18
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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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