SERVICE & PUBLIC UTILITY PROJECTS

Transcription

1 ON THE ACTIVITIES AND ACHIEVEMENTS OF THE COMPANY FOR THE PERIOD FROM 1/1/2014 TO 31/12/2014

2 A N N U A L R E P O R T COMPLETED PROJECTS SERVICE & PUBLIC UTILITY PROJECTS Cold And Freezing Stores Attameer Public Transportation Center Commercial Administrative Building Attameer Meat and Vegetable Market Attameer Vegetable and Fruit Wholesale Market REAL ESTATE PROJECTS Attameer International Car Auction Attameer Sunrise Cities Attameer Technical Services City Attameer Riyadh Hills COMMERCIAL CENTERS Attameer Wholesale Center Attameer Riyadh Market Attameer Plaza II Attameer Plaza I

3 EXPANSION OF EXISTING PROJECTS Expansion of Attameer Meat & Vegetable Market at Bat ha PROJECTSUNDER EXECUTION OTAIQA Central Market Attameer Plaza III Commercial & Residential Center PROJECTSUNDER STUDY AND DESIGN Refrigeration and Freezing Stores (3) Attameer Public Transport Center Development Project Master Plan to Develop Dhahira Area

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5 A N N U A L R E P O R T Custodian of the Two Holy Mosques King Salman Bin Abdulaziz His Royal Highness Prince Migrin Bin Abdulaziz Crown Prince, Deputy Premier His Royal Highness Prince Muhammad Bin Naif Bin Abdulaziz Deputy Crown Prince, the Second Deputy Premeir and Minister of Interior His Royal Highness Prince Faisal Bin Bandar Bin Abdulaziz Governor of Riyadh Region Honorary President of the Board of Directors

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7 A N N U A L R E P O R T BOARD OF DIRECTORS Eng0 Ibrahim Bin Muhammad AlSultam Chairman Dr. Tami Bin Hudaif Albugmi Vice Chairman Dr. Ali Bin Abdulaziz Alkhudairi Member Eng. Ali Bin Abdullah Alhassoon Member CEO Dr. Ayedh Bin Farhan Alqahtani Member Mansur Bin Abdullah Alzeer Member Dr. Nasser Bin Ali Alzilfawi Member Fawaz Bin Hamad Alfawaz Member Eng. Mishari Bin Nasir Alshethri Member Dr. Abdul Aziz Bin Hamad Almeshaal Member

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9 A N N U A L R E P O R T Contents Board of Director s Report Auditor s Report Financial Statements Notes to the Financial Statements

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11 A N N U A L R E P O R T The Board of Directors Report to The Shareholders of ARRIYADH DEVELOPMENT COMPANY on The Company s Works and Accomplishments for the period From 1/1/2014 to 31/12/2014 Respective Shareholders Greetings, The board of directors of Arriyadh Development Co. is pleased to present its annual report to the company general assembly, reviewing in brief the accomplishments made during the period from 1/1/2014 to 31/12/2014 in addition to the financial position list, income list, money use sources, the company s accounts auditor report and commitment by the company to the principle of transparency and disclosure in the Saudi Capital Market regulation for that period. Company Overview The company was incorporated as a national joint stock company per the Royal Decree No. (M/2) dated 9/2/1414H, in order to participate in developing the Riyadh central area and to fulfill investment aspirations all over the Kingdom. The Company is working for accomplishment of its shareholders aspirations by investment in the service and public interest projects in participations with the government and private sector and investment in all types of real estate planning and development with capital of SR 1,333,333,330 Saudi Riyals. Company s Vision To be a leading company in the field of real estate development and public interest service projects. Company s Mission Participation in meeting the society s needs of various real estate products (residential, commercial, office, recreational, hotel, etc.) at the highest level of planning and technical quality and contribution to providing the public interest services at the best quality and knowhow

12 A N N U A L R E P O R T Company s Strategy The Company s board of directors has approved in its fourth meeting «seventh session» convened on 24/11/2013 the strategic plan of the company extending till The most important initiatives for accomplishment of the strategic plan included restructuring of Arriyadh Development Co. to be transformed into a holding company. The top management concentrates on strategic planning, business development, investment and financing, providing the Company s projects at present and in the future to be separated in subsidiaries gradually, in a way each of them shall perform the operational tasks independently, besides the possibility of entering into strategic joint ventures with third parties pursuant to the conditions serving the Company s interests. The strategic plan initiatives included conducting feasibility studies for all new projects of the Company, whether residential, commercial, offices, recreational or hotel projects. Geographic Scope At present the company s projects are concentrated in Riyadh city. However, the company s bylaws allow the Company to invest in all Regions of the Kingdom

13 The Projects First: Projects Executed 1 Project Of Building Expansion For Attameer Meat & Vegetable Market at Bat ha: The project is located to south east of Attameer meat and vegetable market building at Bat ha, as an expansion to this building, on a total area of 500 sq. meter, including construction of 12 onefloor shops and (2) kiosks, and (8) Booths. Second: Projects Under Execution 1 Otaiqa Central Market Development Project: The Company signed on 25/11/2013 a contract for development of Otaiqa Central Market with a national company. The contract value is more than SR 242 million. The execution period is 24 months and the market area is 186,000 sq. meter. The project includes more than 660 shops for the activities of palm dates, honey, dairies, poultry, eggs, supplies, fish and meat and 660 vegetable and fruit shops and 16 commercial exhibitions for various activities besides the offices allocated for the Company s management and more than 2500 car parking. The project includes a yard for multiple purposes of seasonal festivals and celebrations, truck parking and parking for the employees. The market is provided with shaded passageways to protect shoppers from sun and facilitate their movement inside the market. The Company will finance this project from its own resources

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15 2 Building Expansion of the Wholesale Attameer Center (Attameer Plaza 3 Project): The Company has signed on 25/11/2013 a contract for construction of Attameer Plaza (3) complex of an area 7000 sq. meter with a national company. The contract value is more than SR 23 million. The execution period is 14 months. The project includes construction of 109 shops and 38 administration offices, besides provision of services and car parking. The project is an expansion of Attameer Wholesale Center at Dira quarter in the Government Palace area, central Riyadh. The Company will finance this project from its own resources. 3 Project For Construction Of Commercial And Residential Center At Attameer Public Transport Center: The Company signed on 25/11/2013 a contract for building a commercial and residential center located near the public transport center in Riyadh with a national company. The contract value is more than SR 26 million and execution period is 18 months. The project includes construction of 31 shops and 128 residential flats besides car parking and other services and utilities. The project area is sq. meter. The Company will finance this project from its own resources

16 A N N U A L R E P O R T Third: Projects Under Study and Design 1 Refrigeration and Freezing Stores (3): The project is located to the south of Attameer Public Transportation Center Azizia Riyadh, of area 30,000 sq. meter. It consists of refrigeration and freezing stores including all services needed such as the infrastructure, parking, administrative offices, buffets and truck parking. 2 Attameer Public Transport Center Development Project: On 23/12/1434H corresponding to 28/10/2013 the Company signed the minutes of meeting with Arriyadh Development Authority to use the piece of land located to the north of the Attameer Public Transport Center on the southern ring road, of area 18,000 sq. meter as a station for the trains and buses. The Projects and Planning Center at Arriyadh Development Authority shall construct a building consisting of the ground floor and three floors without costs on the Company. The ground floor will be allocated for various commercial and service shops, for the Company to serve the station. The first floor and second floor will be car parking for use by King Abdulaziz Project for Public Transport in Riyadh city, which will be managed by Arriyadh Development Authority. The third floor will be used by the Company as commercial and administrative shops for serving the station. The project s work completion is expected to synchronize with completion of King Adulaziz Public Transportation Project in the city of Riyadh. 3 Master Plan to Develop Dhahira Area: The project includes preparation of the master plan and economic feasibility study for developing Dhahira area in the Riyadh city center. The Australian consultant Urbis JHD has prepared and presented economic feasibility study and reports of the project s fifth (final) stage. Members of Development Alliance: Arriyadh Development Co. General Organization of Social Insurance. Public Pension Agency Al Meaiklia Commercial Center Saudi Company Saudi Real Estate Company Dar Al Arkan Company Solidair Saudi Company FAS Saudi Company Recently MOU was signed with Solidair International Company to introduce changes to the plan based on the comemnts received from the Saudi Tourism and Antiquities Authority and Arriyadh City Development Authority besides comments received from some members of the development alliance. The plan was submitted and is still under study by Arriyadh Development Authority

17 MARKETING The Company is characterized by its diversified service and real estate projects. Through the Marketing and Public Relations Department, the Company is seeking to draw appropriate marketing strategies. OPERATIONAL ASPECTS Attameer Wholesale Center: The center is located in the central area of Riyadh city on King Fahad road in the Gevernment Palace area on a plot owned by the Company of area 104,475 sq. meter. The center is characterized by its diversified activities through more than 1000 rental residential, office and commercial units including supplies for men, women and children, accessories perfumes, food stuff, mobile telephone devices, etc. Attameer Plaza Center (1): The center is located in the Riyadh city center on King Fahad road on a plot owned by the Company, of area 1200 sq. meter, including 19 shops for the accessories and food stuffs activities as complementary activities to Tameer wholesale center activity

18 A N N U A L R E P O R T Attameer Plaza Center (2): The center is located in Riyadh city center on three main streets (Al Meqaibra street, Imam Mohammed Ibn Saudi Street and Al Sabala Street) on a plot owned by the Company, of area 5000 sq. meter. It includes 83 shops specialized in the activities (men clothes, perfumes, Ouds, food material and sweets). Attameer International Car Auction The auction is located in the northeast of AlRiyadh city, on AlRiyadh al Dammam road, alremal avenue on land owned to the company. On a piece of land of area sq. meter. The auction offers its services for the customers as a neutral mediator for selling cars throughout integrating work environment (traffic, companies insurance, cars rental companies, and supermarket etc) and as a desire of the company to develop the actions of The of international reconstruction auction for cars and to increase its income, a contract of establishing a company with limited responsibility has been assigned, with 50% for alriyadh company for construction and 50% for the company of Saeed Mohammad Albassamy with capital of one million RS to handle the management and operating the auction through renting it from alriyadh company for construction in order to develop and improve the performance of the of international reconstruction auction for cars and expanding the activities related to cars whether selling and buying directly or through the internet or any other mean or offering extra services such as fixing and mending cars and selling spare parts and accessories in all their types and all its requirements in addition to the other programs such as helping on the road, insurance, guarantee expansion, issuing international licenses and customs crossing notes and everything related to that of arrangements and expanding all over the kingdom

19 Attameer Public Transport Center The center is located to south of Riyadh city on the southern ring road at Azizia quarter on a piece of land owned by the Company, of area 148,303 sq. meter. The center provides service to the travelers on land using buses and rent cars in a scheduled trips roundtheclock daily inside the Kingdom and abroad. Attameer Fruit And Vegetable Wholesale Market: The market is located to south of Riyadh city on the southern ring road to rear side of Riyadh Attameer market at Azizia quarter on a piece of land owned by the Company, of area 299,226 sq. meter. the market provides services to farmers as sellers, and buyers as traders and consumers. Riyadh Attameer Market, Refrigeration and Freezing Stores and the New Commercial Building: The market is divided into three segments: 1 Riyadh Attameer Market: The market is located in Riyadh city on the southern ring road t Azizia quarter on a plot owned by the Company, of area 24,377 sq. meter. The

20 A N N U A L R E P O R T market includes (155) rental units (offices, shops). The dominating activity of the market is specialization in palm dates trade. 2 Refrigeration and Freezing Stores The refrigeration and freezing stores are located in Azizia quarter south of Riyadh city, near Attameer Fruit & Vegetable Wholesale Market, on a piece of land owned by the Company of area 27,864 sq. meter. the project includes 56 units, characterized by flexible temperature control (refrigeration and freezing) (+5 to 20 O C. We started renting in the 3rd quarter of the year

21 3 The New Commercial Building Located on Hayer road in Riyadh city, Azizia quarter on a plot owned by the Company, of area 1,951.7 sq. meter. The project includes 25 rental units (offices and shops) for diversified activities. Renting started on the 4th quarter of Attameer Meat And Vegetable Market At Bat ha The market is located in Riyadh city center on both King Abdulaziz and Tareq Ibn Ziyad roads on a piece of land leased from Riyadh province Municipality, of area 13,691 sq. meter. The market is characterized by customer stability as a specialized market in selling meat, fish and vegetables

22 A N N U A L R E P O R T Company Properties First: Lands Owned by the Company, on which facilities are constructed: Department/Center Attameer Fruit and Vegetable Market Attameer International Car Auction Attameer Public Transportation Center Attameer Wholesale Center Riyadh Attameer Market Attameer Plaza Center (1) Refrigeration and Freezing Stores Attameer Plaza Center (2) Total Area Sq. Meter 299, sq. meter 241, sq. meter 148, sq. meter 104, sq. meter 24, sq. meter 1, sq. meter 27,864 sq. meter 5, sq. meter 817, sq. meter Second: Developed Lands Owned by the Company: Department/Center Shorooq cities lands and technical service city lands (common sales not completed*) Technical services city lands Azizia area lands Government Palace lands Telal Riyadh lands Land Thumama Total Area Sq. Meter 410,277 sq. meter 197,377 sq. meter 40, sq. meter 39, sq, meter 22, sq. meter 2,550,000 sq. meter 3,261, sq. meter * For Shorooq cities lands and technical service city lands, sales started not yet completed

23 PUBLIC RELATIONS AND SHAREHOLDERS RELATIONS The Public Relations is seeking introduction with the Company s existing projects and extending bridges for communication with the Company s shareholders and customers through the media channels, covering the Company s internal and external activities. ADMINISTRATIVE, TECHNICAL AND FINANCIAL AFFAIRS Human Resources As man is the most important production element, in this year emphasis was made in the operation jobs. Considerable efforts were made in filling the vacant jobs at the Company by qualified workers specially in the operation jobs at the centers and markets which were witnessing a high percentage of infiltration, leading to a considerable job stability. Information technology As a result of the company s interest of walking hand in hand with the modern technologies and developing and accelerating performance, the information technology administration has developed the operating systems in the wholesale market, transportation center, cars auction, and the estate investment system and increasing Censorship of the processes of getting in and out movements which leads to strict financial supervision in addition to fixing computer network and equipping rooms for servers, communications, and surveillance systems in the new projects under construction. Financial Results The Company accomplished total revenues for the fiscal year ending on 31/12/2014 reached (SR 269,175,702 ) including (SR 251,287,927) as activity revenues and (SR 17,887,775) other revenues, with decrease and increase by 29% and 225% respectively, for the year The Company expenses reached (SR 75,159,069) including (SR 62,765,789) activity expenses and (SR 12,393,280) administrative and marketing expenses. Net profit of the Company reached before deduction of Zakat (SR 194,016,633). Zakat allocation for the year 2014 reached (SR 4,650,816). An amount of (SR 18,936,582 ) was transferred to the general reserve which is equivalent to (10%) of the Company s net profits after deduction of Zakat

24 A N N U A L R E P O R T Effect of Operational Activities on Company Works Statement Operation Activity Lease Activity Land Activity Common Assets & Liabilities Total For the year ending on 31 December 2014 Total Assets Total Liabilities Operation Revenues Operation Costs Total Income For the year ending on 31 December 2013 Total Assets Total Liabilities Operation Revenues Operation Costs Total Income Comparative Analytic Presentation of Operation Results Statement Actual Data Actual Data Difference R.S Difference % Operation Revenues % Operation Costs % Total Profit % Administrative & Marketing Expenses % Operation Profit % There is an decreased of 28 % in the company total profit and an decreased of 30 % in the operation profit due to the following reasons: The operation activity revenue decreased at a rate of 29 % with an amount of SAR because of the decreased in Lands sales. The operation costs decreased at a rate of 33 % with an amount of SAR

25 Regulatory Due Payments Statement Statement Legal Zakat GOSI Chamber of Commerce & Industry Capital Market Tadawul Total FINANCIAL STATEMENTS FOR THE LAST FIVE YEARS Balance Sheet as of 31 December ( in Million Riyals ) Statement Total Assets , , ,64 Total Liabilities ,46 170,37 175,33 Total Equities of Shareholders , , ,31 Income Statement for the fiscal years ending on 31 December (in Million Riyals) Statement Operation revenue ,94 162,98 Other revenues ,78 8,98 4,44 Total revenues ,19 205,92 167,42 Operation Costs ,17 55,03 51,40 Other profit & revenue ,02 150,88 116,02 Total Expenses ,08 20,70 19,40 Net profit ,94 130,17 96,62 Operation profit ,54 99,

26 A N N U A L R E P O R T Cash flow Statement for the fiscal years ending on 31 December (in Million Riyals) Statement Cash flows from operation activity , Cash flows from investment activity , Cash flows from finance activity , OTHER INVESTMENTS The company carried out various investment operations including: Investing the company liquidity in Murabha Islamic Funds as per legally admitted contracts. shareholding in Tabuk Cement Co. with a sum of 600,000 SAR for shares (now reaching shares after dividend and profit distribution as shares) the market value as of 31/12/2014 reached SAR. RETAINED PROFITS The balance of retained profits as of 31/12/2014 reached SAR REMUNERATION OF DIRECTORS & EXECUTIVE COMMITTEE The remuneration for attending the meetings of the board and the committees thereof reached SAR CORPORATE GOVERNANCE Responding to the demands of capital market authority, its regulatory bylaws and in order that the company apply the best practices of disclosure and transparency, the company discloses the following to its respectful shareholders:

27 I) The applicable and the inapplicable provisions of corporate governance bylaw & relevant reasons The following schedule details the company compliance with Saudi corporate governance bylaw issued by Capital Market Authority. No. Article number as per the corporate governance bylaw Fully compliant Partially compliant Incompliant Cause of Incompliance 1 General rights of shareholders 2 3 (4) : Facilitating the shareholders practice of their rights and their attainment of information (5) : shareholders rights concerning general meetings 4 (6) : Voting Rights 5 (7) : shareholders rights of share profits Clause (b) cumulative voting it has been rejected after voting in the general meeting 6 (8) : disclosure Policies & Processes 7 (9) : Disclosure in the board report 8 (10) : Main Functions of the board of directors 9 (11) : Board Responsibilities 10 (12) : Board Composition 11 (13) : Board Committees & Their Independence 12 (14) : Audit Committee 13 (15): Nomination & Remuneration Committee 14 (16) : Board meetings & agenda 15 (17): directors Remunerations & Compensations 16 (18): Directors Conflict of Interest Act (6) funding has been obtained from Inmaa bank for five years and allowance period of the first two years and will be exposed in the next meeting of the ordinary General Assembly. Act (1) land has been bought in partnership with Adeer Real Estate Company whose ownership belongs to the admiration council member, DR ayed alqahtany who is a related party. And the assembly will be informed in the next meeting also the reporting will be attached with a special report from the Chartered Accountant. Also, a delayed sale contract with options has been assigned with Adeer Real Estate Company which gives alriyadh Construction Company the option right of selling its whole share of land or what s at least 35% with 5% increase of the purchase price and will be exposed to the next meeting of the ordinary General Assembly

28 A N N U A L R E P O R T II) Ranking the directors, the number of meetings during the year, the record of attendance, the names of the stocking companies of which board the directors are acting as directors : No. Director s Name Ranking Stocking companies of which board the directors are acting as directors 1 Eng. Abdullah Abdulrahman Al Moqbel Riyadh Municipality Representative Chairman Independent NonExecutive SAPTCO 2 Eng. Ali Abdullah Al Hassoun Executive AlAhsaa Development Co. 3 Dr. Tami Hadif Al Baqami 4 Dr. Ayedh Farhan Al Qahtani 5 Mr. Mansour Abdullah Al Zeir 6 Dr. Nasser Ali AlThilfawi 7 Dr. Abdulaziz Hamad Al Mashaal 8 Dr. Ali Abdulaziz Al Khudairi 9 Eng. Meshari Nasser AlShithri 10 Mr. Fawaz Hamad AlFawaz Independent NonExecutive Independent NonExecutive Independent NonExecutive Independent NonExecutive Independent NonExecutive Independent NonExecutive Independent NonExecutive Independent NonExecutive AlAhsaa Development Co. SMOU REALESTATE Co. N/A N/A N/A N/A N/A Umm AlQura Cement Company

29 The board of directors held (5) meetings from 01/01/2014 to 31/12/2014 No. Director s Name 1 st Meeting 02/01/ nd Meeting 14/04/ rd Meeting 14/07/ th Meeting 27/10/ th Meeting Attendance 30/12/2014 % 1 Eng. Abdullah Abdulrahman Al Moqbel Riyadh Municipality Representative Attendant Attendant Attendant Attendant Non Attendant 80% 2 Eng. Ali Abdullah Al Hassoun Attendant Attendant Attendant Attendant 100% 3 Dr. Tami Hadif Al Baqami Attendant 4 Dr. Ayedh Farhan Al Qahtani Attendant Non Attendant Non Attendant Attendant Attendant Attendant 80% Attendant Non Attendant Attendant 60% 5 Mr. Mansour Abdullah Al Zeir Attendant Attendant Attendant Attendant Attendant 100% 6 Dr. Nasser Ali AlThilfawi Attendant Attendant Attendant Attendant Attendant 100% 7 Dr. Abdulaziz Hamad Al Mashaal Attendant Attendant Attendant Attendant Attendant 100% 8 Dr. Ali Abdulaziz Al Khudairi Attendant Attendant Attendant Attendant Attendant 100% 9 Eng. Meshari Nasser AlShithri Attendant Attendant Attendant Attendant Attendant 100% 10 Mr. Fawaz Hamad AlFawaz Attendant Attendant Attendant Attendant Attendant 100% III) Interests & Equities of Directors, Senior Executives & Their Wives & Minors Interests & Equities of Directors No. Director s Name Period Start 01/01/2014 % Period End 31/12/2014 % 1 Eng. Abdullah Abdulrahman Al Moqbel Riyadh Municipality Representative 20,000 shares 0.02% 26,666 shares 0.02% 2 Eng. Ali Abdullah Al Hassoun 21,100 shares % 28,133 shares 0.022% 3 Dr. Tami Hadif Al Baqami 5,000 shares % 6,666 shares 0.005% 4 Dr. Ayedh Farhan Al Qahtani 1,000 shares % 1,333 shares 0.001% 5 Mr. Mansour Abdullah Al Zeir 2,000 shares % 2,666 shares 0.002% 6 Dr. Nasser Ali AlThilfawi 1,000 shares % 1,333 shares 0.001% 7 Dr. Abdulaziz Hamad Al Mashaal 100,000 shares 0.1 % 1,000 shares 0.1% 8 Dr. Ali Abdulaziz Al Khudairi 14,000 shares % 18,666 shares 0.014% 9 Eng. Meshari Nasser AlShithri 15,100 shares % 20,133 shares 0.015% 10 Mr. Fawaz Hamad AlFawaz 1,000 shares % 1,333 shares 0.001%

30 A N N U A L R E P O R T Key Executives Interests & Equities Name Job Title Period Start 01/01/2013 % Period End 31/12/2013 % Eng. Ali Abdullah Al Hassoun Chief Executive Officer Ceo shares % shares % Mr. Fayez Abdullah Al Ahmari Head Of Legal Affairs Unit 0 shares 0%. 0 shares 0%. Mr. Mamdouh Farag Ahmed Sehata Director Of Finance Department 0 shares 0%. 0 shares 0%. En. Mahmoud Ahmed Ahmed Projects & Maintenance Manager 0 shares 0%. 0 shares 0%. IV) Board Committees Competencies Executive Committee Brief Description of Committee Tasks : Studying the executive plans, the operation policies and developing the company projects besides approving consultation studies, systems and researches for projects and work programs in addition to performing any works or assignments assigned by the board of directors. Committee Members & Number of Meetings in 2014 During the period from 01/01/2014 to 31/12/2014 No. Committee Members Number of Meetings 1 Eng. Ali Abdullah Al Hassoun Committee Chairman 2 Mr. Mansour Abdullah Al Zeir Committee Member 3 Dr. Abdulaziz Hamad Al Mashaal Committee Member 3 4 Eng. Meshari Nasser AlShithri Committee Member Brief Description of Committee Tasks : Audit Committee Supervising the internal audit management in the company to verify the extend of its efficiency to perform works and assignments specified by the board of directors. Studying the internal audit system and submitting a written report about the company recommendations in this concern. Studying the internal audit reports and following up the performance of corrective processes to the stated remarks. Providing the board with nomination to appoint the chartered accountants besides removal of the same and specifying their fees; they must be ensured to be independent upon nominating them. Following up the works of chartered accountants and approving any work beyond the scope of audit assigned there to upon performing the audit works

31 Studying the plans of audit with the chartered accountant and providing remarks about them. Studying the remarks of the chartered accountant concerning the financial statements and following up the relevant results. Studying the initial and the annual financial statements before presenting them to the board of directors, expressing opinion and providing recommendation in this regard. Studying the adopted accounting policies, expressing opinion and providing recommendation in this regard. Committee Members & Number of Meetings in 2014 : During the period from 01/01/2014 to 31/12/2014 No. Committee Members Number of Meetings 1 Dr. Tami Hadif Al Baqami Committee Chairman 2 Fawaz Hamad Al Fawaz Committee Member 3 Dr. Ali Abdulaziz Al Khudairi Committee Member 4 4 Dr. Ayedh Farhan Al Qahtani Committee Member Nomination & Remuneration Committee Brief Description of Committee Tasks : Providing nominations to the board of directors for the board directorship according to the approved policies and parameters, considering not to nominate anyone preciously convicted of any crime of dishonesty and dishonor. Annual review of the required needs of appropriate skills for the board directorship besides developing a description for the capabilities and the qualifications required for the board directorship. Revising the board structure and forwarding recommendations concerning the changes that can be carried out in this regard. Specifying the aspects of strength and weakness in the board of directors and suggesting to handle them in conformity with the company interests. Conducting annual assurance concerning the independent directors besides ensuring that there is no conflict of interests if the director occupies a directorship in a another company board. Developing clear policies for the remunerations and the compensations of the directors and the senior executives, taking into consideration to use performance related parameters upon developing such policies

32 A N N U A L R E P O R T Committee Members & Number of Meetings in 2014 : During the period from 01/01/2014 to 31/12/2014 No. Committee Members Number of Meetings 1 Dr. Ali Abdulaziz Al Khudairi Committee Chairman 2 Eng. Ali Abdullah Al Hassoun Committee Member 3 Dr. Tami Hadif Al Baqami Committee Member 1 4 Dr. Nasser Ali AlThilfawi Committee Member Investment Committee Brief Description of Committee Tasks : The investment committee will assume the tasks of proposing and studying investment opportunities and providing recommendations to the board of directors besides supervising the phases of preparing the economic feasibility study for the projects. Committee Members & Number of Meetings in 2014 : During the period from 01/01/2014 to 31/12/2014 No. Committee Members Number of Meetings 1 Dr. Abdulaziz Hamad Al Mashaal Committee Chairman 2 Eng. Ali Abdullah Al Hassoun Committee Member 3 Mr. Fawaz Hamad AlFawaz Committee Member 12 4 Mr. Mansour Abdullah Al Zeir Committee Member V) Remuneration & Compensation: No. Statement Executive Directors (Independent) Non Executive Directors Five of Senior Executives who received the highest remunerations and compensations including CEO (director) and the Financial manager 1 Salaries & Compensation Allowances Regular & Annual Remuneration Incentive Plans Any other compensation or benefit paid monthly or annually

33 VI) Results of Annual Audit for the efficiency of internal audit processes The external auditor tasks include reviewing the final financial data of the company besides the assessment of the internal audit system including the accounting system from the theoretical and the applied aspects; the company provides a report about the weaknesses of the system and the ways adopted to handle them in addition to enabling the auditor to review the reports of the internal audit unit for the related period. The internal audit unit under the supervision of audit committee will carry out continuous financial, operational and technological processes to verify the efficiency of the internal audit systems in terms of protecting the company assets in addition to the assessment of work risks and measuring the sufficiency of performance; the internal audit unit will submit quarterly regular reports to the audit committee, including the results of internal audit assessment. The annual report of the audit committee asserted the effectiveness and the quality of internal audit processes and it revealed no essential weakness during the year 2014 G. BOARD RESOLUTIONS The accounts records have been duly developed accounting to the accounting standards issued by the Saudi commission of chartered accountants. There is no doubt to be mentioned concerning the company ability to continue its operation. The internal audit system has been developed on sound bases and it has been carried out perfectly. DISCLOSURES Long term fund of ( SR)has been obtained from the bank of Inmaa, and the funding duration lasts for 5 years starting from 10/12/2014 a.c, with allowance period for the first and second years in order for financing part of purchasing value of the company s share which reaches 85% of the whole land in the northeast of alriyadh city,which has been bought from Ithraa real estate company, and its space reaches Sqm for 332 RS for the meter the purchasing cost for the company is RS and the rest of the land space which is about 15% has been bought by Adeer Real Estate Company with the same purchasing price of the company whose ownership belongs to the admiration council member, DR Ayed Alqahtany who is a related man, the admiration council member has paid his whole share of the deal which reaches RS, and the company didn t fund his share, and the issue will be exposed in the next meeting of the ordinary General Assembly of the company. The company has assigned a delayed sale contract with options with Adeer Real Estate Company which belongs to the admiration council member, DR Ayed bin Farhaan alqahtany which gives alriyadh construction company

34 A N N U A L R E P O R T the option right of selling its whole share or at least 35% of its land share with 382 RS for each meter with an crease of 15% of purchasing value before 1/12/2015, and he is a related person. Except for this, there are no other contracts with parties related to the administration council members or the executive president or his assistants or the Chief financial officer or any of their relatives. The company has no knowledge about any arrangements of agreements under which a director or a senior executive has transferred any salary or compensation. The company has no knowledge about any arrangements of agreements under which any a corporate shareholder has assigned its rights in the profits. There no other investments or provisions created for the interest of anyone working for the company. The company had no notification concerning any interest in the category of shares with voting rights and any change there of during the last fiscal year. The company has no debt instruments transferable to shares and any preemption rights, underwriting rights or similar rights. The company has not issued any transfer rights or underwriting under debt instruments transferable to shares, any preemption rights, underwriting rights or similar rights. The company has not refunded, purchased or precluded any refundable debt instruments. 150 million RS has been distributed on 28/4/2014 for the shareholders of the company by 1.5 RS for each share as annual profits of the period lasting from 1/1/2013 till 31/12/2013. The capital has been increased from RS to RS, with increase ratio of 33.33%, and shares number before the increase was shares, shares number after the increase was shares as an increase in the capital through guaranteeing free shares to the shareholders of the company that 1 share has been given for every 3 shares. The capital increase has been achieved in the capital through capitalizing RS from the remaining profits act. The Eligibility of the guarantee shares for the shareholders registered in the company books at stocks deposit center (Circulation) at the end of the Circulation of the assembly holding day on 14/6/1435 HA, 14/4/2014. The seventh act of the basic system of the company has been modified in accordance with the capital increase after the assembly acceptance on 14/6/1435HA, 14/4/2014. The Bonus shares has resulted fractions with the number of shares, these shares fractions have been sold on 24/6/1435HA, 24/4/2014 with total sum of RS and with price mean of RS, and the resulting cash of shares fractions sale has been put to the deservers of these fractions on 30/7/1435 HA, 29/5/2014. RISKS FACING THE COMPANY The risks indicated hereunder do not include all the risks that might face the company, there may be additional risks and they are not known to the company or the company may deem them unessential and they may hinder the company operations

35 FLUCTUATION IN THE COMPANY PRO CESSES AND DEPENDENCE ON SERVICE PROJECTS The company works depend on two main aspects: (1) public utility & service projects 2) commercial centers & realestate projects. The revenue of such projects may be affected in the future by the extend of demand, which might result in adverse effect on the company financial position and operation results besides affecting the company activity in the service projects, which may change the demand of such projects in various seasons particularly in Riyadh and generally in the kingdom. However, the kingdom tended to projects providing miscellaneous services and commodities in the fields of transport, vehicles, vegetables, fruits, meats and commercial centers whose growth is positively related with the population growth. REVENUE COLLECTION The sources of the company revenues constitute centers and markets and entail the collection by checks, the bank deposits and particularly the cash collection, however, the company faced such risks through preparing precise documentary courses and applying autosystems besides electronic control systems to limit such risks. EXPANSION STRATEGY Arriyadh development Co. has adopted five plan in the previous years and it has resulted in an unprecedented growth in the operation profits during the last five years; the company approved new projects in the two fields of public utility and realestate development. The new projects of the company. The new projects of the company may be subject to fluctuations in the tastes of consumers and the volume of demand, which might affect adversely on the results of operational processes of the company and its financial position. COMPANY WORKS PROGRESS OBSTRUCTION The company depends for its activity on the infrastructure of its projects which increases the confidence of the dealing parties. Necessary precautions have been processed to protect its properties from natural disasters or terroristic acts by applying the highest standards of safety through the regular maintenance and the exploitation of security protection. However, there is no guarantee for the company that its work progress will not be affected, even indirectly, by anyone of those hindrances

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37 A N N U A L R E P O R T SAUDIZATION The company has no risks because it is ranked in the premium domain as per the classification made by Ministry of Labor, however, there is nothing to guarantee the company ability to maintain the current percentage of Saudization; most importantly, the company has precise updated and documented regulations for all the practical assignments, besides the firm policy to circulate position, continuous training and Saudization. PROFIT DISTRIBUTION POLICY As a general policy adopted in this concern, the board of directors recommends in the end of each fiscal year to distribute the net profits of the company after deducting the all general expenses and other costs including the legally applicable Zakat as indicated in article (44) of the company articles of association as follows: 10 % of the net profits will be withheld to compose the regulatory reserve; the ordinary general meeting may stop such with holding if the said reserve becomes equal to half of the capital. An amount equal to 5 % of the paid up capital will be distributed to shareholders out of the remaining profit. 5 % of the remaining profit will be provisioned as a remuneration to the directors, considering relevant resolutions and instruction issued by the competent authorities; then the balance of profit will be distributed to the shareholders as additional dividends. CONCLUSION We take this opportunity to cite the support provided by the custodian of the two holy mosques King Salman Bin Abdulaziz Al Saud and the crown prince / Muqrin Bin Abdulaziz and the Deputy Crown, The Second Deputy Primeir and Minister of Interior Prince /Mohammed Bin Nayef to the private sector. We further cite the contribution of HRH prince / Faisal Bin Bandar Bin Abdulaziz, vicemayor Riyadh region for the efforts exerted through continuous guidance and follow up to serve the purposes stated in the company articles of association; We also thank you for replying this invitation and your confidence in the board of directors, furthermore, we thank all the employees of the company for their faithful efforts to improve the company performance and the growth of shareholders equities. May Peace and God s mercy and blessing be upon you Directors of The Board

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39 A N N U A L R E P O R T INDEPENDENT AUDITORS REPORT SHAREHOLDERS OF ARRIYADH DEVELOPMENT CO. (A Saudi Joint Stock Company) Scope of Audit: We have audited the accompanying balance sheet of ARRIYADH DEVELOPMENT CO. (A Saudi Joint Stock Company) as of December 31, 2014 and the related statements of income, cash flows and changes in shareholders equity for the year then ended, and the notes from (1) to (30) which are an integral part of these financial statements. These financial statements are the responsibility of the Company s management in accordance with Article (123) of the Companies Regulations. Our responsibility is to express our opinion on these financial statements based on our audit and the informations and explanations we obtained which we considered necessary for the purposes of our audit. We conducted our audit in accordance with auditing standards generally accepted in the Kingdom of Saudi Arabia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. Unqualified Opinion: In our opinion, the financial statements referred to above: 1. Presentfairly, in all material respects, the financial position of ARRIYADH DEVELOPMENT CO. (A Saudi Joint Stock Company) as of December 31, 2014 and the results of its operations and its cash flows and changes in shareholders equity for the year then ended based on the presentation and disclosure of the information included in the financial statements and in conformity with generally accepted accounting principles in the Kingdom of Saudi Arabia which are suitable to the Company s operations. 2. Comply with the financial statement preparation and presentation requirement of the Commercial Code and the Company s bylaws. AlAzem & AlSudairy Certified Public Accountants 24 Rabi Awal 1436H (January 15, 2015) Riyadh, Saudi Arabia Abdullah M. AlAzem License No

40 A N N U A L R E P O R T BALANCE SHEET AS OF DECEMBER 31, 2014 (Saudi Riyals) ASSETS Current Assets: Banks balances (Note 3b) 30,579,651 23,571,874 Investment in securities for trading (Note 3c) 30,000,000 Accounts receivable, net (Notes 3d and 4) 35,852,663 25,606,252 Prepayments and other assets (Note 5) 17,841,972 5,170,176 Total current assets 114,274,286 54,348,302 Noncurrent Assets: Deferred financing expenses (Notes 3e and 6) 5,575,685 Investments with bank available for sale (Note 8) 455,887,983 Investments in securities available for sale (Notes 3c and 7a) 41,371,009 2,183,121 Projects under progress (Note 9a) 915,174,211 32,961,469 Real Estate Investments, net (Notes 3f and 10) 1,278,946,337 1,312,901,390 Property and Equipment, net (Notes 3g and 11) 569, ,969 Total noncurrent assets 2,241,636,333 1,804,433,932 Total assets 2,355,910,619 1,858,782,234 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities: Accounts payable (Notes 3i and 12) 35,812,403 33,207,509 Accrued expenses and other liabilities (Note 13) 56,484,112 48,220,619 Deferred revenue (Note 14) 34,648,176 28,011,526 Accrued dividends distribution (Note 15) 49,638,624 46,426,185 Zakat provision (Notes 3k and 16b) 13,993,376 15,548,972 Total current liabilities 190,576, ,414,811 Noncurrent liabilities: Long term loans (Note 17) 450,000,000 End of Service Benefits (Note 3l) 6,330,509 4,954,834 Total noncurrent liabilities 456,330,509 4,954,834 Total liabilities 646,907, ,369,645 Shareholders Equity: Capital (Note 18) 1,333,333,330 1,000,000,000 Statutory reserve (Note 19) 174,103, ,167,284 Retained earnings 210,958, ,662,184 Unrealized (losses) gains on investment in securities available for sale (Notes 3c and 7a) (9,391,866) 1,583,121 Total Shareholders equity 1,709,003,419 1,682,412,589 Total liabilities and Shareholders equity 2,355,910,619 1,858,782,234 The accompanying notes from (1) to (30) are an integral part of these financial statements

41 STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2014 (Saudi Riyals) Revenue (Notes 3m and 21) 251,287, ,845,848 Cost of Revenue (Notes 3n and 22) (62,765,789) (93,030,747) Gross profit 188,522, ,815,101 Marketing expenses (Notes 3n and 23) (104,774) (406,679) General and administrative expenses (Notes 3n and 24) (12,288,506) (12,026,817) Net profit from main operations 176,128, ,381,605 Other revenue (Notes 3m and 25) 17,887,775 5,511,212 Net profit for the year before Zakat 194,016, ,892,817 Zakat (Notes 3k and 16b) (4,650,816) (6,206,412) Net profit for the year 189,365, ,686,405 Net profit per share for the year (Note 3o) 1,53 2,50 The accompanying notes from (1) to (30) are an integral part of these financial statements

42 A N N U A L R E P O R T STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2014 (Saudi Riyals) Cash Flows from Operating Activities: Net profit for the year 189,365, ,686,405 Adjustments to reconcile net profit to net cash provided by operating activities: Depreciation 19,728,776 18,544,674 End of service benefits 2,532,202 1,219,009 Zakat provision 4,650,816 6,206,412 Gain from selling assets (20,832) Gain from selling real estate investments (26,398,534) (105,773,602) Changes in assets and liabilities: Accounts receivable (10,246,411) 632,180 Prepayments and other assets (12,671,797) 2,266,403 Accounts payable 2,604,894 3,959,644 Deferred Revenue 6,636,650 (9,150,570) Accrued expenses and other liabilities 8,263, ,403 End of service benefits paid during the year (1,156,527) (1,324,466) Zakat paid during the year (6,206,412) (10,170,030) Net cash provided by operating activities 177,102, ,413,630 Cash Flows from Investing Activities: Investments in securities for trading (30,000,000) 275,424,229 Investments with bank available for sale 455,887,983 (455,887,983) Investments in securities available for sale (50,162,875) Purchase of property and equipment (364,216) (222,749) Projects under progress (882,212,742) (29,985,298) Proceeds from disposal of assets 29,750 Proceeds from disposal of real estate investments 40,919, ,384,944 Net cash used in investing activities (465,931,945) (57,257,107) Cash Flows from Financing Activities: Deferred financing expenses (5,575,685) Long term loan 450,000,000 Dividend distribution paid (148,587,560) (99,964,878) Net cash provided by (used in) financing activities 295,836,755 (99,964,878) Net increase (decrease) in banks balances 7,007,777 (808,355) Banks balances at beginning of the year 23,571,874 24,380,229 Banks balances at end of the year 30,579,651 23,571,874 Noncash item: Transfer from project under progress 73,239,813 Accrued dividends distribution Unrealized (losses) gain on reevaluation 3,212,439 1,835,122 in securities available for sale (10,974,987) 312,426 The accompanying notes from (1) to (30) are an integral part of these financial statements