Statements

Mohammed Abdulaziz Al Sarhan

Chairman of the Board

Wajdy M. Al-Ghabban

Chief Executive Officer

Mahmoud Masoud

Chief Finance Officer

Chair

Mohammed Abdulaziz Al Sarhan

Chairman of the Board

Chairman's
Statement

Four Decades of Catering Excellence

“In 2021, SACC demonstrated its considerable resilience by delivering a return to positive performance following the immensely challenging headwinds of the COVID-19 pandemic. 40 years since the launch of our operations, the Company remains the leading force in the Saudi aviation services industry and an increasingly active player in the ongoing diversification of the Kingdom’s economy.”

Total Revenue SAR

1,212.5 million

In-Flight Catering Revenue SAR

938 million

As international travellers made a cautious return to air transport in 2021, and domestic air movements approached pre-pandemic levels in Saudi Arabia, SACC’s careful contingency planning and perceptive cost cutting served to position the Company to capitalize on the accelerating economic recovery.

These efforts were complemented by our diversification strategy, which continues to bring dividends as SACC enters new segments and accesses broader opportunities in our target sectors.

This process mirrors the broader diversification of the Kingdom’s economy away from its traditional reliance on hydrocarbons to become a regional and global economic powerhouse in a growing range of industries. For example, SACC continues to successfully engage in the sports and events space, and to explore further opportunities to diversify our activities going forward.

This is not to say that we have neglected our long and rich history as the Kingdom’s leading aviation services provider, and SACC continued to deliver key aspects of our strategy in terms of investment in human capital, digital transformation and automation for our In-Flight Catering business throughout 2021.

Committed to our People

We continue to place the safety and security of our people and customers above all other concerns. Given the ongoing threat posed by the CVOID-19 pandemic in 2021, we maintained our robust measures to ensure the wellbeing of our people, clients and stakeholders.

The SACC HR division worked throughout the year to enhance and reinforce the Company’s coronavirus safety protocols, which were regularly reviewed throughout 2021 to align them with changing government advice, resulting in updates to our approach to working modes, quarantine guidelines, onboarding procedures, virtual inductions and recruitment procedures.

We also ensured efficient channels of communication with our employees to provide the latest advice and government guidance concerning vaccinations and virus avoidance measures, and continued to work to arrange for the return of employees stranded abroad owing to pandemic-related restrictions.

SACC also retained focus on nurturing talent across the workforce through continued professional development, in particular through the launch of our new Culinary Academy in 2022, which will have a significant impact in developing the capabilities of our people based on the highest international standards.

Supporting our Community and the Environment

SACC is dedicated to supporting the communities we serve across the Kingdom and beyond. In particular, we remain committed to the Saudization goals of the Kingdom’s Vision 2030, as reflected in our platinum Nitaqat rating, and the work completed by our HR division in 2021 to support new regulations issued by the MHRSD concerning the Saudization of key roles and functions. Furthermore, the majority of our cold kitchen employees are now Saudis, whilst the proportion of Saudi hot kitchen employees also continues to grow.

We continue to explore opportunities to reduce our emissions and lessen the impact of our operations on the environment. These include the potential for the introduction of more electric vehicles – including loading and unloading vehicles – and an increasing focus on opportunities for recycling of food waste.

Robust Corporate Governance and Risk Management

Our robust risk management and governance structures ensure SACC remains on course to achieve its corporate vision and mission, free of adverse risks in terms of compliance, workforce wellbeing and safety. Our Enterprise Risk Management (ERM) function, launched in 2019 to enhance SACC’s risk management capabilities and integrate mitigation measures across the group, was fully implemented in 2022. The new function is supported by a dedicated department established within our HSSC division.

Adding Value for Investors

As our market and sector began to recover from the massive impact of the COVID-19 pandemic this year, SACC demonstrated our resilience and the strength of our ongoing strategic diversification. We delivered a 30.9% increase in revenues and a return to profitability, establishing positive momentum as we prepare for accelerating growth in a stronger operating environment over the coming years.

Guided by our dedicated sustainability strategy, which reflects both the sustainability goals of Saudi Vision 2030 and the United Nations Sustainable Development Goals (SDGs), we are working to unlock Saudi Arabia’s digital future by incorporating socially and environmentally sustainable practices across our operations, whilst upholding global best practices in terms of governance, transparency and accountability.

Building on our Successes in 2022

Building on our achievements in 2021, SACC will continue to strengthen its position as the Kingdom’s leading aviation services company, whilst delivering increasing diversification into new segments in our core sectors.

Leveraging our extensive cooperation with partners in government and the private sector, as well as the expansion of our e-commerce activities going forward, we aim to achieve a greater degree of balance between our activities, as the Company embarks on a new phase in its diversification journey, adding value for our customers, partners and the national economy, while enhancing our role in delivering the aims and objectives of the Kingdom’s 2030 vision.

On behalf of the Board of Directors, I would like to express our appreciation to all of our hard working and dedicated employees for their resilience in yet another challenging year for our core industry. Thanks to their efforts, and that of our executive leadership team, SACC remains firmly on course to deliver on its strategic goals going forward, and is ideally positioned for a full return to performance in 2022.

Chair

Wajdy M. Al-Ghabban

Chief Executive Officer

CEO’s
MESSAGE

Diversifying for the Future

“In adversity there is always opportunity, and throughout the year the Company has successfully ramped up the pace of its ongoing journey of diversification, transformation and improvement.”

Revenue growth

30.9%

Catered for

Dakar Rally 2021

SACC has successfully leveraged the diversification achieved under its strategy to deliver a year of highly encouraging results, whilst also capitalizing on the return of our core business in the aviation sector.

While the global aviation industry continued to be undermined by the ongoing disruption caused by the pandemic, the green shoots of recovery were visible in 2021, with passenger numbers climbing as national lockdowns and travel restrictions were lifted around the world.

Meanwhile, the easing of barriers to movement also saw a resumption of major public events as the year progressed, providing opportunities for increasing engagement in this segment in line with SACC’s broad diversification strategy.

Having accelerated the implementation of the strategy throughout 2021, we delivered key aspects of our comprehensive plan to position SACC as an increasingly significant player in a variety of economic sectors beyond our core.

Recovering Performance in 2021

The return to travel and events resulted in revenue growth of 31% to SAR 1.2 billion, compared to SAR 927 million in 2020, signaling a resumption of our target trajectory, whilst net profit stood at SAR 14 million in 2021, as compared to a loss of 335 million in 2020.

We actively engaged with our airline partners in 2021 to meet the continued headwinds in our core industry, developing COVID-19 menus for Saudia, introducing new premium class concepts and services for flynas and flyadeal, and supplying PPE to clients.

Our In-Flight Catering business continued to recover in 2021, particularly in the domestic air travel segment, where activity almost returned to pre-pandemic levels. Nevertheless, international travel remained muted at only around 30% of 2019 levels.

Therefore, while the revenue and net profit generated by IFC remained below pre-pandemic levels, they saw significant improvement over 2020, with SAR 938 million generated in 2021 – representing a 44% increase over 2020.

As the aviation sector continues to rebound following the easing of travel disruptions caused by the pandemic, we will continue to build upon this encouraging platform for future growth in our core business.

Our Catering & Facilities division achieved revenue of SAR 231 million in 2021, representing growth of 10% over 2020 and reflecting the success of our ongoing diversification into new segments in the sector. Meanwhile, the SACC Retail division contributed SAR 43 million to group revenue in 2021 – a 33% decline from 2020.

Our Continuing Strategic Transformation

In the 40th year since our establishment, SACC’s strategic transformation continued unabated in 2021, with cost and quality enhancements in our aviation business, complemented by organic development in our C&F services.

Throughout the year we maintained our focus on expanding our healthcare and government catering services, leveraging the ongoing evolution of the healthcare sector toward greater privatization. This progress was marked by our first contract with a private hospital – City Med Hospital in Riyadh – in 2021 to supply high-end meals for patients and employees. We also secured the largest Hajj contract in SACC’s history, serving 817,000 meals to Pilgrims visiting Mecca and completed the launch of our white label frozen meals range.

We also continued to target greater engagement in the sports segment, building on the successful provision of hot and frozen meals for the 15-day Dakar Rally 2021 to access new opportunities as public events returned later in the year, while the full restructuring of our Retail business also gained pace in 2021, with an expanded on-board offering and a right-sizing of ground retail outlets based on performance.

E-commerce also remains a key priority in our transformation program, having launched a new platform to support our ambitions in this key area of growth while complementing our physical retail offerings on the ground, particularly in the context of high-end products. This was achieved by allowing for the pre-ordering and direct-to-seat delivery on aircraft and trains.

We also continued to engage in active price monitoring in 2021, adjusting our model to adapt to the changing market conditions across our services, whilst also maintaining strict cost efficiency measures to ensure our continued competitive advantage.

Digitalization and Innovation

Our digital transformation program continued in 2021, with extensive progress being achieved by IFC in the digitalization of the customer experience in our lounges to support the roll-out of a new customer e-experience in 2022. We also implemented new Point of Sale (POS) facilities and e-invoicing solutions, and completed the trial phase of our new Saudia Crew QR code project in September 2021.

We will introduce further automation and digitalization in 2022, integrating new technologies to complement the e-experience across other aspects of our business lines.

SACC in 2022

As we enter 2022, SACC will continue to deliver on the key pillars of our strategy, building a business fit to capitalize on the many opportunities presented by the rapidly expanding Saudi Economy.

To this end, we will retain our focus on investment and human capital development, the continuous improvement and promotion of digital and industrial automation across our services, the ongoing diversification of SACC’s business portfolio, and a continuation of our meaningful support for the communities we serve.

As we strengthen our position as the leading aviation services company in the Kingdom, leveraging the gradual return of international travel, our diversification will continue to open up opportunities for expansion into new segments through our C&F division – such as medical and educational facilities, public sector and government organizations, and the return of Hajj and Umrah travelers – and in the burgeoning e-commerce space.

In a ground-breaking move for the company in the coming years, we will also explore the possibility of M&A activities in key sectors to aid this diversification, supporting the broader economic diversification plans of the Kingdom as a whole embodied in Saudi Economic Vision 2030.

Acknowledgements

I would like to take this opportunity to express my thanks to the SACC Board for their diligent stewardship in 2021, as well as to our hard-working employees for their dedication and commitment in what has been another challenging year for our industry.

Thanks are also due to all of our strategic partners and stakeholders for their continued support, as well as to the Saudi Government, the Ministry of Health and the General Authority for Civil Aviation (GACA) for their oversight.

Finally, I am grateful to our clients for their trust as we emerge from the pandemic a stronger, more dynamic and diversified company, fit to capitalize on the opportunities for growth in the coming year and beyond.

Chair

Mahmoud Masoud

Chief Finance Officer

Chief Financial Officer’s
Review

Return to growth and profitability

“We retain our robust financial position, with a strong balance sheet and liquidity profile, which puts the company in a favorable position to invest for the future, including potential strategic acquisitions, to position the company for continued growth and shareholder value creation moving forward.”

Total Profit SAR

14.1 million

Total Revenue SAR

1,212.5 million (+30.9%)

In-Flight Catering Revenue SAR

938 million (+44%)

Retail Revenue SAR

43 million (-33%)

Catering & Facilities Revenue SAR

231 million (+10%)

As our market and sector began to recover from the impact of the COVID-19 pandemic this year, SACC demonstrated resilience and the strength of our ongoing strategic diversification to deliver a significant rebound in revenues and a return to profitability, establishing positive momentum as we prepare for accelerating growth in a stronger operating environment over the coming years.

Driven by a strong recovery in In-Flight Catering, supported by notable improvements in Catering & Facilities, SACC posted full-year net revenue of SAR 1,212.5 million for the year, a 30.9% increase from 2020. Combined with ongoing cost optimization across the organization, this top line growth drove a resilient return to profitability, overcoming persistent market depression and challenges to post a full-year net profit after Zakat and tax of SAR 14.1 million for the year, after a net loss of SAR 335 million last year.

Our In-Flight Catering division, including business lounges, showcased its strength with revenue growth of 44% for 2021, to reach SAR 938 million for the year compared to SAR 652 million for 2020. This solid result was based on the resumption of domestic and international flight activity that accelerated throughout the year, though international flight resumptions did not return anywhere near to pre-COVID levels year. In addition, we carried out continued aggressive cost structure optimization for IFC, covering HR and procurement costs.

For our Catering & Facilities division, we continued our strategic diversification to future-proof our business while focusing on attracting key talent, maintaining cost efficiency, and exiting unprofitable segments. Our C&F division benefited from the return of business and tourism activity, particularly in the second half of the year, to post full year revenues of SAR 231 million for 2021, up 10% from last year’s SAR 209.9 million.

Finally, our Retail division, which has witnessed the slowest recovery from the heavy impact of the pandemic, posted full-year revenues of SAR 43 million in 2021, down 33% from last year’s result of SAR 65 million. During the year, we succeeded in exiting unprofitable retail stores and focused on maximizing the performance of our retail locations in the major international airport hubs.

Supported by our robust Corporate Governance and Risk Management, we are confident that we have now succeeded in weathering the worst impacts of the COVID-19 pandemic on our industry and business, and emerged a more diversified and agile organization, with the right people, partners and propositions to drive sustainable success.

We retain our robust financial position, with a strong balance sheet and liquidity profile, which puts the company in a favorable position to invest for the future, including potential strategic acquisitions, to position the company for continued growth and shareholder value creation moving forward.