Executive Chairman's Message

Dear Valued Shareholders,

On behalf of the Board and management, it is my pleasure to present to you the Annual Report of Uni-Asia Group Limited and its subsidiaries (the “Group” or “Uni-Asia”) for the financial year ended 31 December 2023 (“FY2023”).

FY2023 IN REVIEW

The Group recorded a profit of US$5.1 million for FY2023. Shipping led the Group’s profit with US$10.0 million. In particular, the Group’s wholly-owned vessels contributed US$7.5 million while the Group’s Maritime Asset Management business segment contributed US$2.0 million.

For the Group’s wholly-owned ships, the newer 38k DWT ships averaged close to US$13k per day in FY2023, while the older 29k DWT ships averaged less than US$10k per day in FY2023. Therefore, as asset managers, we have been looking for opportunities to dispose of the older 29k DWT ships so we can improve our portfolio’s returns, as well as prepare our financial capital to purchase newer vessels with more environmental friendly specifications in the future.

Indeed, an opportunity to dispose of our older ship arose in 2023 when the dry bulk second-hand prices remained strong even though the dry bulk charter market softened. This is attributed to the fact that newbuilding prices have risen over the past year driven by strong shipyard capacity utilisation from high level of containership and gas carrier ordering over the past two years. The Group therefore disposed of our oldest ship in our portfolio, Uni Auc One towards the end of 2023 and realised a gain on disposal of US$2.3 million. As this vessel is free from mortgage, all the net proceeds of US$7.5 million went into the Group’s cash balance.

In January 2024, the Group entered into a contract to sell the Group’s 2nd oldest 29k dwt ship built in 2009, M/V Uni Wealth, held through wholly-owned subsidiary Fulgida Bulkship S.A., to an external buyer. The sale was completed on 6 March 2024. In 2020, the Group made an impairment of US$1.7 million for this vessel based on the conditions then present. With the signing of sales contract in 2024, the Group had reversed out US$1.2 million of the US$1.7 million impairment as at 31 December 2023 based on the sales price. The Group does not expect further material reversal of impairment from this sale in FY2024.

Meanwhile, our joint-investment partner of Matin Shipping Limited (which the Group had a 49% stake) also decided to dispose of the ship under Matin Shipping Limited. As a result of this disposal, Matin Shipping Limited distributed US$1.5 million to the Group. In addition, the Group also received dividends of US$1.1 million from other ongoing joint-investment ship entities. These contributed to the US$2.0 million profit of Maritime Asset Management business segment.

The Group’s property investments had a loss of US$1.7 million, due to the losses recorded for property investments in Hong Kong. Prior to the pandemic when US interest rate (and therefore Hong Kong interest rate) was low, the Renminbi was strong vis-à-vis the USD. More funds from China flowed into Hong Kong for investments as HKD is pegged to USD. The situation now is reverse in that the Renminbi is weak vis-à-vis the USD and US interest rate (and also in Hong Kong) is high. As a result, it is more costly for mainland Chinese to purchase Hong Kong properties now, contributing to a slower Hong Kong property market. The Group had to book a fair valuation loss of US$2.1 million for the Group’s Hong Kong property investments. With the possible lowering of US interest rate in the latter part of 2024, market players are cautiously optimistic that the situation would improve. However, the Group is prepared to take more fair valuation losses should the situation worsen.

Let us move on to Japan. Japan’s property market remains robust. The Group sold three properties under development and netted US$1.4 million profit. Investment returns under this business segment has also increased in FY2023. Overall, this business segment’s profit was US$1.2 million, a 12% increase from FY2022. However, had the JPY/USD rate been stronger, a higher profit could be recorded.

Overall, through the Group’s collective effort and despite some sectors not going as well as we had hoped for, we achieved a net profit of US$5.1 million. The Board is pleased to propose a final dividend of 2.2 Singapore cents per ordinary share to be paid on 31 May 2024 should the dividends proposed be approved in the upcoming Annual General Meeting. Together with the interim dividend of 2.2 Singapore cents per ordinary share paid in 2023, the Group’s total annual dividend for FY2023 is 4.4 Singapore cents per ordinary share, representing around 51% payout of FY2023’s net profit.

CONVERGING STRENGTHS DIVERSIFYING POTENTIAL

It is paramount for the Group that we have a diversified portfolio of ships and properties so the two asset classes can complement each other at different stages of each asset class’s business cycle. However, we do need to re-look at the potential of each asset class and re-balance accordingly.

For our ship portfolio, we need to dispose of our older and smaller vessels. We will not rush to deploy our proceeds, but will study the possible ship types, including size and engine type to determine the best portfolio for the Group. In the meantime, we will actively manage the charters of our existing ships to ensure the best possible returns.

For Hong Kong property investments, our main partner is working hard to market the completed units including providing brokers with higher sales commission and enticing buyers with rebates. Meanwhile, we are not likely to increase the exposure further from our current exposure so as to manage our risks.

For our Japan property investments, other than our ALERO projects, we are also expanding our asset management portfolio to include more diversified property assets, including PFI projects, solar power plants, group homes, and hospitality projects.

Sustainability and artificial intelligence have been the dominant topics in the current economic landscape. We will re-look at our investment framework to finetune the process so as to include sustainability targets as part of our investment objectives where applicable. We will explore opportunities for technologies including but not limited to artificial intelligence to improve efficiency and returns. Through converging the strengths of our people and our expertise, we hope to further diversify our returns potential.

LEADERSHIP RENEWAL

As we have announced, Mr. Kenji Fukuyado had stepped down as CEO from 29 February 2024. I would like to take this opportunity to thank Mr. Fukuyado for his years of solid stewardship, including leading the Group to achieve our record profit in 2021 and 2022. Mr. Fukuyado has contributed tremendously to the Group not just during his years as CEO of the Group, but throughout his years with the Group.

With Mr. Fukuyado passing on the baton, please join me in welcoming Mr. Masahiro Iwabuchi as our new CEO from 1 March 2024. Mr. Iwabuchi has been with the Group since the Group’s founding and is a very competent and experienced leader. I am confident that with Mr. Iwabuchi's seasoned leadership, our Group would be steered towards a future rich with potential and purpose. I look forward to a new and prosperous era of stewardship under Mr. Iwabuchi.

GRATITUDE

As we move into a year of uncertainties, the one thing that is certain is that we would not be able to achieve what we have achieved for the past years if not for the unwavering support of our shareholders, the Board, management, employees, clients, business partners, and bankers. I would like to express my gratitude to all our stakeholders for your continued trust and support. Together, we will forge a path of steadfast progress with shared success and will build a future for Uni-Asia that is as sustainable as it is prosperous.