Courage Marine Group Limited

Financial Information

Financials

Unaudited Interim Results For The Six Months Ended 30 June 2018

Financials Archive

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Announcement Of Unaudited Interim Results For The Six Months Ended 30 June 2018

Income Statement

Income Statement

Balance Sheet

Balance Sheet

Financial Review

Liquidity, financial resources and capital structure

During the six months ended 30 June 2018, the Group financed its operation mainly by credit facilities provided by banks and shareholders' funds. At 30 June 2018, the Group had current assets of US$10,926,000 (31 December 2017: US$14,130,000) and liquid assets comprising bank balances and cash, time deposit and investment in listed equity securities totalling US$7,895,000 (31 December 2017: US$11,311,000). The Group's current ratio, calculated based on current assets over current liabilities of US$12,450,000 (31 December 2017: US$5,964,000), was at a ratio of about 0.88 at period end (31 December 2017: 2.37), such decrease in current ratio was mainly due to the maturity of the bank loan secured by MV Heroic in June 2019 and accordingly the whole amount of the loan was classified as current liabilities at 30 June 2018, the Group is currently in negotiation with the bank for renewal of the loan facility. At 30 June 2018, the equity attributable to owners of the Company amounted to US$34,900,000 (31 December 2017: US$37,757,000), decreased by US$2,857,000 or 8% as compared to the prior year end and was mainly due to the loss incurred by the Group during the current period.

At the period end, the Group's borrowings represented loans from banks for financing the acquisition of vessels. The bank borrowings were denominated in United States dollars, bore interest at floating rates, and secured by the relevant vessels. The following is an analysis of the Group's bank borrowings and maturity profile:

Financial Review

The Group's finance costs of US$401,000 for the period represented mainly interests for the above bank borrowings, finance costs increased by 5% compared to the prior period (30 June 2017: US$382,000) was mainly a result of the increase in interest rates during the review period.

The Group's gearing ratio, calculated on the basis of total bank borrowings of US$15,763,000 (31 December 2017: US$17,108,000) divided by total equity of US$34,900,000 (31 December 2017: US$37,757,000), was at a ratio of about 45% at the period end (31 December 2017: 45%).

With the amount of liquid assets on hand as well as credit facilities granted by banks, the management is of the view that the Group has sufficient financial resources to meet its ongoing operational requirement.

Use of proceeds from shares placement

In January 2017, the Company completed the placing of 25,400,000 new shares to independent investors at the price of HK$3.82 per share (the "2017 Placing"). The proceeds from the 2017 Placing after deducting for incidental expenses including placing commission amounted to US$12,207,000 and had been used as intended as general working capital of the Group and for funding of attractive business/investment opportunities. Up to 31 December 2017, the proceeds had been mainly applied by the Group as to (i) approximately US$7,200,000 for the purchase of corporate bonds issued by property and aircraft leasing companies listed on the Hong Kong Stock Exchange or SGX-ST which were classified as "debt instruments at FVTOCI" (previously classified as "AFS investments"); (ii) approximately US$3,100,000 for the purchase of listed equity securities of companies listed on the Hong Kong Stock Exchange which were classified as "financial assets at FVTPL"; (iii) approximately US$1,500,000 had been applied by the Group's merchandise trading business as working capital; and (iv) with the remaining balance for general corporate and administrative purposes.

Placing of new shares

In August 2018, the Company completed the placing of 91,475,000 new shares to independent investors at the price of HK$0.473 per share. The net proceeds from the placing amounted to approximately US$5,428,000. The Company intends to use (i) approximately 80% of the net proceeds as general working capital for the Group's marine transportation services business and (ii) the remaining 20% as general working capital for the Group's other businesses. The Group is currently contemplating to expand its marine transportation services business through acquisition of an additional vessel, if such acquisition materialized, the 80% net proceeds allocated to this business as general working capital will be re-designated for funding such acquisition.

PROSPECTS

The outlook of vessel chartering business has become more positive commencing from the second half of 2017 as indicated by the rise of BDI from 822 points in July 2017 to over 1,600 points level since July 2018, the Group is therefore able to negotiate with existing/potential charterers for better charter rates which will lead to improved financial performance for the marine transportation services business.

Subject to the developments and outcomes of trade wars between the United States and China and other countries/economic group, the Group also intends to acquire an additional dry-bulk vessel in order to expand the carrying capacity and accordingly the scale of operation of the marine transportation business.

Looking forward, the management will keep up their efforts in managing the businesses of the Group and will continue to seize investment/business opportunities with attractive returns aiming to create value to our shareholders. Particular emphasis will be placed on investment/business opportunities linking with the "One Belt, One Road" and "Greater Bay Area" initiatives strongly supported by the Chinese Government, which are beneficial to Hong Kong's long-term economic prospects.

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