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Annual Report Contents Annual Report Contents Message to Business Key Figures Performances The Special the Board of Lines in 2020 Results in Adminstration Thanks Directors 2020 System 2 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 3 4 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 5 Message to the Board of Directors 7 new restaurants were also opened, and new sale lines were added to the frozen meats and bakeries sectors. Our Dear Esteemed Shareholders at Herfy Food Services Company It is with great pleasure that the Company’s Board In accordance with the company’s expansion plan, 12 new restaurants will be opened in of Directors is presenting the Annual Report for the year 2021, as well as continuing increasing the sales lines for its industrial sectors. the fiscal year ending in December 31st, 2020. This report highlights the company’s activities The company, represented by its Board of Directors and executive management, will and most prominent achievements, as well as its continue its pursuit towards maintaining and increasing its market shares and towards financial results and auditors’ report for the year improving its performance, in addition to abiding to the disclosure and transparency 2020. policy through applying corporate governance regulations and other relevant Despite the exceptional economic challenges faced by the entire business sector in regulations issued by the Capital Market Authority and the Ministry of Commerce and 2020 due to the global pandemic of Covid-19, which in turn affected market competition Investment. and consumer spending behavior, and led to the closure of a number of activities, the company, with the grace of God, managed to maintain its market share in all its sectors. The Board of Directors is honored to discuss this report and answer any questions The company was able to generate annual profits as well as achieve growth in some of during the general assembly which will be held on the approved upon date by the its sectors, i.e bakeries, meat factory and the confectionary shops. regulatory authorities. 7 new restaurants were also opened, and new sale lines were added to the frozen meats and bakeries sectors. Lastly, we look forward to your compliace with the details mentioned in this report. Please accept our sincere gratitude for your kindness and support. Herfy Company Board of Directors March 2021 6 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 7 First: The Company’s Main Business Lines 8 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 9 The Company’s Main Business Lines The company operates the below main business lines: Herfy Food Services Co. is a Saudi joint stock Operation and management of a chain of fast-food chain of restaurants under its unique identity. company, registered in the Kingdom of Saudi Arabia under Ministerial Production of all kinds of baked goods in 2 factories in Riyadh, in addition to the operation and management of a chain of chocolate & confectionary shops, Resolution under its unique identity. No. (302 / S) on 11/22/1428 H and Commercial Registry No. 1010037702 dated 4/5/1401 AH Production of all kinds of processed meats in the factory located in the city of Riyadh, under its own unique identity. 10 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 11 Company Timeline Facts & Figures Establishment of Herfy Transformation of Herfy Food Food Services Company. Services Company to Joint Stock Company. Launch of Herfy’s 1st restaurant in KSA. Expansion of Herfy’s restaurant network to 172 branches in KSA. 33 million burgers sold in 2020 Opening Herfy’s bakery in Opening Herfy factory for cake KSA. and pastries. Startup of Herfy’s factory Herfy’s restaurant chain for products used in becomes 368 branches serving meals and sandwiches at KSA. the 2nd Industrial area. years serving our restauranst across great nation the Kingdom First year to begin Herfy’s restaurant chain supplying food products in becomes 388 branches serving online orders through the the Saudi market. KSA. application 12 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 13 Second: The Company’s Key Figures in 2020 14 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 15 Key Figures in Year 2020 A) Highlights & Summary B) Statement of Financial Position As of 31 December, for a period of 5 years, from 2016 to 2021(Million Saudi Riyals) Net Sales Net Profit Assets 2016 2017 2018 2019 2020 52.84 Total Current Assets 301.943 305.393 339.143 849.350 367.304 Total Non-current Assets 1,040.119 1,085.283 1,103.257 1,614.682 1,581.774 nillion Riyals million Riyals The net sales for year 2020 amounted The company achieved a net profit of Total Assets 1,342.062 1,390.676 1,442.400 2,463.033 1,949.078 to 1,076 billion riyals compared to 52.84 million riyals in 2020 vs. 196.09 1,288 billion riyals the preceding year. million riyals in 2019, resulting in a drop of 72.7% in net profit due to the Covid-19 pandemic impact. Liabilities & Shareholders’ Equity Gross Profit Total Current Liabilities 241.600 268.880 298.656 408.116 401.989 Total Non-current Liabilities 297.753 254.981 210.876 627.360 587.694 million Riyals Total Liabilities 539.353 523.861 509.532 1,035.476 989.683 The Company’s gross profit in year 2020 amounted to 249.50 million riyals versing 392.63 million riyals in the preceding year. Shareholders’ Equity Net Profit Capital 462.000 646.800 646.800 646.800 646.800 Operating Profits Statutory Reserve 138.968 38.972 59.389 499.80 85.783 71.148 Retained Profits 201.741 181.043 226.678 270.687 226.812 million Riyals million Riyals Total Equity 802.709 866.816 932.867 997.986 959.395 The company distributed 71.148 million The Company’s operating profits as profits to its shareholders during amounted to 91.33 million riyals in year 2020 at an average of 1.1 riyal /share, Total Liabilities & 1,342.062 1,390.676 1,442.400 2,463.033 1,949.078 2020 versing 238.5 million riyals in the for the second half of the year, and Shareholders’ Equity preceding year. those profits represented 11% of the nominal value/share. 16 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 17 C) Income Statement E) Analysis Of The Company’s Net Sales For 5 years, from 2016 to 2021 (Million Saudi Riyals) Based on the major business sectors over years 2019 and 2020 (Million Saudi Riyals) Statement 2016 2017 2018 2019 2020 Major Sectors 2020 2019 change +/- change % Net Sales 1,156.68 1,157.79 1,227.27 1,288.31 1,076.083 Restaurants 831.408 1,092.053 -260.645 -24% Sales cost 809.080 816.05 882.20 895.67 826.494 Processed Meat Factory 75.355 43.815 31.540 72% Gross Profit 347.60 341.74 345.07 392.64 249.589 Bakery, Factories & Other Sectors 169.320 152.442 16.878 11% Net Profit 217.57 200.04 204.17 196.09 52.839 Total 1,076.083 1,288.310 -212.227 -16% D) Comparative Income Statement For year 2020 in comparison to the preceding year 2019 (Million Saudi Riyals) Statement 2020 2019 change +/- change % Net Sales 1,076.083 1,288.310 -212.227 -16% Sales cost 826.494 895.673 -69.179 -8% Company’s Net Sales Based on the major business sectors in year 2020 Gross Profit 249.589 392.637 -143.048 -36% General & 99.190 85.476 13.714 16% Administrative Restaurants expenses Sales, Marketing, & 84.003 85.573 -1.570 -0.2% 7% Distribution Expenses 16% Income from major 66.396 221.588 -155.192 -70% Bakeries operations Other Expense & Income 77% Financing expenditures 33.132 37.858 -4.726 -12% Net other income 24.935 17.416 7.519 43% Processed Meats Income before Zakat 58.199 201.146 -142.947 -71% Zakat 5.360 5.058 0.302 6% Restaurants Bakeries Processed Meats Net income for the period 52.839 196.088 -143.249 -73% The drop in net profit is mainly due to the impact of the pandemic Covid-19 18 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 19 F) Net Sales Analysis G) Company Net Sales Based on geographic distribution within KSA for 2020 & 2019 (Million Saudi Riyals) For the period of 5 years 2016-2020 (Million Saudi Riyals) Region 2020 2019 change +/- change % 2016 2017 2018 2019 2020 Central Region 628.880 747.212 -118.332 -16% 1,156.683 1,157.792 1,227.270 1,288.310 1,076.083 Eastern Region 137.398 167.483 -30.085 -18% Southern Region 111.012 141.716 -30.704 -22% Northern Region 100.855 103.066 -2.211 -2% H) Company Net Profit For the period of 5 years 2016-2020 (Million Saudi Riyals) Western Region 97.938 128.833 -30.895 -24% Total 1,076.083 1,288.310 -212.227 -16% 2016 2017 2018 2019 2020 217.080 200.042 204.170 196.087 52.839 Geo-demographic Analysis Northern I) Shareholders’ Equity For the period of 5 years 2016-2020 (Million Saudi Riyals) 2016 2017 2018 2019 2020 812.550 866.815 932.867 997.986 959.395 Central Eastern Western J) Shareholders Profit Distribution Growth Rate For the period of 5 years 2016-2020 (Million Saudi Riyals) 2016 2017 2018 2019 2020 Southern 138.600 135.780 137.678 137.561 73.148 20 Herfy Food Services Company | 2020 Annual Report Herfy Food Services Company | 2020 Annual Report 21 H) Outstanding Long-Term Loan at The End Of The Fiscal Year *During the period 2011 to 2017, the total bank facilities from Alrajhi Bank amounted to 610 In compliance with Shariah laws, Herfy Food Services Company is always compliant in its million Saudi riyal, with a maturity period of 5 years effective from the dates of any withdrawal financial dealings, especially with respect to loan policies, whereas all the company’s loans (In 2019 the company repaid an amount of 87.94 million Saudi riyal), and in 2020 it repaid an are issued according to Shariah laws, and hereafter is statement for statement for the long- amount of 46,17 million Saudi riyal.
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