Macroeconomic / business environment in FY2012
Euro countries suffered from economic contraction in FY2012. Across the Atlantic, the US economy was faced with the prospect of a fiscal cliff. In the east, the possibility of a hard landing of the Chinese economy had been much discussed as its export oriented growth model was impaired by sluggish economies of developed nations. Other emerging countries such as India and Brazil also suffered from slowing economies. As a result, the global economy was generally bleak in 2012.
The shipping sector was significantly affected by the gloomy global economy. Growth of cargo traffic volume was depressed as global trade slowed. New vessels supply outpaced demand, leading to dampened vessel prices and charter rates throughout the year. Likewise, the residential property market in Japan remained weak. In Guangzhou in south China and in Hong Kong, the office market remained stable despite slowing Chinese economy. On a more positive note, Japan's hotel industry, which experienced a big dive in occupancy rates in 2011 due to the 3.11 Crisis recovered to pre-crisis levels, as economic activities in the corporate sector revived.Performance in FY2012
Uni-Asia managed to achieve positive business developments and an increased level of profits in FY2012 in this challenging business environment. With regard to our ship finance arrangement and ship investment / management segment, we successfully provided and arranged suitable ship finance solutions to meet our clients' requirements and expanded our ship finance customer base. Fee income from ship finance arrangement increased as we expanded our customer base, offsetting fair value adjustment losses caused by the drop in market value of vessels we invest in. As for our ship owning business, the delivery of one newly built vessel 100% owned under Uni-Asia Shipping Limited ("Uni-Asia Shipping") contributed to enhancing our profit base. The industrial office building redevelopment project in Hong Kong, in which we participate with 10.2% interest, progressed as scheduled. All the saleable floors were sold to end users during pre-sale in FY2012 and we have recognised fair value gain from this project. Meanwhile, Uni-Asia Capital (Japan) Ltd. ("UACJ", formerly known as Capital Advisers Co., Ltd.), which is engaged in the property investment / management business in Japan, managed to reach breakeven at an operational level. However, UACJ took in fair value losses for its investments resulting in a loss for FY2012. Hotel operation has also improved on the back of management efforts to elevate brand recognition for "Hotel Vista" in the market.
As a result, net profit increased to US$3.6 million in FY2012 from US$1.4 million in FY2011. It is my pleasure to announce that the Board of Directors has recommended a final dividend of 0.5 Singapore cents per share. Uni-Asia has recorded steadily improving financial performance after two years of losses in FY2008 and FY2009. We are now on a recovery track and are working towards achieving US$10 million in net profit that was recorded before FY2008. Keeping in mind the Group's future funding requirements for growth and expansion, Uni-Asia hopes to distribute dividends to reward shareholders in years of improving financial performance.Looking ahead
The global economic outlook remains uncertain. In Europe, the sovereign debt crisis is expected to remain unresolved although bond purchase by the European Central Bank acts as a temporary relief. The US is facing its own set of problems including fiscal policies, which brings into question its pace of recovery and its sustainability. In today's interconnected world, the economic woes in these developed nations have harmful effects on emerging economies. Although the uncertain economic environment brings challenges to Uni-Asia, we believe it also provides opportunities to expand our business platforms and strengthen our profit structure.
We expect that the maritime market slump would continue for another year, which in turn provides us with good investment opportunities. We continue to identify good opportunities to expand our fleet of vessels for further growth. As for property investment / management, we are carefully studying the market and will prudently assess investment opportunities when they arise to expand our income base. As investors' interests in vessels and properties as alternative investments are increasing, we will place more focus on enhancing the integrated service function so as to meet investors' requirements.
Through employment of these strategies, we are confident of maintaining our momentum to achieve a full recovery.
On behalf of the Board of Directors, I would like to express our sincere appreciation for your understanding and continued support for the Group.
Mr Kazuhiko Yoshida
Chairman and CEO
15 March 2013