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Final Results Announcement For The Year Ended 31 December 2023
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Final Results Announcement For The Year Ended 31 December 2023
Condensed Consolidated Statement Of Profit Or Loss And Other Comprehensive Income
For the year ended 31 December 2023
Condensed Consolidated Statement Of Financial Position
At 31 December 2023
Overall Results
For FY2023, the Group recorded a loss attributable to owners of the Company of US$3,974,000 (2022: profit of US$1,123,000) and a total comprehensive expense attributable to owners of the Company of US$4,040,000 (2022: US$314,000). Such turnaround of the Group's results was mainly the combined effect of (i) the decrease in profit contribution from the Group's marine transportation operation to US$2,227,000 (2022: US$5,436,000); (ii) the loss on disposal of a subsidiary aforementioned of US$2,100,000 (2022: nil); (iii) the decrease in allowance for credit losses on debt instruments at FVTOCI to US$1,146,000 (2022: US$1,402,000); and (iv) the increase in impairment loss recognised on vessels to US$1,008,000 (2022: US$797,000).
Financial Review
Liquidity, financial resources and capital structure
During FY2023, the Group financed its operation mainly by cash generated from operations, credit facilities provided by a financial institution as well as shareholders' funds. At 31 December 2023, the Group had current assets of US$18,807,000 (2022: US$18,277,000) and liquid assets comprising bank deposits and cash and cash equivalents totalling US$17,849,000 (2022: US$15,819,000). The Group's current ratio, calculated based on current assets over current liabilities of US$1,927,000 (2022: US$3,826,000), was at a strong ratio of about 9.76 (2022: 4.78) at the year end. The significant increase in current ratio was mainly attributed to the net proceeds from disposal of the subsidiary aforementioned of US$1,803,000 which had been applied as working capital of the Group.
At 31 December 2023, the equity attributable to owners of the Company amounted to US$57,098,000 (2022: US$61,138,000), decreased by US$4,040,000 when compared with the last year end and was mainly a result of the loss incurred by the Group of US$3,974,000.
At the year end, the Group's borrowings represented loans from a financial institution mainly applied for financing the holdings of vessels. The borrowings were all due within one year (2022: current portion of US$2,122,000 and non-current portion of US$756,000, totalling US$2,878,000), denominated in United States dollars, bore interests at floating rates, and were secured by two vessels owned by the Group. The following is an analysis of the Group's borrowings and its maturity profile:
For FY2023, the Group's finance costs of US$187,000 (2022: US$346,000) represented mainly interests for the borrowings, finance costs decreased by 46% was mainly a result of the decrease in the average amount of borrowings over last year.
The Group's gearing ratio, calculated on the basis of total borrowings of US$756,000 (2022: US$2,878,000) divided by total equity of US$57,098,000 (2022: US$61,138,000), was at a low ratio of about 1% (2022: 5%) at the year end.
The Group's interest income from banks increased by 153% to US$612,000 (2022: US$242,000) over last year, mainly resulted from additional surplus funds on hand and the general rise in bank deposit rates.
With the amount of liquid assets on hand as well as the credit facilities granted by a financial institution, the management is of the view that the Group has sufficient financial resources to meet its ongoing operational requirement.
Use of proceeds from the Open Offer
In January 2021, the Company successfully raised US$9,148,000 before expenses by way of an open offer of 548,851,784 offer shares (with aggregate nominal value of US$548,851.784) at the subscription price of HK$0.13 per offer share (the closing price of the Company's shares was HK$0.193 on the day when the subscription price was fixed) on the basis of one offer share for every one share of the Company held on the record date (the "Open Offer"). The net proceeds from the Open Offer were US$8,621,000 (equivalent to a net subscription price of approximately HK$0.12 per offer share), of which a sum of US$2,821,000 was utilised as intended to repay a bank revolving loan to achieve immediate saving in finance costs, whilst the remainder of the net proceeds of US$5,800,000 was earmarked as working capital for the Group's marine transportation business. As opposed to the original intention to apply approximately 50% of the remainder of the proceeds to its marine transportation business, approximately 40% to its investment holding business and approximately 10% to its merchandise trading business as working capital, the net proceeds from the Open Offer were not applied as working capital for the Group's merchandise trading and investment holding businesses as the Group was not active in its merchandise trading and investment activities primarily owing to the adverse economic impact brought by the prolonged continuation of the COVID pandemic. The Company has therefore earmarked the remaining net proceeds of US$5,800,000 as working capital for the Group's marine transportation business before any acquisition of a vessel is proceeded with. Such working capital would be continually be used and replenished in the course of operation on an ongoing basis.
The price range of the second-hand Supramax and Panamax vessels with varying specifications that are under consideration by the management has increased significantly since 2021 to around US$7 million to US$17 million currently, about 30% higher on average than the management's original budget of US$7 million to US$12 million back in 2021. The second-hand dry bulk vessel market has softened recently when compared to its peak in around mid-2022 and some buying opportunities have emerged. The management is in the course of evaluating certain vessel buying opportunities and it is still the Group's intention to reutilise the remaining net proceeds of the Open Offer of US$5,800,000 to acquire a second-hand dry bulk vessel. The management will continue to closely monitor the market conditions and will inform shareholders of any update of the vessel acquisition as and when appropriate.
PROSPECTS
Following the full relaxation of anti-COVID measures in China and global trading activities have returned to their normality, the Group is prudently optimistic about the prospects of the marine transportation business in the medium to long term, although the current market conditions are rather volatile as a result of the ongoing Russia-Ukraine war, and the Red Sea and Gulf of Aden safety crises.
The Group has yet to acquire a second-hand Supramax or Panamax vessel as the prices of these vessel types have increased significantly since 2021. However, the second-hand dry bulk vessel market has softened recently and some buying opportunities have emerged. The Group will continue with its plan of acquiring a second-hand dry bulk vessel and will inform shareholders of any update of the vessel acquisition as and when appropriate. Looking ahead, the Group will continue to manage its businesses in a disciplined manner, as well as to explore potential investment and acquisition opportunities and business enhancement strategies which are expected to bring long-term benefits to the shareholders.