PDF Board Annual Report of Sahara International Petrochemical Company (Sipchem)

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Board Annual Report of Sahara International Petrochemical Company

(Sipchem)

For fiscal year 2022

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Dear Shareholders of Sahara International Petrochemical Company In the Name of Allah, the Most Gracious, the Most Merciful

It is with great pleasure that I present to you, on behalf of the Board of Directors of the Sahara International Petrochemical Company "Sipchem," the company's annual report for the fiscal year 2022 AD. This report provides an overview of the company's performance as well as its efforts during 2022.

Sipchem maintains on its path to excellence, recording remarkable successes in the company's overall performance and results for the year 2022.

With focused efforts, Sipchem has made great strides towards its goals of excellence in the petrochemical industry in accordance with the long-term strategy authorized by the board of directors in 2021. The implementation of this strategy has begun in earnest, placing its emphasis on excellence, reliability, and higher efficiency among other initiatives that contributes to overcome global geopolitical and economic influence in support of our great nation's development and prosperity.

Sipchem will continue to emphasize the development and investment made by the executive management team in Sipchem's future leaders in order to further its well-thought-out actions in pursuit of its growth objectives by prioritizing the company's values, encouraging growth, and ensuring the implementation of our pillars, which in turn will drive us to swiftly realize our goals toward digital transformation and business sustainability.

Sipchem would not have taken these bold steps without the success of God first, and then the full support of the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, his devoted Crown Prince Mohammed bin Salman, and the wise government, as well as what was provided by the company's employees and their unwavering determination.

Focusing on creativity and innovation, Sipchem has provided the ideal environment that makes its employees to be in constant unity with oneself; to view adversity as an opportunity; to view hardship as a necessary step toward success; to respond to challenges head-on with a can-do attitude; and to help make Sipchem the best it can be.

In conclusion, and in light of the company's more than 24-years journey culminating in growth and excellence, Sipchem will strive to create positive values that benefit the company and its shareholders while also contributing to the company's presence in a competitive sector and markets.

I would like to express my appreciation to the Board of Directors, employees, and everyone who has contributed to the company along its journey to success.

Khalid A. Al-Zamil Chairman

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1) Formation of the Board of Directors and Classification of Directors.

Sipchem has the privilege of having a highly experienced Board of Directors with full relevant knowledge and efficiency in petrochemicals. The Board is composed of eleven members elected by the Ordinary General Assembly Meeting on 30/11/2022 for three years, extending to 09/12/2025.The new Board of Directors also extends its sincere thanks to the previous Board of Directors for their efforts and achievements in the year of 2022. Members are classified as follows:

S Name Commission Membership Status

1 Eng. Khalid A. Al-Zamil (Representative of Zamil Group Holding Company) Chairman Non-executive

2 Mr. Fahad S. Al-Rajhi Vice Chairman Non-executive

3 Dr. Abdulrahman A. Al-Zamil Member Non-executive

4 Eng. Reyadh S. Ahmed (Representative of Ikarus Petrochemical Holding Company) Member Non-executive

5 Eng. Saeed A. Basamah Member Non-executive

6 Eng. Yousef A. Al-Zamil* Member Non-executive

7 Eng. Abdullah K. Al- Buainain** Member Independent

8 Mr. Saeed O. Al-Esayi Member Independent

9 Mr. Ayidh M. Al-Qarni (Representative of the Public Pension Agency) Member Independent

10 Mr. Ziad A. Al-Turki Member Independent

11 Mr. Ahmed Saad Al Sayyari (Representative of GOSI) Member Independent

12 Mr. Abdulaziz A. bin Dayel Member Independent

13 Eng. Mosaed S. AlOhali*** Member Non-executive

14 Mr. Feras M. Al-Abad*** Member Non-executive

15 Mr. Ahmad A. AL- Dakheel Member Independent

* The date of resignation of a member of the Board of Directors is 01 April 2022

** The date of appointment of a member of the Board of Directors is 25 April 2022.

*** The date of appointment of the new members of the Board of Directors based on the decision of the Ordinary General Assembly on 30 Nov 2022.

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2) DESCRIPTION OF SIPCHEM ACTIVITIES:

(Sipchem) is a Saudi public joint stock company listed on the Tadawul (Saudi Capital Market).

Sipchem is actively investing in basic and intermediary petrochemical and chemical materials that can be utilized as feedstock for manufacturing of a vast array of products that provide prosperity and welfare for humans. Sipchem is committed to implementing its activities in compliance with the highest quality standards whether in its products or maintaining the integrity of the surrounding environment or the safety of its employees and communities.

Sipchem selected Jubail Industrial City, located in the Eastern Province of Saudi Arabia, to establish its industrial complex on an area of 1,766,959 square meters, because of the availability of all required basic infrastructure, the abundance of raw materials and necessary petrochemical products in the Eastern Province and the ease of export operations via King Fahd Industrial Port and Jubail Commercial Port.

In 2022, Sipchem’s existing manufacturing facilities produced 4,159 (2021: 4,042) million metric tons. Net income amounted to SAR 3,595.2 million in 2022 compared with SAR 3,591.8 million in 2021 with an increase of 0.1%. The reason of increasing profits of the Company during this year compared to the previous year is attributed to an increase in sales quantities of company’s products as a result of increase in plants efficiency and reliability in spite of decrease in profits margin due to decrease in products prices and increase in prices of some feedstock and decrease in finance costs due to decrease in gearing ratio in addition to reduction in general and administrative expenses and decrease in zakat expenses Also.

Sahara International Petrochemical Company

Establishment Date 1999

Company Type Joint-Stock Company

Headquarters Al Khobar – Saudi Arabia

Capital SAR 7,333,333,320

Company Activity Petrochemical & Chemical Industries, Basic and Intermediate

Number of shares 733,333,332 shares

%

O therInvestors Zamil G roup Holding C o

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3) A Description of Sipchem's Plans and Strategies

Sipchem updated its strategy for the next ten years in 2022, which is based on five main pillars - Growth, as the company aims to become a medium to large company globally

Profitability, as the company aims to achieve high returns for shareholders through a global level of cost, distinctive profit margins and capital efficiency.

Sustainability, as the company aims to create Related Parties value through sustainable and responsible growth

- Digital transformation and innovation, as the company aims to be a pioneer in innovation and digital transformation in the chemical industry - Human resources, as the company aims to be preferred in the chemical and petrochemical industries

This year, the company worked on developing initiatives to achieve this strategy, which resulted in the approval of 181 initiatives in the various departments of the company, and made them among the main performance indicators for all the company's managers.

Sipchem is always looking forward to working on shaping its future, and attracting new growth opportunities to contribute to the growth and prosperity of the Kingdom of Saudi Arabia and to contribute to achieving the Kingdom's Vision 2030, and this year the company continued to search for investment opportunities and maximize positive results in various petrochemical industries, whether through Investing in new projects or acquisitions inside or outside the Kingdom, which enhances the company's profitability and enables it to enter new global markets. In this context, a new factory for the production of maleic anhydride will be established, as well as the expansion of the polypropylene, vinyl acetate monomer and ethylene vinyl acetate factories, provided that the final investment decision is made at the end of 2023. These projects, if approved, will enable the company to increase the production capacity in line with the growing global demand and reduce the cost of production. production in addition to maximizing profitability and creating new job opportunities for the countrymen.

4) Summary in form of a table regarding Sipchem’ s assets, liabilities, and results of its operations during the last five fiscal years

The key financial indicators for the year 2022 compared to the previous year are as follows:

• Revenues reached SAR 10,254 million during the year 2022 compared to SAR 9,687 million for the previous year with an increase of 6%.

• Gross profit decreased to SAR 4,839 million during the year 2022 compared to SAR 5,342 million for the previous year, with a decrease of 9%.

• Net operational profit decreased to SAR 4,047 million in 2022, compared to SAR 4,301 million in the previous year, with a decrease of 6%.

• Net profit reached SAR 3,595 million during the year 2022 compared to SAR 3,592 million for the previous year, with an increase of 0.1%.

• Earnings per share reached SAR 4.96 during the year 2022 compared to SAR 4.94 for the previous year.

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Assets, liabilities, and operating results for the last five financial years

Consolidated statement of financial position (Million Riyal)

2022 2021 2020 2019 2018

Non-current assets 18.052 18.548 18.792 19.863 12.380 Current assets 5.423 5.917 4.973 4.128 3.000 Total assets 23.475 24.465 23.765 23.991 15.380 Total Equity 16.737 15.722 13.836 14.338 7.125 Non-current liabilities 4.018 5.816 6.464 7.722 6.330 Current liabilities 2.721 2.927 3.465 1.931 1.925 Total liabilities and equity 23.475 24.465 23.765 23.991 15.380

A description of the impact of each activity on the size of Sipchem business and its contribution to the results:

Sectorial Analysis: The Company operates in the following sectors:

• Basic chemicals: They include Methanol, Butane products and Carbon Monoxide.

• Intermediate chemicals: They include Acetyl Acid, Vinyl Acetate Monomers, Ethyl Acetate, Butyl Acetate and related materials.

• Polymers: These include low density Polyethylene, Polyvinyl acetate, Polyvinyl Alcohol, and Polybutylene Terephthalate, electrical wire conductor insulation products plant including the sector of polypropylene material.

• Trade: It includes revenues of Sipchem Marketing Co. and its foreign subsidiaries

• Companies and others: This include Sipchem, Ethylene Vinyl Acetate Films Plant and Tools Production Plant.

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Million Riyals Basic chemicals Intermediate

chemicals Polymers Marketing Companies

and others

Exclusion upon

merger Total

For the year ended 31 Dec. 2022

Revenues 3,184 4,639 3,361 8,048 28 (9,007) 10,254 Gross profit/loss 1,859 1,640 928 331 (25) 107 4,840 Operating profit/loss 1,657 1,309 763 260 (97) 155 4,047 Dividend in joint ventures and associate companies - - - - 365 - 365 Profit/loss before Zakat and tax 1,626 1,253 694 260 251 99 4,184 Total assets 3,356 5,476 6,881 1,688 27,097 (21,022) 23,475 Total liabilities 1,107 1,546 2,677 1,135 3,799 (3,527) 6,738 Capital expenses 80 68 235 2 247 - 632

For the year ended 31 Dec. 2021

Revenues 3,146 4,305 3,455 7,435 17 (8,671) 9,687 Gross profit/loss 1,986 1,706 1,416 336 (20) (82) 5,342 Operating profit/loss 1,765 1,389 1,041 269 (141) (22) 4,301 Dividend in joint ventures and associate companies - - - - 480 - 480 Profit/loss before Zakat and tax 1,697 1,257 932 268 687 (383) 4,457 Total assets 3,839 5,955 7,209 2,061 26,734 (21,332) 24,465 Total liabilities 1,895 1,896 2,928 1,652 4,844 (4,471) 8,743 Capital expenses 80 224 116 77 244 - 741

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Consolidated statement of profit or loss (Million Riyal)

2022 2021 2020 2019 2018

Income 10,254 9,687 5,323 5,440 5,036

Cost of sales (5,415) (4,344) (4,150) (3,805) (3,401)

Gross profit 4,839 5,342 1,173 1,635 1,635

Selling and distribution costs (296) (230) (395) (315) (197)

General and administrative expenses (496) (651) (419) (414) (342)

Impairment of non-financial assets - (160) - - -

Operating profit 4,047 4,301 360 906 1,096

Dividend in joint ventures and associate companies 365 480 (34) (27) -

Finance Revenues 51 30 26 60 28

Finance costs (245) (315) (293) (370) (263)

Other (Expenses)/ income, net (34) (38) 126 (179) 6

Profit before Zakat and income tax 4,184 4,457 185 390 867

Cost of Zakat and income tax (231) (449) (128) (145) (116)

Profit for the year 3,953 4,008 57 245 751

Profit yields to:

Equity 3,595 3,592 176 300 583

Non- controlling interests 358 417 (119) (55) 168

Earnings per share from net profit yields to shareholders 4.96 4.94 0.24 0.52 1.59

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Evolution of sales, operating profit and net profit for the last five years

(Million Riyals)

10,254

9,687

5,323 5,440

5,036

4,047 4,301

360 906 1,096

3,595 3,592

176 300 583

2022 2021 2020 2019 2018

Revenue Operating profit Profit attributable to equity holder

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5) Geographical Analysis of Sales of Sipchem and its subsidiaries

Sipchem's products are marketed and sold in all local markets, Middle East markets and international markets. The following chart shows the geographical distribution of Sipchem’s sales during 2022:

AFRICA+ME 4%

AMERICAS 1%

EUROPE 12%

GCC 2%

SAUDI 14%

ASIA 27%

OCEANIA 0.2%

INDIAN SUB- CONTINENT

17%

INTER-COMPANY SALES

23%

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6) A description of the subsidiaries’ activities and its impact on the size of Sipchem’s business and its contribution to the results for 2022

(Million Riyals)

Activity Revenues Percentage

International Methanol Company 1,032.7 10.1%

International Diol Company 997.1 9.7%

International Acetyl Company Limited 260.0 2.5%

International Vinyl Acetate Company 2,369.2 23.1%

International Gases Company 106.9 1.0%

Sipchem Marketing Company 1,188.0 11.6%

International Polymers Company 1,799.6 17.6%

Sipchem Chemicals Company 457.1 4.5%

Saudi Specialized Products Company 9.0 0.1%

Sipchem Advanced Technologies Company 19.1 0.2%

Sahara International Petrochemical Company 453.7 4.4%

Sahara Marketing Company - -

Al WAHA Petrochemicals Company 1,561.2 15.2%

Total 10,253.6 100%

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Description of Activities of Sipchem’s Subsidiaries

International Methanol Company International Diol Company

Establishment Date

2002 Establishment

Date

2002

Company Type

Limited Liability Company Company

Type

Limited Liability Company

Headquarters Jubail Industrial City – Saudi Arabia Headquarters Jubail Industrial City – Saudi Arabia

Capital SAR 360,97 Capital SAR 431,25

Company Activity

Production of Methanol (methyl alcohol) Company Activity

Production of Butanediol (BDO), Maleic Anhydride (MAn), Tetrahydrofuran (THF) and gamma- Butyrolactone (GBL)

Capacity 970 thousand mtpa Capacity 40 thousand mtpa of Maleic Anhydride (MAn)

5 thousand mtpa of gamma-Butyrolactone (GBL) 7,65 thousand mtpa of Tetrahydrofuran (THF) 50 thousand mtpa of Butanediol (BDO)

% 35 %

Sipchem

%

Sipchem Japan-Arabia Methanol Company

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International Vinyl Acetate Company Ltd.

Sahara Petrochemicals Company

Date

2004

Company Type Limited Liability Company Company Type Closed Joint Stock Company

Headquarters Jubail Industrial City – Saudi Arabia Headquarters AL-Khobar – Saudi Arabia

Capital SAR 676,000,000 Capital SAR 2,378,95

Company Activity Production of Vinyl Acetate Monomer

Company Activity Petrochemical & Chemical Industries, Basic and Intermediate Capacity 330 thousand mtpa

In 2022, the Awqaf share of 3% in the International Vinyl Acetate Company was purchased to become 100% owned by Sipchem on July 21, 2022

%

Sipchem

%

Sipchem

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Al WAHA Petrochemical Company- AL WAHA International Acetyl Company Limited

Establishment Date 2006 Establishment

Date

2006

Company Type Limited Liability Company Company Type Limited Liability Company

Capital SAR 1,660,000,000 Capital SAR 1,003,000,000

Company Activity Production of Propylene and Polypropylene Company Activity

Production of Acetic Acid (AA) and Acetic Anhydride (AAn)

Capacity 450,000 mtpa of Propylene 450,000 mtpa of Polypropylene 1,080 mtpa of caustic soda

150 mtpa of mixed liquid hydrocarbons

Capacity 460,000 mtpa of Acetic Acid 50,000 mtpa of Acetic Anhydride

In 2022, the Awqaf share of 3% in the International Acetyl Company was purchased to become 100% owned by Sipchem on July 21, 2022

75%

25%

Sahara Petrochemicals Company- Sahara Basell Arabie Investissements S.A.S

100 %

Sipchem

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Tasnee & Sahara Olefins Company (TSOC) International Gases Company

Date

2006

Company Type Closed Joint Stock Company Company Type Limited Liability Company

Capital SAR 2,830 million Capital SAR 425,4 million

Company Activity

Establishment, management, operation, ownership and investment in industrial projects, particularly petrochemical and chemical industries in addition to marketing their products and performing all related activities.

Production of Carbon Monoxide and Hydrogen

Capacity 345,000 mtpa of Carbon Monoxide 65,000 mtpa of Hydrogen Sahara Petrochemicals Company indirectly owns 24.41 of Saudi

Ethylene & Polyethylene Company

In 2022, the Awqaf share of 3% in the International Gases Company was purchased to become 100% owned by Sipchem on July 21, 2022

32.55%

60.45 %

7%

Sahara Petrochemical Company- Sahara

7 %

100 %

Sipchem National Industrialization Company

GOSI

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Saudi Ethylene and Polyethylene Company (SEPC) Sipchem Marketing Company

Date

2007

Headquarters Jubail Industrial City – Saudi Arabia Headquarters Al-Khobar – Saudi Arabia

Capital SAR 2,737,500,000 Capital SAR 2,000,000

Company Activity Production of propylene, ethylene, high density polyethylene and low density polyethylene.

Company

Activity Marketing and sales of petrochemicals and plastics.

Capacity 284.8 thousand mtpa of Propylene 1,008 thousand mtpa of Ethylene 800 thousand mtpa of polyethylene

75%

25 %

Tasnee & Sahara Olefins Company (TSOC) BasellMoyen Orient Investissements SAS

100 %

Sipchem

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International Polymers Company

2009

Headquarters Jubail Industrial City – Saudi Arabia

Capital SAR 703,2 million

Production ofPolyvinyl acetate, Polyvinyl alcohol,

polyethylene wax, Low Density Polyethylene and ethylene and vinyl acetate copolymers.

Capacity 200,000 mtpa of ethylene and vinyl acetate copolymers.

125,000 mtpa of Polyvinyl acetate 4,000 mtpa ofLow Density Polyethylene 4,000 mtpa of Polyvinyl alcohol 200 mtpa ofpolyethylene wax

International Utilities Company (IUC)

2009

Company Type Limited Liability Company

Capital SAR 2,000,000

Management, operation and maintenance of utilities and facilities for Sipchem’s subsidiaries.

75 % 25 %

Sipchem Korea's Hanwha Chemical Corp

20 % 20 % 20 % 20 %

20 %

International Methanol Company International Diol Company International Acetyl Company Limited International Vinyl Acetate Company International Gases Company

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Saudi Acrylic Acid Company (SAAC) Saudi Acrylic Monomer Co. Ltd. (SAMCO)

Date

2009

Capital SAR 1,777 million Capital SAR 1,084,5 million

Establishment, management, operation and ownership of acrylic acid and its derivatives production projects, and petrochemical and chemical industrial projects.

Company Activity Acrylic Acid, Butyl Acrylic, Diethylhexyl Acrylic, Glacial Acrylic Acid

Capacity 160 thousand mtpa of Butyl Acrylic 64 thousand mtpa of Glacial Acrylic Acid Based on Sahara Petrochemical Company’s ownership percentage in TSOC, which is 32.55

%, Sahara holds indirectly additional ownership percentage of 21.16 in Saudi Acrylic Acid Company (SAAC), thus is reflected in Sahara’s total equity to be 43.16%.

Based on Sahara Petrochemical Company’s ownership percentage in Saudi Acrylic Acid Company (SAAC), which is 43.16 %, Sahara holds indirectly additional ownership percentage of 32.37%, in Saudi Acrylic Monomer Co. Ltd. (SAMCO).

65%

22%

13%

Tasnee & Sahara Olefins Company (TSOC) Sahara Petrochemicals Company

75%

25 %

Saudi Acrylic Acid Company (SAAC) Rohm and Haas Nederland B.V

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Sahara & Ma'aden Petrochemicals Company (SAMAPCO)

Capital SAR 900,000,000

Company Activity Production of caustic soda, chlorine, and Ethylene Dichloride (EDC)

Capacity 300,000 mtpa ofEthylene Dichloride (EDC) 250,000 mtpa ofcaustic soda

50 % 50 %

Sahara Petrochemicals Company- Sahara Saudi Arabian Mining Company - Ma'aden

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Sipchem Europe Cooperative UA and its Subsidiaries

Headquarters Lotre-Switzerland

Capital SF 1,000,000

Company Activity Providing administrative support in marketing and logistics activities

% 0.01 %

Sipchem

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Saudi Acrylic Polymer Company (SAPCO ) Gulf Advanced Cable Insulation Company

Date

2012

Company

Activity Ownership, management and operation of super absorbent polymers plant within the integrated acrylics complex project

Cable insulation polymers products

Capacity 80 thousand mtpa of super absorbent polymers Capacity 25 thousand mtpa By virtue of Sahara’s aggregate 43.16% equity stake in SAAC, Sahara owns an indirect

equity stake of 32.37% in SAPCO. • Production operations at Gulf advanced cable insulation factory (a subsidiary

of Sipchem) were suspended on 01 July 2021 in line with Sipchem's post- merger strategy to improve profitability and performance efficiency, to ensure liquidity levels and stability, to maintain the sound financial structure and to take into account the investment risks resulting from the current economic conditions and the challenges facing the markets in general.

75%

25%

Saudi Acrylic Acid Company (SAAC) Evonik Industries AG

50 % 50 %

Sipchem Korea's Hanhwa Chemical Corp.

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Saudi Specialized Products Company Sipchem Asia Pte Ltd

Date

2013

Limited Liability Company Company

Type

Headquarters Hail – Saudi Arabia Headquarters Singapore

Capital SAR 56,320,000 Capital SAR 752,970

Production of metal molds used for plastics industries and maintenance of metal molds in addition to producing

transparent films. Company

Activity Marketing Sipchem's products in Asia

Capacity 4000 mtpa

• Production operations were stopped at the Ethylene Vinyl Acetate Film Factory of the Saudi Specialized Products Company (a subsidiary of Sipchem) on January 01, 2021 AD. This comes in line with Sipchem’s post-merger strategy with the aim of improving profitability and performance efficiency.

• On August 29, 2022, the company announced that a fire broke out in the company's factory in the city of Hail, without any injuries or human losses, praise be to God.

100 %

Sipchem

100 %

Sipchem

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Saudi Butanol Company (SABUCO ) Khair Inorganic Chemical Industries

Date

2016

Company Type Limited Liability Company Company Type Closed Joint Stock Company

Headquarters Jubail Industrial City – Saudi Arabia Headquarters Ras Al-Khair – Saudi Arabia

Company

Activity Production of n-butanol and isobutanol ^Company

Activity Production of soda and sodium chloride

Capacity 330 thousand mtpa of n-butanol 11 thousand mtpa of iso-butanol

Capacity 300,000 mtpa ofSoda Ash

384

,

000 mtpa of sodium chloride By virtue of Sahara’s aggregate 43.16% equity stake in SAAC, Sahara

owns an indirect equity stake of 14.38% in SABUCO.

33.3%

Sadara Chemical Company Saudi Acrylic Acid Company Saudi Kayan Petrochemical Company

30%

70%

Sahara Petrochemicals Company Other Investors

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Sahara Marketing Company Saudi Advanced Technologies Company (Wahaj)

Establishment Date 2016 Establishment

Date

2018

Headquarters Jubail Industrial City – Saudi Arabia Headquarters Riyadh – Saudi Arabia

Capital SAR 500,000 Capital SAR 5,000,000

Company Activity Marketing and sales of petrochemicals and plastics.

Metal formation by hammering, pistons, casting, rolling, making structures for motor vehicles, making parts, accessories and engines for motor vehicles.

100 %

Sahara Petrochemicals Company- Sahara

100 %

Sahara International Petrochemicals Company- Sipchem

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50%

Linde Sipchem Industrial Gases

Sahara International Petrochemicals Company- Sipchem Linde Holding Netherlands

Capital SAR 5000,000

Company Activity Production of Primary gases, Production of mixed industrial gases, Production of ammonia, Transport of other gases and liquids via pipelines

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7) Applicable and Inapplicable Provisions of the Corporate Governance Regulations

In implementation of the Corporate Governance Regulations issued by the Saudi Capital Market Authority, Sahara International Petrochemical Company "Sipchem"

has adopted all regulations, policies and procedures that fall within the powers of the Board of Directors and the General Assembly, as follows:

S Regulations/Policy

1 Audit Committee Regulations (General Assembly)

2 Company's Main Plans, Policies, Strategies and Goals (Board of Directors) 3 Nomination and Remuneration Committee Regulations (General Assembly) 4 Executive Committee Regulations (Board of Directors)

5 Governance Committee Regulations (Board of Directors)

6 Policies and Standards for Membership Procedures in the Board of Directors (General Assembly)

7 Remuneration policy for Members of the Board of Directors, Board Committees and Executive Management (General Assembly) 8 Corporate Governance Rules (Board of Directors)

9 Dividend Distribution Policy (General Assembly)

10 Risk Management Policies and Procedures (Board of Directors)

11 Conflict of Interest Management Policy for Members of the Board of Directors, Executive Management and Shareholders (Board of Directors) 12 Policy of Organizing the Relationship with Stakeholders (Board of Directors)

13 Sipchem's Administrative and Financial Policies and Powers Delegated to the Executive Management (Board of Directors) 14 Investment and Financing Policies and Mechanisms (Board of Directors)

15 Employee Remuneration Policy (Board of Directors)

16 Work Procedures Policies in the Board of Directors (Board of Directors) 17 Professional Conduct and Ethical Values Policy (Board of Directors)

18 Policies and Procedures to ensure Sipchem’s compliance with the rules, regulations and disclosure to shareholders and stakeholders (Board of Directors) 19 Policies of Competitive Business Standards (General Assembly)

20 Whistleblowing Policy and Procedure Manual

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Sipchem applies all the provisions stated in the Corporate Governance Regulations issued by the Capital Market Authority (CMA) except for the provisions listed below:

Article No. Article Text Clarifications

39 Evaluation Guiding Article

67 Risk Management Committee Formation

(Guiding Article) The Board of Directors has assigned the responsibilities for the Risk Management processes and regulations to the Board’s Audit Committee, which shall be responsible for developing and implementing risk management processes and regulations, to serve as the framework for the Company. The CEO shall chair the Risk Management’s Internal Executive Committee. The key roles of the Senior Management shall be assigned to the members of the Committee and the Company’s Risk Management Department shall submit its reports to the Audit Committee.

68 Terms of Reference of the Risk

Management Committee (Guiding Article)

69 Meetings of the Risk Management Committee (Guiding Article)

84 Social Responsibility (Guiding Article) Sipchem implements programs aimed at highlighting and sustaining the role of social responsibility, which covers areas that focus on the society. Sipchem is working within a specific strategy in social responsibility.

85 Social Activity Initiatives Guiding Article and the Company shall work on developing KPIs for social responsibility.

90 Disclosure of Remunerations

The Company is committed to the disclosure of the remunerations of Board and Committee Members in details. The company has also committed to disclosing the remuneration of senior executives in total in accordance with the statutory requirements contained in subparagraph (b) of Paragraph No. (4) of Article (90) of the Corporate Governance Regulations, in order to protect the interests of the company, its shareholders and its employees, and to avoid causing any harm that may result from disclosure. Detailed, the details were not presented as contained in Annex No. (1) concerning the remuneration of senior executives from the Corporate Governance Regulations.

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8) Names, Current Positions, Former Positions, Qualifications and Experience of Board Members, Committee Members and Executive Management.

A. Board Members:

S Name Current positions Former Positions Educational Qualifications Experiences

1 Eng. Khalid A. Al-Zamil (Zamil Group Holding Co.

Representative)

Chairman – Sahara International Petrochemical Company (Sipchem) .

Chairman – Zamil Group Holding Co.

Chairman – Middle East Battery Co.

Board Member – Zamil Industrial

Investment Co. Bachelor of Civil Engineering

Chairman of Zamil Group Holding Company.

Chairman of t Zamil Industrial Investment Company.

Chairman of the Zamil Steel Company.

2 Mr. Fahad S. Al-Rajhi

Vice Chairman – Sahara International Petrochemical Company (Sipchem) Chairman - Yanbu Cement Co., Ltd.

Chairman - Alrajhi Ekhwan Co.

Vice Chairman - Al Watania for Industries . Board Member - Musharaka Capital Co.

Chairman - Saudi German Company for Nonwoven Products (SGN) .

Board Member - International Methanol Co.

Chairman of Sulaiman binAbdulaziz Al-Rajhi for Education and Development Co.

Chairman of the flexible packaging Co.

Board Member – Saudi Cement Company

Bachelor of Industrial Management

Chairman – Alrajhi Ekhwan Co.

Board Member – Saudi Cement Company .

3

Eng. Reyadh S. Ahmed (Ikarus Petrochemical Co. Representative)

Board Member - – Sahara International Petrochemical Company (Sipchem) Chairman – Meezan Bank

Chairman - Privatization Holding Company Board Member – Noor Financial Investment Co. (NOOR)

Chairman and CEO of Ikarus Petroleum Industries

Chairman - Middle East Complex for Engineering, Electronics & Heavy Industries Co.

Chairman – IT Partners Co.

Board Member – Karachi Electric Supply Corp.

Vice Chairman – Gas & Oil Fields Services Company

Board Member - Saja'a Gas Private Ltd, (SajGas)

Board Member – United Gas Supply Company

Board Member – Kuwait Rocks Company

Vice Chairman - Eastern United Petroleum Services (EUPS)

Bachelor of Chemical Engineering

MA of Chemical Engineering . Businessman .

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S Name Current positions Former Positions Educational Qualifications Experiences

4 Mr. Saeed A. Basamah

Board Member – Sahara International Petrochemical Company (Sipchem)

Chairman – Khair Inorganic Chemical Industries Co.

Board Member – International Medical Center Co.

Board Member – Saudia Dairy & Foodstuff Co.

(SADAFCO)

Board Member of Future Sources Co.

Board Member of Hala Support Services Co.

Board Member of Basamh Group Co.

- Bachelor of Business Administration Businessman

5 Dr. Abdulrahman A.

Al-Zamil Board Member – Sahara International Petrochemical Company (Sipchem) .

Chairman – Zamil Group Holding Co.

Chairman – Zamil Industrial Investment Co.

Board Member – Sahara Petrochemicals Co.

Chairman – National Power Co.

Chairman – National Chemical Carriers Co.

Chairman – Saudi Advanced Technologies Co

Bachelor of Law

PhD – International Relations .

He worked as Deputy Governor of the General Electricity

Corporation, then as Deputy Minister of Commerce, then as Member of Saudi Shura Council for three sessions

6 Mr. Saeed O. Al-Esayi

Board Member - Sahara International Petrochemical Company (Sipchem)Chairman – Alesayi Trading Corporation .

Board Member – Yanbu Cement Co.

Board Member – Al Rajhi Bank Board Member – Sahara Petrochemical Co.

Bachelor of Industrial Engineering .

General Manager and then Chairman of the Board of Directors of Alesayi Motors Company and Omar Qassem Alesayi & Partners Company Limited.

7 Mr. Ziad A. Al-Turki

Board Member of Sahara International Petrochemical Company (Sipchem).

Chairman of Abdul Rahman Al-Turki Sons Trading and Contracting Co.

Vice chairman – A. A. Turki Co.

for Trading & Contracting Diploma of Social Sciences Vice Chairman of Abdul Rahman Ali Al-Turki Group of Companies

“ATCO Group”.

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Chairman of Abdul Rahman Ali Al-Turki Group of Companies “ATCO Group”.

Board Member of Dhahran International Exhibitions Company "Dhahran Expo", Saudi Arabia.

Member of the Strategic Partners Group, Investcorp, Bahrain .

Board Member of Dhahran International Exhibitions Company

"Dhahran Expo", Saudi Arabia . Member of the Strategic Partners Group, Investcorp, Bahrain .

8 Eng / Abdullah

Khalifa Al Buainain* Board Member of Sahara International Petrochemical Company (Sipchem).

CEO of Marafiq . Chairman of the Board of Directors of Marafiq subsidiaries Several positions in SABIC and Al-Razi Company .

Bachelor's degree in Mechanical Engineering

SABIC - petrochemical field - operation, maintenance and projects - boards of directors of subsidiaries - Chairman of Al- Razi Company - Vice President for Manufacturing Affairs

CEO of Marafiq Company and Chairman of the Board of its subsidiaries.

9

Eng/ Musaed Suleiman Al-Ohali**

(Representative of the General Organization for Social Insurance)

Board Member of Sahara International Petrochemical Company (Sipchem) .

Board Member of the Saudi Military Industries Company.

Board Member of the National Company for Industry .

Ma'aden CEO

SABIC Senior Executive Advisor MSc Chemical Engineering . Graduating in several positions in Sadaf - SABIC - Ma'aden .

10

Mr. Firas Mazen Al- Abad**

(Representative of the General Organization for Social Insurance)

Manager of Hasanah Investment Company .

Manager - Hassana Investment Company .

Manager of the Public Investment Fund .

Master of Finance Bachelor of Accounting

Manager - Hassana Investment Company . .

Manager of the Public Investment Fund .

Analyst - Hassana Investment Company

11 Mr. Ahmed Ali Al- Dakhil**

Board Member of Sahara International Petrochemical Company (Sipchem)

Chief Executive Officer - Al Rajhi International Investment Company .

Board Member of the National Company for Industry Board Member of Al-Rajhi International Investment Company .

Board Member of the Second Milling Company Board Member of Al-Rajhi International Investment Company (Egypt Branch)

Board Member of the Middle East Company for Electrical Industries

Leadership positions in several listed and unlisted joint stock

companies in the Kingdom Bachelor's degree in Industrial Management Leadership positions in several listed and unlisted joint stock companies in the Kingdom

*The Board Member decided to appoint Eng. Abdullah Khalifa Al-Buainain as a member of the Board of Directors on April 25, 2022, to succeed the resigned member, Eng. Yousef Abdul Rahman Al-Zamil.

** On November 30, 2022, the General Assembly approved the election of the members of the Board of Directors for its new session, which began

on December 10, 2022 and ends on December 09, 2025 .

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B)Committees members:

Executive Committee

S Name Current positions Former Positions Educational

Qualifications Experiences

1 Mr. Fahad S. Al-Rajhi

Vice Chairman – Sahara International Petrochemical Company (Sipchem) Chairman - Yanbu Cement Co., Ltd.

Chairman - Alrajhi Ekhwan Co.

Vice Chairman - Al Watania for Industries . Board Member - Musharaka Capital Co.

Chairman - Saudi German Company for Nonwoven Products (SGN) .

Board Member - International Methanol Co.

Chairman of Sulaiman binAbdulaziz Al-Rajhi for Education and Development Co.

Chairman of the flexible packaging Co.

Board Member – Saudi Cement Company

Bachelor of Industrial Management

Chairman – Alrajhi Ekhwan Co.

Board Member – Saudi Cement Company .

2 Eng. Reyadh S. Ahmed

(Ikarus Petrochemical Co. Representative)

Board Member - – Sahara International Petrochemical Company (Sipchem)

Chairman – Meezan Bank

Chairman - Privatization Holding Company Board Member – Noor Financial Investment Co.

(NOOR)

Chairman and CEO of Ikarus Petroleum Industries Chairman - Middle East Complex for Engineering, Electronics & Heavy Industries Co.

Chairman – IT Partners Co.

Board Member – Karachi Electric Supply Corp.

Vice Chairman – Gas & Oil Fields Services Company Board Member - Saja'a Gas Private Ltd, (SajGas) Board Member – United Gas Supply Company

Board Member – Kuwait Rocks Company

Vice Chairman - Eastern United Petroleum Services (EUPS)

Bachelor of Chemical Engineering MA of Chemical Engineering .

Businessman .

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3 Mr. Saeed O. Al-Esayi

Board Member - Sahara International Petrochemical Company (Sipchem)Chairman – Alesayi Trading Corporation .

Board Member – Yanbu Cement Co.

Board Member – Al Rajhi Bank Board Member – Sahara Petrochemical Co.

Bachelor of Industrial Engineering .

General Manager and then Chairman of the Board of Directors of Alesayi Motors Company and Omar Qassem Alesayi &

Partners Company Limited.

4 Eng / Abdullah Khalifa Al Buainain* Board Member of Sahara International Petrochemical Company (Sipchem).

CEO of Marafiq . Chairman of the Marafiq Company.

Several positions in SABIC and Al-Razi Company .

Bachelor's of Mechanical Engineering

SABIC - petrochemical field - operation, maintenance and projects - boards of directors of subsidiaries - Chairman of Al- Razi Company - Vice President for Manufacturing Affairs CEO of Marafiq Company and Chairman of the Board of its subsidiaries.

5 Eng/ Musaed Suleiman Al-Ohali**

(Representative of the General Organization for Social Insurance)

Board Member of the Saudi Military Industries Company.

Board Member of the National Company for Industry .

Ma'aden CEO

SABIC Senior Executive Advisor MSc Chemical Engineering . Graduating in several positions in Sadaf - SABIC - Ma'aden .

* The Board of Directors decided to appoint Eng. Abdullah Khalifa Al Buainain as a member of the Executive Committee on 27 April 2022.

Succeeding the resigned committee member, Eng. Yousef Al-Zamil.

** The Board of Directors decided in its new session which began on December 10, 2022 to appoint Eng. Musaed Sulaiman Al-Ohali as a member of

the Executive Committee on December 12, 2022.

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Audit Committee:

S Name Current positions Former Positions Educational Qualifications Experiences

1 Mr. Mohamed Farhan Al- Nader

Executive partner in United Accountants

Member of RSM International Group.

Member of the Audit Committee - Sahara International Petrochemical Company (Sipchem)

Executive of Finance Awqaf Suleiman Al-Rajhi Holding Company.

Bachelor of Accounting.

Executive partner in United Accountants, a member of the RSM International Group

2 Dr. Muhammad Faraj Al- Kinani

Founder and CEO of Development Allies Foundation.

Member of the Audit Committee - Sahara International Petrochemical Company (Sipchem)

Dean of the College of Industrial Management at King Fahd University of Petroleum and Minerals.

Head of the Finance and Economics Department at King Fahd University of Petroleum and Minerals.

General Supervisor of Investment in the Research and Educational Programs Support Fund at King Fahd University of Petroleum and Minerals.

Bachelor's of Financial Management from King Fahd University of Petroleum and Minerals.

Masters in Financial Management from the University of Colorado Denver in the United States of America.

PhD in Financial Management from the University of Oklahoma in the United States of America.

Certified Financial Analyst from...

Chairman and Board of Dhahran Valley Business Services Company.

Member of the Board of Directors:

(Arab National Bank, Dhahran Valley Technology Holding Company, Saudi Real Estate Refinance Company, National Bonds Company, Al-Ahly Takaful Company, Lijam Sports Company, Environment Fund, Business Oasis Company, Governance Center Company owned by the Public Investment Fund)

3 Eng. / Abdullah Khalifa Al Buainain

Board Member of Sahara International Petrochemical Company (Sipchem).

CEO of Marafiq .

Chairman of the Marafiq Company.

Several positions in SABIC and Al- Razi Company .

Bachelor's of Mechanical Engineering.

SABIC - petrochemical field - operation, maintenance and projects - boards of directors of subsidiaries - Chairman of Al-Razi Company - Vice President for Manufacturing Affairs

CEO of Marafiq Company and Chairman of the Board of its subsidiaries.

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4 Eng./ Mahmoud Saleh Al- Dheeb*

Member of the Audit Committee, Sahara International

Petrochemical Company (Sipchem) .

Vice President of Operations and Maintenance at Marafiq Company.

CEO, ACWA Power Saudi Arabia.

Director of the Planning, Supply and Economic Department, SABIC Company.

Vice President of Technical Services, Sipchem Company .

Bachelors of Chemical Engineering.

Vice President of Operations and Maintenance at Marafiq Company.

CEO, ACWA Power Saudi Arabia.

Director of the Planning, Supply and Economic Department, SABIC Company.

Vice President of Technical Services, Sipchem Company .

* The Board Members decided on December 22, 2022 to approve the appointment of Eng. Mahmoud Saleh Al-Dheeb as a member of the Audit Committee for the new session. (Member from outside the Board).

Nomination and Remuneration Committee :

1

Mr. Ziad A. Al-Turki

Board Member of Sahara International Petrochemical Company (Sipchem).

Chairman of Abdul Rahman Al-Turki Sons Trading and Contracting Co.

Chairman of Abdul Rahman Ali Al-Turki Group of Companies “ATCO Group”.

Board Member of Dhahran International Exhibitions Company "Dhahran Expo", Saudi Arabia.

Member of the Strategic Partners Group, Investcorp, Bahrain .

Vice chairman – A. A. Turki Co.

for Trading & Contracting Diploma of Social Sciences

Vice Chairman of Abdul Rahman Ali Al-Turki Group of Companies

“ATCO Group”.

Board Member of Dhahran International Exhibitions Company

"Dhahran Expo", Saudi Arabia . Member of the Strategic Partners Group, Investcorp, Bahrain . 2

Mr. Saeed A. Basamah

Board Member– Sahara International Petrochemical Company (Sipchem)

Chairman – Khair Inorganic Chemical Industries Co.

Board Member – International Medical Center Co.

Board Member – Saudia Dairy & Foodstuff Co.

(SADAFCO)

Board Member of Future Sources Co.

Board Member of Hala Support Services Co.

Board Member of Basamh Group Co.

- Bachelor of Business

Administration Businessman

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3

Mr. Ahmed Ali Al-Dakhil*

Board Member of Sahara International Petrochemical Company (Sipchem)

Chief Executive Officer - Al Rajhi International Investment Company .

Board Member of the National Company for Industry Board Member of Al-Rajhi International Investment Company .

Board Member of the Second Milling Company Board Member of Al-Rajhi International Investment Company (Egypt Branch)

Board Member of the Middle East Company for Electrical Industries

Leadership positions in several listed and unlisted joint stock companies in the Kingdom

Bachelor's degree in Industrial Management

Leadership positions in several listed and unlisted joint stock companies in the Kingdom

4 Mr. Firas Mazen Al-Abad*

(Representative of the General Organization for Social Insurance)

Manager of Hasanah Investment Company .

Manager - Hassana Investment Company .

Manager of the Public Investment Fund .

Master of Finance Bachelor of Accounting

Manager - Hassana Investment Company Manager of the Public Investment Fund . Analyst - Hassana Investment Company

*In its new session, which began on December 10, 2022, the Board of Directors decided to appoint both Mr. Ahmed Ali Al-Dakhil and Mr. Firas

Mazen Al-Abbad as members of the Nominations and Remuneration Committee on December 12, 2022 .

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Governance Committee:

1 Mr. Abdulaziz A. bin Dayel Chairman of the Committee

Adviser of -GOSI

Board Member – Tabuk Agricultural Development Company (TADCO) Nominations Committee Chairman - Tabuk Agricultural Development Company (TADCO) Audit Committee Member- Tabuk Agricultural Development Company (TADCO)

Executive Director – Munajem Group

Executive Director of Sales & Marketing in Mawaridh Holding Group

Managing Director – Tihama Advertising, Public Relations and Marketing Co.

General Secretary of the Board od Directors of GOSI

Bachelor of Business Administration

He worked in Samba Financial Group and held several positions. Then, he moved to Riyad Bank as Director of the Central Region, then a Board Member of Tihama Company, then he worked as the Executive Director of Mawaridh Holding Group then Munajem Group.

2 Mr. Turki M. Al Marzouq

Local Investment Sypport Department at Hasana Investment Company Governance Committee Member

Financial Management of Alriyadh Development Company

Director of Corporate Governance at the Public Pension Agency

Bachelor of Accounting

He has more than 20 years of practical experience in management, finance, investment and accounting, as well as in boards of directors and their committees in industrial, real estate and agricultural sectors.

3 Mr. Faisal M. Al-Modlij

General Manager of Corporate Affairs and Governance Board Secretary

General Director of Corporate Affairs and Compliance

Bachelor of Management Systems

After joining Sipchem in 2007, he held several positions including director of Corporate Affairs and investor relations and is currently the General Director of

Governance and Corporate Affairs, and was appointed secretary general of the general secretariat of the board of directors. Prior to joining

Sipchem, he worked at SABIC for more than 9 years in the legal department.

* The Board Members agreed to accept the resignation of the member of the Governance Committee, Mr. Najm Abdullah Al-Zaid, and to appoint

Mr. Faisal Muhammad Al-Madlej as a member of the committee on 06/29/2022

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Executive Management

1 Eng. Abdullah S. Al-Saadoon CEO COO

Bachelor of chemical engineering

He held several positions in SABIC in the petrochemical industry. He moved to Sahara International Petrochemical Company (Sipchem) and progressed to become Sipchem's COO after merger with Sahara Petrochemicals Company.

He then was appointed CEO of the Company in 2021.

2 Mr. Rushdi K. Al-Dulijan Vice-President for Finance

Executive Vice-President of Finance and Information Technology at Sahara Petrochemicals Company

Bachelor of Accounting

After joining Sahara International Petrochemical Company (Sipchem) as CFO, he was in charge of the Finance and IT sections until he was promoted to Vice President for Finance of Sipchem.

He also worked at the Saudi Electricity Company in several positions at Auditing and financial Control.

3 Eng. Ibrahim Abdulaziz Al Rashood

Vice President of

Manufacturing Vice President for Operations Bachelor of Electric Engineering

After he joined Sipchem in 2004, he was promoted to several leading positions. He is currently in charge of managing and leading 14 Sipchem Subsidiary Companies. He was appointed Vice President for Operations after the merger in 2019. Before joining Sipchem, he worked at ARAMCO for more than 10 years in consultancy services and projects department of ARAMCO.

4 Matar Atshan Al Dhefiri Vice President for Commercial Sector

Vice President for Marketing and Sales

Bachelor of Chemical Engineering MA of Natural Gas Engineering and Management

After joining Sipchem, he held several senior leading positions, including Sales, Marketing, Strategy, Business

Development and supply chains, before joining Sipchem, he worked for Saudi Aramco for more than 10 years where he

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held a number of technical positions, including Senior Operations Engineer, Operations and production Engineer, and construction engineer.

5 Omar bin Salem Bajubail Vice President for Joint Services

Vice President for Integration Management

Bachelor of Mechanical Engineering

After joining Sipchem in 2004 as general Director of Waha before being promoted to director and CEO of Waha. He was vice president for joint services. Prior to joining Sipchem, he worked for SABIC for more than 10 years, during which he held several positions

6 Mr. Fahad Mansour Al-Ohali*

General Manager of Corporate Communication and Corporate Affairs Secretary General of the Board of Directors and affiliated committees

General Manager of Corporate Communication and Corporate Affairs

Bachelor's of financial management

After joining Sipchem in 2008, he held several positions, including in financial management, sales and marketing management, and corporate communication management. He is currently the general manager of corporate communication and corporate affairs.

Secretary General of the Board of Directors and affiliated committees

*The Board Members decided to appoint Mr. Fahd Mansour Al-Ohali, Secretary General of the Board of Directors and affiliated committees on

March 30, 2022 .

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9)

Names

of Companies inside or outside KSA, Whose Current and Former Board Members or Directors are Board Members of Sipchem

Member Name

Names of companies whose current Board Members or directors are Board Members of

Sipchem

Inside or outside KSA

Legal entity (joint stock company/ listed joint stock company/ unlisted joint stock

company/ limited liability company)

Names of companies whose former Board Members or directors are Board Members

of Sipchem

Inside or outside KSA

Legal entity (joint stock company/ listed joint stock company/ unlisted

joint stock company/

limited liability company) Eng. Khalid A. Al-

Zamil

Zamil Group Holding Co.

Middle East Battery Co.

Sahara Petrochemicals Company

Inside KSA

Closed Joint Stock Company Limited Liability Company Publicly Listed Joint Stock

Company

- - -

Mr. Fahad S. Al-Rajhi

Sahara International Petrochemical Company

(Sipchem) Yanbu Cement Company Al Rajhi Brothers Company

Advanced Company for Packaging in Flex The National Company for

Industry

Musharaka Financial Company Saudi company International Methanol Company

Sulaiman bin Abdulaziz Al-Rajhi Company for Education and

Development

Inside KSA

Listed contribution Listed contribution

closed stock Limited liability

closed stock closed stock Limited liability Public contribution

closed stock

Saudi Cement Company Inside KSA Publicly Listed Joint Stock Company

Mr. Saeed A. Basamah

Sahara International Petrochemical Company

(Sipchem)

Al-Khair Industry for Inorganic Chemicals (Inokhem) International Medical Center

Company Saudi Dairy and Foodstuff

Company

Basamh Group of Companies Hala Support Services Company

Sources of the future company

Inside KSA

Listed contribution Closed Joint Stock Company

Listed shareholder Limited liability Limited liability Limited liability

- - -