riyal)

Non-executive board membersSenior management staff

Salaries, allowances and incentivesSalaries, allowances and incentives

72,0005,894,292

165,0004,144,999

29. General Figures included in the financial statements have been rounded to the closest Saudi Riyal.

30. Comparative FiguresItems, elements and notes of comparative consolidated financial statements were amended, reissued, presented and classified in consistency with the accounting policies applied in issuing, presenting, assorting and classifying the items, elements and notes of comparative consolidated financial statements of the present period, which have been developed according to the IFRS approved in Saudi Arabia and other standards issued by Saudi Organization for Certified Public Accountants. For more information, please refer to Note 6 (Application of new and amended International Financial Reporting Standards (IFRS)) of notes attached to consolidated financial statements for the year ending on 31 December 2017.

31. Approval of Consolidated Financial StatementsThe consolidated financial statements have been approved by the Board of Directors on 8/7/1439 AH (corresponding to 25 March 2018). The Board, convening on 25/6/1439 AH (corresponding to 13 March 2018), recommended the next General Meeting, which date to be subsequently determined, to distribute dividends for the financial year ending on 31 December 2017, with 50 Halalahs per each share, representing 5% of the nominal value of share, with a total amount of SR 27,000,000.

Annual Report 2017170

Tel: +966 (11) 2068855Fax: +966 (11) 2068833

Email: [email protected] website: (www.sasco.com.sa)

The company file on Tadawul: (www.tadawul.com.sa) code 4050International company code: (SA0007870070)

Documents

2017 - Home | SASCO Annual Report 201… · ` Head of Corporate Banking at Al Rajhi Bank. ` Chief Financial Analyst at Al Rajhi Bank. ` Systems analyst at Procter & Gamble. 10 Annual