ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011

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AUDITORS' REPORT STATEMENT OF FINANCIAL POSITION STATEMENT OF INCOME STATEMENT OF CASH FLOW STATEMENT OF CHANGES IN PARTNERS' EQUITY NOTES TO THE FINANCIAL STATEMENT 1 2 3 4 5 - 11

AUDITORS' REPORT TO THE PARTNERS OF ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) Audit scope: We have audited the annexed statement of financial position of ABC COMPANY LIMITED, ("the company") as at 31st December 2011, statement of income, statement of cash flow and statement of changes in partners' equity for the year ended on that date and the notes 1 to 17 thereon, which form an integral part of these financial statements. These financial statements, which have been derived from the computerized accounting records maintained in accordance with the regulations are the responsibility of the companys management and prepared by them in compliance with Article 175 of the Companies Act, and presented to us together with the information and explanations we required. Our responsibility is to express an opinion on these financial statements We conducted our audit in accordance with generally accepted auditing standards applicable in the Kingdom of Saudi Arabia. Those standards require that we plan and perform the audit to obtain reasonable assurance that 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 the companys management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable degree of assurance to enable us to express our opinion on the financial statements. Unqualified opinion: In our opinion, the financial statements taken as a whole: Present fairly, in all material respects, the financial position of the company at 31st December 2011, and the results of its operations and its cash flows for the year ended on that date, in the light of disclosures and presentation of information that contained in the financial statements and in accordance with generally accepted accounting principles applicable in the Kingdom of Saudi Arabia and appropriate to the circumstances of the Company. Comply with the Companies Act and Articles of Association of the Company with respect to the preparation and presentation of the financial statements. Without qualifying our opinion, we draw attention to the following matters: The partners account shows a debit balance as at 31st December 2011. This is in contrary with the instructions issued by the Ministry of Commerce. Purchase of machinery has not been adhered with the covenants of bank loan agreement (refer note: 9)

FOR <Name of Auditing Company> CERTIFIED PUBLIC ACCOUNTANTS

JEDDAH: <English Date> <Arabic Date>

<Name of the partner> Registration No. <Reg. # of partner>

ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) STATEMENT OF FINANCIAL POSITION AS ON 31ST DECEMBER 2011 Notes ASSETS Current assets Cash and bank Accounts receivable Prepayments and other receivables Due from related parties Inventory Total current assets Non current assets Long term receivables Property, plant and equipment Total non current assets TOTAL ASSETS LIABILITIES AND PARTNERS' EQUITY Current liabilities Short term loans Accounts payable Accrued charges and other payables Due to related parties Zakat payable Total current liabilities Non current liabilities Provision for end of service benefits Long term loans Total non current liabilities Total liabilities Partners' equity Share capital Statutory reserve Retained earnings Total partners' equity Partners' current account TOTAL LIABILITIES AND PARTNERS' EQUITY 2011 SR 2010 SR

3 4 5 6 7

214,966,063 456,736,400 2,302,254 167,238,473 126,461,804 967,704,994

117,462,265 522,960,638 2,366,722 171,560,433 106,744,292 921,094,350

59,298,789 25,777,153 85,075,942 1,052,780,936

65,894,898 16,759,542 82,654,440 1,003,748,790

9 10 11 6

350,000,000 66,483,227 78,920,986 9,131,999 11,408,137 515,944,349

264,500,000 87,915,150 90,469,758 11,746,373 9,145,127 463,776,408

13,446,606 465,300,000 478,746,606 994,690,955

13,244,686 437,450,000 450,694,686 914,471,094

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5,000,000 2,500,000 51,415,448 58,915,448 (825,467) 1,052,780,936

5,000,000 2,500,000 55,228,909 62,728,909 26,548,787 1,003,748,790

The accompanying notes 1 to 17 form an integral part of these consolidated financial statements.

ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) STATEMENT OF INCOME FOR THE YEAR ENDED 31ST DECEMBER 2011 Notes 2011 SR 152,652,247 (109,456,360) 43,195,887 2010 SR 129,947,926 (99,042,267) 30,905,659

REVENUES COST OF SALES GROSS INCOME Expenses and charges General and administrative expenses Depreciation Provision for end of service benefits Total expenses and charges INCOME FROM OPERATIONS Other incomes / (expenses) Gain/(loss) on sale of property, plant and equipment Financial charges Sundry income Net other income NET INCOME BEFORE ZAKAT Zakat NET INCOME FOR THE YEAR

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(9,308,701) (1,280,178) (325,487) (10,914,366) 32,281,521

(7,640,383) 3,123,750 (236,487) (4,753,120) 26,152,539

265,847 (15,039) 62,347 313,155 32,594,676 (11,408,137) 21,186,539

(123,587) (12,384) 112,367 (23,604) 26,128,935 (9,145,127) 16,983,808

The accompanying notes 1 to 17 form an integral part of these consolidated financial statements.

ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31ST DECEMBER 2011 2011 SR 21,186,539 2010 SR 16,983,808

OPERATING ACTIVITIES Net income for the year Adjustment to reconcile net income to net cash provided by operating activities: Depreciation Gain on sale of property, plant and equipment Provision for end of service benefits Zakat provision Changes in operating assets and liabilities: Accounts receivable Prepayments and other receivables Due from related parties Inventory Long term receivables Accounts payable Accrued charges and other payables Due to related parties Zakat paid End of service benefits paid Net cash provided by operating activities INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Net cash used in investing activities FINANCING ACTIVITIES Short term loans Long term loan Dividend Partners' account- net movement Net cash provided by financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

1,280,178 (265,847) (325,487) 11,408,137

3,123,750 123,587 (236,487) (9,145,127)

66,224,238 64,468 4,321,960 (19,717,512) 6,596,109 (21,431,923) (11,548,772) (2,614,374) (9,145,127) 527,407 46,559,994

(42,849,987) 4,896,189 (6,332,479) (2,354,897) 2,369,873 (17,109,657) 53,518,977 3,565,898 (5,574,279) 979,169

(10,871,584) 839,642 (10,031,942)

(35,548,987) 1,245,687 (34,303,300)

85,500,000 27,850,000 (25,000,000) (27,374,254) 60,975,746 97,503,798 117,462,265 214,966,063

26,450,000 3,589,000 (14,500,000) 15,539,000 (17,785,131) 135,247,396 117,462,265

The accompanying notes 1 to 17 form an integral part of these consolidated financial statements.

ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) STATEMENT OF CHANGES IN PARTNERS' EQUITY FOR THE YEAR ENDED 31ST DECEMBER 2011 Paid up capital SR Balance at the beginning of 2010 Net income for 2010 Transfer to statutory reserve Dividends paid for 2010 Balance at the end of 2010 Balance at the beginning of 2011 Net income for 2011 Transfer to statutory reserve Dividends paid for 2011 Balance at the end of 2011 5,000,000 5,000,000 5,000,000 5,000,000 Statutory reserve SR 2,500,000 2,500,000 2,500,000 2,500,000 Retained earnings SR 52,745,101 16,983,808 (14,500,000) 55,228,909 55,228,909 21,186,539 (25,000,000) 51,415,448 Total SR 60,245,101 16,983,808 (14,500,000) 62,728,909 62,728,909 21,186,539 (25,000,000) 58,915,448

The accompanying notes 1 to 17 form an integral part of these consolidated financial statements.

ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 1. ACTIVITIES: ABC Company Limited (the parent company) is a limited liability company registered in Jeddah, Kingdom of Saudi Arabia under the commercial registration No. 1234567890 dated 01st Muharram 1401 corresponding to 09th November 1980. The Company is engaged in wholesale selling and distribution of cars, its spare parts and subsequent repair and maintenance of these vehicles. The Company operates through 12 branches in the Kingdom of Saudi Arabia.

2. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with generally accepted accounting principles applicable in the Kingdom of Saudi Arabia, under the historical cost convention using the accrual basis of accounting and the going concern concept The significant accounting policies adopted are as follows: 2.1. Revenue recognition Revenue are recognized when goods/services are delivered and invoiced. 2.2. Property, plant and equipment Freehold land and Capital work-in-progress are not depreciated. Property, plant and equipment are stated at cost net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the property, plant and equipment. 2.3. Depreciation The property, plant and equipment are depreciated on a straight line basis over their estimated useful lives. 2.4. Impairment of assets Property plant and equipment and other non current assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss, if any, is recognized for the amounts by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. 2.5. Inventory Inventory is valued at the lower of cost and net realizable value. Cost is determined by weighted average method. 2.6. Accounts Receivable Accounts receivable originated by the Company are measured at cost. An estimated allowance for the anticipated credit losses in the accounts receivable balance is established when there is objective evidence that the Company will not be able to collect the amounts due according to the original terms. Indicators that the accounts receivable are impaired include consistent default in meeting due payments, known financial difficulties of the debtors, etc. When a receivable is deemed to be uncollectible, it is written off against the allowance account for credit losses. Subsequent recoveries of amounts previously written off are credited to the other income. The carrying value of accounts receivable approximate to their fair values at the balance sheet date. 2.7. Accounts payable and accrued charges Liabilities are recognized for amounts to be paid in the future for supplies or services rendered, whether billed or not to the company.

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ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 2. SIGNIFICANT ACCOUNTING POLICIES (Cont) 2.8. Employees' end of service benefits Provision is made for amounts payable to employees under the Saudi Arabian Labour Law applicable to employees' accumulated period of service. 2.9. Foreign currency transactions Foreign currency transactions are recorded in Saudi Riyals at the rate prevailing at the time of transactions. Monetary assets and liabilities in foreign currencies at the year end are translated at the rate of exchange ruling at that date. Gains and losses are taken to statement of income. 2.10. Zakat Zakat is calculated as per Saudi Arabian Fiscal Regulations. The amount is charged to the statement of income. 2.11. General and administrative expenses Expenses that are not specifically part of cost of sales are classified as selling, general and administrative expenses.

3. CASH AND BANK

2011 SR 28,277 179,937,786 35,000,000 214,966,063

2010 SR 46,872 87,415,393 30,000,000 117,462,265

Cash in hand Cash at bank Margin deposits

4. ACCOUNTS RECEIVABLE

2011 SR 421,889,419 56,998,878 478,888,297 (22,151,897) 456,736,400

2010 SR 516,515,688 36,286,848 552,802,536 (29,841,898) 522,960,638

Trade receivables Advances to suppliers Gross receivables Provision for doubtful debts

5. PREPAYMENTS AND OTHER RECEIVABLES

2011 SR 1,568,489 648,949 84,816 2,302,254

2010 SR 2,126,885 218,189 21,648 2,366,722

Prepaid expenses Staff receivables Other receivables

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ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 6. RELATED PARTIES 6.1. Due from related parties 2011 SR 102,523,113 64,196,887 518,473 167,238,473 6.2. Due to related parties 2011 SR 6,897,842 2,073,318 160,839 9,131,999 6.3. Major related party transaction includes 2011 SR 31,583,034 82,562,552 74,507,817 15,938,685 2010 SR 124,919,798 45,891,897 748,738 171,560,433 2010 SR 9,807,266 1,820,484 118,623 11,746,373 2010 SR 93,272,962 66,729,575 39,631,802 38,613,066

DEF Company Limited GHI Company Limited Mr. JKL

MNO Company Limited PQR Company Limited Mr. STU

Goods and services sold to related parties Supplies received from a related party Management services rendered to a related party Marketing services rendered by a related party

7. INVENTORY

2011 SR 121,689,845 12,841,668 152,189 134,683,702

2010 SR 102,948,943 13,518,984 94,183 116,562,110 (9,817,818) 106,744,292

Finished goods Spare parts and other materials Goods-in-transit

Less: Allowance against inventory

(8,221,898) 126,461,804

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ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 8. PROPERTY, PLANT AND EQUIPMENT The estimated useful lives of the property, plant and equipment for the calculation of depreciation are as follows: Buildings and improvements Plant and machineries Furniture, fixtures and equipment Motor vehicles Computer equipment COST 5 - 10 years 10 - 20 years 4 - 5 years 4 - 5 years 4 - 5 years On 01-01-2011 SR Freehold land Buildings and improvements Plant and machineries Furniture, fixtures and equipment Motor vehicles Computer equipment 14,324,252 738,455 5,624,868 2,043,456 2,495,397 2,018,614 27,245,042 ACCUMULATED DEPRECIATION On 01-01-2011 SR Buildings and improvements Plant and machineries Furniture, fixtures and equipment Motor vehicles Computer equipment 738,103 4,512,879 1,741,431 1,944,045 1,549,042 10,485,500 NET BOOK VALUE Additions during the year SR 9,345,097 47,500 625,420 134,288 614,492 104,787 10,871,584 Charged during the year SR 6,685 658,745 129,178 308,267 177,303 1,280,178 Disposals during the year SR (2,365,870) (309,998) (913,523) (108,154) (3,697,545) Relating to disposals SR (1,847,687) (280,708) (897,585) (97,770) (3,123,750) 2011 SR 23,669,349 41,167 560,481 277,845 841,639 386,672 25,777,153 At 31-12-2011 SR 23,669,349 785,955 3,884,418 1,867,746 2,196,366 2,015,247 34,419,081 At 31-12-2011 SR 744,788 3,323,937 1,589,901 1,354,727 1,628,575 8,641,928 2010 SR 14,324,252 352 1,111,989 302,025 551,352 469,572 16,759,542

Freehold land Buildings and improvements Plant and machineries Furniture, fixtures and equipment Motor vehicles Computer equipment

* Purchase of machinery has not been adhered to covenants of bank loan agreement (refer note: 9)

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ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 9. BANK LOANS 2011 SR 350,000,000 465,300,000 815,300,000 2010 SR 264,500,000 437,450,000 701,950,000

Current portion of term loan Amount due after an year

These represent term loans drawn down from different banks against the available credit lines. These facilities carry special commission rate of SIBOR plus bank margin and repayable within 12 months from the balance sheet date. * One of the covenants of the term loan was that the Company will not purchase any single property, plant or equipment worth more than SR 300,000 without the prior information and permission from one of the bank. The company purchased a machinery amounting to SR 443,000 during the year without informing the bank.

10. ACCOUNTS PAYABLE

2011 SR 63,034,243 3,448,984 66,483,227

2010 SR 85,755,466 2,159,684 87,915,150

Trade payables Advances from customers

11. ACCRUED CHARGES AND OTHER PAYABLES

2011 SR 75,981,050 2,178,987 760,949 78,920,986

2010 SR 89,644,644 354,196 470,918 90,469,758

Accrued expenses Other payables Advances to suppliers

12. SHARE CAPITAL The authorized, issued and paid-up capital of the Company is SR 5,000,000 divided into 500,000 ordinary shares carrying face value of SR 10 each. 75% of the shares are held by Sheikh XXX and 25% shares are held by EIS Co.

13. STATUTORY RESERVE In accordance with the Saudi Arabian Regulations for Companies, 10% of the net income of the company is required to be transferred to statutory reserve until this reserve equals to 50% of the paid up capital. This has been achieved in previous years. The reserve is not available for distribution currently.

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ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 14. GENERAL AND ADMINISTRATIVE EXPENSES 2011 SR 5,489,178 205,162 173,352 557,849 357,035 935,269 690,669 66,404 254,847 541,407 37,529 9,308,701 2010 SR 3,498,498 366,477 704,448 936,448 694,254 271,937 366,088 44,421 356,548 360,281 40,983 7,640,383

Salaries and other benefits Travelling and conveyance Rent Utilities Communication Printing, stationery and office expenses Repair and maintenance Provision for inventory obsolescence Provision for doubtful debts Legal and professional expenses Others

15. COMMITMENTS AND CONTINGENCIES Commitments and contingencies are comprised of the following as at 31 December 2011: 2011 SR Bank guarantees Bills discounted Capital expenditure commitment Bank guarantees 30,873,910 17,000,000 6,820,000 2,000,000 2010 SR 45,024,411 12,400,000 850,000

The Company has a dispute with its major supplier of lubricant oil over the settlement of invoices since 1992. The total disputed amount in the invoices rendered till 2007 amounted to SR 817,000 of which SR 130,000 million is related to 2007. The Company has settled all the invoices after deducting the overcharged amounts in accordance with Royal Order 3/B/7017 and the promulgated prices. The Company formally objected to the overcharges. The supplier has not filed any lawsuits against settlement of these invoices except continuing to submit the incorrect invoices and unilaterally withdrew supply of the oil from 30th January 2007. Upon application by the Company to the highest authority to settle this dispute and to reinstate the supply of oil, a five member Ministerial Committee was constituted to review all disputes. Legal opinions obtained from legal counsels support the Companys position. Consequently there will be no liability on the Company and hence provision for losses/contingencies are not deemed necessary. The Company has replaced its lubricant oil requirements by processing alternate oil.

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ABC COMPANY LIMITED (LIMITED LIABILITY COMPANY) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2011 16. RISK MANAGEMENT 16.1. Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future profitability or the fair values of the financial instruments. The Company is subject to interest rate risk on its interest bearing assets and liabilities. The management limits the Companys interest rate risk by monitoring changes in interest rates in the currencies in which its interest bearing assets and liabilities are denominated. 16.2. Credit risk Credit risk arises when counter parties can not meet the obligations in transactions involving financial instruments. The Company has established procedures to manage credit exposure including credit approvals, credit limits, collateral and guarantee requirements. The Company also manages risk through an in house credit approval system, which evaluates customers' credit worthiness and obtaining adequate securities where applicable. 16.3. Liquidity risk The company limits its liquidity risk by ensuring that it has sufficient liquid cash balances to meet its payment obligation as they fall due. The company maintains good working relations with its banks and ensures compliance as the funds are available in accordance with the facility agreements with the banks, whenever required. 16.4. Currency risk Currency risk is the risk that value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company did not undertake any transactions in currencies other than Saudi Riyals, during the year. Most of its financial assets and financial liabilities are denominated in Saudi Riyal itself and therefore it was not exposed to significant currency risk. 17. COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with current year's presentation wherever necessary.

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