Dear Valued Shareholders,
On behalf of the Board and management, I am pleased to present to you the annual report of Uni-Asia Holdings Limited and its subsidiaries (the "Group" or "Uni-Asia") for the financial year ended 31 December 2015 ("FY2015") It has been widely reported that the shipping market, in particular the dry bulk market, is in its worst shape in 30 years. Some players are running into difficulties, with some other going under. Notwitstanding these difficult conditions, the Group achieved an after tax profit of US$3.5 million in FY2015. We remain confident of the sound long- term fundamentals in our shipping, property and hotel operating businesses. As a show of our confidence, the Board has proposed an ordinary dividend of 6.25 Singapore cents per share, the same dividend amount per share (adjusted for share consolidation) as last year, subject to your approval at the forthcoming Annual General Meeting on 29 April 2016.
A downturn is a double edged sword. It can either be the worst of times for one to thrive or the best of times for one to build on one's fundamentals and strengthen one's capabilities. We will dig in our heels and not let this downturn disrupt our growth plans. At the same time, we will capitalise on the current opportunities to enjoy the fruits when the upturn comes. I shall explain how we plan to achieve this.
First, let me start with our shipping business. Our ship owning business can be broadly categorised into ships owned through our subsidiaries (which are consolidated into our Group accounts) and ships owned through jointinvestment companies (which are booked as fair valued investments).
Our main ship owning subsidiary is Uni-Asia Shipping Limited ("Uni-Asia Shipping"), which focuses on small handysize dry bulk carriers. As at date of this report, Uni-Asia Shipping has a portfolio of 9 handysize dry bulk carriers. Most of these 9 ships are contracted to charterers with medium-term, fixed time charter rates, therefore are less susceptible to the current dismal dry bulk market. However, charters for some of the older ships in Uni-Asia Shipping's portfolio were contracted for short period and suffered from lower market rate when charters were renewed. This impacted Uni-Asia Shipping's performance in 2015 as Baltic Dry Index hit new low. Notwithstanding the current market conditions, our fleet of ships under Uni-Asia Shipping has an average age of less than 5 years and they were built by Japanese shipbuilders. Such ships are of higher reliability, fuel efficiency and of better value retention. Therefore, with a strong, and relatively young fleet, we are better poised than other players to benefit when the shipping cycle turns around.
In 2015, we acquired two containerships from Akebono Fund – one wholly owned by Uni-Asia while another under a joint investment company. The acquisition of these two containerships provides us the opportunities to enjoy the upside of the containership market.
For our ships under joint-investment companies, we currently own 14 ships, of which, 1 will be delivered in 2016 and 4 from 2018 onwards. While the current market may apply downward pressure to the values of existing ships in our joint-investment portfolio, resulting in us taking in fair valuation losses in 2015, we need to ensure we have new ships ready when the market turns around. By buying ships through joint-investment companies, and with delivery from 2018 onwards, we can ensure we are still a player when market recovers yet limit our capital outlay.
For shipping related services, we now provide ship commercial management services to our joint-investment companies in addition to other suite of services that we provide. We are also exploring new markets and reaching out new clients for our services, including finance arrangement services. In this regard, we have opened a representative office in Seoul, South Korea in 2015 to reach out to potential clients in South Korea. Together with our Hong Kong, Tokyo, Shanghai, and Taiwan office, we have a reasonably good presence in North Asia for reaching out to existing and potential clients. This will help ensure a good deal flow to support our fee related business.
Turning to our property business, the development of our second Hong Kong property project is proceeding as scheduled and would be completed in 2017. Meanwhile, we are preparing to source for a third suitable property project in Hong Kong so that we can enjoy returns from such projects beyond 2017.
Meanwhile, Japan property market is still favourable. Our small residential project business continues to expand. We sold 3 projects in 2015, and now have 9 projects under construction and a few pipeline projects under assessment. Our research has shown that there are still potential in Japan property market. Notwithstanding this, we are cautious in our selection of projects yet bold to ensure this business continues to contribute to our bottom-line.
For our hotel operating business, occupancy and daily room rates continued to be good. Our hotel operating business contributed US$0.7 million to our bottom-line in 2015. The construction of two new hotels in Sendai and Yokohama which we will operate are progressing as scheduled. We will start operating Hotel Vista Sendai from 27 April 2016 while the hotel in Yokohama is scheduled to open in the summer of 2017. Further, the Group has secured a new hotel operating contract for a hotel in Nagoya. This hotel is now in the planning stage for redevelopment and the opening date is planned for the summer of 2017. With more hotels under operation, our hotel operating business will be an important contributor to our Group's growth.
Our property and hotel operating businesses have played an important part in supporting the Group's bottom-line in 2015. However, there was a time when the market conditions were not so favourable for our property and hotel operating businesses. It was with sheer determination, resilience and hard work that we grew our property and hotel operating businesses into what they are today. We are now facing similar headwinds in our shipping business. We will use the same determination, reslience and hard work to steer our shipping business into a brighter future.
I thank you all for your unwavering support, and seek your continued support so we can succeed together. I would also like to thank Uni-Asia's Board of Directors, management and employees for the hard work, dedication and commitment, as well as our clients, business partners, bankers and our shareholders for the continued faith and support. We shall build on our fundamentals and strengthen our capabilities, and together, we shall enjoy the fruits of Uni-Asia's success.
Chairman and CEO
Uni-Asia Holdings Limited