ANNUAL REPORT - SASCO Annual... · 2017. 7. 19. · Nahl Computer Company. He has participated in...

ANNUAL REPORT

2016

Custodian of the Two Holy Mosques

King Salman bin Abdul Aziz Al Saud

His Royal Highness Prince

Muhammad bin Nayef bin Abdul Aziz

The Crown Prince, First Deputy Prime Ministerand the Minister of Interior

His Royal Highness Prince

Mohammad bin Salman bin Abdul Aziz

The Deputy Crown Prince, Second Deputy PrimeMinister and Defense Minister

Al-NakhlaAl-Oula Co.

CorporateGovernance

Retail andOperating Sector

OtherAdministrative

and OperationalInformation

Zaiti PetroleumServices Company

OstoolAl-Naqil Co.

Internal Control

Auto &Equipment

Investment Co.

SASCO Franchise Company

Financial Statements

SASCOAl-Waha Co.

SASCOOasis

RisksManagement

Saudi Automobile& Touring

Association - SATA

80

88

110

66 76 847472

9692 10690

114

100

Table of Contents

Financial Data

Mission

SASCO Overview

Chief ExecutiveOfficer’s

Statement

Plans, Decisions,and ProminentAchievements

Board of Directorsand Committees

The most important

achievementsduring 2016

Vision Board of Directors ManagingDirector’s

Statement

Chairman’sStatement

Main BusinessSectors

6 12 1710 14 17

22 342818 26 48

Board of Directors

The Board of Directors is pleased to present to you the annual report of the Company for the fiscal year ended on 31 December 2016, including the Board of Directors› report on the Company›s financial results and its various activities, as well as the achievements that have been made by the assistance of Allah and the efforts of all members of the Board, the executive management and the entire stuff.

6 7Annual Report 2016

He holds a Bachelor's degree in Science from USA. He held a number of managerial positions, where he worked as a computer engineer in the Ministry of Defense. He then moved to the private sector as a technical manager of Al Nahl Computer Company, then Director of Sales at Al Nahl Computer Company and Deputy General Manager within it. He currently serves as the General Manager of Al Nahl Computer Company. He has participated in many boards of directors of joint stock companies.

Bachelor of Political Science from the Faculty of Administrative Sciences (King Saud University), Master of Public Administration from Harvard University in USA, Secretary of His Highness the President of the Royal Court, Assistant Director of the Department of Political Affairs at the Royal Court, and Secretary of His Highness the President of the Presidium of the Council of Ministers. He has been appointed in the office of His Highness the Second Deputy Prime Minister, the Minister of Defense and Aviation and the General Inspector. He worked as an administrative consultant in the Higher Committee of Administrative Organization, Vice Chairman of the Board of Directors of Sanad Investment Company.

Bachelor of Accounting with Honors from King Saud University, Master of Business Administration (MBA) from London Business School. He has held leadership positions in a number of public and private companies in the Kingdom of Saudi Arabia. He has experience in corporate restructuring and strategic planning as well as managing investments in securities, private equity and real estate investment. He participated in the membership of the boards of directors and committees in a number of public and private Joint Stock Saudi companies, including Saudi Chemical Company, Nahaz Investment Company, Zawaya Real Estate Company, Madaen Star Company, Middle East Battery Company (MEBCO), Mulkia Investment Company, and Union Wire Factories Company (ASLAK).

A businessman with more than 30 years of experience in real estate, contracting and automotive services. He serves as the Managing Director of Madaen Star Company, the Member of the Board of Directors of Ibrahim Al-Hudaithi Investment Company, the Member of the Board of Directors of Balda Company for specialized commercial complexes, and the Member of the Board of Directors of Zawya Real Estate Company.

Board of Directors

Master's degree in Accounting and MBA from the University of South New Hampshire in the USA. He has more than 30 years of experience in the management of financial, management and strategic joint stock companies. He has participated in several boards of directors of joint stock companies and the committees related to the Board (Audit Committee). Such as, Al-Jouf Agricultural Company, Taiba Company and United Industrial Cement Company.

Bachelor of Industrial Management from the University of Central Washington with more than 25 years of experience in the field of industrial investment. He participated in several boards of directors of joint stock companies such as Drake & Scull International Saudi Arabia and Fawaz Abdul-Aziz Al Hokair & Partners.

Bachelor of Business Administration from King Abdul-Aziz University. He has a long experience in the field of corporate management, especially fuel station companies. He served as General Manager of Facilities Marketing Company Ltd., Deputy General Manager of Riyadh Development Company. He took over the membership of the Board of Director of several companies, and currently serves as the Chairman of Customs Council of the International Automobile Federation in addition to his chairmanship of the National Committee of fuel station companies in the Council of Saudi Chambers.

Mr. Nasser bin Abdullah Al Awfi - Member of the Board of DirectorsChairman of Audit Committee

Mr. Suleiman Bin Ali Al Khudair - Member of the Board of DirectorsMember of Audit Committee

Mr. Ali bin Mohammed Aba Al Khail - Member of the Board of DirectorsMember of Nomination and Remuneration Committee

Mr. Sultan bin Mohammed Al-Hudaithi - Member of the Board of Directors (MD)Member of Executive Committee

Mr. Majid bin Muhammad Al Othman - Member of the Board of Directors

Mr. Ibrahim bin Mohammed Al-HudaithiChairman of the Board (Chairman of Executive Committee)

Mr. Fawaz bin Sulaiman Al Rajhi - Member of the Board of Directors

A businessman, who has more than thirty-six years of experience in the field of corporate management, he held a number of positions including Chairman of the Saudi Chambers of Commerce Council, participated in many of the boards of directors of registered and non-registered Joint Stock companies within the Saudi financial market. Such as, Madaen Star Company, Akwan Real Estate Company, Ibrahim Mohamed Al-Hudaithi Investment Company, Zawaya Real Estate Company, Nahaz Investment Company and other companies operating in the real estate, services, investment and financial services sectors both inside and outside the Kingdom.

Mr. Ajlan bin Abdulrahman Al Ajlan - Member of the Board of DirectorsChairman of Nominations and Remuneration Committee

Mr. Riyadh bin Saleh Al Malik - Member of the Board of DirectorsCEO | Member of Executive Committee | Member of Nomination and Remuneration Committee.

Bachelor of Administrative and accounting information systems from King Fahd University of Petroleum and Minerals with honors, Master's degree in Business Administration from Stanford University, USA, and the Chairman and CEO of Al Rajhi United Company. He received a training at Procter & Gamble and then he moved to the banking sector to work for eight years in various areas of banking (credit facilities, the corporate financing, and Shares). He has participated in several boards of directors of joint stock companies such as, Raj Real Estate Company, Alpha Company, RAK Ceramics Company, Saco Company and other companies.

Annual Report 20168 9

Among the most important achievements during the year 2016:ff The growth of the company's assets by 10.50% from the previous year to reach 1.4 billion riyals.ff Exemption from the shares of the two investment portfolios managed by the Saudi Francie Capital Company and Mulkia Investment Company in order to direct the liquidity generated by the sale process in its core activities in line with the strategic objectives of the company and its expansion plan.ffAdopting the financial policy in accordance with International Financial Reporting Standards (IFRS) and following up the implementation of the transition plan to the International Accounting Standards in coordination with a consultant office.ff The completion of the establishment of (4) sites according to the identity of the company and the continuity of developing of many existing sites.ff The acquisition of a number of (13) location in various parts of the Kingdom.ff The opening of number of (6) branches for SASCO Palm in various parts of the Kingdom.ff Increment of the number of trucks of the Ostool Al-Naqil Company to reach (95) tankers and (101) trailers.ff Expansion of dry transportation by contracting with multiple clients and companies.ffRetention of the (Super 8) brand of the hotel located on Thamamah Road in Riyadh City after the completion of the exclusive agreement with Windham International Company.ffContracting with one of the specialized companies for preparing the feasibility study for the establishment of a hotel of the category (4) stars location of the company station on King Salman Road.ffContinuing the development of the company's IT systems and the monitoring of the stock with the latest technologies.ff To continue signing several agreements with international companies of restaurant and coffee in order to achieve the company's approach to developing the stations and restrooms sector in the Kingdom and improving the service offered to its customers.ffContinuing to attract qualified cadres to meet the requirements of the company of various administrative functions, especially the leadership positions.ffContinuing to settle jobs and implement the wage protection program as per the requirements of the Ministry of Labor.ffParticipate in many awareness campaigns to confirm the contribution of the Company to social responsibility.

This, is in addition to the contents of this report of the achievements at the level of all the subsidiaries, where the operating income of the Ostool Al-Naqil Company increased by 28% from the previous year to reach 19,663,545 Saudi Riyals. As for the Saudi Automobile & Touring Association (SATA), although its sales were affected by the events experienced by some Arab countries, its operating revenues increased by 1% from the previous year to reach 20,471,234 Saudi Riyals.In the year 2017, the company will continue, God Willing, to achieve its objectives according to its strategic plan set by the Board of Directors and considering the opportunities for horizontal and vertical acquisition in all its operational activities in line with the vision of the Kingdom 2030 and work to overcome all difficulties and challenges in order to achieve this.

Finally, on behalf of the Board of Directors, I would like to thank all the shareholders of Saudi Automotive Services Company (SASCO) for their continued confidence in the administration of the company. I also thank the Executive Management of the company and all its employees for their efforts and dedication in performing their duties in the required manner, which helped to achieve the desired goals during this year. We are confident that the strength of the stuff of the company and the synergy of efforts will lead to the continuity for achieving success, God willing, looking forward to further success in the coming years.

I would also like to extend my sincere thanks and appreciation to the Custodian of the Two Holy Mosques King Salman bin Abdul-Aziz, may Allah protect him, His honest Crown Prince His Royal Highness Prince Mohammed bin Nayef bin Abdul-Aziz, may Allah protect him, and His Highness the Deputy Crown Prince His Royal Highness Prince Mohammed bin Salman bin Abdul-Aziz, may God protect him for all the great efforts and unlimited support for the development of this country they are performing and supporting its economy and stimulating the business environment and national companies in order to achieve the vision of 2030.

May Allah Grant Us All Success,

ChairmanIbrahim bin Mohammed Al-Hudaithi

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

On behalf of the Board of Directors of the Saudi Automotive Services Company (SASCO) and my own, I am pleased to present to you the annual report of the Board of Directors for the fiscal year ended on December 31st, 2016. Which includes the performance and achievements of the company and its subsidiaries including the financial results and the most important financial indicators.

Thanks to God and the efforts of all the members of the Board of Directors, the executive management and the entire stuff of the company. The company achieved net operating income during the year 2016 amounted to 1,094,122,754 riyals compared to 665,048,902 riyals for the year 2015, which means an increase of 64,52% that had a positive impact on the increase in gross earnings, operating earnings, and net earnings of the company. In 2016, the company also achieved net earnings of 26,150,553 riyals compared to 18,616,567 riyals for the previous year 2015, which means an increase of 40.47% due to the increase in net sales in addition to the increase in net investment income by 1,94%. Due to the company’s, exit from all shares of two investment portfolios in the Saudi shares and the increase in other revenues and coverage of the same period of the previous year on the cost of the acquisition of Zaiti Petroleum Services Company by 3.6 million riyals. In addition to the decrease in selling and marketing expenses and financing expenses, despite the increase in general and administrative expenses due to the increase in the provision for customs claims and zakat for this year, which led to a rise in earnings per share comparing with the last year from 0.34 riyals to 0.48 riyals.

With regard to the achievements made during 2016 in accordance with the company's strategic plan set by the Board of Directors in line with its objectives, the opening of the two stations of King Khalid International Airport (SASCO Plus) of Riyadh Airports Company located on King Salman Road in Riyadh is one of the most important achievements of the company, where the area of the first site is 20 thousand square meters and the area of the second site is 10 thousand square meters.

Chairman,s Statement

Mr. Ibrahim bin Mohammed Al-Hudaithi

Net operating income during the year 2016

SR 1,094,122,754Net operating income during the year 2015

SR 665,048,902With an increase, of

64,52%


The following is a summary of the most important achievements in various sectors of the company and its subsidiaries:ff The Retail Sector: A number of sites were acquired in 2016 across the various areas of the Kingdom and the completion the establishment of several sites according to the identity of the company as well as a number of other sites under pre-construction procedures or under construction. Some other sites have been stopped because of the lack of economic feasibility of the current operation to become the number of operating sites in 2016 is (146) sites compared to (147) sites in 2015.ff The opening of the two stations under the brand SASCO Plus at King Khaled International Airport in Riyadh along King Salman Road in Riyadh City, with an area of 20 thousand square meters for the first and 10 thousand square meters for the second, which considered one of the most outstanding sites of the company with a number of restaurants and shops of brands that offering products and services in accordance with the highest international standards.ffAccordingly, the retail sector has provided its services to more than 11 million vehicles, with an increase of 14,4% over the year 2015 and 62 million customers, with an increase of 10,7% over the year 2015, of which 9,7 million Haj and Umrah performers from inside and outside the Kingdom compared to 8,7 million Pilgrim for the year 2015.ff It was continuing to sign of strategic partnerships with many local and international companies competent to run restaurants, cafes, and car maintenance in order to manage some of the sites facilities of the company for providing high-quality integrated services.ff The Supply Sector SASCO Palm Company: A total (6) new branches were added in 2016, bringing the total number of branches by the end of 2016 (61) branches, after the number of (13) branch has been stopped in order to be operated by third parties. « Sasco Palm » has an integrated basket of items that have been carefully studied in order to meet the needs of our customers and gain their satisfaction.ff The Accommodation Sector SASCO Waha Company: The capital of company has been increased from 500 thousand riyals to 5 million riyals in line with the expansion plan of the company, and the «Sasco Waha» company manages all the motels of Sasco scattered all over the Kingdom, through the development under the brand owned by the company «Motel Waha». The first motel bears the name of «Sasco Waha » has been developed on Riyadh / Dammam highway at 154 km. ff In the same context, it has been completed the exclusive franchise agreement for «Super 8» signed between «Sasco» and «Windham World «WYNDHAM»» the owners of «Super 8» hotels while retaining the brand of «Super 8» of the hotel, which has been opened on Thumama road in Riyadh city.ff The Transportation Sector Ostool Al-Naqil Company: The Company increased its trucks fleet in 2016 to reach (95) tankers, compared with (88) tankers in 2015, and increasing in the number of trailers to the number of (101) trailers in 2016 compared to (91) trailers in 2015.ff The Ostool Al-Naqil company after obtaining the tender in

many companies such as the National Water Company and Saudi Electricity Company, to provide the transportation services to the SASCO Company and «Zaiti» Company for the transfer of the «fuel, water, sanitation» and it has also provided the transport Services of «fuel, goods» for other companies. In addition to the expansion of the activity of the company to include dry transportation through trucks that are specialized for all purposes.ff The Saudi Automobile Club Company – SATA: In spite of the great impact of the events surrounding the region, which led to a large recession in the movement of issuing books between the Arab countries, the company continued to seek to urge the competent authorities in the Kingdom and the Gulf Cooperation Council countries to work to activate the convention of the international road transport under the supervision of the International Road Transport Union (IRU) and it has participated in some relevant seminars within the Gulf Cooperation Council.ff Zaiti Petroleum Services Company: The total number of the stations reached (55), including (49) operating stations, (14) sites of them was developed according to the new identity, in addition to (6) parked for the development sites.ff The SOCIAL RESPONSIBILITY: Believing in the company›s effective role in society, (SASCO) has continued to focus on social responsibility, it organized many awareness campaigns aimed at raising awareness about the traffic safety for children. The campaign was spread through social media, billboards, and some publications under the slogan of (I teach you). The company also participated in the Gulf Cooperation Council traffic week and the accompanying awareness campaign under the slogan «Your decision determines your destiny», in addition to many other services provided by the company through its widespread sites located in the Kingdom and on the highways.

In conclusion, I ask Allah Almighty to bless these efforts and to help us to continue to achieve the plans and objectives of the company. Where we expect year 2017 witnesses the opening of a number of strategic locations in several regions of the Kingdom and work to improve performance and enhance the level of efficiency. I would like to extend my thanks and appreciation to you for your confidence, and I would like to the colleagues the members of the Board of Directors for their continuous support and for their keenness and outstanding ideas. And to all the brothers in the executive management and all my colleagues of the company employees for all their efforts that contributed to the continuation of achieving the vision of company and its objectives and strengthening the leading position of SASCO in the market.


Managing DirectorSultan bin Mohammed Al-Hudaithi

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

Thanks to Allah and His success, the year of 2016 witnessed the continuation of the achievements and expansions of the Saudi Company for Car Services and Equipment (SASCO), in accordance with its approved strategic plan and in order to fulfill its promise and commitment to the shareholders of the company and its customers and to lead in the field of operation of fuel stations and the sectors in which the company is operating.I am pleased to present you a brief presentation of the most important events and developments during the year 2016 on the operational and financial level of Sasco Company,The company achieved total operating income of SR 1,094,122,754 compared to SR 665,048,902 for the year 2015 with an increase of 64,52%, which resulted in the increase of the net earnings of the Company for the year 2016 to reach SR 26,150,553 compared to SR 18,616,567 for the year 2015 which indicates an increase of 40,47%. The increase in operating revenues is attributed to several reasons, perhaps the most important of which is the increase in fuel prices to reach the price of «gasoline 91» from 0.45 riyals per liter to 0.75 riyals per liter with an increase of 66%. And the increase in the price of «gasoline 95» from 0.60 riyals per liter to 0.90 riyals per liter with an increase of 50%, and the opening of a number of the company›s sites, as well as an increase in income from investment by 1,94% due to the company selling all shares in its two investment portfolios prepared for trading in Saudi shares and that have been managed by Saudi Fransi Capital Company and Mulkia Investment Company. Also, of the reasons of the increment of the operational revenues, is the reduction of the cost of sales, marketing and financing burdens expenses, which positively impacted the net operating Earnings of the Company. As the earnings reached, before the deduction of interest, Zakat, depreciation and amortization (EBITDA) at the end of the year 2016 amounted to 69,555,469 riyals comparing with 52,531,995 riyals by the end of the year 2015 which represents an increase of 32,41%. As a result, earnings per share increased compared to the last year to reach SR 0.48 for the year 2016 compared to SR 0.34 for the year 2015, equivalent to 14%.

Managing Director,s StatementMr. Sultan bin Mohammed Al-Hudaithi

الربح قبل خصم الفوائد والزكاة عام 2016م

69,555,469 ر.سالربح قبل خصم الفوائد والزكاة نهاية عام 2015م

52,531,995 ر.سبإرتفاع قدره

32,41%


ff Continuing to settle the young Saudi cadres qualified to meet the needs of the company of those competencies.

ff Follow up the preparation of the training programs for all the administrative levels.

ff The opening and operating of the two King Khalid International Airport stations on King Salman Road (SASCO plus two and SASCO plus 3), as was done in the (SASCO plus 1) station.

ff The opening of several branches of SASCO Palm either on highways or within cities to reach (61) branch after the rental of (13) branch to be operated by others.

ff The completion of the entry of a number of the sites of the company to the actual operating filed after being developed according to the identity of the company.

ff Work on the completion of the development of the SASCO Company’s stations on the highways.

ff The development of the sites of Zaiti Petroleum Services Company according to the identity of the company.

ff Involvement in many competitions for the establishment and operating of fuel stations and service centers, where the number of (2) site has been awarded to the company and the company follows all investment opportunities announced.

ff Continue to sign several agreements of cooperation with restaurants and cafes companies in order to improve the service provided to customers.

ff Contracting with one of the specialized company for the preparation of feasibility study for the establishment of a hotel of (4) stars class within the location of the station of the company on King Salman Road.

ff Increasing the number of trucks in the Ostool Al-Naqil Company where the company seeks to increase its operational capacity both in the field of transport of petroleum materials or in solid and liquid materials for the government and private sectors to ensure the horizontal and vertical expansion in this sector and achieve the strategy of the Board of Directors.

ff The development of the company›s information technology in line with the latest developments in this field.

ff The accreditation of international accounting standards in coordination with a specialized consultant office in this field.

ff Our continuity to participate in awareness campaigns to activate the social contribution of the company in cooperation with the various sectors of the state.

At the level of The Saudi Automotive Club Company (SATA), the sales of customs books (TRIPTIK) has been affected significantly by the continuous events experienced by some Arab countries and especially the neighboring countries, in addition to the presence of parallel clubs do not have a license from the International Automobile Federation and they are participating their activities in the Kingdom and they have acquired a market share of the sales of customs transit books (TRIPTIK) and international licenses, where the sales of customs books in 2016 are decreased by 1,98% over the previous year.

In the framework of the agreement signed by the Saudi Automotive Club Company with the International Federation of Road Transport, the company is continuing to urge the concerned authorities in the Kingdom to enter into this agreement in order to activate it. Where the signing of the agreement will facilitate the movement of commercial transport, customs procedures, and facilitate border crossing and transport of goods.

In the field of Ostool Al-Naqil Company, at the end of 2016, the fleet size reached (95) tankers and (101) trailers, where the company expanded in the transport to various destinations, especially after the expansion of the activity of the company to include dry transportation through trucks that are specialized for all purposes.

In conclusion, I would like to thank all the shareholders of Saudi Automotive Services Company SASCO for their massive confidence in the company›s performance and their endless support. The company is fully prepared to receive the contributions and ideas of the shareholders. I also thank the Board of Directors for their continued support of the company to achieve the Board›s strategy in order to maintain that SASCO is the first company in the field of services provided, and I would like to thank all the employees of the company for the great efforts they make and their continuous contributions to achieve the company›s vision and achieve its objectives, wishing everyone the success and prosperity.


Chief Executive OfficerRiyadh bin Saleh Al Malik

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

Thanks to Allah and then the support of the Board of Directors and the efforts of the working stuff, the company has continued to distinguish itself from the best services in this vital important sector which represents the support of the national economy. We are also determined to continue this success in order to your company maintains its leading position in the field of road services, both within the cities or on the highways. We look forward to further to support the national economy and achieving the vision of 2030.

The company has made many achievements in its field of operations during the fiscal year 2016. Where the company continued to develop its sites according to the best international standards and use the best technology to keep pace with the internationality. In addition to the continuous development in the administrative field of the company and the development of future plans so that the company can keep abreast of developments both in the local and international arena, and to contribute to the development of this sector through the partnership with government institutions and sectors by the introduction of the best services and the application of them in the various sites of the company. Where the company is currently working on the application of automated self-service in this sector.

As a continuation of this success, growth and progress in achieving excellence in financial performance, during the year of 2016, the company has achieved net operating income of SR 1,094,122,754 compared to SR 665,048,902 for the previous year, with a growth of 64.52%, which had a positive effect on the increase in the total earnings by 12.63% to reach SR 58,240,034. In addition, the operating income was increased by 19.24% to reach SR 19,582,936.

The company also achieved net earnings of SR 26,150,553 for the current year 2016 compared to SR 18,616,567 for the previous year of 2015 with growth of 40,47%. (New reasons to stop) is what motivates us to achieve further growth; we have been able in 2016 to achieve many achievements, for example:

The company›s net earnings in 2016

SR 26,150,553The company›s net earnings in 2015

SR 18,616,567With an increase, of

40,47%

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


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

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


SASCO Overview

The Saudi Automotive Services Company (SASCO) is a Saudi

public shareholding company established by Ministerial

Decision No. 563 dated 23/12/1402 AH corresponding to

10/12/1982 AD.


The CapitalThe share capital of SASCO is amounted to SR 540,000,000 five hundred and forty million Saudi riyals (fully paid) divided into 54,000,000 shares, each with a nominal value of SAR 10.The Fiscal YearThe fiscal year of the company ends on 31 December of each calendar year.Auditor for the year 2016Allied Accountants Office - Legal Accountants & Auditors.

Investment RestrictionsThere are no restrictions on the listed shares of the company according to the amended rules governing the investment of qualified foreign financial institutions in the listed shares issued by the Capital Market Authority Council pursuant to the resolution No. (32016-104-) dated on 5 Zul Queda 1437 A.H, corresponding to 8 August 2016. In the article XVI, Subparagraphs (a / 3) and (a / 4).

SASCO Overview

The Formation The Saudi Automotive Services Co (SASCO) is a Saudi public shareholding company established by Ministerial Decision No. 563 dated 23/12/1402 AH corresponding to 10/12/1982 AD.The Activities ff Establishing and operating auto and passenger service centres within cities and on the main and intercity roads.ff Establishing and operating rest houses, motels, and restaurants on highways.ffProviding the first-aid means using the latest international methods, including the use of helicopters, with the approval of competent authorities.ff Importing, selling and distributing spare parts, car hardware, and equipment as well as parts, accessories, and materials necessary to provide the 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.ffBuying, selling, renting, and leasing lands and real estate properties required to serve purposes of the company, and managing third parties’ properties.ff Submitting contracting tenders on car and equipment

maintenance for individuals, companies, and institutions.ff Checking cars to issue the road ability certificates upon the approval of the Ministry of Interior. ffProviding an automobile club to issue international driving licenses and customs transit (Trip-Tik) books, and supporting motor sport and tourism. ff Importing and exporting all types of vehicles for the business of the company as well as trading in them after obtaining the approval of the competent authorities.ffManufacturing, re-manufacturing, and renewing auto parts, equipment, and car batteries after obtaining the necessary licenses from the competent authorities.ffManufacturing light and heavy trailers, vehicles refrigerated and non-refrigerated boxes, and all kinds of tankers after obtaining the necessary licenses from the competent authorities.ff Granting franchise to third parties in respect of company trademarks.ff Establishing, managing, maintaining, operating, and cleaning residential and commercial buildings and the fuel stations owned by the company and third parties.


Main Business Sectors


Main Business Sectors

The retail sector is the main sector that manages all the stations and restrooms, and provides fuel service, leasing, coffee and restaurants.

SASCO Palm CompanyIt is specialized in providing the supply service through the management of all branches of Palm SASCO scattered throughout the Kingdom to meet the needs of customers from the passengers and drivers of vehicles inside and outside the cities.

SASCO Al-Waha CompanyIt is specialized in the management of all the motels of the company scattered throughout the Kingdom and the exclusive franchise agreement for Super 8 hotels.

The Ostool Al-Naqil Company

It provides the transportation service for SASCO Company sites and Zaiti Company (fuel, water, sanitation), in addition to the provision of the transport services (fuel, goods) to others.

Saudi Automobile & Touring AssociationIt has a license from the International Automobile Federation for the issuance of customs transit books (TRIP-TIK) and international licenses. It operates through many sales outlets and a network of agents in all regions of the Kingdom.

Auto & Equipment Investment CompanyIt was stablished for managing the company›s investment activities independently, and has a quota of% 7.94 of the capital of the Middle East Batteries Company (MEBCO).

Al Nakhla Al Oula Contracting CompanyIt was established to carry out the operation, maintenance, and cleaning works for the company’ sites in order to improve the quality of the service provided to customers, and it is specialized in the general contracting works for the building and the establishment, management, maintenance, and operation of the residential and commercial buildings and road business.

SASCO Franchise Company

Is concerned with the granting of franchise to other operators through agreements to operate «SASCO stations» and «Palm Supplies Store.»

Zaiti Petroleum Services CompanyIt specialized in the establishment, management, and operation of fuel stations where it owns and operates several stations deployed in the central and southern region.


Plans and DecisionsThe Strategic PlanThe Board of Directors, at its eleventh session (June 30, 2015 - June 29, 2018) adopted a comprehensive developmental strategic plan of action, including the financial, administrative and operational status of the Company, taking into account its priorities in achieving the goals set out in the plan, whether qualitative, quantitative, administrative or organizational objectives. The strategic developmental plan of action includes a list of these objectives with the mechanism of monitoring them and the measuring of performance achieved periodically.This plan comes as an extension of the strategic plans adopted by the Board of Directors at its ninth session (30 June 2009 AD - 29 June 2012 AD) and its tenth session (30 June 2012 AD - 29June 2015 AD), and after a specialized third party has reviewed the strategic plan within the strategy review project of the company and its governance policies. In addition to the restructuring and characterizing the jobs and setting the terms of reference for each job.It has also been taking the main considerations of the company›s strategy according to the following points:ff To identify the items in previous strategies that would remain appropriate and existing for the coming years.ff To identify the items in the previous strategies that require updating or amendment, which fits with the coming years.ff To define the way through which the company can manage its existing assets effectively.ff To determine the human resources required to support the growth process.ff To work towards providing excellent services in terms of value added and maintaining the competitive position of the company.ff To identify strengths, weaknesses, opportunities, and threats.

The Board of Directors of the company reviews the strategic business plan periodically to find out what has been achieved and address deviations «if any», and find solutions to the obstacles facing the implementation of the adopted strategic plan.The main objectives of the most important development plan are as follows:ff Conducting a comprehensive study of the market for all the sectors of the company and its subsidiaries.ffAccelerate the decentralization plan to reduce the costs, improve the profitability, and increase the operational efficiency.ff The Expanding and penetrating the market through strategic partnerships and acquisitions.ff Providing logistics services and a comprehensive distribution network.ff Focusing on the customer satisfaction.ff Providing value added services and innovative products.ff To take advantage of technology to facilitate the provision of services.ff Concentrating on corporate social responsibility (CSR).ff To continue to develop the quality of the services and the quality in their provision.ff Building of a network of stations inside and outside the cities so that the company be among the top three companies operating in this field. ff To continue the development of the stations, rest houses, and service centres on highways.

ffDeveloping the transport fleet in line with the growth in the number of SASCO sites and the transport market in the Kingdom.ff To enter into new alliances with international and leading companies operating in service sectors related to the activity of the company and subsidiaries.ff To apply the concept of total quality to all the sectors of the company.ffDeveloping the services provided by the Saudi Automobile and Touring Association, increasing the market share in the sales of TRIP-TIk and international licenses, and activating the activity of the association in the field of motor sport.ffActivating the role of the subsidiaries.ff Strengthening control over the operation and the quality of the service.ff To maintain the competitive position of the Saudi Automobile and Touring Association.ff To enhance the financial efficiency of the company.ffDisassociating from unexploited assets.ff Continuing distribution of dividends to shareholders.ff Continuing to benefit from the technology and the automation of the services.ffAttracting distinctive administrative expertise and competencies.

The most important objectives that have been achieved:ff Increasing the number of stations as per the expansion policy of the company.ff To continue to develop the existing sites according to the identity of the company to keep pace with the expectations of customers.ff To continue to conduct general maintenance of all facilities at the company›s facilities.ff To continue to engage in strategic partnerships in order to raise the level of service provided to enhance the customer satisfaction.ff Building a distinctive brand of the services provided by the company within its sites.ff To build a distinct work team.ff The Saudization of the jobs and the maintenance of the green zone of the company and its subsidiaries according to the classification of Nitaqat program issued by the Ministry of Labour.ff To continue to develop the company Enterprise Resource Planning (ERP) System.ff The development of the operational and administrative systems for all business units in the company.ffMotivating employees and creating a distinguished work environment.ff Continuing the dissociation from some untapped assets to enhance profitability and provide funding sources.ff Signing Shariah-compliant credit facility agreements with local and international banks.

The Executive Plan: In the light of the strategic development plan of the company, an executive work plan is prepared annually by the company›s management, through which the basic activities of the plan are divided and linked to an execution time schedule on an annual basis and supervised by the managing director of the board of directors so that the actual achievement on a monthly basis is reviewed to ensure the achievement of the objectives set in the Strategic Plan.

Plans and Decisions


The most important achievements during the year 2016At the Level of Expansion and Development of the Networkff The completion of the establishment of a number of (4) new sites according to the identity of the company, of which (3) of them according to the identity of SASCO company and the number of (1) site according to the identity of Zaiti Petroleum Services Company.ff To continue to develop many existing sites inside and outside the cities according to the identity of the company, where a number of (21) sites has been developed including a number of (7) sites according to the identity of SASCO company and the number of (14) site according to the identity of Zaiti Petroleum Services Company, and the work is underway on the development of the rest of the sites, according to the designated plan of development.ff The opening of the two new stations at King Khalid International Airport (SASCO Plus) subsidiaries of the Airports Company of Riyadh and both located on the King Salman Road in Riyadh. Where the area of the first site is 20 thousand square meters and the area of the second site is 10 thousand square meters.

ff Entry in many competitions for constructing and operating fuel stations and service centers, where a number of (2) site were awarded to the company in each of the city of Jeddah and the Province of Holy Makkah work is underway to accomplish them.ff The acquisition of a number of (4) site in the Central Province.ff The acquisition of the number (1) site in the Eastern Province.ff The acquisition of the number (4) sites in the Western Province.ff The acquisition of the number (2) site in the Central and Southern Provinces in favor of Zaiti Petroleum Services Company.ffDisposal of old trucks and trailers with high cost of maintenance.ff To purchase a number of (15) new trucks.ff The purchase of (6) fuel tanks in addition to the number of (9) tanker for the transport of goods.ff Expansion of dry transportation by contracting with multiple customers and companies, while continuing to transport fuel and water to others.ff Rental a site in Jeddah to be the starting point for the trucks of Ostool Al-Naqil Company in the Western Province.

The most important achievements during the year 2016

Statement 2012 2013 2014 2015 2016

Owned – Operating Sites 23 23 31 35 32

Owned Non-Operating Sites 16 20 16 17 20

Non-owned Sites 88 87 90 153 161

Total 127 130 137 205 213

The annual growth rate 14.41% 2.36% 5.38% 49.64% 3.90%

The following table shows a summary of the number of sites (operating or under performance and construction)according to the nature of their ownership (including the sites of Zaiti company) as follows:

250

200

150

100

50

02012 2013 2014 2015 2016

34 481534

90 89 85

147 14618 20

37 34

333

3 13

Plugged Sites under construction or action Disabled for development Operating and leased sites


60

50

40

30

20

10

02012 2013 2014 2015 2016

1919

15

1516

2024

28

3437

Purchased during the year Owned and under Construction Owned and Existing

The Owned Sites

54

2

The Central Province

The Western Province

The Northern Province

The Eastern Province

The Southern Province

57%

10%

8%

21%

4%

The distribution of operating sites)SASCO and Zaiti(

At the level of business developmentff Preparing the feasibility studies for the projects that the company wishes to enter after the final adoption of these studies.ff Signing a contract with a consultant office to made the required designs for the building of the new headquarters of the company.ff To continue signing several agreements with the international restaurant and coffee companies in order to improve the service provided to its customers and to achieve a qualitative and quantitative shift to all the company›s sites inside and outside the cities and to achieve the company›s approach of developing the stations and restrooms sector in the Kingdom.ff The signing of a joint cooperation contract for a period of five calendar years starting from the first of June 2016 with SHAHYIA company for foods limited the exclusive agent of the brand (Dunkin Donuts) in the Kingdom of Saudi Arabia for the opening of shops for the activity of coffee and donuts at the sites and shops of SASCO, both in its stations scattered in the cities and on the regional roads or within all of the Palm markets of the

company, and participation of the total sales system (Dunkin ‹Donuts) in those locations, through the system of participation of the total sales of (Dunkin Donuts) in those sites.ff The contribution of the company of the Saudi Automobile and Touring Association SATA by the signature of the Kingdom of Saudi Arabia of the international roads traffic agreement and to allow Saudi citizens who hold an international driving license issued by SATA to drive and rent cars in the Republic of Austria.ff The cancelation of the selling exclusive advertising franchise agreement in all visual, printed, audible media and the advertising spaces that have been signed with an advertising company during the year 2015 for non-compliance with the terms of the contract.ff Contracting with many companies and the tourism companies and travel tours operators in the hotels (Super 8) in Riyadh city.ff The termination of the exclusive franchise agreement for the hotel (Super 8) brand that has been signed between SASCO and Windham International due to its expiry date on 31 December

2016 and the unwillingness of the parties to renew the agreement between them, while retaining the brand (Super 8) for the hotel which was opened on Al-Thamamah Road in Riyadh city.ff The adoption of contracting with one of the specialized companies for the preparation of feasibility study for the establishment of (4) star class hotel in the location of the company›s station on King Salman Road owned by Riyadh Airports Company.

At the Financial Level and the Operational and Financial Controlff Adoption of the final accounts of the company and the report of the Board of Directors.ff The approval of the 35th Ordinary General Assembly held on 20 April 2016 on the recommendation of the Board of Directors to distribute cash dividends to the shareholders for the fiscal year 2015 by a half riyal per share and the total amount of 27 million riyals, equivalent to 5% of the capital of the company provided that the eligibility of earnings shall be for the shareholders of the company that are registered with the Securities Depository Center (Tadawul) by the end of April 20 April 2016.ff Subscription to a company that has launched its shares for subscription, through the company investment portfolio managed by the Saudi Fransi Capital Company under the Portfolio Management Agreement approved by the Capital Market Authority.ff Engage in an investment funds in order to enhance the profitability of the liquidity available to the company.ff The termination of the contract for the management of an investment portfolio with NCB Capital Company due to the orientation of the Board of Directors of the company, after a periodic review of the performance of the company›s investment portfolio, to reduce the management of the portfolios of the company to two investment managers instead of three, in addition to reducing the cost of portfolio management, While continuing my contract portfolio management signatories with both Saudi Fransi Capital and Mulkia Investment Company. With the transfer of the balance of the portfolio of NCB Capital to the portfolio managed by a Mulkia Investment Company within the limits of the agreement signed with them previously.

ff The sale of all the shares in the investment portfolios of the company managed by Saudi Fransi Capital and Mulkia Investment Company to target the liquidity resulting from the sale in its core activities in line with the company›s strategic objectives and expansion plan, while maintaining the portfolio management agreement in the future if the company wishes to invest in securities according to the liquidity available within it.ff To terminate the accounts of consummation for the acquisition of Zaiti Petroleum Services Company.ff Follow-up to the implementation of the transition plan to the international accounting standards in coordination with the Office of the consultant.ff Adoption of financial policies in accordance with International Accounting Standards (IFRS).ff Continuing to develop the Enterprise Resource Planning ERP program to achieve the company›s objectives.ff Follow-up the implementation of the automation project of fuel pumps and tanks and the use of smart cards with a specialized global company in fuel stations.ff The development of communication and phone systems.ff Continue to open new sale outlets for the of the Saudi Automobile & Touring Association club SATA.ff Continuing to develop the website of the company and its subsidiaries.ff Activating the application of the company on smart devices (Apple, Android).ff The completion of the comprehensive inventory of the company›s sites for the fiscal year 2016 in accordance with the agreed work procedures.ff Adjust the depreciation ratios of certain asset classes in accordance with generally accepted accounting standards.ff To continue to sign a number of agreements for the supply of futures with agents and marketers of food and non-food items including discounts and incentives for withdrawals and reduce cash purchases to the minimum and the withdrawal of expired products.ff Continuing the regular, essential and preventive maintenance works of the company›s sites, in a way that does not interfere with the planned development work carried out within the commercial identity application project.ff The adoption of the 2017 budget.


In addition to the level of social responsibility, the company offers many services such as:ff The Mosques serving in the various locations inside and

outside the cities and on the highways.

ff Service of pilgrims and Umrah performers.

ffComplimentary toilets.

ffHealth care and cleanliness.

ff Environmental attention.

ff The provision of camps during the pilgrimage season in

some of its sites on the highways.

At the level of marketing and social networking activities

Continuous updating of the company›s website

(www.sasco.com.sa) and its subsidiaries. In addition to other

social sites on the following links:

ffwww.sataclub.com.sa

ffhttps://twitter.com/sasco_ksa

ffhttps://twitter.com/SATAclub

ffhttps://twitter.com/sasco_palm

ffhttps://twitter.com/Super8R

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

ffhttps://www.facebook.com/Sataksa/

ffhttps://www.facebook.com/Sasco-palm-613438065491715/

ffhttps://www.facebook.com/Super-8-Hotel-

Riyadh-1777669312470879/

ffhttp://instagram.com/sasco_ksa

ffhttp://instagram.com/sata_ksa

ffhttp://instagram.com/sasco_palm

ffhttp://instagram.com/super8.Riyadh

ffhttp://cutt.us/dxrT

ffhttps://plus.google.com/117174656605659302922

ff www.youtube.com/sasasco

ffwww.flickr.com/photos/sasco

The update of the application of the company on the smart

phone using (iOS / Android) system.

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

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

At the Level of Organizational and Administrative Developmentff Follow up the adoption of the amendment of the company›s Articles of Association with the concerned authorities in line with the new corporate system.ffContinue to enforce governance systems and increase transparency and disclosure.ff Follow up any new legislation issued by the official authorities in order to implement them.ffContinuing to attract qualified cadres to meet the requirements of the company of various administrative functions, especially leadership positions.ff The preparation of training programs for all levels of administration.ff The introduction of (22) new drivers to support the expansion of the Ostool Al-Naqil company.ffContinuing the agreement of supporting the Human Resources Fund «Hadaf» to attract and recruit ambitious Saudi youth in a number of available positions.ffContinuing to localize jobs and maintain the rating of the company and its subsidiaries within the green zone.ff To appoint, train and qualify a team of supervisors and employees to cover and accommodate the expected openings for 2017 at SASCO Waha Company.

The Shareholders Assemblies during 2016Thirty-Fifth Ordinary General Assembly:The first meeting on 13 April 2016.The second meeting was held on 20 April 2016. Where all the agenda items were approved as follows:1. The approval of the report of the Board of Directors for the

fiscal year ended 31 December 2015.2. The approval of the Auditor›s report for the fiscal year

ended 31 December 2015.3. The approval of the consolidated financial statements of

the company for the fiscal year ended 31 December 2015.4. The approval of the recommendation of the Board of

Directors to distribute cash dividends to the shareholders for the year 2015 at a rate of half a riyal per share and a total amount of 27 million riyals equivalent to 5% of the company›s capital. The entitlement of profits to shareholders is for the registered in the company›s records at the end of trading of the day of the General Assembly meeting 20 April 2016.

5. The approval of the transactions with related parties.6. The approval of the discharge of the members of the Board

of Directors for the fiscal year ended 31 December 2015.7. The approval of the auditor selection «Allied Accountants

Office - Legal Accountants & Auditors» nominated by the Audit Committee to review the financial statements for the fiscal year 2016 and quarterly financial statements, including the first quarter of fiscal year 2017 and determine their remuneration.

At the Level of Social ResponsibilityffProceeding from the International Automobile Federation initiative to support the United Nations Declaration in 2011 for the allocation of ten years of work for traffic safety, and as the Kingdom of Saudi Arabia is one of the countries that have the highest rates of traffic accidents injuries, and to fulfill the commitment of its responsibility to the society, the Saudi Automobile & Touring Association (SATA) «a subsidiary of SASCO companies» continued to participate in many social activities and events to raise awareness of the importance of traffic safety and reducing the number of accidents and deaths.

The Saudi Automobile & Touring Association (SATA) has launched (SATA) in March 2016 an awareness campaign aimed at raising awareness about traffic safety for children. The campaign has broadcasted a number of messages through the social networking sites, billboards and some publications under the slogan (I taught you) that focuses on a number of concepts that support the traffic safety for children and infants class, and corrects some of the wrong habits caused by negligence or ignorance or miscalculation. Among the awareness messages that the campaign has worked on publishing them through a number of attractive designs, the importance of the safety chair for child, the correct position to sit children and infants in the vehicle which would contribute to reducing the mortality in the event of accidents – God forbid.

ff The Gulf Cooperation Council (GCC) countries are celebrating the GCC Traffic Week events, where relevant committees are preparing for this week to ensure their success and achieve the desired goals in cooperation and coordination with relevant ministries, government bodies and private companies. A series of events are being prepared to increase traffic awareness among citizens and residents, in recognition of the seriousness of the traffic problems from the economic and social aspects, and the human and material losses they cause, and there are ceremonial awareness programs are being held for this week. The activities of these programs are attended by the bodies and students of schools, colleges, scouts and mentors as well as governmental and private agencies and

institutions. Within those activities, lectures and symposia are provided and brochures and leaflets are distributed to all citizens and residents of the road users.

Usually, every year, the traffic week has a specific slogan in the context of intensive media and field awareness campaigns. The purpose of the traffic week is to raise the awareness of traffic problems and the resulting human and material damage. Through awareness campaigns and other accompanying events, the areas of error and shortcomings and their methods of treatment are being highlighted. This year›s campaign was titled “Your Decision Determines Your Destiny”, in which Saudi Automobile & Touring Association has been keen to participate.


Board of Directors and Committees


The Board Declarations ff That the accounting records had been prepared correctly. ff That the internal control system has been properly prepared and implemented effectively.ff That there is no little doubt in the ability of the company to continue its activities.

The Board Confirmations ffThere are no arrangements or concession agreements under which a member of the Board of Directors or a senior executive for any salary or compensation as there is no arrangement or compromise of concession under which a company›s shareholders waive any rights in the earnings.

The Board MeetingsThe following table shows the attendance at meetings of the Board of Directors during

the year 2016 record (eleventh session) as follows:

No. Member NameMeeting

No. (1)18/02/2016

Meeting No. (2)

20/06/2016

Meeting No. (3)

27/09/2016

Meeting No. (4)

06/12/2016

Meeting No. (5)

27/12/2016

Attendance Ratio

1 Mr. Ibrahim bin Mohammed Al-Hudaithi ✓ ✓ ✓ ✓ ✓ 100%

2 Mr. Nasser bin Abdullah Al-Awfi ✓ ✓ ✓ ✓ ✓ 100%

3 Mr. Suleiman bin Ali Al-Khudair ✓ ✓ ✓ ✓ ✓ 100%

4 Mr. Ajlan bin Abdulrahman Al-Ajlan ✓ ✓ ✓ ✓ ✓ 100%

5 Mr. Majed bin Mohammed Al-Othman Apologized ✓ ✓ ✓ Apologized 60%

6 Mr. Riyadh bin Saleh Al-Malik ✓ ✓ ✓ ✓ ✓ 100%

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

8 Mr. Fawaz bin Suleiman Al-Rajhi ✓ Apologized ✓ By phone Apologized 60%

9 Mr. Sultan bin Mohammed Al-Hudaithi ✓ ✓ ✓ ✓ ✓ 100%

✓ Personal attendance × Authorizing a Board member

ff There is no description of the categories and numbers of any convertible debt instruments, contractual securities, right memorandum, or similar rights issued or granted by the Company during the current financial year. There is also no compensation received by the Company for that.ff There is no description of any conversion or subscription rights under the convertible debt instruments, contractual securities, subscribing right memorandums, or similar rights issued or granted by the company.ff There is no refund, purchase or cancellation by the Company for any redeemable debt instruments.

Board of Directors and CommitteesThe formation of the Board The current Board of Directors took over the management of the Company for the eleventh

session as of 30/06/2015 for a period of three years ending on 29/06/2018.

The classification of the members

The StatementExecutive Board

Members

Non-executive/ Independent Board

Members

Top Five Senior Executives who received Allowances and Remunerations, including the CEO and CFO

Salaries and Remunerations 1.702.375 - 3.954.999

Allowances 63.000 165.000 -

Periodic and Annual Remunerations

1.783.140 - 190.000

Any other remunerations or in-kind benefits paid monthly

or annually- - -

No. Name PositionMembership

Category

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

2 Mr. Nasser bin Abdullah Al-Awfi Board Member – Head of the Audit Committee Independent

3 Mr. Suleiman bin Ali Al-Khudair Board Member – Member of the Audit Committee Independent

4 Mr. Ajlan bin Abdulrahman Al-AjlanBoard Member – Head of Nomination and Remuneration

CommitteeIndependent

5 Mr. Majed bin Mohammed Al-Othman Board Member Independent

6 Mr. Riyadh bin Saleh Al-MalikBoard Member – Member of Executive Committee - Member of

Nomination and Remuneration Committee - CEOExecutive

7 Mr. Ali bin Mohammed Aba Al-KhailBoard Member – Member of Nomination and Remuneration

CommitteeIndependent

8 Mr. Fawaz bin Suleiman Al-Rajhi Board Member Independent

9 Mr. Sultan bin Mohammed Al-HudaithiBoard Member – Member of Executive Committee – Managing

DirectorExecutive

The Remuneration of the Board of Directors ffDuring the fiscal year ending 31 December 2016, the Board members received attendance allowance for meetings of the Board of Directors and the Pop-up Committees of SR 228,000.ff The Members of the Audit Committee from outside the Board received remuneration and attendance allowances for the financial

year ended 31 December 2016 amounting to SR (95,000).

The Remuneration and compensation paid to the members of the Board of Directors and senior executivesThe following statement illustrates what has been disbursed to the members of the Board of Directors and senior executives of the company as follows:


Agency The contracts/Business Related Parties StatementReporting to Board

Reporting to General Assembly

Sites rented by Zaiti

Petroleum Services

Company

Zaiti Petroleum Services Company rents (7) sites from some companies in

which there in (direct or indirect) interest before acquisition


Board member of Nahaz Investment Co. (owns 0,02%

of capital), Chairman of Al-Madaen Star Real Estate

Co. (owns direct and indirect shares of 97,75% of capital),

Chairman of Al Madaen Star Group Company

(owns direct and indirect shares of 97,75% of capital) Chairman of Zawaya Real

Estate Co. (owns direct and indirect shares of 42.96% of

capital).

Mr. Majed bin Mohammed Al-Othman

Board member of Al-Madaen Star Real Estate Co., Managing

Director of Al-Madaen Star Group and Board member of Zawaya Real Estate Co. (owns

0,29% of capital).

Mr. Sultan bin Mohammed Al-Hudaithi

Board member of Nahaz Investment Co. (owns 0.02% of capital), Board member of Al-Madaen Star Real Estate

Co. and Board member of Al-Madaen Star Co. and Managing Director of Zawaya Real Estate

Co. (owns 1,8% of capital).

Two stations from Nahaz Investment

Co., 3 stations from Al-Madaen Star Real Estate Co., one station

from Al-Madaen Star Group and

one station from Zawaya Real

Estate Co., with a total amount of 3,4 million SAR

✓ ✓

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

✓fReported

The next General Assembly of Shareholders will renew the approval of these works and contracts.✓fReported

The next General Assembly of Shareholders will renew the approval of these works and contracts.



Nahaz Investment

Co.

A site lease from Nahaz Investment

Co. to use as headquarters of

Ostool Al-Naqil Co. (subsidiary) and

housing for labor


(Board member who owns 0,02% of capital)



Contract Value is SAR 368 thousand

annually for a Hijri year starting from 16/4/1437 AH

✓ ✓

DAKKIN Advertising and Design

Consultancy

Providing services in the field of

promotion and advertising


(owns 33,34% of capital)

Mr. Majid bin Mohamed Al-Othman




Promotion and advertising works

for SAR 49,000.✓ ✓

Mulkia Investment

Co.

Managing an investment portfolio of 50 million SAR in

NCB Capital



Mr. Suleiman Ali Al-Khudair(owns 0,67% of capital)

Mr. Majed bin MohammedAl-Othman



(A member of the Board of Directors and owns 21,45% of

the capital)

A contract to manage a

portfolio of 50 million SAR

✓ ✓




Al-Madaen Star Travel

and Tourism

Ticket withdrawals for Zaiti Petroleum Services Company


(Chairman of Al-Madaen Star Group Co.)


(Managing Director of Al-Madaen Star Group Co.)


(Board member of Al-Madaen Star Group Co.)

Amounted to SAR 153,3 thousand

SAR during 2016

✓ ✓

Projects Star Co.


Owns an indirect share in Star Projects Company (98.78%)

through Al Madaen Star Co. & Ibrahim Al-Hudaithi

Investment Co.Mr. Majed bin Mohammed

Al-OthmanChairman of the Board of

Directors of Projects Star Co.Mr. Sultan bin Mohammed

Al-Hudaithi(Board member of Al-Madaen

Star Group Co.)

The number of projects to be

awarded to Star Projects will not

exceed 20% of the total annual

projects.

There are no transactions to

date.

✓ ✓



Fuel withdrawals

from Zaiti Petroleum

Services Company and rental

of billboards and

residential rooms

From (Nahaz Investment Co.,

Ibrahim Al-Hudaithi Co., Star Projects Co., Al-Madaen Star Real Estate Co., Security Guards Co., Zawaya

Co., and Fungate Co. Mr. Majed Al-

Othman).


Board member of Nahaz Investment Co. (owns 0,02%

of capital), Chairman of Ibrahim Al-Hudaithi Co. (owns

direct and indirect shares of 98,25% of capital), Chairman

of Star Projects Co. (owns direct and indirect shares of 5% of capital), Chairman of

Al-Madaen Star Group (owns direct and indirect shares of 97,75% of capital), Chairman of Security Guards Co. (owns direct and indirect shares of

100% of capital), Chairman of Zawaya Real Estate Co. (owns direct and indirect shares of

42,96% of capital), Chairman of Al-Madaen Star Real Estate Co. (owns direct and indirect

shares of 97,75% of capital), and Chairman of Fungate Co. (owns

direct and indirect shares of 97,75% of capital)


Managing Director of Star Projects Co., Managing Director of Al-Madaen Star Real Estate

Co., Managing Director of Fungate Co., Board member of Zawaya Real Estate Co. (owns

0,29% of capital).Mr. Sultan bin Mohammed

Al-HudaithiBoard member of Nahaz

Investment Co. (owns 0,02% of capital), Board member of Madaen Star Real Estate Co., Board member of Fungate

Co, Board member of Security Guards Co, and Managing

Director of Zawaya Real Estate Co. (owns 1,8% of capital).

During the year 2016 amounted

to 530,4 thousand SAR, which is the rental of rooms and paintings

worth 68,9 thousand SAR, and the value

of purchases of fuel worth 461,5 thousand SAR

✓ ✓

The Chief Executive OfficersThere is no work or contracts in which the Chief Executive or Chief Financial Officer or any executive director or any person with a relationship with any of them has an interest.

✓fReported The next General Assembly of Shareholders will renew the approval of these works and contracts.

✓fReported The next General Assembly of Shareholders will renew the approval of these works and contracts.


The Audit Committee It comprises: 1- Mr. Nasser bin Abdullah Al-Awfi

Board member (Head of Audit Committee) 2- Dr. Abdulrahman bin Ibrahim Al-Hamid

Member of Audit Committee (Non-Board member)3- Mr. Suleiman bin Ali Al-Khudair

Board member (member of Audit Committee)

The Competencies and Dutiesff To supervise internal audit activities of the company in order to verify their efficiency to perform works and duties defined by the Board.ff To review and follow up the implementation of the reports and observations of Internal Audit Department.ff To review internal control system and prepare a report of its opinion and recommendations thereon.ff To recommend to the Board appointment of legal accountants, dismiss them, set their fees, and ensure their independence.ff To follow up chartered accountants’ activities and approve any works beyond the limits of audit tasks commissioned to them during their audit.ff To review the audit plan with the chartered accountant and present its observations thereon.ff To review the management letter submitted by the chartered accountant, follow up their notes and make recommendations thereon.ff To review the internal audit plan with the internal auditor and ensure its application.ff To review the preliminary and annual financial statements before submitting them to the Board and present opinions and make recommendations thereon.ff To review the adopted accounting policies, present views and make recommendations to the Board thereon.ff To assess the company’s risk appetite, internal audit systems, accuracy of financial and administrative reports, audit management reports and information requested by the supervisory authorities, monitor the work of the external and internal auditors and coordinate among them, and ensure compliance with the rules of financial and administrative dealings as well as the code of ethics.

No. Member NameMeeting No. (1)

25/04/2016

Meeting No. (2)

16/05/2016

Meeting No. (3)

05/09/2016

Meeting No. (4)

26/12/2016

Attendance

Ratio

1 Mr. Ibrahim bin Mohammed Al-Hudaithi ✓ ✓ ✓ ✓ 100%

2 Mr. Riyadh bin Saleh Al-Malik ✓ ✓ ✓ ✓ 100%

3 Mr. Sultan bin Mohammed Al-Hudaithi ✓ ✓ ✓ ✓ 100%

ff To monitor the business risks of the company and submit the necessary recommendations and preventive and corrective actions.ff To provide consultation and necessary assistance to the heads of functional units to identify and reduce risks.ff To review the company’s risk exposure regularly, assess its effectiveness in terms of risk evaluation, and amend the internal control systems accordingly. ff To verify the efficiency of the oversight activity design of the company and ensure the effectiveness of the internal control systems properly to enable limiting fraud and serious mistakes.

The Most Important AchievementsffApproval and follow-up of the internal audit action plan of the company.ffReview of the different internal audit reports and submit recommendations thereon.ff Follow up risk assessment report with a consulting office and submit recommendations thereon.ff Examination of annual and quarterly financial statements and submit recommendations thereon.ff Ensuring the independency of the external auditor of the company.ffRecommending the chartered accountants for the company. ff Examining the structure of Internal Audit Department and submit recommendations thereon.ff Instructing the preparation of the execution plan of International Accounting Standards.

✓fPersonal attendance

The MeetingsThe following table shows the attendance record of Executive Committee meetings during 2016 (Eleventh session):

The Executive Committee Comprise each of:1- Mr. Ibrahim bin Mohamed Al-Hudaithi

Chairman of the Board of Directors (Chairman of the Executive Committee).

2- Mr. Sultan bin Mohammed Al-HudaithiMember of the Board of Directors (Member of the Executive Committee) Managing Director.

3- Mr. Riyadh bin Saleh Al MalikMember of the Board of Directors (Member of the Executive Committee) Chief Executive Officer.

Terms of reference and functionsff The study of strategic and operational plans and budgets for the company and to express an opinion to be presented to the Board of Directors. ffReview and follow up the implementation of all projects of the company and take decisions under the powers delegated to them, and discuss the obstacles encountered in the implementation of various projects and to clarify the causes and ways to address and recommend appropriate solutions.ff Study and provide initial approvals on high-interest topics that require issuance of decisions by the Board of Directors.ffMaking decisions on matters delegated to it by the Board beyond the scope of the Managing Director and Chief Executive Officer of the Company. These may include topics related to investments, human resources, compensation, information technology, capital expenditures, procurement and others within the limits conferred on the Committee.ff To identify the investment objectives and policies of the Company, which includes:f❖ Assets subject to investment according to the adopted regulatory restrictions.f❖ Identifying the asset types.f❖ Investment-related long-term policies and objectives, risk appetite, asset diversification, investment currencies, and internal or external investments.f❖ The nature of investment management arrangements and related controls.f❖ Appointment of investment portfolio managers and trustees, and evaluating their performance periodically.f❖ Method and frequency of performance analysis.f❖ 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.f❖ Reviewing and examining SASCO investment policies based on performance evaluation.

f❖ 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.

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

The Most Important Achievementsff Following up the financial and operational performance of the company and its subsidiaries.ffAdopting the estimated budgets of the company and its subsidiaries, and submitting recommendations to the Board for approval.ff Evaluation of the company's investments and its liquidity and make recommendations thereon to the Board of Directors Board.ffCoordination with the company's management to work on ways to reduce costs.ff Following up the governmental bodies concerned with lands and sites of the company and submitting recommendations thereon.ff Following up the implementation of the projects of the company.ffRecommend to the Board of Directors to establish a hotel at the airport station on King Salman Road.ffAdoption of an engineering office for the design of the headquarters of the company.ff Following up the lawsuits of the company.


Ownership of Substantial Shares The following table shows the bodies holding substantial shares in the Company and the changes made during 2016:

No. Member NameOwnership Percentage

31 December 2015 Change 31 December 2016 Change Ratio

1 Nahaz Investment Co. 11.75% - 11.75% -

2 Mr. Ibrahim bin Mohammed Al-Hudaithi 11.56% - 11.56% -

Declaration: In respect of notices relating to the ownership of a substantial shares and change during the year in accordance with Article

(43) and Article (45) of the rules of registration and enrollment issued by the Capital Market Authority, the Saudi Automotive Services

Company (SASCO) declare that it has not receive any type of notices from the main shareholders stating the change of their ownership

during the year. The company relies on the monitoring of information based on the Saudi financial market information (Tadawul).

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

No. Member NameCompanies of involvement

Listed Unlisted

1 Mr. Ibrahim bin Mohammed Al-Hudaithi -

f❖ Madaen Star Groupf❖ Akwan Real Estate Co.f❖ Ibrahim bin Mohammed Al-Hudaithi Investment Co.f❖ Zawaya Real Estate Co.f❖ Nahaz Investment Co.f❖ Bilda Specialized Commercial Centres Co.f❖ Mulkia Investment Co.

2 Mr. Nasser bin Abdullah Al-Awfi - f❖ United Cement Industrial Company

3 Mr. Suleiman Ali Al-Khudair - -

4 Mr. Ajlan Abdulrahman Al-Ajlan Fawaz Alhokair Group -

5 Mr. Majed bin Mohammed Al-Othman -

f❖ Al-Madaen Star Groupf❖ Zawaya Real Estate Co.f❖ Bilda Specialized Commercial Centres Co.f❖ Ibrahim bin Mohammed Al-Hudaithi Investment Co.

6 Mr. Riyadh bin Saleh Al-Malik - -

7 Mr. Ali bin Mohammed Aba Al-Khail -Eskan Investment Real Estate Co.Sanad Co.

8 Mr. Fawaz Suleiman Al-Rajhi - -

9 Mr. Sultan bin Mohammed Al-HudaithiUnited Wire Factories

Company

f❖ Madaen Star Groupf❖ Zawaya Real Estate Co.f❖ Nahaz Investment Co.f❖ Mulkia Investment Co.

The Nomination and Remuneration Committee It comprises: 1- Mr. Ajlan bin Abdulrahman Al-Ajlan

Board member (Head of the Nomination and Remuneration Committee)

2- Mr. Riyadh bin Saleh Al-MalikMember of Audit Committee Board Member (member of the Nomination and Remuneration Committee) – The chief executive officer

3- Mr. Ali bin Mohammed Aba Al-KhailBoard member (member of the Nomination and Remuneration Committee)

The Competencies and Dutiesff To recommend nominations to Board membership in accordance with the approved policies and standards, considering not nominating any person who has previously been convicted with a crime involving moral turpitude and dishonesty.ff To conduct an annual review of the required needs in terms of adequate Board membership skills and prepare a description of capabilities and qualifications required for Board membership, including setting the time a member should devote to Board works.ff To review the structure of the Board and senior executive management in the company, as well as make

No. Member NameMeeting

No. (1)07/01/2016

Meeting No. (2)

18/01/2016

Meeting No. (3)

17/02/2016

Meeting No. (4)

20/04/2016

Meeting No. (5)

16/06/2016

Meeting No. (6)

21/07/2016

Meeting No. (7)

18/10/2016

Meeting No. (8)

06/11/2016

Attendance Ratio

1Mr. Nasser bin

Abdullah Al-Awfi✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 100%

2Dr. Abdulrahman bin

Ibrahim Al-Hamid✓ ✓ ✓ Apologized Apologized Apologized ✓ ✓ 62.50%

3Mr. Suleiman bin Ali

Al-KhudairApologized ✓ ✓ ✓ ✓ ✓ 87.50%



recommendations regarding changes that can be made.ff To identify weaknesses and strengths in the Board and propose treatments in line with the best interests of the company.ff To ensure, annually, the independence of the independent members and the absence of any conflict of interest if the Board member of another company on a regular basis.ff To develop clear policies for remunerations and rewards of Board members and senior executives considering the use of performance-related criteria when setting those policies.

The Most Important AchievementsffPeriodical review of Board structure.ff Ensuring the independence of the members of the Board of Directors.ff Looking at the reporting of transactions and contracts in which a Board member may have an interest. ffApproval the 2015 remunerations and incentives.ffAdoption of incentives and rewards for the retail sector for the year 2016 according to the approved policies.ffAdoption of the plan of the committee for the year 2017 by the Board of Directors.

The MeetingsThe following table shows the attendance record of the Nomination and Remuneration Committee meetings in 2016 (Eleventh session):

No. Member NameMeeting No. (1)

25/04/2016Meeting No. (2)

16/05/2016Meeting No. (3)

05/09/2016Attendance

Ratio

1 Mr. Ajlan bin Abdulrahman Al-Ajlan ✓ ✓ ✓ 100%

2 Mr. Riyadh bin Saleh Al-Malik ✓ ✓ ✓ 100%

3 Mr. Ali bin Mohammed Aba Al-Khail ✓ ✓ ✓ 100%

The MeetingsThe following table shows the attendance record of Executive Committee meetings during 2016 (Eleventh session):


No. NameOwnership Percentage

Beginning of Period Change 31 December 2016Change

Ratio

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

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

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

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

5 Mr. Majed bin Mohammed Al-Othman 67,249 shares - 67,249 shares -

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

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

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

9 Mr. Sultan bin Mohammed Al-Hudaithi 62,448 share - 62,448 share -

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

11 Mr. David Wales - - - -

12 Mr. Amer Al Ayadi - - - -

13 Mr. Eslam Mohamed Khairy Ahmed - - - -

14 Mr. Najuib Hameed Younis - - - -

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

Recommendation Regarding the Auditor The Board or the Audit Committee has no observations or reservations regarding the current auditor, "Allied Accountants – Chartered Accountants and Auditors," noting that 2016 was the second year for this auditor to deal with the company. The auditor’s activities include auditing the financial statements of the Company for the fiscal year 2016 and the first quarter of the fiscal year 2017.


Consolidated Financial Statement

Financial Position

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

Statement 2012 2013 2014 2015 2016

Cash and Cash Equivalents 90,800,243 130,957,371 182,780,499 175,736,265 135,744,193

Commercial Receivables 31,370,982 21,584,213 34,887,750 36,642,383 78,324,696

Commodity Stock 17,759,307 17,250,085 21,301,237 27,695,790 27,323,999

Total Assets 933,317,596 1,085,496,796 1,131,723,080 1,301,917,897 1,438,631,384

Total Liabilities 239,366,352 356,834,563 405,682,362 569,589,205 710,113,649

Capital 450,000,000 450,000,000 450,000,000 540,000,000 540,000,000

Total Shareholders' Equity 693,951,244 728,662,233 726,040,718 732,328,692 728,517,735

Long-Term Assets 763,678,934 839,560,351 791,550,290 946,464,664 1,099,121,439

Assessts

2012 2013 2014 2015 2016

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

Commodity Stock Cash and cash equivalentsTotal Assets Commercial ReceivablesLong-Term Assets

Consolidated Financial Statement


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

Statement 2012 2013 2014 2015 2016

Sales 344.976.000 368.906.614 453.370.500 665.048.902 1.094.122.754

Direct Costs (316.978.439) (335.843.969) (416.105.976) (613.340.424) (1.035.882.7)

Income Margin 27.997.561 33.062.645 37.264.524 51.708.478 58.240.034

General & Administrative Expenses (20.753.645)

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