BASREC

REPORT Of The CHAIRMAN

On behalf of the Board of Directors, I am pleased to present the 49th Annual Report of The Bahrain Ship Repairing and Engineering Company BSC(BASREC), together with the Consolidated Financial Statements for the year ended 31st December 2010.

Your Directors are pleased to report that the Company’s net profit for the year 2010 is the second best ever achieved during the whole history of BASREC.

During the year 2010, the utilisation of the Company’s facilities was sustained throughout the year at a very satisfactory level and has continued as such so far during the current year 2011.

It should be noted that majority of our core business of ship repairs emanates from the sources outside of Bahrain and our Company has to be competitive and efficient to attract work from outside sources. With the loyalty of our Management, staff and workforce, we are confident that our Company will continue to attract ship-owners from these sources to use our facilities for the foreseeable future.

As mentioned in the last year’s Report, your Directors are considering the expansion and improvement of Company’s facilities.

An additional ship repair yard has commenced operations in the state of Qatar and to the best of our knowledge, there exists official pressure for companies operating in that area to utilize this new facility to repair their marine crafts.

While it could well be considered that this new source of competition will affect our Company, the BASREC Board are confident that the Company’s facilities and long established reputation will ensure that its major customer continue to use that BASREC facilities.

The Company’s project of construction of 8 Vilas, compound in Saar area is nearing completion with a little delay due to non-availability of electricity, and it is expected to be available for renting in the very near future.

The operations of the wholly owned subsidiary Company-Marine and Industrial Pump Repair (Gulf) S.P.C and our Container Repair Division will be elaborated in the accompanied Management Report. Due to the general recession in the area, TEAMS (Bahrain) our Marketing Division is facing slow down, and efforts are being exerted to improve the operations of this division of the Company.

The Company is in the process of compliance with requirements of Bahrain code of Corporate Governance which will be applicable from 1st January 2011.

Directors

All members of the Board were elected at the Annual General Meeting held on 29th March 2009 and under the Memorandum an Articles of Association of the Company, their period of office does not expire until 29th March 2012.