Board of Directors

solutions by stc is managed by a Board of Directors consisting of nine (9) Directors, classified according to the definitions contained in the Corporate Governance Regulations issued by the Capital Market Authority in the Kingdom of Saudi Arabia, and appointed by the Conversion General Assembly of Shareholders held on 22 December 2020. The tenure of Directors, including the Chairman, shall be a maximum of three (3) years for each session. As an exception, the Conversion General Assembly shall appoint the first Board of Directors for five (5) years, and they may be reappointed unless otherwise provided in the Company’s By-laws. The current five-year session of the Board of Directors commenced on 22 December 2020 and ends on 21 December 2025.

Composition of the Board of Directors, the nature and classification of their membership

		Name	Nature of membership	Membership classification
	1	Mr Riyadh Saeed Muawad	Chairman of the Board	Non-executive member
	2	Mr Haithem Mohammed AlFaraj	Deputy Chairman of the Board	Non-executive member
	3	Mr Emad Aoudah Al Aoudah	Board Member	Non-executive member
	4	Mr Omar Abdulaziz AlShabibi	Board Member	Non-executive member
	5	Mr Mathad Faisal AlAjmi	Board Member	Non-executive member
	6	Mr Mohammed Abdullah AlAbbadi	Board Member	Non-executive member
	7	Mr Mohammad Abdullah Alaseeri	Board Member	Independent member
	8	Mr Abdullatif Ali Al-Seif	Board Member	Independent member
	9	Mr Fahad Suleiman Alamoud	Board Member	Independent member

Board Members, Committee Members and Executive Management current and previous positions, qualifications, and experience

Board and Committee Members

Committee Members from outside the Board of Directors

Executive Management

Name of companies inside and outside the Kingdom in which a Board Member is a member of their current or previous Board or Management

Member name	Names of companies in which a Board member is a member of their current Board or a manager	Inside/ Outside the Kingdom	Legal entity	Names of companies in which a Board member is a member of their previous Board or a manager	Inside/ Outside the Kingdom	Legal entity
Mr Riyadh Saeed Muawad	specialized by stc	Inside	Limited Liability Company	Kuwait Telecom Company (stc Kuwait)	Outside	Listed Joint Stock Company
	stc	Inside	Listed Joint Stock Company (LJSC)	Cisco	Inside	Limited Liability Company
	Saudi Cloud Computing Company (SCCC)	Inside	Limited Liability Company	CA Technologies	Outside	Listed Joint Stock Company (USA)
	iot2	Inside	Limited Liability Company	National Technology Company (Bugshan Group)	Inside	Limited Liability Company
Mr Haithem Mohammed Alfaraj	sirar by stc	Inside	Limited Liability Company	specialized by stc	Inside	Limited Liability Company
	Telecommunications Tower Co. Ltd. (TAWAL)	Inside	Limited Liability Company	Etihad Etisalat Company (Mobily)	Inside	Listed Joint Stock Company
	stc	Inside	Listed Joint Stock Company	Aramco	Inside	Listed Joint Stock Company
				Lucent Technologies	Outside	Merged with Alcatel to form Alcatel-Lucent
Mr Emad Aoudah Al Aouda	stc	Inside	Listed Joint Stock Company	channels by stc	Inside	Limited Liability Company
	Arabian Satellite Communications Organization (Arabsat)	Inside	Limited Liability Company	Aqalat	Inside	Limited Liability Company
				stc specialized	Inside	Limited Liability Company
				NUPCO	Inside	Limited Liability Company
				Saudi Research and Marketing Group	Inside	Listed Joint Stock Company
				Saudi Information Technology Company (SITE)	Inside	Limited Liability Company
				Oracle	Outside	Limited Liability Company
				Saudi Central Bank	Inside	Government
				stc Gulf Investment Holding	Inside	Limited Liability Company
				Bravo Company	Inside	Limited Liability Company
Mr Omar Abdulaziz Alshabibi	stc Gulf Investment Holding	Inside	Limited Liability Company	stc Pay	Inside	A Closed Joint Stock Company
	Telecom Commercial Investment Company Limited	Inside	Limited Liability Company	Sapphire Company Ltd.	Inside	Limited Liability Company
	channels by stc	Inside	Limited Liability Company
	stc	Inside	Listed Joint Stock Company
Mr Mathad Faisal Alajmi	stc	Inside	Listed Joint Stock Company	Saudi Iron and Steel Company (Hadeed)	Inside	A Closed Joint Stock Company
	Integral	Inside	Limited Liability Company	Saudi Basic Industries Corp (SABIC)	Inside	Listed Joint Stock Company
				Gulf Petrochemicals and Chemicals Association (GPCA)	Outside	A Closed Joint Stock Company
				King and Spalding	Outside	Int. Law firm
				Freshfields	Outside	Int. Law firm
Mr Mohammed Abdullah AlAbbadi	stc	Inside	Listed Joint Stock Company	stc Pay Aqalat Cisco	Inside Inside Inside	A Closed Joint Stock Company Limited Liability Company Limited Liability Company
	Saudi Volunteer Organization (Takatuf)	Inside	Non-profit Organisation
	Specialized by stc	Inside	Limited Liability Company
	Forus	Inside	A Closed Joint Stock Company
	Cura	Outside	Limited Liability Company
	Center3	Inside	Limited Liability Company
	ITW| Global Leaders' Forum	Outside	Limited Liability Company
Mr Mohammad Abdullah Alaseeri	Municipal and Rural Affairs and Housing	Inside	Government	Traveler Security Center	Inside	Government
				Ministry of Education	Inside	Government
				National Information Center	Inside	Government
Mr Abdulatif Ali Al-seif	Sabeen Investment Company	Inside	A Closed Joint Stock Company	King Abdullah Humanitarian Foundation	Inside	Non-profit Organisation
	Arabian Cement Company (ACC)	Inside	Listed Joint Stock Company	Raidah Investment Company	Inside	A Closed Joint Stock Company
				HSBC	Inside	A Closed Joint Stock Company
	Wisayah Global Investment Company	Inside	Limited Liability Company	Riva Investment Company	Inside	Limited Liability Company
	Al Rajhi Bank	Inside	Listed Joint Stock Company	National Petrochemical Company (Petrochem)	Inside	Listed Joint Stock Company
	Alnahdi Medical Company	Inside	A Closed Joint Stock Company	Alothaim Investment Company	Inside	A Closed Joint Stock Company
	SALIC	Inside	A Closed Joint Stock Company	Saudi Aramco	Inside	Listed Joint Stock Company
	AlBilad Tourism Fund	Inside	Real Estate Fund	Mohammed I Alsubeaei & Sons Investment Company (MASIC)	Inside	A Closed Joint Stock Company
				KAUST Investment Management Company	Inside	A Closed Joint Stock Company
Mr Fahad Suleiman Alamoud	Saudi Visa and Travel Solutions (TASHIR)	Inside	Limited Liability Company	Sehati	Inside	Limited Liability Company
	Saudi Visa and Travel Solution Limited (Bangladesh)	Inside	Limited Liability Company	Saudi Technology and Security Comprehensive Control Comp (Tahakom)	Inside	Limited Liability Company
	The Saudi International Company for Completion and Follow-up of Visa Procedures and Approvals for Embassies (Kuwait)	Inside	Limited Liability Company	Ministry of Transport Ministry of Foreign Affairs	Inside Inside	Government Government
	Saudi Company for Visa solution (Qatar)	Inside	Limited Liability Company

Board of Directors meetings and the attendance record of each meeting held during the year ending 31 December 2022:

Name			Meetings
			1st meeting (11 Jan 2022)	2nd meeting (15 Feb 2022)	3rd meeting (28 Mar 2022)	4th meeting (25 May 2022)	5th meeting (02 Oct 2022)	6th meeting (06 Dec 2022)
	1	Mr Riyadh Muawad
	2	Mr Haithem AlFaraj
	3	Mr Emad Aloudah
	4	Mr Mohammed AlAbbadi
	5	Mr Mathad Alajmi
	6	Mr Omar Alshabibi
	7	Mr Fahad Alamoud
	8	Mr Abdulatif Al-seif
	9	Mr Mohammad Alaseeri

General Assembly Meetings held during the fiscal year ending 31 December 2022 and attendance of Board Members

Name			Meetings
			1st meeting (02 Mar 2022)	2nd meeting (29 May 2022)
	1	Mr Riyadh Muawad
	2	Mr Haithem AlFaraj
	3	Mr Emad Al Aouda
	4	Mr Mohammed AlAbbadi
	5	Mr Mathad Alajmi
	6	Mr Omar Alshabibi
	7	Mr Fahad Alamoud
	8	Mr Abdulatif Al-seif
	9	Mr Mohammad Alaseeri

Procedures taken by the Board to inform its Members, especially the non-Executives, of shareholders’ suggestions and remarks on the Company and its performance

The main objective of the Investor Relations (IR) Department is to act as a mediator between the Company, the investment community, and capital market regulators. We aim to enable further accessibility between shareholders and various stakeholders within the Company through various methods. The IR Department is responsible for all communications with investors and shareholders, and periodically reports to the Board, providing an update about shareholder activities and remarks.

Stakeholders’ views are of paramount importance to the Company and shareholder feedback is always considered and incorporated into departmental strategies for long-term value creation. We ensure that we provide our investors with the maximum information possible by providing access to various disclosures through the Investor Relations section of the website, and through quarterly disclosures, and annual reports.

During the year ending 31 December 2022, the Company did not receive any written proposals or notes from any of the shareholders.

Board Committees

In accordance with the Corporate Governance Regulations issued by the Capital Market Authority and the Companies Law, the Company has prepared a charter for the Audit Committee, the Nomination and Remuneration Committee, the Executive Committee, and the Investment Committee, as these charters include the rules for the members of the committee, their term of membership, and their duties. All those charters and regulations were approved by the Board of Directors and the General Assembly of shareholders, as per the Company’s by-laws. solutions by stc has four committees as follows:

Audit Committee

The Audit Committee consists of four (4) members appointed pursuant to an Ordinary General Assembly resolution dated 26 January 2021 and ending 21 December 2025.

The duties and responsibilities of this Committee include the oversight of the internal audit tasks and reports, the implementation of corrective measures for the observations contained therein, and recommending to the Board of Directors the appointment of Company’s External Auditor and propose his scope of work and annual fees, and reviewing the Company’s interim and annual financial statements before submitting them to the Board of Directors. The Committee’s responsibilities also include evaluating and ensuring that an effective internal control system is in place and prepared on a sound basis and review on corporate governance reports, compliance and risk management.

During the year, the Audit Committee reviewed the quarterly financial statements and the annual financial statements and recommended the approval of the Board of Directors. The Committee met with the External Auditor to ensure that the financial statements have been prepared in accordance with the accounting standards and that there are no material observations on the financial statements. The Audit Committee also discussed the Internal Auditors’ Report, which did not contain material observations.

The Committee is composed of four (4) members and held five (5) meetings during the year 2022, as shown in the following table:

Name			Nature of Membership	Meetings
				1st Meeting (19 Jan 2022)	2nd Meeting (15 Feb 2022)	3rd Meeting (19 Apr 2022)	4th Meeting (01 Aug 2022)	5th Meeting (26 Oct 2022)
	1	Mr Abdulatif Al-seif	Chairman
	2	Mr Mathad Alajmi	Member
	3	Mr Omar Alshabibi	Member
	4	Mr Abdullah Alenzi	Member

Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of four (4) members appointed pursuant to a Board resolution dated 24 January 2021.

The main purpose of this Committee is to make recommendations to the Board of Directors with regard to nominations to the membership of the Board, its subcommittees and Executive Management in accordance with the approved policies and standards. undertaking the annual review of the skill requirements for the Board of Directors; preparing the description of skills and qualifications required for Board membership including determination of the time that the Board Member should dedicate to the business of the Board, and make recommendations concerning changes that can be made.

The Committee also reviews the structure and formation of the Board, makes recommendations concerning changes that can be made and identifies the weaknesses and strengths of the Board with recommendations on how to address them to serve the interests of the Company. On an annual basis, the Committee ensures the independence of the independent members and that there are no conflicts of interest if the member holds membership to the Board of Directors of another company, and evaluating the performance of Board members and the members of its committees. It develops clear policies for the compensation and remuneration of Board Members and senior executives, taking into consideration performance-related standards. Lastly, the Committee prepares periodic and annual reports on the Committee’s activities and the annual disclosure report according to the by-laws. These reports are presented to the Board of Directors.

The Committee is also responsible for assisting the Board of Directors in developing and reviewing the organizational structure of the Company.

The Committee is composed of four members and held four (4) meetings during the year 2022, as shown in the following table:

Name			Nature of Membership	Meetings
				1st Meeting (15 Feb 2022)	2nd Meeting (8 Jun 2022)	3rd Meeting (20 Nov 2022)	4th Meeting (29 Dec 2022)
	1	Mr Fahad Alamoud	Chairman
	2	Mr Fahad Alghamdi	Member
	3	Mr Omar Alshabibi	Member
	4	Mr Mohammed AlAbbadi	Member

Executive Committee

The Executive Committee consists of five (5) members appointed pursuant to a Board resolution dated 24 January 2021.

The Company’s Executive Committee was appointed by the Board of Directors to exercise all functions entrusted thereto and reports to and maintains direct communication channels with the Board of Directors. Pursuant to the relevant laws and regulations, the responsibilities of the Executive Committee include the following:

• Engaging in and supervising the development of the Company’s strategic plan and evaluating the proposals submitted by the Executive Management on the Company’s vision, mission, strategic themes, goals, and strategic and financial initiatives, and submitting them to the Board for approval.
• Overseeing the preparation of the Company’s annual budget, reviewing proposals submitted by the Executive Management, and submitting recommendations to the Board on the approval of the annual budget.
• Reviewing the financial and strategic performance reports related to monitoring the implementation of strategic plans and initiatives, and submitting its recommendations to the Board.
• Examining strategic and important issues and projects with a significant financial impact, and submitting them to the Board for approval.
• Reviewing the corporate social responsibility policy, media plan and sports sponsorships, and submitting its recommendations to the Board.
• Reviewing programs for social work initiatives and submitting its recommendations to the Board.

The Committee is composed of five (5) members and held three (3) meetings during the year 2022, as shown in the following table:

Name			Nature of Membership	Meetings
				1st Meeting (19 May 2022)	2nd Meeting (02 Oct 2022)	3rd Meeting (06 Dec 2022)
	1	Mr Riyadh Muawad	Chairman
	2	Mr Haithem Alfaraj	Member
	3	Mr Mohammed Alaseeri	Member
	4	Mr Emad Al Aouda	Member
	5	Mr Mohammed AlAbbadi	Member

Investment Committee

The Investment Committee consists of four (4) members appointed pursuant to a Board resolution dated 04 July 2022.

The Committee shall carry out all the assigned mandates, submit its recommendations to the Board, and shall maintain channels of direct communication with the Board. The Committee’s mandates shall be as per the relevant laws and regulations as follows:

• Approving, endorsing and reviewing the investment opportunities, mergers, acquisitions, joint ventures, or liquidation all in accordance with the Company’s existing delegation of authority matrices.
• Study the Company’s assets information, develop an investment strategy along with directives and related policies and submit the same to the Board for approval.
• Review performance assessment and work progress on a regular basis for the plans approved by the Boards of Directors of subsidiaries and provide the relevant recommendations to the Board.
• Approving and endorsing the financing structure (to provide funds for business activities, making purchases or investing etc.) for investment transactions and relevant policies, and submitting same to the Board for approval.
• Directly supervising the Company’s domestic and overseas investments.
• Ensuring the integrity of the investment process including any enhancement, setting relevant controls for protecting Company’s interests and fully supervising the stages of acquisition/merger related to any investment opportunity.
• Provide recommendations to the Board regarding the exit from or liquidation of a current investment.
• Reviewing the integration and synergy performance reports for subsidiaries.

The Committee is composed of four (4) members and held four (4) meetings during the year 2022, as shown in the following table:

Name			Nature of Membership	Meetings
				1st Meeting (2 Aug 2022)	2nd Meeting (5 Oct 2022)	3rd Meeting (17 Nov 2022)	4th Meeting (1 Dec 2022)
	1	Mr Riyadh Muawad	Chairman
	2	Mr Fahad Alamoud	Member
	3	Mr Motaz Alangari	Member
	4	Mr Atef Helmy	Member

Disclosure of the remuneration policy for members of the Board of Directors, members of the committees and the Executive Management:

Board and Committee members’ remuneration

1.1 The remuneration of the Board Members shall be a fixed amount, in addition to an allowance given for attending meetings.

1.2 The Board may determine a remuneration for Members/Member of the Board for their membership in the Board’s Standing Committees.

1.3 The remunerations that the Board of Directors’ Member receives shall be fair and coordinates with the Member’s competencies as well as the activities and the responsibilities that the Board Member undertakes in addition to the specified goals for the Board of Directors that must be achieved during the fiscal year.

1.4 The remuneration payment shall be stopped or retrieved if it turns out that it was approved based on inaccurate information presented by a Member of the Board.

1.5 The remuneration shall be based on the number of meetings that the Member attends.

1.6 The remunerations of the Members of the Board and its Standing Committees shall be in accordance with the relevant laws and regulations.

1.7 In all cases, the overall amount that the Member of the Board receives from remunerations shall not exceed SAR 500,000 annually, in accordance with rules prescribed by the Competent Authority.

1.8 If the Member deserves a remuneration for any additional work, or executive, technical, administrative, or advisory positions assigned to him/her in the Company. This is in addition to the remuneration that such Member deserves as a Board Member and shall be verified in accordance with Article 20 (c) (8) of the CMA Corporate Governance Regulations and related action as per the Company’s conflict of interest policy, Ministry of Communication Companies Law and the Company’s By-laws.

Board Members’ remuneration

Members of Board of Directors	Fixed Remunerations							Variable remunerations						End of Service Rewards	Grand Total	Expenses Allowances
	Specific amount	Allowance for attending Board meetings	Total Allowance for attending committee meetings	In-kind benefits	Remunerations for technical, managerial, and consultative work	Remunerations of the Chairman, Managing Director or Secretary, if a member	Total	Percentage of the profits	Periodic remunerations	Short-term incentive plans	Long-term incentive plans	Granted shares	Total
First: Independent Members
Mr Fahad Alamuod	300,000	30,000					330,000								330,000
Mr Abdullatif Al-Seif	300,000	30,000					330,000								330,000
Mr Mohammed Aseeri	300,000	30,000					330,000								330,000
Total	900,000	90,000					990,000								990,000
Second: Non-Executive Members
Mr Riyadh Muawad	375,000	30,000					405,000								405,000
Mr Haithem Alfaraj	300,000	30,000					330,000								330,000
Mr Emad Al Aouda	300,000	30,000					330,000								330,000
Mr Mohammed AlAbbadi	300,000	25,000					325,000								325,000
Mr Mathid Alajmi	300,000	30,000					330,000								330,000
Mr Omar Alshabibi	300,000	30,000					330,000								330,000
Total	1,875,000	175,000					2,050,000								2,050,000
Total	2,775,000	265,000					3,040,000								3,040,000

Committee Members’ remuneration

Senior Executives	Fixed remuneration (except attending sessions)	Allowances for attending sessions	Total (SAR)
Audit Committee
Mr Abdullah Alanizi	100,000	25,000	125,000
Mr Mathid Alajmi	100,000	25,000	125,000
Mr Omar Alshabibi	100,000	25,000	125,000
Mr Abdullatif Al-Seif	100,000	25,000	125,000
Total	400,000	100,000	500,000
Nomination and Remuneration Committee
Mr Fahad Alghamdi	60,000	20,000	80,000
Mr Mohammed AlAbbadi		20,000	20,000
Mr Fahad Alamuod		20,000	20,000
Mr Omar Alshabibi		20,000	20,000
Total	60,000	80,000	140,000
Executive Committee
Mr Riyadh Muawad		10,000	10,000
Mr Haithem Alfaraj		15,000	15,000
Mr Mohammed Alaseeri		15,000	15,000
Mr Emad Al Aouda		15,000	15,000
Mr Mohammed AlAbbadi		15,000	15,000
Total		70,000	70,000
Investment Committee
Mr Riyadh Muawad		20,000	20,000
Mr Fahad Alamoud		20,000	20,000
Mr Motaz Alangari	29,589	20,000	49,589
Mr Atef Helmy	29,589	20,000	49,589
Total	59,178	80,000	139,178

Senior Executives’ remuneration

1.1 The annual remuneration for the Chief Executive Officer shall be determined upon his/her achievement of the financial and strategic goals and other goals according to the Company’s policies.

1.2 The annual remuneration for the Chief Executive Officer shall be calculated after the publication of the financial statements according to the approved policy of the Company.

1.3 The annual remuneration for the Executive Management in the Company shall be calculated according to the policy and the mechanism for the approved annual remuneration in the Company.

1.4 The specified salaries and advantages for the Executive Management shall be determined to include (the base salary and advantages and allowances) according to the Executive Incentive Policy.

Remunerations of the top five Senior Executives (including the CEO and the CFO) in 2022

Senior Exec- utives	Fixed remunerations				Variable remunerations					End of Service Rewards SAR	Total remune- ration for executives in the Board SAR	Grand Total SAR
	Salaries SAR	Allowances SAR	In Kind Benefits SAR	Total SAR	Periodic remune- rations SAR	Profits SAR	Short-term incentive plans SAR	Long-term incentive plans SAR	Total SAR
Total	11,292,981.36		1,233,866.14	12,526,847.50	–	0	9,607,544.58	198,610.40	9,806,154.98	0	0	22,333,002.48

Adherence to Corporate Governance Regulations issued by the Capital Market Authority

The following section highlights provisions of the Corporate Governance Regulations issued by the Capital Market Authority which have not been implemented along with justification thereof.

Article Number	Article text	Implementation status	Justification
Article 70	Composition of the Risk Management Committee	Not Implemented	A dedicated risk management committee has not been established based on the optional article issued by CMA. However, its main mandates were incorporated as part of the Audit Committee responsibilities.
Article 71	Competencies of the Risk Management Committee	Not Implemented	A dedicated Risk Management Committee has not been established based on the optional article issued by CMA. However, its main mandates were incorporated as part of the Audit Committee responsibilities.
Article 72	Meetings of the Risk Management Committee	Not Implemented	A dedicated Risk Management Committee has not been established based on the optional article issued by CMA. However, its main mandates were incorporated as part of the Audit Committee responsibilities.
Article 85	Employee incentives	Not Implemented	This is an optional article.
	3) Establishing social organizations for the benefit of the Company’s employees.
Article 87	Social responsibility	Not Implemented	This is an optional article.
Article 95	Formation of a Corporate Governance Committee	Not Implemented	A dedicated Corporate Governance Committee has not been established based on the optional article issued by CMA. However, significant governance oversights mandates were incorporated as part of the Audit Committee responsibilities.

Internal audit

Results of the annual review of the effectiveness of internal control procedures

The Internal Audit Division carried out planned audits in accordance with the Audit Committee’s approved plan to evaluate, objectively and independently, the adequacy and effectiveness of the Internal control systems, beside a quarterly review of the financial statements. Additionally, internal audit provides advisory services to add value, improve operations, and achieve main strategic objectives.

Throughout 2022, internal audit regularly issued audit progress reports to the Audit Committee covering the audit plan progress, the results of audit engagements and overall views of Internal Control Systems, and reporting on other audit activities. In addition, internal audit continued to pursue the Assurance Transformation Strategy, with impactful outcomes.

The three strategic pillars of the Internal Audit Division are Expanding Digital Audit Services, Combined Assurance and Collaboration with other Assurance Providers, and Project Assurance Audit Services. This enabled internal audit to conduct proactive, innovative, and collaborative audits with notable influence on Governance, Risk Management, and Internal Controls across solutions. The Internal Audit Division also focuses on human capabilities. It remains a top priority; attracting, retaining, and developing talents and equipping them with the required skills and qualifications is essential to perform the audit activities effectively.

Internal Control

The Audit Committee oversees the compliance, risk management, internal audit, and external audit, which regularly review the adequacy and effectiveness of the internal control system and procedures to provide a continuous assessment of the system and its effectiveness. This is part of the objectives of the Board to obtain reasonable assurance about the soundness of the design of solutions by stc internal control system and its effectiveness. During the fiscal year 2022, the Audit Committee held 5 meetings and discussed many topics falling under its competencies, such as reviewing financial statements, as well as strategic and organizational affairs, human resources and procurement, and IT systems, among other issues relevant to solutions by stc businesses. This is during the presence of the Executive Management and the Internal Audit.

In this regard, the Audit Committee has reached reasonable assurance on the effectiveness and efficiency of the internal control systems; in addition, the committee has not found that there are material observations on the performance of internal control system that would affect the integrity and fairness of the financial statements issued by the Company, and the internal control systems associated with the critical business processes in the Company are effective in monitoring and reducing the risks associated.

Information on risks facing the Company (operational, financial or market related) and the policy of managing and monitoring these risks.

Transforming risks into Opportunities

The following section explores risks faced by solutions by stc, and steps taken to manage, mitigate, and transform risks into opportunities. Risks analyzed in the section constitute a summary of material risks that are considered pertinent for disclosure, and go hand-in-hand with the Company’s ongoing Risk Management processes, including the function of the Board and mandated Committees.

In 2022, the Company’s existing risk appetite statement was updated and expanded to better capture the context, and ensure a more robust management of risks. This is in line with solutions by stc’s plans for growth as per its ambitious five-year LEAP strategy. The Company also achieved ISO 31000 Risk Management Certification, which reiterates solutions by stc’s commitment to continual enhancement of our Risk Management practices. Further, as part of a long-term sustainability journey, the Company identified material ESG areas to focus on, which lays the foundation for the Company’s efforts to identify, measure, and mitigate ESG risks and challenges.

The risks we face	The aspect it covers	How we responded/ transformed them into opportunities
Increased competitiveness within the market	Increasing footprint of international players and local players continuously striving to gain market share, additionally the increased number of start-ups in the Saudi Arabian IT market will make the market more fragmented.	solutions by stc is continuously focusing on building and enhancing its digital and IT offering with entry into new business lines and expanding its portfolio to cover customer needs across the IT value chain through organic and inorganic growth. In addition, the Company is continuously expanding its partnership ecosystem to bring complementary offerings to the market to strengthen product portfolio offerings. solutions by stc has embarked on bundling/cross-selling initiatives to improve customer stickiness and protect itself from competitive threats.
Global Economic Risks	Increase in inflation rate and interest rate globally impacting purchasing power and government spendings to invest in digital transformation offerings. Supply chain disruption causing a challenge to obtain materials for hardware-based offerings.	solutions by stc is providing a wide range of offerings targeting value maximization and better selling propositions to meet client needs in a flexible manner. solutions by stc has secured alternative hardware suppliers ensuring that the global supply chain crisis does not impact its projects nor its customers. Additionally, with the value it creates for partners, the Company has nurtured stronger partnerships and lasting relationships with vendors.
Evolving regulatory landscape	The Risk of new laws and regulations (national and international) with a potential result in business disruption, legal and financial implications	The Company actively monitors regulations and plans to participate in public consultations to discuss the regulations, and ensure its products adhere to them.
Cybersecurity and Data Privacy	Growing sophistication and variety of cyberattacks creating a challenge that may impact business opportunities.	solutions by stc is actively monitoring potential cyber threats through a robust established policies, framework, and well qualified resources and use of sophisticated and advanced cyber defense technologies. Effective collaboration and partnership with best of industry entities and leveraging internal and external resources for optimum cyber resilience and defense mechanisms.

Affiliate companies

Affiliate name	Capital	Company’s ownership percentage	Main scope of business	Country of operation	Country of incorporation
stcs for IT	SAR 262,500 (USD 70,000)	100%	The principal activities of the subsidiary are concentrated in the information technology and communication industry domain. The products of the subsidiary involve design and development of electronics and data centers, outsourcing activities, software, application and database development, technological education, and digitization activities.	Egypt	Egypt
SANAD	SAR 5,000,000	100%	Management and Manpower Services	Kingdom of Saudi Arabia	Kingdom of Saudi Arabia
Giza Systems	SAR 18,050,580 (USD 4,813,488)	88.19%	Giza Systems a leading systems integrator in the MEA region, designs and deploys industry-specific technology solutions for asset-intensive industries such as the telecoms, utilities, oil and gas, hospitality and real estate among other market sectors. Help clients streamline their operations and businesses through our portfolio of solutions, managed services, and consultancy practice.	Egypt Kingdom of Saudi Arabia United Arab Emirates Qatar Kenya Tanzania Uganda Nigeria	Egypt

Information on loans and statement of total indebtedness of the Company and its affiliates

List of loans received and paid during the year ended 31 December 2022, are as follows:

	Amount of principal debt	Loan Term	Amounts paid during the year	Remaining amount
1. solutions by stc (Saudi National Bank)	500,000,000	5 years	–	500,000,000
2. Subsidiaries (International Banks)	3,125,386	3 years	–	3,125,386

The Company’s Dividend Distribution Policy

As per the Article Number (48) of the Company’s By-law provided the annual net profits shall be distributed as follows:

• Ten percent (10%) of the net profits shall be set aside to form a statutory reserve of the Company. Such setting aside may be discontinued by the Ordinary General Assembly when the said reserve totals thirty percent (30%) of the Company’s paid-up capital.
• The Ordinary General Assembly may, upon the proposal of the Board of Directors, set aside 5% of the net profits to form consensual reserve to be allocated for certain purposes specified by the General Assembly.
• The Ordinary General Assembly may form other reserves at the portion that would serve the Company’s best interest or would ensure distributing constant profits, as much as possible, amongst shareholders. Besides, the Ordinary General Assembly may allocate a certain amount from the net profits to establish social institutions for the Company employees or to support existing social institutions.
• Out of the balance of the profits, if any, there shall be paid to the shareholders an initial payment of not less than ten percent (10%) of the paid-up capital.
• Subject to provisions in Article (22) hereof, and Article (76) of Companies Law, the remaining amount shall be paid as compensation to the Board of Directors, provided that entitlement of such remuneration shall be in proportion to the number of sessions the member has attended.
• The Company may distribute interim profits to its shareholders on a biannual or quarterly basis as per a decision passed by the Board of Directors if the Company’s financial position allows to do so and the liquidity is available as per the controls and requirements set by the Competent Authority.

Dividends distributed during the year

	2022	2021
Ratio (of paid-up capital)	50%	33%
Total amount (SAR)	595 million*	400 million

*Subject to the approval of the General Assembly

Description of any interest, contractual securities or rights issue of the Board members, Senior Executives and their relatives on the shares or debt instruments of the Company or its affiliates:

There were no Debt instruments ,interest contractual securities or subscription rights of the Board members, Senior Executives and their relatives on the shares or debt instruments of the Company or its affiliates

Senior Executives and Their Relatives on shares or debt instruments of the Company

Names of the persons of interest		Beginning of the year		End of the year		Net change	Change Ratio
		Number of Shares		Number of Shares
1.	Mr Omer Abdullah Alnomany	–	–	817	–	817	–
2.	Mr Muataz Abdullah Aldharrab	–	–	1	–	1	–
3.	Mr Saleh Tareg AlGroony	150	–	150	–	–	–
4.	Mr Yousef Abdulrahman Almarshad	11	–	11	–	–	–
5.	Mr Rajeh Saad AlBogamy	–	–	125	–	125	–

Company ownership

Shareholder's name	Number of shares at the beginning of the year	Ownership percentage at the beginning of the year	Number of shares at the end of the year	Ownership percentage at the end of the year	Share changes	Percentage change
stc	94,800,000	79%	94,800,000	79%	–	–
solutions by stc Treasury shares	1,200,000	1%	1,032,933	0.86%	(167,067)	-0.14%
Public	24,000,000	20%	24,167,067	20.14%	167,067	0.1%

Requests of the Company’s shareholders registry 

Number of the Company’s requests of shareholders registry	Request date	request reasons
(1)	2 January 2022	Internal Management Use
(2)	2 February 2022	Internal Management Use
(3)	1 March 2022	General Assembly Meeting
(4)	3 April 2022	Internal Management Use
(5)	6 April 2022	Internal Management Use
(6)	28 April 2022	Internal Management Use
(7)	29 May 2022	General Assembly Meeting
(8)	3 July 2022	Internal Management Use
(9)	2 August 2022	Internal Management Use
(10)	1 September 2022	Internal Management Use
(11)	20 September 2022	Internal Management Use
(12)	3 October 2022	Internal Management Use
(13)	2 November 2022	Internal Management Use
(14)	5 December 2022	Internal Management Use

Transactions between the Company and any related party

	Name of related party	Type of related party	Contract/ Agreement	Duration	Value (SAR ‘000)
1.	stc	Parent Company	Oracle software licenses renewal.	36 months	195,000
2.	stc	Parent Company	Establishing and developing the internet and communications networks for stc based on the scope of work between the two parties, includes the following: Expansion of internal internet network. Expansion of internet services projects, that serves the business units of stc, in order to meet the requirements of the growing business sectors with regard to the corporate, individual, and other operators sectors.	24 months	298,085
3.	stc	Parent Company	Supply and install servers and data storage centers, in addition to providing software licenses, providing managed service for design and implementation for a number of services owned by stc.	36 months	372,921
4.	stc	Parent Company	Bulk SMS service (normal and gold) through the Short Message Service Center (SMSC).	12 months	138,000

In addition to the above, stc and its subsidiaries are engaged in establishing, managing, operating and maintaining fixed and mobile telecommunication networks, systems and infrastructure, provide integrated communication and information technology solutions which include, among other things, (telecom, IT services, managed services, and cloud services), real estate investment such as selling, buying, leasing, managing, developing and maintenance, providing financial and managerial support and other services to subsidiaries, providing development, training, asset management, providing digital banking services, providing cybersecurity services, and construction, maintenance and repair of telecommunication and radar stations and towers, in addition to other business as mentioned in activities of stc through joint contracts and agreements, which are considered businesses and services within stc Group.

Interests of Related Parties (Board of Directors and Executive Management):

During 2022 the Company has not conducted any business or contracts in which there was a substantial interest for

the members of the Board of Directors and Executive Management or any person related to any of them.

Zakat, taxes, fees, and other charges

Description	2022		Brief description
	Paid Amount (SAR)	Outstanding amount until the end of the annual financial period
Zakat	63,430,468.28	No pending amount payable to ZATCA	Paid during the year
Taxes	449,277.50	No pending amounts payable to ETA	Paid during the year
GOSI	177,810,687.83		Paid during the year
Labor office fees	34,991,336.85		Paid during the year

Treasury shares maintained by the Company

Number of treasury shares maintained by the Company	Value (SAR)	Maintenance date	Utilization details	Purpose of keeping the shares as treasury shares
1,032,933	250,796,132.40	29 December 2022	Employee long-term incentives program	Employee long-term incentives program

Note: Treasury shares maintenance date is date at which solutions by stc vested part of its own shares at a cost of SAR. 242.8 per share for cash consideration of
SAR 250,796,132.40.

solutions by stc’s Board of Directors and General Assembly approved the purchase of 1,200,000 shares that involved solutions by stc buying back shares from its parent company stc to be retained as treasury shares and utilized as part of employees’ rewards and under different schemes and special terms and conditions that contribute towards attracting and retaining talents in addition to nurturing a healthy culture.

Solutions by stc utilized 167,067 shares from treasury shares in 2022 as celebratory grant to active employees on 29/12/2022 that vests on the 1st year anniversary from the grant date where the award of shares ceases to be conditional, i.e. the right to the shares passes from the Company to the participant.

The objective of the celebratory grant is to:

• Celebrate the success of IPO of the Company with the employees.
• Recognize employees’ commitment and contribution.
• Share the rewards of the Company’s success and profitable performance with the employees.
• Align the interests of the Company’s employees with those of its shareholders

solutions by stc management clarifications during the year 2022

• There were no debt instruments issued by the Company.
• There were no debt instruments issued by the Company to its subsidiaries.
• The Company did not issue or grant any debt instruments convertible to shares, contractual-based securities, option rights, subscription right notes, or similar rights.
• The Company did not issue any bonds, and therefore the Company did not redeem, buy, or cancel any recoverable debt instruments.
• There is no arrangement or agreement under which one of the shareholders of the Company waived any rights in profits.
• There is no arrangement or agreement under which one of the board of directors or executive member of the Company waived any rights in profits.
• The Company has not conducted any business or contracts in which there was a substantial interest for the members of the Board of Directors and Executive Management or any person related to any of them.
• The Company complied with the disclosure of components of the Senior Executive’s remuneration on aggregate, in line with the requirements of subparagraph (b) of paragraph (4) of article (93) of the Corporate Governance Regulations issued by the Capital Market Authority. But to protect the interests of the Company, its shareholders and employees, and to avoid any damage that may occur as a result of disclosing the detailed Senior Executives Remuneration by position, the Company did not disclose the details as per Appendix (1) of the Corporate Governance Regulations.
• Consolidated financial statements were prepared in accordance with international financial standards and in accordance with the Company’s by-laws and Articles of Association with respect to the preparation and publishing of financial statements.
• The Company does not have any conversion or subscription rights under any convertible debt instrument, contractually based securities, warrants, or similar rights; both issued or granted.
• There were no differences from the standards approved by the Saudi Organization for Certified Public Accountants (SOCPA), which are the IFRS Standards.
• There were no comments received by the shareholders regarding the Company and its performance.
• The External Auditor’s Report doesn’t contain any reservations on the relevant annual financial statements.
• There were no arrangements or recommendations by the Board to change the Company’s External Auditor.
• There was no recommendation to appoint an Internal Auditor for the Company, as it already has an Internal Audit Division.
• There were no contradictions between the Audit Committee and the resolutions of the Board of Directors, or the Board’s refusal to take them into account regarding the appointment and dismissal of the Company’s Auditor, determining his fees and evaluating his performance or appointing the Internal Auditor.
• There were no debt instruments for the Company, and no interests, contractual documents, or subscription rights owned by Board Directors, or their relatives in its shares or any of its subsidiaries.
• No instance of sanctions, penalties, preventive measures, or precautionary restrictions were imposed on the Company during the year.

The Board of Directors’ declarations includes the following:

• Records of accounts have been properly and precisely prepared.
• Internal control system is built on a sound basis and is effectively implemented.
• There were no significant doubts concerning the Company’s ability to continue carrying out its activity.

Conclusion

After thanking Allah Almighty, the Board of Directors would like to thank the Custodian of the Two Holy Mosques King Salman Bin Abdulaziz Al Saud, HRH Crown Prince Mohammed Bin Salman Bin Abdulaziz Al Saud, and the Government for support extended to the Company in its progress and growth trajectory.

The Board also expresses gratitude to solutions by stc's clients and shareholders for their trust, and to the Company's employees for their commitment and dedication, which have contributed to the solutions by stc's successes.

The Board confirms its commitment to innovation and excellence in developing services that exceed expectations of clients, realize shareholders’ aspirations, achieve the Kingdom's development objectives, and sustain the leadership position of solutions by stc in the region’s Information Technology sector.