Saudi Steel Pipe Company

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Report of the Audit Committee to the Shareholders for the Year Ended 31 December 2022

Saudi Steel Pipe Company

(2)

Report of the Audit Committee to the Shareholders

For the Year Ended 31 December 2022

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1. Introduction

The system of internal controls is designed to provide reasonable assurance on the achievement, effectively and efficiently, of the objectives of Saudi Steel Pipe Company (the Company). These objectives include the issuance of reliable and accurate financial reports in all material respects, compliance with applicable laws, regulations, contracts, policies, and procedures, as well as sufficient management of risks to limit their impact on the achievement of the Company's objectives within reasonable levels. The system of internal controls is also important in safeguarding the Company's assets, as well as preventing fraud.

Management of the Company is responsible for establishing and maintaining this system of internal controls. This system of internal controls is established based on guidelines provided and policies approved by the Company's Board of Directors in compliance with prevailing regulations.

The Board of Directors is responsible for overseeing these and other activities of the Management of the Company. The Audit Committee (the Committee) assists the Board of Directors, inter alia, in carrying out its responsibilities of monitoring the Company's system of internal controls and financial reporting in particular.

In this process, the Committee reviews and approves the risk-based audit plans of the Internal Audit Department (IAD), as well as its reports on the results of its tests on the evaluation of the effectiveness of the Company's system of internal controls. The Committee also reviews, inter alia, through discussions with Management, internal and external auditors, the appropriateness and application of accounting policies, the Company's interim and annual financial statements, and the Company's compliance with legal and regulatory requirements. The work carried out by the Committee is governed by the Charter of the Committee approved by the Companys' shareholders.

2. Members and Meetings

Name Position Period

Salman Ahmed Independent Board Member (AC Chairman) From 07/06/2022 Maged Al-Dakheel Independent Board Member (AC Member) From 27/10/2020 Ruggero Signorelli Non-Board Member (AC Member) From 07/06/2022 Mousa Al-Mousa Independent Board Member (AC Chairman) Up to 06/06/2022 Claudio Tocco Non-Board Member (AC Member) Up to 06/06/2022

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The members of the Committee collectively have significant technical and industry experience in finance and accounting, as well as audit in the Kingdom of Saudi Arabia and overseas.

The following meetings of the Committee were held during 2022:

Member 16 Feb 2022 27 Apr 2022 21 July 2022 01 Aug 2022 31 Oct 2022 29 Nov 2022 19 Dec 2022 Total

Salman Ahmed ^- ^- ✓ ✓ ✓ ✓ ✓ 5

Maged Al-Dakheel ✓ ✓ ✓ ✓ ✓ ✓ ✓ 7

Ruggero Signorelli ^- ^- ✓ ✓ ✓ ✓ ✓ 5

Mousa Al-Mousa ✓ ✓ - - - - - 2

Claudio Tocco ✓ ✓ - - - - - 2

3. Principal Activities During 2022

During 2022, the Committee carried out the activities contained in its Charter approved by the Company's shareholders. These activities are documented in the minutes of the meetings held and included the following:

• Reviewing and approving the 2022 and 2023 risk-based Internal Audit plans and ensuring that sufficient resources are allocated to the IAD.

• Overseeing the IAD through the Head of IAD and monitoring the execution of the approved Internal Audit plan.

• Reviewing reports issued by the IAD as well as inquiring about the implementation of recommendations.

• Reviewing annual financial statements for the Year ended 31 December 2021, the 2022 quarterly financial statements through discussions with Management and External Auditors, and submitting its recommendations to the Board of Directors.

• Reviewing bids received from external auditors, recommending the appointment of external auditors to the shareholders, meeting them periodically, and discussing their reports and findings.

• Reviewing policies, charters, and updates and providing recommendations to the Board of Directors.

• Discussing and/or reviewing reports on compliance with legal and regulatory requirements and following up on implementing the recommendations.

• Reviewing the Head of IAD's objectives and performance. Informing the Board of Directors periodically about the Committee’s activities through sharing minutes of meetings and regular presentations at Board meetings.

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4. Opinion

Systems of internal controls in organizations of the size and nature of the Company, regardless of efficiency and effectiveness, cannot provide absolute assurance, inter alia, as to the complete absence of errors and omissions, accuracy of financial reporting, and full compliance with applicable laws, regulations, contracts, policies, and procedures.

Based on meetings with and reports submitted by the IAD, meetings with and reports of the External Auditors, and discussions with Management during 2022, no material weaknesses in the Company's system of internal controls came to the attention of the Committee that the Committee considers would require to be reported to the shareholders of the Company.