Bahri Annual Report-2010

Financing and Investment

NSCSA enjoys the perks of having a strong budget and available cash funds for the flexible liquidity in meeting its obligations and financing its various projects. Moreover, it has built a good relationship with local and interna- tional financial houses over the past years. NSCSA has adopted a financing and investment policy compatible with the precepts of Islamic Shariah. As a result of adopting this policy, all the company’s investments and 81% of its loans have been converted into Shariah-compliant instruments. The Shariah- compliant financing will reach 100% upon completion of the current outstand- ing conventional loans. NSCSA follows a conservative investment policy of its available cash funds in low-risk investments that are easy to liquidate when such funds are needed to finance corporate needs. NSCSA pursues a conservative financial policy commensurate with the nature of its business and assets. This is managed by financing assets in line with their expected useful life and expected revenues. This leads to the flexibility in cash flows that enables the company to meet all its domestic and interna- tional obligations. By the end of 2010, total financing of the company’s assets reached SAR 4.1 billion. It is expected that financing will reach its maximum level at SAR 4.67 billion in 2011 before it starts to diminish gradually, this is based on the cur- rent financing agreements. The National Chemical Carrier Company announced in July of 2010 that it will construct a (75,000) metric ton dwt chemical carrier of an estimated cost of SAR 245 millions. Also, the company announced in December of 2010, its Board of Directors’ approval to purchase (2) Chemical Carriers of 45,000 metric ton dwt costing SAR 322.5 million. The financing of these projects will be arranged through inter-company and external financing resources during the year 2011.

Financing During the Year 2010 (In Thousands Saudi Riyals)

Loan balance at the beginning of the year

Additions during the year

Repayments during the year

Loan balance at year end

Company

NSCSA

2,482,387 ---

(168,625)

2,313,762

NCC

2,259,224

140,000

(589,168)

1,810,056

Mideast Ship Management Ltd.

21,360 ---

(1,991)

19,369

Total

4,762,971

140,000

(759,784)

4,143,187

The National Shipping Company of Saudi Arabia Annual Report 2010

32

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