Bahri Annual Report-2011

Financial Statements Report 2011

Notes To The Consolidated Financial Statements For the year ended December 31, 2011 (In Thousands Saudi Riyals)

1. ORGANIZATION AND OPERATIONS

On August 28, 2010, the Company entered into an agreement with the Arabian Agricultural Services Company (ARASCO) to establish a new subsidiary “Al-Bahri Company for Bulk Transportation” for dry bulk transportation with a capital of SR 200 million of which 60% is owned by the Company and 40% by ARASCO. The full capital contributions were made by the shareholders as of March 31, 2011. The new subsidiary is expected to commence its commercial operations in the second half of 2012.

The Subsidiary signed a 50 percent joint venture agreement with “Odfjell SE” on 22/06/1430H, corresponding to June 15, 2009 to establish a company in Dubai, (United Arab Emirates), by the name of NCC-Odfjell Chemical Tankers JLT (hereinafter referred as “Joint Venture”), to commercially operate the two companies’ combined fleet of coated chemical tankers in a pool for transporting petrochemicals, vegetable oils and clean petroleum products markets on a world-wide basis with emphasis on the growing production and export of the Arabian Gulf Region. The new company commenced operations in 2010.

The National Shipping Company of Saudi Arabia, a Saudi joint stock company (the “Company”), was established by Royal Decree No. M/5 dated 12/02/1398H, corresponding to 21/01/1978, and registered under Commercial Registration No. 1010026026 dated 01/12/1399H, corresponding to 22/10/1979, issued in Riyadh. The Company is primarily engaged in purchasing, chartering and operating vessels for the transportation of cargo and passengers and other activities related to sea shipping industry. The Company has operations through three distinct segments which are very large crude carriers (VLCCs), chemical transportation, and general cargo (liner). The authorized and paid-up capital of the Company is SR 3,150 million from 315 million shares for the nominal value of SR 10 each as of December 31, 2011 and 2010. The Company owns seventeen Very Large Crude Carriers (VLCCs), one of which is chartered to RWE Supply & Trading GmbH (A German Company), two to Hanjin Company (A Korean Company) and fourteen are operating in spot market. The Company owns four Roll-On Roll- Off (RoRo) vessels operating on liner trade between North America, Europe, the Middle East and Indian Subcontinent. The National Chemical Carriers Ltd. Co. (“Subsidiary”) owns nineteen chemical tankers, out of which three were leased to Odfjell SE (“Odfjell”), a Norwegian company, on January 30, 2009 under a bareboat capital lease arrangement as stated in Note 6, nine are operating in a pool with NCC-Odfjell Chemical Tankers JLT, six are chartered to  the International Shipping and Transportation Company Limited (ISTC), a subsidiary of Saudi Basic Industries Corporation (SABIC), and one tanker is chartered out to Saudi International Petrochemical Company (SIPCHEM).

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