Investor Relations
Financials
Full Year Financial Statement And Dividend Announcement 2024
Financials Archive
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CONDENSED INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTHS AND FULL YEAR ENDED 31 DECEMBER 2024
N/M: Not meaningful
1Tokumei Kumiai (“TK”) refers to a form of silent partnership structure used in Japan. Allocation to TK investors refers to
share of profit and loss attributable to other TK investors of the TK structure.
CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITIONS AS AT 31 DECEMBER 2024
Review of Performance
REVIEW OF CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Total Income
Total income of the Group was US$24.0 million for the year ended 31 December 2024 (“FY2024”), a 59% decrease from US$58.0 million for the year ended 31 December 2023 (“FY2023”). Changes in major components of total income, including charter income, fee income, sale of properties under development, investment returns, interest income and other income are explained below.
(i) Charter Income
In FY2024, the Group completed the sale of two 29k dwt dry bulk carriers – m/v Uni Wealth in March 2024 and m/v Victoria Harbour in December 2024.
Accordingly, total charter income decreased by 14% from US$37.8 million in FY2023 to US$32.5 million in FY2024.
Although the total charter income had decreased from FY2023 to FY2024, the average daily charter in FY2024 had increased quarterly in FY2024 and had outperformed that of FY2023 since 2Q. This can be attributed partly to the Group’s strategy in reducing the number of 29k dwt ships which generated less revenue, and partly to the good charter market in FY2024.
(ii) Fee Income
Total fee income was US$3.8 million in FY2024, a decrease of 19% from US$4.7 million in FY2023. Please refer to Note 9 of Notes To The Condensed Interim Consolidated Financial Statements for breakdown of Fee Income for FY2024 and FY2023.
Recurring asset management and administration fee income for FY2024 reduced by 10% from that in FY2023. The contribution of Japan’s asset management fee income has increased, notwithstanding such increase in USD terms was eroded by the weakened JPY. However, no asset management and administration fees were booked in FY2024 for Hong Kong property project investments due to the dismayed performance of Hong Kong property projects.
Arrangement and agency fee decreased in FY2024 due mainly to absence of significant arrangement fee income.
Brokerage commission decreased in FY2024 by 49% as the Group had a one-off hotel-related brokerage deal in FY2023 which was absent in FY2024.
(iii) Sale of properties under development
Three larger properties under development projects were sold for a total of US$14.8 million in FY2024 compared to three smaller projects sold for a total of US$12.1 million in FY2023, resulting in an increase of 22%.
(iv) Investment Returns
In 2010, the Group partnered with a private developer in Hong Kong to develop the Group’s first Hong Kong property project, with the partner taking a majority stake in the development consortium while the Group and other investors took up minority stakes. Following the success of the first project, the Group continued partnering with this developer using similar modus operandi and to-date invested in a total of 8 projects. For the first three projects, the Group invested a total of US$17.5 million and received total proceeds of US$42.7 million, netting a cash profit of approximately US$25.2 million.
However, Hong Kong faced several challenges since 2019, including the COVID-19 pandemic, causing Hong Kong’s commercial property market to deteriorate significantly. Notwithstanding Hong Kong Government’s recent new initiatives to attract international capital and talent, sales volume of Hong Kong commercial/industrial properties remained subdued. In light of the prevailing market conditions in the Hong Kong and Mainland China property market, completed construction projects in the region are facing declines in sales volume. In particular, a few large Mainland China developers have defaulted on their debt or are experiencing difficulties in meeting their debt and loan obligations. With continuing high interest rates and difficulties in selling the projects, there are indications that the Group may not be able to recover all capital should the consortium which the Group invests in were to sell the projects in the current market to meet the consortium’s debt obligations.
As a result, the Group has booked a fair valuation loss of US$31.0 million for its Hong Kong property project investments. The Group does not have any contingent liabilities (including guarantees) nor capital commitment relating to the Hong Kong property projects. In addition, the Group also booked a US$0.5 million valuation loss for its Guangzhou office investments.
Excluding this US$31.5 million fair valuation loss, investment returns for FY2024 was a gain of US$2.9 million compared to US$2.6 million for FY2023, an increase of 11%.
A fair value gain of US$1.5 million was booked for a ship joint investment as the gain was realised in early 2025.
Please refer to Note 10 of Notes To The Condensed Interim Consolidated Financial Statements for breakdown of Investment Returns for FY2024 and FY2023.
(v) Interest Income
With increasing interest rates, the Group recorded US$1.2 million interest income in FY2024, an increase of 105% from US$0.6 million in FY2023.
(vi) Other Income
No significant one-off miscellaneous income was received in FY2023. Other income reduced by 68% from US$0.7 million in FY2022 to US$0.3 million in FY2023.
Total Operating Expenses
Employee benefits expenses at US$6.4 million, decreased by 5% in FY2024 as compared to FY2023. With 7 wholly-owned ships for FY2024 compared to 9 wholly-owned ships for FY2023, depreciation decreased by 17% from US$10.8 million in FY2023 to US$9.0 million in FY2024, and vessel operating expenses decreased by 21% from US$18.6 million in FY2023 to US$14.6 million in FY2024. Costs of properties under development sold were US$14.0 million for FY2024 compared to US$10.7 million for FY2023 because the projects sold in FY2024 were bigger projects.
In FY2023, the Group recognised a gain on disposal of property, plant and equipment of US$2.3 million and US$1.2 million reversal of impairment for 2 ships sold in FY2023 and early 2024 respectively. In FY2024, while there were no gain on disposal of property, plant and equipment, a reversal of impairment of US$1.3 million offset by US$2.0 million of impairment made, resulting in a net US$0.7 impairment of property, plant and equipment for FY2024.
No significant foreign exchange was recognised in FY2024 as the Group did not have any significant nonUSD foreign currency exposure for FY2024. Translation adjustments for the Group’s foreign subsidiaries are taken to reserves and not income statements.
Due to the aforementioned, net operating expenses for FY2024 was around the same level as FY2024 at US$48.0 million.
Operating Loss
The Group recorded an operating loss of US$24.0 million for FY2024 as operating profit was dragged down by the valuation loss of Hong Kong property projects.
Finance Costs and Other Costs
Interest on borrowings was US$3.1 million for FY2024, a reduction of 13% from FY2023.
Net Profit After Tax
The Group’s net loss after tax for FY2024 was US$28.2 million, compared to a profit of US$5.1 million in FY2023.
Review of Statement of Financial Positions
Non-current assets
The Group’s non-current assets as at 31 December 2024 was US$99.2 million, a decrease of 36.6% compared to US$156.4 million on 31 December 2023.
Investments decreased by US$27.5 million mainly due to US$31.0 million valuation loss recorded for Hong Kong property investments, offset by new property investments in Japan.
Property, plant and equipment decreased by US$29.4 million from US$112.9 million on 31 December 2023 to US$83.5 million on 31 December 2024. This decrease was mainly due to (i) disposal of one ship during the year; (ii) re-classification of one ship to asset held for sale under current assets as the sale of the ship was completed in early 2025; (iii) as well as depreciation and impairment expenses.
Current assets
The Group’s current assets increased by US$11.4 million from US$55.3 million on 31 December 2023 to US$66.7 million on 31 December 2024. Material variances are as follows:
- Decrease in short term investments of US$1.9 million from US$4.3 million on 31 December 2023 to US$2.4 million on 31 December 2024 mainly due to disposal of investments;
- Increase in properties under development for sale to US$2.7 million on 31 December 2024 from nil on 31 December 2023 due to new projects;
- Increase in prepayments, deposits and other receivables from US$2.9 million on 31 December 2023 to US$4.8 million on 31 December 2024 mainly due to purchased made by ship-owning subsidiaries for ship-related stores for use in early 2025.
- Increase in asset held for sale by US$1.8 million as the ship to be disposed of after 31 December 2024 is of a higher value than that as at 31 December 2023; and
- Increase in cash and bank balances by US$7.3 million. Please see the following review of statement of cash flows for further information.
Total liabilities
Total liabilities decreased by US$13.7 million from US$62.7 million on 31 December 2023 to US$49.0 million on 31 December 2024 mainly due to decrease in total borrowings (including both current and non-current) of the Group by US$14.0 million in FY2024 due to scheduled repayment of long-term borrowings as well as repayment of borrowings of disposed ships.
Review of Statement of Cash Flows
The Group’s cash and bank balances increased by US$7.3 million in FY2024 after the effects of foreign exchange rate changes. Material items are listed below.
- US$17.1 million was generated from operating activities in FY2024, a decrease of US$1.9 million from
US$19.0 million in FY2023. The decrease was mainly due to:
- reduction in net charter income as a result of the fewer ships in the portfolio; and
- absence of significant ad hoc fee income in FY2024.
- Net cash inflows from investing activities were US$13.9 million in FY2024.
Main cash inflows from investing activities include:
- Proceeds from redemption/sale of investments of US$3.1 million from sale of investments in Japan;
- Proceeds from disposal of property, plant and equipment of US$10.35 million from the disposal of wholly-owned bulker – m/v Victoria Harbour; and
- Proceeds from disposal of asset held for sale of US$8.6 million from the disposal of wholly-owned bulker – m/v Uni Wealth.
Main cash outflows from investing activities include:
- Purchase of property-related investments in Japan of US$7.7 million; and
- Purchase of property, plant and equipment of US$1.0 million mainly due to drydocking related expenses.
- Cash flows used in financing activities were US$22.8 million in FY2024
Main cash outflows from financing activities include:
- repayments of borrowings of US$25.5 million offset by proceeds from borrowings of US$8.5 million;
- interest and other finance cost paid of US$3.4 million; and
- FY2023 final dividend and FY2024 interim dividend totalling US$1.9 million.
Commentary
Dry Bulk
It can be said that 2025’s global economy is very much shaped by President Trump’s tariff regime, which may potentially lead to an all-out trade war amongst various countries against the United States. Canada and Mexico, the first two countries that President Trump announced imposing tariff on, are amongst the largest suppliers of dry bulk commodities to the US in 2024. Tariffs could push US importers to seek alternative suppliers further ashore US thereby increasing tonne-mile demand. Similarly, importers from another country which impose a tit-for-tat tariff on US commodities may also seek suppliers from new sources. As such, the scope of tariff may affect global trade network, which may affect the global shipping tonne-mile economics.
In addition, the US’ position on the Panama Canal, Houthis’ suspension of vessel attacks on the Red Sea (although many ship owners are still hesitant about passing through the Suez Canal), as well as limit on vessel speed due to environmental regulations, could also impact tonne-mile economics.
Due to the above uncertainties, the dry bulk charter market for 2025 could be volatile.
Meanwhile, although newbuilding prices remained strong due to shipyard slot availability, second-hand dry bulk ship prices have softened after mid 2024 as can be seen from the following charts.
The Group has successfully disposed of most of its older 29k dwt ships before the decline and have now only one 29k dwt ship in its portfolio. The Group will look for opportunities to sell this remaining 29k dwt ship, while striving to maximise the overall time charter income for the Group amidst the above-mentioned uncertainties in coming months. The Group will also explore opportunities to acquire second-hand vessels either from the open market or from its 18% owned joint investment vehicles should such investment fit the Group’s risk-return profile.
Japan Property
The Tokyo property market has been robust, driven by a combination of factors including a weak Japanese Yen and low interest rates. While the Group is encouraged by the ten new ALERO projects in FY2024, it continues to be difficult to identify new reasonably priced land for the Group’s ALERO projects. However, the Group has expanded its asset management expertise in Japan to include private finance initiative (“PFI”) projects, solar power plants, group homes, and other assets with a sustainability angle. The Group would also look for new property investment opportunities outside of Tokyo so as to diversify its Japan property portfolio.
Hong Kong Property
Hong Kong and Mainland China property markets are facing declining property values and tightening credit conditions. Rising office vacancies and softening rents in Hong Kong are affecting the viability of commercial properties, and completed construction projects in the Hong Kong and Mainland China property markets have been facing declines in sale volume. News of Hong Kong developers selling projects at low prices or at a loss have emerged. The Group has written off all its investment in Hong Kong property projects.