Bahri Annual Report-2011

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

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