Dear Shareholders,

Three years have passed since the Group’s listing in January 2020. Throughout this period, we have shown our ability to navigate the pandemic and industry headwinds, achieving continued growth in profitability.

We attribute this performance to the strong management of our business. Our industry experience, network, nimbleness and tight capital management have enabled us to run a tight ship, while proactively tackling business challenges.

For FY2022, we are heartened to report yet another year of growth, with a 55.9% improvement in net profit to S$29.6 million, on the back of a 34.3% increase in revenue to S$179.0 million.

Higher shipping volume and freight rates
FY2022 was driven mainly by our Shipping Services, which recorded improvements on all fronts.

With the addition of three more sets of tugboats and barges during the year, we expanded our fleet size to 14 operating vessels (1 bulk carrier and a total of 13 sets of tugboats and barges) and lifted our capacity by nearly 20%, from 132,000 deadweight tonnage (“dwt”) to 156,000 dwt.

The expanded capacity has allowed us to tap the favourable dynamics in Indonesia, where the demand for chartering and transshipment services outstrips supply. Along with our improved shipping efficiency and faster turnaround time for each voyage, shipping volume rose 45.5% to 5.6 million metric tonnes in FY2022.

Revenue from Shipping Services jumped 82.8% to S$36.8 million (FY2021: S$20.1 million), as a result of higher volume and freight rates. Gross profit from Shipping Services increased 105.4% to S$19.1 million (FY2021: S$9.3 million), while gross profit margin improved 5.8 percentage points to 52.1% (FY2021: 46.3%).

Subdued momentum for Trading business
Growth momentum for our Trading business was hampered by the tight supply of coal, which is currently our main shipping goods, due to weather-related disruptions in Indonesia. We believe this situation is temporary as Indonesian coal miners are aggressively ramping up production to meet the rising demand locally and overseas. We are also exploring ways to diversify our supply source to lift our performance.

While the tight coal supply has led to a 9.8% decline in sales volume in FY2022, revenue for Trading business increased 25.6% to S$142.2 million (FY2021: S$113.2 million) due to a higher selling price, which increased from S$77.8/mt in FY2021 to S$108.5/mt in FY2022. Gross profit improved 8.2% to S$17.4 million (FY2021: S$16.0 million). Gross profit margin was lower at 12.2%, compared to 14.2% a year ago due mainly to higher purchase price.

Strategy ahead
To drive our Trading business, the Group is working hard to widen the pool of coal mines from which we can procure our supply. Only with the easing of coal supply can we fulfil more orders and diversify our sales beyond Indonesia, while to neighbouring countries.

Laying the ground for geographic diversification, we have set up a wholly-owned subsidiary RG International Commodities Pte. Ltd. (“RGIC”) for trading outside of Indonesia, while PT DNS will continue to focus on the domestic market.

Indonesia is ramping up coal production to normalise domestic supply and fulfil the heightened export demands because of the global energy crisis. According to the Ministry of Energy and Mineral Resources, Indonesia is targeting to produce nearly 700 million tonnes of coal in 2023.1 This augurs well for our Shipping Services as coal producers will need more chartering and transhipment services to reach customers.

Tapping the opportunities ahead, we are expanding our fleet to pursue higher value projects. More newly built tugboats and barges will be progressively added in 2023 to increase our shipping capacity. We will also continue to explore ways to improve our fleet management so as to optimise shipping volume. Over the long term, our aim is to leverage our expanding fleet to build a shipping and logistics business, covering other commodities.

Driving healthy cash flows and maintaining a strong balance sheet will remain a key focus as this provides us with the flexibility to pursue opportunities swiftly. So far, we have been using cash generated from operations to fund our fleet expansion, but access to bank loans remains an option. We will continue with our prudent capital management to manage risks.

Subject to feasibility and where resources permit, we would like to diversify geographically and widen the types of customers for both Shipping Services and Trading business. Additionally, in the long term, we may explore adding synergistic income pillars where it makes sense.

Corporate citizenship
We will work closely with all stakeholders to keep improving on our social, environmental and governance efforts. In particular, we are mindful of managing our environmental footprint and will continue to optimise our resource consumption, as well as our shipping operations and routes to improve resource efficiency.

Staff development and workplace diversity will remain an important pillar as we grow the team professionally to tackle business challenges ahead and operate with the highest standards of governance.

Dividends
We are pleased to declare a dividend of three (3) Singapore cent per share, subject to shareholders’ approval at the upcoming annual general meeting on 28 April 2023.

Words of appreciation
I would like to congratulate all staff for delivering yet another healthy report card. It is heartening to witness great teamwork and stronger performance year after year, since our listing.

My appreciation goes out to our customers and business partners for their continued support. I would also like to thank the board of directors for their guidance in driving the Group forward. Finally, to all our shareholders, thank you for being part of our growth journey.

Mr Francis Lee
Executive Director and CEO
13 April 2023