15
Annual Report 2014
Dear Shareholders
This report is being presented in the midst of difficult
market conditions as the world economy continues to
face challenges coupled with the substantial drop in oil
prices since the second half of 2014.
For COSCOCorporation, the performance in the financial
year that ended 31 December 2014 was subdued in
the face of the many challenges that compounded the
already difficult operating conditions. During the year,
the Group had continued to step up efforts to further
improve productivity, job execution and cost efficiency
to maximise yields from our projects. The projects
executed were contracted in recent years at much lower
prices owing to market conditions prevailing then, while
costs have continued to increase.
The Group’s turnover was $4.3 billion, an increase of
21.5% from $3.5 billion for the previous year. Gross profit
decreased by 9.4% to $291.0 million. Profit attributable
to shareholders was $20.9 million, a 31.8% decline from
2013, in spite of every effort to execute projects more
efficiently and cost effectively.
Diluted earnings per share was 0.9 cent. Group net
asset value per ordinary share as at 31 December 2014
was slightly higher at 61.1 cents.
Contribution from Marine Engineering
Remains Strong
The bulk of our income continues to be generated by
our shipyard operations, which contributed to 98.8% of
overall turnover mainly from growth in revenue from the
marine engineering and ship building segments.
In 2014, we delivered marine engineering projects
comprising 2 self-erecting drilling tender barges, 2
pipelay heavy lift vessels, 1 jack-up rig, 1 tender rig,
1 stinger barge, 1 float-over launch barge, 1 platform
supply vessel and 1 wind turbine installation vessel. 8
bulk carriers and 2 livestock carriers were also delivered.
Marine engineering and shipbuilding had contributed
73% and 13% of shipyard revenue respectively.
In the year under review, our ship repair business
remained stable contributing to 10% of total shipyard
revenue. We also continued to deliver ship conversion
jobs, with the segment accounting for 4% of total
shipyard revenue.
The Baltic Dry Index (BDI), the internationally recognised
indicator for commodities shipping, was at 2,113 points
at the beginning of 2014, declining to 782 points at the
end of 2014 to average 1,105 points for the entire year.
For our dry bulk shipping and other businesses segment,
revenue fell by 5.6% to $52.5 million.
Stable Order Book Despite Market
Challenges
As at 31 December 2014, our accumulated orders stood
at US$8.4 billion with progressive deliveries till 2017.
We added US$1.6 billion of new contracts to our
order book during the year under review. Most of the
new orders received in 2014 were marine engineering
products including 8 platform supply vessels, 4
emergency response/rescue/field support vessels, 4
sub-sea supply vessels, 1 jack-up rig, 1 accommodation
barge, 1 floating accommodation unit, and 1 module
carrier. New shipbuilding orders included 9 bulk carriers
and 3 livestock carriers.
Noteworthy is a US$470 million contract the Group
secured from Maersk Supply Service AS (“MSS”), a
member of the Moller-Maersk Group, to construct four
sub-sea supply vessels scheduled for delivery in the
fourth quarter of 2016, with an option for two additional
units.
The array of building and project capabilities at our six
modern shipyards in Guangdong, Zhoushan, Shanghai,
Nantong, Qidong and Dalian dotted along China’s
coastline has helped us secure diversified contracts
from both the marine engineering and shipbuilding
segments to tide over the difficult market.
Key Messages
