King Salman bin Abdulaziz Al-Saud Custodian of the Two Holy Mosques May God protect him
His Royal Highness Prince Mohammad bin Salman Al-Saud Crown Prince of Saudi Arabia, Chief of the Royal Court, First Deputy Prime Minister, and Minister of Defense May God protect him
Contents
Chapter One About Bahri
Chapter Two Business Units
Chapter Four Financial Indicators
40
50
84
Foreword by the Chairman Statement by the CEO Bahri’s Board of Directors Board of Directors’ Report
10 12 14 16
•About Bahri •Vision, Mission and Values •Bahri’s Global Fleet •Destinations and Agent Network •Awards and Certificates
42 43 44 47 48
•Bahri Oil •Bahri Chemicals •Bahri Logistics •Bahri Dry Bulk •Bahri Ship Management
52 58 64 70 74
Chapter Three Supporting Departments
•Independent Auditor’s Report •Consolidated Financial Statements Chapter Five Financial Statements
78
94
•Human Resources •Corporate Communications
80 82
96 102
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Annual Report 2018
Foreword by the Chairman Abdulrahman Mohammed Al-Mofadhi
To further reinforce Bahri’s leadership position in this sector, we strengthened our internal structure and foundations and focused on developing our long-term strategy. Despite key challenges in 2018, including the slow growth of global demand for crude oil due to increased oil prices as well as the new vessels that have entered the market, Bahri has maintained its strong position in the oil transportation market. We also delivered an increase in daily oil transportation rates as a result of our operational efficiency, optimal fleet scheduling, and benefitted from the long-term contracts. The expansion of Bahri Oil fleet has also played a key role in delivering competitive results and achieving higher profit margins throughout the year, in addition to decreasing the need to charter vessels from the market. The Saudi Vision 2030 has always served as a compass for our business. As a result of our dedication to fulfilling this strategic
vision, Bahri has ended 2018 with renewed hope and aspirations, confidently continuing our journey through an era full of opportunities to stimulate the growth of the global trade movement. We have also focused on building and advancing coastal cities by developing seaports and shipyards. In fact, this is one field where Saudi Arabia is a pioneer in, achieving a ranking of 26 globally in terms of the total net capacity of its commercial vessels, according to the 2018 annual report of the United Nations Conference on Trade and Development (UNCTAD). Bahri has also worked on developing partnerships with those investing in projects around Saudi Arabia, boosting our capability to secure an even better economic advantage for the Kingdom and taking full advantage of the country’s geographical prime location. This in turn will enable the Kingdom to acquire a larger share of the maritime market. 2018 has also been a year in
which many achievements and key partnerships have been realized. This is in line with our strategy, which aims to develop the logistics and transportation industry and further improve Saudi Arabia’s global position in this field by building strategic capabilities and relationships with key industry players. We have identified the main logistical projects which Bahri needs to be involved. Additionally, the Company has been qualified to engage with many projects nationwide. Finally, I would like to thank the government of the Custodian of the Two Holy Mosques and his Crown Prince for their support. I would also like to thank Bahri’s Board of Directors for all their continued efforts in helping us achieve our objectives. Finally, I extend my gratitude to Bahri’s owners, customers and employees for their endeavors in helping the Company meet the aspirations and expectations of its shareholders and customers.
Dear respected shareholders, It has been yet another successful year for Bahri, which continues to establish its reputation as one of the largest logistics and transportation companies in the world. Over the course of 2018, we have been even more determined to reinforce our leading position and play a major role in developing the global transport industry through our extensive expertise and promoting innovation and compliance as hallmarks of our business. 2018 has been a year of continued success. This success coincides with the maritime industry being positioned as a key component of the Saudi economy in line with the Saudi Vision 2030 and the aspirations of the government led by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al-Saud and Crown Prince Mohammed bin Salman. Their aim is to plan for the future with decisiveness and implement clear policies, as well as major development projects.
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Annual Report 2018
Statement by the CEO Abdullah Aldubaikhi
The results of our operations over 2018 have demonstrated Bahri’s success in more than doubling our shipping movement compared to 2017, despite having to face significant challenges and obstacles. Our high-quality services and competitive prices were the main factors in establishing the Company as a preferred partner for global oil- producing stakeholders. Our aspirations have proven critical in overcoming any challenges. And Bahri was destined to demonstrate the robustness of its vision and effectiveness of its strategy, which is based on a philosophy where we accentuate today’s achievements and seize tomorrow’s opportunities. These factors will help us preserve Bahri’s leading position in the oil transportation market and increase the daily transportation rate of crude oil by continuously advancing operations and optimizing fleet scheduling, as well as benefiting from the strategic advantage offered by key long-term contracts. Expansion of the Bahri Oil fleet has also played a key role in achieving competitive results and profit margins over the year, in addition to decreasing the need for chartering carriers. Today, Bahri is the largest owner and operator of VLCCs in the world and the largest owner and operator of chemical tankers in the Middle East. The Company runs a huge fleet of 92 multi-purpose vessels, including
VLCCs, chemical and product tankers, general cargo vessels, and dry bulk carriers. We are proud to announce a 45-percent growth in our fleet over the last four years, with our VLCC’s total capacity increasing to 14 million DWT. The total capacity of our chemical tankers now stands at 1.4 million DWT. This has laid the foundations for the Company to be stronger than ever in the future. The Company has demonstrated its innovativeness across its business. We signed many contracts and partnerships over the year. Automation of our operations has also continued to be Bahri’s main area of focus. The Company invests in the automation of all human resources services by utilizing sophisticated global systems. We focused this year on developing our learning and development environment within the group by fostering innovation and creativity and by providing new services to the Saudi society. 2018 has been a year full of professional accomplishments and it was one where Bahri added 11 more prestigious awards, further establishing Bahri as a leading Company and a benchmark in the maritime transport and logistics industry. Bahri was recognized by many industry bodies as the best shipping company and ship manager of the year, and was honored for its role in supporting innovation and
talent development. We take pride in our impressive history and the success of our continued business, which aims to improve the maritime transport and logistics sector, and further strengthen our leading position. These factors are the reason why we were honored with a wide array of awards including the Tanker Shipping & Trade (TST)’s Award for Operational Excellence granted to the best commercial tanker building company. We were also awarded the Topaz Excellence in Logistics Award by Lloyd’s List South Asia, Middle East and Africa, among others. We present to you Bahri’s 2018 annual report, which provides a detailed outline on all lines of our business alongside detailed statistical information. This is to ensure we are meeting the highest transparency and governance standards that are an integral component of our corporate activities. We are forging ahead by entering new areas of operations and exploring new avenues where we can improve by identifying the finest technical solutions and highest safety and security standards, upon which we can base our business. I would like to conclude by thanking everyone who has contributed to Bahri’s achievements, especially our government, Bahri’s Board of Directors, shareholders and employees, along with our partners and customers.
Bahri has continued on its path to become a capable and successful corporation; its inspiring journey has spanned a little over 40 years and set a high benchmark for other businesses to follow. All praise and thanks is firstly due to Allah, then to the support of our government led by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al-Saud, and Crown Prince Mohammed bin Salman, and finally our committed staff. At Bahri, we are always proud whenever the Saudi flag flies high on the mast of one of our ships; it is testament to the global nature of our operation, the prosperity of our Kingdom and the professionalism of our citizens who account for the majority of our employees, especially in leadership positions. It is proof to our efforts to achieve long- term objectives of developing our customer base and broadening the range of our global voyages.
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Annual Report 2018
Bahri’s Board of Directors
Mr. Mohammed Abdulaziz Al-Sarhan Vice Chairman
Mr. Saleh Abdullah Al-Debasi Board Member
Mr. Yasir Abdullah Al-Salman Board Member
Eng. Ahmed Ali Al-Subaey Board Member
Dr. Abdulmalik Abdullah Al-Hogail Board Member
Eng. Ibrahim Qassim Al-Buainain Board Member
Mr. Abdulrahman Mohammed Al-Mofadhi Chairman
Mr. Khalid Mohammed Al-Araifi Board Member
Mr. Khalifa Abdullatif Al-Mulhim Board Member
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Annual Report 2018
Board of Directors’ Report
Bahri’s Board of Directors is pleased to present to its shareholders the Company’s annual report prepared in accordance with Corporate Governance Regulations, Registration and Listing Rules, and the Company’s Articles of Association. The annual report outlines the Company’s business and performance for the year ending December 31, 2018 and is annexed with audited financial statements and notes. It also states the Company’s performance and activities.
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Annual Report 2018
One: Establishment and activity
Two: Geographical distribution of revenues
There is no geographical distribution of revenues due to the nature of the Company’s business; ships and
tankers transport shipments between many local and global ports.
Bahri, the National Shipping Company of Saudi Arabia (Bahri), was established by Royal Decree no. M/5 as a public shareholding company on 21 January 1978, under commercial registration no. 1010026026 issued in Riyadh, dated 22 October 1979. Bahri’s capital consists of 393,750,000
shares as of December 31, 2018. The business areas of the Company and its subsidiaries comprise the purchase, sale and operation of ships and vessels for the transportation of individuals and cargo; participation in maritime shipping operations; acting as an agent for maritime shipping companies, cargo clearance, loading
and arrangement of cargo; and other means of transportation, storage and all maritime shipping activities. Bahri conducts its business through four different channels of activity – crude oil, chemicals, breakbulk, and dry breakbulk transportation.
Three: Plans, future expectations and new projects
a. Plans and future expectations:
Bahri is committed to developing its business and constantly plans to improve its operations and stimulate growth. Future expectations for
the shipping sector, are difficult to precisely forecast due to many governing variables that need to be accounted for and are in turn subject
to economic factors over which the Company has no control.
Bahri Oil:
Bahri Oil’s fleet comprises 45 Very Large Crude-oil Carriers (VLCCs) that operate in the spot market and through shipping contracts. The sector also owns five carriers for refined oil products that are chartered to Aramco Trading Company (ATC).
b. Structural changes and new projects:
Bahri Chemicals:
As part of ongoing initiatives to deliver performance improvements, Bahri restructured its functional units. Service departments including Finance, Human Resources, Procurement and IT have been integrated into one unit called Shared Services. The aim of this restructuring is to strengthen the Company’s organizational and negotiation capabilities, especially through the integration of the procurement unit to serve all subsidiaries – increasing negotiation capabilities and achieving costs efficiency. Bahri will Bahri’s Board of Directors regularly reviews the Company’s policies related to risk management to ensure approved policies and programs are implemented and risks to the Company are minimized. The executive management also ensures that risk management operations and implemented systems work efficiently across all organizational levels. Bahri’s approach to risk management is centered around prioritizing safety in all of its activities and working towards prevention of risk resulting from major and minor accidents as part of Bahri’s strategic objectives and internal organizational controls. The maritime shipping sector, however,
start implementing further initiatives that are expected to increase its capabilities to face future challenges. As part of its efforts to strengthen its leadership position and in line with strategies to diversify its business and income channels, Bahri entered into a 19.9-percent stake partnership with the International Maritime Industries Company (IMI). This partnership will facilitate the construction, development and operation of an international maritime yard at the King Salman International Complex for Maritime Industries and Services in Ras is not void of risks, especially operational ones such as threats posed by terrorist attacks, war and piracy, in addition to marine accidents, cargo damage, and crew injuries. Hence, Bahri has attached a high degree of importance to preventing and minimizing risk by utilizing proper risk management systems in addition to issuing certificates, classifying equipment and procedures, and providing safety training that contributes to safeguarding workers and cargo, in addition to quality assurance and achieving efficient use of available resources. Bahri also relies on insurance coverage, which protects the Company against
Al-Khair. The Company will build and maintain various kinds of ships including VLCCs. Construction work is underway and will be completed over multiple stages. The production capabilities of the complex are expected to be completed by 2022. Bahri has strengthened its fleet with the addition of five VLCCs in 2018 that helped improve efficiency and further established Bahri’s position as the world’s largest owner and operator of VLCCs. Bahri plans to increase its share in the dry bulk transportation market by receiving four new carriers in 2020. risks threatening its vessels, cargo, crews and employees. Providers are selected by monitoring and evaluating their solvency, technical capabilities and obligations before and during the insurance term to ensure Bahri is receiving the best value and benefits for its investment. Additionally, there are financial risks resulting from the Company’s activities including liquidity and credit risks; these are managed through continuous measurement and monitoring procedures. Bahri works towards minimizing the implications of such risks through various methods including necessary financial derivatives to hedge against loan interest rates.
This business unit is fully operated by the National Chemical Carriers Limited Company, a subsidiary with an 80-percent stake owned by Bahri and owns 31 chemical tankers operating as follows:
3 Tankers
16 Tankers
11 Tankers
1 Tanker
Chartered on a bareboat basis under a finance charter contract with Odfjell SE, Norway (a trading partner)
Self-operated by the subsidiary in the spot market
Six of which chartered to the International Shipping and Transportation Company Ltd. (ISTC), a subsidiary of the Saudi Arabia Basic Industries Company (SABIC). and the other five are chartered to Aramco Trading Company (ATC)
Works with Odfjell SE, Norway
Bahri Logistics:
This business unit owns and operates six shipping vessels that are run on trade routes between North America, Europe, the Middle East, and the Indian subcontinent. The business unit operates in maritime and aviation-based freight and goods transportation, in addition to serving as a maritime and aviation agent, a shipping intermediary, and a charteree for ships and airplanes.
Four: Bahri’s risk management and monitoring policy
Bahri Dry Bulk:
This business unit is fully run by the Bahri Dry Bulk, a subsidiary with a 60-percent stake owned by Bahri. It owns five dry bulk carriers, all chartered to the Arabian Agricultural Services Company (ARASCO).
Units’ individual contribution to Company sales as per audited financial statements
Crude oil
Chemicals 872,174
Logistics
Dry bulk and others
Total
Thousands (SAR)
3,692,550
1,158,022
407,164
6,129,910
Revenue
60%
14%
19%
7%
100%
Percentage
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Annual Report 2018
Bachelor of Economics from King Saud University and MBA from the University of Michigan, USA. Previous roles include: Six: Board Members’ biographies, including qualifications, experience and other companies they are board members of Mr. Abdulrahman Mohammed Al-Mofadhi
Five: Board composition, member classification and table of attendance
Bahri’s Board of Directors is composed of nine members – the following table outlines Board composition in 2018 and positions of its members Name Position Executive Non- executive Independent Note Mr. Abdulrahman Mohammed Al-Mofadhi Chairman √ Mr. Mohammed Abdulaziz Al-Sarhan Vice Chairman √ Mr. Saleh Abdullah Al-Debasi Board Member √ Eng. Ahmed Ali Al-Subaey Board Member √ Eng. Ibrahim Qassim Al-Buainain Board Member √ Mr. Khalifa Abdullatif Al-Mulhim Board Member √ Dr. Abdulmalik Abdullah Al-Hogail Board Member √ Mr. Khalid Mohammed Al-Araifi Board Member √ Mr. Yasir Abdullah Al-Salman Board Member √ Board membership valid from Mar 27, 2018 Dr. Ghassan Bin Abdulrahman Al-Shibl Board Member √ Board membership ended on Mar 26, 2018
• Acting Secretary General of the Public Investment Fund (PIF) • Deputy Governor of the OPEC Fund for International Development (OFID) • Executive Director for Saudi Arabia of the World Bank Group
Company
Legal Entity
Location Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA
Membership
Current Current Current Current Current Previous Previous
Saudi Stock Exchange, Tadawul
Shareholding - unlisted Shareholding – unlisted Shareholding – unlisted Shareholding – unlisted Shareholding - unlisted Shareholding - listed Shareholding - listed
Dar Al Tamleek Company
Saudi Real Estate Construction Company
POSCO E&C Saudi Arabia
Al Wedyan Saudi Real Estate Company National Commercial Bank (NCB)
Saudi Real Estate Company
Mr. Mohammed Abdulaziz Al-Sarhan
Board Meetings and Attendance Sheets
Bachelor of Science in Mathematics and Computer Science from Oregon State University, USA. Mr. Al-Sarhan has studied many specialized courses in international universities such as Harvard Business School, USA, and IMD Institute, London.
Meeting 1 Feb 28, 2018
Meeting 2 Apr 29, 2018
Meeting 3 Jul 29, 2018
Meeting 4 Oct 25, 2018
Meeting 5 Dec 10, 2018
Meeting 6 Dec 11, 2018
Position
Name
Previous roles include:
Mr. Abdulrahman Mohammed Al-Mofadhi Chairman
√
√
√
√
√
√
• Advisor to Al Faisaliah Group (AFG) and Chairman of Al Safi Danone • VP for Al Faisaliah Group Holding (AFG) • Managing Director and CEO of Al Safi Danone Ltd. • Managing Director of Al Safi Food Company • VP of the Saudi Arabian Marketing and Refining Company (SAMAREC) • General Manager of Petromin Refinery in Riyadh
Vice Chairman Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member
Mr. Mohammed Abdulaziz Al-Sarhan Mr. Saleh Abdullah Al-Debasi
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√
√
√
√
√
√
√
√
√
√
√
Eng. Ahmed Ali Al-Subaey
√
√
√
√
√
√
Company
Legal Entity
Location Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA Outside KSA Outside KSA Inside KSA Inside KSA Inside KSA Inside KSA
Membership
Current Current Previous Current Current Current Current Current Previous Previous Previous
Al Safi Danone
Limited Liability Company Shareholding – unlisted Shareholding – unlisted
Eng. Ibrahim Qassim Al-Buainain Mr. Khalifa Abdullatif Al-Mulhim Dr. Abdulmalik Abdullah Al-Hogail Mr. Khalid Mohammed Al-Araifi
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√
√
√
√
√
Al Faisaliah Group Holding (AFG)
Riyadh Airports Company
√
√
√
√
√
√
Saudi Airlines Catering Company (SACC) National Chemical Carriers Company
Shareholding – listed
√
√
√
√
√
√
Limited Liability Company
Goknur Foods Import Export Trading & Distribution Company Limited Liability Company
√
√
√
√
√
√
Venture Capital IKEA Company
Limited Liability Company Shareholding – unlisted Limited Liability Company
Mr. Yasir Abdullah Al-Salman
×
√
√
√
√
√
Bayan Realty Estate Company
Saudi Arabia Public Transport Company (SAPTCO)
Shareholding – listed
Dr. Ghassan Bin Abdulrahman Al-Shibl
√
×
×
×
×
×
Bahri Dry Bulk Company
Limited Liability Company
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Annual Report 2018
Mr. Saleh Abdullah Al-Debasi
Bachelor of Mechanical Engineering, Master of Global Business Administration, and Master of Innovation and Leadership from the Massachusetts Institute of Technology (MIT), USA. Mr. Al-Buainain has also achieved a certificate from the Executive Development Program, MIT, Switzerland. Currently working as CEO of Aramco Trading Company (ATC) Eng. Ibrahim Qassim Al-Buainain Previous roles include:
Bachelor of Geography from Imam Muhammad Ibn Saud Islamic University, and Master of Public Administration from the University of Pittsburgh, USA.
Previous roles include:
• Head of the military sector of the Ministry of Finance’s Agency for Budget and Regulatory Affairs. • Assistant Undersecretary for Budget and Regulatory Affairs, Ministry of Finance.
• General Manager of Saudi Aramco’s joint venture in South Korea • Investment manager of all Saudi Aramco’s international joint ventures • Manager of Saudi Aramco’s joint venture in Asia • Manager of structuring and joint ventures at Saudi Aramco’s department for new business • Head of Operations Development at Saudi Aramco
Company
Legal Entity Limited Liability Company
Location Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA Outside KSA
Membership
Current Current Current Current Previous Previous
Bahri Dry Bulk Company
Shareholding – unlisted
Tatweer Co. for Educational Services
Limited Liability Company
Saudi-Korean Company for Maintenance and Properties Management (Mumtalakat)
Company
Legal Entity
Location Inside KSA Outside KSA Outside KSA
Membership
Shareholding – unlisted
Al Moammar Information Systems Company
Limited Liability Company Limited Liability Company
Current Current Current
Aramco Trading Company (ATC) Aramco Singapore Trading Company
Power and Water Utility Company for Jubail and Yanbu (Marafiq) Shareholding – unlisted
Limited Liability Company
Shareholding - listed
S-Oil Company
The Saudi-Moroccan Investment Company (Asma Invest)
Eng. Ahmed Ali Al-Subaey
Bachelor of Electrical Engineering from the University of Arizona, USA; Master of Electrical Engineering from the University of Arizona, USA; and Executive MBA from Stanford University, USA. Eng. Al-Subaey is currently working as Saudi Aramco’s VP for Marketing, Sales and Supply Planning.
Bachelor of Business and Finance Administration from the University of Colorado Boulder, USA. Mr. Al-Mulhim is currently working as CEO of Khalifa A. Almulhem Company Ltd. (Kamco) Mr. Khalifa Abdullatif Al-Mulhim Worked previously at the Saudi Industrial Development Fund (SIDF).
Previous roles include:
• CEO of Saudi Petroleum Limited Co. in Tokyo • CEO and Senior Executive of Saudi Petroleum International Inc. in New York • Senior Executive and Representative Director of S-Oil Company in South Korea
Company
Legal Entity
Location Inside KSA Inside KSA Inside KSA Inside KSA Outside KSA Inside KSA Inside KSA Inside KSA
Membership
Shareholding - listed Shareholding - unlisted Limited Liability Company Shareholding - listed Shareholding - listed Shareholding - listed Shareholding - listed Shareholding - unlisted
Current Current Current Previous Previous Previous Previous Previous
Advanced Petrochemical Company Saudi White Cement Company
Company
Legal Entity
Location Inside KSA Inside KSA Outside KSA Outside KSA Inside KSA Inside KSA Outside KSA Outside KSA
Membership
Al Jazeera Support Services Company (MEHAN)
Current Current Current Current Current Current Current Current
National Chemical Carriers Company Saudi Aramco Base Oil Company (Luberef) Arab Petroleum Pipelines Company (SUMED) POSCO Engineering and Construction
Limited Liability Company Limited Liability Company
Saudi British Bank (SABB) Saudi-Spanish Bank Nama Chemicals Company
Unlisted Unlisted
Bank Aljazira
Aramco Trading Company (ATC)
Limited Liability Company Limited Liability Company Limited Liability Company Limited Liability Company
Al-Ittefaq Steel Products Company (ISPC)
Aramco Asia Company
Saudi Petroleum Overseas Ltd. (SPOL) Saudi Petroleum International Inc.
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Annual Report 2018
Dr. Abdulmalik Abdullah Al-Hogail
Seven: Executive Management Eng. Abdullah bin Ali Aldubaikhi
Bachelor of Accounting from King Saud University, Riyadh and Master of Accounting from Case Western Reserve University, USA. Dr. Al-Hogail also has a PhD in Accounting from Case Western Reserve University as well as professional certificates including the CPA and SOCPA.
Bachelor of Electrical Engineering from King Fahd University of Petroleum and Minerals (KFUPM), Dhahran and MBA from the University of Oxford, UK.
Previous roles include:
• VP and Chief Financial Officer of Al Faisaliah Group Holding (AFG) • Member of the Audit Committee of the Capital Market Authority (CMA) • Faculty Member for the Institute of Public Administration
Company
Legal Entity
Location Membership
Listed
Inside KSA Inside KSA
Current Previous Previous Previous Previous Previous Current Current Current Current Current Current Current Current Current
CEO of Bahri
Unlisted
CEO of the Saudi Agricultural and Livestock Investment Company (SALIC)
Company
Legal Entity
Location Inside KSA Inside KSA Inside KSA Inside KSA Outside KSA Inside KSA Inside KSA Inside KSA Inside KSA
Membership
Limited Liability Company Inside KSA Limited Liability Company Inside KSA Limited Liability Company Inside KSA Governmental Authority Inside KSA
CEO of Afwaf Investment Holding
CEO of AwalNet
Shareholding - listed Shareholding - unlisted Limited Liability Company Limited Liability Company Shareholding - unlisted Limited Liability Company Limited Liability Company Limited Liability Company Limited Liability Company
Current Current Current Current Current Previous Previous Previous Previous
Saudi Electricity Company (SEC) Alinma Investment Company International Medical Holding Company National Chemical Carriers Company Pharma International Company (PIC) Electronics & Systems Holding Company Philips Healthcare Saudi Arabia Company Accenture Saudi Arabia Ltd. Company Americana Group
CEO and Co-Founder of DowLog Technology Credit Advisor at the Saudi Industrial Development Fund
Unlisted Unlisted Unlisted
Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA Outside KSA
Board Member of Alessa Industries
Board Member of Abdullah Al-Othaim Markets
Board Member of the International Maritime Industries Company (IMI)
Limited Liability Company Outside KSA
Board Member of Petredec Ltd.
Semi-Governmental
Board Member of the Saudi Civil Aviation Holding Company
Unlisted
Board Member of Mulkia Investment Chairman of Bahri Bolloré Logistics Chairman of BahriBunge Dry Bulk Board Member of Bahri Dry Bulk
Joint Limited Liability Company Joint Limited Liability Company
Mr. Khalid Mohammed Al-Araifi
Limited Liability Company Inside KSA
Bachelor and Master of Accounting from King Abdulaziz University, Jeddah. Currently working as Assistant Governor for Finance at the Public Pension Agency.
Mr. Naser Mohammed Al-Abdulkarim
Previous roles include:
Bachelor of Science in Industrial Management and MBA from King Fahd University of Petroleum and Minerals (KFUPM), Dhahran. Mr. Al-Abdulkarim is also a graduate of the Executive Management Program from the University of Oxford, UK.
• Advisor and General Supervisor of the General Directorate of Internal Auditing and Follow-Up at the Ministry of Civil Service • Director of the Internal Audit Department at the Saline Water Conversion Corporation (SWCC)
Company
Legal Entity
Location Inside KSA
Membership
Company
Legal Entity Limited Liability Company
Location Inside KSA
Membership
Listed
Current* Current Previous Previous
President of Bahri Oil
Semi-governmental Inside KSA
Saudi Aramco
Current
Bahri Dry Bulk Company
Limited Liability Company
Inside KSA Inside KSA
*Seconded from Saudi Aramco Saudi Electricity Company (SEC) Modern Industries Company
Listed
Bachelor of Accounting from King Saud University, Riyadh and Master of Accounting and Information Systems from Middle Tennessee State University (MTSU), USA. Currently working as Chief Financial Officer of the Public Investment Fund (PIF). Mr. Yasir Abdullah Al-Salman Previous roles include: • Chief Financial Officer of the Saudi Agricultural and Livestock Investment Company (SALIC) • General Manager of Investments at Mobily • Executive Manager of the Finance Department at Kingdom Holding Company Company Legal Entity Location Membership National Water Company (NWC) Shareholding - unlisted Inside KSA Current Saudi Railway Company (SAR) Shareholding - unlisted Inside KSA Current King Abdullah Financial District Company (KAFD) Shareholding - unlisted Inside KSA Current
Mr. Ahmed Mohammad Al-Ghaith
Certificate in Business Administration and certified by the Ship Management Program from Acomarit Academy, UK. Mr. Al-Gaith also completed executive programs at the International Maritime Organization (IMO) and the International Organization for Standardization (ISO).
Company
Legal Entity
Location Inside KSA Inside KSA Outside KSA
Membership
Listed
Current Current Current
President of Bahri Logistics
Joint Limited Liability Company Limited Liability Company
Board Member of BahriBolloré Logistics
Board Member of the National Shipping Company of Saudi Arabia (Bahri), USA
26
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Annual Report 2018
Eng. Fayez Abdullah Al-Asmari
Eng. Mubarak Abdullah Al-Khater
Bachelor of Industrial Engineering from King Saud University, Riyadh and holder of the Credit Program Certificate from Chase Manhattan Bank, USA.
Bachelor and Master of Chemical Engineering from King Fahd University of Petroleum and Minerals (KFUPM) in Dhahran. Mr. Al-Khater also completed the Advanced Program in Management from the International Institute for Management Development, Lausanne, Switzerland; and executive Financial Analysis Program from INSEAD Business School in France.
Company
Legal Entity
Location Membership Inside KSA Current Outside KSA Current Inside KSA Current Inside KSA Previous Inside KSA Previous Inside KSA Previous
Listed
Chief Financial Officer of Bahri
Company
Legal Entity
Location Membership
Joint Limited Liability Company
Board Member of BahriBunge Dry Bulk Company
Listed Listed Listed
Inside KSA Inside KSA Inside KSA Inside KSA Inside KSA
Current Previous Previous Previous Previous
Head of Strategy at Bahri
Unlisted Unlisted
Member of the Audit Committee at Al Moammar Information Systems (MIS) Chief Operating Officer of the Arabian Company for Water and Power Develop- ment (ACWA Holding) Vice President of Finance of the National Manufacturing Company
Head of New Business Development at Saudi Electricity Company (SEC)
CEO of the Saudi Paper Manufacturing Company
Semi-governmental Limited Liability Company
Engineer at Saudi Aramco
Listed Listed
Senior Manager at the Samba Financial Group Credit Advisor at the Saudi Industrial Development Fund Member of the Audit Committee at Malath Insurance Member of the Audit Committee at Watan Investment
Engineer at Al-Jubail Petrochemical Company (SABIC)
Governmental Authority Inside KSA Previous
Listed
Inside KSA Previous Inside KSA Previous
Eng. Nezar Husain Banabila
Unlisted
Bachelor of Electrical Engineering and Computer from Umm Al-Qura University, Saudi Arabia. He holds Harvard University’s Executive Program Certificate and several certificates in professional development from the University of Pennsylvania’s Wharton School, USA; University of Cambridge, UK; and London Business School, UK.
Eng. Abdulaziz Abdulrahman Sabri
Bachelor of Mechanical Engineering from King Fahd University of Petroleum and Minerals (KFUPM) in Dhahran.
Company
Legal Entity
Location Membership
Listed
Inside KSA Outside KSA Outside KSA
Current Current Current Previous
President of Bahri Dry Bulk
Joint Limited Liability Company Limited Liability Company
Company
Legal Entity
Location Membership
Board Member of BahriBunge Dry Bulk
Listed
Inside KSA
Current
President of Bahri Ship Management
Board Member of the National Shipping Company of Saudi Arabia (Bahri), USA General Executive Manager of Alliance Planning and Portfolio Management at Etihad Etisalat (Mobily)
Limited Liability Company
Outside KSA Current
Board Member of the National Shipping Company of Saudi Arabia (Bahri), USA Board Member of the National Maritime Academy, King Salman International Maritime Industries Complex Senior Head of Fleet Operations at Vela International Marine Limited Company Shipyard Manager for South Korea branch, Vela International Marine Limited Company Manager of Fleet Operations at Vela International Marine Limited Company Maintenance Engineer at Saudi Aramco
Listed
Inside KSA
Semi-governmental Semi-governmental Semi-governmental Semi-governmental Semi-governmental
Inside KSA
Current
Limited Liability Company
Outside KSA Previous
Vice President for Wholesale Sales and Business at Viva Bahrain
Inside KSA Previous Outside KSA Previous Outside KSA Previous Outside KSA Previous
From AP Moller-Maersk Shipping Academy Mr. Claus Breitenbauch
Company
Legal Entity
Location Membership
Mr. Hisham Hussain Alkhaldi
Listed
Inside KSA
Current
President of Bahri Chemicals
Bachelor of Business Administration and holder of a level-five certificate in leadership from the British Institute of Leadership and Management (ILM).
Limited Liability Company Outside KSA Previous Limited Liability Company Outside KSA Previous Limited Liability Company Outside KSA Previous
CEO of SEA-tankers
Managing Director at Tomini Shipping CEO of Emirates Ship Investment LLC (Eships) CEO/ General Manager of Wrist Europe B.V. Director of Operations at Ove Wrist & Co. Ltd. Regional Director at Falck Rescue Corps Director of Operations at Neptun Hotel Group CEO of Nordic Tankers
Company
Legal Entity
Location Membership
Listed Listed Listed Listed
Outside KSA Previous Outside KSA Previous Outside KSA Previous Outside KSA Previous
Listed
Inside KSA Inside KSA Inside KSA
Current Previous
Chief Support Officer at Bahri
Limited Liability Company
Senior Manager of Human Resources, Alshaya International Trading Company Board Member of Leejam Sports and Chairman of the Company’s Nomination and Remuneration Committee Vice Chairman of Human Resources and Labor Market Committee, Riyadh Chamber of Commerce Member of the Committee on the Localization of the Maritime Industry, Public Transport Authority
Limited Liability Company Outside KSA Previous
Listed
Current
Semi-governmental
Inside KSA
Current
Governmental
Inside KSA
Current
28
29
Annual Report 2018
Eight: Description and tasks of Board committees Audit Committee
Remuneration and Compensation Committee Tasks and Responsibilities:
• To ensure that the Board of Directors is composed of individuals capable of undertaking their responsibilities in line with the law and highest governance standards. • To ensure the implementation of measures that evaluate the remuneration granted to board members and senior executives. • To develop and obtain approval from the Board of Directors on a clear policy on the remuneration of Board members, committee members and executive
management members. • To conduct periodic reviews of the remuneration policy and evaluate its efficiency. • To define key performance indicators (KPIs) for all Board members and committees and conduct annual performance appraisals against such KPIs. • To control and monitor the selection process for senior executives. • To ensure there is an active succession plan and that it is periodically updated.
• To develop a set of governance standards that define the main responsibilities of the Board and its committees, in addition to reviewing human resources-related duties, policies and programs as well as formulating relevant recommendations to the Board and implementing them. • To ensure compliance with corporate governance guidelines and regulations issued by regulatory and supervisory bodies and authorities.
Tasks and Responsibilities: • The Audit Committee examines and expresses opinions and
tasks, work and reports of the internal audit department. It also ensures the implementation of measures taken to address the recommendations of such reports in order to achieve the Company’s objectives and protect shareholders’ interests. regulatory authorities’ reports and measures taken by the executive management to address them. recommendations to the Board
of Directors on the appointment of an external auditor, defines their remuneration, assesses their performance, verifies their independence and reviews the scope of work and contractual terms. • The Audit Committee monitors the work and activities of executives and managers responsible for risk management.
recommendations on the initial consolidated annual financial statements of the Company. Additionally, it studies analyses provided by the external auditor and ensures measures taken to address its recommendations are implemented.
• The Audit Committee reviews
• The committee ensures the efficiency of internal control
Remuneration and Compensation Committee Meetings and Attendance Sheet
systems and applicable policies and procedures as well as the
• The committee makes
Meeting 1 Feb 28, 2018
Meeting 2 Mar 19, 2018
Meeting 3 Apr 29, 2018
Meeting 4 Jul 25, 2018
Meeting 5 Dec 10, 2018
Meeting 6 Dec 27, 2018
Position
Name
Audit Committee Meetings and Attendance Sheet
Mr. Mohammed Abdulaziz Al-Sarhan Mr. Saleh Abdullah Al-Debasi Eng. Ibrahim Qassim Al-Buainain Mr. Khalifa Abdullatif Al-Mulhim
Chairman
√
√
√
√
√
√
Meeting 1 28 Jan 2018
Meeting 2 25 Feb 2018
Meeting 3 25 Apr 2018
Meeting 4 24 Jul 2018
Meeting 5 24 Oct 2018
Meeting 6 23 Dec 2018
Position
Name
Dr. Abdulmalik Abdullah Al-Hogail
Member
√
√
√
√
√
√
Chairman
√
√
√
√
√
√
Mr. Saleh Abdullah Al-Debasi
Member
√
√
√
√
√
√
Member
√
√
×
√
√
√
Mr. Khalid Mohammed Al-Araifi
Member
×
×
√
√
√
√
Member
√
×
√
√
√
√
Dr. Saad Saleh Al-Ruwaita*
Member
√
√
√
√
×
√
Nine: AGMs held in 2018
*Dr. Saad Saleh Al-Ruwaita is a non-board committee member specialized in finance and accounting. He is holder of a Bachelor of Accounting from King Saud University’s Department of Administrative Sciences, Riyadh; a Master of Accounting from the University of Miami, USA; and a PhD from the University of Colorado, USA.
The 42nd Annual General Meeting was held on April 17, 2018 and attended by the following Board members:
• Mr. Abdulrahman Mohammed Al-Mofadhi • Mr. Khalifa Abdullatif Al-Mulhim • Dr. Abdulmalik Abdullah Al-Hogail • Mr. Khalid Mohammed Al-Araifi
Company
Legal Entity
Location Membership Inside KSA Previous
Listed
Chairman of the Audit Committee, National Commercial Bank (NCB) Member of the Board of Trustees, Prince Sultan University
Ten: Procedures taken by the Board to inform its members, including non-executives, of shareholders’ feedback concerning the Company’s performance Members of the Board are committed to attending AGM meetings to answer shareholders’ enquiries and receive their feedback regarding the Company and its performance. They also communicate with Bahri’s Investor Relations Department to receive shareholders’ suggestions via email (investorrelations@bahri.sa) and other communication channels.
Private University Closed Joint Stock Company
Inside KSA Inside KSA Inside KSA
Current Current Current
Board Member, Wedyan Real Estate
Listed
Chairman of the Audit Committee, Saudi Real Estate Company Chairman of the Testing Committee, Saudi Organization for Certified Public Accountants Member of the Zakat and Tax Appeal Committee, Ministry of Finance Chairman of the Audit Committee, Saudi Research and Marketing Group
Professional Saudi Authority
Inside KSA Previous Inside KSA Previous Inside KSA Previous
Governmental
Listed
Governmental Governmental
Inside KSA Inside KSA
Current Current
Member of the Audit Committee, Public Pension Agency
Chairman of the Audit Committee, Public Education Evaluation Commission
30
31
Annual Report 2018
Eleven: Subsidiaries and Sister Companies
Thirteen: Description of debt instrument activities
Transferable debt instruments
Owner- ship
Headquarters
Activity
Capital
Type
Company
Bahri has not issued or granted any transferable debt instruments, contractual securities, memoranda on subscription rights or any similar rights in 2018. Bahri has not issued or granted any transfer or subscription rights by virtue of any transferable debt instruments, contractual securities, memoranda on subscription rights or any similar rights in 2018. Transfer or subscription rights under debt instruments
National Shipping Company of Saudi Arabia (Bahri), USA
Based in Baltimore, Maryland, USA, with its base of operations in the USA Based in Dubai, UAE, and operates around the world Based in Riyadh Saudi Arabia, and operates around the world Based in Riyadh Saudi Arabia, and operates around the world Based in Dubai, UAE, and operates around the world Based in Singapore, and operates around the world Based and operates in Ras Al-Khair Saudi Arabia
Bahri Ship Agent
3,750,000 Limited Liability Company
100%
Ships Technical Management
Mideast Ship Management Ltd. National Chemical Carriers Company
307,000 Limited Liability Company
100%
Petrochemicals Transportation 610,000,000 Limited Liability Company Dry bulk Transportation 200,000,000 Limited Liability Company
80%
Redeemable debt instruments
Bahri Dry Bulk LLC (BDB) Based in Riyadh Saudi Arabia, and operates around the world
60%
There has been no purchase or cancellation of any redeemable debt instruments by Bahri.
Joint Limited Liability Company
Logistical Services 30,000,000
60%
BahriBolloré Logistics
Fourteen: Operational results
Dry bulk Transportation 18,750,000 Limited Liability Company
The Company’s revenues have witnessed increases over 2018 compared to 2017 due to the addition of new vessels to the Company’s fleet and the improved performance of our business units. Despite the decline in shipping rates and increase in fuel costs over the current period compared to 2017, the new fleet additions and performance improvements helped offset the effects of these negative factors on operating profits and profitability of the current period.
The net profit decline for the current period compared to the previous year, however, is mainly due to the impact of non-operating items. They include the losses of SAR 119 million incurred in associates during the current year compared to the profits of SAR 82 million the previous year, in addition to an increase of financing expenses of SAR 81 million this year. Generally, there has been no substantial difference between the
operational results of 2018 and 2017. However, fleet expansion and performance improvements minimized the effects of declining maritime transportation rates on the Company’s performance. Moreover, our financial results exceeded expectations when compared to the performance of global transportation and shipping companies and decline of shipping rates due to the difficulties and challenges faced by global shipping companies.
36%
BahriBunge Dry Bulk*
Liquefied Natural Gas (LNG) Transportation
22,917,000 Limited Liability Company
30.3%
Petredec Company Ltd.
Joint Limited Liability Company
Maritime Industries
International Maritime Industries Company (IMI)
1,107,000,000
19.9%
* The Group owns an indirect controlling interest in BahriBunge Dry Bulk through Bahri Dry Bulk LLC (BDB). Twelve: Loans and Sukuk received by the Company and subsidiaries according to audited financial statements Thousands (SAR) Company Note Original loan amount Opening balance Balance added during the year Ending balance Loan term (years)
Fifteen: Bahri assets, liabilities and business results for the last five fiscal years Bahri has an exceptional financial position that reflects its strong performance and indicates the high solvency the Company was able to achieve and maintain. The table below is a summarized version of Bahri’s business, assets and liabilities for the previous five fiscal years
Payments during the year
Lender
Bahri Financial Information and Business Results (2014-2018) 000s SAR
Sukuk 3,900,000 3,900,000
0
0
3,900,000
7
Public offering
2018
2017
2016
2015
2014
Item
Short-term
Local and international banks Local and international banks, Public Investment Fund (PIF) Local and international banks, Public Investment Fund (PIF)
0
580,000 490,000 90,000
-
6,129,910
6,045,835
6,788,484 1,717,871 20,837,255 10,750,158
7,502,120 1,817,583 19,096,651 9,397,573
3,626,412
Revenues
loans 1,012,500*
Bahri
Long-term loans
481,238
800,313
533,840
Net period profit Total assets Total liabilities
6,918,535 4,189,908 806,825 800,342 4,196,391
10
21,197,644 11,378,343
21,182,583 11,264,552
17,144,411 8,959,142
Total
11,831,035 8,089,908 1,386,825 1,290,342 8,186,391
Long-term loans
3,001,900 1,917,724
0
245,547 1,672,176
10
Total liabilities
Total assets
Net profit of the year
Revenue
Bahri Chemicals
21,197,644
6,129,910
2018 2017 2016 2015 2014
Total
3,001,900 1,917,724
0
245,547 1,672,176
10
11,378,343
481,238
21,182,583
6,045,835
Short-term loans Long-term loans
75,000*
0
6,000
0
6,000
1
Local bank
11,264,552
800,313
20,837,255
6,788,484
Bahri Dry Bulk
528,000 324,450 108,000
29,400 403,050
10
10,750,158
1,717,871
Local bank
19,096,651
7,502,120
9,397,573
1,817,583
Total
603,000 324,450 114,000
29,400 409,050
17,144,411
3,626,412
8,959,142
533,840
Information in 000s SAR
*Total credit limits available for short-term loans.
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