Bahri Annual Report-2012

Chairman's Message

Implementation of several programs and projects by benefiting from the expertise, experience and great potential, which enhanced the company’s leading role locally, regionally and globally

On behalf of myself and my colleagues the Board Members of The National Shipping Company of Saudi Arabia (Bahri), I am pleased to present the Annual Report for the fiscal year 2012 which includes the Board of Directors’ Report containing the results of the Company’s programs, projects and various activities during 2012, and the consolidated financial statements for the year ended December 31, 2012 which shows the financial position of the Company. During 2012, the Company achieved a net profit of SAR 503,993,000, compared to SAR 287,768,000 last year, marking an increase of 75%. The year 2012 was an extension of previous years in terms of ongoing economic instability and low freight rates due to excess tonnage which is greater than demand in the global market, especially in the sector of crude oil transport. Nevertheless, thanks to God and the directives of the Company’s Board of Directors, and the efforts of its senior management and all its employees, the Company managed to confront these challenges and achieved substantial growth in profits compared to previous years. The Company has also diversified its activities which has had a significant positive impact on its financial results. Moreover, the Company has continued to distribute cash dividends among shareholders on an annual basis. In order to achieve the best returns for shareholders, the total cash dividends for the fiscal year 2012 have been set at SAR 315 million, with the approval of the General Assembly. Thanks to God, Bahri has continued to achieve many of its goals that have been planned and set by the Board of Directors in accordance with an ambitious strategy. The Company has implemented several programs and projects, benefiting from its expertise, experience and capabilities to meet its obligations efficiently. This has boosted its pioneering role locally, regionally and globally, in spite of the fierce competition and rapid changes in this field. During the fiscal year 2012, the Company has implemented many programs and projects based on its overall strategy which is focused on growth and expansion, including the following: • The Company has signed final and binding agreements with both Saudi Aramco and Vela International Marine Dear Shareholders May the peace, mercy and blessings of Allah be upon you.

(which is wholly owned by Saudi Aramco) to merge Vela’s fleet and operations with Bahri, with the approval of the Boards of Directors of Bahri, Saudi Aramco and Vela. This deal is expected to be a quantum shift in Bahri’s trajectory, enhancing its chances to continue to play its role in economic and human capital development in KSA, and to serve the customers of Bahri and Vela in an efficient and reliable manner. As such, Bahri will have the exclusive right to ship all VLCC sized crude oil cargoes produced in the Kingdom and sold by Saudi Aramco on a delivered basis pursuant to a long-term agreement. Bahri and Saudi Aramco have also concluded an agreement to explore more ways to expand their cooperation in the marine business sector. Operations are currently underway on a schedule to complete the necessary procedures to obtain the regulatory approvals in this regard. • In April 2012, the Company launched its trademark “Bahri” after three decades of accumulated experience and heavy investment in constructing a transport fleet in accordance with international standards. The Company’s new trademark reflects the creative and dynamic nature of Bahri. The business world has undergone fast and successive changes which necessitate continuous development on the part of the Company in order to keep up with the latest changes. Today, Bahri has achieved a powerful reach and capabilities which makes it one of the leading companies in its field, as well as providing integrated logistics solutions. It will be able — God willing — to meet the expectations of its shareholders and customers nationally, regionally and globally. • National Chemical Carriers Ltd. Co. (NCC) received four vessels during the year 2012, having previously contracted with ShinaSB Shipyard to build ships in South Korea. It should be noted that the Company has also contracted with Daewoo Shipbuilding and Marine Engineering (DSME) in South Korea to build a massive chemical vessel (75,000 DWT) with high specifications, valued at around SAR 247 million. This tanker is expected to start operating by the end of 2013. NCC currently owns a fleet of 23 chemical tankers.


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