Chairman's Message
(Extracted from Annual Report 2009)
DEAR SHAREHOLDERS,
Following 2008's financial tsunami, 2009 emerged as a year filled with economic uncertainties. The crisis triggered the worst post-war contraction, dampened global trade and created challenging circumstances for shipping firms worldwide.
Amidst the difficult operating environment, Courage Marine has displayed strength and resilience this financial year. Through a cost-effective structure and a firm focus on maintaining a well-deployed, efficient fleet, the Group has managed to stay profitable in the financial year ended 31 December 2009 ("FY2009").
Riding through an uncertain economy
In 2009, the Group recorded revenue of US$27.9 million, reflecting a decline of 63% from the previous financial year. Net profit was significantly reduced to US$75,000 due to low freight rates and reduced fleet utilisation in FY2009.
The lower fleet utilisation was largely due to the volatility of the Baltic Dry Index ("BDI"). After falling under 900 points at the beginning of the year, it had fluctuated before hitting a year-high of 4,635 points in November 2009. Although the fluctuations were less tumultuous compared to its unpredictability in late 2008, it nevertheless affected the freight rates and demand for dry bulk shipping, posing numerous challenges for the Company throughout the year.
At the start of the year, the BDI clearly mirrored the bleak state of the economy as markets worldwide continued to suffer from the after-effects of the financial crisis. After showing subtle signs of recovery, the BDI rose substantially in June 2009 to hit its 10-month high since October 2008, at a level of 4,291 points. This was due to the increasing demand from China's steelmakers for iron ore and coal - raw materials necessary in the production of steel.
This surge however, was not sustained and in October 2009, another sizeable fall of the BDI was witnessed - this time down to a level of 2,100 points. The volatility continued as BDI levels subsequently ascended to its 2009-high of 4,635 points in November, concluding a year of erratic highs and lows. These factors negatively affected the operating environment for the shipping industry, thereby lowering fleet utilisation to 70%.
Upholding excellence
This year, the Group was once again rated as one of the world's Top 10 public shipping companies by Marine Money International - a prestigious ship finance publication - in terms of overall performance. This industry-acclaimed award is strong testament to the Group's consistent ability to exhibit financial prudence and maximise returns, in spite of a weak dry bulk freight market.
The Group also came out tops in terms of debt interest coverage ratio, illustrating our ability to generate enough cash to repay debt liabilities. Through effective cost management strategy and prudent expansion policy, the Group has also attained third placing for return on assets. Our strong showing in these areas is reflective of the Group's excellent financial health.
These accolades demonstrate the Group's commitment to operational efficiency and shareholder value creation. We believe that with consistent perseverance and careful cost management, we will continue building on our reputation as a leading player in the regional dry bulk market.
Boosting our capabilities
In 2010, the Group added a new vessel to the fleet, thereby increasing the Group's shipping capacity by over 32% or 128,150 dwt. At a cost of US$7.85 million, MV Cape Ore's larger tonnage will bring greater cost efficiency to the Group's operations. This enhancement to the fleet amidst difficult times is an indication of our strong financial position and our strategy to prepare for the next phase of growth.
Dividends
The Directors recommend a final dividend of US (cents) 0.472 per ordinary share, amounting to approximately US$5 million to be paid in respect of the financial year ended 31 December 2009, subject to shareholders' approval at the forthcoming annual general meeting of the Company.
Acknowledgements
On behalf of the Board, I would like to thank our shareholders, management, staff, business associates and clients for their steadfast support and dedication to the Group. Your commitment and confidence in the Group will enable us to make bigger strides towards greater value in the coming year.