Bahri Annual Report-2011

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

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