Dear Shareholders,

Two years ago, we embarked on our strategy of dual engines of growth of energy and shipping to enhance our financial strength and stability. The reason was simple — the coal industry was experiencing headwinds then and the strategic plan that we had for the shipping segment meant that we were able to build a cash-generative business that would boost the Group’s financial performance.

The strategy has paid off as we continue to deliver results as seen from the financial year ended March 2017 in which operational profit of the shipping and coal division were up 34.9% and 77.9% year-on-year to HK$117.5 million and HK$301.6 million respectively. The strength of our financial results is testament that our chosen business strategy has borne fruits.

Enhancing coal offerings and expanding energy sources

Coal prices rallied from the middle of 2016 to early 2017 largely due to policy changes in China. While the industry continues to restructure based on the energy plans of individual countries, the fundamentals of coal remain supported, with increasing demand for high quality coal. We respond to the market’s needs for higher grade of coal through Merge Mine, which we strategically acquired in December 2015 that produces 6,426 kcal/kg Newcastle grade coal. The introduction of the new product has allowed us to expand our coal offerings to cater to a wider market, enabling us to expand our client base to international global energy houses.

As countries continue to evolve in their energy needs, we stayed ahead of the change by investing in a biodiesel plant in Arkansas, United States in December 2016. This project marks our first investment into biodiesel. Together with our joint partner, Solfuels Holdings Pte Ltd, an experienced biofuel operator, we acquired the plant that is located beside the Mississippi River and sits on a wide area of 38.2 acres of land. The plant has been retrofitted to accommodate multi-feedstock including yellow grease, rendered animal fats, inedible corn oil and refined vegetable oil. The retrofitting decreases the cost of production as the Group can select the most cost competitive feedstock to maximise profitability. The biodiesel plant has an expected production capacity of 40 million gallons annually and commenced operations in June 2017. Production from this biodiesel plant will cater to the increasing demand for renewable energy in the US market.

Our increased range of products and the investment into a new energy source have been acquired with careful strategic planning to broaden our revenue base. Coupled with our strong financial discipline and a keen eye on cost, we intend to create a portfolio of assets that are able to generate positive cash flow despite the market cycle.

Growing our fleet

Alongside our coal business division, we have our shipping division that provides a steady income stream for the Group. During the course of the year, we expanded our fleet to three Very Large Crude Carriers (“VLCCs”). As compared to other vessels, our VLCCs have been installed with heating and blending capabilities on board, giving us more flexibility to store a wider range of oil products.

Beyond the VLCCs, we also have six sets of tugs and barges and a Panamax vessel. Each of which have long-term contracts attached to it, ensuring stability to the group earnings. Together with our trained professionals who respond around the clock, we strive to be the preferred partner of our valued clients. Our distinctive offering and strong relationship with global energy and resources partners, is our key strategy in differentiating us from competitors.

Building on our Growth

In the next financial year, we endeavour to continue on our growth trajectory and will shape our business to meet the evolving customer’s needs. We will leverage on our good financial health to expand the business in related areas and build long-term value for our company and our shareholders.

Ng Say Pek Chairman