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Message From The Chairman

(*extracted from Annual Report 2018)


Dear Shareholders

The past year was a busy and significant one for the Group, as we marked our foray into the logistics business in Singapore, Malaysia and Indonesia.

We would like to thank all our shareholders for their relentless support and understanding through this period, as we persist in our continuous efforts to acquire promising and profitable businesses that will provide synergy to our portfolio.

Financials

For the year ended 31 December 2018, the Group recorded profit from continuing operations of $13.2 million on turnover of $163.7 million.

Gross turnover from continuing operations increased by 340.1% year-on-year to $163.7 million for FY 2018 mainly due to turnover from the newly acquired logistics businesses.

Overall, the Group recorded net profit attributable to equity holders of $13.0 million from continuing operations for FY 2018 compared to a loss of $27.2 million in FY 2017.

The Group's net asset value per share at 31 December 2018 was 23.7 cents, compared to 23.0 cents at 31 December 2017.

Foray into the Logistics Business

Notably, our entry into the logistics business was the 100% acquisition of Cogent, one of Singapore's leading full service, integrated logistics service providers. With a track record of over 40 years, Cogent has established a strong presence across Singapore and Malaysia.

The logistics business portfolio was also strengthened by an acquisition of a 40% stake in PT. Ocean Global Shipping Logistics, an Indonesian shipping logistics company. This will complement the Group's logistics business and presence in Singapore, Malaysia and Indonesia.

Singapore as a key logistics hub in the region

Sea cargo throughput continued to increase in 2018.

Total cargo tonnage handled by the Port of Singapore reached 630 million tonnes in 2018, close to 2017's level. The number of vessel arrival tonnage reached 2.8 billion gross tonnes in 2018, comparable to 2017.

Singapore is the highest-performing logistics hub in the region and is the world's largest transshipment container port. According to the World Bank's Logistics Performance Index, Singapore has consistently secured the top spot in Asia since 2007. In 2018, the country ranked seventh globally.

Creating overall synergy with related companies

In 2018, the Company announced that it had incorporated a joint venture company known as "COSCO SHIPPING Southeast Asia Container Logistics Services Pte Ltd" ("JV company") with New Golden Sea Shipping Pte Ltd ("NGSS").

NGSS is a subsidiary of COSCO SHIPPING Lines Co., Ltd., which is in turn owned by China COSCO SHIPPING Corporation Limited, the ultimate controlling shareholder of the Company.

The JV Company was incorporated with an issued and paid-up capital of US$2 comprising 2 ordinary shares. The Company and NGSS have agreed to increase the issued and paidup capital of the JV Company to US$600,000 comprising 600,000 ordinary shares and each party shall hold 50% of the issued shares.

The principal activities of the JV Company include investment holding and provision of logistics, storage, forwarding and shipping services and other services.

We will continue to leverage on the Group's expertise and resources, so as to achieve overall synergy and economies of scale and scope.

Bulk shipping market

The Group currently has a total of 3 vessels with a total tonnage of 163,000 tonnes and with an average age of 13 years.

2018 saw some recovery in the bulk shipping market. The Baltic Dry Index (BDI), which is a measure of shipping costs for commodities, started the year at 1,230 points and ended 2018 at 1,271 points, averaging 1,353 points for the entire year, an 18.2% year-on-year increase from 2017's average of 1,145 points.

World economic and trade outlook

The International Monetary Fund (IMF) in its World Economic Outlook has warned of existing key threats to the global economy including policy uncertainty, trade tensions resurfacing and concerns about China's outlook.

The global growth forecast has been revised downwards and is projected to grow at 3.5% in 2019 and 3.6% in 2020. The downward revision reflects negative effects of tariffs implemented in the United States and China, weaker outlook for key advanced economies, as well as for some key emerging markets and developing economies arising from country-specific factors.

Due to increased volatility of the business environment, the Group will continue to be vigilant and cautious as we tread forward to ensure that we are well positioned for growth.

Investing in expansion

Looking ahead, the Group will continue to unveil more positive developments that we believe will help us strengthen our capabilities and build on our competitive advantages.

Our goal remains clear – to become the leading integrated logistics player in the South and Southeast Asian region. Alongside the development of China's Belt Road Initiative (BRI), we will continue to work closely with various industry experts to leverage and build on new opportunities.

Deepest appreciation

We are well positioned for growth in the upcoming year and beyond, following the successful transition into various exciting business ventures. On behalf of the Board, I would like to express our appreciation to our employees, whose collective passion and commitment has enabled the Group to navigate through difficult times.

To our shareholders, we would like to thank you for your steadfast support through this transition period.

The Group is dedicated to seeking out and acquiring promising and profitable businesses as we look towards sustainable growth and value creation.

Wang Yu Hang
Chairman

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