The National Shipping Company of Saudi Arabia (A Saudi Joint Stock Company) Notes to the Consolidated Financial Statements As of December 31, 2012 (in Thousands of Saudi Riyals)
1. Organization and Operations The National Shipping Company of Saudi Arabia, a Saudi Joint Stock Company (the “Company”), was established by Royal Decree No. M/5 dated Safar 12, 1398H, corresponding to January 21, 1978G, and registered under Commercial Registration No. 1010026026 dated Dhul Hijjah 1, 1399H, corresponding to October 22, 1979G, issued in Riyadh. The Company is primarily engaged in purchasing, chartering and operating vessels for the transportation of cargo and other activities related to the sea shipping industry. The Company has operations through four distinct segments which are very large crude carriers (VLCCs), chemical transportation, general cargo (liner), and dry bulk transportation. The authorized and paid-up capital of the Company is SR 3,150 million, comprising 315 million shares with nominal value of SR 10 each as of December 31, 2012 and 2011. The Company owns seventeen Very Large Crude Carriers (VLCCs), two of which are chartered to Hanjin Company (a Korean company) and fifteen are operating in the spot market. In addition, the Company owned four Roll-On Roll-Off (RoRo) vessels operating on the liner trade between North America, Europe, the Middle East and the Indian Subcontinent. National Chemical Carriers Ltd. Co. (a Subsidiary owned 80% by the Company and 20% by SABIC) owns twenty three 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 (Note 6), eleven are operating in a pool with NCC-Odfjell Chemical Tankers JLT, eight are chartered to International Shipping and Transportation Company Limited (ISTC), a subsidiary of Saudi Basic Industries Corporation (SABIC), and one is chartered out to Saudi International Petrochemical Company (SIPCHEM). The Subsidiary signed a 50 percent joint venture agreement with “Odfjell SE” on Jumada Thani 22, 1430H, corresponding to June 15, 2009G to establish an equally owned company in Dubai (United Arab Emirates), by the name of NCC-Odfjell Chemical Tankers JLT (hereinafter referred to as “Joint Venture”), to commercially operate the two companies’ combined fleets of coated chemical tankers in a pool for transportation of petrochemicals, vegetable oils and refined petroleum products on a world-wide basis with its focus on the growing production and export markets of the Arabian Gulf Region. The new company commenced operations in 2010. On August 28, 2010, the Company entered into an agreement with Arabian Agricultural Services Company (ARASCO) to establish a new subsidiary “Bahri Dry Bulk Company LLC” 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 had been made by the shareholders as of March 31, 2011. The new subsidiary commenced its commercial operations in the second quarter of 2012.
The accompanying consolidated financial statements include the activities of the Company and its subsidiaries, in which the Company owns more than 50% of owners’ equity and/or has control over those subsidiaries. The Company has established and/or invested in the following subsidiaries and affiliates:
Date of Incorpo- ration
Effective Ownership % 2012
Effective Ownership % 2011
Name
Activity
Location
Consolidated Subsidiaries:
Company’s ships agent
NSCSA (America) Inc.
USA
1991
100%
100%
Mideast Ship Management Ltd. (Bermuda) * Ship management
Dubai
1996
---
100%
Petrochemicals transportation
National Chemical Carriers Ltd. Co. (NCC)
Riyadh 1990
80%
80%
Bahri Dry Bulk LLC
Bulk transportation Riyadh 2010
60%
60%
Mideast Ship Management Ltd. (JLT) *
Ship management
Dubai
2010
100%
100%
80
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