Bahri Annual Report-2010

Consolidated Financial Statements

12. Ships under construction and others At December 31, 2010, the balance of ships and other assets under construction principally represents costs incurred towards construction of the Company’s new building and costs incurred by NCC (a subsidiary) under signed contracts for constructing new chemical tankers. The Company’s new VLCCs, “Kahla”, “Dorra”, “Ghazal” and “Sahba” construction was completed on March 12, 2009, May 6, 2009, July 3, 2009 and September 25, 2009, respectively, which were deployed on the spot market on April 24, 2009, June 4, 2009, August 2, 2009 and October 6, 2009, respectively, and were transferred from ships under construction to fixed assets during 2009. NCC signed a contract with SLS Shipbuilding Co. Ltd. (“SLS”) of South Korea to build 10 petrochemical carriers and another contract during the year 2007 to build six additional petrochemical carriers with a total cost of SR 3.01 billion (USD 802 million). These tankers are scheduled to be delivered during 2011 through 2012. NCC also signed a contract on July 4, 2010 with Daewoo Shipbuilding and Marine Engineering Co. Ltd. of South Korea to build a specialized chemical tanker for total price of approximately SR 245 million (USD 65.3 million) with expected delivery during 2013. NCC in May 2010 decided to cancel two contracts signed with SLS in 2006 for building two tankers due to delay by SLS to deliver the tankers on the dates agreed in the contracts. Also, in September 2010 it was mutually agreed with SLS to cancel another five new ship building contracts, since SLS was not able to build the ships and deliver them within the period specified in the agreement. As of December 31, 2010, NCC collected SR 701.6 million which include all installments paid to SLS on all the cancelled contracts totaling to SR 641.3 million, all other incidental costs amounting to SR 45.2 million, as mutually agreed between the parties, and net recovery amounting to SR 15.1 million. Such net recovery was credited to other income during the year ended December 31, 2010 (See Note 22). NCC also signed contracts with SLS on December 21, 2010 to purchase two chemical tankers for total price of SR 322.5 million (USD 86 million) with expected delivery during the first half of 2011.

The National Shipping Company of Saudi Arabia Annual Report 2010