Our Greatest Strength Is Our Team Spirit Annual Report 2018...Ostool Al-Naqil Co. 94 Saudi Automobile & Touring Association, SATA 98 Auto & Equipment Investment Co. 102 Al-Nakhla Al-Oula

Annual Report 2018

Our Greatest Strength Is Our Team Spirit

Custodian of the Two Holy Mosques

King Salman bin Abdul Aziz

( May Allah protect him )

His Royal Highness

Prince Mohammad bin Salman bin Abdul Aziz

Crown PrinceVice President of the Council of Ministers & Minister of Defence

( May Allah protect him )

Board of Directors 8Chairman’s Statement 10Vice Chairman andManaging Director’s Statement 12

Chief Executive Officer’s Statement 14Vision 16Mission 17

SASCO Overview 18Main Business Sectors 20Plans and Decisions 22

Most Important Achievements in 2018 26Board of Directors and Committees 32Financial Statement at SASCO Level 62

Table of Contents

Ostool Al-Naqil Co. 94Saudi Automobile & Touring Association, SATA 98Auto & Equipment Investment Co. 102Al-Nakhla Al-Oula Co. 106SASCO Franchise Co. 108

Other Administrative and Operational Information 110

Risks Management 114Internal Control 120Corporate Governance 124Financial Statements 128

Operation Sector 80SASCO Palm Co. 88SASCO Al Waha Co. 92

The Board of Directors is pleased to present to you SASCO Annual Report for the fiscal year ending on December 31st, 2018. It includes the Board of Directors’ Report on SASCO financial results, its various activities, as well as the achievements made thanks to Allah, and then to the efforts of all members of the Board, the executive management, and all staff.

Board ofDirectors

76 Annual Report 2018

Board of Directors

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

Qualifications and experience:He is a businessman, holding the Secondary school certificate and enjoying more than thirty seven 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.

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

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

Mr. 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 Masters of Business Administration from London Business School. He held leading positions in many public and private companies in Saudi Arabia. He enjoys experience in corporate restructuring, strategic planning and investment management in securities, private ownership and real estate investment. He was a member of boards and committees in public and private companies including Saudi Chemical, Nahaz Investment Co., Zawaya Real Estate Co., Al-Madaen Star Group, Middle East Battery Company (MEBCO), Mulkia Investment Co. and United Wire Factories Company (ASLAK).

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

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

Previous Occupations:`` CEO of Ibrahim Modern Investment Company.`` Chief Executive Officer of Zaiti Petroleum Services.`` Deputy General Manager for Financial and

Administrative Affairs at Al Madaen Star Group.`` Board member of Saudi Chemical Co.

Mr. Ali bin Mohammed Aba Al KhailBoard Member | Head 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 Defence

and Aviation and Inspector General. He also worked as an administrative counsellor in the High Commission for Administrative Organization and Deputy Chairman of the Board of Directors of Sanad Investment Company.

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

Investment Company.Present Occupations:

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

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

Mr. Fawaz bin Suleiman Al 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

and member of audit committees in a number of joint-stock companies. He spent more than a decade in banking. He held many positions in Corporate Financing Division of Rajhi Bank. He took part in establishing the department of corporate loans and financing subscription of large corporations. He was the person in charge of establishing the Share and Subscription Department of Al Rajhi Capital Company.

Present Occupations:`` Chairman of the Board of Directors of Union Al Rajhi.`` Chief Executive Officer of Al Rajhi Union.

Present Occupations:`` Chief Operating Officer of Al Rajhi Capital.`` Director of Sales and Distribution, Al Rajhi Capital.`` Head of Corporate Banking at Al Rajhi Bank.`` Chief Financial Analyst at Al Rajhi Bank.`` Systems analyst at Procter & Gamble.

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

Present Occupations:`` CEO of Nasser Bin Mohammed Alsubeaei & Sons

Investment CompanyPrevious Occupations:

`` Manager of real estate projects at Nasser Bin Mohammed Alsubeaei & Sons Investment Company.

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

Mr. Nasser bin Abdullah Al AwfiBoard Member | Head of Audit CommitteeQualifications and experience: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 enjoys more than thirty one years of experience in the management of joint stock companies as well as financial, administrative and strategic consultation. He also participated in the many boards of shareholding companies and board committees (Audit Committee) such as Al Jouf Agricultural Development Company (JADCO), Taiba Holding Company and United Cement Industrial Company.

Present Occupations:`` 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 Occupations:`` 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.

Mr. Suleiman Bin Ali Al KhudairBoard Member | Member of Nomination andRemuneration 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.

Present Occupations:`` General Director of Nahil Computers Co.

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

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 enjoying 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.

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

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

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

Automobile Services.

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 enjoys 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.

Present Occupations:`` SASCO Chief Executive Officer.`` Head of Customs Council of Federation Internationale

de l’Automobile.`` Member of the National Committee of Fuel Station

Companies in the Council of Saudi Chambers.Previous Occupations:

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

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

Company (Al Akaria).`` Sales Director of Saudi Hotels & Resorts Company.`` Head of Customs Council of Federation Internationale

de l'Automobile.`` Head of the National Committee of Fuel Station

Companies in the Council of Saudi Chambers.

9Annual Report 20188

Shareholders’ equity recorded SAR 751,862,914 compared to SAR 729,110,511, i.e. an increase of 3,12%.

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. 2018 with a total amount of SR 30,000,000 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 trading day on which the General Assembly convened.

Some of the most important achievements during 2018 are as follows:

`fCompleting the procedures of increasing SASCO capital from SAR 540 million to SAR 600 million.`fConcluding the procedures of distributing dividends to shareholders for the fiscal year 2017 and depositing them with their respective accounts.`fCompared to last year, SASCO assets rose to SAR 1,6 billion at 6,24%.`f Purchasing an additional share in the capital of Middle East Battery Company (MEBCO) raising SASCO contribution to MEBCO from 7,94% to 12,79%.`f The Saudi Automobile & Touring Association, Ltd SATA signed an agreement with the Saudi Customs to give effect to the Customs Convention on the International Transport of Goods as per international land transport books.`fContinuing to study the options of selling some of SASCO owned sites and leasing them for long periods with the aim to obtain offers matching SASCO interests and goals.`f SASCO obtained the Most Innovative Fuel Station Company Award in the World for 2018 on the margin of the achievements attained during 2018.`f Launching Commercial Franchise Granting Program of operating the brands of “ SASCO Stations” and “Palm Stores”.`fContinuing to update the regulations, policies and standards required by the supervisory bodies.`f Signing many facilities agreements with local banks.`fContinuously developing SASCO accounting and operating systems.`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.`fCompleting the construction of (3) sites and developing (14) sites according to SASCO identity.`fContinuing to study the options of acquiring new sites in different parts of the Kingdom.`f Purchasing 10 new trucks to support fleet in addition to purchasing 8 fuel and water tanks, 8 transport goods containers and 1 reefer truck.`f Expanding dry transport though contracting with new clients.`f SASCO Al Waha Co. contracted with many companies with respect to its hotels.`f Participating in many exhibitions and awareness campaigns confirming SASCO contribution to social responsibility.

When it comes to the operating revenues of subsidiaries, SASCO Palm Stores’ operating revenues rose by 23% compared to last year

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

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

The Board of Directors of the Saudi Automotive Services Company (SASCO) is pleased to present to you SASCO Annual Financial Report for the fiscal year ended on December 31st, 2018. 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 2018 net operating sales of SAR 2,056,081,002 compared to SAR 1,212,329,807 in 2017, i.e. an increase of 69.60%, which reflected positively on the increase in gross profit at 3,13% and operating profit at 18,7%. In addition, in 2018, SASCO recorded a net profit of SAR 35,451,309 compared to SAR 27,985,133 in the previous year, 2017, i.e. an increase of 26.68%. This, in turn, led to an increase of 0.47 in share profits compared to 0.59 of last year. At the end of 2018,

to reach SR 201,456,232. The operating revenues of Ostool Al-Naqil Co. increased by 16% compared to last year to SR 26,359,082. The operating revenues of SASCO Al Waha Co. rose by 47% compared to last year reaching SR 3,911,567. The operating revenues of the Saudi Automobile & Touring Association, SATA, went down by 47%. It has been affected by the political events experienced by some Arab countries in addition to the entering of peer clubs unauthorized by Federation Internationale de l’Automobile.

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

In 2019, 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 looking 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, and 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 they offer 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

Chairman’s StatementMr. Ibrahim bin Mohammed Al-Hudaithi

Net operating income during the year 2018

SR 2,056,081,002

Net operating income during the year 2017

SR 1,212,329,807

With an increase, of

69.60%


pilgrims whether inside or outside the Kingdom.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.

SASCO Palm Stores 6 new branches were added in 2018. At the end of 2018, 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 2018.

Accommodation Sector (SASCO Al-Waha Co.)In 2018, 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.

Ostool Al-Naqil Co.SASCO increased its truck fleet in 2018 to 108 compared to 95 trucks in 2017. The number of trailers rose to 121 in 2107 compared to 101 in 2017.Ostool 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.

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.

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.

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

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

Profit before interest, Zakat, Depreciation and Amortization (EBITDA) at the end of 2018

SR 92,750,036

Profit before Interest, Zakat, Depreciation and Amortization (EBITDA) at the end of 2017

SR 82,673,032


12.19%

the end of 2018 were SR 84,508,044 compared to SR 68,439,549 at the end of 2017, i.e. an increase of 23%. As a result, share profit increased compared to last year and was SR 0,55 in 2018 compared to SR 0,48 IN 2017, with an increase of 12,7%.

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

Retail SectorThis 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 2017, 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.

The Retail Sector offered its services to about 12,700,000 vehicles, with an increase of 11.8% compared to 2017, including 8,300,000

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


It is thanks to Allah’s grace that 2018 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 2018 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 2017, with an increase of 10,80%. This led to an increase of 2018 net profits which were SR 29,980,831 compared to SR 25,980,831 in 2017, 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


0,59. At the end of 2018, shareholders’ equity recorded SR 751,862,914 compared to SR 729,110,511 in 2017, i.e. an increase of 3,12%.

Operational Performance:During 2018, the number of fuel stations grew to 166 operating sites, with an increase of 14 operating sites. SASCO acquired many sites inside and outside cities, some of them have been already received and the other is waiting the signing of contracts. SASCO completed the construction and operation of 3 new sites, namely SASCO Plus Station (Jubail 2) on Dammam/Jubail Road, SASCO Plus Station (Zalim) in Zalim area on Riyadh/Taif Road and Taneem Station in Mecca area. We continued to develop many existing sites located inside and outside cities according to SASCO identity; 14 sites were developed according to SASCO identity. work is underway to develop the rest of sites according to the established development plan.When it comes to the automation of SASCO operating processes, it initiated the automation of pumps and fuel tanks and the use of smart cards and RFID System under the name of “Control Program”.SASCO obtained the Most Innovative Fuel Station Company Award in the World for 2018 presented by International Finance Awards on

the margin of achievements it has made in 2018.

When it comes to SASCO Palm Stores Co., SASCO continued its expansion plan inside and outside SASCO sites. In 2018, the first independent branch of SASCO Palm Stores in Dammam City, with the number of Palm Stores to reach 69 sites at the level of the Kingdom, through which it offers a full basket of items that were carefully studied to meet clients’ needs, whether travellers on the road between cities or vehicle drivers and passengers inside cities. SASCO introduced new items leading to change of client basket at 6,32%, rising from SR 19 in 2017 to SR 20,2 in 2018.

In October 2018 and in a conference attended by many stakeholders, SASCO launched the Commercial Franchise Granting Program of operating the brands of “ SASCO Stations” and “Palm Stores”. The Program is considered the first initiative of its kind to grant the right of commercial franchise to “SASCO Stations” and “Palm Stores Centers” affiliated to SASCO Palm Stores Co. The Program also aims to create new investment opportunities for SASCO and increase its revenues and profitability through granting the franchise of operating commercial brands to other operators, resulting in creating real opportunities for citizens to participate in pioneering projects in line with the Kingdom’s orientation.

In the transport sector, Ostool Al-Naqil Co., Ltd expended in 2018 paticularly in the field of dry transport. It contracted with many clients and companies. It also continued to transport fuel and water to third parties. To achieve such expansion, its fleet was supported by 10 new trucks, 8 fuel and water tanks, 5 transport goods containers and 1 reefer truck for the size of fleet to reach 116 carriers and 132 trailers through which Ostool Al-Naqil offers transport services to the sites of SASCO operating sector, enabling it to acquire an additional market share and continue to contract with new clients.Saudi Automobile & Touring Association, SATA, was largely affected in its revenues by the events recently experienced by the Arab Region and accession of new parallel clubs unauthorized by Federation Internationale de l’Automobile, which acquired a market share of international driving licenses and customs transit (Trip-Tik).

Based on the International Road Transport Agreement concluded in 2012 by Saudi Automobile & Touring Association, SATA, with the International Road Transport Union (IRU), the Saudi Automobile & Touring Association, SATA, signed in 2018 with the Saudi Customs an agreement to activate the Customs Convention on the International Transport of Goods under international carriage of goods by rail (TIR); a simplified system making trade easier and cheaper, being the only international transit and guarantee system.

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


Achieving the Board’s strategy, SASCO continued to achieve its goals and plans in all SASCO main departments and subsidiaries. Thanks to Allah, and then to the directions of the Board and our colleagues, SASCO could attain many financial and operating achievements during 2018; the foremost of which are the following:

Financial Performance:In the fiscal year of 2018, SASCO achieved an increase of net profits at 26,68% compared to 2017, raising the net income to SR 35,451,309. Total profits also increased at 3,13% and were SR 81,981,605. In addition, net operating profits scored an increase of 18,07% and recorded SR 37,683,502. Revenue increase had a positive impact on such increases. 2018 revenues scored SR 2,056,081,002 compared to SR 1,212,329,807 in 2017 with an increase of 69,60%, a matter which raised share profitability compared to last year from SR 0,47 to SR

Under the Convention, the Saudi Automobile & Touring Association, SATA, is considered the issuer of TIR books and the guarantor of trucks exporting under the TIR system in Saudi Arabia. Thanks to this Convention, SASCO aims to activate SATA role to change from a member represented in the International Road Transport Union to an active member to represent the Kingdom of Saudi Arabia and issue TIR books.

In the field of SASCO Al Waha Co., Super 8 Hotel was honored by the Technical and Vocational Training Corporation (TVTC) and the General Sports Authority on the margin of the National Festival of Heritage and Culture (Al Janadriyah Festival 32). During 2018, 2 motels carrying the Brand “Waha Motel” were opened on Al-Hijra Road (Mecca/Medina) with the number of SASCO Al Waha Co. motels to rise to 5 motels. The Company continued to operate Super 8 Hotel in Riyadh and is currently constructing a hotel in Zalim area on Riyadh-Taif Road.

To this end, SASCO continued to attract qualified human cadres and create new job opportunities in favor Saudis to support the Ministry of Labour’s programs to Saudize jobs.

Many other achievements, particularly social participation, detailed in the Board’s 2018 Annual Report were implemented with the attempt to achieve SASCO goals and cope up with the developments witnessed by the Kingdom in its efforts to achieve Vision 2030.

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


Chief Executive OfficerRiyadh bin Saleh Al Malik

Chief Executive Officer’sStatementMr. Riyadh bin Saleh Al Malik

Total profit by the end of 2018

SR 37,683,502

Total profit by the end of 2017

SR 31,915,742


18.07%


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.

VisionTo 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.


SASCO Overview

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.

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.`f Checking cars to issue the roadability certificates upon obtaining 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 is SR 600,000,000 divided into SR 60,000,000 shares, each with a value of SAR 10. On 22 May 2018, the 12th Extraordinary General Assembly agreed to increase SASCO capital from SR 540,000,000 to SR 600,000,000 with a 11,11% increase through bonus shares. One free share shall be granted to each 9 shares of the owned shares through capitalizing SR 60 million of the retained profits. The aim is to strengthen SASCO financial ability to meet current and future expansion of all activities for achieving better growth rates in the coming years and preserving financial solvency.

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

Auditor for the year 2018Office: Allied Accountants - Chartered Accountants and Auditors

Investment RestrictionsThere are no restrictions on the listed shares of the Company in accordance with the content of the rules regulating the investment of Qualified Foreign Financial Institutions in the listed shares, amended by the resolution of the CMA Board number 1-3-8102 dated 22 Rabi Thani 1439H corresponding to 9 January 2018 in Article 14, para (A3) and (A4).

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).

Sasco Overview


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

SASCO Palm 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. It is deemed the only guarantor of TIR books in Saudi Arabia under the Convention signed with the Saudi Customs and its convention with the International Road Transport Union.

Auto & Equipment Investment CompanyIt was established with the aim to independently manage SASCO investment activities. It possesses 12.79% 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)

إستثمارات السيارات والمعدات

Al Nakhla Al Oula Contracting Company

شركة النخلة األولى للمقاوالت

Main Business SectorsMain Business Sectors


Plans and Decisions

The Strategic Plan

Proceeding from the strategic plans adopted by the Board of Directors in its ninth session in 2009, 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 adopted a comprehensive, development and strategic business plan 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.

In 2018, we contracted with an external entity to study SASCO trends. It presented many recommendations that were taken into consideration when developing the strategic plan.

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 the TIR Convention and 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 Signing an agreement with the Saudi Customs to give effect to the Customs Convention on the International Transport of Goods related to the sales of TIR books.`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.

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

Plans and Decisions


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 Stores 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.`fGiving effect to the agreement signed with the Saudi Customs and starting the sales of TIR books.`fDeveloping the services provided by Saudi Automobile and Touring Association (SATA) and expanding its business.`f Activating the granting of commercial franchise to third parties.


`? 16 rapid service centers of SASCO Palm Co. has been excluded from the above statement and converted into the statement of SASCO Palm

Stores because these sites do not contain the fuel service.

Most Important Achievements in 2018

0 50 100 150 200 250

2014

2015

2016

2017

2018 1210166 20

2012152 20

2420140 13

3713136 3

73 11 34 3

Statement 2014 2015 2016 2017 2018

Operating-Owned 31 35 32 34 33

Non-operating-Owned Sites 16 17 20 18 19

Non-Owned Sites 74 137 145 152 156

Total 121 189 197 204 208

The annual growth rate 6.14% 56.20% 4.23% 3.55% 1.96%

The most important achievements during the year 2018At the Level of Network Expansion and Development

`❖ Completing the establishment of the following (3) new sites

according to SASCO identity:

`❖ SASCO Plus station (Jubail 2) on Dammam-Jubail highway.

`❖ SASCO Plus station (Zalim 2) at Zalim area on Riyadh-Taif road.

`❖ Al Taneem Station in Mecca area.

`` Continuing to develop many existing sites inside and outside

cities according to SASCO identity. 14 sites were developed

according to SASCO identity while work is underway to develop

the rest of sites according to the established development plan.

`` Running many government competitions related to

establishing and operating fuel stations and service centers.

SASCO was granted one of the sites affiliated to the Ministry of

Finance (5th site: Riyadh-Sadir-Qassim Road)

`` Acquiring some stations, including those already received and

operated and those still in the process of contracting.

`` Opening the first independent branch of SASCO Palm Stores in

Dammam city.

`` Expanding dry transport through contracting with several

customers and companies and continuing to transport fuel

and water to third parties.

`` Purchasing (10) new trucks supporting SASCO fleet.

`` Purchasing (8) fuel tanks in addition to 5 containers to transport

goods and 1 reefer truck.

`` Opening 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:

Operating & leased sitesUnder Construction SitesStopped Stopped for Development


At Business Development Level`f SASCO was awarded the ‘Best Fuel Stations Company of 2018’ by the International Finance Awards on the sidelines of the company’s achievements in 2018.

`f Continuing to negotiate with a number of financial institutions and investment companies with the aim to obtain offers matching SASCO interests and goals with respect to selling some of SASCO owned sites and leasing them for long periods.`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 Issuing building license for the new headquarters of SASCO after approving its designs.`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 Signing a cooperation agreement between SASCO and STC PAY with the aim to provide digital payment service at SASCO stations.`f Expanding transport through Ostool Al-Naqil contracting with many clients.`f Saudi Automobile & Touring Association, SATA’s success in issuing international driving licenses via its website.`f Contracting with more companies and tourist companies at (Super 8) hotel in Riyadh.

At the Level of Finance and Financial & Operational Control`f Approval of SASCO final accounts and Board of Directors’ Report.`f Continuing to apply the International Financial Reporting Standards in consistency with the IFRS approved in the Kingdom

of Saudi Arabia. `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 the credit facility agreement concluded with Riyadh Bank.`f Renewing and amending the credit facility agreement concluded with the Saudi British Bank (SAB).`f Auto & Equipment Investment Co. Ltd (subsidiary) to purchase an additional share in the capital of Middle East Battery Company (MEBCO) raising SASCO contribution to MEBCO capital from 7.94% to 12.79% with the number of shares to rise from 794 to 1,279.`f Completing the procedures of increasing SASCO capital from SR 540,000,000 to SR 600,000,000 and finalizing to deposit the amounts obtained from selling the fractions of shares resulting from the increase of capital.`f Concluding the procedures of distributing dividends to shareholders for the fiscal year 2017 and depositing them with their respective accounts.`f Approval of the 2019 budget.`f Completing a comprehensive inventory of SASCO sites for the fiscal year 2018 in accordance with agreed work procedures.`f The Saudi Automobile & Touring Association, Ltd SATA’s signing of an agreement with the Saudi Customs to give effect to the Customs Convention on the International Transport of Goods as per international land transport books.`fOpening new sale outlets for the Saudi Automobile and Touring Association (SATA).`f Launching Commercial Franchise Granting Program of operating the brands of “ SASCO Stations” and “Palm Stores”.`fDeveloping SASCO ERP system to achieve SASCO objectives.`f Activating the automation project of pumps and fuel tanks and the use of smart cards and RFID System.

`f Continuing to sign a number of agreements for future supply with agents and marketers of food and non-food supplies`f Continuing preventive and periodic maintenance of SASCO sites.`fWorking for reducing the maintenance costs through contracting with maintenance materials and spare parts suppliers and using LED lighting to rationalize the consumption of electrical power.`f Continuing to dig and operate water wells to reduce water supply costs.`fHonouring (Super 8) Hotel from the Technical and Vocational Training Corporation (TVTC) on the margin of the Annual Heritage & Culture Festival (Janadriyah Festival 32).

Central Province 44.6%

Eastern Province 21.7%

Western Province 16.9%

Southern Province 3.0%Qassim Province 4.8%

Northern Province 9.0%

0 10 20 30 40 50 60

2014

2015

2016

2017

2018 1735

15

15

37

37

21634

28 15 4

Operating Site Distribution

Owned Sites

Purchase during year Owned & Under Construction Owned & Existing


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 Finalizing the transfer of Auto & Equipment Investment Co. Ltd (subsidiary) into a one partner company (SASCO).`f Electing a new board of directors for the 12th session and approving the composition of the Board and its committees. `f Continuing to activate governance regulations and increasing transparency and disclosure.`f Following up and applying any new legislations issued by the competent bodies.`f Continuing to attract and Saudize qualified cadres to meet SASCO needs of various administrative functions, especially in leadership positions.`f Continuing Saudization of jobs and preserving SASCO and its subsidiaries classification within the green zone.`fOrganizing many training courses for all administrative levels of SASCO (the foremost of which are the course of Skills for Raising the Levels of Performance and Productivity and the course of Managing Change and Communications in Business).

At the Level of Corporate Social Responsibility`f Participating in the Saudi International Franchise Expo held in Riyadh city during the period from 5-7 Feb. 2018.`f Saudi Automobile and Touring Association (SATA)’s participation in a global campaign titled “3500 Lives”; a global campaign launched by the Federation Internationale de l’Automobile (FIA) to spread awareness in the society about the golden rules that would help you save your life and the lives of others. The campaign calls on all governments to give priority to traffic and road safety as recent statistics have concluded that about 3500 persons are killed on a daily basis out of road accidents.

`f Participating in “Ramadan is in Our District” Exhibition during which the messages of the awareness campaign on the golden rules that would reduce road accidents were disseminated.`fOrganizing an awareness campaign in favor of fuel filling up staff of SASCO about security and safety to raise the level of performance of staff in this context.`fHonouring the French filmmaker David Coulia during his visit to Riyadh to film the trip (we love road trip). During his visit,

he interviewed the Chairman of SASCO in his capacity as the Kingdom’s representative.`f Launching “From SASCO To Russia Campaign” to support the Saudi national team in 2018 World Cup.

`f SASCO Marketing Department to present a lecture for women under the title of “Safe Driving” to highlight the main driving rules, how to apply for a driving license and types of fuel.`f Launching the women driving campaign titled “Nothing to Stop You” in addition to offering awards and free fuel coupons for the first 37 women to arrive to SASCO Plus Stations.`fHonouring the first Saudi woman to carry an international driving license by the Saudi Automobile & Touring Association, Ltd SATA.

`f Participating in the awareness campaign to celebrate World Alzheimer’s Month. The campaign aims to introduce the initial symptoms, necessary diagnosis, early intervention, and educating the society about symptoms and means of protection against it.`f Inaugurating the “Station Forestation” Project to increase the level of forestation in SASCO stations as part of Riyadh Forestation Campaign under the supervision of Riyadh Development Authority in cooperation with the Saudi Arabian Boy Scouts Association.

At the Level of Corporate Social Responsibility (CSR):`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

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

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

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


?`The membership of Mr. Ajlan bin Abdulrahman Al-Ajlan in the Board and the committees (independent member) expired at the end of the eleventh session on 29 June 2018.

Board of Director’s and Committees Board of Director’s and Committees

Board FormationThe Board of Directors was entrusted with SASCO management it the twelfth session as of 30/6/2018 for a period of three years ending on 29/6/2021. Members’ Classification

No. Name 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 Nomination and Remuneration Committee Non-Executive

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

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

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

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

9 Mr. Majid Bin Nasser Al Sabei’e Board Member – Member of Executive Committee Independent


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

3,60

4,19

4

1,226

,100

-

4,83

0,29

4

1,828

,929

- - - -

1,828

,929

374,

300

-

7,03

3,52

3

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 w

orks

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. Ali bin Mohammed Aba Al-Khail 20

0,00

0

12,0

00

12,0

00 - - -

224,

000

- - - - - - -

224,

000

-

Mr. Fawaz bin Suleiman Al-Rajhi 20

0,00

0

12,0

00

6,00

0

- - -

218.

000

- - - - - - -

218,

000

-

Mr. Majid Bin Nasser Al Sabei’e(12th session)

-

6,00

0

6,00

0

- - -

12.0

00 - - - - - - -

12,0

00 -

Mr. Ajlan bin Abdulrahman Al-Ajlan

(11th session) 200,

000

6,00

0

6,00

0

- - -

212.0

00 - - - - - - -

212,

000

-

Total

600,

000

36,0

00

30,0

00 - - -

666,

000

- - - - - - -

666,

000

-

Second: Non-Executive Members

Mr. Ibrahim bin Mohammed Al-Hudaithi 20

0,00

0

9,00

0

9,00

0

- -

218,

000

- - - - - -

218,

000

Mr. Nasser bin AbdullahAl-Awfi 20

0,00

0

12,0

00

15,0

00 - - -

227,

000

- - - - - -

227,

000

Mr. Suleiman bin AliAl-Khudair 20

0,00

0

12,0

00

12,0

00 - - -

224,

000

- - - - - -

224,

000

Mr. Majed bin Mohammed Al-Othman 20

0,00

0

12,0

00

12,0

00 - - -

224,

00 - - - - - -

224,

00

Total

800,

000

45,0

00

48,0

00 - - -

893,

000

- - - - - -

893,

000

Third: Executive Members

Mr. Sultan bin Mohammed Al-Hudaithi 20

0,00

0

12,0

00

12,0

00 - - -

224,

000

* 1,800

,000

- - - - - -

2,02

4,00

0

47,3

98

Mr. Riyadh bin Saleh Al-Malik

200,

000

12,0

00

12,0

00 - - -

224,

000

- - - - - - -

224,

000

64,4

42

Total

400,

000

24,0

00

24,0

00 - - -

448,

000

1,800

,000

- - - - - -

2,24

8,00

0

111,8

40

* Pursuant to Section Two (Article 3) of the regulatory controls and procedures issued in implementation of the Companies Act with respect to listed shareholding companies issued by the Capital Market Authority and based on SASCO Remuneration Policy, an annual remuneration shall be cashed to the Managing Director (in consideration of works as well as executive and administrative positions entrusted to him in SASCO in his capacity as Managing Director) and shall be determined by a decision from the Board of Directors following a recommendation from the Remuneration Committee. The decision shall be renewed in each new session of the Board.

Statement Fixed remunerations except

meeting attendance allowanceMeeting attendance

allowanceTotal

Executive Committee Members

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

Mr. Sultan bin Mohammed Al-Hudaithi - 12,000 12,000

Mr. Riyadh bin Saleh Al-Malik - 12,000 12,000

Mr. Majid Bin Nasser Al Sabei’e(12th session)

- 6,000 6,000

Total - 39,000 39,000

Audit Committee Members

Mr. Nasser bin Abdullah Al-Awfi 50,000 15,000 65,000

Mr. Fawaz bin Sulieman Al Rajhi 50,000 6,000 56,000

Mr. Turki bin Muhamma Al Quraini(12th session)

40,000 9,000 49,000

Mr. Suleiman bin Ali Al-Khudair(11th session)

25,000 6,000 31,000

Mr. Abdurrahman bin Ibrahim Al Humaid(11th session)

40,000 6,000 46,000

Total 205,000 42,000 247,000

Remuneration & Nomination Committee Members

Mr. Ali bin Mohammed Aba Al-Khail - 12,000 12,000

Mr. Majed bin Mohammed Al-Othman - 12,000 12,000

Mr. Suleiman bin Ali Al-Khudair(12th session)

- 6,000 6,000

Mr. Ajlan bin Abdulrahman Al-Ajlan(11th session)

- 6,000 6,000

Total - 36,000 36,000

Allowances and Remunerations Paid to Board Members and Senior ExecutivesRemuneration of the Board of DirectorsThe following statement shows the payments to Board members in 2018:

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 2018:

Remunerations Paid to Committee Members

The following statement shows the payments to committee members in 2018:


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

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:

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.

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.

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 2018 (eleventh and twelfth sessions):

No. Member Name

11th session 12th session

Attendance Ratio

No. of meetings (2) No. of meetings (2)

Meeting No. (1)13/03/2018

Meeting No. (2)22/05/2018

Meeting No. (3)11/09/2018

Meeting No. (4)18/12/2018

1 Mr. Ibrahim bin Mohammed Al-Hudaithi × 75%

2 Mr. Sultan bin Mohammed Al-Hudaithi 100%

3 Mr. Nasser bin Abdullah Al-Awfi 100%

4 Mr. Suleiman Ali Al-Khudair 100%

5 Mr. Majed bin Mohammed Al-Othman 100%

6 Mr. Riyadh bin Saleh Al-Malik 100%

7 Mr. Ali bin Mohammed Aba Al-Khail By phone 100%

8 Mr. Fawaz Suleiman Al-Rajhi 100%

9 Mr. Majid Bin Nasser Al Sabei’e Date of membership in the board30/06/2018 100%

10 Mr. Ajlan Abdulrahman Al-Ajlan Date of expiry of membership29/06/2018 100%

? No board member has submitted a written request to hold a board meeting in 2018 and no member has objected to the Board’s agenda and resolutions.

`Attendance in person × Authorizing one of the Board members

No. Request Date Request Reasons

1 05/02/2018 Following up the change in Shareholders Register


3 22/05/2018 Twelfth Extraordinary General Meeting




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

Publicity and

advertising of SAR 139,65

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 1.1 million

For five renewable years as of 01/01/2018

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 EstateMr. Sultan bin Mohammed Al-HudaithiBoard member of Madaen Star Real Estate

Contract value is SR 300,000 on an annual

basis

One 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).

Contract value is SR

400,000One year


Reporting to Board

Reporting to

General 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.

Contract value is SR

800,000

Five renewable years from

29 April 2015

Madaen Star Real

Estate




basis

One year

Madaen Star Real

Estate




basis

Ten renew-able years from 1 Au-gust 2007. Site was

evacuated on 1 May

2018

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 2018 fuel purchases

was SR 78,700

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. Majed bin Mohammed Al-OthmanManaging Director of Madaen Star Real EstateMr. Sultan bin Mohammed Al-HudaithiBoard member of Madaen Star Real Estate


was SR 188,600

One year

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


Reported.

All above business and contracts were approved for a coming year in the eleventh extraordinary general meeting held on 22 May 2018. The renewal of the same shall be approved by the next shareholders’ general meeting.

These business and contracts have no preferential terms.


Reporting to Board

Reporting to

General Meeting

Mr. Majed Al-Othman

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

Mr. Majid bin Mohammed Al-Othman


was SR 15,900

One Year

Zawaya Real Estate Co.

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



was SR 10,700

One Year

Zawaya Real Estate Co.

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


2018 value was SR 25,000

One Year

Fun Gate Co.

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

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

2018 value was SR 50,000

One Year


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.

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.

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).

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.

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 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.

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

Present Occupations: f Chief Executive Officer of Nasser Bin Mohammed

Alsubeaei & Sons Investment CompanyPrevious Occupations:

f Manager of real estate projects at Nasser Bin Mohammed Alsubeaei & Sons Investment Company.

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

(Membership Committee acurrent session)

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 signing of the agreement with the Saudi Customs and approving the Saudi Automobile & Touring Association, Ltd SATA as a guarantor of TIR books in the Kingdom.`f Following up SASCO lawsuits.`f Following up the governmental bodies concerned with SASCO lands and sites.`f Following up the acquisition of new sites for SASCO.`f Following up the goals and recommendations of SASCO strategic plan.`f Approving the estimated budgets of SASCO and its subsidiaries and submitting recommendations to the Board for approval.`f Following up the financial and operational performance of SASCO and its subsidiaries.`f Studying the operating sites and endeavouring to extend their lease contracts and reduce their costs.`f Following the project of selling some sites and releasing them.`f Evaluating SASCO investments and liquidity and submitting recommendations thereon to the Board.`f Coordinating with SASCO Management to find ways to reduce costs.`fMaking recommendations on bank facility agreements.`f Examining the investment opportunities available for SASCO.`f Following up the financial and operational performance subsidiaries.`f Following up the implementation of SASCO projects.`f Following up the approval of the Headquarters design and issuing the required building license.

MeetingsThe following table shows the attendance record of Executive Committee meetings during 2018 (eleventh and twelfth sessions):

Personal attendance

No. Member Name


Attendance Ratio


Meeting No. (1) 12/03/2018

Meeting No. (2)21/05/2018

Meeting No. (3) 02/09/2018

Meeting No. (4) 17/12/2018

1Mr. Ibrahim bin Mohammed Al-HudaithiCommittee Head

Apologized 75%

2Mr. Ibrahim bin Mohammed Al-HudaithiCommittee Head

100%

3Mr. Riyadh bin Saleh Al-MalikCommittee Member

100%

4Mr. Majid Bin Nasser Al Sabei›eCommittee Member

Date of membership in the Committee 30/06/2018

100%

Executive Committee It comprises:


?`The membership of Dr. Abdulrahman bin Ibrahim Al-Hamid and Mr. Suleiman bin Ali Al-Khudair in the Audit Committee expired at the end of the Eleventh Session on 29 July 2018.

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

Present Occupations: f Governance and compliance counsellor and

specialist in shareholding companies listed in the Saudi Capital Market (Tadawul).

Previous Occupations: f Director of Compliance with Corporate Governance

Rules – Capital Market Authority. f Director of Corporate Governance Standards -

Capital Market Authority. f General Director of Governance and Board Secretary

- Jabal Omar Development Co. f General Director of Governance and Risks - National

Housing Company.

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 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.

Mr. Nasser bin Abdullah Al-AwfiBoard Member | Head 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 enjoys more than thirty one years of experience in the management of joint stock companies as well as financial, administrative and strategic consultation. He also participated in the many boards of shareholding companies and board committees (Audit Committee) such as Al Jouf Agricultural Development Company (JADCO), Taiba Holding Company and United Cement Industrial Company.

Present Occupations: 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 Director for Financial and Administrative Affairs of Taiba Investment and Real Estate Development Company.

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 remarks 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 and follow up the procedures taken in this regard.`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 Examining the structure of Internal Audit Department and submit recommendations thereon.`f Examination of annual and quarterly financial statements and submit recommendations thereon.`f Recommending the amendment of some financial policies.`f Ensuring the independency of SASCO external auditor.`f Following up the reports developed by the Shifting Counsellor on shifting to the International Financial Reporting Standards and work progress according to them.`fDeveloping the Audit Committee’s annual report and submitting it to the General Assembly of shareholders.`f Reviewing the different internal audit reports and submit recommendations thereon.`f Following up risk assessment reports with a consulting office and submit recommendations thereon.`f Recommending SASCO chartered accountants.`f Recommending amendments to the Business Regulation of the Audit Committee.

MeetingsThe following table shows the attendance record of Audit Committee meetings during 2018 (eleventh and twelfth sessions):

No. Member Name


Attendance Ratio


Meeting No. (1)

13/03/2018

Meeting No. (2)

24/04/2018

Meeting No. (3)

18/07/2018

Meeting No. (4)

08/10/2018

Meeting No. (5)

23/10/2018

1Mr. Nasser bin Abdullah Al-Awfi

Committee Head100%

2Mr. Fawaz bin Suleiman Al-Rajhi

Committee memberApologized By Phone Apologized Apologized 40%

3Mr. Riyadh bin Saleh Al-MalikNon-Board Member

Date of membership in the Committee 30/06/2018

100%

4Mr. Abdurrahman bin Ibrahim Al Humaid Non-Board member

Date of expiry of membership29/06/2018

100%

5Mr. Suleiman bin Ali Al-Khudair Committee member

Date of expiry of membership29/06/2018

100%

Audit Committee It comprises:

Personal attendance


?`The membership of Dr. Abdulrahman bin Ibrahim Al-Hamid and Mr. Suleiman bin Ali Al-Khudair in the Audit Committee expired at the end of the Eleventh Session on 29 July 2018.

Mr. Ali bin Mohammed bin Ali Aba Al-KhailBoard Member | Head of Nomination andRemuneration 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 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.

Mr. Suleiman bin Ali Al-KhudairBoard Member | Member of Nomination and Remuneration 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 Defence. Then, he moved to the private sector where he worked as a technical director, a sales director and deputy general director in Nahil Computers and now he is its General Director.

He participated in boards of many joint stock companies.

Present Occupations: f General Director of Nahil Computers.

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

Mr. Majid bin Mohammed Al-OthmanBoard Member | Member of Nomination and Remuneration CommitteeQualifications & Experiences:He is a businessman, holding the Secondary school certificate and enjoying 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.

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.

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 and 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 of 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 biographies of those applying for the membership

of the Board for the twelfth session policies and present

recommendations thereon.

`f Ensuring the independence of Board members.

`f Periodical review of Board structure.

`f Recommending the payment of remuneration to the Board

members for the fiscal year of 2017.

`f Recommending the benefits and remuneration of the Managing

Director during the twelfth session of the Board pursuant to the

Remuneration Policy of Board members, Board committees and

Senior Executive Management.

`f Recommending the appointment of some leading positions.

`f Approval of 2017 remunerations and incentives.

`f Adopting the 2018 quarterly incentives and remunerations

according to the approved policies.

`fObtainment of Board approval of the Committee’s 2019 plan.

MeetingsThe following table shows the attendance record of the Nomination

and Remuneration Committee meetings in 2018 (eleventh and

twelfth sessions):

No. Member Name


Attendance Ratio


Meeting No. (1)25/02/2018

Meeting No. (2)30/05/2018

Meeting No. (3)10/09/2018

Meeting No. (4)12/12/2018

1Mr. Ali bin Mohammed bin Ali Aba Al-Khail

Committee Head (12th session)100%

2Mr. Suleiman bin Ali Al-Khudair

Committee memberDate of membership in the

Committee 30/06/2018 100%

3Mr. Majed bin Mohammed Al-Othman

Committee member100%

4Mr. Ajlan bin Abdulrahman Al-Ajlan

Committee Head (11th session)Date of expiry of membership

29/06/2018 100%

Nomination and Remuneration CommitteeIt comprises:

Personal attendance


No. Name

Ownership Percentage

Beginning of period Change* December 31st, 2018 Change Ratio*

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

(6,245,352 shares)693,928 shares

11.56%(6,939,280 shares)

11.11%

2 Nahaz Investment Co.11.75%

(6,348,046 shares)705,338 shares

(2,703,384 shares)7.25%

(4,350,000 shares)(31.47%)

Nam

e

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

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

Name of CompanyInside/outside the Kingdom

Legal entityListed/unlisted

joint stock/limited liability company

Name of Company

Inside/outside

the Kingdom



Mr.

Ibra

him

bin

Moh

amm

ed A

l-Hud

aith

i

Al-Madaen Star Group Inside KSA Unlisted shareholding company Solidarity Company

Inside KSA

Listed shareholding company

Akwan Real Estate Inside KSA Unlisted shareholding company

Ibrahim bin Mohammed Al-Hudaithi Investment Co. Inside KSA Unlisted shareholding

company

Zawaya Real Estate Co. Inside KSA Unlisted shareholding company

Nahaz Investment Inside KSA Unlisted shareholding company

Bilda Specialized Commercial Centers Co. Inside KSA Unlisted shareholding

company

Mulkia Investment Co. Inside KSA Unlisted shareholding company

DAKKIN Advertising and Design Consultancy Inside KSA Limited liability

company

Saudi Finance Company Inside KSA Limited liability company

Mr.

Sulta

n bi

n M

oham

med

Al-H

udai

thi

United Wire Factories Company Inside KSA Unlisted shareholding

companySaudi Chemical

CompanyInside

KSAListed shareholding

company

Al-Madaen Star Group Inside KSA Unlisted shareholding company Madaen Star Group

Inside KSA

Limited liability company

Zawaya Real Estate Co. Inside KSA Unlisted shareholding company

Real Estate National Group

Inside KSA


Nahaz Investment Co. Inside KSA Unlisted shareholding company

Ibrahim bin Mohammed Al-

Hudaithi Investment Co.

Inside KSA

Unlisted shareholding

company

Mulkia Investment Inside KSA Unlisted shareholding company

DAKKIN Advertising and Design Consultancy Inside KSA Limited liability

company

Mulkia Trading Co. Inside KSA Limited liability company

Ma’areb Company for Investment and Real Estate

DevelopmentInside KSA Limited liability

company

Middle East Battery Company (MEBCO) Inside KSA Limited liability

company

* 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).

* Change includes shares granted to increase capital (11.11%).

Ownership of Substantial SharesThe following table shows the bodies holding substantial shares in SASCO and the changes made during 2018:

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



Mulkia Real Estate Investment Co.

Inside KSALimited liability

company

Mulkia GulfReal Estate REIT Fund


company

Mulkia Investment Co. Inside KSALimited liability

company

Mulkia GulfReal Estate REIT Fund


company

Knowledge & Childhood Company for Investment


company

Tamadon Al Olafor Real Estate


company

ARZAQ AGRICULTURAL Company


company

Tamadon Al Hadeethafor Real Estate


company

Dur Al Kuttab Limited Inside KSALimited liability

company

Tamdeen Real Estate Company


company

Auto & Equipment Investment co., LTD


company

Ostool Al-Naqil Co. Inside KSALimited liability

company

SASCO Palm Co. Inside KSALimited liability

company

Al-Nakhla Al-Oula Co. Inside KSALimited liability

company

Saudi Automobile & Touring Association


company

Zaiti Petroleum Services Company


company

SASCO Al-Waha Co. Inside KSALimited liability

company

SASCO Franchise Co. Inside KSALimited liability

company

Nam

e






Name of Company

Inside/outside

the Kingdom



Mr.

Nas

ser b

in A

bdul

lah

Al-A

wfi

United Cement Industrial Co.

Inside KSAUnlisted shareholding

company

Al Jouf Agricultural Development Company

(JADCO)

Inside KSA


Food Products Company

Inside KSA


Mr.

Sule

iman

bin

Al

i Al-K

huda

ir

Nahil Computers Inside KSALimited Liability

company

Mr.

Maj

ed b

in M

oham

med

Al-O

thm

an

Al-Madaen Star Group Inside KSAUnlisted shareholding

companyZaiti Petroleum

Services CompanyInside

KSA

Unlisted shareholding

company

Zawaya Real Estate Co. Inside KSAUnlisted shareholding

companyAl-Madaen Star Group

for AutomotiveInside

KSALimited Liability

company

Bilda Specialized Commercial Centers Co.


company

Ibrahim bin Mohammed Al-Hudaithi Investment


company

DAKKIN Advertising and Design Consultancy

Inside KSALimited Liability

company

Madaen Star Group Inside KSALimited Liability

company

FUNGATE Company Inside KSALimited Liability

company


Nam

e






Name of Company

Inside/outside

the Kingdom



Mr.

Riya

dh b

in S

aleh

Al-M

alik

*

Foroseya for Trading & Services Ltd.


companyAl Tas’helat Marketing

Inside KSA


Auto & Equipment Investment Co.


companySahl Transportation

CompanyInside

KSALimited liability

company

Ostool Al-Naqil Co. Inside KSALimited liability

companySara Communications

Company.Inside

KSALimited liability

company

SASCO Palm Co. Inside KSALimited liability

company

Al-Nakhla Al-Oula Co. Inside KSALimited liability

company



company

Zaiti Petroleum Services Inside KSALimited liability

company


company


company

Mr.

Ali b

in

Moh

amm

ed

Aba

Al-K

hail Sanad Investment Company Inside KSA Limited liability

Eskan InvestmentCompany


company

Mr.

Faw

az b

in S

ulei

man

Al-R

ajhi Al Rajhi United Investment

Holding CoInside KSA

Unlisted shareholding company

Rak Ceramics Outside KSAListed shareholding

company

Al Rajhi Alpha Investments Inside KSA Limited liability

RAJ Real Estate Inside KSA Limited liability

Mr.

Maj

id b

in

Nas

ser A

lSub

eaei

Nasser Bin Mohammed Alsubeaei & Sons

Investment CompanyInside KSA

Unlisted shareholding company

No. Name

Ownership

Beginning of Period Change

* December 31st, 2018

Change

Ratio*

1 Mr. Ibrahim bin Mohammed Al-Hudaithi 6,245,352 shares 693,928 shares 6,939,280 shares 11.11 %

2 Mr. Sultan bin Mohammed Al-Hudaithi 62,448 shares 60,770 shares 123,218 shares 97.31 %

3 Mr. Nasser bin Abdullah Al-Awfi 1,200 shares 133 shares 1,333 shares 11.11 %

4 Mr. Suleiman Ali Al-Khudair 198,658 shares 22,073 shares 220,731 shares 11.11 %

5 Mr. Majed bin Mohammed Al-Othman 67,249 shares 7,472 74,721 shares 11.11 %

6 Mr. Riyadh bin Saleh Al-Malik 1,200 shares 122,042 shares 123,242 shares 10,170.17 %

7 Mr. Ali bin Mohammed Aba Al-Khail 1,200 shares 133 shares 1,333 shares 11.11 %

8 Mr. Fawaz Suleiman Al-Rajhi 1,000 shares 111 shares 1,111 shares 11.11 %

9 Mr. Majid bin Nasser AlSubeaei** 3,500 shares 392٫291 shares 395,791 shares 11٫208.31 %

10 Mr. Muhammad bin Abdullah Al Motlaq - - - -

11 Mr. David Whales - - - -

12 Mr. Islam Mohammed Khairi Ahmad - - - -

13 Mr. Saud bin Suleiman Al Otaiby - - - -

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

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

* Change includes shares granted to increase capital (11.11%).

** Membership starts from the beginning of the 12th session on 30 June 2018.


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. Suleiman bin Ali Al-Khudair Board Member

5 Mr. Ajlan bin Abdulrahman Al-Ajlan Board Member

6 Mr. Majed bin Mohammed Al-Othman Board Member

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

8 Mr. Fawaz Suleiman Al-Rajhi Board Member

Shareholders’ Meetings in 2018 Shareholders’ Meetings in 2018

Twelfth Extraordinary General Meeting`f First meeting and second meeting (after an hour) on 22 May 2018.

Names of Attending Board Members

* Board member, Mr. Ali bin Mohammed Aba Al-Khail apologized for special circumstances.


`f All agenda items were approved as follows::

1. Approve the Board’s report for fiscal year ending on 31 Dec. 2017.

2. Approve Auditor’s report for fiscal year ending on 31 Dec. 2017.

3. Approve SASCO consolidated financial statements for fiscal year ending on 31 Dec. 2017.

4. Approve Board members’ acquittance for fiscal year ending on 31 Dec. 2017.

5. Approve the Board’s recommendation to distribute cash profits at SR 0,5 per each share equivalent to 5% of SASCO capital in a total amount of SR 27 million. The entitlement would be for shareholders registered with the Securities Depository Center Company (Idaa) by the end of the second trading day following the date on which the Extraordinary General Assembly convened. The date and method of distribution shall be announced later.

6. Approve the Board’s recommendation to increase SASCO capital from SR 540 million to SR 600,000,000 (no. of shares before the increase of capital was 54 million shares and rose to 60 million) at an increase rate of 11,11% through granting one free 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. Share fractions shall be combined in a single portfolio for all shareholders and shall be sold in the market price, with their value shall be proportionately distributed to entitled shareholders within a period not exceeding 30 days from determining shares entitled to each shareholder.

7. Approve the amendment of Article 7 of SASCO Articles of Association related to capital.

8. Approve the amendment of Article 8 of SASCO Articles of Association related to subscription into shares.

9. Approve the payment of a remuneration to the Board members at a total amount of SR 1,8 million, with each member to receive SR 200,000 for the fiscal year of 2017.

10. Approve and set the fees of the Audit Committee’s nominated auditor “Allied Accountants – Chartered Accountants and Auditors,” to audit the financial statements of the second, third and fourth quarters of fiscal year 2018 and the first quarter of 2019.

11. Approve the business and contracts to be undertaken

between SASCO and Nahaz Investment Co. and license the same for a period of one year, a company in which some Board members have a direct interest, namely Mr. Ibrahim bin Mohammed Al-Hudaithi and Mr. Sultan bin Mohammed Al-Hudaithi, who have a share of 0,02% of capital per each. Such business is to let Ostool Al-Naqil Co., Ltd (subsidiary) to lease a site from Nahaz Investment Co. at an annual sum of SR 368,000 to be used as headquarters and labour accommodation for Ostool Al-Naqil Co. These business and contracts have no preferential terms.

12. Approve the business and contracts to be undertaken between SASCO and DAKKIN Advertising and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 33,34%, Mr. Majed bin Mohammed Al-Othman, owning a share of 33,33% of its capital and Mr. Sultan bin Mohammed Al-Hudaithi, owning a share of 33,33% of its capital. Such business is to offer services and works in the field of publicity and advertising, with the amount of business in 2017 reaching an amount of SR 639,000. These business and contracts have no preferential terms.

13. Approve the business and contracts to be undertaken between SASCO and Mulkia Investment Co. and

license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 17,67% of its capital, Mr. Sultan bin Mohammed Al-Hudaithi, owning a share of 21,45% of its capital, Mr. Suleiman bin Ali Al-Khudair, owning a share of 0,67% of its capital and Mr. Majed bin Mohammed Al-Othman, owning a share of 0,67% of its capital. Such business is an agreement to manage an investment portfolio in Al Ahli Capital with a value of SR 50 million. These business and contracts have no preferential terms.

14. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Nahaz Investment Co. and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi and Mr. Sultan bin Mohammed Al-Hudaithi, who have a share of 0,02% of capital per each. Such business is a lease contract under which Zaiti Petroleum Services Company shall lease two stations No. 1 and No. 2 from Nahaz Investment Co. against an annual sum of SR 800,000. These business and contracts have no preferential terms.

15. Approve the business and contracts to be undertaken


between Zaiti Petroleum Services Company (SASCO subsidiary) and Al-Madaen Star Real Estate and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 97,75% of the capital of Al-Madaen Star Real Estate and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Board member and Mr. Sultan bin Mohammed Al-Hudaithi, Board member. Such business is a lease contract under which Zaiti Petroleum Services Company shall lease station No. 8 from Al-Madaen Star Real Estate against an annual sum of SR 300,000. These business and contracts have no preferential terms.

16. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Zawaya Real Estate Co. and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 42,96% of the capital of Zawaya Real Estate Co. and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Board member owning a share of 0,29% of its capital and Mr. Sultan bin Mohammed Al-Hudaithi, Board member owning a share of 1,8% of its capital. Such business is a lease contract under which Zaiti Petroleum Services Company shall lease station

No. 9 from Zawaya Real Estate Co. against an annual sum of SR 400,000. These business and contracts have no preferential terms.

17. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Al-Madaen Star Real Estate and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 97,75% of the capital of Al-Madaen Star Real Estate and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Board member and Mr. Sultan bin Mohammed Al-Hudaithi, Board member. Such business is a lease contract under which Zaiti Petroleum Services Company shall lease station No. 10 from Al-Madaen Star Real Estate against an annual sum of SR 800,000. These business and contracts have no preferential terms.

18. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Al-Madaen Star Real Estate and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 97,75% of the capital of Al-Madaen Star Real Estate and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Board member, and Mr.

Sultan bin Mohammed Al-Hudaithi, Board member. Such business is a lease contract under which Zaiti Petroleum Services Company shall lease station No. 11 from Al-Madaen Star Real Estate against an annual sum of SR 250,000. These business and contracts have no preferential terms.

19. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Al-Madaen Star Real Estate and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 97,75% of the capital of Al-Madaen Star Real Estate and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Board member, and Mr. Sultan bin Mohammed Al-Hudaithi, Board member. Such business is a lease contract under which Zaiti Petroleum Services Company shall lease station No. 12 from Al-Madaen Star Real Estate against an annual sum of SR 150,000. These business and contracts have no preferential terms.

20. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Nahaz Investment Co. and license

the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi and Mr. Sultan bin Mohammed Al-Hudaithi, who have a share of 0,02% of capital per each. Such business is fuel purchases from Nahaz Investment Co. against a sum of SR 986,000 in 2017. These business and contracts have no preferential terms.

21. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Al-Madaen Star Group and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a direct and indirect share of 97,75% of the capital of Al-Madaen Star Group and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Managing Director of Al-Madaen Star Group, and Mr. Sultan bin Mohammed Al-Hudaithi, Board member. Such business is fuel purchases from Zaiti Petroleum Services Company against a sum of SR 1,997,000 in 2017. These business and contracts have no preferential terms.

22. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO


subsidiary) and Mr. Majed bin Mohammed Al-Othman and license the same for a period of one year. Such business is fuel purchases by Mr. Majed bin Mohammed Al-Othman from Zaiti Petroleum Services Company against a sum of SR 94,000 in 2017. These business and contracts have no preferential terms.

23. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Zawaya Real Estate Co. and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 42,96% of the capital of Zawaya Real Estate Co. and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Board member owning a share of 0,29% of its capital and Mr. Sultan bin Mohammed Al-Hudaithi, Board member owning a share of 1,8% of its capital. Such business is fuel purchases from Zaiti Petroleum Services Company by Zawaya Real Estate Co. against an annual sum of SR 66,000 in 2017. These business and contracts have no preferential terms.

24. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Zawaya Real Estate Co. and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning a share of 42,96% of the capital of Zawaya Real Estate Co. and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Board member owning a share of 0,29% of its capital and Mr. Sultan bin Mohammed Al-Hudaithi, Board member owning a share of 1,8% of its capital. Such business is a lease contract by Zawaya Real Estate Co. of advertising boards in Station No. 9 of Zaiti Petroleum Services Company against an annual sum of SR 25,000. These business and contracts have no preferential terms.

25. Approve the business and contracts to be undertaken between Zaiti Petroleum Services Company (SASCO subsidiary) and Fungate Co. and license the same for a period of one year, a company in which some Board members have a direct interest. These members are Mr. Ibrahim bin Mohammed Al-Hudaithi, owning

a direct and indirect share of 97,75% of the capital of Fungate Co. and occupying the position of the Chairman, Mr. Majed bin Mohammed Al-Othman, Managing Director of Fungate Co., and Mr. Sultan bin Mohammed Al-Hudaithi, Board member. Such business is a lease contract by Fungate Co. of residential rooms in Station No. 2 of Zaiti Petroleum Services Company against an annual sum of SR 50,000. These business and contracts have no preferential terms.

26. Approve the amendment of Article 32 of SASCO Articles of Association regarding calling for general meetings.

27. Approve the amendment of Article 43 of SASCO Articles of Association regarding committee reports.

28. Approve the amendment of Article 49 of SASCO Articles of Association regarding financial documents.

29. Approve the amendment of Article 50 of SASCO Articles of Association regarding profit distribution.

30. Elect Board members from among those nominated for 12th session starting on 30 June 2018 for three years ending to 29 June 2021 (by way of cumulative voting. These are 9 members according to SASCO Articles of Association. They are ordered according to the votes they obtained as follows:

• Mr. Ibrahim bin Mohammed Al-Hudaithi • Mr. Sultan bin Mohammed Al-Hudaithi • Mr. Majed bin Mohammed Al-Othman • Mr. Ali bin Mohammed Aba Al-Khail • Mr. Suleiman bin Ali Al-Khudair • Mr. Riyadh bin Saleh Al-Malik • Mr. Nasser bin Abdullah Al-Awfi • Mr. Fawaz bin Suleiman Al-Rajhi • Mr. Majid bin Nasser AlSubeaei31. Approve the composition of the Audit Committee and

specify its functions, work rules and remuneration of its members for the 12th session commencing on 30 June 2018 and ending on 29 June 2021. Following are the names of its members:

• Mr. Nasser bin Abdullah Al-Awfi,Committee Head

• Mr. Fawaz bin Suleiman Al-Rajhi,Committee member

• Mr. Turki bin Muhamma Al Quraini,Committee member (non-board member)

Mr. Mohammed bin Abdullah Al-MutlaqGeneral Manager 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 the 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).Present Occupations:

f Assistant CEO the Saudi Automotive Services Company (SASCO).

Previous Occupations: f General Director of Zaiti Petroleum Services

Company.

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

lead working teams.Present Occupations:

f Director of Finance Management of the Saudi Automotive Services Company (SASCO).

Previous Occupations: f Head of Accounts Department in Al-Madaen

Star Group. f Chief Financial Officer of Zaiti Petroleum

Services Company.

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

Present Occupations: f General Director of SASCO Palm Stores

(subsidiary).Previous Occupations:

f Director of Supplies Sector at many British corporations.

f Regional Director of Operations at British corporations.

f Deputy General Director of Operations at City Center Hypermarket.

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

Present Occupations: f Director of Operations Sector of the Saudi

Automotive Services Company (SASCO).Previous Occupations:

f Head of Western Province Operations, Al Tas’helat Marketing Company Ltd.

f General Director of Distributors in Kia Motors Saudi Arabia.

f Director of Western and Northern Provinces in the Saudi Automotive Services Company (SASCO).

Recommendation Regarding the Auditor

The Board or the Audit Committee has no observations or reservations regarding the current auditor, “Allied Accountants – Chartered Accoun-

tants and Auditors,” noting that 2018 was the fourth year for this auditor to deal with SASCO. The auditor’s activities include auditing SASCO

financial statements for the fiscal year 2018 and the first quarter of the fiscal year 2019.

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 DirectorsThey are as follows:


Statement 2014 2015 2016 2017 “Amended” 2018

Current assets 340,172,790 335,453,233 310,503,345 336,983,801 358,187,696

Non-current assets 791,550,290 946,464,664 1,182,055,527 1,169,679,455 1,242,554,192

Total Assets 1,131,723,080 1,301,917,897 1,492,558,872 1,506,663,256 1,600,741,888

Current Liabilities 242,486,686 233,134,630 364,594,629 415,126,524 458,879,874

Non-Current Liabilities 163,195,676 336,454,575 345,519,020 362,426,221 389,999,100

Total Liabilities 405,682,362 569,589,205 710,113,649 777,552,745 848,878,974

Financial Statements at SASCO Level Financial Statements at SASCO Level

Financial PositionThe following table summarizes the data of the financial position statement for the past five years:

Total assets and liabilities

2014 2015 2016 2017 2018

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

-

Total assets Total liabilities



Sales 453,370,500 665,048,902 1,094,122,754 1,212,329,807 2,056,081,002

Direct Costs (416,105,976) (613,340,424) (1,036,023,378) (1,132,838,480) (1,974,099,397)

Income Margin 37,264,524 51,708,478 58,099,376 79,491,327 81,981,605

General & Administrative Expenses

(28,717,195) (35,285,668) (38,686,162) (47,575,585) (44,298,103)

Other Revenue (Expenses) 76,539,300 5,584,757 10,222,617 (135,609) 542,811

Zakat (3,036,000) (3,391,000) (3,655,000) (3,795,000) (2,775,004)

Net Income 82,050,629 18,616,567 25,980,831 27,985,133 35,451,309

Assets

Commodity StockCash and cash equivalents Total AssetsCommercial Receivables Long-Term Assets

Change in Net Fixed Assets

2014 2015 2016 2017 2018

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

0

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

02014 2015 2016 2017 2018

Growth rate in total assets 41.44%

Net Fixed Assets Total Assets

2014 2015 2016 2017 2018

900,000,000

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

Growth Rate in Shareholders› Equity 3.56%

Total Shareholders’ EquityTotal Liabilities Capital

Liabilities and Shareholders’ Equity

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


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 sales at 69,60%.

`? Decline of depreciation expenses and customs allowances.

`? Increase of investment revenues in spite of the increase of sales,

financing and general and administrative expenses`f The comprehensive income of the current period was SR 51,55 million compared to SR 215,000 million for the same period of last year at an increase of 23,876% due to an increase in reassessing investments.`f Shareholders’ equity recorded SR 751,86 million compared to SR 729,11 million for the same period, i.e. an increase of 3,12% (there is no minority equity).

`f Share profitability of the same period was recalculated due to the

increase of capital from SR 540 million to SR 600 million.

Statement 2018 2017 Change + (-) % of Change

Revenue 2,056,081,002 1,212,329,807 843,751,195 69.60%

Direct Costs (1,974,099,397) (1,132,838,480) 841,260,917 74.26%

Income Margin 81,981,605 79,491,327 2,490,278 3.13%

Sales and marketing expenses (2,189,061) (3,799,225) (1,610,164) (42.38%)

General & Administrative Expenses (40,020,290) (39,679,677) 340,613 0.86%

Structured Allowances (2,088,752) (4,096,683) (2,007,931) (49.01%)

Net Operating Income 37,683,502 31,915,742 5,767,760 18.07%

Investment Revenue (Loss) 6,745,277 2,983,259 3,762,018 126.10%

Financial Burdens (8,070,599) (5,631,383) 2,439,216 43.31%

Misc. Revenue 1,868,133 2,512,515 (644,382) (25.65%)

Net Income Before Zakat 38,226,313 31,780,133 6,446,180 20.28%

Zakat (2,775,004) (3,795,000) (1,019,996) (26.88%)

Net Income After Zakat 35,451,309 27,985,133 7,466,176 26.68%

Income MarginSales Net IncomeDirect Costs

2014 2015 2016 2017 2018

2,500,000,000

2,000,000,000

1,500,000,000

1,000,000,000

500,000,000

0

2014 2015 2016 2017 2018

80,000,000

60,000,000

40,000,000

20,000,000

0

(10,000,000)

ZakatGeneral & Administrative Expenses Other Revenue (Expenses)

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



Flows from Operating Activities 13,749,624 50,095,250 61,539,044 31,299,799 45,308,582

Flows from Investment Activities 116,172,277 (198,513,124) (168,464,284) (116,986,699) (78,101,689)

Flows from Financial Activities (78,098,773) 141,373,640 66,933,168 65,280,554 9,752,789

Statement 2014 2015 2016 2017 2018

Earnings per Share 1.52 0.34 0.48 0.47 0.59

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

Flows from Financial ActivitiesFlows from Operating Activities Flows from Investment Activities

150,000,000

100,000,000

50,000,000

-

50,000,000

100,000,000

150,000,000

200,000,000

2014 2015 2016 2017 2018

Volume of Capital Spending

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

-

2014 2015 2016 2017 2018

130,

462,

199

137,

316,

422

193,

415,

355

117,

203,

850

100,

479,

857

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

2014 2015 2016 2017 2018

2.00

1.75

1.50

1.25

1.00

0.75

0.50

0.25

0.00

1.52

0.340.48 0.47

0.59

Earnings Per Share

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

Share Value in SAR

30.00

25.00

20.00

15.00

10.00

5.00

02014 2015 2016 2017 2018



Sales Growth 22.90% 46.69% 64.52% 10.80% 69.60%

Net Income Growth 106.16% (77.31%) 39.56% 7.71% 26.68%

Asset Growth 4.26% 15.04% 14.64% 0.94% 6.24%

Equity Growth (0.36%) (0.36%) 6.84% (6.82%) 3.12%


Return on Sales 18.10% 2.80% 2.37% 2.31% 1.72%

Return on Capital 18.23% 3.45% 4.81% 5.18% 5.91%

Return on Investment 10.37% 2.00% 2.20% 2.39% 2.85%

Return on Total Assets 7.25% 1.43% 1.74% 1.86% 2.21%

Return on Equity 11.30% 2.54% 3.32% 3.84% 4.72%


Debtors Turnover 13.00 18.15 13.97 13.06 14.74

Inventory Turnover 19.53 22.15 37.92 31.18 38.56

Asset Turnover 0.40 0.51 0.73 0.80 1.28


Liquidity Ratio 1.40 1.52 0.85 0.81 0.78

Quick Liquidity Ratio 1.32 1.41 0.78 0.72 0.67

Ratio of Indebtedness to Equity 55.88% 57.56% 65.74% 76.19% 78.88%

Ratio of Indebtedness to Total Assets 35.85% 32.38% 34.46% 36.87% 37.05%

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

Growth Indicators

Profit Indicators

20.00%

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

2014 2015 2016 2017 2018

18.10

%

2.37

%

2.31

%

1.72%2.

80%

18.2

3%

4.81

%

5.18

% 5.91

%

3.45

%

10.3

7%

2.20

%

2.39

%

2.85

%

2.00

%

7.25

%

1.74%

1.86% 2.21

%

1.43%

11.3

0%

3.32

%

3.84

%

4.72

%

2.54

%

Return on InvestmentReturn on Sales

Return on Total Assets

Return on Capital

Return on Equity

Profit Indicators

Efficiency Indicators

2014 2015 2016 2017 2018

40.00

35.00

30.00

25.00

20.00

15.00

10.00

5.00

0.00

13.0

0

19.5

3

0.40

18.15

22.15

0.51

13.9

7

37.9

2

0.73

13.0

6

31.18

0.80

14.7

4

38.5

6

1.28

Asset TurnoverDebtors Turnover Inventory Turnover

Efficiency Indicators

Liquidity & Indebtedness Indicators


Statement 2014 2015 2016 2017 2018

Revenue 100% 100% 100% 100% 100%

Direct Costs 91.78% 92.22% 94.69% 93.44% 96.01%

Income Margin 8.22% 7.78% 5.31% 6.56% 3.99%


6.33% 5.31% 3.54% 3.92% 2.15%

Other Revenue (Expenses) 16.88% 0.84% 0.93% (0.01%) 0.03%

Zakat 0.67% 0.51% 0.33% 0.31% 0.13%

Net Income 18.10% 2.80% 2.37% 2.31% 1.72%

?``These payments are within SASCO activity.

Statement

2018

Brief Description Description of ReasonsPaid

Due until end of annual financial period but not paid

Zakat 3,428,479 2,775,004Amount of Zakat paid during

the yearDue for 2018

Value added tax 9,496,817 989,042Paid amount of value

added tax

The due amount belongs to December and is paid in

January 2019

Withholding tax 4,699Paid amount ofwithholding tax

The due amount belongs to December and is paid in

January 2019

General Organization for Social Insurance

3,748,422 361,584 Year duesThe due amount belongs

to December and is paid in January 2019

Costs of visas, passports and labor office

6,221,864Fees for visa, renewal of

residence permit, exit and return

Customs Fees 232,969Customs fees of SASCO and


Total 23,133,264 4,125,630

Punishment / sanction / precautionary measure / pre-

cautionary attachmentReasons for violation Imposing body

How to address and avoid the same in the future

Fine Operating some sites without license

Province Eamana - Ministry of Municipal and Rural Affairs

(MoMRA)

Completing the requirements for issuing and renewing licenses for

the operation of sites

Fine Employing non-Saudis in a Saudized job

Ministry of Labor and Social Development

Saudizing the job and making sure Ministry of Labor’s requirements are met

Fine Shortage of some civil defense requirements

General Directorate of Saudi Civil Defense

Completing and regularly verifying the civil defense

requirements

Fine Lack of license to operate Motel Al Adeed

Saudi Commission for Tourism and National Heritage (SCTH)

Efforts are exerted to issue it in coordination with the SCTH

Items of Income Statement as a Percentage of Revenue

2014 2015 2016 2017 2018

% 100.00

% 90.00

% 80.00

% 70.00

% 60.00

% 50.00

% 40.00

% 30.00

% 20.00

% 10.00

0.00

% 10,00-

8.22

%6.

33% 16

.88%

18.10

%0.

67% 7.

78%

5.31

%

6.56

%

3.99

%

5.31

%

3.54

%

3.92

%

2.15

%

0.84

%

0.93

%

0.03

%

2.80

%

2.37

%

2.31

%

1.72%

0.51

%

0.33

%

0.31

%

0.13

%

92.2

2%

91.7

8%

94.6

9%

93.4

4%

-0.0

1%

96.0

1%


Direct Costs Other Revenue (Expenses)

Net IncomeIncome Margin Zakat

Items of Income Statement as a Percentage of Revenue

Zakat and Regulatory PaymentsZakat 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:

FinesThe following statement shows the punishments, sanctions, violations, precautionary measures or precautionary attachments, if any, imposed on SASCO during the year:


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 2012, SASCO signed a Sharia-compliant facilities agreement

with Banque Saudi Fransi (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. SASCO again amended the

agreement amount on May 22nd, 2018, to be SAR (391,107,316). This

included the renewal of existing facilities of which SAR (140,107,316)

represent various credit facilities and SAR (251,000,000) represent

short, medium and long-term finance facilities guaranteed by a

promissory note. The agreement aims to finance the purchase and

building of new stations.

During 2013, SASCO signed a Shariah-compliant credit facilities

agreement with the National Commercial Bank (NCB) of SAR

(90,000,000) in the form of a long-term commercial loan to expand

construction or acquisition of fuel stations. The agreement was

renewed on May 1st, 2014 and its value became SAR (91,125,000) as

a general credit ceiling, including long-term loan facilities of SAR

(90,000,000) and profit margin swap of SAR (1,125,000) according to

the needs of ordinary course of business.

On August 25th, 2015, SASCO signed a new Shariah-compliant facilities

agreement with NCB of SAR (151,825,000), including long-term loans

of SAR (101,125,000), bank letters of guarantee of SAR (25,000,000),

short-term loans of SAR (25,700,000). The agreement aims to expand

SASCO projects, support its core activities, and purchase new sites

to build fuel stations as well as to finance the working capital. The

agreement was renewed on May 1st, 2016 and its value became SAR

(201,325,000), including long-term loan facilities of SAR (150,625,000)

and bank letters of guarantee of SAR (25,000,000) and short-term

loans of SAR (25,700,000). The agreement aims to expand SASCO

projects, support its core activities, and purchase new sites to build

fuel stations. The agreement was amended on April 30st, 2017 and its

value became SAR (200,700,000), including long-term loans of SAR

(150,700,000) and bank letters of guarantee of SAR (25,000,000) and

short-term loans of SAR (25,000,000). The agreement aims to expand

SASCO projects, support its core activities, and purchase new sites to

build fuel stations. The agreement was amended on 26 September

2018 and its value became SAR (25,000,000) in the form of short-term

commercial facility guaranteed by a promissory note. The agreement

aims to support the needs of working capital.

On May 25th, 2015, SASCO signed a new Shariah-compliant facilities

agreement with the Saudi-British Bank (SABB) of SAR (150,000,000)

effective from the date of signing thereof, provided the use thereof

before January 31st, 2016, and guaranteed by a promissory note.

This agreement includes a long-term loan of SAR (100,000,000) and

bank letters of guarantee of SAR (50,000,000). The agreement aims

to partially finance capital expenses, purchase land, and build new

fuel stations. The agreement was amended on Dec. 7th, 2017 and its

value became SAR (177,967,726), guaranteed by a promissory note,

including a long-term loan of SAR (47,967,726) in addition to SAR

(80,000,000) as bank letters of guarantee and short-term loans of

SAR (50,000,000). The agreement aims to partially finance capital

expenses, purchase land, and build new fuel stations as well as to

finance the working capital. It will expire on January, 31th, 2019. The

agreement was amended on Dec. 10th, 2018 and its value became SAR

(400,000,000), guaranteed by a promissory note, including a long-

term loan of SAR (150,000,000) in addition to SAR (200,000,000) as

bank letters of guarantee and short-term loans of SAR (50,000,000).

The agreement aims to partially finance capital expenses, purchase

land, and build new fuel stations as well as to finance the working

capital. It will expire on January, 31th, 2020.

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 shall be at equal quarterly

instalments. This is in addition to issuing letters of guarantee of

SAR (100,000,000). The agreement aims to expand SASCO projects,

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

as well as to finance the working capital. The agreement was

renewed and amended on Sep. 6th, 2018 and its value became SAR

(48,000,000) in the form of payment guarantees in favor of Aramco,

guaranteed by a promissory note.

On December 21st, 2015, SASCO signed a (Shariah-compliant) 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 31 October 2018, the agreement was renewed and

amended and the value of total guarantees became SAR (104,574,298)

and the value of total guarantees became SAR (750,000,000)

including medium-term loans of SAR (29,574,298), guaranteed by a

promissory note.

On December 21st, 2015, SASCO signed a (Shariah-compliant) facilities

agreement with Riyadh Bank (a Saudi joint-stock company). The

agreement includes bank letters of guarantee of SAR (50,000,000),

aiming at expanding SASCO projects and supporting its core activities.

The agreement was amended on March 8th, 2018 through adding SR

320,000,000 in the form of long-term finance of 235,000,000, short-

term finance of SR 20,000,000, documentary credits of SR 20,000,000

and a hedge to set interest rates at SR 45,000,000 in addition to bank

guarantees of SR 50,000,000 with the final value of the agreement

to be 370,000,000, guaranteed by a promissory note in addition to

pledging real estate deeds.

Loans

Balance of loans at the end of year

150,000,000100,000,00050,000,0000 200,000,000 250,000,000

200,800,000

25,000,000

108,962,882

238,214,286

20,097,391

BSF

National Commercial Bank (NCB)

Saudi British Bank (SABB)

Gulf International Bank (GIB)

Alawwal Bank


Bank Loan Date Balance at the end of 2018 Balance at the end of 2017

BSF 31/05/2013 56,124,000 101,324,000

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

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

BSF 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 3,966,562

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

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

BSF 24/08/2018 20,000,000 20,000,000

NCB 03/12/2013 - 5,000,000

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

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

NCB 10/12/2018 25,000,000 25,000,000

Riyadh Bank 18/03/2018 181,071,429 -

Riyadh Bank 08/05/2018 37,142,857 -

Riyadh Bank 04/06/2018 20,000,000 -

SABB 01/06/2015 - 13,181,625

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

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

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

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

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

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

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

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

SABB 19/12/2018 58,962,882 -

GIB م27/12/2015 - 50,000,000

Alawwal Bank م28/12/2015 16,666,667 33,333,333

Alawwal Bank م13/12/2016 2,264,022 3,773,370

Alawwal Bank م20/12/2016 1,166,702 1,944,503

Total 593,074,559 555,518,930

Statement 2018 2017

Less than 1 Year 215,688,892 204,479,080

1 Year to 2 Years 86,700,386 114,479,080

2 Years to 5 Years 222,935,643 224,894,103

More than 5 Years 67,749,638 11,666,667

Bank Date of Issue Loan Value TermPeriod in Months

Balance at year begin-

ning

Paid during year

Due Date

BSF 31/05/2015 101,324,000 Long-term 72 101,324,000 45,200,000 31/12/2022

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 - 31/12/2022

BSF 19/08/2017 20,000,000 Short-term 12 20,000,000 20,000,000 19/08/2018

BSF 19/08/2018 20,000,000 Short-term 12 - - 19/08/2019

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 18,453,890 - 31/12/2022

NCB 03/12/2013 90,000,000 Long-term 60 5,000,000 5,000,000 30/04/2018

NCB 26/10/2015 30,000,000 Long-term 84 22,500,000 22,500,000 26/04/2022

NCB 15/10/2017 25,000,000 Short-term 4 25,000,000 25,000,000 25/2/2018

NCB 10/12/2018 25,000,000 Short-term 4 - - 27/02/2017

NCB 05/05/2015 10,000,000 Long-term 84 70,000,000 70,000,000 29/01/2015

SABB 01/06/2015 25,173,556 Long-term 72 13,181,625 13,181,625 28/11/2021

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

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

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

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

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

SABB 20/03/2017 5,147,785 Long-term 53 5,147,780 5,147,780 03/11/2021

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

SABB 23/10/2018 1,159,500 Long-term 84 - - 23/10/2025

SABB 10/12/2018 4,581,194 Long-term 84 - - 10/12/2025

Loan Statement Loan Maturity

Loan Movement


Pledged Assets

Bank Date of Issue Loan Value TermPeriod in Months

Balance at year begin-

ning

Paid during year

Due Date

SABB م29/11/2018 1,483,314 Long-term 84 - - 29/11/2025

SABB م18/12/2018 3,442,271 Long-term 84 - - 18/12/2025

SABB م19/12/2018 4,119,030 Long-term 84 - - 19/12/2025

SABB م03/12/2018 1,213,781 Long-term 84 - - 03/12/2025

SABB م22/10/2018 4,364,226 Long-term 84 - - 22/10/2025

SABB م19/09/2018 17,864,606 Long-term 84 - - 19/09/2025

SABB م21/12/2017 50,000,000 Short-term 4 50,000,000 50,000,000 31/03/2018

SABB م19/09/2018 20,733,750 Long-term 84 - - 19/09/2025

SABB م10/11/2018 50,000,000 Short-term 4 - - 10/02/2019

Riyadh Bank م18/03/2018 195,000,000 Long-term 84 - 13,928,571 18/03/2025

Riyadh Bank م08/05/2018 40,000,000 Long-term 84 - 2,857,143 08/05/2025

Riyadh Bank م04/06/2018 20,000,000 Short-term 12 - - 04/06/2019

GIB م27/12/2015 50,000,000Medium-

term59 50,000,000 50,000,000 24/11/2020

Alawwal Bank م31/12/2015 50,000,000Medium-

term48 33,333,333 16,666,667 31/12/2019

Alawwal Bank 13/12/2016 4,528,044Medium-

term42 3,773,370 1,509,348 28/06/2020

Alawwal Bank 20/12/2016 2,333,403Medium-

term42 1,944,503 777,802 28/06/2020

Total 1,012,295,449 555,518,930 371,407,255

Site Entity Guarantee

Periodical Inspection Stationin Riyadh

Riyadh Bank Pledge

Jubail Station in Dammam Riyadh Bank Pledge

Takhassusi Station in Riyadh Riyadh Bank Pledge

Jubail Station 2 in Dammam Riyadh Bank Pledge

Uthman Bin Affan Stationin Riyadh

Riyadh Bank Pledge

Other Guarantees

Bank Guarantee

BSF A promissory note of SAR 391,107,316

NCB A promissory note of SAR 27,500,000

SAAB A promissory note of SAR 400,000,000

GIB A promissory note of SAR 48,000,000

Alawwal Bank A promissory note of SAR 104,574,298

Riyadh Bank A promissory note of SAR 320,000,000

Debt InstrumentsSASCO and its subsidiaries did not issue debt instruments.

Profit Distributions

Pursuant to Article 50 (Profit Distribution) of SASCO Articles of

Association, SASCO annual net profits shall be distributed as follows:`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 (3%) 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 shall have the authority to approve interim profit disbursement to shareholders on a quarterly or biannual basis if SASCO financial position so permits and liquidity is available according to the rules and procedures developed by competent authorities.

According to Article (52) of SASCO Articles of Association (Profit Entitlement):`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.

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.`f SASCO Articles of Association and Policy of Share Profit Distribution

are available on this link: www.sasco.com.sa`f The following table shows the profits distributed to shareholders since 2010:

`f In its session held on March 19th, 2019, SASCO Board of Directors recommended to distribute cash dividends to shareholders for the fiscal year ending on December 31th, 2018, with a total of SAR (30,000,000), 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.

Cash Disbursements

Year (SR/Share)

2010 0.50

2011 0.50

2012 0.50

2013 0.75

2014 0.50

2015 0.50

2017 0.50

Deviations from Applying Accounting StandardsAccounting Standards applicable in the Kingdom of Saudi ArabiaSASCO 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 12/8/2018, 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 the international standards adopted by the Saudi Organization for Certified Public Accountants, SASCO issued all its preliminary and annual financial

statements during 2017 and 2018 according to the IFRS.

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, 2018, without any reservations.

Loan Movement (Continued)


Retail Sector Retail SectorIt is one of SASCO key sectors. All SASCO sites have been merged with Zaiti Company sites in this sector. It contains SASCO basic products offered to clients through (218) sites, divided into (162) operating stations and rest houses operated by SASCO and (6) sites operated by third parties. This is in addition to (9) sites stopped for development

or under construction, (23) sites under pre-construction procedures, as well as (20) sites stopped because the roads deviated away from them and for lack of economic feasibility from operating them at present.

More than 105 mosques

Mosques with a total capacity of more than

10,000 Salat performers

Covering more than 4,000 km

In 2018, Retail Sector offered its services to about 21 million vehicles, with an increase of 18,36% over the previous year, and 109 million customers, with an increase of 18,25% over the previous year.

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

Fuel Services

DieselGasoline

91Gasoline

95

0 20,00 40,00 60,00 80,00 100,00 120,00

21,040

17,777

16,019

Growth Ratio 18.36%

109,344

92,465

86,486

Growth Ratio 18.25%

Number of Vehicles

Thousand

Number of Customers

2018 2017 2016

Statistics of Company Site Visitors


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/litre/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.

Rental 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 continued to sign 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.

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.

200,000,0000 400,000,000 600,000,000 800,000,000 1,000,000,000

Change % of

50.45 %

997,971,241

93,266,802

419,735,635

663,324,664

258,443,751

355,976,099

568,670,086

253,671,756

373,509,987

Gasoline 91

Gasoline 95

Diesel

Change % of (%63.91)

Change % of 17.91 %

2018 2017 2016

Number of sold litres - SASCO

Rental

Rental areas of more than exceeding 114,000 m2


CaféPalm Café offers all types of coffee and hot drinks, in addition to a range of snacks and pastries. Palm Café had (8) branches by the end of 2018.To offer a better service in this field, SASCO contracted with major international café companies to provide their services through SASCO

sites spread throughout the Kingdom.

Pilgrims’ ServicesSASCO provides these services through its rest houses and stations at the Saudi border crossing posts, in addition to SASCO site network spreading on all highways, especially those linking the holy lands (Mecca and Medina).During 2018, SASCO served more than 9,900,000 pilgrims, whether they are from inside or outside the Kingdom. SASCO most important stations and rest houses spread over the following highways:`f Al-Hijra Road (Mecca/Medina)`f Mecca/Jeddah Highway.`f Mecca/Taif Road (Al Hoda/Al Sail)`f Riyadh/Taif highway`f Riyadh/Dammam Road`f Halat Amar/Tabuk/Medina Road

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.

2014 2015 2016 2017 2018

416,266,722 645,234,638 939,405,052 1,034,959,662 1,851,348,389

Direct RevenueContribution Ratio

(in revenue) Direct Costs Total IncomeContribution Ratio

(Income Margin)

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

1,851,348,389 1,034,959,662 90.05% 85.37% (1,798,497,107) (985,257,010) 52,851,282 49,702,652 64.47% 62.53%

2018 20162017

2,0000 4,000 6,000 8,000 10,000

1,100

1,100

1,200

9,900

8,300

9,700

Number of buses

Number of persons

Pilgrims

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:

2018 2017

Retail Sector

500,000,0000 1,000,000,000 1,500,000,000 2,000,000,000

49,702,652

52,851,282

1,034,959,662

(985,257,010)

1,851,348,389

(1,798,497,107)

Operating revenues

Operating costs

Total income

2,000,000,000

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

0

2014 2015 2016 2017 2018

Annual Compound Growth rate 35%

Total Sector Revenue

Revenue Growth of Retail Sector

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


Sector 2018 % 2017 %

Central Province 813,495,006 43.93% 496,453,167 47.96%

Northern Province 118,231,379 6.39% 68,606,196 6.63%

Eastern Province 403,712,322 21.81% 243,897,828 23.57%

Western Province 380,384,808 20.55% 162,882,795 15.74%

Southern Province 63,344,155 3.42% 39,935,068 3.86%

Qassim Province 72,180,719 3.90% 23,184,608 2.24%

Total 1,851,348,389 100% 1,034,959,662 100%

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

Geographical Revenue of Retail Sector





Qassim Province 3.90%

Southern Province 3.42%


SASCO Palm Co. is a limited liability company, with a capital of SAR 500,000 divided into 50,000 equal cash shares, each of SAR 10. SASCO possesses 99% while Auto & Equipment Investment Co., Ltd possesses the remaining 1%.

SASCO offers supply service through (SASCO Palm Stores), for which SASCO opened (4) branches during 2018, bringing the total number of (SASCO Palm Stores) branches to (69) in various regions of the Kingdom at the end of the year after excluding two branches in 2018 to be run by third parties.

Revenue of SASCO Palm Stores square meters in 2018 rose to SR 15,300 compared to SR 12.3, i.e. an increase of 24.39% for all sites. Client basket change was 6.32% rising from SR 19 in 2017 to SR 20.2 in 2018.

(SASCO Palm Stores) 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 phone accessories.`f Perfumes and cosmetics.

The following table shows the most important financial results at SASCO Palm Stores level as well as the percentage of contribution and income margin compared to previous fiscal year:

Central 39

Western 10

Northern 7

Eastern 13

70

65

60

55

2018 2017 2016

69

67

61

Direct Revenue% of Contribution

(in revenues)Direct Costs Total Income

% of Contribution (Income Margin)

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

201,456,232 163,719,373 9.80% 13.50% (190,488,260) (157,234,487) 10,967,972 6,484,886 13.38% 8.16%

SASCO Palm Co.SASCO Palm Co.

Geographical Distribution of BranchesNumber of SASCO Palm Stores Branches


Sector 2018 % 2017 %

Central Province 126,231,352 62.66% 96,753,245 59.10%

Northern Province 10,794,365 5.36% 10,539,418 6.44%

Eastern Province 28,988,690 14.39% 24,333,262 14.86%

Western Province 35,441,825 17.59% 32,093,448 19.60%

Total 201,456,232 100% 163,719,373 100%

20172018

Operating Revenue Operating costs Total income

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

0

201

,456

,232

163,7

19,3

73

190,

488,

260

157,2

34,4

87

10,9

67,9

72

6,4

84,8

86

Sasco Palm Company

250,000,000

200٫000٫000

150٫000٫000

100٫000٫000

50٫000٫000

0

2015 2016 2017 2018


Total Sector Revenue

Growth of SASCO Palm Stores Revenue





The following table shows province-level revenue analysis:

SASCO Palm Stores Geographical Revenue


SASCO Al-Waha Co.

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

SAR 5000,000, divided into 50,000 equal cash shares, each of SAR

100. SASCO possesses 99% of its capital 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.




2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

3,911,567 2,651,845 0.19% 0.22% (3,760,683) (3,150,188) 150,884 (498,343) 0.18% (0.63%)

“Super 8” Hotel, located on Thumama road in Riyadh, contains high class rooms, a restaurant, meeting rooms and a gym. SASCO is currently

constructing Al-Waha Motel Hotel on Riyadh/Taif Road in Zalim area.

The following table shows the most important financial results at SASCO Al-Waha Co. level as well as the percentage of contribution to revenues

and income margin compared to previous fiscal year:

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 2018, two motels

were opened on Al-Hijra Road between Mecca and Medina, bringing

the number of motels carrying the brand of “Waha Motel” to 5.

SASCO Al-Waha Co.

20172018 2016

Super 8SASCO Al-Waha Co.

6

4

2

0

5

3

1 1 1 1

Number of Motels

SASCO Al-Waha Co.

20172018

4٫000٫000

3٫000٫000

2٫000٫000

1٫000٫000

0

-1٫000٫0000

3,9

11,5

67

2,65

1,845

3,76

0,68

3

3,15

0,18

8

150,

884

(498

,343

)



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 equal 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. This headquarters is considered

the starting point of the Company’s trucks. 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 2018 to (116) tankers and (132) trailers through which the company

provides the transportation service to SASCO 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 2018 in order to provide service to its clients exceeded

14 million km2 compared to 12 million in 2017, i.e. an increase of

16,67%.

To offer service to our clients, we went a long drive of more than 14

million km2

2014 2015 2016 2017 2018

140

120

100

80

60

40

20

0

116108

9588

64

132121

10191

68

More than 2,900 trips by our containers.

Ostool Al-Naqil Co.

Fleet Size

Tankers No. Trailers No.





2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

26,359,082 22,759,754 1.28% 1.88% (18,011,444) (15,375,734) 8,347,638 7,384,020 10.18% 9.29%

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 financial results Ostool Al-Naqil Co.

2018 2017

Ostool Al-Naqil Co.

35,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

26,

359,

082

22,

759,

754

18,0

11,4

44

15,3

75,73

4

8,3

47,6

38

7,38

4,02

0


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

Transported Litres

Transported in Liters Tankers No.

2014 2015 2016 2017 2018

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

572

,113,

400 932

,274

,000

1,116

,003

,000

1,37

7,300

,000

1,48

8,53

9,00

0

64 88 95 108

116

30٫000٫000

25٫000٫000

20٫000٫000

15٫000٫000

10٫000٫000

5٫000٫000

0

2014 2015 2016 2017 2018


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

Total Revenue of Ostool Al-Naqil Co.

Revenue Growth of Ostool Al-Naqil Co.


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 sale outlets widespread throughout all regions of the Kingdom, in addition to a network of agents and distributors in the Kingdom. All of them adopt world-class terms, specifications, and performance standards.

The most important services offered by Saudi Automobile & Touring Association include the following:`f Issuing Trip-Tik customs books.`f Issuing international driving licenses.`f Issuing TIR books.`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 more than 62,000 passengers were issued international driving licenses.

The number of passengers benefitting from customs transit books during 2018 was more than 16,000, and more than 33,000 passengers were issued international driving licenses.

The sales of Saudi Automobile & Touring Association SATA were affected over the past years because of political events experienced by some neighbouring countries in addition to the existence of parallel clubs that do not have a license from the FIA to practice their business in the Kingdom but took a market share of sales of Trip-Tik customs books and international driving licenses.

As part of Saudi Automobile & Touring Association’s agreement of 2012 with the International Road Transport Union (IRU), “an international body concerned with serving the interests of road transport industry worldwide and operators of buses, taxis and trucks to ensure economic growth and prosperity through sustainable movement of passengers and goods and reduce immaterial barriers crippling trade, tourism and road transport through reducing long waiting times on borders, simplifying customs procedures, harmonizing border control, applying information systems and common border and ensuring integrity”, the Saudi Automobile &

Touring Association, SATA, signed in 2018 with the Saudi Customs an agreement to activate the Customs Convention on the International Transport of Goods under international carriage of goods by rail (TIR); a simplified system making trade easier and cheaper, being the only international transit and guarantee system. Under the Convention, the Saudi Automobile & Touring Association, SATA, is considered the issuer of TIR books and the guarantor of trucks exporting under the TIR system in Saudi Arabia.

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

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.More than 16,000 passengers traveling via Trip-Tik books.More than 33,000 passengers issued international licenses.

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

Direct Revenue% of Contribution (in

revenues)Direct Costs Total Income


2018 2017 2018 2017 2018 2017 2018 2017 م2018 2017

12,012,231 22,723,350 0.58% 1.87% (2,348,402) (6,305,238) 9,663,829 16,418,112 11.79% 20.65%

More than 16 thousand passengers through the

books of the terrestrial

More than 33 thousand passengers issued an international license

شركة النادي السعودي للسياراتSaudi Automobile Association Co.

Saudi Automobile & Touring Association - SATA


Statement 2014 2015 2016 2017 2018

Sales 23,184,295 20,292,812 20,471,234 22,723,350 12,012,231

TIR book is the solution for transportinggoods and moving better around the world

#IT BECAME _ EASIER GETIT!

Now you can electronically apply for the international driving license from the Saudi Automobile & TouringAssociation - SATA


2018 2017


25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

12,0

12,2

31

2,34

8,40

2

9,6

63,8

29

22,

723,

350

6,3

05,2

38

16,4

18,11

2

?``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:

SATA Revenues

SATA Total Revenues

25٫000٫000

20٫000٫000

15٫000٫000

10٫000٫000

5٫000٫000

0

2014 2015 2016 2017 2018

Trip-Tik Sudan 40.91%

International Driving Licenses 14.43%

Trip-Tik Yemen 6.28%

Trip-Tik International 38.38%

Association Sales Per Type


Auto & Equipment Investment Co.Auto & Equipment Investment Co. was established with a capital of SAR 500,000, fully owned by SASCO, divided into 50,000 cash 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. The most important activities of Auto & Equipment Investment Co. include:`f Manufacturing industries.`f Construction.`f Trade.`f Finance, business and other services.`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 and sell equipment and tools and construct roads and

bridges.SASCO operates most of its investments in its subsidiaries through

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

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

When it comes to investment in other companies and during 2018, Auto & Equipment Investment Co. completed a deal of purchase 485 additional shares of Middle East Battery Company (MEBCO), which is one of the biggest car battery manufacturing companies in the Middle East and specialized in the production of ACDelco batteries as one of the partners sold a part of his share. The deal value was SR 21,8 million and thus the company’s contribution in MEBCO capital rose from 7,94 to 12,79 and the number of shares rose from 794 to 1,279 shares.

Purchasing such shares, the Company aims to increase its investments in companies with investment feasibility and activities that complement car sector business and support its profitability through distributing periodic profits received from MEBCO.

No. Company Name No. of SharesValue of Nominal

ShareTotal Ownership Ratio

1Middle East Battery Company (MEBCO)*

1,279 5,750 7,354,250 12.79%

2National Company of Tourism (Syahya)

3 500,000 1,500,000 0.36%

3 United Racing Company 125 1,000 125,000 25%

Total 8,979,250

إستثمارات السيارات والمعدات

Auto & Equipment Investment Co.

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

16.71%

1.39%

81.90%

National Company of Tourism (Syahya)

Middle East Battery Company (MEBCO)*

United Racing Company

Illustration of Investment Ratios of Total Investment Portfolio


الجهة Investment AmountInvested Amountas at 31/12/2018

Accounting Treatment

Mulkia Investment Co. SAR 34,384,679 SAR 17,358,284 Securities held for sale

2018 2017

Dividends Received from Investments

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

5,710

,088

3,60

3,40

8

0

1,287

,190

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. On grounds of the Board’s approval, the portfolio was transferred from long-term investment to investment held for sale as of 1 October 2018, which financial impact is processed at the end of each financial period in investments and cash the financial position statement, and difference of change between periods directly on income statement.


Al Nakhla Al Oula Contracting Company

شركة النخلة األولى للمقاوالت

Al-NakhlaAl-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 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”.

In October 2018, SASCO launched the Commercial Franchise Granting

Program to operate the brands of “ SASCO Stations” and “Palm

Stores” in a conference held in the evening of Thursday 29 Muharram

1440 AH, corresponding to 9 October 2018 at Hyatt Regency Riyadh

Hotel. The Program is considered the first initiative of its kind to grant

the right of commercial franchise to “SASCO Stations” and “Palm

Stores Centers” affiliated to SASCO Palm Stores Co. The Program

aims to create new investment opportunities for SASCO and increase

its revenues and profitability through granting the franchise of

operating commercial brands to other operators, resulting in creating

real opportunities for citizens to participate in pioneering projects in

line with the Kingdom’s orientation.

SASCO Franchise Co.


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. After 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 per 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 in

United Racing Company balances, the liquidator requested partners

to proportionately (each as per his shares of capital) pay the amount.

A lawsuit was filed by the liquidator before Jeddah Commercial Court

registered under No. 4328 of 1439 AH in this regard. As the liquidator’s

law firm was absent, the lawsuit was cancelled. SASCO Law Firm still

follows up the case.

Jeddah Land Grant LawsuitSASCO possesses 4 sites in Jeddah Governorate granted to it by the

State pursuant to Royal Decree No. 214/4/M dated 08/02/1405 AH.

The Secretariat didn’t give the sites to SASCO. So, SASCO, through

its Law Firm, filed a lawsuit against Jeddah Secretariat before the

Administrative Judicature Court. The lawsuit was recorded under

No. 7078 dated 15/11/1438 AH, was referred to the second Judicial

Department and delayed for many hearings.

On 17 May 2018, SASCO received a judgment in its favor. According to

the judgment, Jeddah Secretariat’s negative decision of abstaining

from delivering the plots outlined in Royal Decree No. 214/4/M dated

08/02/1405 AH shall be cancelled and the Secretariat challenged the

judgment.

On December 2018, the Court of Appeal passed a judgment, which

states as follows:I. Cancel the judgement passed with respect to lawsuit No. 7078/2/k of 1438 AH by Jeddah Administrative Judicature Court.II. Reject the lawsuit filed by SASCO.

Medina Land Grant Lawsuit

SASCO possesses 3 sites in Medina granted to it by the State pursuant

to Royal Decree No. 214/4/M dated 08/02/1405 AH. The Secretariat

didn’t give the sites to SASCO. So, SASCO, through its Law Firm, filed

a lawsuit against Medina Secretariat before the Administrative

Judicature Court. The lawsuit was recorded under No. 2856.

The Court passed a judgment that cancelled the defendant’s (Medina Secretariat) decision of abstaining from delivering the plots outlined in Royal Decree to the plaintiff (SASCO). Secretariat challenged the judgment. The Court of Appeal passed a judgment, which states as follows:

I. Cancel the above judgement passed by the Administrative Department of Medina Administrative Judicature Court.II. Reject the lawsuit filed by SASCO against Medina Secretariat.

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: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 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

Other Administrative & Operational Information


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.

`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. An award was passed to issue an enhancement order by Ha’el city to Jubbah Municipality to pay the amount.

`f The lawsuit filed by SASCO versus Jeddah Municipality. SASCO leased a plot from Jeddah Municipality in Al Hijra District with an area of 20164,66 m2 and paid the rent of the first year. As the Municipality could not hand over the site as the Transport Ministry didn’t allow to create an entrance and an exit for the station and the Municipality didn’t repay the paid amounts.

No. Category 2018 2017

1 Senior Management 1 1

2 Middle & Executive Management 264 253

3 Workers and Technicians 1457 1244

Total 1722 1498

SASCO filed a lawsuit against Jeddah Municipality before the Administrative Judicature Court registered under No. 203/1439 AH binding the Municipality to pay the amounts it received. In the hearing dated 22/12/1439 AH, a judgment was passed in SASCO favor with an amount of SR 831,000. The Municipality appealed against the judgment before Jeddah Administrative Judicature Court. No judgment has been passed to date.

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

1Auto & 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 lease 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.Kingdom of

Saudi Arabia Riyadh

100 % SASCOIncorporated in

2016

7SASCO Franchise Co.(SAR 500,000)

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


Riyadh100 % SASCO


8Zaiti Petroleum Services Company(SAR 37,500,000)

Build, manage, and operate fuel stations.Kingdom of

Saudi Arabia Riyadh

100 % SASCOIncorporated in 2007 and

acquired in 2015

Subsidiaries

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


Risks 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

Risks Management


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 Sector:Retail 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.

? 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 Risks

SASCO 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 Risks

In 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 Risks

Legislations 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 Risks

They 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 ActThe 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.

? Strategic RisksThese are unknown and non-systematic risks which cannot be

absorbed or assessed within a clear approach or model. In case SASCO

falls vulnerable to such strategically affecting events or risks, it may

not only suffer a slight decline in profits, but such danger may also

destroy it fully through bankruptcy and lay-offs.


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

Internal Control


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.


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:

Corporate Governance

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 has been developed and it is under approval.

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 2021 has passed 9 years in SASCO. This is not consistent with independence and SASCO will address the matter in the future according to Capital Market Authority Resolution of compulsory independence as of the Board’s session following 1 January 2019.

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.


With reference to paragraph 9 of Article (22) of 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) of 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.

In 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.

May Allah Grant Us All Success,Board of Directors

Note

Conclusion

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 consider 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’s recommendation, shall establish a policy that guarantees a balance between its objectives and those of the community for the 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 work 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.


Financial Statements

Saudi Automotive Services Company (SASCO)(Saudi Joint Stock Company)

Consolidated Financial Statements & Independent Auditors’ ReportFor the year ending on 31 December 2018

Consolidated Accountants RSMDr. Abdelgadir Bannaga & Partners Company



Orouba RoadOlaya District, Building No. 3193, 1st FloorTax Number: 300003 34 30001034P.O. Box Riyadh 12333 – 8235Tel: 0164169361Fax: 0184169349Kingdom of Saudi Arabiawww.rsmksa.com

Independent Auditors’ Report

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


Opinion

We audited the consolidated financial statements of the Saudi Automotive Services Company (SASCO) “a Saudi joint-stock company” (the “Company”) and its subsidiaries, together referred to as (the “Group”). They include the consolidated financial position statement as at 31 December 2018, statement of profit or loss and other consolidated 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) “Group” as at 31 December 2018, 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 the Group 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 core audit issue and how it is addressed:

Core Audit Issue How it is addressed in auditing

Adoption of the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “ Revenue from Contracts with Customers” (Continued)Please refer to Note No. 7 on consolidated financial statements for more details about the impact of adoption and reclassification resulting from applying the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “ Revenue from Contracts with Customers”.

• We selected a sample of settlements (including calculation and registration) made to different balances and transactions in order to be in consistency with the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “ Revenue from Contracts with Customers”.

• We assessed the consistency of disclosures related to the impact of applying the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “Revenue from Contracts with Customers”.

Revenue RealizationRevenues are a major and determinant factor of the Group’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 the amount and the risk of recording revenues higher than their real values, we see that realization of revenues are an important aspect of audit as there is a risk that revenues may be false due to the Management’s negligence of controls and that the time and amount of revenues recorded in the financial period may have a substantial impact on the financial performance.

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 the Group 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 the Group 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.

Fair value investments through consolidated other comprehensive income statementSASCO possesses fair value investments through items of consolidated other comprehensive income statement with a total value of SR 103,5 million as at 31 December 2018.The fair value of investments, through consolidated other comprehensive income statement, 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 2).• 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 at fair value through consolidated other comprehensive income statement with shareholders’ equity.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 fair value investments through the consolidated other comprehensive income statement, we took the following steps:• 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 net change of fair value investments through consolidated other comprehensive income.

• Assess the sufficiency of the Group’s disclosures towards these investments.

• We assessed the design and application of Management’s control over the investments classified through consolidated other comprehensive income 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 fair value investments through consolidated other comprehensive income.

• We tested the samples of operations used in assessing investments through consolidated other comprehensive income 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.


Core Audit Issue How it is addressed in auditing

Adoption of the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “ Revenue from Contracts with Customers”As of 1 January 2018, the Group must adopt the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “ Revenue from Contracts with Customers”We have considered this a core audit issue because the adoption of the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “ Revenue from Contracts with Customers” has an important impact on consolidated financial statements thanks of the judgments and estimates used in applying the future credit loss model.

With respect to adopting the International Financial Reporting Standard No. (9) “Financial Instruments” and the International Financial Reporting Standard No. (15) “ Revenue from Contracts with Customers”, we took the following steps: • We assessed the adequacy of adopted accounting policies.• 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 the Saudi Organization for Certified Public Accountants which the Group identified.

• We compared the expected credit loss model developed by the Management as required by the International Financial Reporting Standard No. (9) “Financial Instruments”, examined the reasonableness of methodology compared to accepted best practices and verified the accounting accuracy of the model.


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.

Allied Accountants Dr. Abdelgadir Bannaga & Partners Company

Mohammed bin Farhan bin NadirLicense No. (435)Riyadh, Kingdom of Saudi Arabia 12 Rajab 1440 AH, corresponding to 19 March 2019



Other InformationThe Management is responsible for other information, including information stated in the Group’s 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 Group’s ability to continue business, disclosure, as the case may be, of matters related to Group’s continuity and use of continuation basis in accounting unless the Management wishes to dissolve the Group 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 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 Group’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.


Saudi Automotive Services Co. (SASCO)(Saudi joint-stock company)Notes to the consolidated financial statements For the year ended 31 December 2018________________________________________________________________________________________________________________________________


Note 31 Dec. 2018

(SR)31 Dec. 2017

(SR)(Amended - Note 7)

31 Jan. 2017(SR)

(Amended - Note 7)

AssetsNon-current assets

Net properties and equipmentNet intangible assetsCapital works under executionFair value investments through other comprehensive consolidated incomeRecorded cash

891011

1,087,947,29911,032,08440,011,413

103,563,396-

(SR)1,068,977,536

10,064,60025,000,01765,637,302

-

873,569,4638,599,160

150,783,56693,406,73124,273,438

Total non-current assets 1,242,554,192 1,169,679,455 1,150,632,358

Current assets

Net inventoryNet receivables, advance payments, and other receivablesFair value investments through profit or lossCash and balances with banks

13121415

51,193,500226,785,8165,973,36874,235,012

36,337,406172,068,04531,303,02097,275,330

27,323,999137,075,25431,423,169117,681,676

Total current assets 358,187,696 336,983,801 313,504,098

Total assets 1,600,741,888 1,506,663,256 1,464,136,456

Shareholders’ equity and liabilities

CapitalStatutory reserveRetained earningsReserve for reassessing fair value investments through other comprehensive income

120

11

600,000,00044,397,36731,917,651

75,547,896

540,000,00040,852,23688,811,47359,446,802

540,000,00037,870,22163,808,35587,216,231

Total Shareholders’ equity 751,862,914 729,110,511 728,894,807

Non-current liabilities

Financing of resale for profit and long-term loansCommitments for employee benefit plan

16 377,385,66912,613,431

351,039,85011,386,371

335,767,6089,751,412

Total non-current liabilities 389,999,100 362,426,221 345,519,020

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

1616181719

115,000,000100,688,892

39,715,364200,297,924

3,177,694

95,000,000109,479,08038,718,206168,102,7683,826,470

44,594,800134,043,81738,823,795167,850,7174,409,500

Total current liabilities 458,879,874 415,126,524 389,722,629

Total liabilities 848,878,974 777,552,745 735,241,649

Total shareholders’ equity and liabilities 1,600,741,888 1,506,663,256 1,464,136,456

*Notes from No. 1 to 31 constitute an integral part of these consolidated financial statements.

Note 2018(SR)

2017(SR)

(Amended)

Revenues Costs of revenues

21 2,056,081,002(1,974,099,397)

1,212,329,807(1,132,838,480)

Total Profit 81,981,605 79,491,327

Sale and marketing expensesGeneral and administrative expenses 22

(2,189,061)(42,109,042)

(3,799,225)(43,776,360)

Net year profit from core operations Financing costsProfit distributions of fair value investments through other comprehensive incomeUnrealized losses from fair value investments through profit or lossRealized profit from fair value investments through profit or lossProfit distributions of fair value investments through profit or lossOther revenues 23

37,683,502(8,070,599)5,635,089

(582,102)330,0991,362,1911,868,133

31,915,742(5,631,383)3,603,408

(990,140)369,991

-2,512,515

Net year profit before ZakahZakah 19

38,226,313(2,775,004)

31,780,133(3,795,000)

Net annual profit 35,451,309 27,985,133

Other comprehensive incomeItems to be subsequently reclassified into income statement

Net change in fair value of fair value investments through other comprehensive income

11 (16,101,094) (27,769,429)

Total year comprehensive income 51,552,403 215,704

Share profitability 26

Actual dividend per share from core operations 0,63 0,53

Actual year dividend per share 0,59 0,47



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Net annual profitAmendments to settle net profit to net cash available from operating activities:Consumption of Property, plant and equipmentAmortization of intangible assetsComponent of customs claims provisionComponent of provision for other receivables Component of provision for expected credit lossesUnrealized losses from fair value investments through profit or lossRealized profit from fair value investments through profit or lossClosing of projects under executionComponent of commitments for employee benefit planComponent of Zakah provisionProfits of selling properties and equipment

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27,985,13344,096,294

1,165,2224,096,683

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84,902,871 91,722,812

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Receivables, advance payments, and other assetsInventoryPayables, accrued expenses and other liabilitiesPaid part of Zakah provision Paid part of commitments of employee benefit plan

(58,502,393)(14,856,094)

32,195,156(3,423,780)(1,827,123)

(39,089,474)(9,190,898)

252,051(4,378,030)(1,200,721)

Net cash available from operating activities 45,308,582 31,299,799

Cash flows from investment activities

Cash paid to purchase fair value investments through profit or lossSums collected from selling fair value investments through profit or lossCash paid to purchase fair value investments through other comprehensive income Additions to properties and equipmentSums collected from sale of properties and equipmentAdditions to capital projects under constructionAdditions to intangible assets

(190,330,099)215,407,748(21,825,000)(48,409,500)

21,611,979(51,857,336)(2,699,481)

(500,000)23,126,137

(38,060,939)717,151

(79,142,911)

Net cash used for investment activities (78,101,689) (116,986,699)

Cash flows from financing activities

Net change in loans and profits for saleRegistered cashNet change in shareholders’ entitlementsPaid remuneration of board directors

37,555,631-

(26,002,842)(1,800,000)

41,112,70524,273,438(105,589)

Net cash available from financing activities 9,752,789 65,280,554

Net deficit in cash and balances with banksCash and balances with banks at the beginning of yearCash and balances with banks at the end of yearNon-cash transactionsItems changed from projects under execution to properties and equipmentUnrealized profit (loss) from reassessing fair value investments throughother comprehensive incomeItems changed from properties and equipment to intangible assets

(32,040,318)97,275,33074,253,012

34,817,094

16,101,094-

(20,406,346)117,681,67697,275,330

204,785,634(27,769,429)

2,630,662





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 12/10/1982. It is headquartered in Riyadh under Commercial Register No. 1010054361 dated 28/07/1404 H corresponding to 30/4/1984.

- SASCO mainly 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. In 2018, the 12th Extraordinary General Assembly agreed on the recommendation of the Board of Directors to increase SASCO capital from SR 540,000,000 to SR 600,000,000 with a 11,11% increase through bonus shares. One free share shall be granted to each 9 shares of the owned shares in favor of shareholders possessing shares at the end of the trading day on which the 12th Extraordinary General Assembly was held. Capital increase shall be done through capitalizing SR 60 million of the retained profits. Thus, the number of shares shall be increased from 54,000,000 shares to 60,000,000, with the increase of 6,000,000 shares.

- The Main Office of the Group is located at the following addressed: - Saudi Automotive Services Company (SASCO) - Riyadh – Malaz – Al Ahsa St,. Al Ahsa intersection with Omar bin Abdulaziz - Kingdom of Saudi Arabia - Consolidated financial statements as at 31 Dec. 2018 include the financial statements of the following subsidiaries and branches:

Name of Company Core Business% of direct & indirect ownership

Ostool Al-Naqil Co. Transporting oil products and commodities for payment pursuant to the Ministry of Transport’s License No. 010111046000 and license to expire on 5/3/1440H.

100%

Saudi Automobile &Touring Association, Ltd SATA

- Subscribing in local and international car and motorcycle clubs and local and international associations and bodies interested in the affairs of cars and motorcycle.

- Issuing transit books (Trip Ticket) and international driving licenses - Organizing, managing, maintaining and operating car and motorcycle racing tracks - Organizing and participating in car and motorcycle racings and events

100%

Auto & Equipment Investment Co., Ltd - Establishing car and heavy equipment repair workshops as well as car and passenger service stations on the main roads between the cities of the Kingdom to offer fuel, oils and maintenance of cars and heavy equipment

- Establishing rest houses, motels and restaurants and offering food, beverages, soft drinks for passengers.

- Washing and lubricating cars and equipment - Importing and selling equipment and tools - Constructing roads and bridges

100%

Al-Nakhla Al-Oula Co. Undertaking general contracting (establishing, repairing, demolishing and rebuilding) for building, establishing, maintaining and operating residential and commercial buildings as well as road works.

100%

SASCO Palm Stores Co. Import and sale of food, beverages, soft drinks and equipment 100%

SASCO Al Waha Co. Hotels 100%

Zaiti Petroleum Services Company Establishing, managing and operating fuel stations 100%

SASCO Franchise Co. Manufacturing industries and their branches as per industrial licenses, business services, other services, trade and information technology.

100%

Attached consolidated financial statements include the accounts of the Group and the following subsidiaries and branches:

No. Commercial Register No. Core Business City

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

1018000425

2050093628

4030254775

1131030559

5850029530

5850064608

5850064609

1128010283

1011012857

2055025642

2050112261

SASCO branch

SASCO branch

SASCO branch

Zaiti branch

Zaiti branch

Zaiti branch

Zaiti branch

Zaiti branch

Zaiti branch

SASCO Palm Stores Co. branch

SASCO Palm Stores Co. branch

Riyadh

Dammam

Jeddah

Buraidah

Abha

Abha

Abha

Unaizah

Al Kharj

Al Jubail

Dammam

2. Grounds on which consolidated financial statements are developed

2-1 Statement of Compliance

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.

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.

2-2 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 through other comprehensive income at fair value and investments held for sale at fair value through profit or loss.

Items of consolidated financial statements appear in Saudi Riyal (SR). It is the currency of operation and disclosure.

2-3 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.Following are estimates and assumptions that are vulnerable to substantial risks that may lead to making a significant amendment to the book value of assets and liabilities in the subsequent fiscal years:




a.) Depreciation of non-financial assets

On the date of each financial position statement, the Group assesses the assets to find any evidence that these assets have incurred a depreciation. In case such evidence exists, the asset redeemable value is estimated. A redeemable value is the fair value of the asset minus selling cost or value of use, whichever higher. When assessing the used value, estimated future cash flows of an asset are deducted to the present value using a discount rate reflecting the current market assessments of time value of funds and risks determining the asset. When determining the fair value of the asset minus selling cost, the recent market dealings are taken into account. In case the redeemable value of an asset is estimated lower than the book value, the book value of asset is reduced to the redeemable value. Depreciation losses are directly recognized in the profit or loss statement.

In case the depreciation loss is subsequently reflected in value, the asset book value is increased to the amended value of the redeemable value. However, only to the extent that the book value does not exceed the book value that would have been redeemable should there is no depreciation loss of asset book value in the previous years. Reverse of ddepreciation losses are directly recognized in the profit or loss statement.

b.) Measurement of fair value

Fair value represents the value on which an asset is exchanged or an obligation is paid among parties having knowledge and desire to do so on fair dealing conditions. Company’s financial instruments are disclosed as per historical cost principle with the exception of financial assets recorded in fair value through profit or loss. The measure of a fair value is based on the assumption that the transaction of an asset selling or determination of an obligation takes place:• Through the main market of the asset or obligation; or• Through the most preferred market of the asset or obligation in case the main market is absent.

The main market (most preferred market) must be available for the Company in the measurement date.A fair value of an asset or obligation is measured according to assumptions used by market participants when pricing the asset or obligation on the assumption that market parties act for achieving the best interests for themselves. With respect to non-financial assets, this measurement takes into consideration the market participants’ ability to generate economic benefits through using the asset to achieve the best interests or selling it to another market party to achieve the best interests.

The Company uses assessment methods appropriate for circumstances. Such methods have sufficient data to measure the fair value; in that proper observable inputs are used instead of non-observable ones.All assets and obligations measured by fair value or their value is disclosed in financial statements are classified as per a hierarchy of fair value measurement levels below based on the minimum level of measurement input which is crucial for measuring the fair value as a whole.

Used inputs are classified in fair value measurement methods as per the following hierarchy:Level One: prices declared (unamended) and tradable in active asset or obligation market similar to the one measured.Level Two: inputs that can be directly or indirectly observed or controlled for the asset or obligation other than declared prices listed in Level One.Level Three: inputs that are non-observable for the asset or obligation.The Company hires independent expert assessors, with recognized and relevant professional qualifications and experience in the location and type of assets under assessment, to measure the fair value of assets. The Company reviews the independent assessor’s report to evaluate the assumptions, employed assessment methods and the reasonability of assessment as a whole.

c.) Provisions

Provisions are recognized when the Group has emerging (legal or implied) liabilities due to previous events. The payment of liabilities is possible and their value can be credibly measured. An amount recognized as a provision is the best estimation of the amount required to settle the current obligation on the date of report, taking into consideration risks and doubts about the obligation. When a provision is measured using the cash flows estimated for settling the current obligation, the book value shall be the current value of these flows. In case the redemption of some or all economic benefit required for settling a provision from a third party, the due amount shall be recognized as an asset in case it is certain to redeem the amount and that the value of due amount can be reliably measured.

d.) Estimation of productive lifetime of properties, machinery, equipment and remaining value

The Group’s Management determines the estimated productive lifetime of properties, machinery and equipment for the purpose of calculating depreciation. This estimation is made after taking into consideration the expected use of asset or actual prescription. The Management periodically checks the estimated productive lifetimes at least annually and the method of consumption to make sure that the method and consumption periods are consistent with the expected pattern of asset economic benefits.

e.) Assumptions of end-of-service benefit obligations

End-of-service benefits represent liabilities that will be settled in the future and require the use of assumptions toward the expected liabilities. International Accounting Standard 19 “Employee Benefits” requires the Management to use more variable-related assumptions such as discount rates, rate of compensation increase, return on asset, mortality rates, operation turnover and costs of future healthcare. The Group leads an actuarial evaluation to calculate obligation. Changes in core assumptions may have a great impact on expected benefit liabilities and/or costs of periodic incurred employee benefits.

f.) Provision of stagnant and slow inventory

The Group’s Management estimates the provision to reduce the value of inventory to the net verifiable value in case the cost of inventory is irredeemable or the inventory is damaged or wholly or partially vulnerable to inscription or if the selling price is less than the cost or any other factors causing a depreciation of redeemable value less than book value. Zakat Discretionary Zakat is an obligation on the Group according to the laws applicable by the Saudi General Authority for Zakat and Tax. It is set right and allocated to the profit or loss statement. Additional Zakat liabilities, if any, related to assessments of previous years, are calculated by the Authority in the year during which final assessments are issued.

3- Changes to important accounting policies

With the exception of the below, the accounting policies applied to these consolidated financial statements are the same ones applied to financial statements of the previous year for the year ending on 31 December 2017.As at 1 January 2018, the Company applied the following standards: International Financial Reporting Standard No. (9): items of Group’s financial investments were reclassified (as indicated in Note No. 7)International Financial Reporting Standard No. (15): settlements to revenues have been made according to the concept of customer’s access to full control of service provided (as indicated in Note No. 7).

The impact of applying these standards on Group’s applicable accounting policies:

3-1 International Financial Reporting Standard No. 9 – Financial Instruments (versions amended in 2009, 2010, 2013 and 2014)

The International Financial Reporting Standard No. 9 classifies and measures financial assets, financial liabilities and some contracts of purchase or selling non-financial items. It replaces the International Reporting Standard No. 39 “Financial Instruments – Recognition and Measurement”.Following are the details of new important accounting principles and the nature of changes made to previous accounting principles:

3-1-1 Classification of financial assets

IFRS No. 9 includes three main classification categories of financial assets: financial assets measured by amortized cost, financial assets measured by fair value through other comprehensive income, financial assets measured by fair value through profit or loss statement 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 and through other comprehensive income.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.


3-1-2 Measurement of financial assets

The following accounting policies are applied to the subsequent measurement of financial assets:

- Financial assets at fair value through profit or loss: subsequent measurement of these assets is made at fair value. Net profit and loss are recorded. They shall include any interest or income of profit distribution within profit or loss.

- Financial assets at amortized cost: subsequent measurement of these assets is made at amortized cost using the actual interest method. Amortized cost is reduced by depreciation loss. Interest revenues, profits & loss of foreign currency exchange and deprecation are recorded in profits or loss. Any profit or loss is recorded in profits or loss.

- Investments in debt instruments at fair value through other comprehensive income: subsequent measurement of these assets is made at fair value. Interest revenues calculated using the actual interest method, profits & loss of foreign currency exchange and deprecation are recorded in profits or loss. Other net profits and loss are recorded in other comprehensive income. When recording is stopped, profit and loss accumulating in comprehensive income are reclassified into profit or loss.

- Investment in equity instruments at fair value through other comprehensive income: subsequent measurement of these assets is made at fair value. Profit distributions, deprecation profits & loss, profits & loss of foreign currency exchange are recorded in profits or loss unless profit distributions clearly represent the redemption of a part of investment cost. Other profits and loss are recorded in other comprehensive income and are not reclassified into profit or loss.

3-2-2 Depreciation

The 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 apply this policy to commercial receivables and contract assets without significant financing components.

3-1-4 Classification of Financial Liabilities

IFRS 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 Accounting

IFRS 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.

3-1 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”.The Group records revenues when performing service in favor of customer and customer’s access to control of service provided as per the requirements of IFRS No. 15. Therefore, there is no significant impact from applying IFRS No. 15 “Revenue from Contracts with Customers” on recording the Group’s revenues.

4- New Standards IFRS No. 16 – Lease Contracts

IFRS No. 16 “Lease Contracts” (effective as of 1 January 2019) This Standard is effective for annual periods commencing from or after 1 January 2019. Early application is allowed. It has not been applied by the Group when developing these consolidated financial statements. IFRS 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 all 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 No. 16 regarding lessor accounting did not significantly change from the previous one, namely IAS No. 17.It is not expected that the adoption of this Standard during subsequent periods will have a major impact on the Group’s financial statements.

5- 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 the Group and its 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 Group’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. The Group and its subsidiaries develop their financial statements for the same reporting periods.

6- Summary of Major Accounting Policies

Following is a summary of Group’s major accounting policies:Properties, machinery and equipmentProperties, 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 % Percentage

Buildings

Furniture

Cars and trucks

Machinery, equipment, trailers and transport mechanisms

Communication devices and phones

Computer and software

Electrical devices

Advertising boards

Improvements to buildings

2-3%

10%

7-20%

10%

25%

15%

10%

15%

4% or duration of lease contract, whichever less

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. During 2017, the Group selected the cost model to register properties, machinery and equipment according to CMA’s Resolution dated 16/01/1438 AH corresponding to 17 October 2016 binding listed shareholding companies to use the cost model.




a.) Financial assets

On the date of each financial position statement, 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 Group’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 consolidated statement of profit or loss and other comprehensive income.

When it comes to instruments of shareholders’ equity though other comprehensive income, the previously acknowledged losses of depreciation are not reflected in the consolidated statement of profit or loss and other comprehensive income. Any increase in fair value coming after a depreciation loss is directly recognized in the consolidated statement of change in shareholders’ equity.

a.) Non-financial assets

On the date of each financial position statement, the Group 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 Group 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 consolidated statement of profit or loss and other comprehensive income, unless the asset is reassessed, then the depreciation losses are recorded as a reduction from the reassessment provision.

Cancellation of Recognition

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. If the Group fails to transfer or chooses to substantially retain ownership risks and benefits and continuously control the transferred asset, the Group 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 Group, it continues to recognize the financial asset.

Financial Instruments

Financial assets and liabilities are recognized when the Group becomes a party to the 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 consolidated 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 consolidated statement of profit or loss and other comprehensive income, are directly recognized in the consolidated statement of profit or loss and other comprehensive income.

First: Financial Assets

Financial assets are classified into the following categories: financial assets at fair value through consolidated statement of profit or loss and other comprehensive income, financial assets through other comprehensive income 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 Determined at Fair Value through Profit or Loss

Financial assets retained for trading are classified through the consolidated statement of profit or loss 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 Group 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 Group’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 determined at fair value through consolidated 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 from reassessing through statement of profit or loss and other comprehensive income is recognized.

Net profit or loss includes any profit distributions or interest due from the financial asset and included in the consolidated statement of profit or loss and other comprehensive income.

b.) Financial Assets Determined by Fair Value through other comprehensive income statement

The Group’s owned listed shares – circulated in an active financial market as financial assets – are classified through other comprehensive income and included at fair value. The Group also possesses investments in unlisted shares not traded in active markets but so classified as financial assets through other comprehensive income 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 investments through other comprehensive income are recognized when the Group has an emerging right to receive payments for profits of these investments.

c.) Receivables

Receivables 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 Liabilities

Financial liabilities (including loans and receivables) are initially and subsequently measured by amortized cost using actual interest method. The Group 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 consolidated statement of profit or loss and other comprehensive income.

Method of Actual Interest Rate

The 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. An 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 shorter period – when necessary – to net book value at initial recognition.

Cash and balances with banks

Cash 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.The Group has long-term financial obligations for which cash amounts have been credited. Such amounts are classified as cash recorded in non-current assets.

Receivables

Commercial receivables appear in the original amount of the invoice after deducting provisions by doubtedly-collected debts. A provision of expected credit losses is formed in case there is a substantive evidence indicating the Group’s inability to collect due amounts according to the original conditions of receivables. Bad debts are deleted when they are determined against their related provisions. Provisions are allocated to the profit or loss statement. Any subsequent redemptions of amounts of receivables, previously deleted, shall be added to revenues.

Capital Business under Construction

Capital business under construction appears in costs. It includes the cost of constructions, equipment and direct expenses. Capital business under construction is not amortized; but it will be consumed by the Group when it is ready for use as it will be transferred into properties, machinery and equipment.

Inventory

Inventory 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 the Group’s Policy. The net realizable value represents the estimated sale price within the ordinary course of business minus estimated costs and estimated necessary costs to complete the selling process.

Reputation

Reputation represents the 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 group on pro rata basis with their book value with the exception of long-term investments in securities.

Payables

Obligations are recorded against amounts payable in the future for received services, whether respective invoices are provided by suppliers.

Revenues

Revenues from sales are recorded when delivering goods and providing services to clients. Revenues of commodity sales are recognized based on a five-step model as indicated in IFRS No. 15:

1.) Identifying the contract with customer: a contract is defined as an agreement between two or more parties. It creates enforceable rights or obligations and determines the standards that must be met.

2.) Identifying the contract performance obligations: a performance obligation is a promise with the customer to transport a commodity or offer a service.

3.) Determining the transaction price: a transaction price is the amount of money a company expects to achieve against transferring commodities or promised services to the customer with the exception of combined amounts on behalf of third parties.

4.) Allocating a price for the transaction: contract performance obligations: for a contract containing more than one performance obligation, the company shall allocate the transaction price for each performance obligation at an amount determining the consideration made by the Company and also determining the amount of consideration the company expects to get against fulfilling each obligation.

5.) Recognizing the revenues when (as) the entity fulfills the performance obligation.

Lease Contracts

Lease 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 expenses related to selling and marketing in the Group’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 Provision

Discretionary Zakat is an obligation on the Group. It is set right in the attached consolidated financial statements by allocating it to the consolidated 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. The Group obtained the General Authority for Zakat and Tax’s approval to submit a consolidated Zakat declaration for the Group. Differences between provision and final assessment are addressed in the year in which assessment is received.

Long-Term Loans

Loans are recorded in the net received value. Commissions on loans are recorded using the actual commission rate. Commissions on long-term loans are recorded during the period in which they are due. Commissions on long-term loans for financing capital business under construction are capitalized as part of the expenses of this business.

Borrowing Costs

Borrowing costs, used directly for acquiring, constructing or producing an asset that is qualified for the conditions of capitalizing the borrowing costs, are capitalized as part of the costs of that asset. Qualified assets are those that necessarily require a long time to be ready for use. Other borrowing costs are recorded as expenses in the consolidated profit or loss statement in the period during which they were incurred by the Group.

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 consolidated 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 BenefitsThe Group 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 StudyThe Group conducted an actuarial study to staff end of service benefits as at 31 December 2016, 2107 and 2018. 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, 2017 and 2018 in Group’s consolidated financial statements.




Intangible Assets

Intangible assets, except reputation, are measured in costs minus accumulated amortization and depreciation losses, if any. Intangible assets were amortized on a straight-line basis throughout the economic lifetime.

Profit Distribution

Profit distributions of the Group’s shareholders are recognized within other liabilities item in the Group’s consolidated financial statements in the period in which profit distributions are approved by the Group’s shareholders.

Sector Information

Business 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 Group.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.

Set-Off

A set-off is made to financial assets and liabilities. The net amount is presented in the consolidated financial position statement when there is a binding legal right to make a set-off between these amounts. The Group intends to settle on the basis of the net of these amounts or recognize the asset and settle the obligation at the same time.

Transfer of foreign currency

Transactions 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 consolidated statement of profit or loss and other comprehensive income.

7- Impact of applying International Financial Reporting Standards (IFRS) No. 9 and amendments of previous years according to International Financial Reporting Standards No. 8

- As of 1 January 2018, the Group applied IFRS No. 9, deleted receivables of SR 28,422,416, recorded receivables allowances at SR 12,000,000 as at 1 January 2017 as part of the retained profits as per the requirements of International Accounting Standard (IAS) No. 9 and deleted receivables of SR 835,661 during the year ending on 31 December 2017 as the Group’s Management sees there are no expectations to redeem such amounts.

- Allowances of SR 13,128,000 were recorded as at 1 January 2017. The aim was to address customs and government claims as the Group’s Management found that there are potential claims for previous periods and did not take into account such allowances and available information during such periods. Therefore, according to IAS No. 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, these amendments were considered an accounting error as there was information on previous periods and was not included in such periods. Following is the impact of the application and amendments on previous years:

7-1 Impact of application and amendment on consolidated financial position statement as at 31 December 2017:

Amounts previously recorded as at 31

Dec. 2017(Saudi Riyal)

Impact of application

(Saudi Riyal)

Reclassification in line with the presentation of

present year(Saudi Riyal)

Impact of amendments

made to previous years

(Saudi Riyal)

Balance after amendment as at 31

Dec. 2017(Saudi Riyal)

Net receivables, advance payments, and other assets

Investments at fair value through other comprehensive income

Investments at fair value through profit or loss

Payables and other liabilities

Earnings retained after applying IFRS No. 9 and amendments of previous years as per IAS No. 8

203,386,106

96,061,120

879,202

142,974,768

147,158,411

(29,258,077)

(30,423,818)

30,423,818

12,000,000

(45,218,938)

(2,059,984)

-

-

-

-

-

-

-

13,128,000

(13,128,000)

172,068,045

65, 637,302

31,303,020

168,102,768

88,811,473

7-2 Impact of application on consolidated statement of changes in shareholders’ equity for the year ending on 31 December 2017:

Capital(Saudi Riyal)

Statutory Reserve(Saudi Riyal)

Retained earnings(Saudi Riyal)

Reserve for reassessing investments

through other comprehensive

income(Saudi Riyal)

Total(Saudi Riyal)

Balance as at 13 Dec. 2017 as previously disclosed

Amendments of previous years as per IAS No. 8

------------------------------------------

540,000,000

-

-

40,852, 236

-

-

147,185,411

(13,128,000)

-

55,485,941

-

-

783,496,588

(13,128,000)

-

Balance as at 31 Dec. 2017 (amended) 540,000,000 40,852, 236 88,811,473 59,446,802 723,110,511

7-3 Impact of application on consolidated statement of profit or loss and other comprehensive incomeor the year ending on 31 December 2017:

Amounts previously recorded

31 Dec. 2017(Saudi Riyal)

Impact of application (Saudi

Riyal)

Balance after amendment 31 Dec. 2017

(Saudi Riyal)

General and administrative expenses

Earnings unrealized from investments at fair value through profit or loss

Movement of fair value of investments through other comprehensive income

(42,940,399)

9,211

(28,768,780)

(835,661)

(999,351)

999,351

(43,776,360)

(990,140)

(27,769,429)

7-4 Impact of application and amendment on consolidated financial position statement as at 1 January 2017:

Amounts previously recorded as at 1 Jan.

2017(Saudi Riyal)

Impact of application

(Saudi Riyal)

Reclassification in line with the presentation of

present year(Saudi Riyal)

Impact of amendments

made to previous years(Saudi Riyal)

Balance after amendment 1 Jan.

2017(Saudi Riyal)

Net receivables, advance payments, and other assets

Investments at fair value through other comprehensive income


Payables and other liabilities

Earnings retained after applying IFRS No. 9 and amendments of previous years as per IAS No. 8

171,708,591

124,829,900

-

142,722,717

120,320,281

(28,422,416)

(31,423,169)

31,423,169

12,000,000

(43,383,926)

(6,210,921)

-

-

-

-

-

-

-

13,128,000

(13,128,000)

137,075,254

93,406,731

31,423,169

167,850,717

63,808,355

7-5 Notes on Settlements

- Receivables of SR 28,422,416 were deleted, receivables allowances of SR 12,000,000 were recorded as at 1 January 2017 as part of the retained profits as per the requirements of International Accounting Standard (IAS) No. 9 and receivables of SR 835,661 were deleted during the year ending on 31 December 2017 as the Group’s Management sees there are no expectations to redeem such amounts.

- - The Group’s investment in the investment portfolio with Al Ahli Capital run by Mulkia Investment Co. were reclassified at SR 31,423,169 as at 1 January 2017

from investments held for sale into investments at fair value through profit or loss according to the Group’s Business Model related to this investment according to the requirements of IFRS No. 9 – Financial Instruments.

- - Unrealized profit related to fair value investments was reclassified at SR 2,982,015 as at 1 January 2017 from reserve of reclassifying investments held for

sale into accumulated losses as well as an amount of SR 999,351 as at 31 Dec. 2018 from reserve of reclassifying investments held for sale into reserve of

reclassifying investments through profit or loss according to the requirements of IFRS No. 9 – Financial Instruments.


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

8__

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

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

8__

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

8- 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 equ

ip-

men

t tra

ilers

tr

ansp

orta

tion

eq

uipm

ent

(SR)

Com

mun

ica-

tion

dev

ices

and

te

leph

ones

(SR)

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

8 (a

men

ded)

Addi

tion

s Ite

ms C

onve

rted

to

proj

ects

(Not

e 10

)Ex

clus

ions

419,

803,

172

20,6

65,0

99- (2

0,66

5,09

9)

626,

200,

090

549,

568

27,6

30,3

26

(120

,413

)

23,2

22,4

19

946,

597

178,

002

(1,16

8,78

3)

41,8

62,4

58

3,39

9,54

8- (1

,076

,787)

69,3

40,4

21

7,732

,933

895,1

63

(852

,606

)

1,783

,199

18,0

17- (7

0,35

6)

10,2

33,6

69

2,24

8,34

6- (3

0,60

0)

34,3

03,10

3

1,366

,358

446,

869

(825

,386

)

19,6

51,8

70

4,88

0,25

9- (2

04,6

37)

161,9

64,8

37

6,61

7,324

7,659

,580

(84,

929)

1,358

,364

,238

48,4

09,5

0036

,840

,940

(25,

089,

596)

31/1

2/20

1841

9,80

2,17

265

4,25

9,57

123

,178,

535

44,15

8,21

977

,115,

911

1,715

,813

12,4

61,4

1535

,291

,124

24,3

27,4

9212

6,19

2,83

01,4

18,5

30,0

82

Accu

mul

ated

co

nsum

ptio

ns

1 Jan

uary

201

8 (a

men

ded)

Addi

tion

s Ex

clus

ions

- - -

169,

154,

224

17,6

35,0

65(6

1,716

)

15,8

59,8

16

1,071

,905

(1,15

8,12

2)

18,19

4,19

6

3,36

8,95

5(5

27,74

3)

27,3

78,5

31

7,144

,319

(665

,096

)

1,506

,635

129,

241

(70,

344)

4,98

0,63

8

1,620

,236

(30,

599)

15,3

80,4

70

2,78

1,092

(801

,975

)

10,4

26,8

10

2,36

3,31

4(2

04,6

19)

26,4

69,3

82

8,60

6,99

0(1

4,83

3)

289,

386,

702

44,72

1,127

(3,2

52,0

46)

31/1

2/20

18-

186,

717,5

7215

,773

,599

21,0

35,4

0833

,857

,764

1,565

,532

6,58

0,27

517

,359

,588

12,6

22,5

0535

,061

,539

330,

582,

783

Net

boo

k va

lue

At 3

1/12

/201

841

9,80

2,17

216

7,531

,998

7,404

,936

23,14

9,81

143

,258

,147

150,

281

5,88

1,140

17,9

31,5

3611

,705

,987

91,13

1,291

1,087

,947

,299

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

b.) T

he b

uild

ings

item

incl

udes

bui

ldin

gs w

hich

cost

in th

e ac

coun

ting

regi

ster

s sco

red

SR 4

05,73

0,46

9 (2

017:

SR

377,

437,

302)

ere

cted

on

plot

s lea

sed

unde

r ope

rati

onal

leas

e co

ntra

cts w

ith

a du

rati

on o

f ren

ewab

le 5

35- y

ears

.

c.) P

rope

rtie

s, m

achi

nery

and

equ

ipm

ent i

nclu

de la

nds a

nd b

uild

ings

whi

ch co

st in

regi

ster

s sco

red

SR 4

0,89

6,23

3 (2

017:

SR

40,8

96,2

33).

Thei

r tit

le d

eeds

are

ple

dged

aga

inst

faci

litie

s gra

nted

to th

e G

roup

from

ban

ks to

get

ba

nk fa

cilit

ies (

Not

e 16

).

8- 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 equ

ip-

men

t tra

ilers

tr

ansp

orta

tion

eq

uipm

ent

(SR)

Com

mun

ica-

tion

dev

ices

and

te

leph

ones

(SR)

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

As o

n 1 J

anua

ry

2017

(am

ende

d)Ad

diti

ons

Item

s Con

vert

ed

from

cap

ital

pr

ojec

ts u

nder

co

nstr

ucti

on (N

ote

No.

10)

Excl

usio

nsIte

ms C

onve

rted

in

to in

tang

ible

as

sets

(Not

e N

o. 9

a)

419,

803,

172

- - - -

441,5

20,9

75

3,99

7,828

180,

712,

287

(31,0

00)

-

20,75

0,31

9

3,07

1,921

593,

213

(193

,034

)-

27,2

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

81

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

1,907

93,0

51

(107

,697

)-

84,72

9,07

7

12,5

17,3

4015

,044

,599

(336

,179)

-

1,123

,360

,807

38,0

60,9

3930

4,78

5,63

4

(3,2

43,13

0)(4

,600

,012

)

31/1

2/20

1741

9,80

2,17

262

6,30

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

As a

1 Ja

nuar

y 20

17

(am

ende

d)Ad

diti

ons

Excl

usio

ns

Item

s Con

vert

ed

into

inta

ngib

le

asse

ts (N

ote

No.

9a)

- - - -

149,

476,

890

19,6

90,2

36(2

1,902

)-

14,9

86,6

40

1,019

,213

(146

,037

)-

15,13

7,075

3,90

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-

169,

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

7,054

,866

7,362

,603

23,6

68,2

6241

,961

,890

276,

564

5,25

3,03

118

,922

,623

9,18

9,06

085

,495

,455

1,068

,977

,536

At 3

1/12

/201

741

9,80

2,17

239

2,04

4,08

55,

763,

679

22,0

85,5

9336

,222

,926

317,6

546,

690,

848

15,5

48,4

928,

718,

809

66,3

75,2

0587

3,56

9,46

3


9- Net intangible assets



1 Jan. 2017(amended)

(Saudi Riyal)

Software licenses (Note 9-a)Reputation (Note 9-b)

6,723,0914,308,993

5,755,6074,308,993

4,290,1674,308,993

11,032,084 10,064,600 8,599,160

9-a- Software licenses




(Saudi Riyal)

Cost as at 1 January (amended)AdditionsItems converted from properties,machinery and equipment (Note 8)

16,669,1332,699,481

-

12,069,121-

4,600,012

7,151,4534,917,668

-

As at 31 December 19,368,614 16,669,133 12,069,121

Accumulated amortization

As at 1 January (amended)Year amortization Items converted from properties, machinery and equipment (Note 8)

(10,913,526)(1,731,997)

-

(7,778,954)(1,165,222)(1,969,350)

(5,545,727)(528,067)

(1,705,160)

As at 31 Dec. (12,645,523) (10,913,526) (7,778,954)

Net book value

As at 31 Dec.As at 1 Jan.

6,723,0915,755,607

5,755,6074,290,167

4,290,1671,605,726

9 - b- ReputationReputation was obtained thanks to acquiring Zaiti Petroleum Services Company in 2015 as follows:




(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. The present value 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 calculation

The 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.

Sensitivity towards assumption changes

With respect to estimating the current value, Management believes there are no reasonable possible changes in any of the above core 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

10- Projects under execution

This item, which value is SR 40,011,413, represents the cost of establishing oil stations in different parts of the Kingdom of Saudi Arabia. It is expected to conclude

such projects during 2019, with their value being SR 48,5 million.

Following is the movement of projects under execution for the year ending on 31 December:




(Saudi Riyal)

Balance at the beginning of yearAdditions during the yearItems converted into properties, machinery and equipment (Note 8)Closing of capital works under execution

25,000,01751,857,336

(36,845,940)-

150,783,56679,142,911

(204,785,634)(140,826)

48,002,427155,750,748

(52,969,609)-

Balance at the end of year 40,011,413 25,000,017 150,783,566

11- Investments at fair value through other comprehensive incomea.) This item consists of the following:




(Saudi Riyal)

Investments at fair value through other comprehensive income in stocks and shares of non - trading companies

103,563,396 65,637,302 93,406,731

b.) Following is the movement on reserve of reassessing investments at fair value through other comprehensive income:




(Saudi Riyal)

Balance at the beginning of yearFair value movement for investments of stocks and shares ofnon - trading companies

59,446,80216,101,094

87,216,231(27,769,429)

98,005,687(10,789,456)





c.) Investments through other comprehensive income in stocks of non-trading companies

The Group possesses stocks and shares in non-trading companies. During 2018, the Group 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 the 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 798,405,118 (2017: SR 794,190,000), while the market value of National Company of Tourism (Syahya) was SR 687,078,112 (2017: SR 681,560,000).

The Group 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.

Following is the Group’s share:

As at 31 December 2018:

Statement Group’s share

Value of Assessment(Saudi Riyal)

Group’s share at purchase cost(Saudi Riyal)

Group’s share at fair value

(Saudi Riyal)Reassessment profit

(Saudi Riyal)

Middle East Battery Company (MEBCO)



12.79%

0.36%

25%

789,405,810

687,078,112

-

26,390,500

1,500,000

125,000

100,964,915

2,473,481

125,000

16,081,229

19,865

-

1,485,483,230 28,015,500 103,563,396 16,101,094

* On 6 September 2018, the Group concluded an agreement to increase its owned shares in Middle East Battery Company (MEBCO) against an amount of SR 21,825,000 and thus the Group’s owned shares rose to 1,279 shares. Consequently, the Group’s share became 12,79% as at 31 December 2018 (7,94%: 31 December 2017).

As at 31 December 2017:






(Saudi Riyal)




7.94%

0.36%

25%

794,190,000

681,560,000

-

4,565,500

1,500,000

125,000

63,058,686

2,453,616

125,000

(27,774,914)

5,485

-

1,475,750,000 6,190,500 65,637,302 (27,769,429)

As at 1 January 2017:






(Saudi Riyal)




7.94%

0.36%

25%

1,144,000,000

680,036,388

-

4,565,500

1,500,000

125,000

90,833,600

2,448,131

125,000

(10,798,400)

8,944

-

1,824,036,388 6,190,500 93,406,731 (10,789,456)

12- Net receivables, advance payments, and other assets

a.) This item consists of the following:


31 Dec. 2017 (amended)

(Saudi Riyal)


(Saudi Riyal)

Debts of fuel clients and tenants - b

Minus- provision of expected credit loss – c

Net

Prepaid leases

Advance payments to providers

Advance payments to contractors

Staff advance payments and loans

Guarantee letters (Note 27)

Recovered insurance - d

Customs claims

Other

144,742,110

(5,214,808)

139,527,302

40,779,772

16,860,272

11,904,346

8,077,550

5,589,050

3,311,848

1,817,019

5,347,689

98,021,293

(5,214,808)

92,806,485

38,766,894

15,545,499

15,657,863

2,051,110

4,560,597

3,718,938

-

3,693,821

67,307.123

(5,037,317)

62,269,806

41,402,226

17,976,072

779,571

779,571

7,530,181

603,523

-

2,457,075

Other receivables provision233,214,848(6,429,032)

176,801,207(4,733,162)

141,808,416(4,733,162)

226,785,816 172,068,045 137,075,254

b.) The item of debts of fuel clients and tenants includes 49% of balances payable by government entities (2017: 19%)

c.) Following is the movement of expected credit loss provision for the year ending on 31 December:


31 Dec. 2017 (Saudi Riyal)

1 Jan. 2017 (Saudi Riyal)

Balance at the beginning of year

Component during the year

5,214,317

-

5,037,317

177,491

4,162,117

875,200


Lives of receivables were as follows:




From 1 day – 90 days

From 91 days – 180 days

From 181 days – 360 days

More than 360 days

56,105,774

31,734,490

52,489,411

7,416,435

56,105,953

36,887,905

5,027,435

-

36,546,852

29,177,965

1,582,306

-

144,742,110 98,021,293 67,307,123

d.) Recovered insurance item includes an amount of SR 3,000,000 which is the value of a financial cash guarantee to pay customs fees to the Sudanese

Customs Authority with respect to Saudi cars visiting Sudan with Customs transit books issued by Saudi Automobile & Touring Association, Ltd SATA

(subsidiary).






13- Net inventory




Commodity and petroleum

Inventory of spare parts

Customs transit books (Trip-Tik) and international driving licenses

Other

38,634,076

7,476,934

1,816,620

3,265,870

27,275,876

6,310,043

1,321,215

1,430,272

23,960,389

1,250,512

1,338,957

872,676

Total

Minus: stagnant goods provision

51,193,500-

36,337,406-

27,422,534(98,535)

51,193,500 36,337,406 27,323,999

Following is a statement of stagnant goods provision:






Provision no longer required

-

-

-

98,535

-

(98,535)

1,151,544

98,535

(1,151,544)

Balance at the end of year - - 98,535

14- Fair value investments through profit or loss


31 Dec. 2017(amended)

(Saudi Riyal)


(Saudi Riyal)

Fair value investments through profit or loss in trading companies (L 14)

Fair value investments through profit or loss in investment funds (14 -b)

5,709,100

264,268

30,423,818

879,202

31,423,169

-

5,973,368 33,303,020 31,423,169

a.) Movement of fair value investments through profit or loss in stocks of trading companies

Fair value investments through profit or loss are represented in stocks of trading companies listed in the Saudi Capital Market Authority. Following is the movement of these investments during the year:



(Saudi Riyal)


(Saudi Riyal)

Balance at the beginning of year (amended)

Sales during the year

Unrealized losses from reassessing investments

30,423,818

(24,127,649

(587,069)

31,423,169

-

(999,351)

34,384,679

-

(2,961,510)


During the year ending on 31 December 2014, an agreement was signed for managing an investment portfolio with Al Ahli Capital, which is run by Mulkia

Investment Co. The aim was to diversify the Group’s investments and sources of income. During 2018, the Group’s Management decided to transfer the net

portfolio value from investment held of sale account into an account of fair value investments through profit or loss. Therefore, investment was reclassified in

comparison years.

b.) Following is the movement of fair value investments through profit or loss in investment funds during the year:



(Saudi Riyal)

Balance at the beginning of year (amended)

Purchases during the year

Sales during the year

Change in fair value

879,202

190,330,099

(190,950,000)

4,967

-

869,991

-

9,211

Balance at the end of year 264,268 879,202

15- Cash with the fund and balance with banks



(Saudi Riyal)


(Saudi Riyal)

Cash with the fund

Balances with banks*

7,140,181

67,094,831

2,399,696

94,875,634

6,963,289

110,718,110

74,235,330 97,275,330 117,681,676

There are balances with banks in an amount of SR 39,715,364 representing a cash with banks against obligations in consideration shareholders’ entitlements.

16- Financing of resales for profit as well as long and short-term loans

a.) Banque Saudi Fransi (BSF)

On 13 August 2012, the Group 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. The Group amended the

agreement amount on April 28th, 2015, to be SAR (550,900,000). It included the 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 and/or securities or a

deposit and pledge of title deeds in addition to new facilities of SR 305,1 million, diversified credit facilities of SR 55,1 million and long-term financing facilities

of SR 250 million) 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. The Group again on Feb. 17th, 2017, signing the same on 20 June 2017, amended the agreement amount to SAR (502,500,000).

The agreement 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. The Group 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. The Group 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. On 22 May 2018, the Group renewed the agreement to be SR 391 million.

In includes renewal of existing facilities, of which SR 140 million for diversified credit facilities and SR 251 million for short, medium and long-term facilities

guaranteed by a promissory note. The agreement aims to finance the purchase and building of new stations.




b.) NCB

SASCO 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, the Group 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, 2018 and its value became SAR (200,700,000), including long-term loans of SAR (150,700,000) and bank letters

of guarantee of SAR (25,000,000) and short-term loans of SAR (25,000,000). The agreement aims to expand SASCO projects, support its core activities, and

purchase new sites to build fuel stations. The agreement was amended on 26 September 2018 and its value became SAR (25,700,000) in the form of short-term

commercial facility with a promissory note. The aim of the agreement is to support the needs of working capital.

c.) SABB

On May 25th, 2015, the Group 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, 2017, 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 2018.

The agreement was amended on Dec. 7th, 2018 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) in the form of 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 May 10th, 2018, the Group renewed and amended the agreement, and its value became SR 400,000,000 guaranteed by a promissory note. This agreement

includes a long-term loan of SAR (150,000,000) and bank letters of guarantee of SAR (200,000,000) in addition to 50,000,000 as short-term loans. The

agreement aims to partially finance capital expenses, purchase land, and build new fuel stations as well as to finance the working capital. It expired on 31

January 2020.

d.) Gulf International Bank (GIB)

On December 13th, 2015, the Group 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 the Group’s projects, support its core activities, purchase new sites to build fuel stations as well as to

finance the working capital. On September 6th, 2018, the Group renewed and amended the agreement, and its value became SR 48,000,000 in the form of

payment guarantees guaranteed by a promissory note.

e.) Alawwal Bank

On December 21st, 2015, the Group 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 the Group’s 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, 2018 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). On October 31st, 2018, the

agreement was renewed and amended and its total value became SAR (105,500,000) and the value of total guarantees became SAR (75,000,000) including

medium-term loans of SAR (29,500,000) guaranteed by a promissory note.

f.) Riyadh Bank

On December 21st, 2015, the Group 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. On March 8th, 2018, the Group amended the agreement and added an amount of SR 320,000,000 guaranteed in

the form of long-term finance of SR 235,000,000, short-term finance of 20,000,000, documentary credits of 20,000,000 and a hedge to set interest rates at SR

45,000,000. This was in addition to SR 50,000,000 and the final value of the agreement became 370,000.000 guaranteed by a promissory note, and real estate

deed mortgage of SR 100,000,000.

Following is the loan movement as at 31 December:





Amounts received during the year

Amounts paid during the year

555,518,930

513,962,886

(476,407,255)

514,406,225

192,176,340

(151,063,635)

421,497,554

223,742,005

(140,833,334)

Balance 593,074,561 555,518,930 514,406,225

Financing of resales for profit and short-term loans

Trading portion from financing of resales for profit and long-term loans

Financing of resales for profit and long-term loans

115,000,000

100,688,892

377,385,669

95,000,000

109,479,080

351,039,850

44,594,800

134,043,817

335,767,608

17- Payables and other liabilities



(Saudi Riyal)


(Saudi Riyal)

Petroleum providers

Revenues received in advance

Commodity and service providers

Customs claims provision

Due expenses

Performance bond guarantee

Lease claims provision

Deposits for third parties

Other

80,909,206

52,460,050

19,753,109

14,088,752

12,358,469

9,899,145

4,381,009

1,284,539

5,163,645

49,632,844

36,856,497

26,215,742

12,000,000

8,653,180

13,220,647

13,128,000

2,471,569

5,924,289

64,154,935

33,926,435

8,428,718

12,000,000

9,575,547

11,468,643

13,128,000

9,768,068

5,400,371

200,297,942 168,102,768 167,850,717




18- Distributions payable to shareholders




Profit distributions

Shares sold by auction

Subscription surplus – at incorporation

Surplus of capital decrease

Subscription surplus – second installment

17,019,249

16,779,795

2,258,650

2,199,778

1,537,892

15,959,366

16,838,220

2,262,950

2,199,778

1,537,892

16,020,787

16,869,688

2,275,650

2,199,778

1,537,892

39,715,364 38,718,206 38,823,795

19- Zakat Provision



(Saudi Riyal)


(Saudi Riyal)

Shareholders’ equity

Net amended income

Additions

Deductions

751,862,914

55,621,953

535,435,627

(1,237,736,458)

782,445,223

37,892,954

411,286,283

(1,106,591,205)

720,273,786

39,011,026

360,002,304

(996,552,300)

Total 105,184,036 125,033,255 122,734,816

Zakat base 105,184,036 125,033,255 122,734,816

Following is the movement of Sharia Zakat provision during the year ending on 31 December:



(Saudi Riyal)


(Saudi Riyal)


Amounts paid during the year


Component by increase over Zakat base during the year

3,826,470

(3,423,780)

2,775,004

-

4,409,500

(4,378,030)

3,125,831

669,169

3,962,922

(3,208,422)

3,655,000

-


During 2013, Group obtained the General Authority for Zakat and Tax’s approval to submit a consolidated Zakat declaration for both Group and its subsidiaries

according to letter No. 19181/16-1437.

Group submitted its Zakat declarations and paid the amounts due until the year ending on 31 December 2017 and was given a final Zakat certificate for 2014

and a restricted Zakat certificate for 2017. Group 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 the Group 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 the Group for years 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 the Group 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 the Group for year 2008. Total Zakat

differences were SR 3,694,215. The Group paid the amount in full during the second quarter of 2017. The amount was included in Zakat item in the consolidated

profit or loss and other comprehensive income statement.

20- Statutory Reserve

In accordance with the Saudi Companies Law, the Group transfers ten per cent (10%) of annual net profit to the statutory reserve. Such transfer shall continue

until reserve reaches 30% of capital. The statutory reserve is not distributable as dividends for shareholders.

21- Revenues

Revenues of two years ending on 31 December are as follows:



Fuel operation revenues

Grocery revenues

Lease revenues

Other

1,647,772,790

201,456,232

125,451,863

81,400,117

892,673,753

163,719,373

129,165,765

26,770,916

2,056,081,002 1,212,329,807

22- General and administrative expenses



Staff salaries, wages and benefits

Professional fees and consultation

Customs claims provision (Note 17)

Other receivables provision (Note 12)

Consumption of properties, machinery and equipment

Amortization of intangible assets

Leases

Bank expenses

Electricity and water

Maintenance expenses

Amounts paid during the year against Zakat assessments

Other

27,668,290

3,668,987

2,088,752

1,695,870

1,547,636

1,523,908

1,068,769

1,031,904

200,851

200,560

-

1,413,515

22,820,117

1,609,708

4,096,683

-

2,973,689

650,001

1,016,682

973,989

187,867

175,252

3,694,215

4,761,233

42,109,042 43,776,360

23- Other evenues



Delay fines

Deposit revenues

Sale profits of property, machinery and equipment

Other

1,100,820

426,920

47,429

381,964

1,521,291

270,685

5,607

714,932

2,512,515 1,868,133



24- Sector Information

A sector is a main part of the Group. 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, the Group submits to the business sector.

Following are the Group 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 the Group’s trademark.

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37,6

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7,969

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1,350

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1,201

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18,3

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4

94,5

33,5

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26,5

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3




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.

19- Zakat Provision

As at 31 December 2018 Level One Level Two Level Three Total

Investments through other comprehensive income


-

17,622,552

103,438,396

-

125,000

-

103,563,396

17,622,552

17,622,552 103,438,396 125,000 121,185,948

As at 31 December 2017 (amended) Level One Level Two Level Three Total

Investments through other comprehensive income


-

31,303,020

65,512,302

-

125,000

-

65,637,302

31,303,020

31,303,020 65,512,302 125,000 96,940,322

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, the Group’s

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 Management

The Group manages its capital to ensure its durability. It gets the highest revenue from the ideal limit of debt and equity balances. Group’s total strategy of 2017

did not change.

The structuring of the Group’s capital includes shareholders’ equity which consists of capital, reserves, fair value reserve and retained profits as listed in

shareholders’ equity change statement.

Financial Risk Management

Group’s business may be substantially affected by financial risks arising out of the following:

- Foreign currency risk management

The Group 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

The Group 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 the Group to incur financial

losses. The Group is subject to credit risks on its bank balances and receivables as follows:

2018(Saudi Riyal)

2017 (amended)

(Saudi Riyal)


Net receivables

74,235,012

139,527,302

95,215,346

94,866,469

213,762,315 190,081,815

- 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 Group’s future obligations.

25- Debt Ratio

The 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. The Group’s 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 2019.

Following is the debt ratio at the end year:

2018(Saudi Riyal)

2017 (amended)

(Saudi Riyal)

Loans


593,074,561

(74,235,012)

555,518,930

(97,275,330)

Net debts

Shareholders’ equity

518,839,549

751,862,914

458,243,600

729,110,511

Net debt / shareholders’ equity 69.01% 62.84%

26- Earnings per share

Earnings per share are calculated from net income by dividing net annual profit on weighted average of existing number of shares as at the end of year, being 60

million shares after takin into consideration with retroactive effect the increase of Group’s number of shares during the second quarter of 2018 (Note 1). Earnings

per share are calculated from core operations by dividing the income of core operations on weighted average of existing number of shares as at the end of year,

being 60 million shares after takin into consideration with retroactive effect the increase of Group’s number of shares during the second quarter of 2018 (Note 1).



27- Capital Commitments & Possible Obligations

The Group has capital commitments related to establishing assets and properties as at 31 December 2018 at a total amount of SR 8,5 million (2017: SR 24,9

million).

The Group has possible obligations related to bank guarantees as at 31 December 2018 at an amount of SR 284,16 million (2017: SR 259,2 million).

There are some lawsuits filed against the Group, 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- Subsequent Events

Following the date of financial statements, the Group received a final judgment binding the Ministry of Housing to pay an amount of SR 8,217,461 as a charge in

consideration of infringement on SASCO land located in Hafr Al-Batin-Riyadh Road.

The matter relates to a lawsuit filed by SASCO against the Ministry of Housing on 29/07/1434 AH. The judgment was passed Riyadh General Court. The resulting

effect will appear in the profit or loss statement, initial financial results, for the period ending on 31 March 2019.

The Management believes there are no any other important subsequent events to be amended or disclosed after the date of financial statements until the

issuance of these financial statements.

29- Dealings with related parties

Related 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 the Group’s business.

Their dealings during the year were as follows:

Nature of dealing2018

(Saudi Riyal)2017

(Saudi Riyal)

Non-executive board members

Senior management staff

Salaries, allowances and incentives

Salaries, allowances and incentives

893,000

7,033,523

96,000

5,894,292

30- Comparative Figures

Items, 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 7 (Application of new and amended International Financial Reporting Standards (IFRS)) of notes

attached to consolidated financial statements for the year ending on 31 December 2018.

31- Approval of Consolidated Financial Statements

The consolidated financial statements have been approved by the Board of Directors on 12/7/1440 AH (corresponding to 19 March 2019).

166

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)

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