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)
12. Ships Under Construction and Others At December 31, 2012, the balance of ships and other assets under construction represents amounts invested by the Company and its subsidiaries as follows: The Company On March 6, 2011, the Company signed four RoRo/Container (RoCon) vessel contracts with Hyundai MIPO of South Korea for a total cost of SR 1.03 billion (USD 274.2 million). Further, on September 12, 2011, the Company exercised its option to buy two additional RoRo vessels under the above agreement with the same agreed specifications and price for a total cost of SR 0.51 billion (USD 137.1 million). Accordingly, the Company has six general cargo ships under construction for a total cost of SR 1.54 billion (USD 411.3 million). The Company had paid an amount of SR 668.36 million (USD 178.23 million) as at December 31, 2012 representing installments due on those contracts. It is expected that four of the above mentioned vessels will be delivered during 2013 and the remaining two during 2014. The Subsidiary (“NCC”) NCC (a Subsidiary owned 80% by the Company) signed a contract with ShinaSB Yard Co. Ltd. (“SLS”) of South Korea in 2007 to build six petrochemical carriers for a total cost of SR 1.2 billion (USD 312 million). These tankers were scheduled to be delivered during the period 2010 through 2012. One vessel was received in September 2011 and another four vessels were received during 2012 and were put into operation in the pool arrangement with NCC Odjfell Company.
On December 24, 2012, NCC terminated the contract for building the last vessel as a result of SLS’s failure to deliver it according to the time schedule specified in the contract that was signed in 2007 and its amendment that was signed in 2012. The contract states that NCC has the right to terminate the contract if the delay period exceeded the allowed period. The contract also grants to NCC a refund of all installments paid amounting to USD 41.6 million which is guaranteed by the Export-Import Bank of Korea, plus compensation. 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 a total price of approximately SR 245 million (USD 65.3 million) with expected delivery during 2013. Bahri Dry Bulk Company LLC (“a subsidiary”) Bahri Dry Bulk Company LLC (a Subsidiary owned 60% by the Company) signed a contract in April 2012 with a leading international shipyard to build five vessels specialized in bulk transportation, for a total cost of SR 600.42 million (US$ 160.11 million). One vessel will be delivered during the fourth quarter of 2013 and the remaining vessels will be delivered during the first half of the year 2014.
The movement in ships under construction and others is as follows:
2012
2011
Balance, beginning of the year
1,237,130
1,011,466
Additions
596,475
1,025,775
Transfers to fixed assets
(649,336)
(800,111)
Balance, end of the year
1,184,269 1,237,130
Capital commitments
The Company’s capital commitments for constructing RoCon vessels amounted to SR 0.87 billion as of December 31, 2012 (2011: SR 1.23 billion). The Subsidiary’s capital commitments for constructing chemical tankers amounted to SR 98 million as of December 31, 2012 (2011: SR 342 million). In addition, the capital commitment in respect of another subsidiary for building dry bulk vessels amounted to SR 450.42 million as at December 31, 2012 (2011: Nil).
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