1

Board of Directors’ Report 2020

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Board of Directors’ Report 2020

King Salman bin Abdulaziz Al-Saud

The Custodian of the Two Holy Mosques
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Board of Directors’ Report 2020

His Royal Highness
Prince Mohammed bin Salman bin Abdulaziz Al-Saud
Crown Prince, Deputy Prime Minister and Minister of Defense of the Kingdom
of Saudi Arabia
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Board of Directors’ Report 2020

BOARD OF DIRECTORS

Eng. Mohammed Saleh Alkhalil Mr. Abdulwahab Abdulkareem Al-Betairi Eng. Khalid Mohammed Aldawood
CHAIRMAN DEPUTY CHAIRMAN CHIEF EXECUTIVE OFFICER (ACTING)

Mr. Omar Mohammed Alkhuwaite Mr. Aziz Mohammed Al Gahtani

Mr. Hani Suliman Alsaleh Mr. Saad Shaher Alharbi

Dr. Abdullaziz Abdulrahman Alfrayan Eng. Ali Abdullaziz Alturki

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Board of Directors’ Report 2020

Contents
06 I. EXECUTIVE SUMMARY
08 II. FUTURE PLANS
09 III. FINANCIAL HIGHLIGHTS
12 IV. GEOGRAPHICAL ANALYSIS OF COMPANY SALES
12 V. ZAKAT AND OTHER AMOUNTS ACCRUED/PAID TO THE GOVERNMENT
13 VI. SUBSIDIARY COMPANY
16 VII. SUMMARY OF LOANS
17 VIII. INDEPENDENT AUDITOR’S REPORT
18 IX. GENERAL ASSEMBLY
19 X. BOARD OF DIRECTORS
30 XI. REMUNERATION/COMPENSATION OF CHAIRMAN, BOARD OF DIRECTORS AND TOP EXECUTIVES
33 XII. TRANSACTIONS WITH RELATED PARTIES
34 XIII. PROFIT DISTRIBUTION POLICY
35 XIV. POTENTIAL BUSINESS RISKS
36 XV. CORPORATE GOVERNANCE
37 XVI. BOARD DECLARATIONS
38 XVII. BOARD OF DIRECTORS’ RECOMMENDATIONS TO THE SHAREHOLDERS
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Board of Directors’ Report 2020

I. EXECUTIVE SUMMARY
The Board of Directors of Alujain Holding Corp.
(Alujain) is pleased to present the Company’s annual
report, a brief summary on major developments and
achievements during the year and audited consol-
idated financial statements for the year ended De-
cember 31, 2020, with the grace of God and efforts
of its employees under the guidance and continued
monitoring by its’ Board of Directors.

Alujain was established in 1991 with a view to

adding value to Saudi Arabia’s natural hydrocarbon
and mineral resources. It is a listed Saudi joint stock
company with a paid-up capital of SR 692 Million
with its head office in Riyadh, Saudi Arabia. The
shareholders in Extraordinary General Assembly held
on 04 February 2020 agreed to amend 2nd article of by utilizing local strengths and talents, capacities,
the articles of association (AOA) to change the name wealth and natural resources, also setting the highest
from Alujain Corporation to “Alujain Holding Corp.”, standards of national, social and environmental
and to amend 3rd article of AOA related to compa- responsibility. Pursuant to these objectives, the
ny’s objectives to change the company’s activities Company owns majority equity (57.4%) in National
to include managing its subsidiaries or participating Petrochemical Industrial Company (NATPET) which
in the management of other companies in which it operates more than 400,000 tons per year Propylene
owns shares and providing support thereto; investing & Polypropylene Complex (PP Complex) in Yanbu
its funds in shares and other securities; owning real Industrial City, using Oleflex and Spheripol technol-
property and movable assets necessary for its oper- ogies.
ations; providing loans, guarantees and financing its
subsidiaries; owning and utilizing industrial property The net profit of NATPET for the fiscal year 2020
rights, including patents, trademarks, franchises and was SR411.54 million, as compared to net profit
other intangible rights, and leasing the same to its of SR377.10 million during 2019 with an increase
subsidiaries or third parties; and other legitimate of 9.13%. NATPET’s net profit increase is due to 1)
purpose in conformity with the nature of the compa- NATPET received the remaining part of final settle-
ny. The company carries out its activities as a holding ment for insurance amounted SR330 million, which
company. recorded under other income during current year. 2)
Resumption of operations and production after com-
Alujain’s main strategic objectives are to identify, pletion reconstruction of PP complex, which stopped
evaluate, promote, develop and to invest/operate working due to fire incident that occurred during the
major industrial projects in petrochemicals, mining, last quarter of 2018.
metals, energy sectors and other projects, with a
commitment to creating value for its shareholder
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Board of Directors’ Report 2020

NATPET and its subsidiaries reported total sales
of SR1,207 Million during current year, with no
significant production or operational profits during
previous year (being non-operational due to fire
incident).

Alujain also owns 98.75% (majority shares) in Zain

Industries Company Ltd. (Zain). Zain owns and
operates its plant in Jubail Industrial City. Zain’s main
business includes production and marketing of fast
moving consumer goods (FMCG), as well as insecti-
cides, pesticides, fungicides etc.

Zain sales for the year 2020 was SR14.38 million as

compared to SR23.73 million during 2019, with net
loss of SR4.18 million, as compared to net profit of
SR0.80 million during 2019.

During 2020, Alujain reported earnings per share

(EPS) of SR3.00 as compared to SR2.76 during 2019.
Number of shares outstanding remained 69.2 million
during 2020 (69.2 million for the year 2019). The
book value per share increased by 14.37% from
SR21.36 (2019) to SR24.43 (2020). The net profit
was SR207.29 million, as compared to net profit of
SR191.16 million during 2019 with an increase of
8.44%.

Alujain’s accompanied consolidated financial

statements are prepared in compliance with interna-
tional financial standards (IFRS). There is no major
difference in the accounting / financial policies and
standards applied in the company from the account-
ing standards approved by the Saudi Organization
for Certified Public Accountants.
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Board of Directors’ Report 2020

II. FUTURE PLANS

The company strives to increase its investment in NATPET and review proposals to upscale Zain’s business - including
but not limited to merger with other companies having similar activities. The company is also studying investment op-
portunities to search for value-added investment opportunities, especially in renewable energy projects, recycling and
Petrochemical industries.
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Board of Directors’ Report 2020

III. FINANCIAL HIGHLIGHTS
A. Five-Years Profit Summary
Year ended December 31
2020 2019 2018 2017 2016
(SR ‘000) (SR ‘000) (SR ‘000) (SR ‘000) (SR ‘000)
Sales 14,378 23,730 25,871 28,322 -
Cost of sales (13,039) (18,029) (21,235) (20,998) -
Gross profit 1,339 5,701 4,636 7,324 -
Share in net income of an equity accounted investees 236,212 216,454 121,144 133,326 124,817
Operating expenses (27,589) (17,415) (19,904) (19,696) (10,135)
Profit from operations 209,962 204,740 105,876 120,954 114,682
Financial charges (588) (98) - - -
Net other income 6 1,432 279 16,557 2,011
Profit before Zakat 209,380 206,074 106,155 137,511 116,693
Zakat (2,145) (14,908) (1,433) (1,331) (1,349)
Profit Before Minority Interest 207,235 191,166 104,722 136,180 115,344
Minority Interest 52 (10) 28 18 -
Net Profit for the year 207,287 191,156 104,750 136,198 115,344
Earnings per share on net income 3.00 SR 2.76 SR 1.51 SR 1.97 SR 1.67 SR

Five-Year Net Profit Chart (Amounts in SR ‘000)

207,287

191,156

136,198

115,344
104,750

2020 2019 2018 2017 2016

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Board of Directors’ Report 2020

B. major difference in Operating Results compared to last year

The 2020 net income before Zakat and minority interest is SR209.38 million as compared to SR206.07 million
during 2019.
A net profit of SR207.29 million, as compared to net profit of SR191.16 million in 2019 with an increase of 8.44%.
The net profit increase during current year is mainly due to increase in Alujain’s share from NATPET’s net profit,
by SR19.76 million and a decrease in Zakat provision by SR12.76 million during current year as compared to last
year. The Zakat provision for the last year includes additional Zakat differences from final assessments issued by
the General Authority for Zakat and Tax (GAZT) for the years 2003 to 2016. Although, General and administrative
expenses increased during current year mainly due to certain non-recurring items.

Two years comparative consolidated operating results

Year ended on December 31

2020 2019 Net Changes Percentage
(SR ‘000) (SR ‘000) (SR ‘000) (%)
Sales 14,378 23,730 (9,352) (39.41%)
Cost of sales (13,039) (18,029) 4,990 (27.68%)
Gross profit 1,339 5,701 (4,362) (76.51%)
Share in net income of an equity accounted investees 236,212 216,454 19,758 9.13%
Operating expenses (27,589) (17,415) (10,174) 58.42%
Profit from operations 209,962 204,740 5,222 2.55%
Financial charges (588) (98) (490) 500.00%
Net other income (expenses) 6 1,432 (1,426) (99.58%)
Profit before Zakat 209,380 206,074 3,306 1.60%
Zakat (2,145) (14,908) 12.763 (85.61%)
Profit Before Minority Interest 207,235 191,166 16,069 8.41%
Minority Interest 52 (10) 62 (620.00%)
Net Profit for the year 207,287 191,156 16,131 8.44%
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Board of Directors’ Report 2020

C. Summary of Financial Position

As at December 31
2020 2019 2018 2017 2016
(SR ‘000) (SR ‘000) (SR ‘000) (SR ‘000) (SR ‘000)
ASSETS
Current assets 53,758 21,980 47,669 60,787 56,725
Non-current assets 1,651,295 1,474,742 1,277,561 1,176,635 1,111,553

Total Assets 1,705,053 1,496,722 1,325,230 1,237,422 1,168,278

Current liabilities 9,849 13,539 16,294 15,480 4,119

Non-current liabilities 4,090 4,418 4,370 4,628 4,831
Total Liabilities 13,939 17,957 20,664 20,108 8,950
Total Liabilities 1,690,768 1,478,367 1,304,178 1,216,901 1,159,328
Minority interest 346 398 388 413 -
Total Liabilities & Shareholders’ Equity 1,705,053 1,496,722 1,325,230 1,237,422 1,168,278

Five-Year Balance Sheet Chart (Amounts in SR ‘000)

1,800,000

1,350,000
1,705,053
1,690,768

900,000
1,496,722
‎1,478,367

‎1,325,230
‎1,304,178

1,237,422
1,216,901

‎1,168,278
‎1,159,328
‎13,939

‎17,957

‎20,664

‎20,108

8950

450,000
346

398

388

413

2020 2019 2018 2017 2016

Minority interest Total Liabilities Shareholders› Equity Total Assets

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IV. GEOGRAPHICAL ANALYSIS OF COMPANY SALES

Board of Directors’ Report 2020

1) Geographical analysis of Zain’s sales 2) Geographical analysis of NATPET’s sales

Essentially, Alujain Holding Corp’s consolidated sales The total sales of NATPET and its subsidiaries for current
amounted SR 14.38 Million comes from its subsidiary year amounted is SR 1,207, and products were sold
(Zain) by selling its products within and outside the inside and outside the Kingdom of Saudi Arabia, directly
Kingdom of Saudi Arabia, as presented in the chart and indirectly, as presented in the chart

USA/LATAM 28%
Central Region 36% MENA 19%
Western Region 28% China 14%
Eastern Region 21% Turkey 11%
South Region 12% Saudi Arabia 10%
Contracts Packing 2% Europe 7%
Export 1% Other Asian countries 7%
Vietnam 4%

V. ZAKAT AND OTHER AMOUNTS ACCRUED/PAID TO THE GOVERNMENT

ZAKAT STATUS
On a standalone basis, Alujain made total provision of SR1.68 million for estimated 2020 Zakat return and against the
difference in Zakat due for the year 2018. The accrued Zakat balance is SR1.45 million. Other issues are summarized
below:

• The company obtained its final Zakat certificates up to the year 2016, after signing an agreement with the General
Authority for Zakat and Tax (GAZT) to settle the differences of Zakat assessments for the years 2003 to 2016. The total
additional assessments were around SR32.58 million which were settled for an amount of SR14.5 million as a one-time
payment. The settlement amount of SR14.5 million was paid during 2019.
• During January 2020, GAZT issued final Zakat assessment for the year 2018 with an additional Zakat of SR 64
thousand, which was paid and the final Zakat certificate was obtained.
• The company has submitted its 2019 Zakat return which is under review by GAZT.
• The company will submit its Zakat declaration for the year 2020 on the due date.

AMOUNTS PAID TO THE GOVERNMENT (SR ‘000) Paid Accrued

On a standalone basis, following is a
Zakat 1,068 1,617
summary of amounts paid and accrued by
Additional Zakat assessed for the years 2018 64 -
Alujain to the Government: General Organization for Social Insurance 64 -
Tadawul 603 -
Registration, visas and other expenses 131 -
Total 1,930 1,617
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VI. SUBSIDIARY COMPANY

Board of Directors’ Report 2020

1. National Petrochemical Industrial Company (NATPET):
NATPET is a closed joint stock company incorporated in the Kingdom of Saudi Arabia with its head office in
Jeddah and Propylene/Polypropylene Complex in Yanbu Industrial City to produce Propylene/Polypropylene
and its derivatives, having a name plate production capacity of 400,000 tons per year of polypropylene. The
authorized and paid-up capital comprised 107 million shares of SR10 per share as at the end of current year.
Alujain currently holds 57.4% of the total equity of NATPET. On September 2013, NATPET shares owned by
Alujain 57.4% of NATPET total shares are pledged against NATPET loans from commercial bank. In September
03, 2020, the pledged has been redeemed.
NATPET has two companies in Yanbu Industrial City for propylene products, (1) Geo NATPET (formerly Bonar
NATPET) for non-woven geotextile products which is 100% owned by NATPET, and NATPET Schulman for the
production of polypropylene compounds, which it owns equally with Lyndel Basil Co.
NATPET and its subsidiaries reported total sales of SR1,207 Million for current year, with no significant
production or operational profits during previous year (due to fire and reconstruction). The net profit of
NATPET during 2020 was SR411.54 million, as compared to net profit of SR377.10 million during 2019 with
an increase of 9.13%.
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Board of Directors’ Report 2020

2. Zain Industries Company Ltd (Zain):

Zain is a Saudi Limited Liability Company incorpo-
rated in Kingdom of Saudi Arabia with its head office
and plant in Jubail Industrial City, with a paid-up
capital of SR40 million, comprised of 4,000 shares of
SR10,000 per share, Alujain holds 98.75% own-
ership in Zain as the end of current year. Its main
objective is to produce homecare products (spray
starch, air-fresheners, anti-static spray, bleach, fabric
softener, oven cleaner, furniture polish, stainless
steel polish etc.), insecticides and all kinds and
forms, beside general health products.
During 2020, Zain reduced its paid-up capital by
SR20 million as per its partners› decision dated 06
October 2020 and amended its articles of associa-
tion accordingly.
Zain’s sales during 2020 is SR14.38 million as com-
pared to SR23.73 million during 2019, with net loss
of SR4.18 million (2019 profit was SR0.80 million).
The decrease in sales during 2020 is mainly due
to Corona pandemic related bans. Zain’s products
mainly depend on laundries market, which was bad-
ly affected this year. There are certain non-recurring
expenses to improve company’s business.
Zain will complete implementation of company’s
business development plans and will add new
cleaning products, disinfectants and aromatic scents
to its current range of detergents, disinfectants and
household washing materials which will qualify
company to enter and compete in wholesale and
retail markets as a better option than focusing on
commercial laundry market only.
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Board of Directors’ Report 2020

3. Alujain Company for Investment (ACI):
ACI is a Limited Liability Company owned
100% by Alujain Holding Corp. (Parent Compa-
ny) was incorporated in the Kingdom of Saudi
Arabia during 2017, with a paid-up capital of
SR 100 thousand. The Parent Company has
transferred 26,008,709 shares held in NATPET
(representing 20% share capital of NATPET )
to ACI under an agreement dated August 17,
2017. Legal formalities to update the share reg-
ister of NATPET to reflect the new shareholding
are under process. ACI’s purpose is to engage
in sale and purchase of land and real estate,
and to provide commercial and administrative
services, However, ACI has not commenced
commercial operations yet.

4. Alujain Industrial Company (AIC):

AIC is a Limited Liability Company owned
100% by Alujain Holding Corp. (Parent Compa-
ny) was incorporated in the Kingdom of Saudi
Arabia during 2017, with a paid-up capital of
SR 100 thousand. The Parent Company has
transferred 26,008,709 shares held in NATPET
(representing 20% share capital of NATPET )
to ACI under an agreement dated August 17,
2017. Legal formalities to update the share reg-
ister of NATPET to reflect the new shareholding
are under process. AIC’s purpose is to engage
in providing commercial and administrative
services. However, AIC has not commenced
commercial operations yet.
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Board of Directors’ Report 2020

VII. SUMMARY OF LOANS

Below are the details of the loans for Alujain Holding Corp. and its subsidiaries:
1) Alujain Holding Corp. (SR ‘000)

Advance Outstanding Loan

Bank Credit limit Withdrawals repayments
payments balances during 2020
Short-term loans and credit facilities (Islamic)

Aljazira Bank 30,000 17,778 - - 17,778

Total 30,000 17,778 - - 17,778

2) NATPET and its Subsidiary (SR ‘000)

Terms Original Loan repayments Outstanding

Description of loan
of loans loans balances
Prior years Current year
Islamic Facility Agreement/ Commercial
Term loan, 8 Yrs. 1,000,000 868,380 131,620 -
Banks
Public Investment Fund (PIF) Term loan, 10 Yrs. 750,000 675,000 75,000 -
Saudi Fund For Development (SEP) Short Term loan, 1 Year 50,749 - - 50,749
(Settled in Q1 2021)

Arab Banking Corporation  (ABC) Short Term loan, 3 Months 28,125 - 28,125 -
Saudi Industrial Development Fund (SIDF) Term loan, 8 Yrs. 76,600 12,500 - 64,100
(For NATPET’s Subsidiary)
No fixed repayment
Others 21,645 - - 21,645
period
Total 1,927,119 1,555,880 234,745 136,494

During 2020, NATPET paid all long-term loans, leaving only the loans of its subsidiaries.
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Board of Directors’ Report 2020

VIII. INDEPENDENT AUDITOR’S REPORT
Opinion
We have audited the accompanying consolidated financial statements of ALUJAIN HOLDING CORPORATION (the
“Company”) and its subsidiary (collectively the “Group”), which comprise the consolidated statement of financial
position as at December 31, 2020, and the consolidated statements of profit or loss, comprehensive income, changes in
equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the con-
solidated financial position of the Group as at December 31, 2020 and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards that are
endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by Saudi Organization for
Certified Public Accountants (SOCPA).
Emphasis of Matters
We draw attention to the following:
1) As explained in Note (9) of the accompanying consolidated financial statements, end of 2019, established four
companies , Mna Company, Developed Fawasel Chemical Company, Abraj Altaj Plastic Industrial Company and
Professional Afaq Company (“the four companies”) without paid their capital as of 2019, and in Jan 1 ,2020 NATPET
company signed contract with a combined value of SR 559 million so that the four companies can purchase shares in
Alujain Holding Corporation and pay off the loan on December 31, 2025. Through first quarter for their 2020, NATPET
company gave up its full shares in these four companies in stages, and the management of NATPET believes that the
process of assigning ownership of these four companies is illegal, and legal procedures have begun to restore its own-
ership and control over these four companies. Accordingly, the financial statements of these four companies were not
consolidated within the consolidated financial statements of NATPET company for the year ending on December 31,
2020. In addition, NATPET company obtained a legal opinion that supports its position and confirms its ability to recover
the value of the loan by the due date, and our opinion has not been amended based on this matter.

2) As explained in Note (9) and Note (30) to the accompanying consolidated financial statements which describes that
NATPET invested in Alujain Holding Corporation shares and the fair value of those shares as of December 31, 2019
amounted to about SR 223 million (7.435 million shares). At the beginning of March 2020, NATPET sold all these shares.
On March 10, 2020, a court ruling was issued against NATPET and any of its subsidiaries, whether owned directly or
indirectly, restricting the rights of shares owned by NATPET Company in the Alujain Holding
Corporation until ownership is corrected and moving properly through activating the regular role of the General
Assembly of NATPET, according to the Regulations for Companies. Management, after consulting with legal counsel,
believes that this ruling includes restricting the rights of these shares transferred by NATPET to others as long as the
transfer of shares is in a fictitious and unrealistic manner. Our opinion is not further modified in respect of this matter.

3) As explained in Note (9) to the accompanying consolidated financial statements which describes that a court ruling
was issued at the end of 2019 revoking the NATPET General Assembly’s decision regarding dividends amounting SR 107
million related to year ended December 31, 2018. The General Assembly of NATPET was held on May 31, 2020, and
approved a dividend of SR 107 million for the year ended December 31, 2019. Our opinion is not further modified in
respect of this matter.
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IX. GENERAL ASSEMBLY

Board of Directors’ Report 2020

A) Constitution of the Board of Directors (BOD)

The following table shows the number of general assembly meetings held during the year and the names of the
members of the board of directors’ present.
OGA no 32
EOGA no 9 OGA no 33 OGA no 34
Names 04/02/2020
(Cancelled*)
10/06/2020 18/08/2020
10/03/2020

Mohammed Saleh Alkhalil ✓ ✓ ✓ ✓

Abdulwahab Abdulkareem Al-Betairi ✓ ✓ ✓ ✓
Jamail Jamail Sifrah ✓ ✓ X Not member

Saad Saud Abonayan ✓ X ✓ Not member

Abdullah Owdah Alenazi X X ✓ Not member

Khalid Mohammed Aldawood ✓ ✓ ✓ ✓

Aziz Mohammed Al Gahtani ✓ ✓ ✓ ✓
Hani Suliman Alsaleh ✓ ✓ ✓ ✓
Abdullah Abdulrahman Alayadhi ✓ X X Not member

Omar Mohammed Alkhuwaiter Not member Not member Not member ✓

Saad Shaher Alharbi Not member Not member Not member ✓
Abdullaziz Abdulrahman Alfrayan Not member Not member Not member ✓
Ali Abdullaziz Alturki Not member Not member Not member ✓
* Ordinary General Assembly No. 32 was cancelled due to violation of OGA rules by some shareholders.

B) The company›s applications for the register of shareholders

The following table shows the number of the company’s requests for shareholders ’register during the year, the dates
:and reasons for those requests

Request Request
No. Reason File Date No. Reason File Date
Time Time
1 Co. Procedures 05/01/2020 05/01/2020 9 Co. Procedures 05/03/2020 05/03/2020

2 Co. Procedures 08/01/2020 08/01/2020 10 Co. Procedures 08/03/2020 08/03/2020

3 Co. Procedures 27/01/2020 27/01/2020 11 OGA 10/03/2020 10/03/2020

4 OGA 04/02/2020 04/02/2020 12 Co. Procedures 08/04/2020 08/04/2020

5 Co. Procedures 12/02/2020 12/02/2020 13 Co. Procedures 19/05/2020 19/05/2020

6 Co. Procedures 23/02/2020 23/02/2020 14 OGA 18/08/2020 18/08/2020

7 Co. Procedures 27/02/2020 27/02/2020 15 Co. Procedures 15/09/2020 15/09/2020

8 Co. Procedures 03/03/2020 03/03/2020 16 Co. Procedures 10/11/2020 10/11/2020

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Board of Directors’ Report 2020

X. BOARD OF DIRECTORS
A. Constitution of the Board of Directors
The Board of Directors consisted of nine members as per below table:

Membership
No. Names
Executive Non-Executive Independent
Mohammed Saleh Alkhalil
1
(Chairman) ✓ From 01/06/2020 ✓Till 31/5/2020
Abdulwahab Abdulkareem Al-Betairi
2
(Deputy Chairman) ✓ From 01/06/2020 ✓Till 31/5/2020
3 Omar Mohammed Alkhuwaiter* ✓
Khalid Mohammed Aldawood
4
(CEO - Acting) ✓
5 Aziz Mohammed Al Gahtani ✓
6 Hani Suliman Alsaleh ✓
7 Saad Shaher Alharbi* ✓
8 Abdullaziz Abdulrahman Alfrayan* ✓
9 Ali Abdullaziz Alturki* ✓
- Jamail Jamail Sifrah** ✓
- Saad Saud Abonayan** ✓
- Abdullah Owdah Alenazi** ✓
- Abdullah Abdulrahman Alayadhi** ✓
* They were elected during the General Assembly meeting held on 10/06/2020 to be a member Board of Directors for the session starting on 15/06/2020.
* Mr. Saad Shaher Alharbi submitted his resignation, and it is considered valid as of the end of 31/12/2020.
** The membership of the Board of Directors ended on 14/06/2020.
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Board of Directors’ Report 2020

B. Names, qualifications, experiences, and current and previous positions of the Board and
Committees’ members and the Executive Management.
1) Functions of current Board members:

Name Current Positions Previous Positions Academic Qualifications Experiences

Long experience in investment,

real estate, travel, tourism,
Bachelor of Science and Computer petrochemicals and industrial
Engineering (King Fahd University of
Mohammed Saleh Chairman of Seera Group Holding - Business Man Petroleum and Minerals). sector. He held several positions
as Chairman of Board of
Chairman of Alujain Holding Corp.
Alkhalil Master of Business Administration with Directors or a member of
Board of Directors of several
honors (Colorado University) tourism and travel companies,
.petrochemicals and real estate

Bachelor of Finance (King Fahd

Abdulwahab Managing Partner - Watar Partners Co-founder and member of
Executive Committee - The
University of Petroleum and Minerals) Investment, Finance, Banks &
Co. Administration
Abdulkareem Al-Betairi Family Office Master - Business Administration
(London Business School)

Bachelor of Accounting (King Faisal

Omar Mohammed Director - Insurance & Claims Director - Risk Management
& Insurance Department –
University)
Insurance
Department (Bahri Co.)
Alkhuwaiter (SABIC Co.) Cert.CII Professional Insurance from the
Chartered Institute of London

G.M. Economy Planning & Bachelor of Electrical and Control

Khalid Mohammed Partner - Energy Efficiency Co. Risk Management (Saudi Engineering Industrial asset management,
economics, engineering and
Arabian Mining Co. -
Aldawood Maaden) .Master, Business Administration management

Bachelor - Accounting (King Fahd Long experience in internal

Aziz Mohammed Financial and Administrative Chief Audit Executive, Saudi
Technology Development &
University of Petroleum and Minerals) auditing, accounting, finance, risk
Advisor - Takamol Holding. assessment, corporate governance
Algahtani Investment Co. (TAQNIA) Master - Accounting (King Fahd and professional consulting
University of Petroleum and Minerals)

Master - Business Administration Supply chains, Logistics, and general

Hani Sulaiman Alsaleh CEO, Arabian Hala Co. CEO - Naqel Co.
(Babson College - USA) management

Bachelor of Organization &

Executive Vice President Administrative (King Abdulaziz Uni.)
Head of Banking Relations Business administration and
Saad Shaher Alharbi (National Water Co. - NWC) (Ahmed Al Fahhad Operation & economics
Maintenance Co.) Master of Business Administration (Asia
Metropolitan Uni.)

Beachelor’s degree, Islamic Law - Al-

Imam Muhammad Ibn Saud Islamic
University
Abdullaziz Abdulrahman Founder & Chairman of the Board at Deputy of Minister of
Human Resources and Social Master - Criminal justice Naif Arab Legislation and Regulations
Dr. Abdulaziz Alfrayan Law Firm University for Security Sciences
Alfrayan Development
PhD – Islamic Poloicy- Al-Imam
Muhammad Ibn Saud Islamic University

Executive Chairman - Redland Investment, financial services, oil

Founder and CEO of Energy Capital Bachelor - Manufacturing Engineering
Ali Abdullaziz Alturki Group Industrial Services (Arabia) (Boston University) and marine services, industrial
Ltd. - RISAL services and contracting
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Board of Directors’ Report 2020

2) Functions of current committee’s members

Current
Name Previous Positions Academic Qualifications Experiences
Positions
Bachelor - Business Administration –
Accounting - (King Saud University)
Internal audit advisor – STC
Saleh Hamad Alshinifi Internal audit Member Board of Directors - Saudi Master - Business Administration (Saint Finance
advisor Louis University - America)
Member of Audit Committee Organization for Certified Public
)Accountants (SOCPA PhD - Business Administration – Account-
ing - (Florida Atlantic University - America)

Bachelor - Accounting (King Saud

University)
Jasim Shaheen Alrumaihi Full-time financial
and management Director, Arab Open University Master - Accounting (University of Financial and administra-
Eastern Province Missouri, Kansas, USA) tive field
Member of Audit Committee consultant
Ph. D. Accounting (University of Dundee,
England)

3)Functions of current executive management:

Academic
Name Current Positions Previous Positions Experiences
Qualifications
VP Finance Finance Manager, Khalid Ali CPA, USA Finance and Accounting for
Saleem Akhtar Alujain Holding Corp. Al-Turki Group, Khobar ACMA, Pakistan more than 25 years
 22

C. Names of companies inside and outside the Kingdom in which a Board member is a
member of their current or previous Board or a manager
Board of Directors’ Report 2020

Names of Companies in which a Board Inside/ names of Companies in which a Inside/

Member Name member is a member of their current Outside Legal entity Board member is a member of their Outside Legal entity
Board or a manager KSA previous Board or a manager KSA
Seera Group Holding inside Joint Stock Tatweer Holding Company inside LLC
‎FAD Investment & Development inside LLC Manafea Holding Co. inside Closed joint stock
Akwaan Realestate Company inside Closed joint stock Thakher Investment & Real Estate Co inside LLC
ARKAN Steel Company inside LLC
Cementra Company outside Private Closed
Kanolli Food Industries Ltd. Co inside LLC
Mohammed S. Tatweer Buildings Company inside LLC
Alkhalil Inwan AlMakan for Real Estate Investment inside LLC
Elite Doctors Medical Co. inside Closed joint stock
Unaizah Investment Co. inside Closed joint stock
Unaizah Wqfiah Co. inside Closed joint stock
Al Tahaluf Real Estate Company inside LLC
Al Widyan Real Estate Company inside Closed joint stock
National Petrochemical Industrial Co. inside Closed joint stock
Osool & Bakheet Investment Co. inside Closed joint stock Future ceramic Company inside Closed joint stock
Sunbulah Group inside Closed joint stock Capital Market Authority inside Government
National Petrochemical Industries Co. (NATPET) inside Closed joint stock TriSpan LLP Corporation outside LLC
Abdulwahab A. Al Himmah Tadamun Company inside LLC
Al-Betairi Manafeth Ambulance & Handicap Vehicles inside LLC
Riyadh Cables Group Co. inside LLC
Riyadh Chamber inside Government
Bank AlJazira inside Joint Stock
Bahri Co. inside Joint Stock SABIC inside Joint Stock
Omar M. Alkhuwaiter North of England Insurance Co. outside LLC West of England insurance outside LLC
Energy Efficiency Corp. - Non-Executive Partner inside LLC Saudi Aramco inside Closed joint stock
National Petrochemical Industrial Co. (NATPET) inside Closed joint stock Shell Global inside Closed joint stock
Khalid M. Aldawood Alpha Enterprises Company inside LLC
Saudi Arabian Mining Co.(Maaden) inside joint stock
Al-Hamadi Development & Investment inside joint stock Saudi Technology Development & Investment inside Government
Co. (TAQNIA)
Middle East Specialized Cables Co - MESC inside joint stock Petroleum, Chemical and Mining Co. inside LLC
Saudi Real Estate Co. inside joint stock Business Triangle Co. inside LLC
Jazan Energy and Development Company inside joint stock Saudi Research & Marketing Group inside joint stock
Aziz M. Algahtani Mouwasat Medical Services Co. inside joint stock Nadec Agricultural Company inside joint stock
Basic Chemical Industries Corp. inside joint stock

Saudi Telecom Company inside joint stock

Saudi Aramco inside Government
Yanbu Cement Company inside joint stock
Al-Etihad Cooperative Insurance Co. inside Joint stock Emirates NBD Capital Saudi Arabia inside LLC
Health Water Bottling Co. inside Closed joint stock
Naqel Co. inside Closed joint stock
Hani S. Alsaleh Hala Car Services Co. inside LLC
Specialist business Co. for cars inside LLC
Hala Supply Chains Services inside LLC
Dermabit Waterproofing Co. inside LLC
Vision Business Company inside LLC
Dawam Alafyah Company inside LLC
Saad S. Alharbi Majd Medical Care Company inside LLC
National Petrochemical Industries Co (NATPET)* inside Closed joint stock
Abdullaziz A. Alfrayan Al-Hamadi Development & Investment inside joint stock
Samba Capital inside Closed joint stock Rawabi Holding inside LLC
Jinan Real Estate inside Closed joint stock Rawabi United Safety inside LLC
United Safety Outside LLC Rawabi Hot Head inside LLC
Franks Rawabi inside LLC
Ali A. Alturki .Nesma & Co inside LLC
Red Land Industrial Services inside LLC
Rawabi Valians Marine Services inside LLC
News Geosolutions Outside LLC

* Mr. Saad bin Shaher Al-Harbi submitted his resignation from the board of directors of NATPET effective 31/12/2020.
- Listed joint stock - Closed joint stock - Limited liability
 23

Board of Directors’ Report 2020

D. Meetings
The following table shows number of meetings of Board of Directors during the year:

Mtg# 115 Mtg# 116 Mtg# 117 Mtg# 118 Total

Directors 12/01/2020 18/05/2020 15/06/2020 19/07/2020 Present

Mohammed Saleh Alkhalil ✓ ✓ ✓ ✓ 4

Abdulwahab Abdulkareem Al-Betairi ✓ ✓ ✓ ✓ 4
Omar Mohammed Alkhuwaiter Not member Not member ✓ ✓ 2
Khalid Mohammed Aldawood ✓ ✓ ✓ ✓ 4
Aziz Mohammed Al Gahtani ✓ ✓ ✓ ✓ 4
Hani Suliman Alsaleh Proxy ✓ ✓ ✓ 3
Saad Shaher Alharbi Not member Not member ✓ ✓ 2
Abdullaziz Abdulrahman Alfrayan Not member Not member ✓ x 1
Ali Abdullaziz Alturki Not member Not member ✓ ✓ 2
Jamail Jamail Sifrah x x Not member Not member -
Saad Saud Abonayan Proxy ✓ Not member Not member 1
Abdullah Owdah Alenazi ✓ ✓ Not member Not member 2
Abdullah Abdulrahman Alayadhi ✓ ✓ Not member Not member 2
 24

E. Board Committees : There are three Board Committees as detailed below

1. Audit Committee:
Board of Directors’ Report 2020

1-1 Summary of functions and responsibilities:

The audit committee is responsible for monitoring company’s business and verifying the integrity and fairness of its
financial statements and internal control systems. The duties and responsibilities of the committee, as per its Charter in
Corporate Governance Regulations, include the following:

Reviewing the Company›s quarterly and annual financial Verification of the auditor›s independence, objectivity and
statements before presenting to the Board of Directors for fairness, and the effectiveness of the audit work, taking into
their review and approval. The AC is responsible for the account relevant rules and standards.
integrity, fairness and transparency of all activities of the
company and to express their opinion/s and corrective Reviewing the audit plan of the company and its work, and
measures, if any to the Board. verifying that it does not provide technical or administrative
works beyond the scope of the audit work, and make
To provide the technical opinion, at the request of the Board comments thereon.
of Directors, whether the Board of Directors› report and
the financial statements of the Company are fair, balanced Answering the inquiries of the company›s auditors.
and understandable and include information that allows
shareholders and investors to evaluate the Company›s Studying the auditors› report and its observations on the
financial position, performance, business model and strategy. financial statements and following up on what has been
taken.
Studying any important or unusual items/issues contained in
financial statements. Reviewing the results of the reports of the regulatory bodies
and verifying that the company took the necessary action.
Investigating thoroughly any matters raised by the Company›s
CFO, his representative, the Compliance Officer or the Auditor. Verification of the company›s compliance with relevant laws,
regulations, instructions and policies.
Verification of accounting estimates on material matters in the
financial reports. Reviewing contracts and transactions proposed by the
company with related parties and submitting their views
Studying the policies and accounting principles used in the thereon to the Board of Directors.
company and expressing its opinion and recommendations to
the board of directors in this regard. Ensuring the efficiency of the internal audit in the investee
companies by reviewing the annual evaluation of the quality
Supervising and monitoring the performance and activities of of the internal audit of these companies and as permitted
the internal auditor and the internal audit department of the by the partner agreements and submitting to the Board of
company, in order to verify the availability of the necessary Directors as it sees fit.
resources and its effectiveness in carrying out the work and
tasks entrusted to it. Carrying out special tasks related to the investee companies
when requested by the Board of Directors.
Studying the internal audit reports and follows up
the implementation of the corrective measures of the Raising the issues for which it deems necessary to take action
observations contained therein. to the Board of Directors and recommending the actions to be
taken.
Studying and reviewing the internal and financial control
systems and risk management in the company. Establishing a mechanism that allows employees of the
Recommending to the Board of Directors to appoint the company to submit their comments on any overruns in
Director of the Internal Audit Unit or Department or the financial or other reports in secret. The Committee shall
Internal Auditor and propose his remuneration. verify the application of this mechanism by conducting an
independent investigation commensurate with the size of
Recommending to the Board of Directors the nomination the error or overrun and adopting appropriate follow-up
and removal of auditors, the determination of their fees and procedures.
the evaluation of their performance. After ascertaining their
independence and reviewing the scope of their work and the
terms of their contract.
 25

1-2 The Results of the annual review of the effectiveness of Internal Audit procedures for the year 2020:
The Board of Directors reviewed the audit committee’s report for the audit results for the year 2020, which states that the
committee did not discover a fundamental weakness in the internal control systems and their integrity during the year 2020,

Board of Directors’ Report 2020

and the recommendation to appoint an internal auditor for the company during the year 2020.
The audit committee’s report:
During the year, the Audit Committee held eight meetings to carry out the following tasks:

1. Review the annual audited financial statements for 2020 as well as the quarterly financial statements and follow up the corrective
actions taken to address the comments of the External Auditor.
2. Voting for the Board of Directors to appoint the external auditor from candidates to audit financial statements, determine his fees, and
supervise the plan and scope of the external auditor’s work, and ensure his independence.
3 - Follow-up of the implementation of the control procedures contained in the Companies Regulations, the Corporate Governance Regu-
lations and the Audit Committee›s Articles of Association.
4 - Recommendation of Audit Committee to appoint an internal auditor for company during the year 2020.

Based on the assurances obtained by Audit Committee from external auditor and executive management, the com-
mittee did not discover that there was a fundamental weakness in the internal control systems and their integrity
during the year 2020, with the need for continuous review and development of the systems and policies in order to
raise efficiency and effectiveness of control activities. Note that any system of internal control - regardless of the
soundness of its design and effectiveness of its implementation - cannot provide absolute assurance.

1-3 Audit Committee Members:

The committee consists of three members as follows:
2.For the period from 15.06.2020 until the end of
1.For the period ended on 14.06.2020* the current session of the Board *:

Members Membership Members Membership

Member of BOD - Member of BOD -
Aziz Mohammed Al Gahtani Aziz Mohammed Al Gahtani
Independent - Chairman Independent - Chairman
Saleh Hamad Alshinafi Independent Saleh Hamad Alshinafi Independent

Jasim Shaheen Alrumaihi Independent Jasim Shaheen Alrumaihi Independent

Mohammed Abdullah Alibrahim Independent * The formation of the Audit Committee, specifying its tasks and operating
controls, and rewarding its members for the current session, which started on
* Membership of the Audit Committee ended on 14/06/2020. 15/06/2020 and ends on 14/06/2023, was approved at the Extraordinary
General Assembly meeting on 10/06/2020.
1-4 Audit Committee Meetings:
The following table shows the number of committee meetings during the year:

Mtg# 85 Mtg# 86 Mtg# 87 Mtg# 88 Mtg# 89 Mtg# 90 Mtg# 91 Mtg# 92 Total

Members 20/06/20 01/07/20 15/08/20 19/08/20 23/08/20 07/09/20 05/10/20 27/10/20 Attendance

Aziz Mohammed Al Gahtani ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 8

Saleh Hamad Alshinafi ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 8

by phone
Jasim Shaheen Alrumaihi ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
8
 26

2. Nomination and Remuneration Committee:

Board of Directors’ Report 2020

2-1 Summary of functions and responsibilities:

The functions and responsibilities of the Nomination and Remuneration Committee mentioned in the Nominations and
Remuneration Committee’s working list within the approved corporate governance regulations include the following:-

- To prepare a clear policy for the remuneration of members of - To prepare a description of the abilities and qualifications
the board of directors and committee’s members and executive required for Board membership and occupy executive manage-
management and submit to the Board for consideration in prepa- ment jobs.
ration for approval by the General Assembly taking into account
the standards related to performance, disclosure and verification - Determining the time at which a member should specify to the
of implementation. works of the Board of Directors.

- To clarify the relationship between the bonuses awarded and - Annual review of the necessary skills or experience require-
the applicable remuneration policy and indicate any core devia- ments for board membership and executive management jobs.
tion from this policy.
- To review the structure of the Board and Executive Management
- Periodic review of remuneration policy and evaluation of its and make recommendations on possible changes.
effectiveness in achieving its objectives.
- To verify annually the independence of the independent mem-
- Recommending to the Board of Directors the remuneration of bers and to ensure that there is no conflict of interests between
the members of the Board of Directors and committee’s members the company and the members of the board of directors.
and the senior executives of the Company in accordance with the
approved policy. - To develop a functional description of executive members,
non-executive members, independent members and senior
- To propose clear policies and criteria for membership in the executives.
Board of Directors and Executive Management.
- To establish Special procedures in the event of presence of a
vacant position in the Board of Directors or senior executives.
- Recommending to the board of directors the nomination and
re-nomination of members in accordance with approved policies - To identify weaknesses and strengths in the board of directors
and criteria taking into account that no person who has been and propose solutions to address them in line with the company’s
convicted of a crime against the Secretariat shall be nominated. interests. 
 27

Board of Directors’ Report 2020

2-2 The Nomination and Remuneration Committee Members:
The current Committee consists of three members as follow: 2. For the period from 15.06.2020 until the end of the
1. For the period till 14.06.2020*: current session of the Board *:

Members Membership Members Membership

Abdulwahab Abdulkareem Member of BOD Member of BOD -
Hani Suliman Alsaleh
Al-Betairi - Independent - Chairman Independent - Chairman
Hani Suliman Alsaleh Member of BOD - Independent Abdullaziz Abdulrahman
Member of BOD - Independent
Alfrayan
Othman Mohammed Khujah Independent Omar Mohammed
Member of BOD - Independent
Alkhuwaiter
* Membership of the Nominations and Remuneration Com- * The Board of Directors decided to form the Nomination and Remuneration
mittee ended on 14/06/2020. Committee on 15/06/2020.

2-3 The Nomination and Remuneration Committee Meetings:

The following table shows the number of committee meetings during the year:

Mtg# 31 Mtg# 32 Mtg# 33 Mtg# 34 Mtg# 35 Mtg# 36 Mtg# 37 Mtg# 38 Total

Members 02/01/20 03/02/20 10/02/20 13/02/20 16/02/20 09/04/20 01/06/20 28/12/20 Attendance

Abdulwahab A. Al-Betairi ✓ ✓ ✓ ✓ ✓ ✓ ✓ Not member 7

Hani Suliman Alsaleh ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 8

Othman Mohammed Khujah ✓ ✓ ✓ ✓ ✓ ✓ ✓ Not member 7

Abdullaziz Abdulrahman
Alfrayan
Not member ✓ 1

Omar Mohammed Alkhuwaiter Not member ✓ 1

 28

3. Investment and Development Committee:

3-1 Summary of functions and responsibilities:
Board of Directors’ Report 2020

The duties and responsibilities of the Investment and Development Committee mentioned in the list of work of the
Investment and Development Committee within the approved corporate governance regulations include the following:

- Identification of investment strategy and policies (subject to - To perform any other functions that may be requested by
Board approval) as well as guidelines including policies and the Board from time to time or may be required by the policy
guidelines on asset classes, allocation of assets, prohibited of the Board of Directors.
investments and valuation.
- The Committee shall have the powers of the Board of Direc-
- To review and approve investments made by or on behalf of tors to perform and approve the activities entitled to it by the
the Company in accordance with the limits approved by the Board of Directors except for the following:-
Board of Directors. * Recommend to the Board of Directors to approve the annual
budget of the company.
- To review proposed new investments and monitor compli- * Approval of periodic and annual financial reports.
ance with investment policies and procedures. * Approval of company’s business strategies.
- To review whether the proposed investment is a transaction - To inform the Committee’s decisions to the board of direc-
with a related party that requires special attention, review and tors at their next meeting.
approval by the Board of Directors.
- The Committee has the power to retain the consultants and
- To review and approve any investment criteria or other other experts as the Committee deems necessary to carry out
methods of measuring the investments used by the Company its duties and responsibilities.
to monitor the performance of its investments.
- The Committee may conduct or authorize investigations or
- To review transactions related to Zakat / Taxes and zakat / study of matters within the scope of the Commission’s respon-
tax liability related to these investment transactions. sibilities. It may also retain an independent consultant or other
advisers as the Committee deems necessary to perform its
- To review the accounting transaction and disclosure of each responsibilities properly at the expense of the Company. The
investment transaction to ensure that it is presented fairly in Executive Chairman shall, with the approval of the Commit-
accordance with Generally Accepted Accounting Standard. tee, maintain or terminate the service of any expert or consult-
ant to be retained under the direction of the Committee or the
- Continuous monitoring of the performance of the Com- Chief Executive Officer to assist the Committee in carrying out
pany’s investment advisors and their retention as deemed its responsibilities including the authority to approve fees or
appropriate by the Committee. other compensation and retention periods of such consultant
or expert. The Company shall bear such fees or rewards.
- To perform any other responsibilities related to the activities
and investment policies of the company or other matters that
may be assigned to the committee by the Board from time to
time.

3-2 The Investment and Development Committee Members: 3-3 The Investment and Development Committee Meetings:
The Committee consists of five members as follows: The following table shows the number of committee
meetings during the year:
Executive/Non-executive/
Members *
Expert
Member of BOD – non Mtg# 7
Abdullah Owdah Alenezi Members 30/04/20
Total
Executive - Chairman
Abdulwahab Abdulkareem
Member of BOD - Independent Abdullah Owdah Alenezi ✓ 1
Al-Betairi
Abdulwahab Abdulkareem
Khalid Mohammed Aldawood Member of BOD - Executive Al-Betairi ✓ 1

Adel Ali Alsayed Independent Khalid Mohammed Aldawood ✓ 1

Rami Hassan Farahat Independent Adel Ali Alsayed ✓ 1

* The membership of Investment and Development Committee ended on

Rami Hassan Farahat ✓ 1
14/06/2020, and the Investment and Development Committee was not ap-
proved within the company’s committees in the amended and approved cor-
porate governance on 08/18/2020.
 29

F. Movement of Shares Owned By Directors, Senior Executives & Their Family Members
• The following table includes a description of any interest, contractual securities or rights issue of the Board members,

Board of Directors’ Report 2020

Senior Executives and their relatives on the shares or debt instruments of the Company:

1) Ownership of members and members of their families:

Beginning of the year End of the year
Name Number of Number of
Net Change Change %
Debt Debt
shares instruments shares instruments
Mohammed Saleh Alkhalil 110,000 - 110,000 - - -
Abdulwahab Abdulkareem Al-Betairi 4,843 - 50,000 - (45,157) (0.065%)
Omar Mohammed Alkhuwaiter* - - - - - -
Khalid Mohammed Aldawood - - - - - -
Aziz Mohammed Al Gahtani 1,000 - 1,000 - - -
Hani Suliman Alsaleh 500 - 500 - - -
Saad Shaher Alharbi* - - 35 - 35 0.001%
Abdullaziz Abdulrahman Alfrayan* - - - - - -
Ali Abdullaziz Alturki* - - - - - -
Jamail Jamail Sifrah** 1,000 - - - (1,000) (0.001%)
Saad Saud Abonayan** - - - - - -

Abdullah Owdah Alenazi** - - - - - -

Abdullah Abdulrahman Alayadhi** - - - - - -

* They were elected during the General Assembly meeting held on 10/06/2020 to be a member Board of Directors for the session starting on 15/06/2020
** The membership of the Board of Directors ended on 14/6/2020

2) Ownership of senior executives and members of their families:

Beginning of the year End of the year

Name Number of Number of
Net Change Change %
Debt Debt
shares instruments shares instruments
Khalid Mohammed Aldawood - - - - - -
)CEO(

Saleem Akhtar
- - - - - -
)VP – Finance(

• There is no interest, contractual securities or rights issue to the Board members, Senior Executives and their relatives
on the shares or debt instruments of the Company’s subsidiaries.

G. Procedures taken by the Board to inform its members, Non-Executive Directors

in particular, of shareholders› suggestions and remarks on the Company and its
performance:

The Chairman of the Board and the Chief Executive Officer (CEO) inform the members of the Board of Directors about
the opinions, suggestions, or comments of the shareholders at the first Board meeting.
 30
Board of Directors’ Report 2020

XI. REMUNERATION/COMPENSATION OF CHAIRMAN, BOARD

OF DIRECTORS AND TOP EXECUTIVES
1) Policy of the remuneration of Board members and committee’s members and Executive
Management
The remuneration policy for members of Board of Directors, committee’s members and Senior Executives was prepared within
the corporate governance. This policy approved in the Ordinary General Assembly (OGA) meeting on 12/21/2017, and the
amendment of this policy approved in OGA meeting on 18/08/2020.

A) Remuneration of Board members and

committee’s members
- Board members’ remuneration consists of a certain
amount, attendance allowance for sessions, specific
benefits, or a certain percentage of net profits, and it is
permissible to combine two or more of these benefits.
The remuneration of the members may be of varying
amounts to reflect the member’s experience, competence,
tasks entrusted to him and his independence, the number
of sessions he attended, and any other considerations at
the discretion of the Board of Directors.
- If the remuneration is a specific percentage of the
company›s profits, this percentage may not exceed 10%
of the net profits, after deducting the reserves decided by
the General Assembly, and after distributing a profit to
the shareholders of not less than 5% of the company›s
paid-up capital.

- In all cases, the remuneration and financial or in-kind

benefits and rewards that a member of the Board of
Directors receive shall not exceed the amount of five hun-
dred thousand riyals (500,000) annually in accordance
with the controls set by the Ministry of Commerce and
Investment and the Financial Market Authority.

- The remuneration of the members may be of varying

amounts to reflect the member’s experience, competence,
tasks entrusted to him, his independence, the number of
sessions he attended, and any other considerations at the
discretion of the Board of Directors.
- The remuneration of the independent members of the
board of directors should not be a percentage of the
profits achieved by the company or it should not be based
directly or indirectly on the profitability of the company
according to what is set by the competent authority.
 31

The following are the details of the policies related to annual bonuses and session

Board of Directors’ Report 2020

attendance allowances for members of the Board, Committee’s Member:

•For the period from beginning of the year until 18/08/2020: (Amounts in SR›000).

Committees
Description BOD Description
Members
Chairman remuneration 350 Chairman remuneration 100

Member remuneration 80
Member remuneration 300
Independent Member remuneration 100

Meeting Attendance allowance 6 Meeting Attendance allowance 5

Other expenses not exceeding 2 Other expenses not exceeding 2

• For the period from 19/08/2020 to the end of the year *: (Amounts in SR’000)

Committees
Description BOD Description
Members
Chairman remuneration if member 75
Chairman remuneration 350
Chairman remuneration if not member 150

Member remuneration if member 50

Member remuneration 250
Member remuneration if member 100

Attendance meeting allowance 4 Attendance meeting allowance 3

Other expenses not exceeding 2 Other expenses not exceeding 2

* The shareholders in Extraordinary General Assembly held on 18/08/2020 approved the amendment of the compa-
ny›s corporate governance

B) Remuneration of Executive Management

- Monthly salary and additional allowances such as housing, transportation, and medical insurance, according to the
company›s regulations.
- Annual bonus based on the employee›s annual performance evaluation.

C) The remuneration granted to members of the board of directors, committee’s members and executive
management are in line with the remuneration policy in force and approved by the shareholders, and
there is no material deviation from this policy.
 32

2) Board Member remuneration (Amounts in SR›000)

Fixed Remuneration Variable Remuneration
Board of Directors’ Report 2020

Allowance for attending the Board meeting

Remunerations of the chairman, Managing

Allowance for attending committee

End-of-service award
managerial and consultative work

Expenses Allowance
Director or Secretary if a member

Grand Total
Remunerations for technical,

Short-term incentive plans

Long-term incentive plans

Periodic remunerations
*

In-kind benefits
Specific amount

Profit share
meeting

Total

Total
First: Independent Members
Saad Saud Abonayan ** 133 6 - - - - 139 - - - - - - 139 -
Aziz Mohammed Al Gahtani 270 24 30 - - - 324 - - - - - - 324 -
Hani Suliman Alsaleh 270 18 38 - - - 326 - - - - - - 326 -
Abdullah Abdulrahman Alayadhi ** 133 12 - - - - 145 - - - - - - 145 -
Omar Mohammed Alkhuwaiter *** 137 12 3 - - - 152 - - - - - - 152 -
Abdullaziz Abdulrahman Alfrayan *** 137 6 3 - - - 146 - - - - - - 146 -
Ali Abdullaziz Alturki *** 137 12 - - - - 149 - - - - - - 149 -
Total 1,217 90 74 - - - 1,381 - - - - - - 1,381 -

Second: Non-executive Members

Mohammed Saleh Alkhalil 347 24 - - - 4,000 4,371 - - - - - - 4,371 -
Abdulwahab Abdulkareem Al-Betairi 270 24 40 - - - 334 - - - - - - 334 -
Saad Shaher Alharbi *** 137 12 - - - - 149 - - - - - - 149 -
Jamail Jamail Sifrah ** 133 - - - - - 133 - - - - - - 133 4
Abdullah Owdah Alenazi ** 133 12 5 - - - 150 - - - - - - 150 -
Total 1,020 72 45 - - 4,000 5,137 - - - - - - 5,137 4

Third: Executive Members ****

Khalid Mohammed Aldawood 270 24 5 - - - 299 - - - - - - 299 -
Total 270 24 5 - - - 299 - - - - - - 299 -

* Remuneration of members whose end on 14/06/2020 was paid during 2020 and members whose started on 15/06/2020 during 2021.
** Member Board of Directors ended on 14/06/2020
*** New member Board of Directors from 06/15/2020
**** Remuneration and allowances paid to executive members are for their membership as board members and not for their executive positions in company.

3) Senior Executives Remuneration (Amounts in SR›000)

Fixed remunerations Variable remunerations
End-of-service award

Expenses Allowance
Grand Total
remunerations *
In-kind benefits

incentive plans

incentive plans
Allowances

Short-term

Long-term
Periodic
Salaries

Profits
Total

Total

Khalid Mohammed Aldawood

360 - - 360 240 - - - 240 - 600 8
(MOD & CEO) **
Saleem Akhtar
485 170 33 688 50 - - - 50 95 833 -
)VP – Finance(
Total 845 170 33 1,048 290 - - - 290 95 1,433 8

* Paid during 2021.

** Salaries and remunerations paid to member of board of directors are for his position as CEO of company and not as a member of board of directors.
 33

4) Committees Members Remuneration (Amounts in SR›000)

Board of Directors’ Report 2020

Fixed Remuneration
Attending meetings
(Except attending Total
allowance
allowance)*

Audit Committee Members

Aziz Mohammed Al Gahtani 86 30 116
Saleh Hamad Alshinafi 100 30 130
Jamail Jamail Sifrah 100 30 130
Mohammed Abdullah Alibrahim
45 - 45
)Till 14/6/2020(
Total 331 90 421

Nomination & Remuneration Committee

Abdulwahab Abdulkareem Al-Betairi 44 35 79
Hani Suliman Alsaleh 77 38 115
Othman Mohammed Khujah 44 35 79
Abdullaziz Abdulrahman Alfrayan 28 3 31
Omar Mohammed Alkhuwaiter 28 3 31
Total 221 114 335

Investment & development Committee

Abdullah Owdah Alenezi 44 5 49
Abdulwahab Abdulkareem Al-Betairi 35 5 40
Khalid Mohammed Aldawood 35 5 40
Adel Ali Alsayed 44 5 49
Rami Hassan Farahat 44 5 49
Total 202 25 227

* Remuneration of members whose end on 14/06/2020 was paid during 2020 and members whose started on 15/06/2020 during 2021.

XII. TRANSACTIONS WITH RELATED PARTIES

There are no significant transactions / contracts during the year between the Company and the members of the Board
or senior executives.
 34
Board of Directors’ Report 2020

XIII. PROFIT DISTRIBUTION POLICY

The Company›s net profits (annual, semi-annual or quarterly)
shall be distributed after the approval of the Ordinary General
Assembly of the Council and this approval shall be renewed
annually after deduction of all general expenses and other
costs as follows:-

• 10% of the net profits shall be deducted from the statutory

reserve of the Company. The Ordinary General Assembly may
decide to discontinue such deduction when the said reserve
reaches 30% of the paid-up capital.

• Ordinary General Assembly on the proposal of the Board of

Directors can avoid 30% of the net profit to form a statutory
reserve specified to support the financial position of the com-
pany.

• The statutory reserve shall be used to cover the losses of the

company or capital increase. If this reserve exceeds 30% of the
paid-up capital, the general assembly of the company may de-
cide to distribute the increase to the shareholders in the years
in which the company does not achieve sufficient net profits to
distribute their share specified for them in this system.

• The Ordinary General Assembly may decide to make other

reserves to the extent that it serves the interest of the Company
or to ensure the distribution of fixed profits to the sharehold-
ers as much as possible. The Assembly may also deduct from
the net profits amounts to establish social corporations for the
company’s employees or to assist the existing ones.

• The residue shall be distributed to the shareholders a per-

centage at least 5% of the paid-up capital of the company.

The shareholder shall be entitled to his share of the profits in accordance with the General Assembly decision issued in this
regard. The decision indicates the entitlement date and the date of distribution and the entitlement of profits to the share-
holders registered in the shareholders› registers at the end of the day specified for entitlement.
 35

XIV. POTENTIAL BUSINESS RISKS

Board of Directors’ Report 2020

The Group›s activities expose it to a variety of potential business risks, market risks, financial risks (including currency
risk, fair value and cash flow interest rate risks and price risk), credit risk, and liquidity risk. The Group›s overall risk
management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse
effects on the Group›s financial performance. The risk management is carried out by senior management under
policies approved by the board of directors.

Risks The potential impact of risks How it is handled/mitigated

As explained earlier in 2017 BOD report, Alujain Holding Control issue has changed substantially by the end of NATPET
Corp. lost control over its major investment, (Alujain invested Board of Directors term on May 31, 2020, whereby Alujain
Control over Major 98% of its paid-up capital in NATPET and owns 57.4% of NAT- Holding Corp. was able to effectively represent the Board and
Investment (NATPET) PET). and such dealing with and removing this risk was one in the executive management of NATPET. The Board of Direc-
of the most important objectives of the previous and current tors is working to develop what guarantees the sustainability
.Board of Directors .of this situation and its strengthening in the future

Currency risk is the risk that value of a financial instrument

will fluctuate due to changes in foreign exchange rates. The
Group is subject to fluctuations in foreign exchange rates in
normal course of its business. The Group did not undertake The group does not undertake significant transactions in
Currency Risk any significant transactions in currencies other than the Saudi currencies other than the Saudi Riyals or US dollar and lesser
(related to NATPET Riyal, US dollar, and Euro. The Group’s management monitors extent of Euro. Management monitors these operations on
operations) the fluctuations in currency exchange rates and believes that a regular basis. However, there were no material foreign
currency risk is not material. However, there are no significant .exchange contracts in place as at the end of current year
foreign currency contracts due at the end of the current year.
As the Saudi Riyal is pegged to US dollar, the group is not
.exposed to foreign currency risk

Raw Material Price

The Raw material prices may vary adversely, which are related
Differences (For NATPET .to international gas and petroleum derivative prices
.The prices are beyond the control of the Group
operations)
The finished product is sold in international market and Group sales activities are not restricted to any particular
Economic Risks (related
any global or regional recession may impact the financial region, but are spread across the globe. Therefore, any fluctua-
to NATPET operations) .performance .tion in prices is beyond the control of the Group

Group’s activities expose it to a variety of operational risks at

These risks are managed based on a “template decision mak-
the plants operated by its subsidiaries/associate companies,
ing matrix”, to minimize potential adverse effects on Group’s
Operational Risk which are defined as “any circumstances or situation when
operational performance. The Group also consults its vendor,
equipment failure poses a threat to (1) health & environment
.licensor & third party experts, if needed
.”and (2) production loss and repair cost

Being subjected to legal issues such as imposition of The Group develops its strategies based on the changing
Legal Risks (pertaining to
anti-dumping tax or anti-trust laws by countries where the global market conditions and remains vigilant to initiate
NATPET operations) .subsidiaries’ products are sold could affect the Group sales .appropriate measures to overcome such situations

The management believes that cash and cash equivalents will

Alujain Holding Corp.’s major investment is in NATPET (The
be sufficient to meet its obligations for more than a year, with
Liquidity Management company owns 57.4% of NATPET) and dividends from
creditworthiness enabling the company to obtain short-term
Risk NATPET are the main source of cash for the company despite
loans from banks in case there is an operational or investment
.NATPET’s high cash balance
.need

The consequences of COVID-19 can still be dealt with no

Covid-19 risks may cause company’s business to be disrupted significantly affecting operating business. Although this
if it escalates to point where it becomes difficult for NATPET pandemic has greatly affected the prices of the company’s
COVID-19 Risks to continue its business, noting that prices began to recover products, NATPET, and the demand for Zain’s main products
.significantly (laundry detergents), the impact is still within the range that
.does not constitute a threat to its continuity
 36

XV. CORPORATE GOVERNANCE

The company is committed to implementing all the mandatory articles stipulated in the Corporate Governance
Board of Directors’ Report 2020

Regulations. Following are some guiding materials that have not yet been applied and requirements for their
application and expected impact of adherence to them are being evaluated:

Item No. Text Reasons for not applying

Guidance article: This will be studied by Nomination and Remuneration Commit-
39 Training
tee
Guidance article: Nomination and Remuneration Committee will study adoption of
41 Evaluation
evaluating Board members
Formation of Risk
70 Guidance article
Management Committee
Terms of Risk Management
71 Guidance article
Committee
Risk Management Committee
72 Guidance article
meetings
Guidance article: An external office has been appointed to carry out the internal
Create a unit or audit
76 audit work based on the audit committee’s recommendation to appoint an internal
department
auditor during the year 2020
77 Internal audit plan Guidance article: The audit committee approved the internal audit plan
78 Internal audit report Guidance article: The Audit Committee reviewed the internal audit report
85 Motivate employees Guidance article
87 Social Responsibility Guidance article
88 Social work initiatives Guidance article
 37

XVI .BOARD DECLARATIONS

1. The Company’s financial statements were prepared 8. There were no any redemption, purchase or cancella-

Board of Directors’ Report 2020

in accordance with the International Financial Report- tion by the Company of any redeemable debt instruments
ing Standards (IFRS) and there is no difference from the and the value of such securities outstanding, distinguish-
accounting standards approved by the Saudi Organization ing between those listed securities purchased by the
for Certified Public Accountants and were audited by Company and those purchased by its subsidiaries.
independent auditors as per International standards on
auditing that are endorsed in the Kingdom of Saudi Arabia. 9. The Company has not received any notices for any
interest in a class of voting shares held by persons (other
2. The board declares that: than the company’s directors, Senior Executives and their
a. Proper books of account have been maintained. relatives), along with any change to such rights during the
b. The system of internal control is sound in design and year.
has been effectively implemented; and
c. There are no significant doubts concerning the issuer’s 10. There were no material contracts awarded to any
ability to continue as a going concern. related parties including directors, Senior Executives or
any person related to any of them during the year, other
3. The external auditors have given an unqualified opinion than as described in the “Board of Directors” section and
on the financial statements for the period ended on “Related Party Transactions” section in this report.
December 31, 2020 with Emphasis of Matters, which are
described in the “Independent Auditor’s Report” section of 11. There were no long-term loans outstanding during
this report. the year, except for short-term credit facilities and loans
granted to NATPET, which are described in the “Summary
4. There were no penalties or preventive restrictions im- of Loan” section of this report.
posed on the company during the year except suspending
the shares of Alujain Holding Corp. from trading during 12. There were no loans given to any of its directors,
the year as follow: except as shown in “Related Party Transaction” section in
this report.

Date Duration Reason for suspension 13. There are no treasury shares held by the Company
during the year.
Upon the company’s request in
05/03/2020 One Day preparation for the announcement of a
material event. 14. The Company has not received waiver any remunera-
tions from any Board member or senior executives.
Due to the delay in receiving approved
financial statements for 2019 of NATPET,
and accordingly external auditor stated 15. The Company has not received any arrangements or
30/04/2020 69 Days
that they will not be able to complete re- agreements under which a shareholder of the Company
view process for financial statements of has waived any rights to dividends.
Alujain for 2019 before the end of the time
specified by the CMA to announce annual
results for the year 2019 on 31/03/2020 16. The Company has not made any investments or creat-
ed reserves for its employees, except for, as is required by
Saudi Labor Law and Company policies.
5. There were no any convertible debt instruments,
contractual securities, right issue or similar rights issued or 17. The company has not contributed in any of the social
granted by the Company during year. responsibility programs during the year.
6. There were no any conversion or subscription rights un- 18. Board has not recommend to replace the external au-
der any convertible debt instruments, contractually based ditor before the end of the term for which it is appointed.
securities, rights issue or similar rights issued or granted by
the Company during the year. 19. Audit committee’s recommendation regarding ap-
pointing an internal auditor for company during 2020.
7. Subsidiaries have not issued any shares and debt instru-
ments during the year. 20. There is no conflict between audit committees’ recom-
mendations and with Board’s resolutions during the year.
 38
Board of Directors’ Report 2020

XVII. Corporate Governance

1. Vote on the Board of Directors’ Report for 2020.
2. Vote on the 2020 year-end financial statements and external auditors’ report.
3. Vote on the appointment of external auditors from among the candidates by the Audit Com-
mittee to review the financial statements for the second, third and annual quarters of 2021 and
the first quarter of 2022, and determine his fees.

The Chairman and the Board of Directors express their appreciation and gratitude to the
Custodian of the Two Holy Mosques King Salman Bin Abdul-Aziz Al-Saud; HRH Crown Prince
Mohammad bin Salman bin Abdul-Aziz AlSaud, Deputy Prime Minister & Minister of Defense
for their continued cooperation and support.

Thanks also to the Shareholders for their continued support, and the Executive Management
and Staff of the Company for their great efforts, which helped to achieve the Company’s goals
in 2020.

BOARD OF DIRECTORS
Board of Directors’ Report 2020
39
Board of Directors’ Report 2020
40