Annual Financial Report

1. Letter to Shareholders

Dear Shareholders,

Business Environment

The dry bulk shipping market can be said to have generally moved at a steady pace in 2024. It delivered consistent results during the Lunar New Year and the off-season in summer, but showed no significant rebound after the off-season. In the meantime, economic concerns about the global economy triggered by the US election and China's economic slowdown weighed on the shipping market to a certain degree. Therefore, shipping activities fell in the fourth quarter of 2024, and the index stagnated.

US President Trump wasted no time in making changes to US tariff policy after he took office. Given that the United States is the world's largest market, changes to US tariffs will inevitably have a major impact on the global economy. Currently it is hard to predict President Trump's policy goals, so it remains difficult to formulate any response quickly, which puts the market in a cautious stance. However, grains, coal, and other goods that are closely related to dry bulk shipping are essential consumables, and so any decrease in shipped volume is unlikely to persist over the long term. We remain confident about the fundamental soundness of the demand in the dry bulk shipping market.

China's economy did not make a clear recovery in 2024, and the fiscal and debt problems that gradually emerged with slowing growth are making the market cautious. Nevertheless, China's total imports of iron ore, coal, and grains rose by 6.4% in 2024, providing important support for the demand for dry bulk shipping.

Although the Israel-Palestine conflict has eased, the Red Sea routes continue to carry a higher risk. The Russia-Ukraine war has not ended either. The risk of war has not led to significant changes in global shipping routes so far. Yet hope remains to restore the Red Sea routes in 2025. If a ceasefire can be reached between Russia and Ukraine, there will be also be a good chance of restoring the demand for raw materials and grain shipping.

Regarding environmental requirements, President Trump holds a right-wing attitude towards climate initiatives, but the European Union continues to push for related regulations. It will not only lower the carbon tax exemption from 60% to 30%, but also introduce the transition of fuels under the FuelEU Maritime Regulation. However, as the EU is not the largest market for dry bulk shipping, these regulations have a limited impact on the overall market capacity despite having prompted some shipping companies to explore environmental innovation. On the other hand, energy-efficient ships with a good energy efficiency record may create benefits in terms of compliance cost and corporate image.

2024 Business Results

In 2024, we added 4 newbuild ships, sold 4 ships, and added 1 ship under management. The number of ships in our fleet saw a net increase of 1 and counted a total of 134 at the end of the year. The 4 newbuild ships included 1 kamsarmax, 2 supramax, and 1 handysize. The ships sold included 1 capesize, 1 supramax, 1 handysize, and 1 small handysize.

In 2024, aided by the overall recovery in the market, the annual revenue was US$634.4 million, up by 16.3% compared to 2023; the operating profit was US$211.3 million and the operating profit margin rose back up to 33.3%. Aside from the first quarter, performance in the fourth quarter also did not meet expectations.

A total of US$31.3 million were recognized in non-operating profit and loss for the sale of 4 ships in the year. We continued to reduce our debt in 2024. The debt ratio fell from 48.8% to 42.6%, which reduced interest expenses from US$68.8 million in 2023 to US$61.5 million. The recognized exchange rate profit and loss was US$6.2 million due to continuing depreciation of the Japanese yen. The total net profit before tax was US$188.5 million, and the EPS was NT$8.08.

2025 Business Plan

We expect to receive another 2 newbuild ships in 2025. Both are handysize bulk carriers made by the Japanese builder Namura. Both are eco-ships that comply with the Tier III NOx emission standards. Both are expected to be delivered in the fourth quarter.

A relatively large percentage of our current charters are index-linked hires. The plan is that our ships' better energy saving performance will lead to higher charter premiums than the market average and we will not have to negotiate for fixed hires at a discount in uncertain political or economic times. Nevertheless, we will also utilize the index futures market and lock in charterers for certain ships during specific periods.

Despite fluctuations in the freight market at present, the prices of new ships have not changed much due to overall inflation and abundant orders at Japanese shipyards, which means there is relatively limited capacity for fulfilling more ship orders. We do not currently have any plans for large capital expenditures. The fleet policy for 2025 will continue to prioritize the elimination of less energy-efficient vessels.

The Japanese yen has been falling in recent years, which may suggest more room for appreciation, while the US dollar interest rate stays high. To diversity interest rate and exchange rate risks, we are making plans to increase Swiss franc-denominated loans in response to market conditions. However, we remain conservative when planning for capital expenditures. We will also consider continuing the repayment of loans when the operating cash flows become stronger.

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