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SHIPPING LIMITED

ANNUAL REPORT

2017

Progressing

Steadily

in Clear

Direction

Uni-Asia Shipping Limited (“UAS” or the “Company”) is an owner of small & medium size bulk carriers. We also commercially manage bulk carriers leveraging our expertise and wide network in the industry.

Our StrategyTo achieve sustainable growth by expanding our fleet focusing on small & medium size bulk carriers such as Handysize bulk carrier and Supramax bulk carrier

Our MissionTo serve our clients who transport sea cargoes in environment-friendly manners and with safety demonstration

Our GoalTo be a group of highly experienced professionals to achieve our mission

Corporate Information

Financial Highlights

Our Business and Operation

Feet Expansion History

Regulations and Our Actions

Market Review

Financial Review

About Our Shareholder

Risk Management

Management & Team

Report of the Directors

Independent Auditor’s Report

Audit Financial Statement

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Contents

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/ UNI-ASIA SHIPPING LIMITED / Annual Report 2017 /

Corporate Information

Date of Incorporation12 Apr 2010

Place of IncorporationHong Kong SAR

Principal Place of BusinessHong Kong HQ

30th Floor,

Prosperity Millennia Plaza,

No. 663 King’s Road,

North Point, Hong Kong

Tel: 852 2528 5016

Regional contactsTokyo

MD Kanda Building 7F,

9-1 Kanda Mitoshirocho,

Chiyoda-ku, Tokyo Japan 101-0053

Tel: 81 3 3518 9252

Shanghai

Room 2106, Yongda International Tower,

2277 Longyang Road,

Pudong District, Shanghai, 201204 China

Tel: 86 21 5888 8007

DirectorsMichio Tanamoto (Chairman)

Zac K. Hoshino (Chief Executive Officer)

Makoto Tokozume (Chief Financial Officer)

Masaki Fukumori

Kenji Fukuyado

ShareholdersImmediate Shareholder

Uni-Asia Holdings Limited (100%)

Ultimate Shareholder

Uni-Asia Group Limited

(100% via Uni-Asia Holdings Limited)

Principal BusinessVessel Owning & Chartering (Bulk Carrier)

Vessel Commercial Management

Paid-Up CapitalUS$51,998,342.00

(as at 31 May 2018)

Principal BankersBank SinoPac Hong Kong Branch

CTBC Bank Co., Ltd. Head Office

Mega International Commercial Bank

Offshore Banking Branch

Mizuho Bank Hong Kong Branch

AuditorErnst and Young

Company Websitewww.uniasiashipping.com

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会社概要

設立2010年4月12日

設立地香港特別行政区

所在地香港本社

30th Floor,Prosperity Millennia Plaza,No. 663 King’s Road,North Point, Hong KongTel: 852 2528 5016

グループ他拠点東京

〒101-0053東京都千代田区神田美土代町9 – 1MD 神田ビル７FTel: 81 3 3518 9252

上海裕洋船舶管理（上海）有限公司中国上海市浦東新区龍陽路2277号永達国際大厦2106室郵編　201204Tel: 86 21 5888 8007

役員棚元　道夫（会長）星野　清己（チーフ・エグゼクティブ・オフィサー）床爪　誠（チーフ・フィナンシャル・オフィサー）福森　雅紀福宿　謙二

株主親会社（直上の株主）

　　ユニ・アジアホールディングスリミテッド100%究極の株主

　　ユニ・アジアグループリミテッド　　　（100％、ユニ・アジアホールディングス　　　リミテッド経由）

主要業務船主・貸渡業務（ばら積み船）船舶コマーシャルマネジメント

資本金51,998,342米ドル　（2018年5月31日現在）

主要取引銀行永豊銀行（バンク・サイノパック）　香港支店中国信託商業銀行　本店兆豊国際銀行　オフショアバンキング支店みずほ銀行　香港支店

会計監査人アーンスト・アンド・ヤング

ウェブサイトwww.uniasiashipping.com

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Financial Highlights

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

(13,289)

5,426

2,565 2,223 613

4,692

52,557

66,21383,779

91,925105,784102,210

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

7,235

10,395 11,062

15,44114,386

10,918

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

7,2238,612

9,979

14,20113,356

11,449

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

Y-O-Y comparison(US$’000)Revenue Number of operating days

Profit/(Loss) for the year Net borrowings

EBITDA Net cash flow from operating activities

Operating profit Net assets

FY2013FY2012

12,72316,190

FY2014 FY2015 FY2016 FY2017

19,396

31,01026,860

28,645

1,2481,647

1,953

3,221

2,7563,157

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

+8.3% +2.0%

-10.1%

+41.4% +24.0%

+2,110.9% +11.9%

3,778 3,8714,479

9,745

5,838

441

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

31,019

44,08251,890

56,94863,674

50,871

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

+$17,981

EBITDA = Profit before tax + Depreciation - Interest Income + Finance Cost + Unrealised Loss/(Gain) on DFI + Unrealised FX Loss/(Gain) + Impairment Loss + Provision/(Reversal of Provision) of Onerous Contract - Gain on Disposal of Vessel - Fair Valuation Gain/(Loss) on Equity Investment

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業績ハイライト

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

(13,289)

5,426

2,565 2,223 613

4,692

52,557

66,21383,779

91,925105,784102,210

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

7,235

10,395 11,062

15,44114,386

10,918

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

7,2238,612

9,979

14,20113,356

11,449

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

前年度対比

売上高船舶稼働日数

当期利益╱（損失）純借入

EBITDA 営業活動によるキャッシュ・フロー

営業利益純資産

FY2013FY2012

12,72316,190

FY2014 FY2015 FY2016 FY2017

19,396

31,01026,860

28,645

1,2481,647

1,953

3,221

2,7563,157

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

+8.3% +2.0%

-10.1%

+41.4% +24.0%

+2,110.9% +11.9%

3,778 3,8714,479

9,745

5,838

441

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

31,019

44,08251,890

56,94863,674

50,871

FY2013FY2012 FY2014 FY2015 FY2016 FY2017

+$17,981

EBITDA = 税引前当期利益 + 減価償却費 – 利息収入 + 財務費用 + デリバティブ商品評価損/(益)+ 為替評価損/(益) + 減損損失 + 不利な契約に係る引当金/(引当金の戻入) – 船舶売却益 – 有価証券時価評価益/(損)

（千米ドル）

6



1. OUR BUSINESS1) Our Business functionsi) Vessel Owning & CharteringWe own vessels and charter them out to third party owners and/or operators,

with which we earn recurrent charter hire income. We are also bareboat

chartering in one vessel, in addition to owning vessels, which is time

chartered out to a third-party operator.

ii) Commercial ManagementIn addition to vessel owning, we commercially manage vessels owned by

joint investments between our parent company and other parties.

2) Vessel TypeA bulk carrier is a large, single deck ship which carries unpacked cargo. The

cargo is simply poured, tipped or pumped in the holds or tanks of the vessel.

Bulk carriers are classified several categories by the size of the capacity.

Bulk CarrierShip Owning / Chartering

Bulk CarrierCommercial Management

Service

OUR BUSINESS

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Segment DWT Major cargo Particulars

Handysize

(including Small

Handy)

10,000 – 40,000 Steel products,

Forest products,

Grain,

Minor Bulk*

• The most versatile segment due to its compact mobility.

• Able to trade into most ports in the world in including small ports with length and draft restrictions and without some infrastructures.

• Most vessels are equipped with its own gear/cranes to handle various types of cargo.

Handymax

(including Supramax

and Ultramax)

40,000 – 65,000 Steel Products,

Coal, Grain,

Minor Bulks*

• Started to be built from late 1990’s and 56,000 - 58,000 DWT is its common size nowadays.

• This is also versatile segment compared to other bigger size categories.

Panamax

(Including Post-

Panamax)

65,000 – 100,000 Grain, Salt,

Coals, Iron Ore

• The vessel was originally designed to navigate the old Panama Canal with the maximum width of 32.2 meters.

• Suitable for carrying bulk cargo of industrial commodities such as salt, grain, coal and iron ore.

• Much of ore is traded through the Panama Canal thus the vessel with this size is usable for ore trading.

• After opening of the expanded Panama Canal in June 2016, new Post-Panamax vessel with wider holds than those of Panamaxes transits the new locks.

Capesize 100,000 – 200,000 Iron Ore, Coals • Because of its size, there are relatively small number of ports around the world with the infrastructures to accommodate this type of vessel.

VLOC 200,000 – Iron Ore • Special category of bulk carriers and the term is used to indicate ships designed to transport iron ore with a deadweight of over 300,000 tonnes.

Our focus!

Our focus!

Minor Bulk: Fertilizer, Wood Pallet, Mineral Sands, Cement, Cement Clinker, Limestone, Gypsum, Feldspar Chips, etc

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We focus on Handysize/Supramax bulk carriers with the size ranging from 28,000 dwt to 65,000 dwt for the following

reasons:

• We pay attention to their versatility. As these sizes of bulk carriers can carry a wide variety of cargoes such as grain,

steel products, cement, logs including so called minor bulk, the vessel needs are in wide range.

• Their small size allows Handysize/Supramax vessels to enter smaller ports to pick up cargoes. Because they are

usually crane fitted, they can usually load and discharge cargoes at ports where port facilities are still under

development.

• Because of above versatility, the number of vessels under these categories are more than the those of larger size

categories. As we can see in the pie chart below, Handysize (10K-40K DWT) and Supramax (40K-65K DWT) vessels

share more than 60% of bulk carrier in terms of number of vessel. High liquidity in S&P and charter market enable

us to have flexible strategy to change the fleet size by easier disposal/acquisition of the vessels.

10k to <40k DWT30.2%

10k to < 40k DWT

≥100k DWT15.2%

65k to <100kDWT

22.6%

40k to <65k DWT32.0%

40k to < 65k DWT 65k to < 100k DWT ≥100k DWT

Source: Clarksons (1 June 2018)

As our strategy, we take following measures to maximise our profit.

i. Acquiring good quality vessels at reasonable prices

➝ Most of our vessels are acquired after 2010 at relatively low price after industry’s booming time. Our fleet is

competitive in terms of vessel age.

ii. Chartering out our vessels at reasonable hire rates

➝ We are trying to determine the adequate charter period foreseeing the market situation. We applied voyage

charter for some vessels in 2017, in order to maximise the earning capacity of the vessel. Putting our vessels in

the pool operation is also one of our options we can try.

Share of Number of Vessel by Size

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iii. Making efforts to minimise vessels’ operational incidents

➝ We closely work with our ship management companies to better control the vessel operation.

iv. Selectively working with reputable charterers with stringent credit control

➝ Regular monitoring on the charterer’s performance and regular/ad hoc credit reviewing on our clients is

carried out.

v. Strictly controlling vessels’ operating expenses

➝ Stringent operating expenses budgeting is discussed with ship managers followed by the monthly monitoring

of the actual expenses.

2. OUR OPERATION1) Our operating functionsLeveraging our internal resources and network, we are providing our tonnage and taking cares of our vessel

performance in which following parties are involved.

• Commercial team of UAS– Our commercial team is closely communicating with charterers and responding to their needs timely and

properly.

• Wealth Ocean Ship Management (Shanghai) Co., Ltd. (“WOSMS”)– WOSMS, which is a subsidiary of Uni-Asia Group Limited (“UAG”), is in-house technical team of UAG group, and

WOSMS can take care of our vessels operation as a technical manager.

• A third-party ship management company– We may appoint a third party as a ship manager of our vessel to meet charterers’ special requirements.

• Uni Ships and Management Limited (“USM”)– A vessel related service provider of UAG group, also helps us as a middleman in relation to ship operation

between WOSMS and the Company.

Provide tonnage as ship owner•UNI-ASIA SHIPPING with its commercial team

Provide our vessels to our clients

Provide ship operationrelated service

•USM- helps procurement- helps crew management- intermediates ship management

Provide ship technicalmanagement

•WOSMS•A THIRD PARTY SHIP MANAGER

As a ship owner/bareboat charterer/commercial manager, we are keeping our vessels always in good condition

and complying with international regulations and rules in order for them to carry our clients’ cargoes safely and

efficiently among ports worldwide. Working with WOSMS, which has affluent experiences, and leveraging our wide

connection with other ship management companies which provided professional services, we are able to provide

our clients with good performance of ships and establish good relationship with them.

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Log Steel Grain Fertiliser

2) Our fleet trading routesWe always maintain our fleet in high standards to trade worldwide, which can always meet our clients’ specific trading

patterns in the planet. Examples of our vessels’ trading routes are set out as follows:

4

9

10

1

87

5

10 9

4

3

6

2

Route No. Main Cargo Loading Discharging Voyage Period

1 Log Wellington/Napier,New Zealand

Inchon Korea/Lianyungang, China 42 days

2 Log Wewak, PNG Jingjiang, China 63 days

3 Log Liepaja, Latvia Skagen, Denmark/Gemlik,Turkey 39 days

4 Steel Diliskelesi/Gemlik/Nemrut Bay/Iskenderun,Turkey Houston/Brownsville, USA 60 days

5 Steel Kashima/Oita, Japan Chittagong, Bangladesh 30 days

6 Corn Yuzhny, Ukraine Valencia, Spain 19 days

7 Wheat Melbourne, Australia Cilacap, Indonesia 33 days

8 Barley Geelong, Australia Taniyama/Yatsushiro/Hakata/Sakaide, Japan 30 days

9 DDGS Garyville, USA Bandirma, Turkey 38 days

10 Soda Ash Port Arthur, USA Huelva/Castellon/Tarrangona, Spain 52 days

* Voyage period includes loading/discharging/anchoring/shifting/bunkering time.

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3) Cargo portfolioOur Handysize bulk carriers, majority of which are logger with shallow draft, geared, logged fitted, bring high flexibility

for trading areas and loadable cargoes. The commodities we transported primarily include log, coal, cement, cement

clinker, steel products, fertilizer, grain, sugar, pet coke and mineral concentrates.

Uni-Asia Shipping Limited Cargo Profile in 2017

43.8%Construction materials

10.9%Energy

10.9%Metals

34.4%Agricultural products

Cargo Category

Item % share

ConstructionMaterials

Log & wooden products 14.1%

43.8%

Steel & scarp 21.9%

Cement & Cement Clinker

6.2%

Other 1.6%

AgriculturalProducts

Agricultural products 4.7%

34.4%Grains 9.4%

Fertiliser 20.3%

MetalsConcentrates &

other metal10.9% 10.9%

EnergyCoal 9.4%

10.9%Petcoke 1.5%

Total 100.0% 100.0%

Breakdown of cargo items

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All of our vessels are crane-fitted and ensure maximum flexibility for self-handling of commodities in those regions

where port facilities are still under development.

Loading the Coal Loading Fertilizer

Discharging Log Discharging Log

Loading Wheat Loading Soybean

Loading Bagged Cement Loading Steel Bar

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3. REVIEW ON 2017 OPERATION1) Development for the year

Business Environment in 2017

Dry bulk market rebounded from the historically low level of 2016

• Baltic Indices, as well as period charter rate, continued to improve.

➝ Daily average BDI surged from the bottom of 290 in 2016 to 1,743 in 2017.

➝ Daily average BHSI surged from 183 in 2016 to 690 in 2017.

➝ Annual average of one year TC rate for 30K DWT went up from $5,200/day in 2016 to S8,000/day in 2017.

• Second hand vessel value also improved in 2017.

Our business development under surrounding business environment in 2017

No fleet expansion in 2017

• All the vessels we ordered had been delivered by 2016.

• There is no order book as our own vessel

➝ All vessels are in operation now.

We managed to maximise our charter income

• Among the UAS fleet, employments of four (4) vessels were on short term basis. To capture the recovering market trend and maximise our profit margin, we put two vessels into pool operation.

• Number of off-hire day was less than that of 2016 due to prudent and careful ship management.

We managed to minimise our operating expenses

• We closely monitored and stringently controlled operating expenses.

• Financing cost was well managed by minimising US$ interest rate hike impact.

Outlook/Strategy in 2018

Foreseeing continuing recovery, we may seek opportunity to enhance our portfolio

1. Consider efficient employment arrangement to maximise our charter income.

• Consider to shift from short term charter to longer term charter, if it makes sense.

➝ One another vessel long-term charter party will expire in 2018. New CP has been already fixed taking advantage of recovery trend in Q1 2018.

➝ focus more on subcontinental route trading expecting the growth of cargo demand.

2. Look at opportunities to reshuffle our fleet

➝ Closely monitor second hand vessel market.

3. Improve expense ratio

➝ Take advantage of scale economy of our fleet for purchasing vessel operating items.

➝ Stringent annual opex budget is agreed with ship managers and close monitoring will be carried out.

4. Expand the fleet under commercial management

➝ We will add 3 more commercial management vessels in 2018 to enhance fee income.

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2) Our fleetAs at 31 May 2018, our fleet comprises 13 bulk carriers including five vessels we commercially manage. They are all in

operation now. We have ordered four handysize bulk carriers since 2013, in which we own 100% or majority ownership.

All of these four new buildings have been delivered to date.

UAS fleet

Own / BBC in vessel 8

Commercial management vessel 5

Total 13

Uni-Asia Shipping Fleet List

Existing vessels Disposed

Type Capacity (DWT) Year of Built Shipyard Flag

Dry Bulker 28,300 2001 Kanda Hong Kong

1* Dry Bulker 28,709 2007 Shin-Kurushima Hong Kong

2 Dry Bulker 29,100 2011 Y-Nakanishi Hong Kong

3 Dry Bulker 29,118 2012 Y-Nakanishi Hong Kong

4 Dry Bulker 37,094 2013 Onomichi Hong Kong

5 Dry Bulker 37,649 2014 Imabari Hong Kong



8** Dry Bulker 57,836 2015 Tsuneishi Hong Kong

9** Dry Bulker 57,836 2015 Tsuneishi Hong Kong


11** Dry Bulker 37,700 2016 Imabari Hong Kong

12** Dry Bulker 37,700 2018 Imabari Hong Kong

13** Dry Bulker 36,300 2018 Oshima Hong Kong

As at 31 May 2018* Bareboat vessel** Vessel under commercial management of UAS

Year to date 2018, we disposed one vessel which was built in 2001, in tandem with recovery of the secondhand vessel

price. One each commercial management vessel was added in February and April 2018 respectively, both vessels

are owned by Uni-Asia Holdings Limited (“UAH”), the immediate parent of the company, with 18% interest with another

investor.

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Our fleet comprises mostly young vessels with the 7 years of age or younger. Among our fleet of 13, 12 vessels were

built after 2010, the building prices of which are relatively low, as we contracted after the market boom had ended by

Global Financial Crisis in 2008. In this respect, we believe that our fleet is highly competitive in the market.

In addition to above fleet, the Company is going to enter into commercial management agreement to act as a

commercial manager for additional two new vessels, in which UAH invested with another investor in 2015. Those

vessels are scheduled to be delivered in June 2018 and H1 2020 respectively.

3) CharteringAll of our existing vessels are time/voyage chartered out to reputable charterers. In 2017, we had four vessels which

were contracted short-term Time Charter Parties/spot basis and renewed them from time to time, including Voyage

Charter. Among these four vessels, we put two vessels into pool operation to reduce inefficiency caused by frequent

charter fixture/re-delivery and to make use of pool manager’s charter arrangement capacity. This is the first time for

UAS to make use of this sort of arrangement. We can terminate this pool contract at any time after 12 months pool

period with three months prior notification.

One vessel, which had been employed on short-term basis, was disposed in April 2018, Therefore, three vessels

including two vessels in the pool vessel, are now employed on short-term basis. Once market recovers to a certain

extent, we will consider to fix one-year charter or longer for these vessels on a timely manner so that we can realise the

gain from market recovery.

Vessel No. 2017 2018 2019 2020 2021 2022 1 2 Pool** 3 Pool** 4 5 6 7

8* 9* 10

11* 12* 13*

As at 31 May 2018* Vessel under commercial management of UAS** We can terminate Pool Contract with 3 months prior notice and minimum participation of 12 months

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4) Commercial ManagementLeveraging our expertise and wide network in shipping industry, we started providing commercial management

services to external clients. As the first step, we committed to provide commercial management services for three new

vessels by the end of 2017 of which our joint investment partner holds 82% of interest while Uni-Asia Holdings Limited,

our parent company, holds 18 % of investment interest. Year to date 2018, we have added two more commercial

management vessels (No. 12 and 13 in the schedule on page 15) and another two more will be added going

forward.

5) Operation Datai) Charter Hire IncomeIn 2017, there was no new vessel delivery which we own. Thus, the number of operating days increased by 64 days

only from 3,157 days in 2016 to 3,221 days in 2017, mainly due to full year contribution of one new vessel delivered

during 2016. Notwithstanding this, charter hire income increased from US$28,645K to US$31,010K by 8.3% due to surge

of market hire rate.

Charter Income and No. of Operating Days

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

CH income (US$’000)

6,540

572

1,248

1,647

1,953

2,756

3,1573,221

12,723

16,190

19,396

26,68028,645

31,010

No. of operating days

Charter Income


2011 2012 2013 2014 2015 2016 2017

Notes:1. Commercial management vessels are excluded.2. Voyage charter income and working days of voyage charter period are included.

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The average charter hire rate of all the vessels, excluding voyage charter period, went up from US$9,071/day in

FY2016 to US$9,581/day in FY2017 by US$510, reflecting the market hire rate recovery in 2017. Among nine (9) vessels

operated in 2017, excluding three (3) commercial management vessels, four (4) vessels were employed on short term

basis and these hire rates went up in tandem with market recovery.

Average Charter Hire Rate (all vessels)

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

US$/day11,436

10,1929,832 9,932

9,676

9,0719,581

2011 2012 2013 2014 2015 2016 2017

Notes:1) Average charter hire rate above does not include voyage charter2) Commercial management vessels are excluded

ii) Operating expensesA) Operating cost ratio against charter hire income

The Operating Cost Ratio, which is the ratio of total operating cost to charter hire income, dropped to 78.5% in FY2017

from 88.0% in FY2016, and this increased our profit margin. Here, the total operating cost comprises i) vessel operating

expenses, ii) operating lease expense, iii) depreciation, iv) administration expenses and v) brokerage commission

paid. Factors of the drop of operating cost ratio, in addition to rise of average hire rate aforementioned, are as below.

a) Total depreciation amount (including Bareboat Charter vessel drydocking expense amortisation) decreased

mainly due to impairment loss of the vessels we recognised in 2016, which reduced vessel book value.

b) Our efforts to reduce operating expenses, such as changing ship manager and stringent cost control, bore fruits.

18



As a result of above a) and b), the ratio of vessel operating expenses against charter hire income went down from

49.8% in FY2016 to 43.8% in FY2017 and Operating Cost Ratio went down from 88.0% in FY2016 to 78.5% in FY2017.

Operating Cost Ratio(Proportion to Charter Income)

0%

10%

20%

30%

40%

50%

60%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%77.0% 77.5%81.5%

88.0%78.5%

28.0%

44.3% 43.0%45.9%

49.8%

43.8%

29.5%

5.5%

0.0% 0.0% 0.0%

5.3%3.8%

0.9% 0.9% 1.2% 1.4% 1.4%4.1% 2.8% 2.5% 3.9%

28.9%

24.1%

31.7%

20142013 2015 2016 2017

Vessel operating expenses/Charter Income

Depreciation/Charter Income

Vessel lease expense/Charter Income

Administration cost/Charter Income

Brokerage Commission/Charter Income

Total cost/Charter Income

B) Breakdown of vessel operating expensesBreakdown of vessel operating expenses is set out below. Crew expenses, insurance expenses and lubricant oil are

major items, which account for 59.1%, 8.1% and 4.5% of total operating expenses respectively. As increase/decrease

of these items have significant impact on our vessel financial performance, we are trying to manage these expenses

efficiently.

FY2017 Operating Expenses Breakdown

Crew expenses

Insurance

Lubricating oil

Ship management fee

Ship’s stores charges

Vessels repairs/maintenance

Vessels survey

Operating miscellaneous expenses

Commercial management expenses

Other expenses

59.1%

8.1%

6.7%

5.0%

1.6%

5.6%

3.4%

4.5%

1.5% 4.4%

19



C) Vessel operating expenses per dayThe movement of major operating expense items per day is set out in the below line chart. All the major items

including crew expenses, lubricating oil and insurance expenses showed stable movement or slight decrease in

2017 compared to 2016. Our various efforts to reduce these expenses, such as bulk purchase of lubricating oil,

centralised control of insurance management and stringent controlling of crew manning fee, are contributing to

better management of our vessel operating expenses. Due to the increase of the number of vessels, economy of

scale is also giving us more benefit than before in terms of cost control.

Major Vessel Operating Costs per Day

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016 2017

US$

Crew Expenses/day

Lubricating oil/day

Insurance expenses/day

Note: Above numbers are calculated as annual cost/number of operating days including off-hire days.

With WOSMS, our ship management company and sister company under UAH group, we are paying close attention

to these vessel operating expense items so as to better control and minimise these expenses.

20



iii) Off-hire daysOff-hire usually takes place in the case of technical problems of vessel which require repair or survey and when a

regulator orders the vessel to stop operation for regulatory reasons. Also, our vessel dry-docks at least every five years

and usually conduct interim dry-docking every 2.5 years, which also ingenerates off-hire.

The chart set out below shows the off-hire situation of our vessels (excluding commercial management vessels).

The total number of off-hire days, which comprises dry-docking off-hire and non-dry-docking off-hire, went down

significantly to 64.3 days in FY2017 from 109.7 days in FY2016. The number of dry-docking off-hire days dropped to

37.4 days in 2017 from 47.5 days in 2016. Two vessels dry-docked in 2016 and in 2017 respectively and we managed

to reduce dry-docking off-hire by better management in 2017. The number of non-dry-docking off-hire days also

dropped from 62.2 days in 2016 to 26.9 days in 2017.

Total No. of Off-Hire days

0

20

40

60

80

100

120

0

20

40

60

80

100

120

2012 2013 2014 2015 2016 2017

17.60.09.0

9.021.8

25.2

0.726.0

31.847.5

37.4

26.9

64.362.2

109.7

days

32.5

64.3

4.2

No. of Off-Hire Days For DD

No. of Off-Hire Days (Total)

No. of Off-Hire Days (excluding DD)

21



If we take a look at the number of off-hire days per vessel, including off-hire for dry-docking, it decreased from 12.3 days

in FY2016 to 7.1 days in FY2017. While dry-docking off-hire days per vessel slightly decreased from 5.3 days in FY2016 to

4.2 days in FY2017, the number of non-dry-docking off-hire days per vessel dropped significantly from 6.9 days to 3.0

days. This drop of the number of non-drydocking off hire days proves that our vessel operation was more efficient and

smoother than in 2016, in terms of safer voyage and vessel re-delivery off-hire.

No. of Off-Hire days/vessel

0

2

4

6

8

10

12

14

2012 2013 2014 2015 2016 2017

5.1

2.0

2.0

6.3

4.7

0.1

4.8

4.15.3

4.2

3.0

7.16.9

12.3

days

4.2

8.3

1.2

No. of Off-Hire Days/Vessel (excluding DD)

Total No. of Off-Hire Days/Vessel

No. of Off-Hire Days/Vessel for DD

22


Feet Expansion History

↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓M.V. Victoria Harbour M.V. Clearwater Bay M.V. Ansac Pride M.V. Island Bay M.V. Inspiration Lake M.V. Uni Bulker

29,100 DWT 29,118 DWT 37,094 DWT 37,649 DWT 37,706 DWT 37,700 DWT

Built in 2011 Built in 2012 Built in 2013 Built in 2014 Built in 2015 Built in 2016

M.V. Uni Auc One M.V. Glengyle

28,709 DWT 37,679 DWT

Built in 2007 Built in 2015

M.V. Orient Sunrise M.V. Orient Sunrise

28,514 DWT 28,514 DWT

Built in 2001 Disposed in April 2018

M.V. Kellett Islands M.V. Uni Harmony M.V. Uni Blossom

57,836 DWT 37,700 DWT 37,700 DWT

Built in 2015 Built in 2015 Built in 2018

M.V. Trident Star M.V. Uni Sunshine

57,836 DWT 36,300 DWT

Built in 2015

M.V. Uni Horizon

36,300 DWT

As of 31 May 2018

Own/ BBC

vessel

CM Vessels

Delivery/ Disposal

Built in 2018

Scheduled to be built in 2018

34

56

89 9

8

2

3 36

0

2

4

6

8

10

12

14

16

2011 2012 2013 2014 2015 2016 2017 2018

No

. of v

ess

el

Fleet Size History

CM

Own/BBC

Vessel delivered

Vessel disposed

Vessel to be delivered

CM: Commercial Management VesselsOwn/BBC: Our Own Vessels/Bare Boat Vessels

23



1. BALLAST WATER MANAGEMENT

BackgroundInternational Marine Organization

("IMO") ConventionThe Company’s action

• To stabilise vessels at sea, sea water

has been used as ballast for many

years. Thus, ballast water is essential

for safe and efficient operation.

• On the other hand, it has been

criticised that it causes ecological

problems due to the multitude of

marine species carried in the ballast

water being transferred to different

environmental area. The transferred

species may survive to establish a

reproductive population in the host

environment and expel the native

species. In this way, ecological

system would be damaged.

• In February 2004, International

Convention for the Control and

Management of Ships’ Ballast Water

and Sediments (BWM Convention)

was adopted by IMO.

• The BWM Convention requires all

ships to implement a Ballast Water

and Sediments Management

Plan and carry out ballast water

management procedures to given

standards.

• The Convention entered into force

on 8 September 2017, after Finland

joined and triggered 35% world

tonnage point on 8th September

2016.

• Well before this convention became

effective, we had kept studying the

action to be taken and preparing

for it. The vessels we ordered since

2013 had factored in this issue and

vessel specifications were made

to satisfy the requirements. For the

vessels we ordered before 2013, we

are preparing for the necessary

investment by discussing with

equipment vendors. M/V ANSAC

PRIDE built in 2013 is the first vessel to

which new ballast water treatment

system will be additionally installed

in 2018 in order to comply with IMO

convention. We plan to install it to

other vessels in due course.

2. SULPHUR 2020

Background IMO Convention The Company’s action

• The shipping transport is criticised by

the world about excessive Sulphur

Oxides (SOx) emiss ion, which

have negative impact on global

environment.

• IMO has been gradually strengthening

the limit of SOx and set the global limit

that Sulphur of fuel oil must be on or

below 0.50% m/m from 1st January

2020.

• We may be able to comply with

the regulation by using low-Sulphur

complaint fuel oil or using exhaust

gas cleaning systems or scrubbers

w h i c h c l e a n t h e e m i s s i o n s .

Foreseeing the deadline of 2020, we

keep monitoring market movement,

such as opinions and actions of

other owners, bunker suppliers and

traders. We are also liaising with

different manufacturers to study on

the available technology solution

to reduce SOx emission, including

scrubber installation.

24



3. ECO SHIP/GREEN SHIP

Background IMO convention The Company’s action

• A l though there’s no common definition of “ECO ship” in the world as it is a new category, it is usually referred to as a ship with special consideration for the environmental impacts. Energy efficiency is most notable factors of ECO ship.

• The features of ship design include advanced hull form, large propeller, longer stroke engines and other additive design features relate to the bow, rudder and paint.

• It attracts market players’ attention since it can reduce vessel’s bunker consumption and noxious gas emissions.

• IMO issued new regulat ion in January 2013, aiming at improving the energy efficiency of international shipping, which requires the Energy Efficiency Design Index (“EEDI”) for new ships with maximum four years grace period.

• All of our four vessels we ordered since 2013 and new vessels under commercial management are designed with high standards and meets the requirements of IMO.

4. ELECTRONIC CHART AND DISPLAY INFORMATION SYSTEM (“ECDIS”)


• Conventional Sea Charts have been used for marine navigation over the past century. Recently, many nations criticise that it costs excessive wood and is not good for the planet.

• M o re ove r, C a p ta i n n e e d s to manually correct paper Charts, which is burdensome work.

• Carriage requirement of ECDIS was adopted by IMO in 2009 for both new and existing ships. The mandatory date when it will come into force varies depending on ship types and sizes. (Table 1 below shows enforcement schedule)

• Un l ike paper char ts , ECDIS i s able to upload data of Electronic Navigational Chart (“ENC”), and display it in the screen, without using paper.

• Al l navigational information is displayed in ENCs, and Captain is no longer required to make manual correction of Sea Charts, which can reduce the shipside’s workload.

• The Company is acting quickly for ECDIS installations, although there is still time for such rules to be imposed on our fleet.

• Four vessels delivered on or after 2014 are already fitted with ECDIS and training was carried out for all top 4 Officers of those vessels. They are sailing “paperless” from her maiden voyage.

• For other exist ing vessels bui l t before July 2013, the Company has sufficient preparation of the installation schedule and plan is ready to be activated in due course. At the time of drydocking, ECDIS installation was done for one vessel in 2016 and two vessels in 2017. In drydocking in 2018, one last vessel will be installed with ECDIS soon. After that, all the eight vessels owned/operated as bareboat vessel by the Company will be equipped with ECDIS and comply with the relevant rules.

25



TABLE 1: IMO – MANDATORY REQUIREMENT OF ECDIS CARRIAGE ON BOARD

Ship types Constructed DateGross Registered Tonnage(GRT)

Entry into force

Cargo ships(Other than Tanker)

Before 01/07/2013 10,000<= GRT< 20,000 Not later than the 1st survey on or after 01/07/2016

Before 01/07/2013** 20,000<= GRT< 50,000 Not later than the first survey on or after 01/07/2017

Before 01/07/2013** 50,000<= GRT Not later than the first survey on or after 01/07/2018

On or After 01/07/2014 3,000<= GRT< 10,000 Not later than the initial safety equipment survey

On or After 01/07/2013** 10,000<= GRT Not later than the initial safety equipment survey

** Remarks: Applied to Uni-Asia Shipping’s fleetResource: IMO

Conventional way–Paper Sea Charts

New technology–Electronic Navigational Charts

Display of Electronic Navigational Chart

Combination of ECDIS, Autopilot & Radar can guide ship away from

hazardous water

ECDIS in m/v ANSAC PRIDE (2013) ECDIS in m/v INSPRIATION LAKE (2014)

26



5. SHIP RECYCLING MATTERS


• The end-of life vessels are gathered

are gathered in the ship breaking

yards in development countries from

all over the world and demolishing

works are carried out by manual

labours. Workers may be exposed

to asbestos, fuel oils and other

substances some of which are

hazardous for human and not

friendly to environment.

• The Hong Kong In te rnat iona l

Convent ion fo r the Sa fe and

Environmentally Sound Recycling

of Ships, 2009 (the “Convention”),

was adopted in Hong Kong in May

2009, aiming to ensure that ships,

when being recycled after reaching

the end of their operational lives,

do not pose any unnecessary risks

to human health, safety and to the

environment.

• Regulations in the Convention

includes certification and reporting

requirements so as to facilitate safe

and environmentally sound recycling

without compromising the safety

and operational efficiency of ships.

• Ship Owners are required to ensure

that a vessel maintains i) an initial

survey to verify the inventory of

hazardous materials(“IHM”), i i)

additional surveys during the life of

the ship, and iii) a final survey prior to

recycling.

• It is yet to be mandatory as the

number of countries which signed

the convention has not reached the

required numbers as of the date of

this report. It is expected be effective

in the near future.

• Although the Convention is yet to be

in force, more-than-standard actions

are planned or have been carried

out by the Company.

• For the vessels we took delivery

before 2014, we are continuously

updating and maintaining IHM by

following manners:

– To request experts to make an

IHM as per IMO guideline to

classification society; and

– To cooperate with classification

society and get issuance of

Statement of Fact/Certificates of

IHM.

• For the vessels we took/will take

delivery after 2014, we prepared/will

prepare and developed/will develop

IHM by following manners:

– To m a ke s u re t h e I H M fo r

new-buildings is compiled by

the shipyard and verified by

classification society during

the normal construction survey

process;

– To cooperate with classification

society and get issuance of

Statement of Fact/Certificates of

IHM; and

– To develop and distribute a

software which is designed

by classification society, for

the purpose of bet ter IHM

development.

27



6. NOISE LEVEL ON BOARD

Background IMO convention The Company’s action

• In the last over 30 years, there was

only non-mandatory guidance

to flag authorities on maximum

noise levels and exposure limits to

seafarers.

• On 1 July 2014, the International

Convention for Safety of Life at Sea

(SOLA) was amended to make the

Code on Noise Levels on Board ships

(the “Code”) mandatory for new

vessels by IMO resolution. This rule

mainly focuses on crew’s health on

board especially in engine room

under an appropriate noise level.

• The Code is applied to all new ships

with a gross tonnage of 1,600 or

above. “A new ship” is a ship which

falls under one of the followings;

(i) It is delivered on or after 1 July

2018;

(ii) Construction is contracted on or

after July 2014; or

(iii) In the absence of bui lding

contract, keel laying is on or after

1 January 2015.

• The code sets out a series of noise

levels and verification of acoustic

insulation between accommodation

spaces.

• If a vessel with not categorized as

a new ship but falls under certain

categories, measures should be

taken to reduce machinery noise in

machinery spaces to acceptable

levels depending on the case, and

adequate noise survey report should

be made.

• The Company understands that

appropriate noise level control could

benefit to seafarers, Ship Owners

and Char terers f rom fol lowing

perspectives:

– Ensuring acceptable quality of

crew sleep on board.

– Protection of crew from hearing

loss due to excessive noise.

– Better communication among

crews in contro l s tat ion of

engine room and machinery for

avoidance of injury or machinery

accident due to human error

and avoid impairing the safety of

our marine asset.

• With such philosophy, applicable

ve s s e l s o f t h e C o m p a ny a re

constructed strictly in compliance

with the Code. The noise level

measurement has been carried out

by surveyors of Classification Society

during sea trial and record is safely

kept.

28


Market Review

Vessel Demand and Supply

• Vessel supply surplus over the vessel

demand decreased to 113 mil DWT in

2017 from 120 mil DWT in 2016. While vessel

demand increased by 5.1% in 2017, supply

increase was limited to 3.4%, resulted in the

improvement of demand-supply balance.

Vessel demand increase of 5.1% in 2017

was a significant increase compared with

1.8% growth in 2016. Vessel supply increase

of 3.4% in 2017 was still lower level of growth

in the last 10 years.

• Vessel demand growth was supported

by growth of dry cargo demand, which

reached around 5,100 mil tonnes in

2017 with an annual growth rate of 4.0%

(+197.7 mil tonnes), up from smaller

growth rate of 1.3% in 2016. Not only raise

of Chinese import, but also steam coal

import of European countries and other

developing countries, supported the

demand growth.

Utilisation

• Before the Global Financial Crisis in 2008,

the utilisation rate had been over 90% and

it dropped to below 90% thereafter. It had

been hovering around the level between

84% and 89% for the period from 2011 to

2015. However, it further dropped below

84% in Q1 2016, reflecting the increased

oversupply of the vessel. In tandem with

improvement of demand-supply balance,

the situation has improved gradually after

Q1 2016 and this trend continued in 2017.

The utilisation rate reached to 87% in Q4

2017.

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Bulker Dwt Demand Dry bulk supply Supply-Demand

Source: Marsoft

Mill

ion

DW

T

Bulk Carrier Demand and Supply

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Annual Change of Demand and Supply

Demand Annual Change Supply Annual Change

Source: Marsoft

80

82

84

86

88

90

92

94

96

98

100

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

2014

Q3

2015

Q1

2015

Q3

2016

Q1

2016

Q3

2017

Q1

2017

Q3

Fleet Utilisation (%)

Source: Marsoft

29


Market Review

Charter Rate

• The Baltic Dry Index (“BDI”) is a daily index

which reflects the price movement of

transporting the dry cargo. The BDI slumped

to historic lows at 290 in February 2016

since 1985. The index has been improving

since March 2016 and this trend continued

in 2017. It reached 1,743 in December 2017.

• The Baltic Exchange Handysize Index

(“BHSI”), which focuses on handysize bulk

carrier, also showed improvement in 2017.

After hitting its lowest of 183 in February

2016, it continued to recover and it reached

690 in October 2017.

• 1-Year TC hit the historic low in 2016, after

which it showed recovery from middle of

2016 and throughout 2017. Average TC

rate for 30K DWT in 2016 was about $5,200/

day, which improved to about $8,000/day

in 2017. Similarly, yearly average of 1-year

TC for 38K DWT was about $5,500/day in

2016, which surged to about $8,500/day

in 2017. In tandem with market recovery

and improvement of vessel demand-supply

balance, hire rates has significantly

recovered in 2017.

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Jan

-95

Jan

-96

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

BDI Movement(from 1995)

Source: Marsoft

0200400600800

1,0001,2001,4001,6001,800

Jan

-15

Ma

r-15

Ma

y-15

Jul-1

5

Sep

-15

No

v-15

Jan

-16

Ma

r-16

Ma

y-16

Jul-1

6

Sep

-16

No

v-16

Jan

-17

Ma

r-17

Ma

y-17

Jul-1

7

Sep

-17

No

v-17

BDI/BHSI Movement(from 2015)

BHSI

DBI

Source: Marsoft

05,000

10,00015,00020,00025,00030,00035,00040,00045,000

Jan

-85

Jul-8

6Ja

n-8

8Ju

l-89

Jan

-91

Jul-9

2Ja

n-9

4Ju

l-95

Jan

-97

Jul-9

8Ja

n-0

0Ju

l-01

Jan

-03

Jul-0

4Ja

n-0

6Ju

l-07

Jan

-09

Jul-1

0Ja

n-1

2Ju

l-13

Jan

-15

Jul-1

6

1 Year TC Rates (From 1995-32K DWT)

Source: Clarksons

2,000

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

4,000

6,000

8,000

10,000

12,000

US$

/da

y

1 year TC rate(From 2014)

30K DWT 38K DWT

Source: Marsoft

30


Market Review

Vessel Price

• New building price for 30K DWT bulker

improved slightly in 2017. Regarding 30K

DWT bulker, after starting from the recent

low of USD17.4Mil in Q1 2017, it reached

USD19.1Mil in Q4 2017. Similarly, 38K DWT

bulker improved from USD19.2Mil in Q1

2017 and it reached USD20.7Mil in Q4 2017.

• The vessel price for 5-year old secondhand

bulker improved over 2017. 30K DWT buker

price started from USD10.4Mil in Q1 2017

and it reached USD12.5Mil in Q4 2017. 38K

DWT bulker price improved from USD12.1Mil

in Q1 2017 to USD14.1Mil in Q4 2017.

0.0

5.0

10.0

15.0

20.0

25.0

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

US$

Mill

ion

30K DWT Vessel Price

Newbuilding Second-hand 5-Years

Source: Marsoft

Source: Marsoft

0.0

5.0

10.0

15.0

20.0

25.0

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

US$

Mill

ion

38K DWT Vessel Price

Newbuilding Second-hand 5-Years

31


Financial Review

Total Revenue 31,010

Cost of Service 21,796

Gross Profit 9,214

Other Income 1,753

Administrative Expenses 1,221

Finance Cost 3,849

Impairment Loss 1,000

Profit after Tax 4,692

Fixed/Non-Current Assets 148,732

Current Assets 14,018

Current Liabilities 28,142

Non-Current Liabilities 77,660

Total Equity 56,948

Shareholders’ Equity 53,737

Net Cash Flow from Operation 14,201

Depreciation 7,343Finance Cost 3,849Reversal of Onerous Contract Provision (1,333)Impairment Loss 1,000Unrealised Loss on DFIUnrealised FX loss (Net) andOthers (111)

1. KEY DATA (FY2017)

Y-O-Y US$000

Total Revenue

31.0 US$ million

Operating Profit

9.7 US$ million

Profit after Tax

4.7 US$ million

Total Assets

162.8 US$ million

Shareholders’ Equity/ Total Assets (Equity Ratio)

33.0 (%)

Cash Flow from Operation

14.2 US$ million

EBITDA

15.4 US$ million


3,221 days

EBITDA = Profit before Tax + Depreciation - Interest Income + Finance Cost + Unrealised Loss/(Gain) on DFI + Unrealised FX Loss/ (Gain) + Impairment Loss + Onerous Contract Provision - Gain on Disposal of Vessel -

EBITDA = Profit before Tax + Depreciation - Interest Income + Finance Cost + Unrealised Loss/(Gain) on DFI + Unrealised FX Loss/ (Gain) + Impairment Loss + Onerous Contract Provision - Gain on Disposal of Vessel - Fair valuation Gain/(Loss) on Equity Investment

+8.3%

+2,110.9%

N/M

- 4.2%

+41.4%

+2.0%

+24.0%

up from 28.7%

One vessel, which was delivered at the

end of January 2016, fully contributed in

2017

32


Financial Review

2. FINANCIAL PERFORMANCE (CONSOLIDATED FINANCIAL STATEMENTS)

1) Income Statement (Statement of Profit or Loss and Other Comprehensive Income)• The Company recorded a net profit of US$4.7 million in FY2017, up from a net loss of US$13.3 million in FY2016.

The net loss of FY2016 was mainly attributed to vessel impairment losses of US$8.6 million and provision of vessel

related onerous contract of US$3.5 million. In FY2017, market recovery, together with our operational efforts,

helped us to move back into the black. Hire rate in the market went up about 50%, which boosted our hire

income and profit after tax.

• The number of operating days for vessels increased from 3,157 days in FY2016 to 3,221 days in FY2017 by 2.0%,

as the last vessel we own, which was delivered in late January 2016, fully contributed to our business in 2017.

• Total revenue increased from US$28.6 million in FY2016 to US$31.0 million in FY2017 by 8.3%. As mentioned

earlier, charter market recovery continued throughout 2017 from late 2016 after market hit the historical low

in early 2016. Together with slight increase of the number of vessel operation days, this supported our income

increase as we have employed 4 vessels under short-term CP at the market rate. As we can see on page 17,

the average hire rate over our own/BBC vessel improved from $9,071/day in 2016 to $9,581/day in 2017.

Note: Average hire rate is calculated for our owning /bbc vessels only, excluding commercial management vessels.

Voyage charter period is also excluded.

• Operating profit increased from US$0.4 million in FY2016 to US$9.7 million in FY2017. In FY2016, US$3.5 mil of

onerous contract provision was made under cost of services rendered, while we recognised US$1.3 million

of reversal of onerous contract provision in FY2017, which reduced cost of services rendered. In addition to

improvement of vessel performance helped by market recovery, this accounting factor improved our operating

profit.

• In FY2016, total US$8.6 million of impairment losses was recognised for three vessels due to the significant drop

of the value in use of each vessel. In 2017, we still recognised US$1 mil impairment loss, but the amount was

reduced significantly.

2) Balance Sheet (Statement of Financial Position)• Total assets decreased to US$162.8 million at the end of December 2017 from US$170.0 million at the end of

December 2016 by 4.2%. All the vessels we ordered as an owner had been delivered by the end of FY2016 and

there was no new vessel delivery in FY2017. Depreciation of our vessel asset was the major factor for balance

sheet downsizing.

• The financial position of the Company improved significantly. Equity ratio (shareholders’ equity / total asset),

which dropped to 28.7% at the end of FY2016, moved back to 33.0%, near to the level of FY2015, as profit for the

year wiped out the accumulated losses.

3) Cash Flow & EBITDA• Net cash flow from operating activities jumped up from US$11.4 million in FY2016 to US$14.2 million in FY2017,

mainly due to improvement of charter market and our effort to save vessel operating expenses. EBITDA

increased from US$10.9 million in FY2016 to US$15.4 million in FY2017. Accordingly, EBITDA margin (EBITDA / total

revenue) also went up from 38.1% to 49.8% by 11.7 Percentage Point, reflecting improvement of our financial

performance.

33


About our shareholder – Uni-Asia Group

Our immediate parent company is Uni-Asia Holdings Limited ("UAH"), which was established in March 1997 and was

listed on Singapore Exchange ("SGX") Main Board in August 2007. UAH is an alternative investment company, which

acts as a principal investor as well as an integrated service provider in relation to investment in vessels and properties.

From 2 June 2017, Uni-Asia Group Limited, a newly established Singapore Company, took over the listed status as an

ultimate shareholding company of the group.

Starting with a background of transportation asset finance arranger, UAH and its group companies ("UAG Group" or

the "Group") branched out into asset management business of ship investment and property investment, in which we

are acting as a principal investor.

UAG Group comprises two business segments, shipping business and property/hotel business, under each of which

we have three sub-business segments respectively.

Business SegmentSub-segment

Hong Kong

Singapore

Parent & headquarters Hongof the group Kong

HongKong

Taiwan

Shanghai

China

Japan

Japan

Japan Japan

Business Entities Business Outline

Uni-Asia Hotels Limited

Wealth Ocean Ship Management

(Shanghai) Co., Ltd.

Uni-Asia Shipping Limited

Vista Hotel Management Co., Ltd

Uni-Asia Guangzhou Property Management

Company Limited

Uni-Asia Holdings Limited

Uni-Asia Investment Limited

Uni-Asia Capital (Singapore) Limited

Uni-Asia Capital (Japan) Limited

Ultimate holding and listed entity

Uni Ship & Management Limited

(Taiwan)


(Korea)

Uni-Asia Group Limited

Basic segment

South Korea

・Vessel owning & chartering, ・Commercial management

・Ship finance arrangement ・Ship investment /asset management

Uni-Asia Shipping

Vista Hotel Management

Shipping & Finance

Propertyand Hotel Operation

Maritime Asset Management

MaritimeService

PropertyInvestment (ex Japan)

PropertyInvestment (in Japan)


Uni-Asia Capital Company Limited

・Ship brokerage services for chartering and sale & purchase

・Property investment / asset management in Hong Kong & China

・Property investment & asset management in Japan

・Hotel Operation in Japan

・Ship commercial/technical management

As illustrated, UAG Group provides integrated services in relation to ship investment under Maritime Asset

Management and Maritime Service sub-segment. The Company is supported by UAG group in the following business

area.

– Ship finance arrangement

– Ship management service

– Charter brokerage services and ship sale & purchase brokerage

– Administration and management of ship owning SPCs

– Providing idea of restructuring vessel ownership, i.e. reforming the ship ownership to joint investment or investment

funds

UAG Group has 51% subsidiary of Wealth Ocean Ship Management Shanghai (“WOSMS”), which is a ship

management company of UAG Group and has been supporting us by providing ship management/technical

management service for our vessels. We are working closely with WOSMS so as to improve our ship management in

terms of quality as well as cost efficiency.

34


Risk Management

Risk management FrameworkUAG Group, as a Singapore listed company, engages external

consultant from KPMG Services Pte Ltd to set up an Enterprise

Risk Management ("ERM") framework ("ERM Framework") in

2012, which governs the risk management process in the Group.

Through this framework, risk capabilities and competencies would

be continuously enhanced. The ERM Framework also enables

the identification, prioritisation, assessment, management

and monitoring of key risk to the Group's business. The risk

management process in place covers, inter alia, financial,

operational and compliance risks faced by the Group. Complementing the ERM Framework is a Group-wide system

of internal controls, which includes the Code of Conduct, documented policies and procedures, proper segregation

of duties, approval procedures and authorities, as well as checks-and-balances built into the business process. As part

the Group, the Company is involved in this ERM exercise and ERM Framework is built in the Company's ship owning

and chartering business. Under this framework, relevant risks are identified & evaluated on regular basis. Remedial

actions or appropriate measures to control and mitigate these risks are taken, when necessary.

Risk Management Framework

UAG Group also engages external audit professionals to outsource its internal audit function. The outsourced

professional conducts internal audit based on the internal audit plan approved by the Audit Committee of UAG. As

part of UAG Group, business operation of the company is subject to the Group's internal audit work and it is audited

by the outsourced auditor on regular basis.

Internal/external audit

Risk Management

Operational Governance Financial Governance Policy Management

Compliance

PEOPLE

PROCESS SYSTEMS

4TH LINEOF DEFENCEUAH BOARDOVERSIGHT

3RD LINE OF DEFENCEINDEPENDENT ASSURANCE

2ND LINE OF DEFENCEMANAGEMENT AND ASSURANCE

1ST LINE OF DEFENCEBUSINESS GOVERNANCE/POLICY MANAGEMENT

35


Management & Team

3

1 2

4 5

1 Mr. Michio Tanamoto (Chairman)

2 Mr. Zac K. Hoshino (CEO)

3 Mr. Makoto Tokozume (CFO)

4 Mr. Masaki Fukumori

5 Mr. Kenji Fukuyado

Board of Directors

36


Management & Team

Ms. Yan Kwan(Senior Vice President)

Ms. Candy Wong(Group Supervisor)

Mr. Ivan Ho(Senior Accountant)

Ms. Valarie Shum(Accountant)

Ms. Karman Fung(Accountant)

Ms. Grace Hui(Accountant)

Ms. Karen Cheung(Assistant Accountant)

Ms. Ally Chiu(General Manager-chartering)

Mr. Shinichiro Ishizaki(General Manager)

Mr. Billy Zhang(Manager)

Ms. Fiona Wu(Manager)

Ms. Vita Wang(Manager)

Ms. Zoe Tsang(Associate)

Commercial (S&P and Chartering/ Operation) Team

Accounting Team

Mr. Kiyoshi Takami(General Manager)

Mr. Joe Qiao(Director/Technical Dept.)

Capt. Xin Chengyu(Director/Marine Dept.)

Wealth Ocean Ship Management (Shanghai) Co., Ltd

37


Report of the Directors

The directors present their report and the audited financial statements of Uni-Asia Shipping Limited (the “Company”)

and its subsidiaries (collectively referred to as the “Group”) for the year ended 31 December 2017.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. Details of the principal activities of the principal

subsidiaries are set out in note 1 to the financial statements. There were no significant changes in the nature of the

Group’s principal activities during the year.

RECOMMENDED DIVIDEND

The directors do not recommend the payment of any dividend in respect of the year.

SHARES ISSUED

There were no movement in the Company’s share capital during the year.

DIRECTORS

The directors of the Company during the year were:

Mr. Michio Tanamoto

Mr. Masaki Fukumori

Mr. Kiyomi Hoshino

Mr. Kenji Fukuyado

Mr. Makoto Tokozume

In accordance with article 13 of the Company’s articles of association, directors are not subject to rotation or

retirement at annual general meetings. Accordingly, all directors continue in office.

DIRECTORS’ INTERESTS

At no time during the year was the Company, its holding company, or any of its subsidiaries and fellow subsidiaries

a party to any arrangement to enable the Company’s directors to acquire benefits by means of the acquisition of

shares in or debentures of the Company or any other body corporate.

DIRECTORS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS

No director had a material interest, either directly or indirectly, in any transactions, arrangements or contracts of

significance to the business of the Group to which the Company, or any of the Company’s holding companies,

subsidiaries or fellow subsidiaries was a party during the year.

38


Report of the Directors (continued)

BUSINESS REVIEW

No business review is presented as the Company, being a wholly-owned subsidiary of another body corporate, is

exempted from presenting a business review under section 388(3) of the Hong Kong Companies Ordinance (Cap.

622).

PERMITTED INDEMNITY PROVISIONS

At no time during the financial year and up to the date of this report, there was or is, any permitted indemnity provision

being in force for the benefit of any of the directors of the Company (whether made by the Company or otherwise)

or associated company (if made by the Company).

EVENTS AFTER THE REPORTING PERIOD

Details of the Group’s significant events after the reporting period are set out in note 32 to the financial statements.

AUDITORS

Ernst & Young retire and a resolution for their reappointment as auditors of the Company will be proposed at the

forthcoming annual general meeting.

ON BEHALF OF THE BOARD

Mr. Michio Tanamoto

Chairman

Hong Kong

3 April 2018

39


Independent Auditor’s Report

To the members of Uni-Asia Shipping Limited

(Incorporated in Hong Kong with limited liability)

OPINION

We have audited the consolidated financial statements of Uni-Asia Shipping Limited (the “Company”) and its

subsidiaries (the “Group”) set out on pages 42 to 100, which comprise the consolidated statement of financial

position as at 31 December 2017, and the consolidated statement of profit or loss and other comprehensive income,

the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then

ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position

of the Group as at 31 December 2017, and of its consolidated financial performance and its consolidated cash flows

for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong

Kong Institute of Certified Public Accountants (the “HKICPA”) and have been properly prepared in compliance with

the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of

the consolidated financial statements section of our report. We are independent of the Group in accordance

with the HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical

responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON

The directors of the Company are responsible for the other information. The other information comprises the

information included in the report of the directors.

Our opinion on the consolidated financial statements does not cover the other information and we do not express

any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with the consolidated

financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based

on the work we have performed, we conclude that there is a material misstatement of this other information, we are

required to report that fact. We have nothing to report in this regard.

40


Independent Auditor’s Report (continued)

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of consolidated financial statements that give a

true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and

for such internal control as the directors determine is necessary to enable the preparation of consolidated financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the

Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using

the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or

to cease operations or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our

opinion. Our report is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies

Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person

for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance

with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement

resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by the directors.

41


Independent Auditor’s Report (continued)

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures

in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future

events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including

the disclosures, and whether the consolidated financial statements represent the underlying transactions and

events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within the Group to express an opinion on the consolidated financial statements. We are responsible

for the direction, supervision and performance of the group audit. We remain solely responsible for our audit

opinion.

We communicate with the board of directors of the Company regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we

identify during our audit.

ERNST & YOUNG

Certified Public Accountants

Hong Kong

3 April 2018

42


Consolidated Statement of Financial Position31 December 2017

Notes 2017 2016US$ US$

NON-CURRENT ASSETS Vessels 4 147,417,573 155,251,153Accounts receivables 5 884,656 620,930Derivative financial instruments 6 429,556 329,589

Total non-current assets 148,731,785 156,201,672

CURRENT ASSETSDerivative financial instruments 6 156,562 17,217Equity investments at fair value through profit or loss 7 1,206,517 2,398,331Accounts receivables 5 480,882 197,089Prepayments and other receivables 5 3,299,107 2,012,641Income tax recoverable – 59,582Restricted bank balances 8 771,647 1,303,801Cash and cash equivalents 8 8,103,703 7,765,314

Total current assets 14,018,418 13,753,975

TOTAL ASSETS 162,750,203 169,955,647

43


2017 年 12 月 31 日終了年度連結財政状態計算書

注記 2017 2016US$ US$

非流動資産船舶 4 147,417,573 155,251,153売掛金 5 884,656 620,930金融派生商品 6 429,556 329,589

非流動資産合計 148,731,785 156,201,672

流動資産金融派生商品 6 156,562 17,217損益を通じて公正価値で測定する株式投資 7 1,206,517 2,398,331売掛金 5 480,882 197,089前払金及びその他の未収金 5 3,299,107 2,012,641払戻法人所得税 – 59,582拘束性銀行口座預金 8 771,647 1,303,801現金及び現金同等物 8 8,103,703 7,765,314

流動資産合計 14,018,418 13,753,975

資産合計 162,750,203 169,955,647

44


Consolidated Statement of Financial Position (continued)31 December 2017


EQUITYEquity attributable to the sole shareholder of the Company

Share capital 9 51,998,342 51,998,342Hedging reserve 22 941,847 352,287Retained profits/(accumulated losses) 796,701 (3,592,880)

53,736,890 48,757,749Non-controlling interests 3,211,073 2,113,294

TOTAL EQUITY 56,947,963 50,871,043

NON-CURRENT LIABILITIESSubordinated loans, secured 10 2,750,000 1,250,000Loans from the non-controlling shareholder of a subsidiary 12 2,116,765 2,818,336Borrowings, secured 13 70,949,831 82,523,078Deferred income – 972,800Derivative financial instruments 6 108,493 258,183Payables and accruals 15 1,734,895 2,139,731

Total non-current liabilities 77,659,984 89,962,128

CURRENT LIABILITIESSubordinated loans, secured 10 – 1,500,000Bridge loans from the ultimate holding company 11 – 2,300,000Bridge loans from the intermediate holding company 11 200,000 –Borrowings, secured 13 19,783,792 16,888,160Borrowings, unsecured 14 5,000,000 4,000,000Deferred income 1,341,771 1,460,428Payables and accruals 15 1,689,360 2,633,854Derivative financial instruments 6 127,133 340,034Income tax payable 200 –

Total current liabilities 28,142,256 29,122,476

TOTAL LIABILITIES 105,802,240 119,084,604

TOTAL EQUITY AND LIABILITIES 162,750,203 169,955,647

Mr. Michio Tanamoto Mr. Masaki Fukumori

Director Director

45


連結財政状態計算書（続き）2017 年 12 月 31 日終了年度

注記 2017 2016US$ US$

資本当社の一人株主に帰属する資本

株式資本 9 51,998,342 51,998,342ヘッジ留保金 22 941,847 352,287利益剰余金╱（累積損失） 796,701 (3,592,880）

53,736,890 48,757,749非支配持分 3,211,073 2,113,294

資本合計 56,947,963 50,871,043

非流動負債担保付劣後ローン 10 2,750,000 1,250,000子会社の非支配株主からの借入金 12 2,116,765 2,818,336担保付借入金 13 70,949,831 82,523,078前受収益 – 972,800金融派生商品 6 108,493 258,183その他の未払金及び未払費用 15 1,734,895 2,139,731

非流動負債合計 77,659,984 89,962,128

流動負債担保付劣後ローン 10 – 1,500,000究極の親会社からのブリッジローン 11 – 2,300,000中間持株会社からのブリッジローン 11 200,000 –担保付借入金 13 19,783,792 16,888,160無担保借入金 14 5,000,000 4,000,000前受収益 1,341,771 1,460,428その他の未払金及び未払費用 15 1,689,360 2,633,854金融派生商品 6 127,133 340,034未払法人所得税 200 –

流動負債合計 28,142,256 29,122,476

負債合計 105,802,240 119,084,604

資本負債合計 162,750,203 169,955,647


取締役取締役

46


Consolidated Statement of Profit or Loss and Other Comprehensive IncomeYear ended 31 December 2017


REVENUE 16 31,009,892 28,645,369

Cost of services rendered 17 (21,796,201) (27,966,486)

Gross profit 9,213,691 678,883

Other income 16 1,752,546 485,592

Administrative expenses 18 (1,221,140) (723,693)

OPERATING PROFIT 9,745,097 440,782

Finance costs 19 (3,848,777) (3,986,799)Net losses on derivative financial instruments (150,555) (1,157,587)Gain on disposal of a vessel – 509Impairment of vessels 4 (1,000,000) (8,590,000)Realised foreign exchange loss, net (13,448) (1,186)Unrealised foreign exchange loss, net (40,084) (18)

PROFIT/(LOSS) BEFORE TAX 4,692,233 (13,294,299)

Income tax 20 (200) 5,219

PROFIT/(LOSS) FOR THE YEAR 4,692,033 (13,289,080)

47


2017 年 12 月 31 日終了年度連結損益及びその他の包括利益計算書

注記 2017 2016US$ US$

売上高 16 31,009,892 28,645,369

売上原価 17 (21,796,201) (27,966,486)

売上総利益 9,213,691 678,883

その他の収益 16 1,752,546 485,592

一般管理費 18 (1,221,140) (723,693)

営業利益 9,745,097 440,782

財務費用 19 (3,848,777) (3,986,799)正味金融派生商品損失 (150,555) (1,157,587)船舶売却益 – 509船舶の減損損失 4 (1,000,000) (8,590,000)正味実現為替差損失 (13,448) (1,186)正味未実現為替差損 (40,084) (18)

税引前利益╱（損失） 4,692,233 (13,294,299)

税金費用 20 (200) 5,219

当期利益╱（損失） 4,692,033 (13,289,080)

48


Consolidated Statement of Profit or Loss and Other Comprehensive Income (continued)Year ended 31 December 2017

2017 2016US$ US$

PROFIT/(LOSS) FOR THE YEAR 4,692,033 (13,289,080)

OTHER COMPREHENSIVE INCOME

Cash flow hedges:Effective portion of changes in fair value of hedging instruments

arising during the year 601,902 486,406

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX 601,902 486,406

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 5,293,935 (12,802,674)

Profit/(loss) for the year attributable to:The sole shareholder of the Company 4,389,581 (13,504,793)Non-controlling interests 302,452 215,713

4,692,033 (13,289,080)

Total comprehensive income/(loss) attributable to:The sole shareholder of the Company 4,979,141 (13,139,404)Non-controlling interests 314,794 336,730

5,293,935 (12,802,674)

49


2017年 12月31日終了年度連結損益及びその他の包括利益計算書（続き）

2017 2016US$ US$

当期利益╱（損失） 4,692,033 (13,289,080)

その他の包括利益╱（損失）

キャッシュ・フロー・ヘッジ:ヘッジ手段の公正価値の変動のうちヘッジ有効部分 601,902 486,406

当期その他の包括利益╱損失（税引後） 601,902 486,406

当期包括利益╱（損失）合計 5,293,935 (12,802,674)

当期利益╱（損失）の帰属する割合：当社の一人株主 4,389,583 (13,504,793)非支配持分 302,450 215,713

4,692,033 (13,289,080)

当期包括利益╱（損失）の帰属する割合：当社の一人株主 4,979,141 (13,139,404)非支配持分 314,794 336,730

5,293,935 (12,802,674)

50


Consolidated Statement of Changes in EquityYear ended 31 December 2017

Attributable to the sole shareholder of the Company

Share Capital

Hedging reserve

Retained profits/

(accumulated losses) Total

Non-controlling

interestsTotal

equityUS$ US$ US$ US$ US$ US$

At 1 January 2016 51,998,342 (13,102) 9,911,913 61,897,153 1,776,564 63,673,717

Profit/(loss) for the year – – (13,504,793) (13,504,793) 215,713 (13,289,080)

Other comprehensive income for the year - fair value gain of effective cash flow hedges – 365,389 – 365,389 121,017 486,406

Total comprehensive income/(loss) for the year – 365,389 (13,504,793) (13,139,404) 336,730 (12,802,674)

At 31 December 2016 and 1 January 2017 51,998,342 352,287 (3,592,880) 48,757,749 2,113,294 50,871,043

Profit for the year – – 4,389,581 4,389,581 302,452 4,692,033

Other comprehensive income for the year - fair value gain of effective cash flow hedges – 589,560 – 589,560 12,342 601,902

Total comprehensive income for the year – 589,560 4,389,581 4,979,141 314,794 5,293,935

Deemed capital contributions from non-controlling shareholder of a subsidiary – – – – 782,985 782,985

At 31 December 2017 51,998,342 941,847 796,701 53,736,890 3,211,073 56,947,963

51


2017 年 12 月 31 日終了年度連結持分変動計算書

当社の一人株主持分

ヘッジ利益余剰金╱ 非支配株式資本保留金 ╱（累積損失）小計持分合計

US$ US$ US$ US$ US$ US$

2016年1月1日現在 51,998,342 (13,102) 9,911,913 61,897,153 1,776,564 63,673,717

当期利益 – – (13,504,793) (13,504,793) 215,713 (13,289,080)

有効キャッシュ・フロー・ヘッジから生じた公正価値の変動損失 – 365,389 – 365,389 121,017 486,406

当期包括利益╱（損失）合計 – 365,389 (13,504,793） (13,139,404) 336,730 (12,802,674)

2016年12月31日及び 2017年1月1日現在 51,998,342 352,287 (3,592,880) 48,757,749 2,113,294 50,871,043

当期利益╱（損失） – – 4,389,581 4,389,581 302,452 4,692,033

有効キャッシュ・フロー・ヘッジから生じた公正価値の変動損失 – 589,560 – 589,560 12,342 601,902

当期包括利益╱（損失）合計 – 589,560 4,389,581 4,979,141 314,794 5,293,935

非支配持分の子会社への期中配当 – – – – 782,985 782,985

2017年12月31日現在 51,998,342 941,847 796,701 53,736,890 3,211,073 56,947,963

52


Consolidated Statement of Cash FlowsYear ended 31 December 2017


CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before tax 4,692,233 (13,294,299)Adjustments for:

Interest income 16 (46,679) (18,614)Fair value gain on equity investments at fair value through profit or loss 16 (959,350) (62,331)Net losses on derivative financial instruments 150,555 1,157,587Depreciation 17 7,343,290 8,272,489Finance costs 19 3,848,777 3,986,799Gain on disposal of a vessel – (509)(Reversal of provision)/provision for onerous contract (1,332,841) 3,474,541Impairment of vessels 4 1,000,000 8,590,000Unrealised foreign exchange losses, net 40,084 18

14,736,069 12,105,681Decrease/(increase) in equity investments at fair value through profit or loss 2,151,164 (2,336,000)Increase in accounts receivables, prepayments and other receivables (1,649,781) (395,848)Increase/(decrease) in deferred income (1,091,457) 2,099,727Increase/(decrease) in payables and accruals (44,913) (27,872)

Cash generated from operations 14,101,082 11,445,688Bank interest income 41,064 18,545Hong Kong profits tax refunded/(paid) 59,139 (15,448)

Net cash flows from operating activities 14,201,285 11,448,785

CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of a vessel – 15,840,356Purchases of vessels and payments of dry-docking costs of vessels (617,337) (18,622,961)Settlement of derivative financial instruments (150,555) (1,200,084)

Net cash flows used in investing activities (767,892) (3,982,689)

53


2017 年 12 月 31 日終了年度連結キャッシュ・フロー計算書

注記 2017 2016US$ US$

営業活動によるキャッシュ・フロー税引前利益╱（損失） 4,692,233 (13,294,299)調整項目：

利息収入 16 (46,679) (18,614)損益を通じて公正価値で測定する株式投資評価益 16 (959,350) (62,331)正味金融派生商品損失 150,555 1,157,587減価償却費用 17 7,343,290 8,272,489財務費用 19 3,848,777 3,986,799船舶売却益 – (509)有償契約に対する引当金の（戻し入れ）╱繰り入れ (1,332,841) 3,474,541船舶の減損損失 4 1,000,000 8,590,000正味未実現為替差損 40,084 18

14,736,069 12,105,681損益を通じて公正価値で測定する株式投資の減少╱（増加） 2,151,164 (2,336,000)売掛金、前払金及びその他の未収金の増加 (1,649,781) (395,848)前受収益増加╱（減少） (1,091,457) 2,099,727その他の未払金及び未払費用の増加╱（減少） (44,913) (27,872)

営業活動によるキャッシュ・フロー 14,101,082 11,445,688受取利息 41,064 18,545法人所得税の払い戻し╱（支払い） 59,139 (15,448)

営業活動により獲得したキャッシュ・フロー純額 14,201,285 11,448,785

投資活動によるキャッシュ・フロー船舶売却益 – 15,840,356船舶購入及びドライドック費用 (617,337) (18,622,961)金融派生商品の決済 (150,555) (1,200,084)

投資活動に使用したキャッシュ・フロー純額 (767,892) (3,982,689)

54


Year ended 31 December 2017

Consolidated Statement of Cash Flows (continued)


CASH FLOWS FROM FINANCING ACTIVITIESNew borrowings 9,830,022 27,367,000Loan from the ultimate holding company – 6,550,000Loan repayment to the ultimate holding company – (5,375,000)Loan repayment to the intermediate holding company (2,100,000) –Repayment of borrowings (17,662,672) (29,316,665)Decrease/(increase) in restricted bank balances 532,154 (311,530)Decrease/(increase) in prepayment to lenders (23,318) 153,979Interest paid on borrowings (3,273,580) (2,981,403)Interest paid on derivative financial instruments (312,778) (574,974)Upfront fee paid for borrowings – (153,023)Other incidental borrowing costs paid (86,466) (94,540)Other finance costs – (65,735)

Net cash flows used in financing activities (13,096,638) (4,801,891)

NET INCREASE IN CASH AND CASH EQUIVALENTS 336,755 2,664,205Cash and cash equivalents at beginning of year 7,765,314 5,101,048Effects of foreign exchange rate changes, net 1,634 61

CASH AND CASH EQUIVALENTS AT END OF YEAR 8 8,103,703 7,765,314

55


2017 年 12 月 31 日終了年度連結キャッシュ・フロー計算書（続き）

注記 2017 2016US$ US$

財務活動によるキャッシュ・フロー新規借入金 9,830,022 27,367,000究極の親会社からの借入金 – 6,550,000究極の親会社への借入金の返済 – (5,375,000)中間持株会社への借入金の返済 (2,100,000) –借入金の返済 (17,662,672) (29,316,665)拘束性銀行口座預金の減少╱（増加） 532,154 (311,530)貸主に対する前払金の減少╱（増加） (23,318) 153,979借入金支払利息 (3,273,580) (2,981,403)金融派生商品の支払利息 (312,778) (574,974)借入金に伴うアップフロントフィー – (153,023)その他の借入に係る付随費用 (86,466) (94,540)その他の財務費用 – (65,735)

財務活動により使用したキャッシュ・フロー純額 (13,096,638) (4,801,891)

現金及び現金同等物の純増加 336,755 2,664,205現金及び現金同等物期首残高 7,765,314 5,101,048為替レートの変動による純増減額 1,634 61

現金及び現金同等物期末残高 8 8,103,703 7,765,314

56


Notes to Financial Statements31 December 2017

1. CORPORATE AND GROUP INFORMATION

Uni-Asia Shipping Limited (the “Company”) is a limited liability company incorporated in Hong Kong. The

registered office of the company is located at 30th Floor, Prosperity Millennia Plaza, No. 663 King’s Road, North

Point, Hong Kong.

During the year, the Company and its subsidiaries (collectively, the “Group”) were principally involved in vessel

owning and chartering.

In the opinion of the directors, the ultimate holding company of the Company is Uni-Asia Group Limited

(“Uni-Asia Group”), which is an exempted company incorporated in the Republic of Singapore with limited

liability and shares of which are listed on the Singapore Exchange.

Information about subsidiaries

Particulars of the Company’s subsidiaries are as follows:

Company name

Place of incorporation/operations

Issued ordinary

share capital

Percentage of equity attributable to the Company Principal activities

2017 2016

Hope Bulkship S.A. Republic of Panama/Hong Kong

US$4,000 83 83 Vessel owning and chartering

Imperial Bulkship S.A. Republic of Panama/Hong Kong


Jade Bulkship S.A. Republic of Panama/Hong Kong


Karat Bulkship S.A. Republic of Panama/Hong Kong

US$10,000 100 100 Vessel chartering

Luna Bulkship S.A. Republic of Panama/Hong Kong


Jubilee Bulkship S.A. Republic of Panama/Hong Kong


Mable Bulkship S.A. Republic of Panama/Hong Kong


Nora Bulkship S.A. Republic of Panama/Hong Kong


Regina Bulkship S.A. Republic of Panama/Hong Kong


57



2.1 STATEMENT OF COMPLIANCE

These consolidated financial statements have been prepared in accordance with Hong Kong Financial

Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong

Accounting Standards (“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public

Accountants (the “HKICPA”), accounting principles generally accepted in Hong Kong and the Hong Kong

Companies Ordinance.

2.2 BASIS OF PREPARATION

These financial statements have been prepared under the going concern concept, notwithstanding that

the Group’s current liabilities exceeded its current assets by US$14,123,838 as at 31 December 2017 because

Uni-Asia Group has agreed to provide adequate funds to the Group to meet its liabilities as and when they fall

due.

The consolidated financial statements have been prepared on a historical cost basis, except for derivative

financial instruments and equity financial investment at fair value through profit or loss that have been

measured at fair value. The consolidated financial statements are presented in the United States dollar (“US$”).

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries

for the year ended 31 December 2017. A subsidiary is an entity (including a structured entity), directly or

indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable

returns from its involvement with the investee and has the ability to affect those returns through its power over

the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the

investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee,

the Group considers all relevant facts and circumstances in assessing whether it has power over an investee,

including:

(a) the contractual arrangement with other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

(c) the Group’s voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using

consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group

obtains control, and continue to be consolidated until the date that such control ceases.

58



2.2 STATEMENT OF PREPARATION (continued)

Basis of consolidation (continued)

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent

of the Group and to the non-controlling interests, even if this results in the non-controlling interest having

a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to

transactions between members of the Group are eliminated in full on consolidation.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are

changes to one or more of the three elements of control described above. A change in the ownership interest

of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities

of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation

differences recorded in equity; and recognizes (i) the fair value of the consideration received, (ii) the fair

value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of

components previously recognised in other comprehensive income is reclassified to profit or loss or retained

profits, as appropriated, on the same basis as would be required if the Group had directly disposed of the

related assets or liabilities.

2.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group applied, for the first time, certain amendments to the standards, which are effective for

annual periods beginning on or before 1 January 2017. The Group has not early adopted any standards,

interpretations or amendments that have been issued but not yet effective.

Several other amendments apply for the first time in 2017. However, they do not impact the annual

consolidated financial statements of the Group and, hence, have not been disclosed.

The accounting policies adopted are consistent with those of the previous year, except for the following

emended standards effective as of 1 January 2017:

Amendments to HKAS 7 Disclosure initiative

Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses

Amendments to HKFRS 12 Disclosure of Interests in Other Entities: Clarification of

the Scope of HKFRS 12

59



2.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

The nature and the impact of the amendments are described below:

(a) Amendments to HKAS 7 require an entity to provide disclosures that enable users of financial statements

to evaluate changes in liabilities arising from financing activities, including both changes arising from

cash flows and non-cash changes. The amendments have resulted in additional disclosure of the

changes in liabilities arising from financing activities in note 23 to the financial statements.

(b) Amendments to HKAS 12 were issued with the purpose of addressing the recognition of deferred tax

assets for unrealised losses related to debt instruments measured at fair value, although they also have a

broader application for other situations. The amendments clarify that an entity, when assessing whether

taxable profits will be available against which it can utilise a deductible temporary difference, needs to

consider whether tax law restricts the sources of taxable profits against which it may make deductions

on the reversal of that deductible temporary difference. Furthermore, the amendments provide

guidance on how an entity should determine future taxable profits and explain the circumstances in

which taxable profit may include the recovery of some assets for more than their carrying amount. The

amendments have had no impact on the financial position or performance of the Group as the Group

has no deductible temporary differences or assets that are in the scope of the amendments.

(c) Amendments to HKFRS 12 clarify that the disclosure requirements in HKFRS 12, other than those

disclosure requirements in paragraphs B10 to B16 of HKFRS 12, apply to an entity’s interest in a subsidiary,

a joint venture or an associate, or a portion of its interest in a joint venture or an associate that is

classified as held for sale or included in a disposal group classified as held for sale. The amendments

have had no impact on the Group’s financial statements as none of the Company’s subsidiaries is

classified as a disposal group held for sale as at 31 December 2017 and so no additional information is

required to be disclosed.

2.4 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not early applied any of the new and revised HKFRSs that have been issued but are not yet

effective for the accounting year ended 31 December 2017 in these financial statements. Among the new and

revised HKFRSs, the following are expected to be relevant to the Group’s financial statements upon becoming

effective:

HKFRS 9 Financial Instruments1

HKFRS 15 Revenue from Contracts with Customers1

Amendments to HKFRS 15 Clarifications to HKFRS 15 Revenue from Contracts with Customers2

HKFRS 16 Leases2

1 Effective for annual periods beginning on or after 1 January 20182 Effective for annual periods beginning on or after 1 January 2019

60



2.4 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS (continued)

In September 2014, the HKICPA issued the final version of HKFRS 9, which reflects all phases of the financial

instruments project and replaces HKAS 39 and all previous versions of HKFRS 9. Under HKFRS 9, a debt

instrument is measured at amortised cost if the asset is held within a business model whose objective is to hold

assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on

specified dates to cash flows that are solely payments of principal and interest on the principal outstanding.

In addition, the standard requires an impairment on debt instruments recorded at amortised cost or at fair

value through other comprehensive income, lease receivables, loan commitments and financial guarantee

contracts that are not accounted for at fair value through profit or loss under HKFRS 9, to be recorded based on

an expected credit loss model either on a twelve-month basis or a lifetime basis. The Company will apply the

simplified approach and record lifetime expected losses that are estimated based on the present value of all

cash shortfalls over the remaining life of all of its trade receivables.

Furthermore, the Company will apply the general approach and record twelve-month expected credit losses

that are estimated based on the possible default events on its other receivables within the next twelve months.

The Company does not expect that the adoption of HKFRS 9 will have a significant impact on the Company’s

overall financial performance and financial position upon initial application. Moreover, the Company will

perform a more detailed analysis which considers all reasonable and supportable information, including

forward-looking elements, for estimation of expected credit losses on its trade and other receivables upon the

adoption of HKFRS 9.

HKFRS 15 was issued in July 2014 and establishes a new five-step model that will apply to revenue arising

from contracts with customers. Under HKFRS 15, revenue is recognised at an amount that reflects the

consideration to which an entity expects to be entitled in exchange for transferring goods or services to a

customer. The principles in HKFRS 15 provide a more structured approach for measuring and recognising

revenue. The standard also introduces extensive qualitative and quantitative disclosure requirements, including

disaggregation of total revenue, information about performance obligations, changes in contract asset and

liability account balances between periods and key judgements and estimates. The standard will supersede

all current revenue recognition requirements under HKFRSs. In June 2016, the HKICPA issued amendments to

HKFRS 15 to address the implementation issues on identifying performance obligations, application guidance

on principal versus agent and licences of intellectual property, and transition. The amendments are also

intended to help ensure a more consistent application when entities adopt HKFRS 15 and reduce the cost and

complexity of applying the standard. The Company will adopt the new standard from 1 January 2018.

The Company expects that the adoption of HKFRS 15 will have no impact on the timing of the revenue

recognition and the accounting for warranties but additional disclosures on the nature, amount, timing and

uncertainty of revenue and cash flows arising from contracts with customers will be required.

61



2.4 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS (continued)

HKFRS 16 was issued in May 2016 and replaces HKAS 17 Leases, HK(IFRIC)-Int 4 Determining whether an

Arrangement contains a Lease, HK(SIC)-Int 15 Operating Leases – Incentives and HK(SIC)-Int 27 Evaluating

the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the

recognition, measurement, presentation and disclosure of leases and requires lessees to recognise assets and

liabilities for most leases. The standard includes two recognition exemptions for lessees that they can elect as

practical expedients – leases of low-value assets and short-term leases (i.e., where the lease term is 12 months

or less).

At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the

lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the

right-of-use asset). The right-of-use asset is subsequently measured at cost less accumulated depreciation

and any impairment losses unless the right-of-use asset meets the definition of investment property in HKAS 40

Investment Property. The lease liability is subsequently increased to reflect the interest on the lease liability and

reduced for the lease payments. Lessees will be required to separately recognise the interest expense on the

lease liability and the depreciation expense on the right-of-use asset. HKFRS 16 also requires lessees to make

more extensive disclosures than under HKAS 17. The Company expects to adopt HKFRS 16 on 1 January 2019.

The application of the new requirements under HKFRS 16 is expected to result in changes in the measurement,

presentation and disclosures of a lease as indicated above. The Company does not expect that the adoption

of HKFRS 16 will have a significant impact on the Company’s overall financial performance and financial

position upon initial application and other corresponding changes in presentation and disclosures, once

HKFRS 16 is adopted.

2.5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries

Subsidiaries are all entities that are controlled by the Group. The Group controls an investee when it is exposed,

or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns

through its power to direct the relevant activities of the investee. The existence and effect of potential voting

rights that are currently exercisable or convertible are considered when assessing whether the Group controls

another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

They are de-consolidated from the date that control ceases. The accounting policies of subsidiaries have been

changed where necessary to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less

impairment losses.

62



2.5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair value measurement

The Group measures its derivative financial instruments at fair value at the end of each reporting period.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date. The fair value measurement is based on

the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal

market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the

asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value

of an asset or a liability is measured using the assumptions that market participants would use when pricing

the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate

economic benefits by using the asset in its highest and best use or by selling it to another market participant

that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data

are available to measure fair value, maximising the use of relevant observable inputs and minimising the use

of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised

within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair

value measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value

measurement is observable, either directly or indirectly

Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value

measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group

determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation

(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of

each reporting period.

63




Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a holding company of the

Group;

or

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a holding company, subsidiary

or fellow subsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or

an entity related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or its member of the key

management personnel of the entity (or of a holding company of the entity); and

(viii) the entity, or an any member of a group of which it is part provides key management personnel

services to the Group or to a holding company of the Group.

64




Vessels

Vessel are stated at cost less accumulated depreciation and any impairment losses. Historical cost includes

expenditure that is directly attributable to the acquisition of the items. When an item of vessels is classified as

held for sale, it is not depreciated and is accounted for in accordance with HKFRS 5, as further explained in

the accounting policy for “Non-current assets held for sale”. Vessel repairs and surveys costs are charged as

expenses as they are incurred.

Vessel is depreciated on the straight-line basis over an estimated useful life of 25 years, after taking into account

the residual value and dry-docking costs. The vessel’s residual value and useful life are reviewed, and adjusted

if appropriate, at each reporting date. Dry-docking costs of a vessel are attributed at acquisition to its service

potential reflecting its maintained condition, while dry-docking costs of the vessel incurred subsequent to the

acquisition are capitalised. Dry-docking costs of a vessel are depreciated on the straight-line basis over the

estimated period until the next dry-docking of 30 months to 60 months.

The gain or loss on disposal of a vessel is the difference between the net sales proceeds and the carrying

amount of the vessel, and is recognised in profit or loss.

Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through

a sales transaction rather than though continuing use. For this to be the case, the asset must be available for

immediate sole in its present condition subject only to terms that are usual and customary for the sale of such

assets or disposal groups and its sale must be highly probable.

Non-current assets classified as held for sale are measured at the lower of their carrying amounts and fair

values less costs to sell. Vessel classified as held for sale is not depreciated or amortised.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other

than financial assets and non-current assets classified as held for sale), the asset’s recoverable amount is

estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and

its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate

cash inflows that are largely independent of those from other assets or groups of assets, in which case the

recoverable amount is determined for the cash-generating unit to which the asset belongs.

65




Impairment of non-financial assets (continued)

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In

assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to

the asset. An impairment loss is charged to the profit or loss in the period in which it arises in these expense

categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that previously

recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the

recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill

is reversed only if there has been a change in the estimates used to determine the recoverable amount of

that asset, but not to an amount higher than the carrying amount that would have been determined (net of

any depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of such an

impairment loss is credited to profit or loss in the period in which it arises.

Leases

Lease where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted

for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are

included in non-current assets, and rentals receivable under the operating leases are credited to profit or loss

on the straight-line basis over the lease terms.

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans

and receivables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

When financial assets are recognised initially, they are measured at fair value plus in the case of financial

assets not at fair value through profit or loss, directly attributable transaction costs that are attributable to the

acquisition of the financial assets, except in the case of financial assets recorded at fair value through profit or

loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date

that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales

of financial assets that require delivery of assets within the period generally established by regulation or

convention in the marketplace.

66




Investments and other financial assets (continued)

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial

assets designated upon initial recognition as at fair value through profit or loss. Financial assets are

classified as held for trading if they are acquired for the purpose of sale in the near term. Derivatives,

including separated embedded derivatives, are also classified as held for trading unless they are

designated as effective hedging instruments as defined by HKAS 39. Financial assets at fair value

through profit or loss are carried in the statement of financial position at fair value with net changes in

fair value recognised in profit or loss.

Financial assets designated upon initial recognition as at fair value through profit or loss are designated

at the date of initial recognition and only if the criteria in HKAS 39 are satisfied.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair

value if their economic characteristics and risks are not closely related to those of the host contracts

and the host contracts are not held for trading or designated as at fair value through profit or loss. These

embedded derivatives are measured at fair value with changes in fair value recognised in profit or

loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly

modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of

the fair value through profit or loss category.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are

not quoted in an active market. After initial measurement, such assets are subsequently measured at

amortised cost using the effective interest rate method less any allowance for impairment. Amortised

cost is calculated by taking into account any discount or premium on acquisition and includes fees

or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is

included as interest income in profit or loss. The loss arising from impairment is recognised in profit or loss.

67




Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)

is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation

to pay the received cash flows in full without material delay to a third party under a “pass-through”

arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset,

or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset,

but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through

arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset.

When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred

control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s

continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset

and the associated liability are measured on a basis that reflects the rights and obligations that the Group has

retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower

of the original carrying amount of the asset and the maximum amount of consideration that the Company

could be required to repay.

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that an item

of financial assets or a group of financial assets is impaired. An impairment exists if one or more events that

occurred after the initial recognition of the asset have an impact on the estimated future cash flows of the

financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may

include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or

delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial

reorganisation and observable data indicating that there is a measurable decrease in the estimated future

cash flows, such as changes in arrears or economic conditions that correlate with defaults.

68




Impairment of financial assets (continued)

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually

for financial assets that are individually significant, or collectively for financial assets that are not individually

significant. If the Group determines that no objective evidence of impairment exists for an individually assessed

financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit

risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for

impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective

assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying

amount and the present value of estimated future cash flows (excluding future credit losses that have not

yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s

original effective interest rate (i.e., the effective interest rate computed at initial recognition).

The carrying amount of the asset is reduced through the use of an allowance account and the loss is

recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount using

the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Loans and receivables together with any associated allowance are written off when there is no realistic

prospect of future recovery and all collateral has been realised or has been transferred to the Group.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an

event occurring after the impairment was recognised, the previously recognised impairment loss is increased

or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to other

operating expenses in profit or loss.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or

loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as

appropriate.

All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, net of

directly attributable transaction costs.

The Group’s financial liabilities include other payables, an amount due to the ultimate or intermediate holding

company, derivative financial instruments and interest-bearing bank and other borrowings.

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Financial liabilities (continued)

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and

financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of repurchasing

in the near term. This category includes derivative financial instruments entered into by the Group that

are not designated as hedging instruments in hedge relationships as defined by HKAS 39. Separated

embedded derivatives are also classified as held for trading unless they are designated as effective

hedging instruments. Gains or losses on liabilities held for trading are recognised in profit or loss. The

net fair value gain or loss recognised in profit or loss does not include any interest charged on these

financial liabilities.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated

at the date of initial recognition and only if the criteria of HKAS 39 are satisfied.

(b) Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised

cost, using the effective interest rate method unless the effect of discounting would be immaterial, in

which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities

are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees

or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is

included as finance costs in profit or loss.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or

expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms,

or the terms of an existing liability are substantially modified, such an exchange or modification is treated as

a derecognition of the original liability and a recognition of a new liability, and the difference between the

respective carrying amounts is recognised in profit or loss.

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Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement

The Group uses derivative financial instruments, such as forward currency contracts and interest rates swaps,

to hedge its foreign currency risk and interest rate risk, respectively. Such derivative financial instruments are

initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently

remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when

the fair value is negative.

Any gains or losses arising from changes in fair value of derivatives are taken directly to profit or loss, except

for the effective portion of cash flow hedges, which is recognised in other comprehensive income and later

reclassified to profit or loss when the hedged item affects profit or loss.

For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the

exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised

asset or liability or a highly probable forecast transaction, or a foreign currency risk in an unrecognised firm

commitment.

At the inception of a hedge relationship, the Group formally designates and documents the hedge

relationship to which the Group wishes to apply hedge accounting, the risk management objective and its

strategy for undertaking the hedge. The documentation includes identification of the hedging instrument,

the hedged item or transaction, the nature of the risk being hedged and how the Group will assess the

hedging instrument’s effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure

to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are

expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on

an ongoing basis to determine that they actually have been highly effective throughout the financial reporting

periods for which they were designated.

71




Derivative financial instruments and hedge accounting (continued)

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised directly in other

comprehensive income in the hedging reserve, while any ineffective portion is recognised immediately in profit

or loss as unrealised gain/loss on derivative financial instruments.

Amounts recognised in other comprehensive income are transferred to profit or loss when the hedged

transaction affects profit or loss, such as when hedged financial income or financial expense is recognised or

when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability,

the amounts recognised in other comprehensive income are transferred to the initial carrying amount of the

non-financial asset or non-financial liability.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part

of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the

criteria for hedge accounting, the amounts previously recognised in other comprehensive income remain in

other comprehensive income until the forecast transaction occurs or the foreign currency firm commitment is

met.

Current versus non-current classification

Derivative instruments that are not designated as effective hedging instruments are classified as current or

non-current or separated into a current and non-current portions based on an assessment of the facts and

circumstances (i.e., the underlying contracted cash flows).

• Where the Group expects to hold a derivative as an economic hedge (and does not apply hedge

accounting) for a period beyond 12 months after the end of the reporting period, the derivative is

classified as non-current (or separated into current and non-current portions) consistently with the

classification of the underlying item.

• Embedded derivatives that are not closely related to the host contract are classified consistently with the

cash flows of the host contract.

• Derivative instruments that are designated as, and are effective hedging instruments, are classified

consistent with the classification of the underlying hedged item. The derivative instruments are

separated into current portions and non-current portions only if a reliable allocation can be made.

72




Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on

hand and demand deposits, and short term highly liquid investments that are readily convertible into known

amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally

within three months when acquired, less bank overdrafts which are repayable on demand and form an

integral part of the Group’s cash management.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash

on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as

to use.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is

recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be

recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted

or substantively enacted by the end of the reporting period, taking into consideration interpretations and

practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting

period between the tax bases of assets and liabilities and their carrying amounts for the financial reporting

purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a

transaction that is not a business combination and, at the time of the transaction, affects neither the

accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and

joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is

probable that the temporary differences will not reverse in the foreseeable future.

73




Income tax (continued)

Deferred tax assets are recognised for all deductible temporary differences, the carryforward of unused tax

credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that

taxable profit will be available against which the deductible temporary differences, the carryforward of unused

tax credits and unused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial

recognition of an asset or liability in a transaction that is not a business combination and, at the time of

the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates

and joint ventures, deferred tax assets are only recognised to the extent that it is probable that the

temporary differences will reverse in the foreseeable future and taxable profit will be available against

which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to

the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the

deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting

period and are recognised to the extent that it has become probable that sufficient taxable profit will be

available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when

the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or

substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current

tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same

taxation authority.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past

event and it is probable that a future outflow of resources will be required to settle the obligation, provided that

a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the

end of the reporting period of the future expenditures expected to be required to settle the obligation. The

increase in the discounted present value amount arising from the passage of time is included in profit or loss.

74




Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the

revenue can be measured reliably, on the following bases:

(a) charter income, commercial management fee and other income, when pre-agreed terms and services

have been rendered; and

(b) interest income, on an accrual basis using the effective interest rate method.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e.

assets that necessarily take a substantial period of time to get ready for their intended use or sale, are

capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the

assets are substantially ready for their intended use or sale. Investment income earned on the temporary

investment of specific borrowings pending their expenditure on qualifying assets is deducted from the

borrowing costs capitalised. All borrowing costs are expensed in the period in which they are incurred.

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of

funds.

Foreign currencies

These financial statements are presented in the United States dollar, which is the Company’s functional

currency and the Group’s presentation currency. Each entity in the Group determines its own functional

currency and items included in the financial statements of each entity are measured using that functional

currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their

respective functional currency rates prevailing at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency

spot rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation

of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the

exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign

currency are translated using the exchange rates at the date when the fair value was measured.

75



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates

and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their

accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions

and estimates could result in outcomes that could require a material adjustment to the carrying amounts of

the assets or liabilities affected in the future.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements,

apart from those involving estimations, which have the most significant effect on the amounts recognised in

the financial statements:

Operating lease commitments – Group as lessor

The Group has entered into commercial leases on its vessels. The Group has determined, based on an

evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards

of ownership of vessels which are leased out on operating leases.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the

reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets

and liabilities within the next financial year, are discussed below:

Impairment of vessels

The Group determines whether there are any indicators of impairment for vessels at the end of each reporting

period. Vessels are tested for impairment when there are indicators that the carrying amounts may not be

recoverable. An impairment exists when the carrying value of vessel exceeds its recoverable amount, which

is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value less

costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of

similar vessels or observable market prices less increment costs for disposing of the vessel. When value in use

calculations are undertaken, management will estimate the expected future cash flows from the vessel and

choose a suitable discount rate in order to calculate the present value of those cash flows.

76



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)

Estimation uncertainty (continued)

Useful life of vessels

The Group’s management determines the estimated useful life and related depreciation expense for the

vessel. The Group’s management estimates useful life of the vessel by reference to expected usage of the

vessel, expected repair and maintenance, and the technical or commercial obsolescence arising from

changes or improvements in the vessel market. It could change significantly as a result of the changes in these

factors.

Residual value of vessels

The Group’s management determines the residual value for its vessel. This estimate is based on the current

scrap values of steels in an active market at each measurement date since the management decides to

dispose of the fully depreciated vessel as scrap steels. The depreciation expense will increase where the

residual value is less than previously estimated value.

Fair value of derivative financial instruments

The fair value of derivative financial instruments that are not traded in an active market (for example,

over-the-counter derivatives) is determined by using valuation techniques. The Group uses a variety of methods

and makes assumptions that are based on market conditions existing at each end of the reporting period. The

fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair

value of forward foreign exchange contracts is determined using quoted forward exchange rates at the end

of the reporting period.

77



4. VESSELS

2017 2016US$ US$

At beginning of year: Cost 191,889,369 168,590,761Accumulated depreciation and impairment (36,638,216) (21,980,864)

Net carrying amount 155,251,153 146,609,897

Net carrying amount:At beginning of year 155,251,153 146,609,897Additions during the year 509,710 18,622,316Transfer from deposits for purchase of vessels – 6,881,429Disposals during the year - cost (1,194,779) (2,205,137)Depreciation provided during the year (7,343,290) (8,272,489)Disposals during the year - accumulated depreciation 1,194,779 2,205,137Impairment provided during the year (1,000,000) (8,590,000)

At end of year 147,417,573 155,251,153

At end of year:Cost 191,204,300 191,889,369Accumulated depreciation and impairment (43,786,727) (36,638,216)

Net carrying amount 147,417,573 155,251,153

Notes:

(a) At 31 December 2017, all of the Group’s vessels were pledged to secure the Group’s subordinated loans and secured borrowings (notes 10 and 13(d)).

(b) Included in the above balance of vessels as at 31 December 2017 are dry-docking costs with an aggregate net carrying amount of US$2,704,855 (2016: US$3,492,647).

(c) During the year, an impairment loss of US$1,000,000 (2016: US$8,590,000), representing the write-down of vessels to their recoverable amounts, was recognised as “Impairment of vessels” line item in profit or loss. The recoverable amounts of the vessels were determined based on its value in use and the pre-tax discount rates used were 6.30% to 6.60% (2016: 5.60%).

If the discount rate used in the valuation had been 1% higher than management’s estimate, the carrying amount of the vessels would have been US$3,214,000 lower (2016: US$4,663,000 lower).

5. ACCOUNTS RECEIVABLES, PREPAYMENTS AND OTHER RECEIVABLES

None of the accounts receivables, prepayment and other receivables is either past due or impaired. The

financial assets included in the balances related to receivables for which there was no recent history of default.

78



6. DERIVATIVE FINANCIAL INSTRUMENTS

Current Non-Current

2017 2016 2017 2016US$ US$ US$ US$

Financial assets

Financial assets at fair value through other comprehensive income – interest rate swaps designated as hedge 156,562 17,217 429,556 329,589

Financial liabilities

Financial liabilities at fair value through other comprehensive income – interest rate swaps designated as hedge (127,133) (340,034) (108,493) (258,183)

At 31 December 2017, the Group had five interest rate swaps agreements in place with notional amounts

of US$12,520,000, US$14,936,000, US$15,005,700, US$16,231,250 and US$13,690,000, respectively. The Group

paid interests at fixed rates ranging from 1.00% to 2.60%, and received variable rates equal to one-month to

three-month LIBOR on the notional amounts.

At 31 December 2016, the Group had four interest rate swaps agreements in place with notional amounts of

US$13,960,000, US$16,248,000, US$16,230,900 and US$15,170,000, respectively. The Group paid interests at fixed

rates ranging from 1.00% to 2.60%, and received variable rates equal to one-month to three-month LIBOR on the

notional amounts.

The interest rate swaps met the criteria for hedge purposes and are measured at fair value through other

comprehensive income.

79



7. EQUITY INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

2017 2016US$ US$

Listed shares 1,206,517 2,398,331

Fair values of listed shares are based on quoted market price at the end of the reporting period.

8. RESTRICTED BANK BALANCES AND CASH AND CASH EQUIVALENTS


Cash at bank other than short term time deposits 4,418,143 5,669,115Short term time deposits 4,457,207 3,400,000

Total bank balances (a) 8,875,350 9,069,115Less: Restricted bank balances (b) (771,647) (1,303,801)

Cash and cash equivalents 8,103,703 7,765,314

Notes:

(a) Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day to three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates.

(b) Restricted bank balances are restricted as to their use for repayment of the secured borrowings (note 13).

80



9. SHARE CAPITAL

2017 2016US$ US$

Issued and fully paid:4,695 ordinary shares 51,998,342 51,998,342

10. SUBORDINATED LOANS, SECURED

Current Non-Current

Notes 2017 2016 2017 2016US$ US$ US$ US$

US$ loan (a) – 1,500,000 1,500,000 –5.00% p.a. fixed rate US$ loan – – 1,250,000 1,250,000

– 1,500,000 2,750,000 1,250,000

Notes:

(a) The effective interest rates of the US$ loan was approximately 2.81% (2016: 2.38%) per annum.

(b) Subordinated loans were borrowed from independent third parties for the purpose of financing the purchase costs of the Group’s vessels. They are secured, inter alia, by the second priority ship mortgages over two of the Group’s pledged vessels.

81



11. BRIDGE LOANS FROM THE ULTIMATE OR INTERMEDIATE HOLDING COMPANY

2017 2016US$ US$

US$ loans:Ultimate holding company – 2,300,000Intermediate holding company 200,000 –

200,000 2,300,000

The effective interest rates of the US$ loans was approximately 2.75% (2016: 2.48%) per annum. The bridge loans

were unsecured and repayable by 15 November 2018.

12. LOANS FROM THE NON-CONTROLLING SHAREHOLDER OF A SUBSIDIARY

2017 2016US$ US$

Loans from the non-controlling shareholder of a subsidiary (the “Non-controlling Interest Loans”) 1,839,627 2,622,612

Imputed interest on Non-controlling Interest Loans 277,138 195,724

2,116,765 2,818,336

The principal of the Non-controlling Interest Loans amounted to US$3,524,570 (2016: US$3,524,570), and are

non-interest-bearing and repayable upon sale or total loss of the vessel of a subsidiary. The initial fair value

of the loans at inception is determined by the discounted cash flows method using a rate based on the

borrowing rate of approximately 4.00% (2016: 3.00%) per annum.

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13. BORROWINGS, SECURED

Current Non-Current

Notes 2017 2016 2017 2016US$ US$ US$ US$

US$ bank loans (a) 1,480,000 10,562,500 12,210,000 13,690,000JPY bank loans (a) 887,626 – 7,322,919 –Other US$ loans (b) 17,517,920 6,437,920 51,557,920 69,075,840

19,885,546 17,000,420 71,090,839 82,765,840

Less: Unamortised cost of borrowings (101,754) (112,260) (141,008) (242,762)

19,783,792 16,888,160 70,949,831 82,523,078

Notes:

(a) The balance represented loans borrowed from banks for the purpose of financing the purchase costs of the Group’s vessels.

(b) The balance represented loans borrowed from affiliates of banks and leasing and financing financial institutions, which are specialised in ship finance, for the purpose of financing the purchase costs of the Group’s vessels.

(c) The effective interest rates of the borrowings was approximately 3.12% (2016: 2.79%) per annum.

(d) The borrowings are secured by mortgages over Group’s vessels and guaranteed by the ultimate and/or intermediate holding company of the Company.

14. BORROWINGS, UNSECURED

2017 2016US$ US$

US$ bank loans 5,000,000 4,000,000

The Group’s unsecured uncommitted banking facilities consists of short term revolving loan facilities

amounting to US$5,000,000 (2016: US$5,000,000) and treasury products facilities amounting to US$3,000,000

(2016: US$3,000,000) on a revolving basis, of which US$5,000,000 (2016: US$4,000,000) short term revolving loan

facilities have been utilised as at the end of the reporting period. The effective interest rates of the borrowings

ranged from approximately 3.14% (2016: 2.14%) per annum. The bank facilities are guaranteed by the ultimate

and/or intermediate holding company.

83



15. PAYABLES AND ACCRUALS

Included in payables and accruals were amounts due to the ultimate holding company, the intermediate

holding company and a fellow subsidiary which are interest-free, unsecured and repayable on demand.

2017 2016US$ US$

Amount due to the ultimate holding company – 407,288Amount due to the intermediate holding company 154,642 –Amount due to a fellow subsidiary 7,953 –

The remaining balances are interest-free, unsecured and expected to be settled within one year.

16. REVENUE AND OTHER INCOME

Revenue of the Group is charter hire income from vessel leasing.

An analysis of the Group’s other income is as follows:

2017 2016US$ US$

Other income Interest income 46,679 18,614Commercial management fee income 245,554 221,575Fair value gain on equity investments at fair value through profit or loss 959,350 62,331Others 500,963 183,072

1,752,546 485,592

84



17. COST OF SERVICES RENDERED

2017 2016US$ US$

Brokerage commission 440,226 389,259Depreciation 7,343,290 8,272,489Commercial management fee 207,637 –Crewing expenses 8,027,139 8,062,250Drydocking expenses 122,976 –Vessels repairs and maintenance 915,764 836,665Vessels surveys 217,138 224,984Lubricants 606,105 661,811Insurance 1,101,520 1,157,783Ships’ stores charges 674,907 618,936Ship management fee 763,564 749,903Vessel lease expense 1,642,500 1,566,000Operational miscellaneous expenses 465,024 1,011,435Other expenses 601,252 940,430(Reversal of provision)/provision for onerous contracts (1,332,841) 3,474,541

21,796,201 27,966,486

18. ADMINISTRATIVE EXPENSES

2017 2016US$ US$

Administration fee 168,000 568,000Auditor’s remuneration 61,748 52,372Directors’ remuneration – –Employee benefits expenses 755,024 –Entertainment 8,777 9,057Legal and professional fees 72,240 45,072Operating lease expenses 83,005 –Other expenses 72,346 49,192

1,221,140 723,693

85



19. FINANCE COSTS

2017 2016US$ US$

Interest on subordinated loans 108,494 127,525Interest on bridge loans from the ultimate holding company – 10,776Interest on bridge loans from the intermediate holding company 29,851 –Imputed interest on the Non-controlling Interest Loans 81,414 82,361Interest on borrowings 3,115,517 2,894,254Interest on derivative financial instruments 282,240 590,430Amortisation of upfront fee 112,260 122,930Other finance costs 32,235 65,735

3,762,011 3,894,011Less: Interest capitalised in deposits for purchase of vessels – (2,622)

3,762,011 3,891,389Loan guarantee fee 86,766 95,410

3,848,777 3,986,799

20. INCOME TAX

No provision for Hong Kong profits tax for the prior year had been provided at the rate of 16.50% (2016: 16.50%)

on the estimated assessable profits arising in Hong Kong during the prior year.

2017 2016US$ US$

Current – Hong Kong Charge for the year 200 –Over-provision in prior years – (5,219)

200 (5,219)

86



20. INCOME TAX (continued)

A reconciliation between tax expense of the Group applicable to profit/(loss) before tax using applicable rates

and the tax expense for the year is as follows:

2017 2016US$ US$

Profit/(loss) before tax 4,692,233 (13,294,299)

Tax at the statutory tax rate 16.50% (2016: 16.50%) 774,218 (2,193,560)Adjustments in respect of current tax of previous periods – (5,219)Expenses not deductible for tax 4,449,794 6,696,218Income not subject to tax (5,192,509) (4,729,899)Tax losses utilised from previous periods (31,303) –Tax losses not recognised – 227,241

Tax expense/(credit) at the Group’s effective rate 0% (2016: 0%) 200 (5,219)

The Group has tax losses of US$1,310,918 (2016: US$1,503,261) that are available indefinitely for offsetting

against its future taxable profits. Deferred tax assets have not been recognised in respect of these losses and it

is not considered probable that taxable profits will be available against which the tax losses can be utilised.

21. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

Details of the Group’s subsidiaries that have material non-controlling interests are set out below:

2017 2016

Percentage of equity interests held by non-controlling interests:Hope Bulkship S.A. 17% 17%Regina Bulkship S.A. 49% 49%

US$ US$

Profit/(loss) for the year allocated to non-controlling interests:Hope Bulkship S.A. (30,699) (158,864)Regina Bulkship S.A. 333,151 374,577

Accumulated balances of non-controlling interests at the reporting dates:Hope Bulkship S.A. 347,066 377,765Regina Bulkship S.A. 2,864,007 1,735,529

87



21. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS (continued)

The following tables illustrate the summarised financial information of the above subsidiaries. The amounts

disclosed are before any inter-company eliminations:

Hope Bulkship S.A.

Regina Bulkship S.A.

US$ US$

2017

Revenue 2,894,088 3,915,271Other income 73,321 136,156Total expenses (3,147,993) (3,371,529)Profit/(loss) for the year (180,584) 679,898Total comprehensive income/(loss) for the year (180,584) 705,087

Current assets 1,047,639 2,653,781Non-current assets 15,546,822 21,704,809Current liabilities (878,216) (2,003,518)Non-current liabilities (13,674,677) (16,510,161)

Net cash flows from operating activities 1,051,236 2,314,576Net cash flows used in investing activities – –Net cash flows used in financing activities (1,223,288) (2,002,276)

Net increase/(decrease) in cash and cash equivalents (172,052) 312,300

2016

Revenue 2,122,739 4,026,000Other income 65,479 19,696Total expenses (3,122,708) (3,281,253)Profit/(loss) for the year (934,490) 764,443Total comprehensive income/(loss) for the year (934,490) 1,011,416

Current assets 929,838 2,606,946Non-current assets 16,349,168 22,760,789Current liabilities (6,875,306) (2,057,100)Non-current liabilities (8,181,548) (19,768,739)

Net cash flows from operating activities 357,489 2,494,278Net cash flows used in investing activities (522,923) –Net cash flows used in financing activities (1,594,302) (1,990,381)

Net increase/(decrease) in cash and cash equivalents (1,759,736) 503,897

88



22. RESERVES

The amounts of the Group’s reserves and the movements therein for the current year and the prior year are

presented in the consolidated statement of changes of equity.

23. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

1 January 2017

New borrowings

Repayment of borrowings

Classification between

current and non-current

Amortisation of upfront fee

Foreign exchange

31 December 2017

US$ US$ US$ US$ US$ US$ US$

Current interest-bearing loans and borrowings 24,688,160 1,000,000 (19,762,672) 18,950,807 112,260 (4,763) 24,983,792Non-current interest-bearing loans and borrowings 83,773,078 8,830,022 – (18,950,807) – 47,538 73,699,831

Total liabilities from financing activities 108,461,238 9,830,022 (19,762,672) – 112,260 42,775 98,683,623

1 January 2016

New borrowings

Repayment of borrowings

Classification between

current and non-current Upfront fee

Amortisation of upfront fee

31 December 2016

US$ US$ US$ US$ US$ US$ US$

Current interest-bearing loans and borrowings 28,359,997 11,250,000 (34,566,665) 19,521,899 – 122,930 24,688,160Non-current interest-bearing loans and borrowings 80,780,999 22,667,000 – (19,521,899) (153,022) – 83,773,078

Total liabilities from financing activities 109,140,996 33,917,000 (34,566,665) – (153,022) 122,930 108,461,238

Apart from the above changes in interest-bearing liabilities, the change in the fair value of loans from the

non-controlling shareholder of a subsidiary was driven by the non-cash activities.

89



24. OPERATING LEASE ARRANGEMENTS

(a) As lessor

The Group leases its vessels to independent third parties (the “Charterers”) under operating lease

arrangements, with the leases negotiated for terms ranging from four months to seven years.

At 31 December 2017, the Group had total future minimum lease receivables under non-cancellable

operating leases of vessels with the Charterers falling due as follows:

2017 2016US$ US$

Within one year 19,800,938 18,132,327Later than one year and not later than five years 26,366,238 42,266,549

46,167,176 60,398,876

(b) As lessee

The Group leases back a vessel under an operating lease arrangement from an independent third

party with the lease negotiated for a maximum term of seven years at the Group’s option.

At 31 December 2017, the Group had total future minimum lease payments under non-cancellable

operating lease falling due as follows:

2017 2016US$ US$

Within one year 1,642,500 1,642,500In the second to fifth years, inclusive 4,751,500 9,496,500After five years – 3,102,500

6,394,000 14,241,500

90



25. CAPITAL COMMITMENTS

At 31 December 2017, the Group had no capital commitments (2016: Nil).

26. CONTINGENT LIABILITIES

The Company is the controlling shareholder of Hope Bulkship S.A. (“Hope”). Under a shipbuilding contract

dated 6 December 2006 (the “Shipbuilding Contract”) entered into between two independent shipbuilding

companies (collectively, the “Sellers”) and an independent third party (the “Original Buyer”), the Sellers

agreed to build for and to deliver to the Original Buyer a shipping vessel (the “Vessel”). Pursuant to a novation

agreement dated 13 March 2010 (the “Novation Agreement”) entered into between the Original Buyer, the

Sellers and Hope, as the new buyer, the rights and obligations of the Original Buyer under the Shipbuilding

Contract were transferred to Hope. An independent third party (the “Agent”) acted as an agent of the Original

Buyer to introduce the vessel to Hope and coordinated the negotiation and documentation of the Novation

Agreement between the Original Buyer and Hope.

In consideration of the Agent’s contribution to the successful completion of the Novation Agreement of the

Vessel, the Company entered into an agreement with the Agent on 18 June 2010 whereas an option was

granted to the Agent to participate in a 33% sharing out of capital gain of the Vessel should the Vessel be

disposed of on or after 5 years from delivery of the Vessel, in such case the capital gain would be calculated

on net sale proceed less US$15 million, by the Company for a consideration of US$300,000. The maximum share

of capital gain by the Agent is US$2.5 million.

Currently, management has no intention to dispose of the Vessel.

91



27. RELATED PARTY DISCLOSURES

(a) In addition to the transactions detailed elsewhere in these financial statements, the Group had the

following material transactions with related parties during the year:


Ultimate holding company Bridge loan interest (i) – 10,776Loan guarantee fee (ii) 38,196 95,410Administration fee (iii) – 568,000

Intermediate holding companyBridge loan interest (i) 29,851 –Loan guarantee fee (ii) 48,571 –Administration fee (iii) 168,000 –Administration expenses (iv) 863,561 –

A fellow subsidiaryBrokerage commission (v) 252,003 211,769Crew pooling fund (vi) 48,000 47,500Ship management fee (vii) 672,000 665,903Ship operating expenses (vii) 2,134,199 2,054,772Subscription fee (vii) 5,288 –Outsourcing fee (viii) – 12,456

Notes:

(i) The interests were charged on certain loans provided by the ultimate or intermediate holding company on arm’s length basis.

(ii) The loan guarantee fee was charged on the loan advanced at a mutually agreed rate. Further details of the loan were disclosed in note 13 to the financial statements.

(iii) The administration fee was charged to two subsidiaries at US$7,000 (2016: US$7,000) per month. In 2016, US$400,000 administration fee was charged to the Company.

(iv) The administration expenses were charged to the Company are naturally approved (2016: Nil).

(v) The brokerage commission was charged on 1.25% of the charter hire income of the Group’s vessels as referred in note 16 to the financial statements in the normal course of business and on arm’s length basis.

(vi) The crew pooling fund was charged at US$500 (2016: US$500) per month per vessel for the crew seniority scheme.

(vii) The ship management fee, ship operating expenses and subscription fee took place in the normal course of business and on arm’s length basis.

(viii) The outsourcing fee was charged to the Company at JPY500,000 per month up to June 2016 for the marketing services provided in the normal course of business and on arm’s length basis.

92



27. RELATED PARTY DISCLOSURES (continued)

(b) Outstanding balances and other transaction with related parties

(i) Details of balances with the ultimate holding company, intermediate holding company and

non-controlling shareholder of a subsidiary are disclosed in notes 11, 12 and 15 to the financial

statements.

(ii) Details of the guarantee given by the ultimate holding company and intermediate holding

company in respect of the borrowings are disclosed in notes 13(d) and 14 to the financial

statements.

(c) In the opinion of the directors, the directors represented the key management personnel of the Group.

During the year, no compensation was paid to the key management personnel (2016: Nil).

28. FINANCIAL RISK MANAGEMENT

The Group’s principal financial instruments, other than derivatives, comprise amount due to the ultimate

holding company, amount due to the intermediate holding company, borrowings and subordinated loans. The

main purpose of these financial instruments is to raise finance for the Group’s operations and purchases of

the Group’s shipping vessels. The Group’s other financial instruments include cash and cash equivalents, other

payables and accruals which arise directly from its operations.

The Group also enters into derivative transactions, principally interest rate swaps and forward currency

contracts. The purpose is to manage the interest rate and currency risks arising from Group’s operations and its

sources of finance.

It is the management’s intention to wherever possible or desired hedge investments that are not denominated

in US$. All hedging transactions are subject to an approval process as stated in the Group’s standard operating

procedure (SOP) for investments.

The main risks arising from the Group’s financial instruments are foreign currency risk, interest rate risk, credit risk

and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and they

are summarised below. The Group accounting policies in relation to derivatives are set out in note 2.5 to the

financial statements.

93



28. FINANCIAL RISK MANAGEMENT (continued)

(a) Foreign exchange risk

The Group has transactional currency exposures. Such exposure arises from the borrowing

denominated in Japanese Yen (“JPY”). At 31 December 2017, assuming a 5% change in US$ against JPY

with all other variables including tax rate being held constant, the effect on the profit for the year would

have been US$432,000 (2016: Nil) lower or US$391,000 (2016: Nil) higher.

In addition, the Group’s income is denominated in US$ while its operating expenses are mainly

denominated in US$ and Hong Kong dollar (“HK$”). Since the HK$ is pegged to the US$, the Group’s

exposure to foreign currency risk in respect of the bank balances denominated in HK$ is considered to

be minimal.

(b) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate as a result of changes in

market interest rates and the cash flow risks associated with the variability of cash flows from floating

rate financial instruments. The Group is exposed to interest rate risk primarily from its cash and cash

equivalents, borrowings, subordinated loans and interest rate swaps.

The Group’s cash balances are kept in interest bearing accounts and on term deposits to maximise the

level of return while maintaining an adequate level of liquidity.

The Group’s borrowings and subordinated loans at variable rates are denominated in US$ and are

stated at amortised cost and not revalued on a periodic basis. Floating rate interest expenses are

capitalised in deposits for purchase of vessels or vessel costs as incurred.

The Group has entered interest rate swaps contracts to manage its interest rate risk. These are

commitments to exchange one set of cash flow for another. Swaps result in an economic exchange of

currencies or interest rates (i.e. fixed rate for floating rate).

94




(b) Interest rate risk (continued)

At 31 December 2017, if the US$ market interest rates had been 50 basis points higher/lower, which was

considered reasonably possible by management, with all other variables held constant, the profit for the

year would have been US$64,000 lower/higher (2016: US$196,000), mainly as a result of higher/lower net

interest expenses incurred on floating rate financial instruments.

At 31 December 2017, if the JPY market interest rates had been 50 basis points higher/lower, which was

considered reasonably possible by management, with all other variables held constant, the profit for the

year would have been US$41,000 lower/higher (2016: Nil), mainly as a result of higher/lower net interest

expenses incurred on floating rate financial instruments.

(c) Credit risk

Credit risk is the risk of loss resulting from the failure of counterparties to meet the terms of their

obligations under a financial instrument or customer contract. The Group is exposed to credit risk from

account receivables, deposits with bank and financial institution and other financial instruments.

The Group deals only with customers of good credit standing. The bank balances are deposited with

creditworthy banks with no recent history of default. In the opinion of the directors, the Company’s

exposure to credit risk is minimal.

95




(d) Liquidity risk

The Group manages liquidity risk by maintaining sufficient cash and the availability of funding through

an adequate amount of committed credit facilities and the ability to close out market positions in order

to meet our normal operating commitment and capital investment requirement.

The tables below analyse the maturity profile of the financial liabilities of the Group and the Company

based on contractual undiscounted cash flows:

On demand

Within 1 year

More than 1 year but

less than 2 years

More than 2 years

but less than 5 years

More than 5 years Total

US$ US$ US$ US$ US$ US$

At 31 December 2017Non-derivative financial instruments Subordinated loans, secured – 116,972 2,807,885 – – 2,924,857Loans from the non-controlling shareholders

of a subsidiary – – – – 3,524,570 3,524,570Bridge loans from the intermediate holding

company – 205,735 – – – 205,735Borrowings, secured – 22,600,312 17,351,561 44,150,786 14,050,714 98,153,373Borrowings, unsecured – 5,040,205 – – – 5,040,205Payables and accruals – 729,393 – – – 729,393

– 28,692,617 20,159,446 44,150,786 17,575,284 110,578,133

Derivative financial instrumentsCash inflows – 1,110,563 1,153,127 979,892 – 3,243,582Cash outflows – (1,088,897) (921,385) (888,820) – (2,899,102)

– 21,666 231,742 91,072 – 344,480

At 31 December 2016Non-derivative financial instrumentsSubordinated loans, secured – 103,634 103,634 2,801,675 – 3,008,943Loans from the non-controlling shareholders

of a subsidiary – – – – 3,524,570 3,524,570Bridge loans from the ultimate holding company – 65,279 2,350,702 – – 2,415,981Borrowings, secured 19,700,764 21,236,649 55,572,121 11,717,689 108,227,126Borrowings, unsecured 4,010,471 4,010,471Payables and accruals – 827,152 – – – 827,152

24,707,300 23,690,985 58,373,796 15,242,259 122,100,243

Derivative financial instrumentsCash inflows – 630,813 771,587 1,379,492 – 2,781,892Cash outflows – (972,565) (810,824) (1,261,492) – (3,044,881)

– (341,752) (39,237) 118,000 – (262,989)

96




(e) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a

going concern in order to provide returns for the sole shareholder and benefits for other stakeholders.

In order to maintain or adjust the capital structure, the Group will consider the macro economic

conditions, prevailing borrowing rate in the market and adequacy of cash flows generating from

operations.

The Group’s total capital is calculated as equity as shown in the consolidated balance sheet. The

Group’s strategy is to maintain sufficient capital with the funds generated from operations, borrowings

and subordinated loans.

29. FINANCIAL INSTRUMENTS BY CATEGORY

Other than the derivative financial instruments and equity investments being classified as financial assets/

liabilities at fair value through profit or loss as disclosed in notes 6 and 7 to the financial statements, all financial

assets and liabilities of the Company as at 31 December 2017 and 2016 were loans and receivables, and

financial liabilities stated at amortised cost, respectively.

30. FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES

(a) Fair value of financial instruments by classes that are not carried at fair value and those carrying amounts are reasonable approximation of fair value

The carrying amounts of accounts receivables, prepayments and other receivables, cash and cash

equivalents, floating rate subordinated loans, bridge loans from ultimate and intermediate holding

company, loans from the non-controlling shareholder of a subsidiary, borrowings, payables and

accruals are reasonable approximation of fair values, either due to their short-term nature or that they

are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting

period.

97



30. FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES (continued)

(b) Fair value of financial instruments by classes that are not carried at fair value and those carrying amounts are not reasonable approximation of fair value

Carrying amount Fair value

US$ US$

At 31 December 2017Financial liabilities - Subordinated loans, secured (1,250,000) (1,427,193)

At 31 December 2016Financial liabilities - Subordinated loans, secured (1,250,000) (1,341,104)

The fair value of the loans to subsidiaries and shareholder’s loan from the non-controlling shareholder

of a subsidiary is determined by the discounted cash flow method based on the borrowing rate

of approximately 4% (2016: 3%) per annum, which the directors expect would be available to the

Company for loans on similar terms, credit risk and remaining maturities. The effective interest rate of the

loans to subsidiaries was 4% (2016: 3%) per annum.

The fair values of the subordinated loans are determined by the discounted cash flow method based

on the borrowing rate of approximately 4% (2016: 3%) per annum, which the directors expect would be

available to the Company for loans on similar terms, credit risk and remaining maturities. The effective

interest rate of the subordinated loans was 5% (2016: 5%) per annum.

98



30. FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES (continued)

(c) Analysis of financial instruments carried at fair value by level of fair value hierarchy as at the end of the reporting period is as follows:

Fair value hierarchy

Fair value measurement

Quoted prices in active markets

(Level 1)

Significant Observable

inputs(Level 2)

Significant unobservable

inputs(Level 3) Total

US$ US$ US$ US$

At 31 December 2017Financial assets at fair value through other

comprehensive income – interest rate swaps designated as hedge – 586,118 – 586,118

Financial assets at fair value through profit or loss – equity investments 1,206,517 – – 1,206,517

1,206,517 586,118 – 1,792,635

Financial liabilities at fair value through other comprehensive income – interest rate swaps designated as hedge – (235,626) – (235,626)

At 31 December 2016 Financial assets at fair value through other

comprehensive income – interest rate swaps designated as hedge – 382,983 – 382,983

Financial assets at fair value through profit or loss – equity investments 1,206,517 – – 1,206,517

1,206,517 382,983 – 1,589,500

Financial liabilities at fair value through other comprehensive income – interest rate swaps designated as hedge – (556,630) – (556,630)

During the year 2017 and 2016, there were no movement in fair value measurement in Level 3, no transfer

of fair value measurements between Level 1 and Level 2 and no transfer into or out of Level 3.

Analysis of financial instruments carried at fair value by level of fair value hierarchy as at Interest rate

swap contracts are valued using a valuation technique with market observable inputs. The most

frequently applied valuation techniques include forward pricing and swap models, using present value

calculations. The models incorporate various inputs including the credit quality of counterparties, foreign

exchange spot and forward rates, interest rate curves and forward rate curves.

99



31. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

Information about the statement of financial position of the Company at the end of the reporting period is as

follows:

2017 2016US$ US$

NON-CURRENT ASSETSInvestments in subsidiaries 44,961,504 45,817,667Loan to a subsidiary 4,790,000 –

Total non-current assets 49,751,504 45,817,667

CURRENT ASSETSLoan to a subsidiary – 4,500,000Equity Investments at fair value through profit or loss 1,206,517 2,398,331Prepayments and other receivables 2,203 3,950Income tax recoverable – 46,183Cash and cash equivalents 260,840 1,727,711

Total current assets 1,469,560 8,676,175

TOTAL ASSETS 51,221,064 54,493,842

EQUITYShare capital 51,998,342 51,998,342Accumulated losses (Note) (7,253,572) (6,495,205)

TOTAL EQUITY 44,744,770 45,503,137

CURRENT LIABILITIESBridge loans from the ultimate holding company – 2,300,000Bridge loans from the intermediate holding company 200,000 –Borrowings, unsecured 5,000,000 4,000,000Deferred income 6,845 7,585Due to the ultimate holding company – 400,000Due to the intermediate holding company 154,305 –Due to subsidiaries 1,095,000 2,264,058Payables and accruals 19,944 19,062Income tax payable 200 –

Total current liabilities 6,476,294 8,990,705

TOTAL LIABILITIES 6,476,294 8,990,705

TOTAL EQUITY AND LIABILITIES 51,221,064 54,493,842


Director Director

100



31. STATEMENT OF FINANCIAL POSITION OF THE COMPANY (continued)

Note: The movement of the Company’s retained profits/(accumulated losses) is as follows:

Retained profits/(accumulated

losses)US$

At 1 January 2016 4,527,122

Loss for the year and total comprehensive loss for the year (11,022,327)

At 31 December 2016 and 1 January 2017 (6,495,205)

Loss for the year and total comprehensive loss for the year (758,367)

At 31 December 2017 (7,253,572)

32. EVENTS AFTER THE REPORTING PERIOD

On 5 February 2018, the Company entered into a memorandum of agreement with a third party in respect of

the sale of its vessel. As at the date of this accounts, the sale has not been completed and an estimate of the

financial effect cannot be made.

33. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 3 April 2018.

30/F, Prosperity Millennia Plaza, No. 663 King's Road, North Point, Hong KongTel: 852 2528 5016Website: www.uniasiashipping.com

SHIPPING LIMITED

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