Contents
Members of the Board of Directors ............................................. Chairman’s Message .................................................................. Board of Directors Report .......................................................... Strategy and projects ........................................................ Financial Statements and Operational Results ...................... Affiliates and Segments .................................................... Technical Ship Management ............................................... Business Planning and Development ................................... Communications and Public Relations ................................. Information Technology .................................................... Internal Audit and Control ................................................. Human Resources ............................................................. Marketing and Customer Services ........................................ Quality Assurance ............................................................. Environment and Safety .................................................... Social Responsibility ......................................................... Risk Management ............................................................. Financing and Investment ................................................. Regulatory Payments ......................................................... Dividend Distribution ........................................................ Shareholders’ Equity and Communication with Shareholders ... Disclosure and Governance ................................................. The Board of Directors ....................................................... Board Committees ............................................................. Executive Management ...................................................... Compensations and Remunerations ..................................... Consolidated Financial Statements ............................................. Auditors’ Report ............................................................... Consolidated Balance Sheet ................................................ Consolidated Income Statement .......................................... Consolidated Statement of Cash Flows ................................. Consolidated Statement of Changes in Shareholders’ Equity .... Notes To The Consolidated Financial Statements ................... Bahri Offices & Subsidiaries ................................................
2 4 7 9 9
12 24 25 25 26 27 28 29 29 30 30 30 32 33 34 35 38 39 42 44 45 47 49 50 52 53 55 56 78
Board of Directors Report 2011
Members of the Board of Directors 2011 - 2013
Mohammed Abdulaziz Al-Sarhan Vice-Chairman
Abdullah Sulaiman Al-Rubaian Chairman
Saleh Abdullah Al Debasi Member
Esam Hamad Al-Mubarak Member
Nasser Mohd. Al-Kahtani Member
Abdulkarim Ibrahim Al-Nafie Member
Farraj Mansour Abothenain Member
Ghassan Abdulrahman Al-Shibl Member
Abdullah Ali Al-Ajaji Member
The National Shipping Company of Saudi Arabia
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Board of Directors Report 2011
Abdullah Sulaiman Al Rubaian Chairman
Chairman’s Message
vessels in the spot market to lower levels. Nevertheless, with the grace of The God and the policy of the Company to diversify the sources of income, Bahri has realized lucrative profits under these circumstances. In spite of the current situation in the region and challenges of the global economy, the Company is moving vigorously towards achieving its stated goals and aspirations for the future. Concluded a contract for building (6) General Cargo (ROCON) vessels equipped with cranes, capable of loading and discharging (360) intermodal shipping containers (TEUs); in addition, loading goods and other break bulk project equipment that are placed inside the hull of the vessel which consists of four decks dedicated to the carriage of bulk goods and cars. During the year 2011, many programs and projects were implemented, including:
Dear Shareholders,
On behalf of the Board of Directors of The National Shipping Company of Saudi Arabia (Bahri) and myself, I am pleased to present to you the annual report for the fiscal year 2011. It includes the Board of Directors report on the various results, the activities of the Company and its programs as well as projects that have been implemented during 2011 in addition to the consolidated financial statements for the year ended 31/12/2011 presenting the financial position of the Company and a net profit of SAR 287,768,000 achieved during the fiscal year 2011. The year 2011 was one of the most difficult years experienced by the shipping industry due to the significant impact in the global economic growth, combined with the continued entry of record tonnage capacity from the vessels contracted during previous years. The Crude oil segment is the largest segment of the Company and the highest contributor to its profitability in recent years; it was one of the most affected sectors in the industry, rendering the average daily time-charter equivalent (TCE) rates for
The delivery of (6) chemical carriers during the year and (5) other chemical carriers are
The National Shipping Company of Saudi Arabia
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Concluded a contract for building (6) General Cargo (ROCON) vessels equipped with cranes, capable of loading and discharging (360) intermodal shipping containers (TEUs); in addition, loading goods and other break bulk project equipment that are placed inside the hull of the vessel which consists of four decks dedicated to the carriage of bulk goods and cars.
I would also like to thank all the shareholders for showing their support and confidence in the Company, my colleague members of the Board, Executive Management team and all the employees of Bahri and its affiliates to further improve and develop the company.
expected to be delivered during 2012 and (1) specialized carrier is also expected to be delivered in 2013. The Board of Directors has agreed to adopt a mechanism of linking bonuses, salary increases and benefits of the employees completely to their performance and efficiencies. The completion of the administrative and legal formalities of company’s new brand, which is expected to be launched during the second quarter of 2012. A service contract has been signed with the Ministry of Defense (MOD) for an amount of SAR 230 million for three years. According to this contract, the Company will be an official carrier of the Armed Forces for the Ministry of Defense in all sectors; it will cover air, sea and land logistic services. Further, there is an opportunity that the company can also be assigned to transport additional shipments beside the current scope of work of this contract, resulting in an increase of expected returns from this contract.
The technical specifications to build the Dry Bulk vessels are finalized; negotiations are in progress to select an appropriate shipyard. The operational efficiency of the crude oil vessels’ has been improved by reducing their sailing speed which helped to reduce the fuel consumption. The administrative and legal formalities regarding the transfer and registration of Mideast Ship Management Company Ltd. from Bermuda to Dubai have been finalized. These achievements were a result of the concerted efforts by the Board of Directors, Executive Management and the employees of Bahri and its affiliates. In conclusion, I would like to extend my gratitude and appreciation to the Government of the Custodian of the Two Holy Mosques and King Abdullah bin Abdul Aziz for their constant support.
We look forward to achieve all our objectives for the current year, God willing.
Abdullah Sulaiman Al Rubaian Chairman
The National Shipping Company of Saudi Arabia
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Board of Directors Report
Board of Directors Report 2011
Introduction
profits on an annual basis, to contribute to the development of the country’s economy and maximize the returns for its shareholders. Bahri also provides high quality services to satisfy its customer needs, in addition to creating job opportunities for Saudi graduates who are eligible to participate in building the national economy. Currently, Bahri operates extensively around the world to link the economies and participate in the global growth. Bahri has committed itself to maintain transparency in all its dealings and the disclosure of the financial results. Bahri adopts safety standards in its operations to preserve the environment and committed to its social responsibilities. In 2010, Bahri was awarded first place for transparency by BMG, which is an award for the best corporate disclosure. Through implementing the successive strategic plans, Bahri continues to grow and focus on the mission and stated objectives by utilizing its resources in order to achieve the best returns for the shareholders.
The National Shipping Company of Saudi Arabia (Bahri) was established in the year 1979 as a Saudi Joint Stock Company by a Royal Decree No. M/5 dated 12/02/1398H, corresponding to 22/01/1979, to be the national carrier and a prominent company among the leading shipping companies of the world. The Public Investment Fund owns 28.2% of Bahri’s share capital. Bahri commenced its business operations in the General Cargo segment. In 1985, it entered into the transportation of petrochemical products and expanded in the mid-1990s into the segment of transporting crude oil. In 2005, Bahri entered into the liquefied petroleum gas (LPG) segment by buying a stake in Petredec Ltd., a company specialized in the trade and transport of liquefied petroleum gas (LPG). In 2010, Bahri announced its entry in the Dry Bulk segment. All these activities come in line with Bahri’s strategy to diversify its sources of income. Bahri embodies the national maritime transport industry and links the Kingdom’s trade to the rest of the world. Bahri services cover various global markets through its branches, subsidiaries and a network of agents. Bahri has investments in its operations to realize
Vision
Connecting Economies, Sharing Prosperity and Driving Excellence in Global Logistics Services.
Mission
practices to run a world-class fleet, whilst building mutually beneficial relationships with all stakeholders.
By consistently focusing on our Values and responsible business fundamentals, we shall be a leading service provider applying best
Values
Driven, Relentless, Transparent, Considered.
The National Shipping Company of Saudi Arabia
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Strategy and Projects
Ltd. (DSME) to construct a specialized chemical tanker of 75,000 DWT expected to be delivered in 2013. Bahri continues its focused progress in line with its stated strategy. The strategy is to expand the Company’s business through expansion of the fleet, diversification of investments, effective management that monitors the markets, reduce operating costs and oversees processes of implementation. Operation of crude oil vessels in an optimal manner in the spot market and through time-charter contracts. Explore markets for optimal operation of the chemical tankers. Improve operational management in all business sectors. Explore promising investment opportunities for potential expansions in the future. The strategic plan consists of the following components: shipyard (6) chemical tankers each with a tonnage capacity of (45,000) tons. These tankers began its operations through (NCC ODFJELL CHEMICAL TANKERS JLT), headquartered in Dubai. Bahri signed a contract with an international consulting firm specialized in branding the identity to determine the Company’s future strategy related to the rebranding project which is expected to be complete during the second quarter of 2012. million compared to SAR 415 million in 2010. The total operating income for the year 2011 amounted to SAR 230 million compared to SAR 454 million in 2010, marking a decrease of 49% over prior year’s operating income. This decrease is traced to the decline in the results of operations of the crude oil transport segment, which was affected by a decrease in the charter rates of crude oil in the spot market, which in turn was affected by the increase of tonnage resulting from the entry of new VLCCs in the market as well as the completion of charter agreements of (3) Very Large Crude Carriers (VLCCs) owned by the Company during the second and third quarters of 2011; in addition to the increasing purchase cost of bunker fuel for the vessels.
Bahri continues to expand and grow in various shipping sectors including General Cargo, Dry Bulk and Petrochemicals. This is in line with the comprehensive strategic plan focused on growth in shipping activities to increase and diversify sources of income. At the end of 2008, the Board of Directors adopted a new five-year strategic plan (2009-2013), which was prepared in coordination with an international consulting firm. This plan confirmed the strong financial and operational position of the Company, which enhances its competitive edge in the global markets. The National Chemical Carriers Company (NCC) purchased the two chemical tankers whose contracts were previously cancelled due to their delayed delivery by the shipyard. (6) Tankers have been delivered in 2011 and the remaining (5) tankers, currently under construction are due to be delivered by the end of 2012. On August 28, 2010, Bahri signed an agreement with the Arabian Agricultural Services Company (ARASCO) to establish a JV company to transport dry bulk cargo, named Bahri Dry Bulk Company LLC. On March 6, 2011, Bahri signed a contract with Hyundai (MIPO) to build (4) ROCON vessels with an option to build (2) additional vessels. Bahri has exercised this option to build the (2) additional vessels. The year 2011 was one of the most difficult years for the shipping industry due to the significant impact in the global economy and successive entry of large tonnage capacities of the VLCCs contracted during the prior years. The crude oil segment was the largest segment of the Company in terms of contribution to its profitability during the last years and the most affected sector of the industry in 2011. The time charter equivalent (TCE) rates in the spot market were the lowest in twenty years. Nevertheless, with the grace of God and the adoption of a policy for diversification of investments, Bahri has realized lucrative profits. On July 4, 2010, NCC signed a contract with Daewoo Shipping and Marine Engineering Co. During 2011, NCC received from (SHINAsb)
Completed Projects
Financial Statements and Operational Results
In 2011, Bahri realized a net profit of SAR 288
Board of Directors Report 2011
Financial results for five years (In Thousands Saudi Riyals)
2011
2010
2009
2008
2007
Operating Revenues
1,991,084
2,049,830
1,672,016
2,594,530
1,703,294
Bunker cost
(801,163)
(625,692)
(395,986)
(539,592)
(327,217)
Other operating expense
(1,027,214)
(976,253)
(903,559)
(1,094,290)
(924,741)
Gross operating income before bunker subsidy
162,707
447,885
372,471
960,648
451,336
Bunker subsidy
176,465
109,498
83,212
72,859
56,640
Gross operating income
339,172
557,383
455,683
1,033,507
507,976
General and Administrative Expense
(109,660)
(103,801)
(95,020)
(105,718)
(87,301)
Revenue (Expense) Other
83,753
2,339
43,227
(123,350)
174,166
Zakat & Tax Provision
(25,497)
(36,365)
(34,590)
(54,471)
(18,419)
Net Profit
287,768
414,878
369,300
749,968
576,422
Earning per share from net profit (SAR)
0.91
1.32
1.17
2.38
1.48
3.0
2.5
2.0
1.5
1.0
0.5
0.0
In Billion (Saudi Riyals)
2007
2008
2009
2010
2011
Operating Revenues
Operating Expenses
General and Administrative Expense
Net Profit
The National Shipping Company of Saudi Arabia
10/11
Assets & Liabilities as of December 31, 2011 (In Thousands Saudi Riyals)
Description
2011
2010
2009
2008
2007
Total Current Assets
1,042,280 1,578,464 1,225,146 1,579,185 1,400,642
Fixed Assets, net
7,252,854 6,407,630 6,730,766 5,658,910 4,634,435
Other non-current Assets
2,328,077 1,980,185 2,380,922 2,581,331 1,761,709
Total Assets
10,623,211 9,966,279 10,338,584 9,819,426 7,796,786
Total Current Liabilities
944,248
736,030
608,041
817,726
717,011
Murabaha financing and long-term finance
4,294,968 3,818,540 4,516,180 3,709,941 2,229,291
Other non-current Liabilities
28,058
33,326
34,974
37,888
37,002
Total Liabilities
5,267,274 4,587,896 5,160,945 4,565,555 2,983,304
Paid-up share capital
3,150,000 3,150,000 3,150,000 3,150,000 3,150,000
Statutory Reserve and Retained Earnings
1,912,623 1,939,691 1,837,520 1,940,796 1,509,793
Minority Interest
293,314
288,692
190,119
163,075
153,689
Total Equity
5,355,937 5,378,383 5,177,639 5,253,871 4,813,482
Total Liabilities and Equity
10,623,211 9,966,279 10,338,584 9,819,426 7,796,786
Board of Directors Report 2011
Affiliates and Segments
Bahri owns or invests in a group of companies within the Kingdom of Saudi Arabia and abroad, as shown in the following table:
Country of Establishment
Head Office Location
Geographical Scope of Activity
Data of Incorporation
Ownership (%) 2011
Company Name
Activity
Bhari (America) Inc.
Bahri Ship Agent
USA
USA
Global
1991
100%
Mideast Ship Management Ltd.
Technical Ship Management
UAE
UAE
Global
1996
100%
National Chemical Carriers Ltd. Co.
Petrochemical Transportation
KSA
KSA
Global
1990
80%
Bahri Dry Bulk
Dry Bulk Transportation
KSA
KSA
Global
2010
60%
LPG Transportation and Trading
Petredec Co. Ltd.
Bermuda
Singapore
Global
1980
30.3%
Arabian United Float Glass Company
Glass Manufacturing and Trading
KSA
KSA
Local
2006
10%
Financial Results for Affiliates and Segments for the FY 2011 (In Thousands Saudi Riyals)
Percentage contribution in Company’s Net Profit
Operating Revenue
Operating Expenses
General & Administrative
Other Income (Expenses)
Net Profit (Loss)
Company Name
Bahri (America) Inc.
23,470
(6,605)
(16,541)
(86)
238
0.1%
Mideast Ship Management Ltd.
40,665
----
(36,055)
(3,002)
1,608
0.1%
National Chemical Carriers Ltd. Co.
362,539
(210,785)
(7,439)
8,880
135,435
47%
Bahri Dry Bulk
----
----
(2,290)
(3,874)
(6,164)
(2%)
* Dependent entirely on the parent company in generating their income.
The National Shipping Company of Saudi Arabia
12/13
two independent companies: The National Chemical Carriers (NCC) and Bahri Dry Bulk, in collaboration with its strategic partners in these two segments.
The Company operates through independent strategic shipping segments: oil & gas, petrochemicals, general cargo and dry bulk. The petrochemical and dry bulk cargo segments’ operations are carried out through
Gross Operating Income
(%) of the segment contribution to the total
Other Operating Expenses
Total Operating Expenses
before bunker subsidy
Gross Operating Profit
Operating Revenue Bunker Cost
Bunker Subsidy
Segment
Crude Oil & LPG Transportation
1,227,423 (661,509) (560,057) (1,221,566) 5,857 137,449 143,306
42%
Petrochemical Transportation 362,539
---
(210,785) (210,785) 151,754
---
151,754
45%
General Cargo Transportation 401,122 (139,654) (256,372) (396,026)
5,096
39,016 44,112
13%
Dry Bulk Transportation
---
---
---
---
---
---
---
---
Total
1,991,084 (801,163) (1,027,214) (1,828,377) 162,707 176,465 339,172 100%
Operating Revenue
Operating Expenses
Gross Operating Income
62%
67%
42%
18%
11%
45%
20%
22%
13%
Crude Oil & LPG Transportation
Petrochemical Transportation
General Cargo Transportation
Dry Bulk Transportation
Board of Directors Report 2011
Asset and Liability distributions over the company’s segment as on 31 December 2011 (In Thousands Saudi Riyals)
Crude Oil & LPG Transportation
Petrochemical Transportation
General Cargo Transportation
Dry Bulk Transportation Combined
Total
Assets
5,415,286
3,647,375
542,316
199,124
819,110
10,623,211
Percentage (%)
51%
34%
5%
2%
8%
100%
Liabilities
2,337,777
2,568,479
213,692
5,288
142,038
5,267,274
Percentage (%)
44%
49%
4%
0.1%
3%
100%
Assets
51% 34%
Liability
5% 2% 8%
44% 49%
Crude Oil & LPG Transportation
Petrochemical Transportation
4% 3%
General Cargo Transportation
Dry Bulk Transportation
Combined
The National Shipping Company of Saudi Arabia
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Crude Oil Transport Segment
the global market at the time of signing the charter contract. Due to the poor spot market rates during the year 2011 and their direct impact on the time charter contract rates, Bahri refrained from entering into medium- or long-term time charter contracts at low rates, pending the issuance of clear market indices. In the meantime, Bahri has devoted its best efforts to improve the relationship with its major customers, reduce the vessels speed to minimize bunker fuel consumption and aims to maximize the returns by establishing its presence in various markets and taking advantage of the timely presence of Bahri vessels in those markets.
The crude oil transport segment is the largest operating segment of Bahri. This segment operates a fleet of (17) Very Large Crude Carriers (VLCCs) in the spot market and long term contracts (time charter) basis. The risk management strategy is to balance between fixed and variable income, i.e. to benefit from the high revenue in the spot market and fixed revenue generated from time charter contracts. In 2011, (3) VLCCs completed their time charter agreements and were deployed in the spot market as a result (14) VLCCs were operating in the spot market by the end of the year 2011. Charter rates are set according to the mechanisms of supply and demand in Bahri started the operation of crude oil transportation during 1996. The company presently owns a fleet of (17) VLCCs. The total DWT capacity of these VLCCs reached (5,256,605) tons which is equivalent to about (36) million barrels of crude oil.
Facts and Figures
Number of VLCC Voyages completed during 2011 was as follows:
Percentage at the beginning of the year
Percentage at the end of the year
Number of Voyages
Vessels operating in the Spot Market
66%
80%
79
Vessels operating on Time Charter Contracts
34%
20%
28
Total
100%
100%
107
In 2011, VLCCs made 320 ports call. The main routes on which these VLCCs operated were as follows: • Arabian Gulf / Far East (45%). • Arabian Gulf / United States of America (30%). • West Africa / Far East (25%) Technology systems installed on VLCCs fleet include: • Energy-saving technology; • Electronic control system in the main operational engines.
Global VLCCs market (new construction and exit from the service): • By the end of 2011, the total number of VLCCs operating in the global market reached (575) vessels and (127) vessels are under construction. • (61) VLCCs are expected to be delivered during 2012. • (12) VLCCs are expected to exit the market during 2012 and 2013.
Board of Directors Report 2011
Main Routes for VLCCs Globally
The National Shipping Company of Saudi Arabia
16/17
VLCC Fleet
Length (Meter)
Width (Meter)
Weight (Static Tons)
Number of Tanks
Speed (Knots)
Year of Manufacture VLCC Name
S#
Type
1
Ramlah
1996
Double-Hull
340
56
300,361
17
15
2
Ghawar
1996
Double-Hull
340
56
300,361
17
15
3
Watban
1996
Double-Hull
340
56
300,361
17
15
4
Hawtah
1996
Double-Hull
340
56
300,361
17
15
5
Safaniyah
1996
Double-Hull
340
56
300,361
17
15
6
Harad
2001
Double-Hull
333
58
302,700
17
17.1
7
Marjan
2002
Double-Hull
333
58
302,700
17
17.1
8
Safwa
2002
Double-Hull
333
58
302,700
17
17.1
9
Abqaiq
2002
Double-Hull
333
58
302,700
17
17.1
10
Wafrah
2007
Double-Hull
333
60
318,000
17
16.7
11
Layla
2007
Double-Hull
333
60
318,000
17
16.7
12
Jana
2008
Double-Hull
333
60
318,000
17
16.7
13
Habari
2008
Double-Hull
333
60
318,000
17
16.7
14
Kahla
2009
Double-Hull
333
60
318,000
17
16.7
15
Dorra
2009
Double-Hull
333
60
318,000
17
16.7
16
Ghazal
2009
Double-Hull
333
60
318,000
17
16.7
17
Sahba
2009
Double-Hull
333
60
318,000
17
16.7
Total Capacity 5,256,605
Board of Directors Report 2011
Liquefied Petroleum Gas (LPG)
bareboat charter contracts, (26) carriers are on time chartered agreements, (19) carriers operate in the spot market and additional (3) carriers are under construction. Petredec operations cover Asian, European, Caribbean and Middle Eastern markets. Over the past years, Bahri realized remarkable profits from this investment. Bahri’s share in Petredec’s net profits amounted to SAR 135.38 million in 2011, compared to SAR 36.93 million in 2010, marking an increase of 267% over the previous year. During 2011, the construction of (4) chemical carriers was completed and were delivered in June, August, September and October. Also, the (2) carriers purchased in March and April of the same year were also delivered. These vessels joined service in the pool with the (NCC Odfjell) JV immediately upon receiving their delivery. Voyages: The chemical fleet completed (100) voyages during 2011, (45) were completed by the carriers operating under the pool of (NCC Odfjell) JV and (55) voyages were completed by the carriers operating under time-charter contracts. Volume of Shipments: The total tonnage transported by the chemical carriers’ segment in 2011 reached (3.7) million tons of chemicals, oils and clean fuel shipped to destinations globally. Of the total of these shipments, (1.7) million tons were carried by the carriers operating in the pool of the (NCC Odfjell) JV and (2) million tons were carried by carriers operating under time-charter contracts.
Bahri operates in the Liquefied Petroleum Gas (LPG) segment through Petredec Co. Ltd. which was founded in 1980. This Bermuda-based company has offices in Monaco, Singapore and the Bahamas, operating exclusively in the trade and transport of LPG. In 2005, Bahri bought a 30.3% stake in the share capital of Petredec Co. Ltd. The business activity of Petredec in LPG is supported by a fleet of specialized LPG carriers, consisting of (64) vessels of various sizes, of which (17) are owned by the company, (2) carriers are on In 1990, Bahri founded the National Chemical Carriers Company (NCC) with a capital of SAR 200 million, in collaboration with Saudi Basic Industries Corporation (SABIC) with an ownership of 80% and 20% respectively. Additional funds were injected to support the expansion plans of NCC, increasing its capital to SAR 610 million by the end of 2011, shareholders’ equity to be SAR 1,079 million and total assets to be SAR 3,647 million. The National Chemical Carriers Co. Ltd., an affiliate of Bahri, currently owns (19) specialized chemical carriers, operated as follows: (9) Carriers are operating in a commercial pool arrangement with (NCC Odfjell Chemical Tankers JLT) company. (6) Carriers are chartered to the International Shipping and Transportation Co. Ltd., an affiliate of Saudi Basic Industries Corporation (SABIC). (3) Carriers are chartered to Odfjell, a Norwegian company, under a bareboat capital lease arrangement. (1) Carrier is chartered to the Saudi International Petrochemical Company (Sipchem). The purpose of NCC alliance with Odfjell in mid- 2009 is to incorporate a JV company owned equally, to commercially operate the fleet of chemical carriers’ of both companies’ in one pool to transport chemicals, vegetable oils and refined petroleum products throughout the world. This JV will enhance its presence in the global markets with a special focus on the GCC region. Successive receipt and operation of carriers in this pool confirmed the financial returns and the presence of this strategy.
Chemical Transport Segment
Main Routes for Chemical Fleet Globally:
Middle East - Far East.
Middle East – Europe.
Far East - Europe - United States.
Europe - United States - South America.
Europe - Far East.
United States - Europe - Far East.
United States - South America.
South America - Far East.
The National Shipping Company of Saudi Arabia
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Main Routes for Chemical Tankers Globally
Growth of Chemical Carriers Fleet
Capacity (Static Tons)
Description
Number of Carriers
13
574,500
Fleet at the beginning of the year 2011
6
270,000
Fleet delivered during the year 2011
19
844,500
Fleet at the end of the year 2011
Carriers under construction and expected to be delivered during 2012-2013
6
300,000
25
1,144,500
Total
Board of Directors Report 2011
Chemical Carrier Fleet-Operational and Under Construction as on 31 December 2011
Length (Meter)
Weight (Static Ton)
Number of Tanks Speed (Knots)
S#
Carrier
Year Built
Width (Meter)
1
NCC Makkah *
1995
32.2
183.10
37,500
52
16
2
NCC Riyadh *
1995
32.2
183.10
37,500
52
16
3
NCC Jubail *
1996
32.2
183.10
37,500
52
16
4
NCC Najd
2005
32.2
183.02
46,200
22
15
5
NCC Hijaz
2005
32.2
183.02
46,200
22
15
6
NCC Tihama
2006
32.2
183.02
46,200
22
15
7
NCC Abha
2006
32.2
183.02
46,200
22
15
8
NCC Tabuk
2006
32.2
183.02
46,200
22
15
9
NCC Qassim
2006
32.2
183.02
46,200
22
15
10
NCC Rabegh
2007
32.2
183.02
46,200
22
15
11
NCC Sudair
2007
32.2
183.02
46,200
22
15
12
NCC Dammam
2008
32.2
183.02
46,200
22
15
13
NCC Hail
2008
32.2
183.02
46,200
22
15
14
NCC Noor
2011
32.2
183
45,000
22
15
15
NCC Huda
2011
32.2
183
45,000
22
15
16
NCC Amal
2011
32.2
183
45,000
22
15
17
NCC Safa
2011
32.2
183
45,000
22
15
18
NCC Danah
2011
32.2
183
45,000
22
15
19
NCC Nesmah
2011
32.2
183
45,000
22
15
20
NCC Shams
Expected in 2012
32.2
183
45,000
22
15
21
NCC Najm
Expected in 2012
32.2
183
45,000
22
15
22
NCC Reem Expected in 2012
32.2
183
45,000
22
15
23
NCC Samaa
Expected in 2012
32.2
183
45,000
22
15
24
NCC Bader
Expected in 2012
32.2
183
45,000
22
15
25
NCC Fajer
Expected in 2013
36.8
228
75,000
30
14
Total Capacity
1,144,500
* The carriers (NCC Makkah), (NCC Riyadh) and (NCC Jubail) were bareboat chartered to Odfjell for (10) years with a purchase option after the third year.
The National Shipping Company of Saudi Arabia
20/21
General Cargo Segment
Size of Shipments: The total amount of cargo carried by General Cargo fleet (RoRo) during 2011 was, (20,126) containers and (811,235) DWT of general cargo carried by 14 liner voyages. Main Route for the General Cargo Segment: The general cargo fleet operates a liner service from the US East coast and Canada to the Indian sub-continent passing through Livorno Port in Italy, Jeddah Islamic Port on the Red Sea, King Abdul Aziz Port in Dammam and Jebel Ali Port on the Arabian Gulf coast.
Bahri commenced its operation through the general cargo segment, which covers a geographical area extending from the eastern coast of the US and Canada to the Indian sub- continent, passing through the Mediterranean Sea, Red Sea and Arabian Gulf. This segment began its operation through Bahri offices in Dammam, Riyadh, Jeddah, Jubail, Mumbai, Livorno in Italy, and Baltimore in Maryland, U.S.A. Bahri’s focus is to expand its customer base and was awarded a contract for (3) years period amounting SAR (230) million to provide logistic services for the Ministry of Defense in the Kingdom of Saudi Arabia. Bahri is appointed as an official carrier for all the branches of the Armed Forces sectors of the Ministry of Defense, to transport cargo by sea, land and air to and from the Kingdom of Saudi Arabia.
Specifications of the General Cargo Fleet operating and under construction.
Specifications of the General Cargo Fleet operating and under construction
Weight (Static Ton)
Immersion (Meter)
Width (Meter)
Speed (Knots)
S#
Vessel
Length
TEUs
Horse Power
1
Saudi Hofuf
42,600
11.12
32.29
248.72
2,310
27,600
18
2 Saudi Diriyah
42,600
11.12
32.29
248.72
2,310
27,600
18
3
Saudi Abha
42,600
11.12
32.29
248.72
2,310
27,600
18
4
Saudi Tabuk
42,600
11.12
32.29
248.72
2,310
27,600
18
5 Hull No. 8085
26,000
9.5
32.30
225
2,500
---
17
6 Hull No. 8086
26,000
9.5
32.30
225
2,500
---
17
7 Hull No. 8087
26,000
9.5
32.30
225
2,500
---
17
8 Hull No. 8088
26,000
9.5
32.30
225
2,500
---
17
9 Hull No. 8089
26,000
9.5
32.30
225
2,500
---
17
10 Hull No. 8090
26,000
9.5
32.30
225
2,500
---
17
Board of Directors Report 2011
Main Route For General Cargo Fleet
CANADA
Livorno
Halifax
ITALY
US
New York
Dammam
Wilmington Baltimore
Shuwaikh
Savannah
INDIA Mundra
Houston
Tripoli
Mumbai
Singapore
Jeddah
Dubai
Mosaieed
Bahrain
Loading Unloading
The National Shipping Company of Saudi Arabia
22/23
Owned and leased Containers as on 31 December 2011
Type
2011
2010
1 20ft standard container
3,118
2,835
2 20ft open-top container
328
332
3 40ft standard container
552
556
4 40ft high cube container
1,325
1340
5 40ft open-top container
146
146
6 20ft flat bed
55
55
7 40ft flat bed
134
153
8 20ft trailers (chassis)
43
225
9 40ft trailers (chassis)
66
248
10 20ft Mafi – 30 tons
4
4
11 40ft Mafi – 60 tons
69
69
12 40ft Mafi – 80 tons
8
8
13 40ft Mafi – 100 tons
212
212
14 62ft Mafi – 80 tons
15
15
Board of Directors Report 2011
Container Yard
Bahri owns a spacious container yard in the Jeddah Islamic Port. This yard is used as a workshop to repair and store Bahri containers and related equipment. This also contributes to handle the containers to and from the vessels rapidly and speeds up the clearance of customers shipments. In line with the company’s policy to expand its activities in selected transportation segments, Bahri signed a JV agreement with the Arabian Company for Agricultural Services (ARASCO). This JV Company is specialized in transporting dry bulk cargo and has an initial capital of SAR 200 million. Bahri contributed 60% and ARASCO contributed the remaining 40% of the capital. The newly-formed JV Company is expected to start its operations of transporting wheat, corn and other dry bulk cargo during the year 2012 In 1997, Bahri established the Mideast Ship Management Co. Ltd. in partnership with a strategic specialized company in ship management services. Subsequently, Bahri acquired the share of the partner and the Company became wholly owned by Bahri. The main objective of this subsidiary company is to set-up a specialized technical management for Bahri’s vessels which applies all technical and operational standards and develops operational efficiencies. Mideast Ship Management Co. Ltd. is committed to adopt the highest quality standards, safety rules and protect the environment by following the directives issued by the International Maritime Organization (IMO) of the United Nations and the laws of different countries, wherein the Company’s vessels may call on their ports as these laws are getting stricter on an ongoing basis. This company operates in accordance with the requirements of international maritime organizations and standards of international oil companies and companies that produce and export chemicals, and other clients whose expectations continuously increases for a districted performance. Mideast Ship Management manages the company’s VLCCs, chemical tankers and general cargo vessels. Mideast Ship Management recruits the crew for the ships in accordance with the requirements of high efficiency, and seeks to train the crew
Dry Bulk Cargo Transport Segment
after obtaining the vessels of the appropriate size to the nature of this activity. The total initial investment in the newly established company amounts to SAR 656 million and is expected to increase to SAR 1,325 million during the next three years. Negotiations are currently underway with financial institutions to finance about 70% of the cost to build the first (5) vessels. Final specifications of the vessels have been approved and bids have been solicited from specialized shipyards. Negotiations are underway to award the building contracts of the requested vessels. on all new processes and devices adopted by the Company. Mideast Ship Management Company has a specialized team of dedicated captains, engineers and technicians with high technical expertise and extensive experience in the management as well as technical and administrative operation of the fleet. The total number of employees working for the Company’s vessels reached (1,182) members from (28) different nationalities, of whom (1,098) persons are employed on board the vessels and (84) employees working in the office of the Company. Those employees working in the office carry out diverse activities ranging from specialists in fleet management; engineers specializing in technical supervision; officials in procurement, recruitment and training, accountants and specialists in quality, safety and the environment. Mideast submits technical reports to Bahri on the performance and status of the vessels, fuel consumption, results of periodic inspections and recommendations in this regard. The Company also provides periodic financial reporting on operating expenses, budgeting and several other reports. Mideast is also responsible to train newcomers from Saudi sailors aboard the vessels and tankers of the Company.
Technical Ship Management
The National Shipping Company of Saudi Arabia
24/25
Business Planning and Development
business segments and other support units of the Company; follow-up regarding the performance of these segments and units and to compare their performance in light of the stated goals as listed in the approved plans.
The Planning and Business Development Department of Bahri is responsible to prepare strategic plans and follow-up their implementation; do periodic planning of business development; coordinate with the Planning and Business Development Department Functions: Prepare and review the Company’s strategic plans. Monitor and implement approved initiatives. Assist in the development of new plans of implementation to ensure optimal utilization of corporate resources. Prepare action plans and key performance indicators. Follow-up on the measures of change, restructuring and exploring available opportunities in line with the approved initiatives. The Communications Department is the key link between the Company and various media, government offices and other institutions. The Communications Department has adopted several initiatives, including the project to rebrand and change company’s commercial identity, media relationship, advertising, social responsibility, corporate management events, information published by the Company’s management and other related responsibilities. The Company has set up a distinct and efficient Communications and Public Relations Department with a professional team, experienced in public relations, local and foreign media, and preparation of conferences, meetings and exhibitions locally and abroad. Monitor various corporate expansion projects to ensure their timely implementation, including coordination with partners, shipyards, marine engineers, consultants and consulting firms. Identify, explore and assess the suitability
of the proposed business in line with the strategic objectives of the Company. Assist in identifying investment opportunities and developing strategic partnerships. Communicate with all business units and assist in the implementation of the initiatives that are identified. Submit reports on financial business activities, operational costs, major competitors’ performance, forecasts and market trends in the shipping industry. Monitor performance measurement for all segments and business units prior to submittal of quarterly reports to senior management. Follow-up projects with the shipyards.
Communications and Public Relations
Memberships
Membership of the Islamic Ship Owners’ Conference.
Membership of the Saudi-American Business Council.
Achievements
Assembly meetings, management of the General Assembly activities and sorting the results of voting electronically. This is accomplished in coordination with Tadawul using “Tadwulati” software.
Implementation of a unified system for management and planning of the Company’s resources (Oracle ERP). The first Saudi joint stock company to apply the electronic remote voting system for all the items on the agenda of the General
Board of Directors Report 2011
Contributions and Participations
Participation in the preparation of the Special Report on the Public Investment Fund, which was published in “Al Eqtisadiah” newspaper.
Participation in the (Marine Money) Conference in March 2011.
Information Technology
The planning phase of the new IT system for the general cargo segment covering all general cargo activities was completed and will begin implementation early 2012. This system is expected to be finalized by the end of the year. Among the completed projects are the development of the Company’s website to keep pace with the requirements of customers, shareholders and visitors of the website and development of an intranet portal to enhance internal communications among Company employees. Special webpages were also set up for the Company on world-renowned social networking sites for the diversification and enhancement of the Company’s foreign channels for communication. Bahri’s website is considered one of the best Pan Arab websites in terms of content, design and friendly browsing.
During 2011, a study was embarked regarding the second phase of company’s Information Technology Department strategy (Manarah 2). This study covered a range of strategic projects and initiatives to provide the latest technologies and advanced applications software for achieving the desired objectives and to support all business segments of the Company. It will assist its various departments to cope with the growth and upgrade the level of services and competitive edge. Among the most important projects of that stage is the completion of the first phase of the unified system for management and planning of corporate resources (ERP) at the various levels of business segments of the Company; in addition to setting up a backup Information Center to ensure continuity of critical systems. At this stage, the information technology network of the Company has been linked to a standard international network in order to utilize consolidated common services and conduct a comprehensive update of the information technology infrastructure.
The National Shipping Company of Saudi Arabia
26/27
Internal Audit and Control
The Internal Audit and Control Department has implemented several tools and programs in the control applications which led to the integration of the head office, subsidiaries and regional offices of the Company. The Department has also completed the internal audit functions for the year 2011, according to the approved audit plan. This included the review and examination of accounts and documents relating to the various offices, affiliates and branches. The Department has achieved its goals of completing those tasks, according to the audit plan, and submitted its recommendations to the Company’s Audit Committee which is directly in charge of the functions of this Department. The Internal Audit and Control Department has also implemented the Governance, Risk and Compliance Management System (GRCM), which is a component of the unified Enterprise Resource Planning (ERP) system. This systemhas contributed to the promotion and improvement of audit functions, enhanced transparency, risk control and overall control over the Company’s dealings and operations. The system also helped in converting the internal audit functions to an electronic operating system.
The Internal Audit and Control Department employs highly qualified professionals, in addition to competent and qualified technical marine personnel with experience in surveying the maintenance of vessels. The Department continues to develop the capacity of its staff and to refine their skills through the application of modern technology in the implementation of audit programs, training and access to new audit and risk analysis information. The Internal Audit and Control Department verifies that the business units and offices of the Company comply with the stated rules, standards, policies, procedures, controls, government laws and relevant legislation. The Department also develops relevant plans and projects related to risk management based on international audit standards. The Internal Audit and Control Department implemented applications for internal control systems of the Company and its affiliates. These systems aim to protect the assets of the Company, maintain and protect its accounting records against any unauthorized use, ensure the application of accounting policies, regulations and internal procedures of the Company in order to obtain reliable financial reporting.
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