Chairman's Statement
Dear Shareholders,
I am pleased to report that the financial year ended 31 December 2010 ("FY2010") saw a recovery of our business performance.
As you are aware, the Global Financial Crisis and subsequent global economic depression which started from later half of 2008 had adversely affected our business environment and hence our business performance. Under such difficult circumstances, we recorded net losses in the last two consecutive financial years. However, with our active business promotion supported by a recovery of the global economy, FY2010 became a turnaround year for the Company.
The shipping industry on the whole has shown a recovering trend, but the degree of recovery has varied, depending on the different segments. The property market in Japan, which has seen a few difficult years, showed some signs of stabilisation in 2010, though a significant recovery of the market has yet to be seen.
Our business strategy for FY2010 was to simply focus on the profitability of the group. We systematically improved the profitability in all business segments by enhancing our existing business as well as realising new business opportunities.
Our maritime investment business has been active during the FY2010. Using our internal resources, we invested in two new handysize bulk carriers at competitive prices for the majority stake. Those two vessels are scheduled to be delivered in the second quarter of 2011 and the second quarter of 2012 respectively. In January and March 2011, we ordered a total of two more handysize bulk carriers in which we have 100% stake. One product tanker under the Akebono Fund was delivered in the fourth quarter of 2010, resulting in all vessels under the Akebono Fund being in operation now. Fee income from our structured finance business in the maritime sector improved, as our competitive structured finance proposals were well accepted by our clients while the ship industry recovers and financial institutions gradually come back to the market.
As part of our strategy, we branched out into property investment in Hong Kong in order to diversify our investment portfolio. We have participated in a property redevelopment project in Hong Kong with a Hong Kong property development company, while inviting another investor to participate. This investment is expected to contribute to our profit in two years time.
As for our Japanese property investments, because of the stabilised property prices in Japan, the negative impact of fair value adjustment was far less in FY2010 compared with FY2009 when we needed to recognise a significant amount of fair value adjustment loss and impairment loss.
While we tried to rejuvenate our business activities in FY2010, we continued to maintain a rationalised expense programme. As a result, we recorded a net profit of US$2.3 million in FY2010, which is a significant recovery from a net loss of US$15.7 million in FY2009.
CONFIDENCE FOR THE FUTUREThough our bottom-line has turned to the black in FY2010, I would like to emphasise that it is but the first step to a full recovery. As mentioned, we have planted the investment seeds for future growth and although they did not contribute to our profitability in FY2010, they will form the basis for the full recovery and future growth of the Company. We will continue to make such investments to realise opportunities that will increase the value of the company.
Through the process of weathering the heavy financial storm in the past two years, the foundation of the Company has become more solid than before. Now that the uptrend of the market is gradually being realised, a lot of business opportunities are opening up for us and it is time for us to step forward and capitalise on them.
I would like to report that the recent earthquake and tsunami disaster in Japan, which occurred on 11 March 2011, did not cause any major physical damage on the properties that we invested in or manage as an asset manager. With regard to the vessels managed by the Group and/or which the Group has an interest in, none were damaged or structurally affected. Similarly, our hotel operations were also not affected by the disaster in terms of physical damages or injuries. At this stage, it is still too early to assess the collateral impact of the disaster on our property business and hotel operations in Japan, as it depends on the overall effect on Japanese economy and tourism. We will act prudently and quickly to cope with the challenge of this unpredictable environment as it develops.
On behalf of the Board of Directors, I would like to express our sincere appreciation for the support extended to us by shareholders, and to seek your continuous support as we move ahead.
Mr Kazuhiko Yoshida
Chairman and CEO
17 March 2011