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Annual Report 2019 Introduction Financial Highlights Our Three Operational Divisions Transforming for the journey ahead Annual Report 2019 Introduction Financial highlights Our three Operational Divisions Established in 1981 to Revenue (SAR) provide catering services to the Kingdom’s flag 2.16bn carrier Saudia, Saudi Airlines In-Flight Catering Company (SACC) 2019 2.16bn has blossomed into a broad 2018 2.04bn and diversified enterprise 2017 1.95bn offering a full suite of food and beverage, retail, hospitality, Pay-out ratio Catering and support services to local and international clients. 98.1% Read more about how we are restructuring on page 32. Contents 2019 98.1% 2018 99.1% Overview 2017 94.5% 1 Our Three Operational Divisions Net profit after Zakat Strategic Review and Income Tax (SAR) 4 Chairman’s Statement 6 Year in Review 8 Board of Directors 10 Management Team 463.9m 12 CEO’s Statement Retail 2019 463.9m 16 Our Journey 18 Our Transformation Roadmap 2018 459.3m 2017 481.7m 20 Business Model Read more about how we are 22 SACC Strategy restructuring on page 38. 24 Risk Management Earnings per share (SAR) 28 KPIs 30 Our Operational Divisions at a Glance 32 In-Flight Catering 38 Retail 5.66 44 Catering & Facilities 50 Operations 2019 5.66 52 Financial Review 2018 5.60 Catering 54 Investing in our People 2017 5.87 Corporate Governance Financial Statements 122 Independent Auditors’ Report & Facilities 126 Statement of Financial Position 127 Statement of Profit or Loss and Other Comprehensive Income 128 Statement of Changes in Equity Read more about how we are 129 Statement of Cash Flows restructuring on page 44. 130 Notes to the Financial Statements Saudi Airlines Catering Company Annual Report 2019 5 STRATEGIC REPORT Strategic Review 4 Chairman’s Statement 6 Year in Review 8 Board of Directors 10 Management Team 12 CEO’s Statement 16 Our Journey 18 Our Transformation Roadmap 20 Business Model 22 SACC Strategy 24 Risk Management 28 KPIs 30 Our Operational Divisions at a Glance 32 In-Flight Catering 38 Retail 44 Catering & Facilities 50 Operations 52 Financial Review 54 Investing in Our People 2 Saudi Airlines Catering Company Annual Report 2019 Saudi Airlines Catering Company Annual Report 2019 3 STRATEGIC REPORT Chairman’s Statement It gives me great pleasure to present the Annual Report of the Saudi Airlines Catering Company for 2019. Being Transforming for the the first year of our term as a new Board, I would like to thank all our predecessors for the invaluable foundations they established, which have enabled SACC to reach the journey ahead leadership position it occupies today in our sector. During the past year, SACC has made A strategy for Earnings per share (SAR) important strides in its journey of comprehensive growth transformation and improvement, Our priorities have remained unchanged, while delivering significant growth and as have our commitments to our diversification. Our strategy as a Board is shareholders, stakeholders and clients. 5.66 now focused on diversifying our revenue The enduring focus on achieving organic streams in the F&B sector, while reducing growth within our In-Flight Catering our dependence on in-flight catering. business has delivered strong returns, Revenue (SAR) Geographical expansion beyond our supporting the expansion of our key boundaries is also a current priority. customer, Saudia, while our efforts to drive efficiency and ensure quality for Despite challenging headwinds, our all our clients have also been highly 2.156bn company is evolving to maximize the successful in 2019. value we deliver for our shareholders, customers and the nation, mirroring the This success has been overseen by an As we become more lean, functional process of rapid positive change being active and engaged Board of Directors, and un-bureaucratic, the diversification felt across the Kingdom as a whole. which has provided perceptive oversight of our revenue streams will see further while pursuing a proactive role in expansion into areas such as event Rising above turbulence for defining SACC’s strategic parameters. management and health sector catering, increased profitability The Board’s broad mix of expertise complemented by a renewed emphasis In the face of ongoing market turbulence, and knowledge has also allowed us on the Business and Industry client SACC generated SAR 2.156 billion in to develop new, effective task forces sector. These actions will strengthen revenue and a net profit of SAR 463.9 across our business lines. our already significant contribution by million in 2019, representing an increase maximizing local content in line with the of 1% over 2018 and resulting in an Delivering on our vision in 2020 implementation of Saudi Vision 2030. earnings per share of SAR 5.66. Looking to 2020, we remain committed to our strategy of business line As with our own goals as a company, Our In-Flight Catering division achieved development and diversification. achieving Vision 2030 requires the a growth in net profit of 2.1% to reach With the grace of God, we will continue combined efforts of many stakeholders, SAR 883.6 million from an annual to flourish as a dynamic multi-service and in this regard I wish to express revenue of SAR 1.707 billion, whilst our business, varying our activities and my deep gratitude to our clients and Retail division generated SAR 176.7 revenue streams around our core sectors partners across the Kingdom, as well as million in revenue and a net profit of SAR by building complimentary capabilities to my fellow Board members, the SACC 2.4 million, equating to a contraction of in growth areas such as rail, hospitality, management team and our dedicated 46.7% from the previous year. Revenue laundry, retail and the Hajj/Umrah space. employees throughout the Company and net profit from our Catering and for their hard work and support. Facilities division were SAR 197.3 million We will also continue to actively and SAR 2.0 million, respectively, explore opportunities for growth Together, I am confident that we will representing an increase in profit through strategic M&A activities, as well continue to grow and diversify our for the year of 53.8%. as targeting non-organic growth within business, delivering increasing value our core business and further geographic to our customers and the nation expansion in line with our diversification in the coming year. strategy. Mohammed Abdulaziz Al Sarhan Chairman Our strategy as a Board is now focused on diversifying our revenue streams in the F&B sector, while reducing our dependence on in-flight catering.” 4 Saudi Airlines Catering Company Annual Report 2019 Saudi Airlines Catering Company Annual Report 2019 5 STRATEGIC REPORT Year in Review Catering for 2020 KSA 3,500 people on each of the 12 days of Dakar Rally the rally, across nine separate locations In 2020, the newly created Parties and along the route, spanning a total of Events unit of our C&F division will 8,000 kilometers. Transforming partner with the organizers of the world’s premier off-road endurance motoring event – the Dakar Rally – under a catering and sponsorship agreement signed 3,500 in 2019. The agreement will see SACC our journey people will be catered provide catering services for more than for every day Growing our e-commerce Powering the transformation Following major investments in 2018, of our support services SACC launched a revitalized e-commerce 2019 has brought major internal process platform on January 1, 2019 – a improvements and new controls in the retail platform that encapsulates the areas of system efficiency and payment Kingdom’s vision for the development processing, particularly the extension Five becomes three Improving performance in 2019 of a digital/knowledge economy. Thanks of SACC’s enterprise resource planning As part of the strategic consolidation SACC generated SAR 2.156 billion in to a highly focused roll-out strategy, our (ERP) functionality to new businesses of the company’s business lines in revenue and a net profit of SAR 463.9 1,177% e-commerce retail sales revenue grew across the kingdom – covering remote 2019 – implemented to achieve greater million in 2019, representing an increase revenue growth in by a staggering 1,177% in 2019, with total sites, airport lounges and outlets – to efficiency through closer integration of 1% over 2018 and resulting in an e-commerce retail sales online orders growing by 999% over the help manage stores and operational of support structures and procedures earnings per share of SAR 5.66. The previous year. process. This has boosted sales activity, – our C&F division took responsibility IFC division saw a growth in net profit leading to increasing performance and for our Hajj and Umrah functions and of 2.1% to SAR 883.6 million and annual accelerating month-close data collation. railway operations, whilst our IFC division revenues of SAR 1.707 billion; the Retail now includes our Airport Lounges, division generated SAR 176.7 million Serving more pilgrims during considerably diversifying their in revenue and a net profit of SAR 2.4 Hajj & Umrah respective operational scopes. million – equating to a contraction of The SACC Hajj and Umrah unit served 46.7% from the previous year; and the more than 700,000 meals in 2019 to Building on 38 years of Trust C&F division delivered SAR 197.3 million as many as 100,000 pilgrims, achieving The renewal of SACC’s IFC agreement in revenue and SAR 2.0 million in net a growth in revenue of 220% over 2018. with our main client, Saudia, for a profit – an increase of 53.8% over 2018. The unit also developed a new house further 10 years beginning January 1, brand for frozen Hajj and Umrah ready 2020, builds on a 38-year relationship New Board Members and meals, ‘First Food,’ for deployment in by providing a firm, long-term strategic insights 2020, and continued to expand its B2B foundation from which to grow, develop In January of 2019, the SACC Board business – now the fastest growing and innovate over the next decade, of Directors welcomed a new Chairman, aspect of this market.
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