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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

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88

110

66 76 847472

9692 10690

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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

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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) (24.621.845) (28.717.195) (35.285.668) (38.657.098)

Other Revenue (Expenses) 38.980.626 35.687.812 76.539.300 5.584.757 10.222.617

Zakah (1.165.607) (4.328.983) (3.036.000) (3.391.000) (3.655.000)

Net Income 45.058.935 39.799.629 82.050.629 18.616.567 26.150.553

2012 2013 2014 2015 2016

1,200,000,000

1,000,000,000

800,000,000

600,000,000

400,000,000

200,000,000

0

Direct Costs Income MarginSales Net Income

Decline in Net Income (41.96%)

80,000,000

70,000,000

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

0

2012 2013 2014 2015 2016

Other Revenue (Expenses) ZakahGeneral & Administrative Expenses

Net Fixed Assets Total Assets

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

02012 2013 2014 2015 2016

Change in Net Fixed Assets

2012 2013 2014 2015 2016

Liabilities and Shareholders' Equity

Total Shareholders› EquityCapitalTotal Liabilities

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 in shareholders' equity 0.05%

Growth in total assets 54.14%


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

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

Statement 2012 2013 2014 2015 2016

Earnings per Share 0.83 0.74 1.52 0.34 0.48

Earnings Per Share

1.60

1.40

1.20

1,00

0.80

0.60

0.40

0.20

0

2012 2013 2014 2015 2016

0.830.74

1.52

0.340.48

Share Value in SAR

30.00

25.00

20.00

15.00

10.00

5.00

02012 2013 2014 2015 2016

200,000,000

150,000,000

100,000,000

50,000,000

-

(50,000,000)

(100,000,000)

(150,000,000)

(200,000,000)

(250,000,000)

2012 2013 2014 2015 2016

Flows from Operating ActivitiesFlows from Investment ActivitiesFlows from Financial Activities

2012 2013 2014 2015 2016

200,000,000

150,000,000

100,000,000

50,000,000

-

Capital Spending

162,

523,

270

106,

274,

385

130,

462,

199

137,

316,

422

193,

415,

355

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

Statement 2012 2013 2014 2015 2016

Flows from Operating Activities 83.853.152 24.004.616 13.749.624 50.095.250 62.654.964

Flows from Investment Activities

(228.889.196) (67.067.998) 116.172.277 (198.513.124) (169.580.204)

Flows from Financial Activities 179.270.262 83.220.510 (78.098.773) 141.373.640 66.933.168

f❖ Comparison figure for 2015 was re-classified to be consistent with the current period presentation.


Efficiency Indicators

Statement 2012 2013 2014 2015 2016

Debtors Turnover 11.00 17.09 13.00 18.15 13.97

Inventory Turnover 17.85 19.47 19.53 22.15 37.91

Asset Turnover 0.37 0.34 0.40 0.51 0.76

2012 2013 2014 2015 2016

40.00

35.00

30.00

25.00

20.00

15.00

10.00

5.00

0.00

Debtors TurnoverInventory TurnoverAsset turnover rate

Efficiency Indicators

11.0

0

17.0

9

13.0

0

18.15

13.9

7 17.8

5

19.4

7

19.5

3 22.15

37.9

1

0.37

0.34

0.40

0.51

0.76

Statement 2012 2013 2014 2015 2016

Liquidity Ratio 1.59 1.66 1.40 1.52 0.93

Quick Liquidity Ratio 1.34 1.54 1.32 1.41 0.86

Ratio of Indebtedness to Equity 34.49% 48.97% 55.88% 57.56% 70.61%

Ratio of Indebtedness to Total Assets 25.65% 32.87% 35.85% 32.38% 35.76%

Liquidity & Indebtedness Indicators

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

Growth Indicators

Statement 2012 2013 2014 2015 2016

Sales Growth 41.42% 6.94% 22.90% 46.69% 64.52%

Net Income Growth 12.46% (11.67%) 106.16% (77.31%) 40.47%

Asset Growth 37.76% 16.31% 4.26% 15.04% 10.50%

Equity Growth 27.46% 5.00% (0.36%) (0.36%) 0.87%

Profit Indicators

Statement 2012 2013 2014 2015 2016

Return on Sales %13.06 10.79% 18.10% 2.80% 2.39%

Return on Capital %10.01 8.84% 18.23% 3.45% 4.84%

Return on Investment %5.90 4.74% 10.37% 2.00% 2.38%

Return on Total Assets %4.83 3.67% 7.25% 1.43% 1.82%

Return on Equity %6.49 5.46% 11.30% 2.54% 3.59%

2012

2.80

%

2.39

%

3.45

% 4.84

%

2.00

%

2.38

%

1.43

%

1.82

%

2.54

% 3.59

%

2013 2014 2015 2016

20.00 %

18.00 %

16.00 %

14.00 %

12.00 %

10.00 %

8.00 %

6.00 %

4.00 %

2.00 %

0.00 %

Return on InvestmentReturn on Sales Return on Total AssetsReturn on Capital Return on Equity

13.0

6 %

10.79

%

18.10

%

10.0

1 %

8.84

%

18.2

3 %

5.90

%

4.74

%

10.3

7 %

4.83

%

3.67

%

7.25

%

6.49

%

5.46

%

11.3

0 %

Profit Indicators


Zakah and Regulatory PaymentsZakah is calculated in accordance with the Zakah and Income Tax System applicable in the Kingdom of Saudi Arabia. The due Zakah is applied to the income statement and the amendments to the final Zakah assessment, if any, are recorded in the assessment period.During the year ended on December 31st, 2016, the Company established an allowance for regulatory Zakah dues of SAR (3,655,000). The company also paid SAR (3,208,420) from the Zakah allowance until 2015.

The company follows up with the Department of Zakah and Income through a consulting office specialized in Zakah and tax services to settle all issues concerning Zakah assessments for the period from 2000 to 2015.According to the statement of Zakah advisor, there are differences between Department of Zakah and the company assessments as follows:

Statement 2016 2015 2014

Zakah and Tax 3.208.420 3.801.233 7.786.950

Social Insurance 3.402.886 2.777.307 2.012.895

Customs Duties 17.170 58.948 536.626

Visa Costs and Others 3.824.063 1.012.750 1.497.600

Total 10.452.539 7.650.238 11.834.071

YearZakah according

to issued assessment

Differences in favor of

the companyPaid Items Appealed Due

From 2000 to 2005 10,350,081 (1,841,351) (4,055,386) (4,453,344) -

2008 8,318,805 (737,741) (5,982,144) (1,598,920) -

Total 18,668,886 (2,579,092) (10,037,530) (6,052,264) -

f❖ The compnay issued bank guarantees in favour of the Department of Zakah in exchange for items appealed.

The following table summarizes regulatory payments:

f❖ These payments are within activity of the company.

Statement 2012 2013 2014 2015 2016

Revenue 100% 100% 100% 100% 100%

Direct Costs 91.88% 91.04% 91.78% 92.22% 94.68%

Income Margin 8.12% 8.96% 8.22% 7.78% 5.32%

General & Administrative Expenses

6.02% 6.67% 6.33% 5.31% 3.53%

Other Revenue (Expenses) 11.30% 9.67% 16.88% 0.84% 0.93%

Zakah 0.30% 1.17% 0.67% 0.51% 0.33%

Net Income 13.06% 10.79% 18.10% 2.80% 2.39%

Items of Income Statement as a Percentage of Revenue

General & Administrative Expenses Zakah Net IncomeIncome Margin Other Revenue (Expenses)Direct Cost

2012 2013 2014 2015 2016

100.00 %

90.00 %

80.00 %

70.00 %

60.00 %

50.00 %

40.00 %

30.00 %

20.00 %

10.00 %

0.00 %

91.8

8%8.

12 %

11.3

0 %

Items of Income Statement as a Percentage of Revenue

11.3

0 %

13.0

6 %

0.30

%

91.0

4%

91.7

8%

92.2

2%

94.6

8%

8.96

%

8.22

%

7.78

%

5.32

%

6.67

%

6.33

%

5.31

%

3.53

%

9.67

%

16.8

8 %

0.84

%

0.93

%10.7

9 %

18.10

%

2.80

%

2.39

%

1.17

%

0.67

%

0.51

%

0.33

%

The FinesThe Company does not have any penalties or punishments imposed by the Capital Market Authority or any other supervisory,

regulatory or judicial body.


Loan Statement

Bank Loan Date Balance at the end of 2016 Balance at the end of 2015

BSF 23/12/2015 30,000,000 60,000,000

BSF 22/3/2013 9,166,664 27,499,998

BSF 31/5/2013 101,324,000 101,324,000

BSF 30/6/2016 39,735,709 Zero

BSF 29/8/2016 24,654,233 Zero

BSF 29/8/2016 20,000,000 Zero

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

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

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

NCB 3/12/2013 37,500,000 52,500,000

NCB 5/12/2015 Zero 25,000,000

NCB 30/12/2014 Zero Zero

NCB 26/10/2015 27,500,000 30,000,000

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

SABB 1/6/2015 25,173,556 25,173,556

SABB 19/4/2016 2,928,793 Zero

SABB 19/4/2016 11,846,787 Zero

SABB 3/5/2016 1,183,076 Zero

SABB 23/5/2016 2,313,569 Zero

SABB 7/6/2016 7,791,414 Zero

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

SHB 28/12/2015 50,000,000 50,000,000

SHB 13/12/2016 4,528,044 Zero

SHB 20/12/2016 2,333,403 Zero

Total 514,406,226 421,497,554

The LoansArticle (19) of the company’s Articles of Association states

that,”Considering the competencies of the General Assembly,

the Board of Directors shall have the broadest powers in Com-

pany management. Within its competencies, the Board shall

also have the right to authorize one or more of its members,

as well as third parties, to undertake certain functions or du-

ties. The Board of Directors may borrow, buy, sell, or mortgage

some of the Company’s properties, discharge some of the Com-

pany’s debtors from their obligations, or open and manage in-

vestment portfolios to sell and buy shares listed and unlisted

in the domestic and international financial market.” There is

no restriction in terms of the periods and amounts of loans.

During the fiscal year 2010, the company signed a Sharia-

compliant credit facilities agreement with ANB for SAR

(255,000,000) as a general credit ceiling. This included letters

of guarantee facilities of SAR (70,000,000) and real estate loan

facilities of SAR (90,000,000), loans to finance the development

of the stations in the amount of (55.000.000 SAR), short-term

financing in the range of (20,000,000 SAR), and multi-purpose

short-term facilities to import amount of (SAR 20,000,000).

The Company amended the agreement on April 28, 2015 to

SR (550,940,648). The agreement includes the renewal of ex-

isting facilities amounting to SAR (245,833,332) of which SR

(110,000,000) are various credit facilities and SR (135,833,322

SR) medium term financing facility, by securing a bond and /

or pledge of shares or deposit and pledge of ownership deeds.

In addition to new facilities amounting to SAR (305,307,316) of

which SAR (55,107,316) various credit facilities and (250,000,000)

SR long-term financing facilities, by securing a bond. The agree-

ment aims to finance the purchase of land and the construc-

tion of new stations and the improvement and development

of stations. The Company also renewed the agreement on Feb-

ruary 17, 2016 to SR (502,500,000), this agreement includes the

renewal of existing facilities amounting to SR (237,500,000) of

which SR (150,000,000) various credit facilities and (87,500,000)

SAR medium and long term financing facilities, by guarantee

of order and / or mortgage deeds . In addition to new facilities

amounting (SR 265,000,000), of which (39,000,000 SAR) vari-

ous credit facilities and (SR 226,000,000) Long-term financing

facility , by securing a bond. The agreement aims to finance the

purchase of land and building.

During 2013, the company signed a Shariah-compliant credit

facilities agreement with NCB of SAR (90,000,000) in a form

of long-term commercial loan to expand construction and ac-

quiring 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 (90,000,00)

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

needs within the regular course of business.

On August 25th, 2015, the company 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 the projects of the

compny, support its core activities, and purchase new sites to

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

agreement was amended on 1 May 2016 to become amounting

of SR (201,325,000) including long term loans amounting to SR

(150,625,000), bank guarantee letters of SAR (25,000,000) and

short term loans amounting to SR (25,700,000). The agreement

aims to expand the company’s projects, support its main ac-

tivities and purchase new sites to build fuel stations.

Om May 25th, 2015, the company signed a new Shariah-compli-

ant facilities agreement with SABB of SAR (150,000,000) effec-

tive 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 agree-

ment aims to partially finance capital expenses, purchase land,

and build new fuel stations.

On December 13th, 2015, the company signed a (Shariah-com-

pliant) a resale 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), pro-

vided the repayment of loan at equal quarterly instalments.

This is in addition to letters of guarantee of SAR (100,000,000).

The agreement aims to expand the projects of the compayn,

support its core activities, purchase new sites to build fuel sta-

tions as well as to finance the working capital.

On December 21st, 2015, the company signed a (Shariah-com-

pliant) resale for profit facilities agreement with the SHB (a

Saudi joint-stock company). This agreement includes a general

facility limit of SAR (150,000,000) in the form of a long-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 the projects of the company, support its core

activities, purchase new sites to build fuel stations as well as

to finance the working capital. The guarantee clause of the

agreement was amended on 24 October 2016 to become a total

guarantee of SAR (40,000,000) and documentary credits of SR

(10,000,000).

On December 21st, 2015, the company signed a (Shariah-com-

pliant) facilities agreement with Riyadh Bank (a Saudi joint-

stock company). This agreement includes letters of guarantee

facilities of SAR (50,000,000) aiming at expanding the projects

of the company and supporting its core activities.


The Pledged Assets

No. Loan Date Bank Pledge Type

1 Othman bin Affan Road - Riyadh ANB Possession

2 Abu Bakr Al-Seddiq Road - Riyadh ANB Possession

3 Al-Takhassusi Road 1 - Riyadh ANB Possession

4 Al-Takhassusi Road 2 - Riyadh ANB Possession

5 Al-Ras Land ANB Possession

6 Tabuk Land – Al Murooj ANB Possession

7 Tabuk Land - Daba ANB Possession

8 Hafr Al-Baten Land – Al-Raqaie ANB Possession

9 Nahda Road - Riyadh BSF Possession

10 Salah Eddin Road - Riyadh BSF Possession

11 Khaled Ibn Al-Waleed Road - Riyadh BSF Possession

12 Aaesha bint Abu Bakr Road - Riyadh BSF Possession

13 King Abdullah – Dammam BSF Possession

14 Al-Khaleej Road - Dammam BSF Possession

15 General Al-Swidi Road- Riyadh BSF Possession

16 King Saud Road 3 - Dammam BSF Possession

17 Periodic Check Road - Riyadh BSF Possession

18 Prince Nayef Road- Dammam BSF Possession

19 Rafha Land BSF Possession

20 Al-Marwa Station in Jeddah BSF Possession

21 Al-Qariyat Station BSF Possession

Movement of loans

Bank Date of Issue Loan Value TermPeriod in Months

Balance at year

beginning

Paid during year

Due Date

BSF 23/12/2015 90,000,000 Long 60 60,000,000 30,000,000 30/9/2017

BSF 22/3/2013 101,324,000 Long 72 101,324,000 - 31/12/2021

BSF 31/5/2013 15,000,000 Medium 36 27,499,998 - 30/6/2017

BSF 30/6/2016 39,735,709 Long 66 - - 31/12/2021

BSF 29/8/2016 24,654,233 Long 64 - - 31/12/2021

BSF 29/8/2016 20,000,000 Short 6 - - 28/6/2016

BSF 13/12/2016 23,274,737 Long 60 - - 31/12/2021

BSF 28/12/2016 18,557,431 Long 60 - - 31/12/2021

NCB 3/12/2013 90,000,000 Long 60 52,500,000 15,000,000 30/4/2018

NCB 26/10/2015 30,000,000 Long 84 30,000,000 2,500,000 26/4/2022

NCB 5/12/2015 25,000,000 Short 1 25,000,000 2,500,000 5/1/2016

NCB 29/2/2016 25,000,000 Short 4 - 2,500,000 27/6/2016

NCB 27/6/2016 25,000,000 Short 4 - 2,500,000 27/10/2016

NCB 31/10/2016 24,594,800 Short 4 - - 27/2/2017

NCB 30/9/2014 10,000,000 Long 4 - - 29/1/2015

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

SABB 1/6/2015 25,173,556 Long 72 25,173,556 - 28/11/2021

SABB 19/4/2016 2,928,793 Long 67 - - 28/11/2021

SABB 19/4/2016 11,846,785 Long 67 - - 28/11/2021

SABB 3/5/2016 1,183,076 Long 66 - - 28/11/2021

SABB 23/5/2016 2,313,569 Long 66 - - 28/11/2021

SABB 7/6/2016 7,791,424 Long 65 - - 28/11/2021

GIB 13/12/2016 50,000,000 Medium 54 50,000,000 - 27/6/2020

SHB 31/12/2015 50,000,000 Medium 48 50,000,000 - 31/12/2019

SHB 13/12/2016 4,528,044 Medium 36 - - 31/12/2019

SHB 20/12/2016 2,333,403 Medium 36 - - 31/12/2019

TOTAL 774,935,176 421,497,554 140,833,334

Loan Maturity

Statement 2016 2015

Less than 1 Year 178,638,617 93,350,692

1 Year to 2 Years 111,543,808 109,466,176

2 Years to 5 Years 221,723,801 188,398,532

More than 5 Years 2,500,000 30,282,154


The following is a description of the main justifications forfundamental changes in the business results of the company:ff The reason for the rise during the current period compared to the corresponding period of the previous year to:f❖ Net sales increased by 64,52% due to higher fuel selling prices and the opening of new locations which had a positive impact on overall profit and operating profit.f❖ Net investment income increased by 1,94% due to the company’s exit from the entire equity of two investment portfolios in Saudi equities and the increase in other income.f❖ The inclusion of the corresponding period of the previous year on the cost of possession of the Zaiti Petroleum Services Company of 3,6 million riyals.f❖ Decrease in selling and marketing expenses and expenses of the burden of financing.f❖ The increase in general and administrative expenses due to the increase in the provision for customs claims and zakat payments for this year.f❖ Low sales income margin due to higher energy product prices for the whole year.f❖ The net profit for the year 2015 was adjusted by SR 322 thousand to be charged for amortization of an item of intangible assets in general and administrative expenses for the year.

Profit Distributions Pursuant to Article (43) of the Articles of Association of the comapny, the company’s annual net profits are distributed after deducting all general expenses and other costs, including legally prescribed

Zakah, shall be distributed as follows:ff Ten (10%) of net profit shall be retained to form a statutory re-serve. The Ordinary General Assembly may stop retention when the said reserve reaches half of the capital.ff The rest is then distributed as a first payment to shareholders equal to (5%) of the paid capital.ff After that, no more than (5%) of the net profit is allocated to Board remuneration, and the rest is then distributed to shareholders as an additional profit share.ff The Board shall have the authority to approve interim profit dis-bursement until the General Assembly that follows the issuance of the said decision approves such disbursement.

Article (44) of the Articles of Association of the company stipulates the payment of profits to shareholders in the place and the dates speci-fied by the Board of Directors.

The following table shows the profits distributed to shareholders since 2010:

Other Guarantees

Bank Guarantee

BSF A promissory note of SAR 502,500,000 and pledge of property equals 125% of the first agreement value

NCB A promissory note of SAR 24,281,000, or local securities pledge of SAR 32,965,000

NCB A promissory note of SAR 201,325,000 million

SAAB A promissory note of SAR 150 million

GIB A promissory note of SAR 150 million

SHB A promissory note of SAR 150 million

Riyadh Bank A promissory note of SAR 50 million

Debt Instruments The Company and its subsidiaries did not issue debt instruments.

Statement 2016 2015 Change + (-) Change Ratio

Revenue 1.094.122.754 665.048.902 429.073.852 64.52%

Direct Costs (1.035.882.720) (613.340.424) 422.542.296 68.89%

Income Margin 58.240.034 51.708.478 6.531.556 12.63%

General & Administrative Expenses (32.165.193) (31.530.648) 634.545 2.01%

Structured Allowances (6.491.905) (3.755.020) 2.736.885 72.89%

Net Operating Income 19.582.936 16.422.810 3.160.126 19.24%

Investment Revenue (Loss) 9.689.273 7.457.235 2.232.038 29.93%

Capital Profit (Loss) 1.605.256 439.115 1.166.141 265.57%

Financial Burdens (2.405.799) (2.999.070) (593.271) (19.78%)

Misc. Revenue 1.333.887 687.477 646.410 94.03%

Net Income Before Zakah 29.805.553 22.007.567 7.797.986 35.43%

Zakah (3.655.000) (3.391.000) 264.000 7.79%

Net Income After Zakah 26.150.553 18.616.567 7.533.986 40.47%

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

Cash distributions

Year (Riyal/Share) Year (Riyal/Share)

2010 0.50 2013 0.75

2011 0.50 2014 1.50

2012 0.50 2015 0.50


Based on the circulation of the Capital Market Authority No. PO / 7/5 / 7258/16, issued on 18/11/1437 AH corresponding to 21/ 08/2016 regarding the disclosure, in stages, to keep pace with the listed companies to tranfer to the international accounting standards, the company announced on 30/08/2016 for the first phase of the transformation to keep pace with international accounting standards, and as follows: a plan has been prepared for the transition to the application of the international accounting standards, noting that the target date for the adoption of accounting policies and the date is 31 October 2016. Ahmed Bajinid & Co. Office has been appointed as an external consultant to the company for the transition to international standards.An internal working group has been formed withing the company to be responsible for the follow-up and implementation of the transition plan for the application of international accounting standards.To date, the Company has not experienced significant difficulties in the process of transition to the application of international accounting standards.The target date for the preparation of the first financial statements in accordance with International Accounting Standards for the first quarter of 2016 is 30 November 2016.The company also announced on 26/10/2016 for the second phase as follows:The financial ploicies draft has been prepared on 19 October 2016 that is necessary for the preparation of financial statements in line with International Accounting Standards, and will be presented to the Audit Committee and then the Board of Directors for approval, noting that the target adoption date is 30 November 2016, and that the target date for the preparation of the first financial statements in accordance with the International Accounting standards, which is for the first quarter of 2016 is 15 December 2016.The third phase was announced by the company on 30/01/2017 as follows:1- On 28 November 2016, the Board adopted the updated

accounting policies for the purposes of the preparation of the financial statements in accordance with the International Financial Reporting Standards.

2- The preparation of the editorial consolidated statement of the financial position (administrative) that has been prepared in accordance with International Accounting Standards as on 01 January 2016.

3- The significant impact of the application of International Accounting Standards on the editorial balances as of 01 January 2016 is as follows:

ff The increase in retained earnings in the amount of SR 44,34 million resulted from (transfer) of the balance, gifts, and land grants to retained earnings amounting to SR 111,34 million of which SR 67 million are offered resulting from: ((net) decrease in receivables of SR 10,84 million, decrease in customs claims, advances, and other current assets (net) amounting to SR 18,96 million, a decrease in intangible assets (net) of SR 1,51 million, impairment of assets of SR 22,94 million, increase in balance of other current liabilities and liabilities amounting to SR 8,14 million and increase in provision for Zakat SR 4,61 million).

ff The increase of unrealized gains on available-for-sale investments as a result of revaluation of available-for-sale investments in shares and equities of non-trading companies amounting to SR 98 million.ffBased on the above, an increase of SR 31 million (SR 98 million - SR 67 million) was recorded in the total shareholders’ equity.ff Certain property and equipment items have been reclassified into real estate investment.

4- The interim consolidated financial statements for the first quarter of 2016 prepared in accordance with International Financial Reporting Standards (IFRS), previously announced on 15 December 2016, were postponed to coincide with the financial statements at the end of the year. Initial financial statements for all quarters will be prepared before the date of 30 April 2017.

5- There are no impediments that may affect the ability of the Company to prepare its financial statements in accordance with International Accounting Standards.

6- The Company is ready to prepare its financial statements for the first quarter of 2017, in accordance with the International Financial Reporting Standards (IFRS) for the regular period specified for this purpose.

The auditor’s report The auditor issued their report on the financial statements of the company for the period ended on December 31st, 2016, without any reservations.

The Deviations from Applying Accounting Standards The accounting standards followed in the Kingdom of Saudi Arabiaff The Company applies the accounting standards issued by the Saudi Organization for Certified Public Accountants, and

there is no deviation from the application of those standards.

The International Financial Reporting Standards (IFRS)ffWith reference to the CMA letter No. S/1/12231/15 dated 27/10/1436 AH, corresponding to 12/8/2015, regarding the CMA Circular No. 4/2978 on 25/3/2014, concerning the application of the international financial reporting standards (IFRS) to the financial statements of listed companies as of 1/1/2017 in accordance with international standards adopted by the Saudi Organization for Certified Public Accountants, and the CMA requiring SASCO management to prepare a plan to apply IFRS by the end of 2015.

After the Audit Committee, in its meeting held on 20/8/2015, commissioned the Finance Department to review the IFRS and the differences between them and the standards applied to the financial statements, and the impact of applying IFRS. The Audit Committee ordered the recruitment of a consultant in case of need and referring to the Saudi Organization for Certified Public Accountants in case of difficulties or queries.

The Finance Department submitted to the Audit Committee an explanation regarding the stages of implementing the application plan of the IFRS, including:

12 1 2 3 4 5 6 7 8 9 10 11 12 1 2

2015 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017

Form Transition Team

Develop Transition Mechanisim

Identify Transition Obstacles

Develope Policies & Procedures

Training

Develope Transition detailed Plan

Transition Application: OR 1




Opening Balance 2017

1- Stage One: Identifying the IFRS compatible with the activity of the company.2- Stage Two: Identifying the obstacles to transition and develop a detailed plan thereof.3- Stage Three: Initial transition to the IFRS.4- Stage Four: The Application.

The Committee recommended the submission of the plan to the Board of Directors, emphasizing the following:1. Forming a working group from the Finance Department to

follow up the external office during the application stages.2. Documenting the differences that may result from the

application of the IFRS.3. Working to modify the existing policies in line with the IFRS.4. Analysing the potential financial impact on the business

results on a larger scale.5. Referring the potential financial settlements and their

impact on the financial statements prior implementation of the IFRS to the Audit Committee.

6. Follow up the impact of modifying the Accounting Manual and the way to apply it to the automated system used in the company.

7. Referring periodic reports and working group observations through all stages of the application to the Audit Committee.

The Board of Directors of the company adopted the application plan prepared by the Finance Department in accordance with the time schedule enclosed with the plan as follows:

f❖ An external consulting office was appointed to follow up implementation of the plan.


Retail and Operating SectorIt is one of SASCO key sectors. It contains SASCO basic products offered to clients through (213) sites, of which (55) belong to Zaiti Company sites (A subsidiary) and (97) operating site that are divided into (87) stations and rest houses operated by the company and (6) quick service centres and (4) sites operated by others. This is in addition to (16) sites under development or under construction, (27) sites under preparation and construction, as well as (18) sites stopped by a Board decision because the roads

The Retail Sector manages all fuel stations and the services provided there, including:

Fuel Services

DieselGasoline

91Gasoline

95

deviated away from them and lack of economic feasibility from operating them at the current time.

In 2016, Retail Sector offered its services to about 11,500,000 vehicles, with an increase of 14.14% over the previous year, and 62,000,000 customers, with an increase of 10.71% over the previous year.

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 0.01395 SAR /litre/km

for paved roads and 0.01815 SAR /litre/km for non-paved roads,

from the nearest reservoir of Saudi Aramco, provided that this is

done by competent local committees.

80,000

60,000

40,000

20,000

0

Thousand

Statistics of Company Site Visitors

Vehicle Number Customer Number

2014 2015 2016

11,5

00

62,0

00

10,5

75

56,0

00

7,816

44,0

00

Growth Ratio10٫71 ٪

Growth Ratio 1471 ٪

Retail and Operating Sector


According to the priorities of SASCO strategy to attract

companies specialized in restaurant management and reduce

the number of restaurants SASCO operates to improve service,

provide a unique experience, achieve a quantum shift, enhance

customer satisfaction, assume leadership in this field, and

advance the Stations and Rest Houses Sector in the Kingdom,

SASCO continued to sign several agreements with global

and local restaurant companies, which have already begun

providing services in many SASCO sites inside and outside cities

and at border crossing posts.

Pilgrims’ ServicesSASCO provides these services through its rest houses and

stations at the Saudi border crossing posts (Salwa, Al-Adeed, Al-

Financial Performance of Retail Sector The following table shows the most important financial results at the Retail Sector level as well as the contribution ratio of each sector

in revenue and income margin compared to the previous fiscal year:

Direct Revenue Direct Costs Total IncomeContribution Ratio

(Income Margin)

2016 2015 2016 2015 2016 2015 2016 2015

816.638.406 533.553.237 (788.584.736) (506.218.858) 28.053.670 27.334.379 48.17% 52.86%

Hudaitha, Halat Amar, and Al-Batha), in addition to SASCO site

network spreading on all highways, especially those linking the

holy lands (Mecca and Medina).

During 2015, SASCO served more than 9,700,000 pilgrims,

whether inside or outside the Kingdom. SASCO most important

stations and rest houses spread over the following highways:

ffAl-Hijra Road (Mecca/Medina)

ff Taif highway

ffRiyadh/Dammam Road

ffHalat Amar/Tabuk/Medina Road

Pilgrims

no. of buses no. of persons

Estimated figures inthousands

10,000

8,000

6,000

4,000

2,000

0

1,200

1,000

900

9,70

0

8,70

0

9,10

0

Product Sale Price Cost From Aramco Profit Margin Profit Margin Ratio

Gasoline 91 75 Halalah 66 Halalah 9 Halalah 12%

Gasoline 95 90 Halalah 81 Halalah 9 Halalah 10%

Diesel 45 Halalah 41.5 Halalah 3.45 Halalah 7.67%

The profit margin includes various expenses and costs borne by SASCO, most important of which are:ff Transport cost in direct relation with the increase in diesel prices.ff Electricity cost.ffWater cost.ffRequirements of the Ministry of Municipal and Rural Affairs in relation to companies qualified to manage fuel stations.ff Increasing labour cost, particularly after increasing work permission costs.ff Evaporation cost.

Lease SectorThrough competent departments in all areas, Retail Sector

leases some facilities that SASCO authorizes third parties to

manage, such as restaurants, car maintenance workshops, oil

and tire services, as well as other shops serving passengers and

clients.

SASCO also signed strategic partnership agreements with several

international and local competent companies specialized in

operating restaurants, cafes, and car maintenance 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 customers’ number in SASCO sites throughout the

Kingdom.

Sold Litres

Gasoline 91

Change Ration 32.83%

Change Ratio 1.58%

Change Ratio (10.14%)

Gasoline 95 Diesel

400,000,000

350,000,000

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

0

397,0

89,8

00

298,

952,

411

217,8

49,0

62

192,

316,

655

214,

009,

586

179,

034,

472 26

5,98

5,21

3

261,8

41,6

85

209,

927,2

09

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

a range of snacks and pastries. Palm Café had (12) branches by

the end of 2016.

DiningSASCO restaurants offers convenient services to customers with

different tastes.

SASCO restaurants offer the following meals:

ffBreakfast

ffAppetizers

ffMain courses

ffBeverages

20142015 2016

2014 2015 2016


Performance at Geographical Level (Retail Sector)

The following table shows province-level revenue analysis:

Sector 2016 % 2015 %

Central Province 332.983.183 40.77% 237.930.154 44.59%

Northern Province 54.311.162 6.65% 38.574.712 7.23%

Eastern Province 255.205.914 31.25% 147.523.074 27.65%

Western Province 174.138.147 21.33% 109.525.297 20.53%

Total 816.638.406 100% 533.553.237 100%

Central Province

Eastern Province

Western Province

Northern Province

40.77%

31.25%

21.33%

6.65%

Geographical Revenue of Retail Sector

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

Sector 2012 2013 2014 2015 2016

Stations & Rest Houses 304.222.942 327.228.376 416.266.722 523.058.172 808.343.024

Parks 17.958.725 17.653.871 14.564.358 10.495.065 8.295.382

Total 322.181.667 344.882.247 430.831.080 533.553.237 816.638.406

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

Total IncomeOperational CostOperating Revenue

2016 2015

Retail Sector

816

,638

,406

533

,553

,237

788

,584

,736

506

,218

,858

28,

053,

670

27,3

34,3

79

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

02012 2013 2014 2015 2016

Revenue Growth of Retail Sector

Annual Compound Growth rate 20%

Total Sector Revenue


SASCO Palm Co.

A limited liability company with a capital of 500,000 SAR divided into 50,000 equal cash shares, each of SAR 10.

SASCO owns 99% and Auto & Equipment Investment Co., Ltd owns the remaining 1%.

SASCO offers supply service through (SASCO Palm Stores), for which SASCO opened (6) branches during 2016,

bringing the total number of (SASCO Palm Stores) branches to (61) in various regions of the Kingdom at the end

of the year after stopping (13) branch to be operated by others.

(SASCO Palm Stores) include 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:

ff Food supplies.

ffNon-food supplies.

ffDairy products and cold drinks.

ff Instruments, tools, and accessories.

ff Trip supplies.

ffPrepaid communication cards.

ff Electronics.

ffMobile phones

ffMobile accessories.

ffPerfumes and cosmetics.

Central

Western

Northern

Eastern

34

11

9

7

Geographical distributionfor branches

SASCO Palm Co.


SASCO Al-Waha Co.“SASCO Al-Waha Co.” was established as a limited liability company with a capital of 500,000 SAR divided into 50,000 equal cash shares, each of 10 SAR. SASCO owns 99% and Auto & Equipment Investment Co., Ltd owns the remaining 1%. This aims to manage this activity independently to achieve the best returns from it.

In line with the expansion plan of SASCO Al-Waha Co., the Board of Directors approved the recommendation of SASCO management to increase the capital of SASCO Al-Waha Co. from 500,000 SAR to 5,000,000 SAR and work is underway to finalize the related procedures with competent authorities.

SASCO Al-Waha Co. manages all SASCO motels spread all over

the Kingdom. SASCO integrated in its strategy the develop-ment of these motels to carry its own brand “Waha Motel”. The first motel under this brand was opened in Riyadh / Dammam highway at kilo 154.

Concerning the exclusive franchise agreement for the Super 8 hotel brand signed between SASCO and Wyndham Interna-tional, the owners of Super 8 hotels, the agreement has been terminated as it reached its expiry date on 31 December 2016 and the desire of the parties not to renew the agreement set between them. The hotel’s Super 8 brand will be retained. That hotel was opened in Al-Thamama road in Riyadh city, which includes meeting halls, a gym and a restaurant to serve meals.

SASCO Al-Waha Co.


Ostool Al-Naqil Co.A limited liability company with a capital of 5 million SR divided into 5 thousand equal cash share. The value of each share is 1000 SR. Saudi Automotive Services Company SASCO has 99% of the capital and Auto & Equipment Investment Co has 1% of the capital.Ostool Al-Naqil Co has been rehabilitated in each of the national water company and Saudi Electricity Company. The company also has integrated headquarters in Riyadh province comprising Ostool management premises and an integrated workshop for maintenance of tankers, in addition to considering this headquarters a launch base for the company trucks.

With the acquisition of Saudi Automotive Services and Equipment (SASCO) of Zaiti Petroleum Services Company and expansion of the activity of Ostool Al-Naqil Co, the fleet size at the end of the year 2016 has become (95) tanker and (101) trailer by which transportation services are provided to SASCO company sites and Zaiti (fuel, water, sewage transport). Ostool Al-Naqil Co continued to provide transportation services (fuel, cargo) to a number of retail and major distribution companies as well as expanding its operations to include dry transportation using customized trailers for all purposes.

Direct income Direct costs Total incomeContribution ratio(Income margin)

2016 2015 2016 2015 2016 2015 2016 2015

19.663.545 15.328.226 (13.390.332) (11.396.764) 6.273.213 3.931.462 10.77% 7.61%

Financial performance of Ostool Al-Naqil Co.

The table below shows the main financial results at the level of main sectors of the company and the percentage of each sector’s contribution to revenues and the income margin compared to the previous fiscal year as follows:

2012 2013 2014 2015 2016

120

100

80

60

40

20

0

Trailers Number Tankers Number

Fleet Size

5461

5561 64 68

88 91 95101

Ostool Al-Naqil Co.


25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

Total Revenue of Ostool Al Naqil

CAGR 25%

2012 2013 2014 2015 2016

Growth of the fleet revenues of the transport company

The next graph shows the number of liters transported by Ostool Al-Naqil Co within the last five years:

20،000،000

15،000،000

10،000،000

5,000,000

0

Total incomeOperational costsOperating income

2016 2015

Fleet Transport Company

19,6

63,5

45

15,3

28,2

26

13,3

90,3

32

11,3

96,76

4

6,2

73,2

13

3,9

31,4

62

2012 2013 2014 2015 2016

1,200,000,000

1,000,000,000

800,000,000

600,000,000

400,000,000

200,000,000

0

Trailers Number Delivered in Liters

337

,703,

000

458

,997

,000

572

,113,

400

932

,274

,000

1,11

6,00

3,00

0 Delivered Liters

54 55 64 88 95


Saudi Automobile & Touring Association SATA


f❖ Sales of the association are centralized sales from the head office in Riyadh according to the nature of its activity.

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

Statement 2012 2013 2014 2015 2016

Sales of customs transit books 21.761.478 23.350.990 21.592.590 18.814.150 18.441.204

Sales of international licenses 1.032.855 1.332.544 1.591.705 1.478.662 2.030.030

Total 22.794.333 24.683.534 23.184.295 20.292.812 20.471.234

Triptic Yemen

Triptic Sudan

Triptic International

International Licenses

35.23%

29.09%

25.77%

9.91%

The association sales according to type

Direct income Direct costs Total incomeContribution ratio(Income margin)

2016 2015 2016 2015 2016 2015 2016 2015

20.471.234 20.292.812 (7.711.734) (9.469.364) 12.759.500 10.823.448 21.91% 20.93%

Saudi Automobile & Touring Association - SATASaudi Automobile & Touring Association SATA was established as a limited liability company with a capital of 500,000 SR divided into 50 thousand equal cash shares. The value of each share is 10 SR. Automotive Services Company Sasco has 99% of the capital and Auto & Equipment Investment Co has 1% of the capital.Saudi Automobile Company has a license from the International Automobile Federation to issue customs transit books (Trip-Tik). The company works through many outlets in all parts of the Kingdom in addition to a network of agents and distributors within Saudi Arabia operating according to the conditions, specifications and standards of global performance.Saudi Automobile & Touring Association (SATA) plays a prominent role in the International Automobile Federation, as the President of Saudi Automobile & Touring Association (SATA) was re-elected for a new two-year period starting from December 2016 as a chairman for the International Customs Committee of the International Automobile Federation. Among the most important services provided by Saudi Automobile & Touring Association:ff Issuance of customs transit books.ff Issuance of international driving licenses.ff Organizing sports activities for cars and motorcycles and the establishment, operation and running various racetracks of various categories.

Sales of Saudi Automobile & Touring Association were affected within the past years with political events experienced by some neighboring countries, particularly the presence of parallel associations that have no license from International Automobile Federation. These associations practice their business within the Kingdom and have a market share from the sales of customs transit books and international licenses.

As part of SATA signing to the agreement with IRU in 2012 (which is an international body specialized in servicing the interests of land transport industry all over the world), the company is still urging the concerned authorities in the Kingdom and the GCC to enter into this agreement for activating it in the Kingdom. Thus, several meetings were held with these bodies with the attendance of an IRU delegate.One of the main objectives of IRU is to facilitate transportation through:ff Facilitating trade harmony and customs procedures.ff Improving the cost level.ff Facilitating border crossing.ff Door-to-door carriage under international control.

Saudi Automobile & Touring Association (SATA) represented by the association president has participated in attending the Sixth International Symposium of Arab States League and the Arab Union of Land Transport about road Safety and trade facilitation in the Arab World. It was held in the United Arab Emirates during October 2016 under the sponsorship of Arab States League in partnership with the Islamic Development bank where the United Nations Transport Convention and its role in facilitating trade and improving roads in the Arab world were discussed.Through management of sports activities related to automobile and motorcycles in coordination with the relevant authorities, SATA also seeks to extract the license of sports activities to practice this

sport professionally.

Saudi Automobile & Touring Association performance - SATA The table below shows the most important financial results at the level of the Company›s main sectors and the main contribution ratio of each sector to the revenues and income margin compared

to the previous fiscal year as follows:

25،000،000

20،000،000

15،000،000

10،000،000

5,000,000

0

Total IncomeOperating CostOperating Revenue

2016 2015

Saudi Automobile & Touring Association

20,

471,2

34

20,

292,

812

7,71

1,734

9,4

69,3

64

12,75

9,50

0

10,8

23,4

48


Auto & Equipment Investment Co.


Subscription Investment Portfolio

ffOn 12 May 2014, The Company concluded an agreement to open an investment portfolio managed by Saudi Fransi Capital Company under the portfolio management agreement approved by the CMA. The objective was to diversify the company’s investments and income sources by contributing to companies offered for subscription and joint-stock companies are allowed to subscribe in them. This type of investment is dealt with according to the criterion of investment in securities held for trading recorded in the financial position statement at fair value, while the unrealized gains and losses

are recorded within the income for the financial period.

Investment Portfolios according to Investment Regulations issued by CMA

ff The Company signed agreements with three parties authorized by the CMA for the management of investment portfolios according to the CMA investment regulations to diversify the company’s investments and income sources by investing in securities listed on the Saudi Stock Market.ffOn 29 December 2016, the Company sold all shares in its two investment portfolios in the Saudi shares owned by it and managed by Saudi Fransi Capital Company and Mulkia Investment Company in order to direct liquidity in its main activities in line with its strategic objectives and expansion plan. This is while keeping the two portfolios management agreement in place if the company wishes in future to invest in securities according to the liquidity available to it.

Agency Investment AmountInvested Amount as on

31/12/2016Accounting Treatment

Saudi Fransi Capital Company 30,000,000 SAR - Securities held for trading

NCB Capital *

50,000,000 SAR 50,000,000 SAR Securities available for sale

Mulkia Investment Co. 50,000,000 SAR - Securities held for trading

* On 29 September, the company terminated the contract for the Investment Portfolio management with NCB Capital, due to the direction of the Board of Directors of the company to limit its portfolio management to two manager instead of three. In addition to reducing the cost of managing these portfolios, while continuing with the portfolio management contracts signed with both Saudi Fransi Capital and Mulkia Investment Co. The balance of NCB Capital’s portfolio shall be

transferred to the portfolio managed by Mulkia Investment Company within the limits of the agreement previously signed with them as of 2 October 2016 and with the same accounting treatment as available-for-sale securities. The financial impact of which is accounted for at the end of each financial period for shareholders equity in the statement of financial position when evaluating the portfolio.

12،000،000

10،000،000

8،000،000

6،000،000

4،000،000

2,000,000

0

Securities InvestmentsCompanies Investments

2016 2015

Dividends Received from Investments

7٫6

69٫74

1

11٫7

23٫6

81

3٫6

24٫7

88

2.32

1٫231

Auto & Equipment Investment Co.

SASCO established Auto & Equipment Investment Co. with a capital of 500,000 SAR divided into 50,000 cash shares each of 10 SAR to provide infrastructure, human resources, and expertise required to manage SASCO investments independently and impartially and, thus, increase the company diversity of income sources and enable it to manage its operational and investment processes efficiently and effectively. SASCO owns 99% of the capital and Ostool Al-Naqil Co, Ltd owns the remaining 1%.The most important activities of this company include:ff Establish and own shares and stocks in subsidiary and associate companies.ffPossess land and property and erect buildings thereon for operation, sale, or lease.ffBuild car and heavy equipment maintenance workshops as well as car and passenger service centers.ffBuild rest houses, motels, and restaurants.ff Import, export, and wholesale and retail trade in spare parts, equipment and others.ff Execute general contracting of buildings.

No. Company Name Investment Amount Ownership Ratio

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

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

3 United Racing Company 125,000 25%

Total 6.190.500

SASCO operates most of its investments in its subsidiaries through Auto & Equipment Investment Co. 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, 1% of the capital of SASCO Al-Nakhla Al-Oula Co, as well as 5% of the capital of Zaiti Petroleum Services Company.As for investment in other companies, Auto & Equipment Investment Co. holds 794 shares, i.e. 7.94% of the capital of Middle East Battery Company (MEBCO), a company among the biggest automobile batteries manufacturing companies that is specialized in the production of ACDelco batteries.

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

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

Middle East Battery Company (MEBCO)

National Company of Tourism (Syahya)

United Racing Company

73.75%

24.23%

2.02%

An illustration of the investment ratios of the totalinvestment portfolio of the company


Al-Nakhla Al-Oula Co.

A limited liability company founded and 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 500,000 SAR divided into 50,000 equal cash shares each of 10 SAR. SASCO owns 99% of the capital and Auto & Equipment Investment Co., Ltd owns the remaining 1%.

Al-Nakhla Al-Oula is specialized in the following:ffGeneral contracting (construction, repair, demolition, and restoration).ffConstruction, management, maintenance, and operation of residential and commercial buildings.ffRoad works.

Al-Nakhla Al-Oula Co.


SASCO Franchise Co.

The establishment of “SASCO Franchise Co. was completed with

a capital of 500,000 SAR divided into 50,000 cash shares each of

SAR 10. SASCO owns 99% of the capital and Auto & Equipment

Investment Co., Ltd owns the remaining 1%. “SASCO Franchise Co.”

grants third parties a franchise to operate “SASCO fuel stations”

and “Palm Stores”.

Through this subsidiary, SASCO aims to increase its revenues and

improve its profitability by granting franchise to other operators

under agreements it concludes with them to benefit from SASCO

brands in light of successful development of its sites according to

its identity and its distinguished position in the fuel station sector

in the Kingdom.

One of the goals of SASCO Franchise Co. is to define another

alternative for station owners who do not wish to sell or rent their

stations.

SASCO Franchise Co.


Zaiti Petroleum Services Company


Financial Performance of Zaiti Petroleum Services Company

The following table shows the most important financial results at Zaiti Petroleum Services Company level as well as the contribution

ratio of each sector to the revenues and income margin in comparison with the past fiscal year:

Direct Revenue Direct Costs Total IncomeContribution Ration

(Income Margin)

2016 2015 2016 2015 2016 2015 2016 2015

264.716.936 111.681.401 (253.608.285) (102.062.212) 11.153.651 9.619.189 19.15% 18.60%

The following table shows revenue analysis at province level:

Sector 2016 % 2015 %

Central Province 223.093.362 84.26% 97.187.134 87.02%

Southern Province 41.668.574 15.74% 14.494.267 12.98%

Total 264.761.936 100% 111.681.401 100%

f❖ Zaiti Petroleum Services Company was acquired on 29 April 2015.

300،000،000

250،000،000

200،000،000

150،000،000

100،000،000

50،000،000

0

Total IncomeOperating CostsOperating Revenue

2016 2015


264،

716،

936

111،6

81،4

01

253،

608،

285

102،

062،

212

11،15

3،65

1

9،61

9،18

9

Central Province

Southern Province

84.26%

15.74%

Geographical Revenues of ZaitiPetroleum Services Company


On 29 April 2015, SASCO completed the transfer of partners’ shares in Zaiti Petroleum Services Company to SASCO. The capital of Zaiti Petroleum Services Company, LLD reaches 37,500,000 SAR divided into 3,750,000 equal cash shares each of 10 SAR. This company specializes in the establishment, management, and operation of fuel stations.

By the end of 2016, the number of Zaiti operating stations had been (55) from which there are (49) operating stations as well as (6) stations under development. These sites spread in the central province (48 sites) and in Asir province (7 sites).

180،000،000160،000،000140،000،000120،000،000100،000،00080،000،00060،000،00040،000،00020,000,000

0

DieselPetrol 95Petrol 91

2016 2015

Number of sold liters

171,5

80,2

86

89,

629,

468 61,3

55,10

1

53,

093,

250

107,5

24,7

74 63,

623,7

48

60

40

20

0

Southern RegionCentral Region

Under Development Operating Sites

Sites Distribution

5

143

6

Rented

Owned

51%

4%

Sites property Zaiti Petroleum Services Company


Other Administrative and Operational Information

Lawsuits United Racing Company Lawsuit

The partners of the United Racing Company filed lawsuit No.

5475/2/k versus SASCO before the Administrative Judicature

Court in Jeddah, which sentenced to stop the course of the

lawsuit. They demanded the liquidation of their company. The

Court ordered a stay of proceedings upon SASCO request until

SASCO case versus one of the said partners regarding the sale of

SASCO share, has been decided.

After the Court issued its judgment in the share sale case, the

proceedings resumed. The plaintiff’s attorney requested the

Court either to have SASCO approval for liquidation or the

partners in the United Racing Company would give it up with all

its receivables and liabilities.

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 labor lawsuits versus SASCO and

its Legal Department follows up these financial rights and

collection thereof, either by amicable or judicial means.

ffOne important case is the one SASCO has 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 owns 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. The court requested to refer

the case to a certified land valuer to evaluate the land price

and determine its area. The court has been provided with a

copy of the evaluation and the case is still not settled to date.

ff 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 and the Secretariat of the

City of Tabuk regarding the nullification of Modon title deed

in relation to the overlap with SASCO-owned land in Tabuk

Industrial Zone. In addition to claiming a compensation for

the value of land in case of failure to receive it. Consequently,

the case was referred to the Review Board in Tabuk to inquire

about the status of the title deed. The Review Board reported

that SASCO title deed was older based on the statement

received from Tabuk Notary Public. As the headquarters of

Modon is in Riyadh, the judge referred the case to the General

Court in Riyadh. The case is still under review.

ff The case is filed by the Company against Al Khalidi Foundation

– a SASCO site tenant on Dammam - Riyadh road at Kilo

205 for the failure to deliver the station after the end of the

contract in 2014, where the case is still reviewed at Al Khobar

Court for study and judgment to evacuate the site.

ff In addition, the case filed by the company against the

Municipality of Jubbah, where the company on 03/08/1432

has contracted with the municipality of Jubbah governorate

to take rent of sites on the international road Hail - Al – Jouf.

Since the company did not receive any of the sites referred

to at all due to the non-validity of these sites for the purpose

the contract was concluded for, the company filed a lawsuit

in the administrative court in the province of Hail against

the Municipality of Jubbah to judge for it to terminate

the contracts and release the guarantee letters and be

compensated for the damages incurred due to the company’s

failure to receive the sites. The court decided to hold the case

for final judgment.

Human ResourcesThe following table shows human resources analysis of SASCO

and its subsidiaries as follows:

No. Category 2016 2015

1 Senior Management 1 2

2Middle & Executive

Management218 258

3Workers and Technicians

1226 1151

Total 1445 1411

Other Administrative and Operational Information


No. Subsidiary Name Core ActivityHeadquarters

Foundation CountryDirect and Indirect Ownership Ratio

Remarks

5SASCO Palm Stores

Co.(500,000 SAR)

Import and sale of foods.Kingdom of Saudi

ArabiaRiyadh

100% SASCOIncorporated in

2014

6SASCO Al Waha Co.

(500,000 SAR)Provide accommodation services.

Kingdom of Saudi ArabiaRiyadh


2014

7SASCO Franchise Co.

(500,000 SAR)

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



2015

8Zaiti Petroleum

Services Company(37,5 million SAR)

Build, manage, and operate fuel stations.


100% SASCO

Incorporated in 2007

and acquired in 2010

Subsidiaries

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

No. Subsidiary Name Core ActivityHeadquarters

Foundation CountryDirect and Indirect Ownership Ratio

Remarks

1Auto & Equipment Investment Co., Ltd

(500,000 SAR)

Build car and equipment repairs workshops - wash-ing and lubricating cars - import and export spare parts - establish training centres - import and sell tools -buy lands and in-vest in them.



2010

2Ostool Al-Naqil Co.,

Ltd(5,000,000 SAR)

Transport goods and equipment - transport petroleum products - im-port, export, and whole-sale – establish, operate, and rent maintenance workshops - advertising services on tankers ser-vices.



2010

3

Saudi Automobile & Touring

Association, Ltd SATA

(500,000 SAR)

Subscription in interna-tional and local associa-tions of cars and motor-cycles, international and local associations and bodies interested in cars and motorcycles issues, issuance of customs tran-sit books (Trip-Tik ), inter-national driving licenses- build, manage, maintain and operate car & motor-cycles sports tracks - orga-nize cars and motorcycles events and races- partici-pation in races and events of cars and motorbikes sports.



2012

4Al-Nakhla Al-Oula

Co.(500,000 SAR)

General contracting for buildings, establish, maintain and operate residential and commer-cial buildings and road works.



2012


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 but less losses and probability risks are addressed

later.

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 ObjectivesffAchieve close control and monitoring of risks in activities and

business.

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

ffPrevent and minimize losses through immediate control or by

transferring them to external parties.

ff Identify actions and procedures to be taken in terms of certain

risks to control incidents and monitor losses.

ffPrepare 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.

ffProvide 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:

ffHow far SASCO objectives provide profound data and

guidance in terms of SASCO aims while sufficiently specific to

be directly linked to SASCO.

ff Effectiveness of communicating objectives to staff and the

Board.

ff Links between strategies and their consistency with SASCO

objectives.

ffConsistency of business plans and budgets with SASCO

objectives, strategic plans, and current conditions.

Activity-Wise Objectives:

ff Link between activity objectives, SASCO objectives, and

strategic plans.

ffConsistency of the activity objectives.

ffAdequacy of activity objectives with important operations.

ff Idiosyncrasy of the activity objectives.

Sufficiency of Objective-Related Resources:

ff Identifying important objectives (important success factors)

to achieve SASCO objectives.

ff Involvement of all management levels in setting objectives

and the extent of their interest in achieving these objectives.

■ Risks:

ff Sufficiency of mechanisms to identify risks originating from

external sources.

ff Sufficiency of mechanisms to identify risks originating from

internal sources.

ff Identifying important risks of every important activity.

ffAnalysing risks at SASCO level and activity level and changing

the method of risk analysis since many risks are difficult to

quantify. The analysis process 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- Avoid Risk

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- Minimize Risk:

By reducing investments facing certain risk, which an investor

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

3- Transfer Risk:

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).

Risks Management


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 periodical monitoring of customs claims and

trying to reduce them.

ERP-Related Risks

All departments of SASCO and its subsidiaries depend mainly on

the use of Enterprise Resource Planning (ERP) system in all their

operational and financial processes. This system can serve more

than one administration. The company management uses the

following systems:

ff Financial Management 2012 AX.

ffHuman Resources Management 2012 AX.

ff Sales of Sasco Palm (Palm Supplies). NCR Aloha

ffGilbarco fuel sales

ff Sales of Al Waha System (Opera) and (Nazeel) system for

motels.

ffMaintenance management- reporting system (BMC).

As SASCO is eager to avoid any expected problems, it monitor

the updating of the system periodically updated 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 Centers

The 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 centers 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 future if it fails to obtain the

necessary construction and operation licenses, whether for the

existing or new stations.

Legislative Environment RisksSASCO operates in a dynamic legislative environment, and

changes to systems and law applicable in the Kingdom of Saudi

Arabia can affect SASCO business positively or negatively. To

reduce 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 activity from

the Ministry of Municipal and Rural Affairs and Civil Defense

periodically. SASCO activity may be affected in future if it fails to

obtain or renew such licenses.

Legal RisksIn addition, SASCO faces legal risks in relation to financial claims

due for it from some tenants and debtors, namely collecting

amounts due for it for previous years. Moreover, there are some

labor lawsuits filed versus SASCO, and its Legal Department

follows up these financial rights to collect them, either by

amicable or judicial means.

HR-Related RisksLegislations in the Kingdom require a Saudization ratio of total

staff in companies through Nitaqat Program. SASCO has achieved

the required Saudization ratio and continually seeks to saudize

various administrative functions in line with its expansion plan

that requires many workers in its different sites.

SASCO signed an agreement with the Human Resources Fund to

support Saudization plan in accordance with the regulation 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 its activity, 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 labor and recruitment.

Parameters have been developed for the internal control through:

1. Continuous follow up of updates and requirements of Labor

Office in relation to Saudization and Nitaqat Program.

2. Making sure that the staff get sufficient training to perform

their duties effectively.

3. Ensuring the periodical monitoring and assessment of

performance.

4. Following up Saudization of supervisory functions in all

sectors to increase Saudization ratio.Market-Related RisksThey comprise:

■ Growth and Expansion-Related Risks:ff 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.ff 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.ffDelay 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.

Based on the Board belief in the importance of risk management

being one of management foundations to protect shareholders’

investments and related parties’ rights, the Board continually

develops risk management, policies, and procedures consistent

with governance and internal control policies through setting

a general strategic plan for SASCO to face these risks and

ensure expeditious treatment thereof and providing necessary

solutions in a manner that reduces their impacts. The most

important risks SASCO may face and their mitigations are

classified as follows:

Most Important Risks SASCO may Face and their Mitigations

Operational 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 activity 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. The company offers the following services:

f_ Transportation services of all types of fuel.

f_ water and sewerage transport services.

f_ Dry transportation services

One of the most prominent risks faced by this company is the

renewal of its license from the Ministry of Transport periodically.

Although this company 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 this operation.

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:

ffCovering operational objectives of transportation sector and

helping officers to improve, develop, and schedule supply.

ff Following up the adherence to security and safety laws and

procedures and recommending rectifications to violations.

ffChecking quality assurance procedures and complying with

specific quality standards.

■ Saudi Automobile & Touring Association (Subsidiary)The activity of Saudi Automobile & Touring Association, which

works under the umbrella of UN- related international bodies,

is an essential cornerstone of SASCO operational activity. Profit

from its activity, 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 developments in some neighboring countries,

activities of some local competitors (parallel associations) and

establishment of new organizations may affect the financial

performance of this company.

To minimize competition risks and increase the company’s

market share, the company is in the process of developing an

expansion plan to increase the number of its branches and

products, enhance its integration, and deal with strategic

dealers. Parameters have been developed for the internal control

through:


ff Examines the financial position of the investee companies and assesses their performance quarterly and annually.ffWorks to dissociate from some investments to focus on its SASCO core activity whenever the opportunity comes.ff

■ Risks Related to Increased Energy Prices The increase in the sale tariff of electrical energy products and the rise in the price 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.

As for this regard, 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 decisions.

■ Competitive Environment Risks:Stations and rest houses sector witness fierce competition to provide best services. SASCO growth and profit levels relates to 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 exist. This is in addition to starting the execution of public transport projects, subway network, and railway lines to link the Kingdom regions, which can adversely affect SASCO level of the operational profit.In this regard, SASCO develops control in this regard through:Studying new road and railway line projects and the road network expansion plans in the Kingdom periodically to plan SASCO sites strategically, 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 MotorcycleAssociation system

The System includes some points that would affect the activity of Saudi Automobile & Touring Association. SASCO studies the System and identifies the expected impact on the Association works to take the necessary measures towards addressing the System requirements.

■ Risks Related to Customs Claims of the Association covered by the FIA Insurance Policy

There 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 papers when issuing Trip-Tik customs books, and forms a provision in form of a percentage of monthly sales of books to cover this claim.

■ Risks Relating to Granting Land and Land Handed over by State

On 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, 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 on them.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 the granted lands 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 handed over to it in 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 adversely be 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 Risks Insurance policies cover all employees and properties of SASCO and its subsidiaries. The financial results of SASCO or its subsidiaries may be affected by any future losses not covered under the insurance policies.

■ Credit-related Risks The 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 Risks SASCO 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 a profit 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 the following:ffMonitoring the achievement of expansion targets - numerically.ffMonitoring the achievement of financial performance targets.ffConducting, analyzing, and comparing budgets with the actual results and reasons for deviations.ffReviewing and improving cash flows continually.ff Scheduling expansions.

■ Investment Risks SASCO 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 is continually and periodically familiarized with the results of investee companies to determine their conditions in general.Although SASCO focuses on its core activity, in case on an untapped cash surplus, SASCO invests it by entering into new investment portfolios.SASCO also owns 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:


Internal Control


quantities of stocks.ff Ensure that the available cash covers the continuity of planned operations.ffAnnounce SASCO bylaws, instructions, and policies conspicuously.ffCheck the training of current employees to perform multiple tasks.ffCheck security and safety procedures.ff Ensure the availability of financial analysis of the cash flow statement to make adequate financial and administrative decisions.ffAvoid supply stoppage to a minimum.ff 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.

The most important recommendations by the Audit Committee included the following:1. Disclose the investment portfolios opened in the note on

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. Revisit the constituent appropriations to ensure their

efficiency.6. Extend the term for 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 with

the development witnessed by SASCO.9. The need for SASCO to cope with the technological

development 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.

SASCO Internal ControlInternal control is one of the basic pillars of the oversight system of any organization to assist it to evaluate management risks. It is an objective and an independent activity of a consultative nature designed to increase the value of the organization, enhance its operations, and achieve its goals. External parties can provide internal control services to ensure the 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:ff Effectiveness and efficiency of operations.ffReliability of financial reports.ffCompliance with the related laws and instructions.

SASCO Roles and Responsibilitiesff Everyone in SASCO is responsible for a 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.ffA 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 the Effectiveness of Internal Control

Departments’ 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 permissions.7. Daily deposits.8. Staff training.9. Correct 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. Protection and security.19. Financial and property monitor.20. Periodic Audit of Financial and Accounting Procedures and Financial Reporting operationsSASCOperiodically 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 making reports periodically.

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. SASCO also updates risks continuously based on the developments of work conditions. These plans aim to describe how to deal with these risks and determine how, when their consequences will be avoided or reduced.The internal (risk-based) audit plan included the following objectives:ff Evaluate the effectiveness and efficiency of the internal control system and processes.ffUnderstand policies and procedures.ff Ensure the compliance with laws and regulations as well as SASCO contracts and policies.ff Ensure the preservation of SASCO assets.ff Ensure the reliability and integrity of financial and operational information.ffCompare the current SASCO practices with the best practices followed.ff 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 the 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:ffCover the strategic plan as a basis to achieve the SASCO-wide objectives.ffVerify that fixed assets represent actual values owned by SASCO.ff Ensure the provision of the necessary and adequate resources and skills to support business.ff Ensure that the IT facilities and services both support SASCO strategic objectives and preserve its competitive features.ff Follow up inventory mechanism and the failure of current automated software.ff Ensure scheduling of operations to guarantee sufficient


Corporate Governance


Note:In reference to Article (42-A) of the Listing Rules issued by the

CMA, which stipulates “The interim and annual financial

statements of an issuer must be approved by the directors and

signed by a director authorized by the directors, by the CEO and

the CFO prior to their issuance and circulation to shareholders

and third parties.” Article (6) of SASCO Governance Regulation

states, “the Board shall establish an adequate number of

committees to be able to direct its efforts effectively towards

the optimum management of the Company. The Board shall

identify whether the powers authorized to a certain committee

are defined so that they can consider certain issues or the said

committee is authorized to act on behalf of the Board. The Board

may authorize its powers and authorities to its committees, but

it may not waive its responsibilities.” Pursuant to Article (7-2) of

SASCO Governance Regulation on general responsibilities of the

Audit Committee, which includes considering and reviewing

the financial statement as well as presenting recommendations

thereon.

The Board adopted a mechanism to approve the interim

financial statements. Audit Committee has the mandate

to authorize financial statements and approve publication

thereof on Tadawul website, provided these interim financial

statements are approved and signed by the Managing Director.

After this approval, they shall be sent to the Board members to

be reviewed in the meeting following the announced interim

financial period.

No.Regulation Article No.

Paragraph Article/Paragraph Text Reasons of Non Application

3 Sixth d

Investors who are judicial persons and who act on behalf of others - e.g. investment funds- shall disclose in their annual reports their voting policies, actual voting, and ways of dealing with any material conflict of interests that may affect the practice of the fundamental rights in relation to their investments.

SASCO has no legal capacity to oblige juristic investors acting on behalf of others, such as investment funds, to disclose their voting policies, actual voting, and ways of dealing with any material conflict of interests that may affect the practice of the fundamental rights in relation to their investments.

4 Twelfth I

Judicial person who is entitled under the company’s Articles of Association to appoint representatives in the Board of Directors, is not entitled to nomination vote of other members of the Board of Directors.

SASCO Articles of Association does not include granting any juristic person the right to appoint representatives in the Board of Directors.

ConclusionIn conclusion, the Chairperson, Board members and the

executive management extend their thanks and appreciation

to the shareholders of 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 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 Allah protect him, for all of the 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

Corporate GovernanceRegulation and Adopted Procedures During 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. SASCO

developed the said Regulation in accordance with SASCO

Corporate Governance Regulation issued by the CMA and

adopted by the Board on 22 December 2009. SASCO made

amendments to the Regulation and approved by the Thirty

Ordinary General Assembly held on 7 May 2013. SASCO provided

the CMA with a copy of its Corporate Governance Regulation

approved on 11 May 2013.

Application of Governance Regulation SASCO applied all articles of its Corporate Governance Regulation

except the following:

No.Regulation Article No.

Paragraph Article/Paragraph Text Reasons of Non Application

1 Sixth bIn voting in the General Assembly for the nomination to the board members, the accumulative voting method shall be applied.

SASCO Articles of Association does not stipulate the accumulative voting method. According to Article (95) of the Companies Act, which stipulating that the Articles of Association of the company shows the election method in shareholders associations. All companies shall apply the accumulative voting to elect Board members and so as not to use the election right for the share once more. The company is currently in coordination with the Ministry of Commerce and Investment to adopt the amendments to the Company Articles of Association, including following up the method of cumulative voting at the vote to select the members of the board of directors and then approval by the Extra-ordinary shareholder association.Noting that the company did not hold elections to the Board of Directors during 2016, and that the current session of the Council ends on 29 June 2018.

2 Eighteenth a

A Board member shall not, without a prior authorization from the General Assembly, to be renewed each year, have any interest (whether directly or indirectly) in the company business and contracts. The activities to be performed through general bidding shall constitute an exception where a Board member is the best bidder. A Board member shall notify the Board of Directors of any personal interest he/she may have in the business and contracts that are completed for the company’s account. Such notification shall be entered in the minutes of the meeting. A Board member who is an interested party shall not be entitled to vote on the resolution to be adopted in this regard neither in the General Assembly nor in the Board of Directors. The Chairman of the Board of Directors shall notify the General Assembly, when convened, of the activities and contracts in respect of which a Board member may have a personal interest and shall attach to such notification a special report prepared by the company auditor.

There are transactions and contracts conducted for SASCO, in which some Board members have an interest (directly or indirectly). The Board has been notified therewith, and some of them are approved by the General Assembly of shareholders.

The approval of these works and contracts will be renewed by the next General Assembly.


Financial Statements


Auditors’ ReportTo: Messrs/ Shareholders Saudi Automotive Services Co. (SASCO) (Saudi joint-stock company)

Scope of audit

We have audited the attached consolidated balance sheet statement of The Saudi Automotive Services Company Sasco (Joint Stock Company) as it is on 31 December 2016, consolidated income statement, changes in equity statement and cash flows statement for the year ended on that date. The considered notes from no (1) to no (27) are an integral part of this consolidated financial statement prepared by the company as per the context of article (126) of the Saudi Companies Act and submitted to us with all information and data we have requested. The company’s administration is responsible for these financial statements, and our responsibility lies in expressing our opinion about these statements based on our conducted audit.

We have conducted our audit according to the audit standards generally accepted in Saudi Arabia. Such standards require that we plan and perform our audit to obtain a reasonable degree of assurance that the financial statements are free of any material misstatements. The audit procedures include test examination of the documents supporting the amounts and information contained in the financial statements. An audit also includes the assessment of the accounting standards followed by the company and the significant estimates used by the management and the assessment of the overall presentation of the financial statements. We believe that our audit provides us with a reasonable basis to give an opinion. Non-reserved opinion: in our opinion, the above mentioned financial statements as a whole:

1. Fairly presents, in all material respect, the financial position of the Saudi Automotive Co. (SASCO) – a Saudi joint-stock company – as of 31 December 2016 and the results of its operations and cash flows for the year then ended in light of the presentation and disclosure of information contained in the financial statements according to the accounting standards generally accepted in Saudi Arabia and appropriate to the company›s circumstances.

2. In conformity with the Companies› Law and the company›s articles of association in respect of the preparation and presentation of the financial statements.

Allied Accountants Dr. Abdelgadir Bannaga & Partners Company

Mohammed bin Farhan bin NadirLicense No. (435)Riyadh, Saudi Arabia 9/6/1438H – 08/03/2017

Saudi Automotive Services Co. (SASCO)(Saudi joint-stock company)Consolidated statement of changes in theshareholders’ equitiesFor the year ended 31 December 2016

Consolidated Accountants RSMDr. Abdelgadir Bannaga & Partners CompanyKing Abdllah RoadAl Saif Center-3rd floorP.O.Box 2227 Riyadh12253-7749Tel: +966 114562974Fax: +966 114940587KSAwww.rsmksa.com

Note 2016(SR)

2015(SR)

AssetsCurrent assetsCash and cash equivalentsInvestments and financial assetsAccounts receivable, net Inventory, net Advance payments and other current assets, net

48567

135,744,193-

78,324,69627,323,99998,117,057

175,736,26521,520,88136,642,38327,695,79093,857,914

Total current assets 339,509,945 355,453,233

Non-current assetsIntangible assetsGood willInvestments and financial assetsProjects under progressProperties, plant and equipments, net

10

8119

3,822,2634,308,99337,613,669

150,783,566902,592,948

4,180,6084,308,99340,575,179

48,002,427849,397,457

Total non-current assets 1,099,121,439 946,464,664

Total assets 1,438,631,384 1,301,917,897

Liabilities and shareholders› equities Current liabilities Murabaha finance and short-term loansCurrent portion of Murabah finance and long-term loansAccounts payable Accrued expenses and other current liabilities Due to shareholdersZakat provision

121213141516

44,594,800134,043,81772,583,65370,139,06438,823,7954,409,500

25,000,00068,350,69251,715,709

46,306,00937,799,2983,962,922

Total current liabilities 364,594,629 233,134,630

Non-current liabilities Long-term Murabahas and loansEnd of service benefits provision

12 335,767,6089,751,412

328,146,8628,307,713

Total non-current liabilities 345,519,020 336,454,575

Total liabilities 710,113,649 569,589,205

Shareholders’ equities Capital Statutory reserveLand grants and donations Retained profits Unrealized losses from investment revaluation

117

540,000,00037,870,221111,337,57855,929,969

(16,620,033)

540,000,00035,255,166111,337,57859,394,471

(13,658,523)

Total shareholders’ equities 728,517,735 732,328,692

Total liabilities and shareholders’ equities 1,438,631,384 1,301,917,897

The attached notes from No. (1) to No. (27) form an integral part of these consolidated financial statements

Saudi Automotive Services Co. (SASCO)(Saudi joint-stock company)Notes to the consolidated financial statements For the year ended 31 December 2016________________________________________________________________________________________________________________




Note

2016

(SR)

2015

(SR) modified

Net turnover

Cost of sales

1,094,122,754

(1,035,882,720)

665,048,902

(613,340,424)

Total income from sales

Selling and marketing expenses

General and administrative expenses

18

58,240,034

(1,030,495)

(37,626,603)

51,807,478

(1,590,114)

(33,695,554)

Income from main operations 19,582,936 16,422,810

(losses) from revaluation of investments earned for trading

Delivered profit provisions

Costs of acquisition of Zaiti petroleum services

Profits of acquired investment evaluation for trading

Losses of investment sales and financial assets

-

9,689,273

-

1,605,256

-

(3,386,028)

14,351,845

(3,622,668)

919,176

(805,090)

Other revenues, net

Finance expenses

19 1,333,887

(2,405,799)

1,126,592

(2,999,070)

Net income before Zakat

Zakat 16

29,805,553

(3,655,000)

22,007,567

(3,391,000)

Net income 26,150,553 18,616,567

Share profitability from:

Income from main operations

24

0.36 0.30

Net income 0.48 0.34

Weighted average number of outstanding shares 54,000,000 54,000,000

*The attached notes from No. (1) to No. (27) form an integral part of these consolidated financial statements

2016(SR)

2015(SR) modified

Operational activitiesAmendments to settle net profit to net cash available from operational activities:DepreciationAmortizationsCustoms liabilities provision componentDead stock provision componentDoubtful debts provision componentNon-achieved losses of acquired investments in purpose of tradingSales profits of acquired investments in purpose of tradingSales profits of property, machinery and equipmentSeverance pay componentZakat provision componentFinancial expensesOperational assets and liabilitiesAccounts receivableInventoryAdvance payments and other current assetsAccounts payableOther current assets and liabilitiesPaid for Zakat provisionPaid for severance payPaid financial expenses

26,150,55335,869,8521,474,2656,491,906

98,535875,200

-(1,605,256)(256,061)2,297,1263,655,0002,405,799

(42,557,513)273,256

(10,751,049)20,867,94423,833,055(3,208,422)

(853,427)(2,405,799)

18,616,56726,279,2101,246,1483,755,0201,151,544

-3,368,028(919,176)(439,115)1,831,0243,391,0002,999,070

1,525,258(6,184,125)(3,137,863)1,770,8962,226,290(3,801,233)(584,233)

(2,999,070)

Net cash available from operational activities 62,654,964 50,095,250

Investment activitiesCash paid in acquired investments in purpose of tradingCash collected from acquired investments in purpose of tradingProcurement of property, machinery and equipmentUnder progress project additionsCollected from property, machinery and equipmentIntangible assets additionsNet cash paid for acquisition of an affiliate

-23,126,137

(37,664,607)(155,750,748)

1,824,934(1,115,920)

-

(10,000,000)5,453,067

(39,992,191)(97,324,204)

2,500,489(1,074,168)(58,076,117)

Net cash used in investment activities (169,580,204) (198,513,124)

Financial activitiesShareholders AccrualsNet change in bank fundsProfit provisions for shareholdersBoard of directors reward

1,024,49792,908,671

(27,000,000)-

(80,466)142,854,106

-(1,400,000)

Net cash from financial activities 66,933,168 141,373,640

Net decrease in cash and balances in banksOpening cash and balances in banks

(39,992,072)175,736,265

(7,044,234)182,780,499

Closing cash and balances in banks 135,744,193 175,736,265

Non-cash transactionsTransferred from under progress project to property, machinery and equipmentNon-achieved losses from revaluation of investmentsCapital increase

52,969,609(2,961,510)

-

91,268,300(9,963,658)90,000,000

*The attached notes from No. (1) to No. (27) form an integral part of these consolidated financial statements


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1. Formation and activitySaudi Automotive Services Company (SASCO), a Saudi joint stock company under the Ministerial Resolution No (563) and dated 23 / 12 / 1402 AH corresponding to 12 October 1982 that was founded in the city of Riyadh under the Commercial Registration No 1010054361 and date of 28 Ragab 1404 AH corresponding to 30 April 1984.

The company›s main activity is represented in providing vehicles and passengers› services by establishing central workshops to provide the highest level of maintenance and repair, establishment of vehicle service stations network, rest houses and restaurants, importation and sale of food stuff and beverages and relevant services. Importation of vehicles and spare parts of all kinds for the company›s works, trading in them after obtainment of the necessary licenses, performance of all kinds of contracting in connection with erection management maintenance and operation of residential and commercial buildings, contracting of vehicles and equipment maintenance for individuals and companies, participation with entities and companies that practice similar activities, merge with them or establish subsidiaries owned by it or with other parties.

The company capital increased to 450,000,000 SR divided to 45,000,000 share whose value is 10 SR, which is paid completely up to 540,000,000 SR with an increase of 90,000,000 SR. The Tenth Extra-ordinary General Assembly on 6 May 2015 has approved the board of director’s recommendation to increase the Sasco capital from 450,000,000 SR to 540,000,000 SR i.e. an increase ratio of 20%. This is achieved by gifting a free share for every five current shares owned by the shareholders registered in the shareholders register at the closing transaction of the day when the Extra-ordinary General Assembly was held on 6 May 2015. The increase value shall be repaid through transferring 40,000,000 SR from the “statutory reserve” item and 50,000,000 SR from the “retained earnings” item. Thus, the shares number increases from 45,000,000 share to 54,000,000 share with an increase of 9,000,000 share.

2. Summary of the most significant accounting policiesThe Company›s consolidated financial statements have been prepared under the historical cost convention except for investments valued at fair value based on the accrual principle and in accordance with generally accepted accounting principles in the Kingdom of Saudi Arabia. The company depends on the same principles and accounting policies for the preparation of the consolidated financial statements. The following is a summary of the most significant accounting policies used in the preparation of these consolidated financial statements.

Basis of consolidation The consolidated financial statements include the assets, liabilities, operating results and cash flows of the Company and its subsidiaries shown below which form the group. Transactions and balances between group companies are eliminated on consolidation of financial statements. Non-controlling interests are accounted for, if any based on equity and net income of affiliate companies.

The following is a list of the subsidiaries whose financial statements are consolidated and all of which have been established in the Kingdom of Saudi Arabia. The Company has all the equity interests therein directly or indirectly:

Subsidiary name Company’s main activity %

Ostool Al-Naqil Co. Transportation of petroleum products and derivatives. 100%

Saudi Automobile & Touring Association

Issuance of custom transit books and international driving licenses. 100%

Auto & Equipment Investment Co. Establishing workshops to repair cars and heavy equipment. 100%

Al-Nakhla Al-Oula Co.General contracting of buildings and establishing, management, maintenance and functioning of residential and commercial buildings.

100%

SASCO Palm Co. Import and sale of foodstuff, beverages, refreshments and equipment. 100%

SASCO Oasis Co. Housing services (Motel). 100%

SASCO Franchise Co. for investment and commercial development Marketing services for others. 100%

Zaiti Petroleum Services Company Establishing, management and functioning of fuel stations. 100%



The consolidated financial statements include Sasco accounts and its following subsidiaries and affiliates:

Sr. Commercial register No. Branches name City

1 1018000425 Saudi Automotive Services Company (Sasco) affiliate. Riyadh

2 2050093628 Saudi Automotive Services Company (Sasco) affiliate. Dammam

3 4030254775 Saudi Automotive Services Company (Sasco) affiliate. Jeddah

4 1131030559 Zaiti company Affiliate for petroleum services Buraydah

5 5850029530 Zaiti company Affiliate for petroleum services Abha



8 1128010283 Zaiti company Affiliate for petroleum services Onaiza

9 1011012857 Zaiti company Affiliate for petroleum services Al Kharj

Accounting estimatesThe preparation of the consolidated financial statements according to the generally accepted accounting principles requires the use of estimates and assumptions that may affect the values of assets and liabilities and disclosure of contingent assets and liabilities on the date of the consolidated financial statements as well as on the amounts of revenues and expenses during the consolidated financial statements period. Although that the accounting estimates are based on the best knowledge of information and events available for the management on the date of consolidated financial statements issuance, the final actual results may immaterially differ from such estimates.

These estimated and assumptions are continuously reviewed and the effect of amendments resulting from change of accounting estimates is shown in the period in which they occurred if the amendment is related to the year in which the change occurred and the future years. The most significant items subject to estimation and assumptions and which affect the applied accounting policies and subsequently may affect the amounts recorded in the consolidated financial statements are as follows: • Estimationoftheusefuleconomiclifeandtheresidualvalueofthepropertiesmachinesandequipment.• Estimationoflong-termcontractscosts.• Provisionsofdoubtfuldebts.• Provisionsandamountspayable.

Balances with banksThe balances with banks include the cash with banks banking Murabaha, and other investments of high liquidity to be transferrable into known cash amounts which fall due within three months or less from the date of their purchase.

Accounts receivable The trade accounts receivable are stated at the original invoice amount after deducting the doubtful debts provision. The doubtful debts provision is formed if there is an objective indication of the non-ability of the group to collect the receivable amounts according to the original terms and conditions of the accounts receivable. The bad debts are written off upon their determination against the relevant provisions. The provisions are charged to the consolidated income statement. Any subsequent recovery of accounts receivable amounts that have been written off are recorded in the revenues.

Inventory Inventory is evaluated at the lower of cost or net realizable value. The cost is determined by using the weighted average method. The stagnant goods provision is stated in the consolidated income statement for the foodstuffs goods according to the company’s policy in this regard.

Good willGood will represents the increased cost of investments over the fair value of net assets acquired upon consolidation. Goodwill is recognized annually to determine the amount of impairment and is carried at cost less any impairment losses. Impairment losses are not reversed after being recorded. Gains or losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold.If the cost of an acquired investment is less than its fair value on the date of acquisition, the difference shall be adjusted by reducing the fair values of non-current assets of the acquired company in proportion to their book value.


InvestmentsInvestments in subsidiaries

Investments are consolidated in subsidiaries over which the Company has significant control and in which the Company›s share is often more than 50% of the capital.

Investment in securities Investments in the capital of companies for which the Company has no significant influence, and in which the Company›s share is often less than 20% of the capital are initially recognized. These investments are classified according to management›s intent to invest for trading if the management intends to sell them in the short term or make them available for sale if management intends by purchasing investments not to sell them in near future.

Both investments held for trading and available for sale are measured in the periods following their validity at their fair values. Fair value is determined based on market value in the event that such securities are traded on the financial market. For non-current securities, they are held at cost if there are no reliable indicators of fair value. The acquired investments, which are held for trading, are displayed in current assets and the unrealized gains or losses arising from the revaluation are included in the consolidated statement of income. Available-for-sale investments are presented in non-current assets unless management intends to sell them within the next twelve months. Unrealized gains or losses arising from revaluation of investments are recognized in the shareholders equity, while gains or losses recognized in the consolidated statement of income are recognized in the period in which the realized gains or losses occurred. When there is a non-temporary decline in the value of these investments or an objective evidence of impairment in their value, the unrealized losses are transferred to the consolidated statement of income.

Properties and equipmentsProperty and equipment are stated at cost less accumulated depreciation. Repairs and maintenance expenses are expenses for improvements are capital expenditures. Depreciation is calculated based on its useful life using the straight-line method. The sold or excluded asset and its accumulated depreciation are eliminated from the accounts on the date of sale or disposal. During the fourth quarter of 2016, the company became aware of new information regarding depreciation ratios, which resulted in an adjustment to the useful lives of assets that are still in use and not fully depreciated.

The depreciation rates of the main items of such assets are:

Ratio before evaluation % Ratio after evaluation %Buildings 2-3% 2-3 %Machines equipments trailers and transportation equipments 10% 10 %Furniture 10% 10 %Computers and programs 15% 15 %Vehicles and trucks 10-20% 7-20 %Communication equipments and telephones 25% 25 %Electrical equipments 10% 10 %Advertisement signs 15% 15 %Improvements to buildings 3-10% 4 % or for the rental contract

period, whichever is less.

End of service compensation The end of service benefits are corrected in the consolidated financial statements according to the Labor Law requirements based on the period of employees› service with the company.



Intangible assets

The expenses that are expected to have a future benefit are capitalized as deferred expenses, and are amortized over the period of seven years according to the straight-line method.

Recognition of sales

The sales are recognized upon the performance of the service or delivery of goods and issuance of the invoice. The other revenues are recognized upon their realization.

Expenses

All direct expenses related to the realization of the activity›s revenues comprise the salaries wages goods costs and indirect costs charged to sales cost, while the sale and marketing expenses include the sales staff salaries and any other expenses related to sale and marketing in favor of the company. The remaining expenses are classified within the general and administrative expenses. Expenses common between sale cost and general and administrative expenses are distributed according to fixed basis.

Zakat provision

The estimated Zakat is an obligation on the Company and is recognized in the consolidated financial statements attached to its statement of income in accordance with the Zakat and the opinion issued by the Saudi Organization for Certified Public Accountants as they are virtually calculated for the year in accordance with the principle of entitlement.

Zakat is calculated at the end of the year based on the modified net income or the Zakat Fund whichever is greater as per the regulations of General Authority for Zakat and Income in the Kingdom of Saudi Arabia. The company obtained the approval of the General Authority for Zakat and Income to submit a unified Zakat acknowledgement for both the Company and its subsidiaries.

Differences between the provision and the final assessment are treated within the year in which the assessment is received.

Impairment of non-current assets

At the date of each balance sheet, the company conducts periodical reviews to the book value of the tangible assets to ensure presence of any indication of occurrence of any loss resulting from impairment in the assets value. In the case of presence of such indication, the recoverable value of such asset is estimated to determine the size of loss. In cases where it is not possible to estimate the recoverable value of that asset, the company estimates the recoverable value of the cash generating unit to which that asset pertains.

When the recoverable amount of the asset (or the cash generating unit) is estimated at lower than its carrying value, the carrying value of that asset (or the cash generating unit) is reduced to its recoverable value. The impairment loss is recorded as expenses promptly in the consolidated income statement. If the impairment loss is subsequently reversed, the book value of the asset (or the cash generating unit) is increased to the amended recoverable value, provided that the increased book value shall not exceed the book value that would determined if no loss was recorded in the asset’s value (or the cash generating unit) in the previous years. The reverse of the impairment loss is recorded in the revenues promptly in the consolidated income statement.

Translation of foreign currencies

Transactions denominated in foreign currencies are translated to the Saudi riyal at the foreign exchange rates ruling at the date of such transactions. The monetary assets and liabilities in foreign currencies are translated to Saudi riyal as of the consolidated balance sheet date at the foreign exchange rates prevailing at the end of year. The earnings and losses resulting from the payments or foreign currencies translation are stated in the consolidated income statement.


3. Combination of businesses

Acquisition for the previous period of the subsidiary

The company acquired Zaiti Petroleum Services Company on 29 April 2015, where the share of the partner company “Madaen Star Group (Closed Joint Stock Company)” was transferred with 3,562,500 shares representing 95 % of the partners› shares to Saudi Automotive Services Company Sasco and the share of Partner: Majid Bin Mohammed Al Othman amounting to 187,500 shares which represents 5% of the partners› shares to Auto & Equipment Investment Co. LLD, (a subsidiary of Sasco). The Company has paid an amount of 61,374,884 SAR as a preliminary payment, including the purchase value of 58,000,000 SAR plus an amount of 3,374,884 SAR as a difference between the preliminary estimate calculated on the date of signing the sale and purchase agreement on 30 Nov 2014 and the current estimated account. The acquisition done by Sasco resulted in the consolidation of financial statements of Zaiti Petroleum Services as a subsidiary.

Sasco consolidated the assets and liabilities of Zaiti Petroleum Company on the date of acquisition. Net assets were recorded in the financial statements based on the interim valuation as on 30 June 2015. After application of the final purchase price provision done by the management during the second quarter of 2016, balances were adjusted as on 30 June, 30 September and 31 December 2016. This resulted in an increase in the value of the assets by 19,926,352 SR in the consolidated interim statement of financial position. The Company did not modify the statement of income, as on 31 December 2015 as the change amounts are immaterial. The final purchase price is allocated based on an independent professional valuation of the assets and the Company based on the book values of assets on the acquisition dates as summarized below has adjusted the balances:

Initial fair value realized upon acquisition

Fair value recognized on acquisition, April 2015 (Final)

SR

Initial Fair value recognized on acquisition, April 2015 (Initial)

SR

Assets:

Property and equipment

Trade receivables and in-advance expenses (net)

Inventory

Goodwill

Cash and cash equivalents

52,730,143

15,974,458

1,361,972

4,308,993

3,298,767

37,557,209

15,530,033

1,361,972

--

3,298,767

Total assets 77,674,333 57,747,981

Liabilities:

Accounts payable and other balances payable

End of service benefits provision

14,284,215

2,015,234

14,284,215

2,015,234

Total liabilities 16,299,449 16,299,449

Initial value of net assets 61,374,884 41,448,532

Total acquisition cost

Cash consideration 61,374,884 61,374,884

Cash flows upon acquisition

Net cash acquired from the subsidiary

Cash consideration

3,298,767

(61,374,884)

3,298,767

(61,374,884)

Net cash flows used in acquisition (58,076,117) (58,076,117)




4. Cash at hand and with banks

2016(SR)

2015(SR)

Cash in handCash with banksShort-term deposits

752,368110,718,38724,273,438

-151,462,82724,273,438

135,744,193 175,736,2655. Accounts receivable, net

2016(SR)

2015(SR)

Clients receivablesDoubtful debts

83,362,013(5,037,317)

40,804,500(4,162,117)

78,324,696 36,642,383

The following is a statement for the doubtful debts provision movement:

2016(SR)

2015(SR)

Opening balanceComponent from the provision

4,162,117875,200

4,162,117-

5,037,317 4,162,1176. Inventory

2016(SR)

2015(SR)

Goods and Petroleum materialsCustoms passage books and international licensesSpare partsOthers

23,960,3891,338,9571,250,512872,676

26,643,1671,719,175484,992-

TotalStagnant stock provision

27,422,534(98,535)

28,847,334(1,151,544)

27,323,999 27,695,790

The following is a statement for the dead stock provision movement:

2016(SR)

2015(SR)

Opening balanceComponent during the yearprovision no longer required

1,151,54498,535(1,151,544)

-1,151,544-

98,535 1,151,544

93,413,489 81,780,5047. Prepayment and other current assets

2016(SR)

2015(SR) (modified)

Prepaid expensesCustoms claimsPre- payments to contractorsPre-payments to suppliers

41,402,22637,214,84617,976,0728,771,962

39,385,37634,566,52623,949,0432,169,650

Letters of guarantee (note 22)Personnel loans and advancesInsurances in possession of othersOthers

7,530,1814,841,469603,5234,502,752

5,112,8513,416,271304,2363,188,029

Customs claims provision122,843,031

(24,725,974)

112,091,982

(18,234,068)

98,117,057 93,857,914

The following is a statement for the customs liabilities provision movement:

2016(SR)

2015(SR)

Opening balanceComponent from the provision

18,234,0686,491,906

14,479,0483,755,020

24,725,974 18,234,068

8. Investments and financial assets

2016(SR)

2015(SR)

Acquired investments for purpose of trading

Available-for-sale investments in current companies shares (8a)

Available-for-sale investments in non-current companies shares and provisions (8a)

-

31,423,169

6,190,500

21,520,881

34,384,679

6,190,500

37,613,669 62,096,060

A. Available-for-sale investments in current companies shares

Available-for-sale investments are shares of Saudi joint stock companies that are listed in the Saudi stock market. The following is the movement of such investments within the year ended on 31 December:

2016(SR)

2015(SR)

Opening balancelosses non-attained from revaluationof investments

34,384,679(2,961,510)

44,348,337(9,963,658)

Ending balance 31,423,169 34,384,679

A management agreement of investment portfolio was signed with Al Ahli Financial Company during the year ended on 31 December 2014 in a purpose to diversify the Company›s investments and sources of income. The nominal cost of the portfolio as on 31 December 2016 was 48,043,202 SAR.

These losses are recorded in a separate item in equity. The Company›s management does not believe that the year of impairment is considered a long year to judge on the sustainability and continuity of such impairment. The Company periodically determines such impairment and makes the necessary adjustments if any, when such impairment is found to be permanent.

B. Available-for-sale investments in non-current companies’ shares and provisions

Due to the lack of reliable evidence on the fair value of investments in unquoted companies, such evidences has been accounted for according to the cost method which is as follows:

2016(SR)

2015(SR)

Middle East Co. for BatteriesNational Tourism Co. AlSibag Co. Ltd.

4,565,5001,500,000125,000

4,565,5001,500,000125,000

6,190,500 6,190,500


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10. Intangible assets

2016(SR)

2015(SR) (modified)

Cost at beginning of year (modified)Additions during the yearPrevious years adjustments

8,214,3071,115,920-

8,105,0741,074,168(964,935)

Cost at end of year 9,330,227 8,214,307

Accumulated amortization at beginning of year (modified)Year amortization (note 18)Previous years adjustments

(4,033,699)

(1,474,265)-

(2,787,551)

(924,512)(321,636)

Accumulated amortization at end of year (5,507,964) (4,033,699)

3,822,263 4,180,60811. Under progress projectsThe following is the movement of under progress projects for the year ended on 31 December:

2016(SR)

2015(SR) (modified)

Opening balance Additions during the year

48,002,427155,750,748

41,813,07797,324,204

Transferred to property and equipment (note 9) (52,969,609) (91,134,854)

150,783,566 48,002,42712. Short and long term bank funds

A) Arab National BankThe Company concluded an agreement with Arab National Bank (“compliant to Islamic Shariah “) on 2 December 2013. The agreement was amended on 10 June 2014 to finance capital expenditures of 48.7 million SAR in addition to bond facilities and guarantees of 50 million SAR ending on 30 September 2015. These facilities are guaranteed in return of depositing real estate title deeds in favor of the Arab National Bank of value: 131 million SAR in return of a bond to request an amount of 99 million SAR. On 24 November 2015, the company has completed the procedures of early repayment of the loan by paying the current amount of value 20,025,000 SAR (twenty million and twenty five thousand Saudi riyals) whose payment was supposed to be scheduled up to 28 February 2017. The Company renewed the agreement on 5 January 2016 and signed it on 25 May 2016 to become (39,200,000) SAR which are Islamic bond and guarantees facilities with a cancellation of facilities limits in securitization by guaranteeing the issuance of real estate title deeds in favor of the Arab National Bank. The agreement has been renewed to 31 January 2017.

B) Saudi Fransi BankThe company concluded a Murabaha Financing Agreement (Shari’ah compliant) with Banque Saudi Fransi on 13 August 2012 with a total value of 255 million SAR as facilities for letters of guarantee amounting to 70 million SAR, real estate loan facilities of 90 million SAR, financing and plant development loans amounting to 55 million SAR, short-term financing 20 million SAR and letters of credit of 20 million SAR and ended on 31 July 2013. The company modified the agreement on 28 April 2015 is to become valued to 550,940,648 SAR. This agreement includes the renewal of current facilities with an amount of 245,833,332 SAR (110 million SAR as miscellaneous credit facilities and 135,833.332 as medium term financial facilities) and this with the guarantee of the order bill of exchange or mortgage of shares or deposit and mortgage of property title deeds. In addition to new facilities valued to 305,107,316 SAR and 55,107,316 SAR as miscellaneous credit facilities and 250 million SAR as long term financial facilities) and this with the guarantee of the order bill of exchange. This agreement is to finance the purchase of lands, construct new stations, improve, and develop stations. The agreement was renewed by the company on 17 February 2016 and signed on 20 June 2016 to be valued to 502.5 million SAR. This agreement includes a short term financing with an amount of 20 million SAR and issuance of letters of guarantee and letters of credit amounted to 120 million SAR and this with the guarantee of the order bill of exchange, mortgage of shares or deposit and mortgage of property title deeds. This agreement is to finance the purchase of lands, construct new stations, improve, and develop stations. This agreement shall end on 31 January 2017.

C) National Commercial BankThe Company concluded an agreement with the National Bank for facilities of 92 million SAR (Shari’ah compliant) with a mortgage guarantee of local shares to finance the expansion of the establishment or acquisition of the stations, which are valid until 1 June 2019.

The company on 25 August 2015 also concluded a new agreement (Shari’ah compliant) with The National Bank for facilities of 151,825,000 SAR including long-term loans of 101,125,000 SAR and bank guarantees of 25 million SAR and short-term loans of 25,700,000 SAR. This agreement is to expand the company’s projects, support its main activities and purchase new sites for the construction of fuel stations in addition to financing of the working capital. The Company amended the agreement in 1 May 2016 to be valued to 201,325,000 SAR including long-term loans of 150,625,000 and bank guarantee letters of 25 million SAR and short-term loans of 25,700,000 SAR. This agreement shall end on 1 June 2019.



D) SAABOn 25/5/2015, the company concluded a credit facilities agreement (Shari›ah compliant) with SAAB in the value of 150 million SR starting from the date of its execution to be used before 31/1/2016 under a security of note to order. This agreement includes 100 million SR long-term loan in addition to 50 million SR banking guarantees. This agreement is for the partial finance of the capital expenses and purchase of lands to construct new stations. The agreement is valid until 31/1/2017.

E) Gulf International BankOn 13/12/2015, the company concluded a Murabaha facilities agreement (Shari›ah compliant) with Gulf International Bank (Bahraini joint stock Co.) in the value of 150 million SR under the security of note to order. This agreement includes a medium-term loan amounting SR 50 million for a finance period of 5 years (two years grace period) to be repaid through quarterly equal installments, in addition to issuance of letters of guarantee amounting SR 100 million. This agreement tends to expand the company›s projects, support its main activities, purchase of new sites to construct stations and finance of working capital.

F) Saudi Holland Bank On 21/12/2015, the company concluded a Murabaha facilities agreement (Shari›ah compliant) with Saudi Holland Bank (Saudi joint-stock Co.), including a general facility limit in the value of 150 million SR comprising medium-term loan amounting 100 million SR for a finance period of 54 months (18 months as grace period) to be repaid through half yearly equal installments, in addition to letters of guarantee amounting 40 million SR and credit letters of 10 million SR. This agreement aims to expand the company›s projects, support its main activities, purchase of new sites to construct stations and finance of working capital.

G) Riyadh BankOn 21/12/2015, the company concluded a facilities agreement (Shari›ah compliant) with Riyadh Bank (Saudi joint-stock Co.), including banking letters of guarantee in the value of 50 million SR. This agreement aims to expand the company›s projects, support its main activities, purchase of new sites to construct stations and finance of working capital.

Below is the loans movement during the year ended 31 December:

2016(SR)

2015(SR)

Balance at beginning of yearReceived during the yearPaid during the year

421,497,554233,742,005(140,833,334)

278,643,448281,497,556(138,643,450)

Balance as of 31 December 514,406,225 421,497,554

Short-term fundsCurrent installments of long-term funds

44,594,800134,043,817

25,000,00068,350,692

long-term funds 335,767,608 328,146,862



13. Accounts payable

2016(SR)

2015(SR)

Petroleum material suppliersGoods and services suppliers

64,154,9358,428,718

36,363,31715,352,392

72,583,653 51,715,70914. Accruals and current liabilities

2016(SR)

2015(SR)

Revenues collected in advanceAccrued expensesPerformance bond Third parties custodiesOthers

33,926,4359,575,54711,468,6439,768,0685,400,371

24,405,7367,041,3676,426,4464,477,8163,954,644

70,139,064 46,306,00915. Due to shareholders

2016(SR)

2015(SR)

Subscription surplus – upon foundationSubscription surplus – second installmentStocks sold in auction Capital decrease surplusDividends

2,275,6501,537,89216,869,6882,119,77816,020,787

2,331,7001,537,89216,939,3502,119,77814,870,578

38,823,795 37,799,298

16. Zakat provision

During 2013 the company obtained ZITD approval on submission of a consolidated tax return for the company and its subsidiaries according to ZITD›s letter No. 191811434/16/.

2016(SR)

2015(SR)

Main Zakat base elements are as follows: Equities Net adjusted income Additions Deductions

720,273,78639,011,026360,002,304(996,552,300)

695,379,96629,066,791340,210,056(948,195,660)

Total 122,734,816 116,461,153

Zakat base 122,734,816 116,461,153

Below is the movement in the Zakat provision during the year ended 31 December:

2016(SR)

2015(SR)

Balance at beginning of yearPaid during the yearTransferred from Zaiti Co. Formed during the year

3,962,922(3,208,422)-3,655,000

4,333,155(3,801,233)40,0003,391,000

Balance as of 31 December 4,409,500 3,962,922



During 2013, the company got the approval of ZITD to submit a consolidated tax return for the company and its subsidiaries according to ZITD’s letter No. 7293/16/1434. During 2016, the approval in ZITD letter No. 19181/16/1434 was amended to add the acquired company Zaiti for Petroleum Services during 2015.

The company submitted its tax returns and paid the Zakat payable up to year ended 31 December 2015 and obtained the final Zakat certificate for year 2014 and a registered Zakat certificate for year 2015. The company received the final assessments from ZITD for the years from 2000 up to 2008. The net value of Zakat assessments differences payable by the company SR 6,052,264. The company submitted an objection to the Appeal Committee which is still under study. The company did finalize its Zakat position with ZITD until the date of issuance of these consolidated financial statements. In addition, the company did not receive any Zakat assessments from ZITD for the years from 2009 to 2014. 17. Statutory reserve

A 10% of the net profits is kept aside to form the statutory reserve according the Companies’ Act in KSA. The statutory reserve will continue to reach 30 % of the capital. This statutory reserve is not distributable among the shareholders.

18. General and administrative expenses

2016(SR)

2015(SR) modified

Salaries wages and the likeCustoms claims provision (note 7)Banking charges Professional and consultancy feesDepreciation Amortizations (note 10)Doubtful debts provision Rents Maintenance expenses Electricity and water Stationery and printing Dead stock provisionInsurance Others

19,539,7976,491,9062,509,6992,129,8961,661,7731,474,265875,200530,709242,025139,168119,00098,53596,1221,718,508

22,101,6343,755,0201,157,6041,424,8531,302,3821,246,148-643,427275,843123,470119,2991,151,544122,477271,853

37,626,603 33,695,55419. Other revenues

2016(SR)

2015(SR)

Late payment fineRevenues from deposits profits from sales of property and equipmentOthers

381,677293,456256,061402,693

526,665128,622439,11532,190

1,333,887 1,126,592


20. Sector information

The sector is an essential part of the company and carries out sale/ provision of certain services (sector/ business) or sale/ provision of services in a certain economic environment (geographical sector). Its profits and losses differ from the profits and losses of the other sectors. The company follows the business sector to report its sector information. The company›s sectors are represented in the following:

Retail and operation sector: include stations operation activities such as sale of fuels, foodstuffs, beverages and operation of residential and commercial buildings.

Investments sector: include activity of investment in other companies and in securities.

Saudi Automobile & Touring Association sector: carries out the issuance of customs cross border books and international driving licenses in addition to the sports activities.

Ostool Al Naqil services sector: carries out services of transportation of liquid and dry materials.

Franchise sector: is the sector that grants the right of using the trademarks of SASCO.

Below exists some financial data of those sectors for the year ended 31 December:

Retail & operation sector(SR)

Investments sector(SR)

Saudi Club for Vehicles sector(SR)

Ostool Al Naqil Sector(SR)

Franchise sector(SR)

Common assets and liabilities(SR)

Total(SR)

31 December 2016Total assetsTotal liabilities Net sales Investments revenues Income from main operations

1,594,766,028803,988,3361,081,400,342

3,624,788

12,030,780

25,390,39610,000-

7,669,741

(10,000)

30,797,6981,618,37320,471,234

-

3,503,002

29,663,23414,744,01819,663,545

-

4,069,154

500,00032,000-

-

(10,000)

(242,485,972)(110,279,078)(27,412,367)

-

-

1,438,631,384710,113,6491,094,122,754

11,294,529

19,582,936

31 December 2015Total assetsTotal liabilities Net sales Investments revenues Income from main operations

1,329,914,932577,039,322645,234,638

(4,266,446)

6,795,704

18,635,997169,480-

11,723,681

(13,492)

32,632,4765,452,65820,292,812

-

6,672,727

26,281,30915,233,66815,328,226

-

2,967,871

500,000--

-

-

(106,046,817)(28,305,923)(15,806,774)

-

-

1,301,917,897569,589,205665,048,902

7,457,235

16,422,810



21. Dividends

The ordinary general meeting on 13 Ragab 1437 corresponding to 20 April 2016 approved the Board recommendation in the General Meeting on 28 December 2015 to distribute cash profits to shareholders for the fiscal year 2015 in a total sum of 27 million SR and 0.5 SR per stock share in the ratio of 5% of the nominal value of the stock. Eligibility for profits will be to the shareholders registered with the securities depositary centers (Tadawul) at the end of the shareholders’ General Meeting day which be announced later.

22. Capital engagements and contingent liabilities

The company and its subsidiaries have capital engagements in respect of establishing assets and properties as of 31 December 2016 in a total amount of 63 million SR (2015: 89.9 million SR).

The company and its subsidiaries have contingent liabilities attributable to banking guarantees as of 31 December 2016 amounting 282.6 million SR (2015: 150 million SR).

There are some suits filed against the company. They are currently under litigation, but the result cannot be determined yet. The management do not expect the results of such cases will have material impact on the consolidated financial statements.

23. Financial instruments and risks management

The financial instruments contained in the company’s consolidated financial statements comprise essentially the cash with banks, accounts receivable, other assets, accounts payable, loans and other liabilities.

Credit risks The credit risks are represented in the failure of a party to a financial instrument in the fulfillment of its obligation causing the

company to incur a financial loss. The company’s financial instruments that may expose it to credit risks mainly include cash with banks and customers’ accounts. The company deposits its funds with financial institution of high credit classification. The company also has a policy in respect of the size of moneys deposited with each bank and the management does not expect any exposure to significant credit risks from the customers’ accounts due to that it has a vast base of customers working in different activities and various localities in addition that the company monitors the standing accounts receivable periodically.

Exchange rate risks The exchange rate risks arise because of changes and fluctuations in the financial instruments value due to change in the foreign

currencies rates. The company did not carry out any significant transactions in currents other than Saudi riyal and US Dollar. Whereas, the Saudi riyal exchange rate is pegged with the US $, the balances in US$ do not represent significant currencies risks. The company monitors the fluctuations of currencies rates and believes that the currencies exchange rate risks are not material.

Interest rate risks The interest rates risks arise from the probable changes and fluctuations in the interest rates that affect the future profitability or

the fair values of the financial instruments. The company is subject to interest rates risks on its liabilities on which bear interest and represented in banking facilities balances

as well as financial amounts due under Islamic financing. The company mitigates the interest rates risks through monitoring the probable fluctuations in the interest rates and hedges for such risks as necessarily required. The company believes that the interest rates risks are not material at this time.

Liquidity risks Liquidity risks are represented in non-ability of the company to meet its obligations related to the financial liabilities upon

their accrual. The liquidity requirements are monitored on a monthly basis and the management makes sure the availability of sufficient funds to meet any liabilities when they fall due.

The company’s current financial liabilities consist of financing under Murabaha, accounts payable and other liabilities. The company mitigates the liquidity risks by ensuring the availability of banking facilities, in addition to harmonizing customers’ accounts collection periods with the repayment of suppliers’ balances and other payable balances.


Fair value

The fair value is the amount in which an asset can be exchanged or a liability repaid between acquainted parties willing to dead at arm’s length transactions. The management does believe that the fair value of the company’s assets and liabilities materially differ from their book values.

24. Profitability per stock

The profitability of the stock is calculated from the net income by dividing the net income over the weighted average of the number of stocks existing at the yearend amounting 54 million stocks after taking into consideration retroactively the increase in the company’s stocks number during the year ended 31 December 2015, note (1).

The stock profitability is calculated from the main operations by dividing the income from main operations over the weighted average of the number of stocks existing at the end of year amounting 54 million stocks after taking into consideration retroactively the increase in the company’s stocks number during the year ended 31 December 2015, note (1).

25. Effect of adjustments to the financial statements for the period ended on 31 December 2015 Some of the comparison year figures have been reclassified to match with the current year’s figures.

a. The Company as collected the assets and liabilities of Zaiti Petroleum Company on the date of acquisition on 31 December 2015. The net assets were recorded in the financial statements based on the interim valuation. In addition, after applying a final purchase rate provision made by management during the second quarter of 2016, the balances have been adjusted as on 31 December 2015.

b. The amortization expense of an item of the intangible assets has been proved as on 31 December 2015 which showed no recognized amortization expenditure since 2012. Thus, the balances of the previous years are adjusted.

The amendments to the financial statements are as follows:

Balance before adjustment Balance on adjustment Balance after adjustment

Advances and other current assetsGood willproperty and equipment, netintangible assetsretained earningsstatutory reservegeneral and administrative expensesnet profit

93,413,48919,926,352834,224,5235,467,17960,648,87935,287,32933,373,91818,938,203

444,425(15,617,359)15,172,934(1,286,571)(1,254,408)(32,163)321,636(321,636)

93,857,9144,308,993849,397,4574,180,60859,394,47135,255,16633,695,55418,616,567

26. Comparison figures

Some of the comparison year figures have been reclassified to match with the current year’s figures.

27. Approval of the financial statements

These consolidated financial statements were approved by the Board dated 8 March 2017 (corresponding to 9 / 6 / 1438 AH).


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