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Message From The Chairman

(*extracted from Annual Report 2017)

Dear Shareholders

The past year was a very busy one for us. We divested our entire loss-making shipyard business in China and worked hard to identify and nurture new growth opportunities.

We would like to thank all our shareholders for their patience and understanding, as we push ahead to seek and acquire promising and profitable businesses to replenish our portfolio.

For the year ended 31 December 2017, the Group recorded loss from continuing operations in dry bulk shipping and other businesses of $27.1 million on turnover of $37.2 million.

Gross turnover from continuing operations decreased by 8.2% to $37.2 million for 2017 compared to 2016 mainly due to a decrease in shipping revenue from a smaller fleet of bulk carriers.

At the end of the financial year, the Group's dry bulk shipping fleet comprised three bulk carriers after having scrapped seven bulk carriers by the end of 2017.

Overall, the Group recorded net profit attributable to equity holders of $263.9 million for the year, compared to a loss of $466.5 million for 2016.

The Group recorded profit from discontinued operations of $166.9 million for 2017 which included gain recognised on the disposal of subsidiaries of $373.6 million, offset by loss from discontinued operations of $206.7 million.

The Group's net asset value per share at 31 December 2017 was 23.0 cents, compared to 15.0 cents for the previous year.

Bulk shipping market remains soft

While there has been some recovery in the bulk shipping market, the uptick was from a very low base and the Baltic Dry Index (BDI) has remained at a relatively low level.

The BDI, which is a measure of shipping costs for commodities, started the year at 953 points and ended 2017 at 1,366 points, averaging 1,145 points for the whole year.

Disposal of shipyard business in China

Resolutions passed at the Extraordinary General Meeting ("EGM") to sell 51% equity interest in COSCO Shipyard Group Co., Ltd., 50% equity interest in COSCO (Nantong) Shipyard Co., Ltd. and 39.1% equity interest in COSCO (Dalian) Shipyard Co., Ltd. to our China Parent Group. The deal will inject RMB 1.41 billion (net of tax) into the Company's funds, allowing it to invest in promising businesses.

The Group had sustained substantial losses in its shipyard business over the last few financial years, owing to highly challenging market conditions. The disposal is an effort to stem further losses, reduce the Company's debt and improve its financial position.

Reshaping our business through acquisitions

On 3 November 2017, the Company announced that it had entered into a Share Sale and Purchase Agreement with COSCO SHIPPING (South East Asia) Pte Ltd to acquire approximately 40% of the issued and paid-up share capital of PT. Ocean Global Shipping, incorporated in Indonesia, for a consideration of S$13,953,371 payable in cash. PT. Ocean Global Shipping's business includes logistic service, freight forwarding and container depot services.

On 3 November 2017, the Company made a voluntary conditional cash offer for all the shares of Cogent Holdings Limited, one of Singapore's leading logistics management service providers, and its subsidiaries, with a consideration of S$1.02 per share amounting to approximately S$488 million.

On 2 January 2018, the Company received valid acceptances representing approximately 92.05% of the total number of shares. With that, the Offer Acceptance Condition had been satisfied and the Offer had become unconditional as to acceptances and in all other respects.

On 6 March 2018, the Company has completed the compulsory acquisition. Following the competition of the compulsory acquisition, Cogent has become a wholly-owned subsidiary of the Company. Cogent has been delisted from the official list of the SGX-ST on 8 March 2018.

The Group's control of one of Singapore's leading full service, integrated logistics service providers with a track record of over 40 years will help us to transform our business to offer end-to-end services to our customers with logistical needs in Singapore and Malaysia. The Company intends for Cogent to carry on with its existing business activities.

Singapore continues to advance as logistics hub

Singapore, one of the largest cargo hubs in the world, saw its sea cargo throughput continue to increase in 2017. Total cargo tonnage handled by the Port of Singapore increased by 5.5% to 626.2 million tonnes in 2017, compared to 593.3 million tonnes in 2016. The number of vessel arrival tonnage was up by 5.1% to reach 2.8 billion gross tonnes in 2017.

Singapore continues to be a highly promising growth centre for logistics in the region. The World Bank's Logistics Performance Index in 2016 ranked the country as Asean's logistics hub for the 10th consecutive year, globally the country is ranked fifth.

Singapore is well-positioned to take advantage of developments in South and Southeast Asia that are set to transform the logistics industry in region, driven by regional economic integration, free trade agreements and e-Commerce. The projected high growth of the economies of India, Indonesia, Thailand, Vietnam, and the Philippines will further fuel demand for transportation and logistics services in these countries.

World economic and trade outlook looking more positive

The vibrant South & South East Asian economies can also look forward to stronger economic growth worldwide. The International Monetary Fund (IMF) in its World Economic Outlook updated in January 2018 projected the global economy to rise to 3.9% in 2018 and 2019, from 3.7% in 2017. It said the revision reflected the stronger global growth momentum.

The stronger economic growth has resulted in the World Trade Organisation (WTO) raising its forecast for global trade forecast to 3.6% for the entire 2017 from its previous estimate of 2.4%. WTO has attributed the stronger growth in 2017 to a resurgence of Asian trade and a pickup in intra-regional shipments. It expects trade growth to moderate in 2018 to around 3.2% within its full range estimate of 1.4% to 4.4%.

While business confidence has improved generally, we still see uncertainty and confusion in the volatile world due to new leadership styles in some countries and continued conflicts around the world. Going forward, we will continue to be vigilant and to tread cautiously.

Potential opportunities

The Company will continue the hard work to reshape our future. We will accelerate our efforts to actively look for other investment opportunities, to potentially develop new businesses in South and Southeast Asia's logistics sectors. We will also work closely with external consultants and industry experts to align with China's One Belt, One Road (OBOR) Vision.

Deep appreciation

On behalf of the board I would like to record our deep appreciation to our staff and the various business associates for their support during the year as we prepared for our exit from the loss-making shipyard business into fresh business ventures.

We are also very thankful to our shareholders for their patience and support as we endeavour to transit into new revenue streams.

The Board has resolved not to recommend payment of dividend for the financial year ended 31 December 2017 as the Company was evaluating various strategic moves to expand its business.

Thank you.

Wang Yu Hang

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