AR2006

ACHIEVING MORE
COURAGE MARINE GROUP LIMI TED
Annual Report 2006
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Corporate Mission
Excellence with reliability and efficiency. We aim to deliver sustainable growth and long-term shareholder value by: Developing and broadening our customer base. Expanding our fleet to meet growing demand, particularly Chinas. Adding qualified personnel and enhancing service facilities.
Corporate Vision
We aim to be one of the leading dry bulk carriers serving Asias needs.
Courage Marine Group, founded in June 2001, is one of Asias younger dry bulk shipping companies. It owns and operates 10 bulk carriers, deployed around Greater China, Japan, Russia, Vietnam, Indonesia, Bangladesh, and elsewhere in Asia. The vessels, totalling 455,463 deadweight tonnes, transport dry bulk commodities such as coal, cement, clinker, iron ore, minerals, and wood chips. On board to steer the group are five industry veterans with extensive hands-on experience in dry bulk shipping in Asia, particularly in Greater China. They bring nearly 150 years of combined experience, each excelling in his expertise to complement the others. Profitable since inception, our substantial presence in the region can capitalise on China and Asia-Pacifics continued economic growth. We are well-poised to take advantage of growing demand for dry bulk marine transportation services, especially coal. Industry growth prospects are positive, likewise Courages outlook.
Contents
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1 2 4 6 7 10 11 12 18 20 24 26 27 Company Profile Chairmans Message Board of Directors Executive Officers Corporate Structure Group Financial Summary Financial Highlights Operations Review Milestones Our Fleet Business Strategy and Plans Corporate Information Financial Contents
2006 >>
ACHIEVING MORE
CHAIRMANS MESSAGE
By the end of 4Q06, when our net profit soared 42% year-on-year to US$8.5 million on higher freight rates and utilisation, our Group recorded an annual net after-tax profit of US$27.8 million.
Dear Shareholders, 2006 was a year of accomplishment for the Courage Marine Group as we saw interesting developments in the dry bulk shipping market. After our Groups strong performance, especially in 4Q06, our results positioned us at the top end of analysts forecasts by the end of the year. For this, I wish to congratulate our Group, and assure all our stakeholders that our Company is moving towards the right direction.
Operating Performance
Our success for 2006 was mainly a result of improved market conditions and an astute business strategy. By and large, market conditions during 2006 have been favourable to our Group. We started the year contending with a comparatively low Baltic Dry Index which was an offshoot of a market downturn in the latter half of FY2005. While our Group remained stable during this period, we were only enthusiastic to see market conditions improve since 1Q06. Towards the end of 2006, we saw the BDI averaging above the 4,000 levela remarkable development compared to its
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Courage Marine Group Annual Report 2006
corresponding period in 2005 and to the first three quarters of 2006. Continuing economic expansion in the Greater China region, in addition to India and the Middle East, also provided our business with good opportunities as demand for raw materials such as coal, cement and iron ore soared.
We have recommended a final dividend of US0.94 per ordinary share on 1.059 billion shares, amounting to approximately US$15 million in respect of the financial year ended 31 December 2006. Together with the interim dividend of US0.47 which has already been declared and paid, the total dividend for FY2006 is US1.41. The proposed dividend is
By keeping our fleet well-deployed and wellmaintained, we were able to respond to market demands to the fullest of our abilities, with our fleets utilization rate staying over 90% during the year despite having an expanded tonnage and higher capacity of 455,463 dwt.
subject to shareholders approval at the Annual General Meeting.
Acknowledgements
I wish to extend my appreciation to our management team and staff, clients, business associates and
We also managed to have the upper hand in our financial performance this year. By the end of 4Q06, when our net profit soared 42% year-on-year to US$8.5 million on higher freight rates and utilisation, our Group recorded an annual net after-tax profit of US$27.8 million.
shareholders for your continued support, commitment and contribution to our Groups growth.
Once again, I congratulate the Group for an outstanding FY2006. Our overall performance in 2006 is a solid testament to our Groups capability to take on a bigger role in the industry for years to
Dividend
As we work hard in accelerating our growth for years to come, we will continue our commitment to provide only the best services to our expanding customer base and offer attractive returns to our shareholders.
come.
Sincerely,
Hsu Chih-Chien Chairman of the Board
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BOARD OF DIRECTORS
L-R (1st row) : Hsu Chih-Chien, Wu Chao-Huan, Chen Shin-Yung and Chiu Chi-Shun L-R (2nd row) : Captain Wu Chao-Ping, Sin Boon Ann, Lui Chun Kin and Chu Wen Yuan
Hsu Chih-Chien
Non-Executive Chairman
Mr Hsu, 49, co-founded Courage Marine with Mr Wu Chao-Huan in 2001. With more than 26 years of experience in the shipping industry, he is responsible for the sale and purchase of the Groups second-hand vessels. His other positions take charge of insurance and financing. Mr Hsu is also Chairman of Waywiser Marine Shipping Agency Co, and Managing Director of Eddie Steamship Co. He holds a BA degree from Colby College, Maine (USA). Mr Wu, 56, oversees sales and marketing, customer service, strategic planning, and general management. Prior to cofounding the Group, Mr Wu was General Manager of New Amego Shipping Corp and Everlasting Maritime Corp over 1966- 2001. His more than 30 years managing shipping companies exposed him to sales and marketing, schedule planning, ship purchases and sales, personnel, and general management. He is a graduate of China Navigation Institute in Taiwan. Mr Chen, 63, comes with more than 30 years experience in the shipping industry in supplies, repair and maintenance. As the Groups Technical Director since 2001, he is responsible for the fleets overall technical management. Over 1979-97, he was General Manager of Bada & Co, which specialised in ship supplies in Taiwan. He was the Technical Manager of New Amego Shipping Corp over 1997-2001.
Wu Chao-Huan
Managing Director
Chen Shin-Yung
Director of Technical, Repair and Maintenance
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Chiu Chi-Shun
Director of Systems and Standard Compliance
Mr Chiu, 55, oversees technical safety and process compliance. His key role is identifying second-hand ships in excellent condition suitable for acquisition, drawing from over 30 years in ship design, building, and maintenance. Before joining Courage, he worked in organisations such as China Shipbuilding Corp, Yang Ming Line, and Jacksoon Shipping Safety Management Consulting Co. Mr Chiu graduated from Taiwans Ocean University, Naval Architecture Department. Captain Wu, 54, joined the Group in 2001 as Operations Director, overseeing overall fleet operations. He works to ensure the crew is well-trained and equipped to handle emergencies on board. He began his career as a port captain in 1975 and has 30 years of experience in the industry. He has also worked with Jeyuan Shipping Co, New Amego Shipping, and Everlasting Maritime Corp. Captain Wu is a graduate of China Navigation Institute, Taiwan.
Captain Wu Chao-Ping
Director of Operations, Scheduling, and Crewing
Sin Boon Ann

Non-Executive Director
Mr Sin, 49, joined the board on 24 August 2005. As a Director of Drew & Napier LLC, he specialises in corporate finance, banking, joint ventures, investments and acquisitions, and helped establish Drew & Napiers Hanoi office. Before joining Drew & Napier in 1992, Mr Sin taught at the Faculty of Law of the National University of Singapore from 1987. He is a Member of Parliament for the Tampines Group Representative Constituency. Mr Sin received his Bachelor of Arts and Bachelor of Laws (Honours) degree from the National University of Singapore and Master of Laws from the University of London. Mr Lui, 46, joined the board on 24 August 2005. He is Chief Financial Officer of Fantatech Inc, in charge of management, strategic planning, investment, and corporate restructuring. Before that, he was Vice President and Chief Financial Officer with CBR Brewing Co, Project Controller with First Shanghai Investments, General Manager with GKC Inc, Assistant Financial Controller of Chung Wah Shipbuilding & Engineering (Holdings) Co, and Senior Accountant with Arthur Andersen & Co, in all, 18 years of experience. Mr Lui obtained a Bachelor of Social Science (Hons) degree from University of Hong Kong in 1987 and Master in Applied Finance from Charles Stuart University in 2001. He is a member of the Hong Kong Institute of Certified Public Accountants, fellow of the Association of Chartered Certified Accountants, and provisional member of the Institute of Certified Public Accountants in Singapore. Mr Chu, 48, joined the board on 24 August 2005. He is General Manager of Xcellink Pte Ltd, overseeing its Singapore and Malaysia operations. Prior to that, he was General Manager of HTL Manufacturing, Integral Chemical Co, Walsin International Management, Composers & Authors Society of Singapore, and Financial Controller of Citicorp Insurance Brokers (S), in all, 18 years of experience. Mr Chu graduated in 1984 with a Bachelor of Science, Accounting degree from San Francisco State University, USA. He obtained a Master of Business Administration, Finance degree from University of Oregon, USA, in 1986.
Lui Chun Kin, Gary

Chu Wen Yuan

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EXECUTIVE OFFICERS
Hon Kwok-Ping Financial Director

Mr. Hon, 58, is in charge of the Companys corporate governance and co-ordinate of the Companys internal control function. He served as Accountant, Chief Accountant, and the Company Secretary in several international companies between 1973 and 1984. From 1984 to 1996, he was a Financial Director, Deputy Managing Director, and Chief Operating Officer in the Asian operations of European and North American companies. From 1997 to 2003, he was President of Agrocan Corp. An advisor to our company since January 2004 and was appointed Financial Controller in November 2004. He obtained his accounting professional status through the Association of International Accountants, UK. He is a Fellow of the Hong Kong Institute of Certified Public Accountants.
Yuen Chee Lap, Carl Financial Controller

Mr. Yuen, 33, is in charge the Companys finance and accounting control, as well as the Companys reporting and SGX compliance. Mr. Yuen has rich experience in finance and accounting both in Hong Kong and the United States. He started his career in Houston, Texas. He joined Greensmart Corp., a U.S. listed company in 2000 and served as Chief Financial Officer from 2001 to 2003. He then joined the Company as the financial manager since January 2004 and was appointed Financial Controller in May 2006. Mr. Yuen received BBA and MBA degrees from University of Houston, Texas in 1997 and 1998, respectively.
Lin Tsai-Seng Sales and Marketing Manager

Mr Lin, 58, is our Sales and Marketing Manager, responsible for sales and marketing functions, including client relationship management. He served as an engineer in a number of shipping companies between 1974 and 1983. He was the General Manager of Horong Shipping Co between 1983-2000. Mr Lin joined our company in 2001. He graduated from Ocean University, Taiwan.
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CORPORATE STRUCTURE
Courage Marine Group Limited

100%
Courage Marine (BVI)

100%
Courage Marine Holdings

100% 100% 100%
Ally Marine Courage Marine Jeannie Marine Midas Shipping New Hope Marine Zorina Navigation Panamax Mars Marine Raffles Marine Bravery Marine Sea Valour Marine Heroic Marine
Courage Marine HK Courage Shanghai Courage Amego 100%
Courage Maritime
Courage Amego Agency
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The Group has grown its presence on the Middle East routes.
SAILING
GROUP FINANCIAL SUMMARY
Revenue
US$ million FY2005 FY2006
48.4 56.7
Net Profit
26.3 27.8
Total Assets
77.1 80.9
EBITDA Margin
2005 59.7%
2006 55.6%
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FINANCIAL HIGHLIGHTS
FY2006
Income Statement (US$ 000) Revenue EBITDA Net profit Balance Sheet (US$ 000) Fixed assets Total assets Total current assets Share capital & reserves (US$ 000) Net cash/(debt) Financial Ratios Return on equity (%) Net gearing (%) Interest cover (times) Per share Earnings (US cents) Net tangible assets (US cents) Ordinary dividends - gross (US cents) Share price at year end (SGD cents) 1.41 18 2.63 6.82 38.5 11.9 46.0 52,010 80,851 28,841 72,249 19,796 56,734 31,558 27,798
FY2005
48,381 28,861 26,318
50,067 77,083 27,016 63,404 14,533
41.5 21.6 35.9
3.03 5.99
1.32 20
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OPERATIONS REVIEW
Our fleet was well deployed and achieved a high average utilisation of 93.6% for 2006.
Market Overview
The Group saw market conditions improving at the start of the year, following a general decline in dry bulk freight rates in the second half of 2005. The Baltic Dry Index (BDI) averaged a low 2,500 in 1Q06 compared to 4,600 in 1Q05, but had been considerably picking up since. By November 2006, the Baltic Dry Index has been averaging above the 4,000 level. BDI averaged about 4,200 in a very strong 4Q06, a sharp boost from 2,900 in 4Q05. As dry bulk rates continue to be demand-driven, BDI currently averages around 4,600. Robust raw material demand particularly for cement, coal and iron ore comes from the Greater China Region, Northeast Asia and Middle East regions.
Aside from the BDI, the continuing economic expansion in China heavily impacted the market in 2006, making the demand for dry bulk commodities to escalate. The significant increase in consumption of electricity, coupled with the policy on closing down small-sized coal mines, created a higher demand for coal imports. Rising standards of living reflected by the increase in general income of individuals ushered greater demand for new properties, consequently boosting the demand for cement. In view of Chinas burgeoning economy, the National Bureau of Statistics recorded a 19.7% increase in Chinas crude steel output and a 25.3% increase in finished steel production in 2006. Ongoing trends in steel production suggest a sustained soaring of iron ore imports in the coming years. The market in 2006, however, is not without its share of challenges. Due to the ever-increasing demand for raw materials, the market is still
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Return on Equity
+38.5%
Our return on equity was high at 38.5% while net gearing was low at 11.9%.
burdened by a limited vessel supply for bulk carriers. This presents a window of opportunity for Courage Marine, which we will cash in on through further fleet expansion. Port congestion and traffic also remain to be market challenges for our Group. We saw improvements in vessel traffic in China, but we still had to contend to port congestion in Vietnam, Indonesia and other developing countries.
we are looking forward to accommodating new additions to our already diverse cargo mix. Our fleets utilization rate stayed over 90% during the year despite having an expanded tonnage and higher capacity of 450,000 dwt. At average freight rates of US$14,000/day for Handysize vessel and US$23,000/day for Panamax vessel, our Group operated our fleet of 10 dry bulk carriers on a 70:30 split between spot charters to Contracts of Affreightment. For 2006, we were able to maintain our management strategy to fix cargoes directly with customers instead of placing our vessels on long-term time charter to operators. As with the preceding years, this strategy provided us more flexibility to take full advantage of our fleets utilization while steering clear of overcapacity.
Cargo Chartering & Operations

In 2006, the cargo we shipped rose to 6.1 million tonnes compared to 5.5 million tonnes in 2005. Coal which comprised the biggest bulk of raw material dispatched this year formed 54.5% of the total cargo shipped, driven by an expanding customer base of power generators in the PRC. Our growing clientele included long-term customers like Taiwan Power Company, Glencore International AG Baar, and Green Island Cement Shipping, as well as China Steel Corporation, Arctic Marine Company and Shun Shing. The range of cargo we carried this year includes coal, cement, clinker, iron ore, limestone and steel. In light of our efforts to cultivate a healthier stable of satisfied clients,
Fleet Expansion & Development

Our Groups total fleet size remains at 10 after the disposal of MV New Hope II in June 2006 and the acquisition of another Handymax vessel, MV Heroic (41,538 dwt), in April 2006. These developments increased our fleets total tonnage to 455,463 dwt from 444,742 dwt last year.
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OPERATIONS REVIEW
Net Profit Margin
+49%
We achieved a 2006 net profit margin of 49% compared to 54.4% in 2005. As fleet expansion will always be an integral aspect of our business development, we will continue to seek for acquisitions that will enhance our ability to better service our existing clients and accommodate new ones. With market conditions and vessel availability considered, we shall employ prudent selection processes in our purchases to ensure that we get quality secondhand vessels at attractive prices. Our optimal fleet composition of five Handysize, two Handymax, and three Panamax vessels by the end of 2006 increases our flexibility to meet our customers requirements for shortand long-haul trips in the future. average fuel prices in the year. Depreciation charges, on the other hand, increased by 84% as the Group acquired three more relatively younger vessels since the end of 3Q05. The Groups gross profit this year was about the same compared with FY2005. Our gross margin of 50.7% for FY2006, however, was lower than the 59.6% achieved in FY2005, on the back of 5% lower average freight rates and higher cost of sales. Administrative expenses increased by 106% to approximately US$3.1 million in FY2006 while other operating expenses fell by 82% to US$88,000. FY2005s non operating item of US$708,000 included in administration expenses was attributed to the Groups initial public offering (IPO) exercise against none in FY2006. Due mainly to the gain on disposal of MV New Hope II in June, other operating income increased by 202% to about US$2.9 million from last years US$951,000. Overall, the Groups FY2006 net profit increased by 6% to approximately US$27.8 million due to higher capacity despite weaker freight rates experienced in the first half of 2006 and higher cost of sales.
Financial Review
Our Group turnover in 2006 improved by 17%, from last years US$48.4 million to US$56.7 million, due to the increase in our fleet capacity and the total voyage days recognized. The total revenue days for the year increased to over 3,400 days from 2,400 days in 2005. The cost of sales increased by 43% due to higher bunker cost, port charges, depreciation, crew wages and repair and maintenance expenses. Higher bunker costs which increased by 30% were a result of the rise in
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Lower finance cost of US$618,000 in FY2006 was due to the reduced amount of loan principal as the Group repaid part of its borrowings, and did not obtain any additional borrowing after 1Q05. Plant and equipment increased to US$52.0 million as the Group acquired MV Heroic in April 2006, with a book value of US$6.2 million. The net book value of MV New Hope II which was disposed in June was around US$1.4 million. The Group continued to generate strong cash flow from its operations. There was a net increase in cash and cash equivalents of US$583,000 in FY2006 despite dividend payments of US$19.0 million for the final dividend of 2005 and interim dividend of 2006, acquisition of MV Heroic and repayment of bank loans. The Groups gearing ratio was at less than 0.1 time for FY2006.
on the long-term demand outlook for dry bulk transportation based on the continually increasing raw material demand in the Greater China Region, India and the Middle East. Assuming the BDI remains at its current level, we are looking forward to good prospects in 2007, and a business performance comparable to that of 2006. We believe our farsighted cost structure and focus on keeping our fleets welldeployed will provide good buffers against the precarious freight market. As current industry trends present good opportunities for our business, we are stepping up our efforts to enhance and make full use of our resources. In keeping with ensuring our fleets structural conditions, we have one of our vessels for special survey in 1Q07 and will be out of deployment for about 30 days. We also intend to have two more vessels for drydocking within the first half of 2007.
Outlook
Market conditions have been improving since 1Q06 as the Baltic Dry Index has been increasing to an average above 4,000 level since last November. We remain positive
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Our fleet tonnage has expanded to 455,000 dwt, or 33% increase of total tonnage since IPO on October 2005.
EXPANDING
MILESTONES
June 2001 Courage Marine Holdings (then known as Champion Treasure (Asia) Limited) was founded. December 2001 Owned three Handysize vessels, with a total capacity of 88,420 dwt.
December 2002 Owned three Handysize vessels, with a total capacity of 65,327 dwt.
March 2003 Purchased the first Panamax vessel, MV Courage, for the Company. December 2003 Courage Marine Holdings changed its name from Champion Treasure (Asia) Limited to Courage Marine (Holdings) Co. Limited Owned four Handysize, one Handymax and one Panamax vessels, with a total capacity of 242,406 dwt.
2001
2002
2003
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December 2004 Owned four Handysize, one Handymax and two Panamax vessels, with a total capacity of 304,616 dwt.
January 2005 Purchased a secondhand Handysize vessel MV Raffles. April 2005 Our Company was incorporated under the laws of Bermuda. October 2005 Our Company successfully launched IPO on Singapores SGX Mainboard. November 2005 Purchased a secondhand Handysize vessel after the IPO, MV Bravery (35,676 dwt) December 2005 Purchased a secondhand Panamax vessel after IPO, MV Valour (66,754dwt). Owned six Handysize, one Handymax and three Panamax vessels, with a total capacity of 444,742 dwt.
February 2006 Expansion of voyages to the Middle East region April 2006 Acquisition of MV Heroic, a secondhand handymax vessel with 41,538 dwt May 2006 Final Dividend of 2005 for the amount of US$14.0 million June 2006 Disposal of MV New Hope II, a handysize vessel with 30,817 dwt Oct 2006 The first anniversary of launching IPO on Singapores SGX Mainboard December 2006 First Interim Dividend of 2006 for the amount of US$5.0 million
2004
2005
2006
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OUR FLEET
Our Fleet consists of 5 Handysize, 2 Handymax size and 3 Panamax dry bulk carriers, with total tonnage of approximately 455,463 dwt with details as follow:
43% of Our Fleet
Panamax
18% of Our Fleet
Handymax
39% of Our Fleet
Handysize
Our Fleet is wholly owned by the Company. Since the Company began operations in 2001 it has expanded rapidly. We continuously acquire newer vessels while disposing of older ones to update our Fleet. The following table sets forth the development of our Fleet:
Year No. of Vessel
2001 4
2002 5
2003 6
2004 7
2005 10
2006 10
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Vessel
Type
Dwt
Flag
Ally II Bravery Courage Heroic Jeannie III Midas Panamax Mars Raffles Valour Zorina TOTAL
Handysize
34,510
Panama
Handysize
35,676
Panama
Panamax
66,754
Panama
Handymax
41,538
Panama
Handysize
34,537
Panama
Handysize
34,537
Panama
Panamax
62,210
Panama
Handysize
37,696
Panama
Panamax
66,754
Panama
Handymax
40,573
Panama
455,463
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STRATEGISING
The Group will continue to maintain its lean cost structure and focus on keeping its fleet well deployed.
BUSINESS STRATEGY AND PLANS
Expand and upgrade our Fleet capacity We believe the Handysize, Handymax, and Panamax segments of the bulk carrier sector present attractive demand and supply characteristics as the cargo transport is expected to grow faster than the increase in the supply of these vessels. Longer term, we intend to upgrade our Fleet with more up-to-date technology such as black boxes, additional safety devices and more advanced navigation systems so that we can better serve the needs of our customers and attract new ones. Secure more contracts of affreightment (COAs) We intend to keep securing spot charter contracts, whenever possible, as they typically offer premium rates compared to COAs. However, we may be exposed to possible market fluctuations in charterhire/freight rates. Accordingly, we will limit our potential exposure to short-term fluctuations in charter-hire/freight rates by utilising part of our capacity to secure COAs. Improve margins through securing more back haul cargo We aim to secure further volumes of back haul trades and reduce the number of ballast days. While
our capacity utilisation is close to maximum, the decrease in ballast days maximises our revenue and profit margins. Expand our network of offices to facilitate expansion of our geographical coverage Most customers deal with us through our Hong Kong and Taipei offices. As we envisage our business volume and customer base increasing, we plan to expand our Hong Kong and Taipei operations and establish our Shanghai and Qinhuangdao offices in the Peoples Republic of China (PRC). Our increased presence in Hong Kong and Taipei enables us to undertake more extensive marketing to customers in these countries and to increase our managerial and operational capabilities beyond the comprehensive range of services offered. The new PRC offices will facilitate better liaison with our customers and suppliers there, including securing of crew requirements. This is also a platform to increase our business development efforts in this important market, including exploring the feasibility of providing coastal transport services from commodity-rich northern China to the more industrialised south experiencing high consumption of commodities as well as the import and export trade in and out of the PRC.
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Our focus is to develop and maintain a customer base that enables us to maximise the utilisation and return on investment on our vessels by securing customers offering premium rates.
Continue to build up a quality customer base Our focus is to develop and maintain a customer base that enables us to maximise the utilization and return on investment on our vessels by securing customers offering premium rates. We want to build a portfolio of established customers to enhance and improve our customer base quality. We have placed significant emphasis on building our customer base quality. Due to our credibility and track record, we have built a portfolio of established customers, including multinational corporations and state-owned corporations such as Taiwan Power, China Coal Hong Kong Ltd, and GIC Shipping International Inc, the shipping division of Green Island Cement (Holdings) Ltd. To strengthen our relationships with existing customers and gain new ones, we constantly look for ways to add value to, and improve our service offerings. We intend to expand our services to logistics services. Continue to run cost-efficient operations As we increase our Fleet size and operations to meet the anticipated rise in demand for our services, we will continue to manage our cost of operations without compromising our service quality. Historically, we have acquired and operated older second-hand vessels as opposed to new vessels or younger second-hand vessels. Leveraging on our Directors networks and contacts in the shipping industry, we
have been very selective in our purchase decisions. Our ability to effectively operate our Fleet is enhanced by our technical management skills and preventive maintenance programmes. This strategy helps generate higher profit margins due to the lower capital cost of investment required, and resultant lower depreciation. Despite the higher cost of operations, repairs and maintenance that one would expect of a relatively older fleet, our Directors technical skills and experience enable us to effectively contain such costs. We will continue to grow our Fleet capacity through timely and selective acquisitions of well-maintained secondhand dry bulk carriers although we will, over time, reduce the Fleets average age via acquisition of relatively younger second-hand vessels. While we intend to increase our staffing as a result of expansion of our Hong Kong and Taipei operations, and establishment of new PRC offices, our staff cost will still be kept relatively low compared to the revenue generated.
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CORPORATE INFORMATION
BOARD OF DIRECTORS HSU Chih-Chien Chairman of the Board WU Chao-Huan Managing Director CHEN Shih-Yung Director CHIU Chi-Shun Director WU Chao-Ping Director CHU Wen Yuan Director LUI Chun Kin, Gary Director SIN Boon Ann Director AUDIT COMMITTEE LUI Chun Kin, Gary (Chairman) CHU Wen Yuan SIN Boon Ann REMUNERATION COMMITTEE CHU Wen Yuan (Chairman) HSU Chih-Chien SIN Boon Ann NOMINATING COMMITTEE SIN Boon Ann (Chairman) HSU Chih-Chien LUI Chun Kin, Gary
FINANCIAL CALENDAR Financial Year End 31 December 2006 ANNOUNCEMENT OF FINANCIAL RESULTS Fourth Quarter February First Quarter May Second Quarter August Third Quarter November PRINCIPAL PLACE OF BUSINESS Suite 906 Wing On Centre 111 Connaught Road Central Hong Kong REGISTERED OFFICE Clarendon House 2 Church Street Hamilton HM 11 Bermuda COMPANY SECRETARY LEE Pih Peng ASSISTANT COMPANY SECRETARY Ira Stuart Outerbridge III SHARE REGISTRAR Lim Associates (Pte) Ltd. 3 Church Street #08-01, Samsung Hub, Singapore 049483
BERMUDA REGISTRAR Codan Services Limited Clarendon House 2 Church Street Hamilton HM 11 Bermuda AUDITORS Deloitte & Touche Certified Public Accountants 6 Shenton Way #32-00 DBS Building Tower Two Singapore 068809 Partner-in-charge: Ernest KAN Yaw Kiong Appointed in 2005 DISPATCH OF ANNUAL REPORTS TO SHAREHOLDERS 5 April 2007 ANNUAL GENERAL MEETING 26 April 2007 BOOK CLOSURE TO REGISTER MEMBERS FOR DIVIDEND PAYMENT 4 May 2007 PROPOSED PAYMENT OF FINAL DIVIDEND 16 May 2007
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29 Corporate Governance Statement 36 Report of the Directors 39 Independent Auditors Report 40 Balance Sheets
41 Consolidated Profit and Loss Statement 42 Statements of Changes in Equity 44 Consolidated Cash Flow Statement 45 Notes to Financial Statements
66 Statement of Directors 67 Statistics of Shareholdings 69 Notice of Annual General Meeting Proxy Form
Corporate Governance Statement

Courage Marine Group Limiteds (the Company) shares were listed for trading on the Main Board of the Singapore Exchange Securities Trading Limited (SGX-ST) on 13 October 2005. The Companys corporate governance practices are described below with specic reference to the Code of Corporate Governance (the Code) and the Best Practices Guide (Best Practices Guide) introduced by the SGX-ST with regard to the Audit Committee and securities trading by ofcers of the Company and its subsidiaries (the Group).
BOARD OF DIRECTORS Principle 1: Boards Conduct of its Affairs Our Board of Directors is entrusted with the responsibility for the overall management of our Company. The Boards primary role is to set the Companys policy and supervise the performance of the Managing Directors duties. Among other things, the Board sets the Companys goals and approves the Companys action plans and budget (proposed by the Companys management), reports to the Annual General Meeting about the state of the Companys matters and about the Companys business results, and resolves any matters which require the Boards approval under any applicable law (including, without limitation, interested persons transactions). The Board also delegates its function to the various Board committees, namely the Audit, Nominating and Remuneration Committees. All Committees are chaired by an independent director and consist mainly of independent directors. Principle 2: Board Composition and Balance As of the date of this report, our Board of Directors comprises eight directors, three of whom are independent. Key information about each director is detailed in the Board of Directors section of the annual report. The directors of our Company in ofce at the date of this report are: Executive Mr. Mr. Mr. Mr. Wu Chao-Huan Chen Shin-Yung Chiu Chi-Shun Wu Chao-Ping Non-Executive Mr. Hsu Chih-Chien Independent Mr. Sin Boon Ann Mr. Lui Chun Kin Gary Mr. Chu Wen Yuan
There are no permanent alternate directors. The three independent directors joined the Board on 24 August 2005, prior to the listing of our Company. Our Nominating Committee reviews the independence of each director annually and applies the Codes denition of who qualies as an independent director in its review. The other directors were appointed to the Board on 13 April 2005. The present board size of 8 members is appropriate for the current size of our Company and the scope of its operations, and is ideal to provide for effective debate and decision-making of the Board. As a team, the Board collectively provides core competencies in the areas of strategic business decision making, nance and accounting, risk management, legal and regulatory matters and human resource management.
29

Principle 3: Chairman and Managing Director The non-Executive Chairman and the Managing Director of our Company are separate individuals. As the most senior executive in our Company, the Managing Director bears executive responsibility for our Companys business according to the policy set by our Board and subject to our Boards directives. The Chairman of our Board bears responsibility for the proper functioning of our Board, maintains on-going supervision over the management of our Company and the ow of information from our Companys management to our Board. The Chairman ensures that Board meetings are held regularly and, in addition, when necessary, sets the Board meetings agenda in consultation with the Managing Director. As a general rule, Board papers are sent to directors in advance in order for directors to be adequately prepared for the meeting. The Chairman leads each Board meeting and ensures full discussion of agenda items. Management staff, as well as external experts who can provide additional insights into the matters to be discussed, are invited when necessary, to attend at the relevant time during the Board meetings. Principle 4: Board Membership According to our Companys Bye-Laws (the Bye-Laws), each director shall retire at least once every three years. In addition, any director appointed by our Board shall retire at the next annual general meeting of our Company and shall then be eligible for re-election at that meeting. In accordance with the Bye-Laws, Mr. Hsu Chih-Chien, Mr. Chiu Chi-Shun and Mr. Wu Chao-Ping shall retire and submit themselves to re-election at our Companys upcoming AGM, to be held on 26 April 2007. Our Nominating Committee has recommended the re-appointment of the three retiring directors at the Companys upcoming AGM, and our Board has accepted our Nominating Committees recommendation and accordingly the three retiring directors are offering themselves for re-election. Our Nominating Committee comprises 3 directors, a majority of whom, including the Chairman, is independent. As at the date of this Report, our Nominating Committee members are: Mr. Sin Boon Ann Mr. Lui Chun Kin Gary Mr. Hsu Chih-Chien Chairman and Independent Director Independent Director Non-executive Director
Our Nominating Committee is responsible for: (a) making recommendations to our Board on all board appointments, including re-nomination, having regard to the Directors contribution and performance including, if applicable, as an independent director. All directors are required to submit themselves for rotation and re-appointment at regular intervals and at least once every three years; determining annually whether or not a director is independent, bearing in mind the circumstances set forth in the Code and any other salient factors; deciding whether or not a Director is able to and has been adequately carrying out his duties as a Director; and deciding on how our Boards performance may be evaluated and propose objective performance criteria, as approved by our Board, that allow comparison with our industry peers and which address how our Board has enhanced long-term shareholders value.
(b)
(c)
(d)
30

Principle 5: Board Performance Our Nominating Committee has, with the approval of our Board, established performance criteria and evaluation procedures for the assessment of the effectiveness and performance of our Board as a whole. Currently, our Boards performance is judged on the basis of accountability as a whole, as our Board is of the opinion that the nancial indicators or performance criteria such as return on equity or return on assets as set out in the Code are less appropriate for assessment of non-executive directors and our Boards performance as a whole. For individual assessments, including any recommendation in respect of a directors re-nomination (if applicable), each director is evaluated on the basis of his attendance at Board and committee meetings and contribution to discussions at such meetings. In addition, our Nominating Committee will have regard to whether a director has adequate time and attention to devote to our Company, in the case of directors with multiple board representations. Each member of our Nominating Committee abstains from voting on any resolutions in respect of the assessment of his performance or re-nomination as a director. The attendance of the directors at meetings of our Board and committees between 1 March 2006 and 28 February 2007 is presented as follows: Nominating Committee Meetings Held Attended 1 1 1 1 1 1 1 1 1 1* 1* 1* 1* 1 1* 1 Remuneration Committee Meetings Held Attended 1 1 1 1 1 1 1 1 1 1* 1* 1* 1* 1 1 1*
Board Meetings Name Hsu Chih-Chien Wu Chao-Huan Chen Shin-Yung Chiu Chi-Shun Wu Chao-Ping Sin Boon Ann Chu Wen Yuan Lui Chun Kin Gary Held 4 4 4 4 4 4 4 4 Attended 4 4 3 4 3 3 4 4
Audit Committee Meetings Held Attended 4 4 4 4 4 4 4 4 4* 3* 2* 2* 1* 4 4 4
* The directors are not members of the committee but have attended the meetings by invitation.
Principle 6: Access to Information Our Board has separate and independent access to senior management of our Company. Requests for information from our Board are dealt with promptly. Our Board, acting through its Executive Directors, is informed on all material events and transactions as and when they occur. Professional advisors may be invited to advise our Board, or any of its members, if our Board or any individual member thereof needs independent professional advice. Our Company Secretary attends all Board meetings and is responsible for ensuring that Board procedures are followed and recording the minutes. Together with the management staff of our Company, our Company Secretary is responsible for compliance with the applicable laws, rules and regulations.
31

Principles 7, 8 & 9 : Procedures for Developing Remuneration Policies, Level and Mix of Remuneration, and Disclosure of Remuneration Our Remuneration Committee comprises 3 directors, a majority of whom, including the Chairman, is independent. As at the date of this Report, our Remuneration Committee members are: Mr. Chu Wen Yuan Mr. Sin Boon Ann Mr. Hsu Chih-Chien Chairman and Independent Director Independent Director Non-Executive Director
Our Remuneration Committee is responsible for: (a) (b) implementing and administering the Employee Share Option Scheme; and recommending to our Board a remuneration framework for our Directors and determining specic remuneration packages for each Director. The recommendations of our Remuneration Committee are submitted for endorsement by our Board.
All aspects of remuneration of our Directors, including but not limited to Directors fees, salaries, allowances, bonuses, options and benets-in-kind are considered by our Remuneration Committee. Each member of our Remuneration Committee abstains from voting on any resolutions in respect of his own remuneration package. All directors and employees are entitled to participate in the Companys Share Option Scheme. Information on the Share Option Scheme is disclosed in the Directors Report on pages 36 to 38. To date, no option has been granted to the directors and employees of the Group. A summary remuneration table of our Directors is shown below. For competitive reasons, our Company is not disclosing the identity of the Directors and the breakdown of their remuneration. Remuneration Bands Below S$250,000 Between S$250,001 and S$300,000 No. of Directors 7 1
A summary remuneration table of the top 5 key management executives is shown below. For competitive reasons, our Company is not disclosing the identity of the key management executives within the bands and the breakdown of their remuneration. Remuneration Bands Below S$250,000 No. of Executives 5
Our Company does not have any employee who is an immediate family member of a Director. Principle 10: Accountability Our Board is accountable to our Companys shareholders. Our Board shall provide the shareholders with periodical, and to the extent necessary and/or required immediate, reports with regard to the business, nancial and other aspects of our Companys activities.
32

Principle 11: Audit Committee Our Audit Committee comprises 3 directors, all of whom, including the Chairman, are independent. As at the date of this Report, our Audit Committee members are: Mr. Lui Chun Kin Gary Mr. Sin Boon Ann Mr. Chu Wen Yuan Chairman and Independent Director Independent Director Independent Director
Our Audit Committee assists our Board in discharging their responsibility to safeguard our assets, maintain adequate accounting records, and develop and maintain effective systems of internal control, with the overall objective of ensuring that our management creates and maintains an effective control environment in our Group. Our Audit Committee provides a channel of communication between our Board, our management and our external auditors on matters relating to audit. In particular, our Audit Committee is responsible for: (a) reviewing with external auditor the following: audit plan; their evaluation of the system of internal accounting controls; their letter to management; and the managements response; reviewing nancial statements and balance sheet and prot and loss accounts before submission to our Board for approval, focusing in particular on changes in accounting policies and practices, major risk areas, signicant adjustments resulting from the audit, compliance with accounting standards and compliance with the Listing Manual and any other relevant statutory or regulatory requirements; reviewing internal control and internal audit reports (where available), ensuring co-ordination between external auditors and our management, reviewing assistance given by our management to the auditors, and discussing problems and concerns, if any, arising from the nal audit, and any matters which the auditors may wish to discuss (in the absence of our management, where necessary); considering appointment or re-appointment of external auditors and matters relating to resignation or dismissal of auditors; reviewing the Interested Person Transactions (if any) falling within the scope of Chapter 9 of the Listing Manual; reviewing potential conicts of interest, if any; undertaking such other reviews and projects as may be requested by our Board, and reporting to our Board ndings from time to time on matters arising and requiring the attention of our Audit Committee; generally undertaking such other function and duties as may be required by statue or the Listing Manual, or by such amendment as may be made thereto from time to time; reviewing on a regular basis, and subject to such review, approving the nancial products with respect to any hedging activities, if any, to be undertaken by our Group; and reviewing the quarterly and annual announcements as well as the related press releases on the results and nancial position of the Company and the Group.
(b)
(c)
(d)
(e)
(f) (g)
(h)
(i)
(j)
Apart from the above functions, our Audit Committee will also commission and review the ndings of internal or external investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls, or infringement of any law, rule or regulation which has or is likely to have a material impact on our Groups operating results or nancial position. Each member of our Audit Committee abstains from voting in respect of matters in which he is interested.
33

Principle 12: Internal Controls Our Audit Committee has, with the assistance of the external and outsourced internal auditors, reviewed the effectiveness of the Groups internal controls relating to nancial, operational and compliance controls. Based on this review, our Board is satised that the internal controls of the Group are adequate to safeguard shareholders investments and the Groups assets, as well as the integrity of its nancial statements. Principle 13: Internal audit Since March 2006, our Company has outsourced its internal audit function to an independent assurance service provider which specialises in risk management and internal audit. Our Audit Committee is satised that the appointed internal auditor has the relevant qualications and track record to meet the standards set by internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. The primary objective of the internal audit is to assure our Audit Committee and our Board that sufcient risk management processes and controls are in place and operating effectively. The internal auditor reports primarily to the Chairman of our Audit Committee. Our Audit Committee is satised that the internal audit function is adequately resourced and will comprehensively cover the major activities within the Group. Principles 14 & 15: Communication with Shareholders and Greater Shareholder Participation Our Companys results are published through the SGXNET and news releases. Our Company does not practise selective disclosure. Price sensitive information is rst publicly released, either before our Company meets with any group of analysts or simultaneously with such meetings. Results and annual reports are announced or issued within the mandatory period. All shareholders of our Company receive the annual report and notice of the convening of the AGM. At the AGM shareholders are given the opportunity to air their views and ask directors or management questions regarding our Company.
DEALINGS IN SECURITIES Our Company has adopted the recommendations of the SGXs Best Practices Guide on Dealing in Securities in relation to its policy on directors, ofcers and employees dealings in our Companys shares.
MATERIAL CONTRACTS The following material contracts were entered into by our Company and/or its subsidiaries during the nancial year ended 31 December 2006: 1. Acquisition of MV Ulysses II (renamed to MV Heroic after acquisition) through a memorandum of agreement dated 22 February 2006 entered into between Heroic Marine Corp. and International Compass S.A. Disposal of MV New Hope II through a memorandum of agreement dated 6 June 2006 and an addendum to the memorandum of agreement dated 21 June 2006 entered into between New Hope Marine, S.A. and Seascape Marine Ltd.
2.
34

INTERESTED PERSON TRANSACTIONS All interested person transactions are to be considered and reviewed by our Board of Directors, and to the extent required by the Listing Manual and/or the Bermuda Companies Law, by our Audit Committee and the shareholders of our Company. Our internal control procedures will ensure that all interested person transactions are conducted at arms length and on commercial terms. During the nancial year, interested person transactions entered into by the Group were as follows: Name of interested person Nature of Transaction Aggregate value of all interested person transactions during the nancial year under review US$38,111
Mr. Hsu Chi Chien / Way-East Shipping
Sales commission
The transaction value was not over 1% of the Net Tangible Assets of our Company as at 31 December 2006.
35
Report of the Directors

The directors present their report together with the audited consolidated nancial statements of the Group and the balance sheet and statement of changes in equity of the Company for the nancial year ended December 31, 2006.
DIRECTORS The directors of the Company in ofce at the date of this report are: Hsu Chih-Chien Wu Chao-Huan Chiu Chi-Shun Chen Shin-Yung Wu Chao-Ping Sin Boon Ann Chu Wen Yuan Lui Chun Kin Gary
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES Neither at the end of the nancial year nor at any time during the nancial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benets by means of the acquisition of shares in the Company or any other body corporate, except as disclosed in paragraphs 3 and 5 of the Report of the Directors.
DIRECTORS INTERESTS IN SHARES AND DEBENTURES The directors of the Company holding ofce at the end of the nancial year had no interests in the share capital and debentures of the Company and related corporations except as follows: Direct interest At beginning At end of year of year Deemed interest At beginning At end of year of year
Name of directors and companies in which interests are held The Company Chu Wen Yuan Hsu ChihChien Wu ChaoHuan Chen ShinYung Chiu ChiShun Wu ChaoPing
Ordinary shares of US$0.018 each 40,000 40,000 669,740,318 669,740,318 669,740,318 669,740,318 669,740,318 669,740,318 669,740,318 669,740,318 669,740,318 669,740,318
The directors interest in the share capital of the Company as at January 21, 2007 were the same as at December 31, 2006.
36

4 DIRECTORS RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS Since the beginning of the nancial year, no director has received or become entitled to receive a benet by reason of a contract made by the Company or a related corporation with the director or with a rm of which he is a member, or with a Company in which he has a substantial nancial interest, except for salaries, bonus and other benets as disclosed in the nancial statements.
SHARE OPTIONS (a) Options to take up unissued shares The Employee Share Option Scheme (the Scheme) of the Company was approved by its shareholders on August 24, 2005. Particulars of the options granted in 2005 under the Scheme were set out in the Report of the Directors for the nancial year ended December 31, 2005 and in Note 25 to the nancial statements. The Scheme is administered by the Remuneration Committee whose members are: Chu Wen Yuan (Chairman) Sin Boon Ann Hsu Chih-Chien A member of the Committee who is also a participant of the Scheme will not participate in any deliberation or decision in respect of the options to be granted to the participant. Under the Scheme, options granted to the executive and non-executive directors and employees of the Group may, except in certain special circumstances, be exercised at any time after the rst or second anniversary (depending on the exercise price) of the grant of the option. Options granted under the Scheme will have a life span of 10 years, save for those granted to nonemployees which shall have a life span of 5 years. The exercise prices of the options may at the Committees discretion, be set at a price equal to the average of last dealt prices of the Companys shares on the Singapore Exchange Securities Trading Limited for the ve market days immediately preceding the date of grant. The Remuneration Committee may also at its discretion x the exercise price at a discount not exceeding 20 percent to the above price. No options have been granted at a discount. (b) Unissued shares under options and options exercised The number of Shares available under the Scheme shall not exceed 15% of the issued share capital of the Company. There are no options granted to any of the Companys controlling shareholders (as dened in the Singapore Exchange Securities Trading Listing Manual). During the nancial year, no option to take up unissued share of the Company was granted. During the nancial year, there were no shares of the Company or any corporation in the Group issued by virtue of the exercise of an option to take up unissued share. At the end of the nancial year, there were no unissued share of the Company or any corporation in the Group under option.
37

6 AUDIT COMMITTEE The Audit Committee of the Company comprises 3 independent directors, namely Lui Chun Kin Gary, Sin Boon Ann and Chu Wen Yuan with Lui Chun Kin Gary as the Chairman. The Audit Committee met periodically to perform the following functions: (a) review the audit plans and results of the internal auditors examination and evaluation of the Groups systems of internal accounting controls; review the audit plan of the Companys external auditors; review the external auditors report; review the co-operation given by the Companys ofcers to the external auditors; review the nancial statements of the Company and the Group before submission to the Board of Directors; nominate external auditors for re-appointment; review interested person transactions; and review the quarterly and annual announcements as well as the related press releases on the results and nancial position of the Company and the Group.
(b) (c) (d) (e)
(f) (g) (h)
The Audit Committee recommended to the Board of Directors the nomination of Deloitte & Touche for re-appointment as external auditors at the forthcoming Annual General Meeting of the Company.
AUDITORS The auditors, Deloitte & Touche, have expressed their willingness to accept re-appointment.
ON BEHALF OF THE DIRECTORS
.................................
Hsu Chih-Chien
.................................
Wu Chao-Huan
38
March 16, 2007

Independent Auditors Report

To The Members of Courage Marine Group Limited We have audited the accompanying nancial statements of Courage Marine Group Limited (the Company) and its Subsidiaries (the Group) which comprise the balance sheets of the Group and the Company at December 31, 2006, the prot and loss statement, statement of changes in equity and cash ow statement of the Group and the statement of changes in equity of the Company for the nancial year then ended, and a summary of signicant accounting polices and other explanatory notes as set out on pages 40 to 65. Directors Responsibility The Companys directors are responsible for the preparation and fair presentation of these nancial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the nancial statements 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors as well as evaluating the overall presentation of the nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated nancial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with International Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at December 31, 2006 and of the results, changes in equity and cash ows of the Group and changes in equity of the Company for the nancial year ended on that date.
Certied Public Accountants Singapore
Ernest Kan Yaw Kiong Partner
March 16, 2007

39
Balance Sheets
As at December 31, 2006 Group Note 2006 US$000 ASSETS Current assets Cash and bank balances Trade receivables Other receivables and prepayments Amount due from subsidiaries Dividend receivable Held for trading investments Total current assets Noncurrent assets Plant and equipment Investment in subsidiary Total noncurrent assets Total assets LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities Other payables and accruals Amount due to subsidiaries Borrowings due within one year Total current liabilities Noncurrent liability Borrowings due after one year Capital and reserves Share capital Share premium Retained earnings Total Total liabilities and equity 2005 US$000 Company 2006 2005 US$000 US$000
6 7
25,806 1,634 780 621 28,841
25,223 1,267 526 27,016
286 3 40,114 10,000 50,403
10,684 39 22,250 16,000 48,973
9 10
52,010 52,010 80,851
50,067 50,067 77,083
14,217 14,217 64,620
14,217 14,217 63,190
11 12
2,592 5,330 7,922
2,989 4,680 7,669
839 6,108 6,947
485 922 1,407
12
680
6,010
13
19,059 28,027 25,163 72,249 80,851
19,059 28,027 16,318 63,404 77,083
19,059 28,027 10,587 57,673 64,620
19,059 28,027 14,697 61,783 63,190
40
See accompanying notes to nancial statements. Courage Marine Group Annual Report 2006
Consolidated Prot and Loss Statement

Financial Year Ended December 31, 2006 Group Note 2006 US$000 Revenue Cost of sales Gross prot Other income Administrative expenses Other operating expenses Finance costs Prot before income tax Income tax Prot for the nancial year 16 17 18 15 14 56,734 (27,988) 28,746 2,870 (3,080) (88) (618) 27,830 (32) 27,798 2005 US$000 48,381 (19,560) 28,821 951 (2,205) (495) (754) 26,318 26,318
Earnings per share (US$ cents) basic fully diluted
20 2.63 2.63 3.03 3.03
41
Statements of Changes in Equity

Financial Year Ended December 31, 2006 Share capital US$000 Group Balance at January 1, 2005** Prot for the nancial year Dividends paid prior to the Restructuring Exercise (Note 19) Credited as fully paid-up the 1,000,000 ordinary shares of US$0.018 Adjustments arising from the Restructuring Exercise @ Issuance of shares pursuant to the Restructuring Exercise Transferred from retained earnings to merger reserve Issuance of shares arising from Pre-IPO Investors conversion Issuance of shares after invitation Share issue expenses Balance at January 1, 2006 Prot for the nancial year Dividends paid (Note 19) Balance at December 31, 2006
*
Share premium US$000
Merger* reserve US$000
Retained earnings US$000
Total US$000
14,216 26,318
14,217 26,318
(10,000)
(10,000)
18
18
(1)
(14,216)
(14,217)
14,199
14,199
14,216
(14,216)
432 4,410 19,059 19,059
2,062 27,424 (1,459) 28,027 28,027
16,318 27,798 (18,953) 25,163
2,494 31,834 (1,459) 63,404 27,798 (18,953) 72,249
Merger reserve represents the difference between the nominal value of shares issued by the Company and the nominal value of shares of the subsidiary as part of the Restructuring Exercise. The balance as at January 1, 2005 represents the share capital and retained earnings of Courage Marine (Holdings) Co., Limited prior to the Restructuring Exercise. The nancial statements for nancial year ended December 31, 2005 disclosed the details of the Restructuring Exercise.
**
42
Statements of Changes in Equity

Financial Year Ended December 31, 2006 Share capital US$000 Company Balance at April 5, 2005 (date of incorporation) Credited as fully paidup the 1,000,000 ordinary shares of US$0.018 Issuance of shares pursuant to the Restructuring Exercise Issuance of shares arising from PreIPO Investors conversion Issuance of shares after invitation Prot for the nancial year Share issue expenses Balance at January 1, 2006 Prot for the nancial year Dividends paid (Note 19) Balance at December 31, 2006 Share premium US$000 Retained earnings US$000
Total US$000
18
18
14,199
14,199
432 4,410 19,059 19,059
2,062 27,424 (1,459) 28,027 28,027
14,697 14,697 14,843 (18,953) 10,587
2,494 31,834 14,697 (1,459) 61,783 14,843 (18,953) 57,673
43
Consolidated Cash Flow Statement

Financial Year Ended December 31, 2006 2006 US$000 Operating activities Prot before income tax Adjustments for: Interest income Interest expense Depreciation expense Gain on disposal of plant and equipment Operating prot before movements in working capital Trade receivables Other receivables and prepayments Other payables and accruals Amount due from related companies Cash generated from operations Income tax paid Interest income received Interest expense paid Net cash from operating activities Investing activities Purchase of plant and equipment Proceeds on disposal of plant and equipment Purchase of investments held for trading Net cash used in investing activities Financing activities Decrease in amount due to shareholders Decrease in amount due to directors Increase in amount due to related companies Dividend paid Proceeds of borrowings Repayment of borrowings Proceeds from issue of shares Share issue expenses Net cash (used in) from nancing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (Note 6) (18,953) (4,680) (23,633) 583 25,223 25,806 (16) (164) (222) (20,000) 7,500 (5,479) 34,328 (1,459) 14,488 10,785 14,438 25,223 (7,186) 2,488 (621) (5,319) (32,939) (32,939) 27,830 (748) 618 3,858 (1,103) 30,455 (367) (254) (397) 29,437 (32) 748 (618) 29,535 26,318 (305) 754 2,094 28,861 (144) 1,552 (1,458) 874 29,685 305 (754) 29,236 2005 US$000
44
Notes to Financial Statements

December 31, 2006 1 GENERAL The Company (Registration No. 36692) was incorporated in Bermuda on April 5, 2005 as an exempted company with limited liability under the Companies Act 1981 of Bermuda. The registered ofce is at Clarendon House 2, Church Street, Hamilton HM11, Bermuda and its principal place of business is at Suite 906, Wing On Centre, 111 Connaught Road Central, Hong Kong. The Company is listed on the Mainboard of the Singapore Exchange Securities Trading Limited (SGX-ST). The nancial statements are expressed in United States dollars. The principal activity of the Company is that of an investment holding company. The principal activities of its subsidiaries are set out in Note 10 to the nancial statements. The consolidated nancial statements of the Group and balance sheet and statement of changes in equity of the Company for the nancial year ended December 31, 2006 were authorised for issue by the Board of Directors on March 16, 2007.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The nancial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of International Financial Reporting Standards (IFRS). In the current nancial year, the Group has adopted all the new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for annual periods beginning on January 1, 2006. The adoption of these new/revised standards and interpretations does not result in changes to the Groups and Companys accounting policies and has no material effect on the amounts reported for the current or prior years. The application of IFRS 7 Financial Instruments : Disclosures and the consequential amendments to other FRS will not affect any of the amounts recognised in the nancial statements, but will change the disclosures presently made in relation to the Company and consolidated nancial statements of the Group, and the objectives, policies and processes for managing capital. Other than IFRS 7, the Company is evaluating the provision of new/revised IFRS and IFRIC that were issued at the date of authorisation of these nancial statements but not yet effective till future periods. Preliminary assessment by the Company indicated that the adoption of these IFRS and IFRIC will have no material impact on the nancial statements of the Company and consolidated nancial statements of the Group in the period of their initial adoption. BASIS OF CONSOLIDATION The consolidated nancial statements incorporate the nancial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the nancial and operating policies of an entity so as to obtain benets from its activities. The consolidated nancial statements of the Group for the nancial year ended December 31, 2005 had been prepared using the pooling-of-interest method. Under the pooling-of-interest method, the assets and liabilities are brought into the consolidated nancial statements at their existing carrying amounts. Under this method of accounting, the difference between the nominal value of the share capital issued and the nominal value of shares and capital reserve received is accounted for as merger reserve.
45

December 31, 2006 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd) The results of subsidiaries acquired or disposed of during the year are included in the consolidated prot and loss statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the nancial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. In the Companys nancial statements, investment in subsidiary is carried at cost less any impairment in net recoverable value that has been recognised in the prot and loss statement. BUSINESS COMBINATIONS Except for those companies under restructuring in prior years, which are accounted for under the pooling-of-interest method, the acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquirees identiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classied as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Groups interest in the net fair value of the identiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Groups interest in the net fair value of the acquirees identiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the consolidated prot and loss statement. The interest of minority shareholders in the acquiree is initially measured at the minoritys proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. REVENUE RECOGNITION Revenue is measured at the fair value of the consideration received or receivable. Income from voyage charter is recognised on the percentage of completion basis. Income from time charter is recognised on a time proportion basis. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Dividend income from investments is recognised when the shareholders rights to receive payment have been established. EMPLOYEE LEAVE ENTITLEMENT Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date. INCOME TAX Income tax represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable prot for the year. Taxable prot differs from prot as reported in the prot and loss statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Groups liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the balance sheet date.
46

December 31, 2006 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd) Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the nancial statements and the corresponding tax bases used in the computation of taxable prot, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable prots will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable prot nor the accounting prot. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufcient taxable prots will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to prot or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION The individual nancial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated nancial statements, the results and nancial position of each entity are expressed in United States dollars, which is the functional currency of the Company, and the presentation currency for the consolidated nancial statements. In preparing the nancial statements of the individual entities, transactions in currencies other than the entitys functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the date of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in prot or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in prot or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.
47

December 31, 2006 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd) For the purpose of presenting consolidated nancial statements, the assets and liabilities of the Groups foreign operations (including comparatives) are expressed in United States dollars using exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates uctuated signicantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classied as equity and transferred to the Groups translation reserve. Such translation differences are recognised in prot or loss in the period in which the foreign operation is disposed of. On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign currency translation reserve. Goodwill and fair value adjustments arising on the acquisition of a foreign operation, if any, are treated as assets and liabilities of the foreign operation and translated at the closing rate. PLANT AND EQUIPMENT Plant and equipment held for use in production or supply of goods or services, or for administrative purposes, are stated at cost less depreciation and any identied impairment losses. Depreciation is charged to write off the cost of assets over their estimated useful lives from the date of initial delivery from the shipyard (second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life), after allowing for residual values estimated by the directors, using the straight-line method. Each vessels residual value is equal to the product of its lightweight tonnage and estimated scrap rate. The estimated useful lives of the assets are summarised as follows: Vessels Drydocking Furniture, xtures and equipment Leasehold improvement 30 years from the date of initial delivery from the shipyard 30 months or 60 months depending on the level of drydocking (intermediate: 30 months, special: 60 months) 5 years 5 years
The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Fully depreciated assets still in use are retained in the nancial statements. The gain or loss arising on disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the prot and loss statement. Costs incurred in restoring plant and equipment to their normal working condition to allow continued use of the overall assets are charged to the consolidated prot and loss statement. Improvements are capitalised and depreciated over their expected useful lives to the Group. IMPAIRMENT OF TANGIBLE ASSETS At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
48

December 31, 2006 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd) Recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash ows are discounted to their present value using a pre-tax discount rate that reects current market assessments of the time value of money and the risks specic to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised immediately in the prot and loss statement. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately. PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash ows estimated to settle the present obligation, its carrying amount is the present value of those cash ows. When some or all of the economic benets required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. LEASES Rentals payable under operating leases are charged to prot or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benets from the leased asset are consumed. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benet of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benets from the leased asset are consumed. FINANCIAL INSTRUMENTS Financial assets and nancial liabilities are recognised on the Groups balance sheet when the Group becomes a party to the contractual provisions of the instrument. Financial assets Trade and other receivables Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the prot and loss statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the assets carrying amount and the present value of estimated future cash ows discounted at the effective interest rate computed at initial recognition. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and are subject to an insignicant risk of changes in value.
49

December 31, 2006 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd) Investments Investments are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value. Held for trading investments are stated at fair value, with any resultant gain or loss recognised in prot and loss statement. Financial liabilities and equity instruments Financial liabilities and equity instruments issued by the Group are classied according to the substance of the contractual arrangements entered into and the denitions of a nancial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Signicant nancial liabilities of the Group include interestbearing loans and other payables. The accounting policies adopted for specic nancial liabilities and equity instruments are set out below. Bank borrowings Interest-bearing bank loans are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Groups accounting policy for borrowing costs. Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
CRITICAL JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY Critical judgements in applying the entitys accounting policies In the application of the Groups accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
50

December 31, 2006 3 CRITICAL JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Contd) Critical judgements in applying the entitys accounting policies (contd) Revenue recognition During the nancial year ended December 31, 2006, the goods on board one of the vessels of the Group were damaged during the voyage period from June to December 2006. The customer did not make payment and following negotiations, the customer had requested for the Group to source for an alternative buyer for the damaged goods. In light of the problems identied, management was required to consider whether it was appropriate to recognise the revenue from these transactions of US$1.6 million in the current year, or whether it was more appropriate not to recognise the revenue until there is certainty in the collection of revenue. In making its judgement, management considered the detailed criteria for the recognition of revenue from the rendering of services, set out in IAS 18 Revenue and, in particular, whether it is probable that the economic benets associated with the transactions will ow to the Group. The management considered the uncertainty of the collection and that it is not probable that the economic benets associated with the transactions will ow to the Group, and did not recognise the revenue in the current year. Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nancial year. Allowance for bad and doubtful debts The Group makes allowances for bad and doubtful debts based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identication of bad and doubtful debts requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact carrying value of trade and other receivables and doubtful debts expenses in the year in which such estimate has been changed. Depreciation of plant and equipment Plant and equipment are depreciated on a straight-line basis over their estimated residual value. The Group assesses regularly the residual value and the useful life of the plant and equipment and if the expectation differs from the original estimated, such difference will impact the depreciation in the year in which such estimate has been changed. For the year ended December 31, 2006, the Group changed its estimate of residual values of vessels based on relevant factors such as monthly average of demolition values. This change resulted in a decrease of depreciation charge and an increase of prot before tax for the year then ended by US$311,000. Impairment of plant and equipment The Group assesses regularly whether plant and equipment have any indication of impairment in accordance with its accounting policy. The Group reviews the carrying amounts of the vessels based on the operating cost budget and the comparison of scrap value to the carrying amount of the assets. These calculations require the use of judgement and estimates.
51

December 31, 2006 4 FINANCIAL RISKS AND MANAGEMENT RISK POLICIES The Groups activities expose it to a variety of nancial risks, including the effects of: foreign currency exchange rates, interest rates, credit and liquidity. However, the Group does not use any derivative nancial instruments such as foreign exchange contracts to hedge certain exposures due to reasons stated below. The Group also does not hold or issue derivative nancial instruments for speculative purposes. (a) Foreign currency risk The Groups functional and reporting currency has been United States dollars since its operations are mainly in United States dollars and the operating expenses incurred are denominated in United States dollars. All revenue is invoiced in United States dollars except for smaller amounts which are received in New Taiwan dollars. The majority of the operating expenses are denominated in United States dollars and to a smaller extent in New Taiwan dollars, Hong Kong dollars and Singapore dollars. To the extent that the Groups sales and purchases are not naturally matched in the same currency and to the extent that there are timing differences between invoicing and collection/payment, the Group will be exposed to foreign currency exchange gains and losses arising from transactions in currencies other than its functional currency. As a result, the Groups earnings may be adversely affected. (b) Interest rate risk The Group has exposure to interest rate risk through the impact of the oating interest rate on cash equivalents and borrowings. The Group obtained nancing through bank and third party borrowings, and the details of the Groups interest rate exposure is disclosed in Note 12. (c) Credit risk The Groups credit risk is primarily attributable to its trade receivables and other receivables and prepayments. As the Group has a policy of requesting the customers to prepay the charter-hire income in full before discharging for voyage charter and prepay the charter-hire income for time charter, the balance of trade receivables at respective balance sheet dates are normally low. The unsettled trade receivables are monitored on an ongoing basis and followed up by the nance department. The Group has no signicant concentration of credit risk. Cash and bank balances are held with creditworthy nancial institutions. (d) Liquidity risk The Group does not have signicant liquidity risk as it maintains sufcient cash and cash equivalents, and generate cash ows from its operations to nance its activities. The Group continues to nance its liquidity needs through internally generated cash ows and minimises liquidity risk by keeping committed credit lines available.
52

December 31, 2006 4 FINANCIAL RISKS AND MANAGEMENT RISK POLICIES (Contd) (e) Fair value of nancial assets and liabilities The carrying amount of cash and bank balances, trade and other current receivables and payables approximate their respective fair values due to the relatively short-term maturity of these nancial instruments. The fair values of other classes of nancial assets and liabilities are disclosed in the respective notes to nancial statements.
RELATED PARTY TRANSACTIONS The directors consider that its immediate and ultimate controlling company to be Pilot Assets Group Limited, a company incorporated in British Virgin Islands. Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise signicant inuence over the other party in making nancial and operating decisions. Some of the Groups transactions and arrangements are with related parties and the effect of these on the basis determined between the parties are reected in these nancial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated. a) Trading transactions The Group has the following transactions with its related parties who are not members of the Group: Group Nature of transaction Notes 2006 US$000 Rental Sales commission Interest income
Notes: (i) (ii) Rental expense was charged at the rate determined by companies concerned. The sales commission was calculated at 0.5% (2005 : 0.5%) on the total turnover of the transactions arranged by a related party. The interest income was calculated at 2.5% per annum above London Interbank Offered Rates based on the loan utilised in respect of a bank loan granted to Panamax Mars Marine as determined by a memorandum of agreement dated February 23, 2005 signed among Panamax Mars Marine, Centurion Marine and Midas Shipping.
2005 US$000 60 37 15
(i) (ii) (iii)
38
(iii)
53

December 31, 2006 5 RELATED PARTY TRANSACTIONS (Contd) b) Remuneration of key management personnel The remuneration of the directors, who are the key management personnel of the Group, is disclosed in Note 17. c) Guarantees Details of the guarantees provided by related companies, related parties and the directors of the Group for security of the borrowings granted to the Group are disclosed in Note 12.
CASH AND BANK BALANCES Cash and bank balances comprise cash and deposits held by the Group and Company with an original maturity of three months or less, and earn interest at 1% to 6% (2005 : 1% to 4%) per annum. The cash and bank balances represent the cash and cash equivalents of the Group. Signicant cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows: Group 2006 US$000 Hong Kong dollars New Taiwan dollars Singapore dollars 44 108 286 2005 US$000 48 148 10,684 Company 2006 2005 US$000 286 US$000 10,684
OTHER RECEIVABLES AND PREPAYMENTS Group 2006 US$000 Prepayment of expenses Deposits 340 440 780 2005 US$000 480 46 526 Company 2006 2005 US$000 3 3 US$000 39 39
The Groups and Companys other receivables and prepayments are mainly denominated in the United States dollars which are also functional currencies of the Company and the Groups entities.
HELD FOR TRADING INVESTMENTS Group 2006 2005 US$000 US$000 Quoted equity shares, at fair value
54
621

December 31, 2006 8 HELD FOR TRADING INVESTMENTS (Contd) The investments above include investments in quoted equity securities that offer the Group the opportunity for return through dividend income and fair value gains. They have no xed maturity or coupon rate. The fair values of these securities are based on closing quoted market prices on the last market day of the nancial year. Signicant trading investments that are not denominated in the functional currencies of the respective entities are as follows: Group 2006 US$000 Hong Kong dollars 621 2005 US$000
PLANT AND EQUIPMENT Furniture, xtures and equipment US$000
Vessels US$000 Group Cost: At January 1, 2005 Additions At December 31, 2005 Additions Disposals At December 31, 2006 Accumulated depreciation: At January 1, 2005 Depreciation for the year At December 31, 2005 Depreciation for the year Disposals At December 31, 2006 Carrying amount: At December 31, 2006 At December 31, 2005 20,256 30,400 50,656 6,150 (1,110) 55,696
Drydocking US$000
Leasehold improvement US$000
Total US$000
2,326 2,326 984 (384) 2,926
2 48 50 33 (1) 82
165 165 19 184
20,258 32,939 53,197 7,186 (1,495) 58,888
1,036 1,744 2,780 3,084 5,864
314 314 704 (110) 908
6 6 14 20
30 30 56 86
1,036 2,094 3,130 3,858 (110) 6,878
49,832 47,876
2,018 2,012
62 44
98 135
52,010 50,067
The carrying amount of vessels of the Group included an amount of approximately US$18,078,000 (2005 : US$19,903,000) in respect of assets held under mortgage loans disclosed in Note 12 to the nancial statements.
55

December 31, 2006 10 INVESTMENT IN SUBSIDIARY Company 2006 US$000 Unquoted equity shares, at cost The Company has the following subsidiaries: Country of incorporation (3) Proportion of interest held by the Group 2006 % Held by the Company Courage Marine Holdings (BVI) Limited (1) (2) (Courage Marine BVI) Held by Courage Marine BVI Courage Marine (Holdings) Co., Limited (2) (Courage Marine Holdings) Held by Courage Marine Holdings Ally Marine Co. Ltd. (Ally Marine) Bravery Marine Holding Inc. (Bravery) Courage Marine Co. Ltd. (Courage Marine) Courage Marine (HK) Company Limited (Courage Marine HK) Heroic Marine S.A. (Heroic Marine) Courage Maritime Technical Service Corp. (Courage Maritime) Courage New Amego Shipping Corp. (Courage Amego) The British Virgin Islands Republic of Panama The British Virgin Islands Hong Kong 100 100 Provision of marine transportation services Provision of marine transportation services Provision of marine transportation services Provision of administration services to Group companies Provision of marine transportation services Provision of technical management services to Group companies Provision of marketing and operating services to Group companies Hong Kong 100 100 Investment holding The British Virgin Islands 100 100 Investment holding 2005 % 14,217 2005 US$000 14,217
Name of subsidiary
Principal activities
100
100
100
100
100
100
The British Virgin Islands Republic of Panama
100
100
100
Republic of Panama
100
100
56

December 31, 2006 10 INVESTMENT IN SUBSIDIARY (Contd) The Company has the following subsidiaries: (Contd) Country of Proportion of interest incorporation (3) held by the Group Principal activities 2006 % Jeannie Marine Co. Ltd. (Jeannie Marine) Midas Shipping Navigation Corp. (Midas Shipping) New Hope Marine, S.A. (New Hope Marine) Panamax Mars Marine Co. Ltd. (Panamax Mars Marine) Pointlink Investment Limited (Pointlink) Sea Valour Marine Corp. (Sea Valour) Rafes Marine Corp. (Rafes Marine) Zorina Navigation Corp. (Zorina Navigation) Courage Marine (Holdings) Co. Ltd. Shanghai Representative ofce (Courage Shanghai Representative Ofce) Held by Courage Amego Courage New Amego Shipping Agency Co. Ltd. (Courage Amego Agency)
Notes: (1) (2) Courage Marine BVI is not required to be audited in its country of incorporation. For the purpose of this report, the nancial statements of Courage Marine BVI and Courage Marine Holdings and its subsidiaries were audited by overseas practices of Deloitte Touche Tohmatsu. The Group operates all these subsidiaries from Taiwan and Hong Kong.
Name of subsidiary
2005 % 100 Provision of marine transportation services Provision of marine transportation services Provision of marine transportation services Provision of marine transportation services Dormant (2005: Investment holding) Provision of marine transportation services Provision of marine transportation services Provision of marine transportation services Marketing and crewing function
The British Virgin Islands Republic of Panama Republic of Panama The British Virgin Islands The British Virgin Islands Republic of Panama Republic of Panama Republic of Panama Peoples Republic of China
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Republic of China
100
100
Provision of ship agency services
(3)
57

December 31, 2006 11 OTHER PAYABLES AND ACCRUALS Group 2006 US$000 Other payables Accrued vessel related expenses Accrued staff related expenses Other accrued operating expenses 865 882 416 429 2,592 2005 US$000 875 1,315 514 285 2,989 Company 2006 2005 US$000 520 202 117 839 US$000 200 74 211 485
The Groups and Companys other payables and accruals are mainly denominated in the United States dollars which are also functional currencies of the Company and the Groups entities.
12
BORROWINGS Group Notes 2006 US$000 2,850 3,160 6,010 Less: Amount due within one year shown under current liabilities Amount due after one year Amount due after one year is represented by the following: Payable in second year Payable in third year (5,330) 680 2005 US$000 5,050 5,640 10,690 (4,680) 6,010
Loan A Loan B
a b
680 680
5,330 680 6,010 LIBOR + 2.5
Effective interest rate (%) per annum The carrying amount of borrowings approximate their fair value.
LIBOR + 2.5
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December 31, 2006 12 BORROWINGS (Contd) a. A bank granted a loan to Panamax Mars Marine, amounting to US$7,800,000 in 2004. The loan agreement was signed on July 16, 2004 and the loan bearing interest at a rate of 2.5% per annum above London Interbank Offered Rates (LIBOR), was repayable by 11 consecutive quarterly instalments of US$550,000 commencing from October 30, 2004 followed by a nal payment of US$1,750,000 on July 31, 2007. The loan is secured by the following: (i) (ii) Personal guarantee from a director of the Group. First preferred mortgage over the vessel held by Panamax Mars Marine, named PANAMAX MARS. First preferred mortgage over the vessel held by Midas Shipping, named MIDAS. First preferred mortgage over the vessel held by Centurion Marine Co, Limited, a company in which a director of the Group has benecial interest, named SEA CENTURION. Corporate guarantees from Midas Shipping and Centurion Marine Co, Limited. Assignment of charter-hire income and insurance in respect of the vessels, named PANAMAX MARS, MIDAS and SEA CENTURION.
(iii) (iv)
(v) (vi)
Pursuant to a memorandum of agreement dated February 23, 2005 (Loan Sharing Agreement) signed among Panamax Mars Marine, Centurion Marine and Midas Shipping, the three companies acknowledged that each partys share of the liability of the aforesaid US$7,800,000 loan would be in the proportion of US$6,000,000 to Panamax Mars Marine, US$900,000 to Centurion Marine and US$900,000 to Midas Shipping and accordingly, they agree to assume liability for repayment of the loan in the same proportion, and in the event any party were to default in fullling its obligations, the other parties will be indemnied by the defaulting party. As at December 31, 2004, the amount owing by Centurion Marine to Panamax Mars Marine as aforesaid was approximately US$874,000. In 2005, the full outstanding balance of Centurion Marines share of the loan was repaid to the Group, and pursuant thereto, Centurion Marine was released and discharged from all its obligations under the Loan Sharing Agreement, save that Centurion Marine agreed to continue providing the securities until the expiry of the loan. b. A bank granted a loan to Rafes Marine, amounting to US$7,500,000. The loan agreement was signed on January 27, 2005 and the loan was interest bearing at the rate of 2.5% per annum above the London Interbank Offered Rate (LIBOR) and repayable by 11 consecutive xed US$620,000 quarterly instalments commencing from April 30, 2005 followed by a nal payment of US$680,000 on January 31, 2008. The loan is secured by the following: (i) (ii) (iii) Personal guarantee from a director of the Group. First preferred mortgage over the vessel held by Rafes Marine, named RAFFLES. Assignment of charter-hire income and insurance in respect of the vessel named RAFFLES. Corporate guarantee from Courage Marine Holdings.
(iv)
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December 31, 2006 13 SHARE CAPITAL Group and Company 2006 2005 2006 US$000 2005 US$000 Number of ordinary shares of US$0.018 each Authorised: 10,000,000,000 10,000,000,000
180,000
180,000
On incorporation, the authorised share capital of the Company was US$18,000 comprising shares of par value US$0.018 each. Pursuant to written resolutions passed on August 15, 2005, the shareholders of the Company approved the increase in the authorised share capital of the Company from US$18,000 divided into 1,000,000 ordinary shares of par value US$0.018 each to US$180,000,000 divided into 10,000,000,000 ordinary shares of par value US$0.018 each. Group and Company 2006 2005 2006 US$000 2005 US$000 Number of ordinary shares of US$0.018 each Issued and paid up: At the beginning of the year/date of incorporation Credited as fully paid the 1,000,000 ordinary shares of US$0.018 each that were issued nil-paid Issuance of shares At end of the year 1,058,829,308 1,000,000 19,059 18
1,058,829,308
1,057,829,308 1,058,829,308
19,059
19,041 19,059
The Company has only one class of shares which has no right to xed income.
14
REVENUE Group 2006 US$000 Income from marine transportation services arising from operation of vessel voyage charters and time charters 2005 US$000
56,734
48,381
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December 31, 2006 15 OTHER INCOME Group 2006 US$000 Interest income third party Interest income related parties Gain on disposal of plant and equipment Foreign currency exchange adjustment gain Sundry income 748 1,103 735 284 2,870 2005 US$000 290 15 646 951
16
FINANCE COSTS Group 2006 US$000 Interest expense from: - Bank loan 618 2005 US$000 754
17
PROFIT BEFORE INCOME TAX Group 2006 US$000 Directors remuneration (representing shortterm benets): of the Company of the subsidiaries Total directors remuneration Employee benets expense (including directors remuneration): Dened contribution Staff costs Total employee benets expense Non audit fees paid to auditors Foreign currency exchange adjustment (gain) loss net Depreciation of plant and equipment Bad debts written off Crew costs Gain on disposal of plant and equipment 2005 US$000
357 350 707
236 316 552
20 1,570 1,590 (735) 3,858 3,560 1,103
4 1,191 1,195 24 2,094 179 2,739
61

December 31, 2006 18 INCOME TAX The tax charge for the nancial year can be reconciled to prot before tax per the Group results as follows: Group 2006 US$000 Tax at the applicable income tax rate * Effect of different tax rates of subsidiaries operating in other jurisdictions Tax effect of offshore income not taxable for tax purpose Tax effect of expenses not deductible for tax purpose Others Net 4,871 (62) (4,840) 70 (7) 32 2005 US$000 4,606 (4,623) 50 (33)
* For the purpose of presenting the tax reconciliation in this set of Group nancial statements, the applicable income tax of the Group is calculated at prevailing Hong Kong tax rates, 17.5% (2005 : 17.5%).
No deferred tax has been provided as the Group did not have any signicant temporary difference during the year and at the balance sheet date.
19
DIVIDENDS The following dividends were paid in 2006: (i) Dividends of approximately US$13,977,000 representing US (cents) 1.32 per ordinary share in respect of the nancial year ended December 31, 2005; and Dividends of approximately US$4,976,000 representing US (cents) 0.47 per ordinary share in respect of the nancial year ended December 31, 2006.
(ii)
In 2005 and prior to completion of the Restructuring Exercise, a company of the Group declared interim dividends of US$4,000,000 and US$6,000,000 to its then shareholders representing US$400 and US$600 per share respectively. Subsequent to December 31, 2006, the directors proposed a nal dividend of US (cents) 0.94 per ordinary share to be paid in respect of the nancial year ended December 31, 2006. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these nancial statements. The total estimated dividend to be paid is approximately US$10,000,000.
62

December 31, 2006 20 EARNINGS PER SHARE The calculation of the basic earnings per ordinary share for the nancial year ended is based on the prot for the nancial year of the Company divided by the weighted average number of ordinary shares of the Company during the nancial year as shown below. Fully diluted earnings per ordinary share is calculated by dividing the prot after tax of the Group by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options). No share options were granted by the Group. Accordingly, there are no dilutive effect as at December 31, 2006. Group 2006 US$000 Net prot attributable to shareholders 27,798 Group 2006 Number of shares (000) Weighted average number of ordinary shares 1,058,829 2005 Number of shares (000) 867,528 2005 US$000 26,318
21
OPERATING LEASE COMMITMENTS Group 2006 US$000 Minimum lease payments under operating leases recognised as an expense in the year of rented premises 2005 US$000
115
90
At the balance sheet date, the Group had outstanding commitments under non-cancellable operating leases, which fall due as follows: Group 2006 US$000 Within one year In the second to fth years inclusive 112 21 2005 US$000 82 102
Operating lease payments represent rentals payable by the Group for its ofce premises. Leases are negotiated for a term of one year.
63

December 31, 2006 22 CAPITAL EXPENDITURE COMMITMENTS Group 2006 US$000 Commitments for future capital expenditures, but not provided in the nancial statements - acquisition of nancial management system 2005 US$000
11
23
SEGMENT INFORMATION No business segmental information of the Group is presented as the Groups revenues, expenses, assets, liabilities and capital expenditure are primarily attributable to the provision of ship chartering services. Due to the nature of the provision of ship chartering services, which are carried out internationally, the directors consider that it is not meaningful to provide the nancial information by geographical segment. Accordingly, geographical segment results for the provision of ship chartering services are not presented.
24
ACQUISITION OF SUBSIDIARY 2005 On November 15, 2005, Courage Marine Holdings acquired Pointlink Investment Limited, a company incorporated in the British Virgin Islands. This has been accounted for by the purchase method of accounting. Acquirees carrying amount before combination ** US$000 Deposit Loan from previous shareholder Total consideration
* Purchase consideration was US$1. ** The directors determined that the carrying amount approximated fair value due to short term nature of these items.
785 (785) *
64

December 31, 2006 25 SHARE OPTIONS Under the Share Option Scheme (the Scheme) granted to the executive and non-executive directors and employees of the Group, an option may, except in certain special circumstances, be exercised at any time after the rst or second anniversary (depending on the exercise price) of the grant of the option. Options granted under the Scheme will have a life span of 10 years, save for those granted to non-employees which shall have a life span of 5 years. The exercise prices of the options may at the Remuneration Committees discretion, be set at a price equal to the average of last dealt prices of the shares on the Singapore Exchange Securities Trading Limited for the ve market days immediately preceding the date of grant. The Remuneration Committee may also at its discretion x the exercise price at a discount not exceeding 20 percent to the above price. No options have been granted during the year.
26
RECLASSIFICATION AND COMPARATIVE FIGURES Certain reclassications have been made to the prior years nancial statements to enhance comparability with the current years nancial statements. Management has included insurance expense for its eet of vessels in cost of sales. In the prior year nancial statements, such expense amounting to US$1,494,000 were included in administrative expenses. As a result, certain line items have been amended on the face of the prot and loss statements. Comparative gures have been adjusted to conform with the current years presentation. The items were reclassied as follows: Group Previously After rereported classication 2005 US$000 Cost of sales Administrative expenses 18,066 3,699 2005 US$000 19,560 2,205
27
COMPARATIVE FIGURES The nancial statements of the Company for 2005 covered the nancial period from April 5, 2005 (date of incorporation) to December 31, 2005. The nancial statements of the Group for 2005 include the results of the subsidiaries from January 1, 2005 to December 31, 2005 as a result of the Restructuring Exercise undertaken for the purpose of the Companys listing on SGX-ST. The nancial statements of the Company and of the Group for 2006 cover the 12 months ended December 31, 2006.
65
Statement of Directors
In the opinion of the directors, the consolidated nancial statements of the Group and the balance sheet and changes in equity of the Company set out on pages 40 to 65 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at December 31, 2006, and of the results, changes in equity and cash ows of the Group and changes in equity of the Company for the nancial year ended December 31, 2006 and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.
ON BEHALF OF THE DIRECTORS
...........................
Hsu Chih-Chien
...........................
Wu Chao-Huan
March 16, 2007
66
Statistics of Shareholdings
As at 15 March 2007 Distribution of Shareholdings No. of Shareholders 4 1,250 1,610 33 2,897 No. of Shares 248 7,092,020 97,712,482 954,024,558 1,058,829,308
Size of Shareholdings 1 999 1,000 10,000 10,001 1,000,000 1,000,001 and above Total :
% 0.14 43.15 55.57 1.14 100.00
% 0.00 0.67 9.23 90.10 100.00
Twenty Largest Shareholders Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CIMB-GK Securities Pte. Ltd. Lin Tsai-Seng DBS Vickers Securities (S) Pte Ltd First U.S. Capital Group Limited Diamond Unit Investments Limited Ho Tsuy-Hong Shan Ling Mei Morgan Stanley Asia (Spore) Securities Pte Ltd HSBC (Singapore) Nominees Pte Ltd Lawrence Kwok Ping Hon Tan Swee Teck Michael UOB Kay Hian Pte Ltd Meren Pte Ltd Phillip Securities Pte Ltd Sun Hsien-Long Merrill Lynch (Spore) Pte Ltd Nomura Singapore Limited Quek Seng Long Phay Seng Whatt DMG & Partners Securities Pte Ltd Total : No. of Shares 668,414,568 60,114,524 38,817,000 25,587,879 23,672,808 17,966,132 14,580,000 13,038,711 12,533,000 11,525,000 8,700,000 6,542,000 6,500,000 4,531,000 3,901,936 3,490,000 3,200,000 2,920,000 2,900,000 2,602,000 931,536,558 % 63.13 5.68 3.67 2.42 2.24 1.70 1.38 1.23 1.18 1.09 0.82 0.62 0.61 0.43 0.37 0.33 0.30 0.28 0.27 0.25 88.00
67
Statistics of Shareholdings
As at 15 March 2007 SUBSTANTIAL SHAREHOLDERS Direct Interest No. of Shares % Pilot Assets Group Limited Hsu Chih-Chien(1) Wu Chao-Huan(2) Chen Shin-Yung(3) Chiu Chi-Shun(4) Lin Tsai Seng
Notes: (1) Hsu Chih-Chiens deemed interest arises by reason of Sea-Sea Marine Co. Ltds deemed interest in the 669,740,318 Shares owned by Pilot Assets Group Limited. Accordingly, Sea-Sea Marine Co. Ltd and Mr. Hsu is each considered a Substantial Shareholder of our Company. Wu Chao-Huans deemed interest arises by reason of China Lion International Limiteds deemed interest in the 669,740,318 Shares owned by Pilot Assets Group Limited. Accordingly, China Lion International Limited and Mr. Wu is each considered a Substantial Shareholder of our Company. Chen Shin-Yungs deemed interest arises by reason of China Harvest Enterprises Limiteds deemed interest in the 669,740,318 Shares owned by Pilot Assets Group Limited. Accordingly, China Harvest Enterprises Limited and Mr. Chen is each considered a Substantial Shareholder of our Company. Chiu Chi-Shuns deemed interest arises by reason of Pronto-Star Limiteds deemed interest in the 669,740,318 Shares owned by Pilot Assets Group Limited. Accordingly, Pronto-Star Limited and Mr. Chiu is each considered a Substantial Shareholder of our Company.
Deemed Interest No. of Shares %
669,740,318
63.25 669,740,318 669,740,318 669,740,318 669,740,318 63.25 63.25 63.25 63.25
60,114,524
5.68
(2)
(3)
(4)
Shareholding Held in Public Hands Approximately 31.07% of the shareholding of the Company is held in the hands of the public as at 15 March 2007 and Rule 723 of the Listing Manual is complied with.
68
Notice of Annual General Meeting

Courage Marine Group Limited (Incorporated in Bermuda)
NOTICE IS HEREBY GIVEN that the Second Annual General Meeting of the Company will be held at Hilton Singapore, 581 Ochard Road, Singapore 238883 on Thursday, 26 April 2007 at 11 a.m. for the following purposes: -
Ordinary Business 1. To receive and adopt the Directors Report and Audited Accounts for the year ended 31 December 2006. To declare a nal dividend of US(cents) 0.94 per share (tax not applicable) for the year ended 31 December 2006. To re-elect the following Directors retiring pursuant to the bye-laws of the Company and who, being eligible, offer themselves for re-election: a) b) c) 4. Mr Hsu Chih-Chien Mr Chiu Chi-Shun Mr Wu Chao-Ping
2.
3.
To approve the payment of Directors fees of US$357,529 for the year ended 31 December 2006 (FY2005: US$ 236,026). To re-appoint Deloitte & Touche as Auditors of the Company and to authorise the Directors to x their remuneration. To transact any other business of an Annual General Meeting.
5.
6.
Special Business 7. To consider and, if thought t, to pass the following Ordinary Resolutions, with or without any modications: a) That pursuant to the bye-laws of the Company and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST), authority be and is hereby given to the Directors of the Company to issue shares and convertible securities in the capital of the Company (whether by way of rights, bonus or otherwise or in pursuance of any offer, agreement or option made or granted by the Directors during the continuance of this authority which would or might require shares or convertible securities to be issued during the continuance of this authority or thereafter) at any time to such persons and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem t (notwithstanding that such issue of shares pursuant to the offer, agreement or option or the conversion of the convertible securities may occur after the expiration of the authority contained in this Resolution), provided that the aggregate number of shares and convertible securities to be issued pursuant to this Resolution shall not exceed fty (50) per cent. of the issued shares of the Company, and provided further that where members of the Company with registered addresses in Singapore are not given an opportunity to participate in the same on a pro rata basis, then the number of shares and convertible securities to be issued under such circumstances shall not exceed twenty (20) per cent. of the issued shares of the Company, and for the purpose of this Resolution, the
69

percentage of issued shares shall be based on the Companys issued share capital at the time this Resolution is passed (after adjusting for (a) new shares arising from the conversion or exercise of convertible securities, (b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time this Resolution is passed, provided the options or awards were granted in compliance with the Listing Manual of the SGX-ST and (c) any subsequent consolidation or subdivision of shares), and unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. b) That authority be and is hereby given to the Directors of the Company to offer and grant options in accordance with the provisions of the Courage Marine Employee Share Option Scheme approved by shareholders in general meeting on 24 August 2005 (the Scheme) and to allot and issue from time to time such number of shares in the Company as may be required to be issued pursuant to the exercise of the options under the Scheme (notwithstanding that such allotment and issue may occur after the conclusion of the next or any ensuing Annual General Meeting of the Company).
By Order of the Board
Lee Pih Peng Company Secretary Singapore 11 April 2007
Explanatory notes: Resolution 2 an interim dividend of approximately US$5 million was paid in respect of the nancial year ended 31 December 2006 on 8 December 2006. Resolution 3(a) if re-elected, Hsu Chih-Chien, who is considered a non-executive director, will continue to be a member of the Nomination Committee and a member of the Remuneration Committee. Resolution 3(b) if re-elected, Chiu Chi-Shun will continue to be an executive director of the Company. Resolution 3(c) - if re-elected, Wu Chao-Ping will continue to be an executive director of the Company. Resolution 6(a) - if passed, will empower the Directors, from the date of the above Annual General Meeting until the next Annual General Meeting, to allot and issue shares and convertible securities in the Company, without seeking any further approval from shareholders in general meeting but within the limitation imposed by the resolution, for such purposes as the Directors may consider would be in the best interests of the Company. The number of shares and convertible securities that the Directors may allot and issue under this Resolution shall not exceed fty (50) per cent. of the issued share capital of the Company at the time of the passing of this Resolution. For issues of shares and convertible securities other than on a pro rata basis to all shareholders, the aggregate number of shares and convertible securities to be issued shall not exceed twenty (20) per cent. of the issued share capital of the Company at the time of the passing of this Resolution. Resolution 6(b) - if passed, gives authority to the Directors to offer and grant options and to issue shares pursuant to the exercise of options in connection with the Scheme. This authority is in addition to the general authority to issue shares and convertible securities sought under Resolution 6(a).
70

Notes : 1. With the exception of The Central Depository (Pte) Limited (CDP) who may appoint more than two proxies, any member of the Company entitled to attend and vote at the AGM is entitled to appoint no more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company. Subject to paragraph 3 below, to allow persons whose names are listed on the Depository Register (individually a Depositor and collectively the Depositors) maintained by CDP as at 24 April 2007 (Cut-Off Date) to attend the AGM, arrangements will be made for CDP to automatically issue a proxy form appointing each of the Depositors and, in relation to each of the Depositors, in respect of such number of shares of the Company set out opposite their respective names in the Depository register maintained by CDP as at the Cut-Off Date, as its proxy/proxies to attend and vote at the AGM. Accordingly, a Depositor who wishes to attend and vote in person at the AGM can do so without having to submit the Depositor Proxy Form (as dened below), provided that a Depositor who is a corporation and who wishes to attend the AGM must submit the Depositor Proxy Form (as dened below) for the appointment of person(s) to attend and vote at the AGM on its behalf. If a Depositor wishes to appoint person(s) other than the Depositor to attend and vote at the AGM in his stead, the Depositor should complete and submit the proxy form attached to this notice and despatched to Depositors (Depositor Proxy Form). If a shareholder, who is not a Depositor, wishes to appoint person(s) other than the shareholder to attend and vote at the AGM in his stead, the shareholder should complete and submit the proxy form dispatched to shareholders who are not Depositors (Shareholder Proxy Form). To be effective, the Depositor Proxy Form or the Shareholder Proxy Form must be deposited at the ofce of the Companys Singapore share transfer agent, Lim Associates (Pte) Ltd at 3 Church Street, #08-01 Samsung Hub, Singapore 049483, not less than 48 hours before the time appointed for the AGM or its adjournment thereof.
2.
3.
Notice of Books Closure and Dividend Payment Date NOTICE IS HEREBY GIVEN that the Register of Members and Share Transfer Books of the Company will be closed on 5 May 2007 to determine the shareholders entitlements to the proposed dividends. Duly completed registrable transfers of shares received by the Companys Share Registrar, Lim Associates (Pte) Ltd at 3 Church Street, #08-01 Samsung Hub, Singapore 049483, up to 5.00 pm on 4 May 2007 (the Book Closure Date) will be registered to determine shareholders entitlements to the proposed dividends. Subject as aforesaid, shareholders whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary shares in the capital of the Company as at 5.00 pm on the Book Closure Date will be entitled to the dividends. The proposed dividends, if approved by the members at the Annual General Meeting, will be paid on 16 May 2007.
71
This page has been intentionally left blank
COURAGE MARINE with limited liability) LIMITED GROUP (Incorporated in Bermuda

2007 ANNUAL GENERAL MEETING - DEPOSITOR PROXY FORM
We, The Central Depository (Pte) Limited, of 4 Shenton Way #02-01, SGX Centre 2, Singapore 068807, (CDP) being a member of COURAGE MARINE GROUP LIMITED (the Company), pursuant to a proxy form lodged or to be lodged by us with the Company (the CDP Proxy Form), have appointed, or will be appointing the person whose name and particulars are set out in Part I below (the Depositor(s)), in respect of such number of shares (the Depositor(s) Shares) set out against his/her/its name in the Depository Register maintained by CDP as at 24 April 2007 (the Cut Off Date), as our proxy to vote for us on our behalf at the Annual General Meeting of the Company to be held at Hilton Singapore, 581 Orchard Road, Singapore 238883 on Thursday, 26 April 2007 at 11 a.m. and at any adjournment thereof (the Annual General Meeting).
I.
OR, in the event the Company receives this Depositor Proxy Form, which is:(i) duly completed and signed/executed by the Depositor(s); and (ii) submitted by the requisite time and date, and to the requisite ofce as indicated below, we hereby appoint the person or persons (the Appointee(s)) whose details are given in Part II(a) and (b), provided that such details have been veried in Part V by the afxing of the seal or the signature of or on behalf of the persons named in Part I, and on the basis that such person or persons are authorised to vote in respect of the proportion of the shareholding referred to in Part II as shown in Part III or if no proportions are so reected, in respect of the whole of the said shareholding:-
II. (a)
Name
Address
NRIC/ Proportion of Passport Number Shareholdings (%)
and/or (delete as appropriate) (b)

as my/our *proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting. The Appointee(s) *is/are hereby directed to vote for or against the resolutions to be proposed at the Annual General Meeting as indicated hereunder. If no specic direction as to voting is given, the Appointee(s) may vote or abstain from voting at his/her/their discretion, as he/she/they will on any other matter arising at the Annual General Meeting. We further hereby authorise and direct the Company to accept this Depositor Proxy Form(s) in substitution for the CDP Proxy Form in respect of the Depositor(s) Shares and the CDP Proxy Form, to the extent it relates to the appointment of the said Depositor(s) as our proxy in respect of the Depositor(s) Shares, shall be of no force or effect whatsoever. *Delete accordingly
III.
No. 1. 2. 3.
RESOLUTIONS To adopt Directors Report and Audited Accounts To declare a nal dividend To re-elect Directors:(a) Mr Hsu Chih-Chien (b) Mr Chiu Chi-Shun (c) Mr Wu Chao-Ping To approve Directors'' fees To re-appoint auditors Any other business (a) To authorise directors to issue share and convertible securities (b) To authorise directors to offer and grant options
For
Against
4. 5. 6. 7.
Dated this
day of
2007
IV.
The Central Depository (Pte) Limited
Signature of Director
V.
TO BE COMPLETED BY DEPOSITOR(S) IF HE/SHE/IT WISHES TO NOMINATE A PROXY/PROXIES UNDER PART II For Individuals: For Corporations:
Signature of Direct Account Holder
Signature of Director
Signature of Director/Secretary
Common Seal
IMPORTANT:- PLEASE READ NOTES OVERLEAF
IMPORTANT:- PLEASE READ NOTES BELOW Notes:Part II 1) A Depositor who is a natural person need not submit this Depositor Proxy Form if he/she is attending the AGM in person. A Depositor(s) may nominate not more than two Appointees, who shall be natural persons, to attend and vote in his/her/its place as proxy for CDP in respect of the number of the Depositor(s) Shares by completing Part II(a) and/or (b). Where a Depositor(s) is a corporation and wishes to be represented at the Annual General Meeting, it must nominate an Appointee/Appointees to attend and vote as proxy for CDP at the Annual General Meeting in respect of the number of the Depositor(s) Shares. 2) A Depositor(s) who wishes to nominate more than one Appointee must specify the proportion of the number of the Depositor(s) Shares (expressed as a percentage of the whole) to be represented by each Appointee. If no proportion of number of the Depositor(s) Shares is specied, the Appointee whose name appears rst shall be deemed to carry 100 per cent of the number of Depositor(s) Shares of his/her appointer and the Appointee whose name appears second shall be deemed to be nominated in the alternate.
Part III
Please indicate with an X in the appropriate box against each resolution how you wish the Appointee to vote. If this proxy form is deposited without any indication as to how the Appointee shall vote, the Appointee may vote or abstain from voting at his/her discretion. 1) If a Depositor(s) wishes to nominate an Appointee/Appointees, this Depositor Proxy Form must be signed by the Depositor(s) or his/her/its attorney duly authorised in writing. In the case of joint Depositor(s), all joint Depositor(s) must sign this Depositor Proxy Form. If the Depositor(s) is a corporation, this Depositor Proxy Form must be executed under its common seal or under the hand of its attorney duly authorised in writing. The power of attorney appointing the attorney or other authority, if any, under which this Depositor Proxy Form is signed, or a notarially/duly certied copy thereof must be attached to this Depositor Proxy Form. This Depositor Proxy Form, duly completed, must be deposited by Depositor(s) at the ofce of the Companys share transfer agent in Singapore, Lim Associates (Pte) Ltd at 3 Church Street #08-01, Samsung Hub, Singapore 049483 not less than 48 hours before the time of the Annual General Meeing in accordance with the instructions stated herein.
Part V
Part VI
2)
GENERAL Completion and return of this Depositor Proxy Form by a Depositor will not prevent him/her/it from attending and voting in person at the Annual General Meeting as proxy of CDP if he/she/it subsequently wishes to do so. The Company shall be entitled to reject any Depositor Proxy Form, which is incomplete, improperly completed or illegible or where the true intentions of the Depositor(s) are not ascertainable from the instructions of the Depositor(s) specied on any Depositor Proxy Form.
Suite 906 Wing On Centre 111 Connaught Road Central, Hong Kong Tel: (852) 3184-0755 Fax: (852) 3184-0750
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AR2006

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ACHIEVING MORE

COURAGE MARINE GROUP LIMI TED

Annual Report 2006

subject to shareholders approval at the Annual General Meeting.

Hsu Chih-Chien Chairman of the Board

Sin Boon Ann

Lui Chun Kin, Gary

Chu Wen Yuan

Hon Kwok-Ping Financial Director

Yuen Chee Lap, Carl Financial Controller

Lin Tsai-Seng Sales and Marketing Manager

Courage Marine Group Limited

Courage Marine (BVI)

Courage Marine Holdings

Courage Marine HK Courage Shanghai Courage Amego 100%

Courage Amego Agency

GROUP FINANCIAL SUMMARY

48,381 28,861 26,318

50,067 77,083 27,016 63,404 14,533

41.5 21.6 35.9

Courage Marine Group Annual Report 2006

Cargo Chartering & Operations

Fleet Expansion & Development

Net Profit Margin

Courage Marine Group Annual Report 2006

Courage Marine Group Annual Report 2006

43% of Our Fleet

18% of Our Fleet

39% of Our Fleet

Year No. of Vessel

BUSINESS STRATEGY AND PLANS

Corporate Governance Statement

Corporate Governance Statement

Corporate Governance Statement

Audit Committee Meetings Held Attended 4 4 4 4 4 4 4 4 4* 3* 2* 2* 1* 4 4 4

Corporate Governance Statement

Corporate Governance Statement

Corporate Governance Statement

Corporate Governance Statement

Mr. Hsu Chi Chien / Way-East Shipping

Report of the Directors

Report of the Directors

Courage Marine Group Annual Report 2006

Report of the Directors

(b) (c) (d) (e)

(f) (g) (h)

ON BEHALF OF THE DIRECTORS

March 16, 2007

Independent Auditors Report

Certied Public Accountants Singapore

Ernest Kan Yaw Kiong Partner

March 16, 2007

25,806 1,634 780 621 28,841

25,223 1,267 526 27,016

286 3 40,114 10,000 50,403

10,684 39 22,250 16,000 48,973

52,010 52,010 80,851

50,067 50,067 77,083

14,217 14,217 64,620

14,217 14,217 63,190

2,592 5,330 7,922

2,989 4,680 7,669

839 6,108 6,947