3rd Quarter Results
Ocean Wilsons Holdings Ld
13 November 2007
Ocean Wilsons Holdings Limited
Today our principal operating subsidiary, Wilson Sons Limited announced to the
Brazilian and Luxembourg Stock Exchanges the results of the Company and its
subsidiary companies for the nine months ending 30 September 2007.
November 12, 2007 - Wilson Sons Limited (Bovespa: WSON11), through its
subsidiaries in Brazil, is one of the largest integrated operators of port and
maritime logistics in the Brazilian market, with 170 years of experience,
offering a comprehensive line of services to participants in the international
commerce area, particularly in the port and shipping sector, with activities
divided into six operating segments: port terminals, towage, logistics, shipping
agency, offshore and non-segmented activities - discloses the results of the
third quarter of 2007 (3Q07).
The interim financial and operating information below, except as otherwise
indicated, is presented on a consolidated basis and in US dollars, in accordance
with the International Accounting Standards number 34 (IAS 34) related to the
Interim Financial Information.
Operating and Financial Highlights
Net revenue of US$ 104.3 million in the 3Q07, an increase of 12.3% as compared
to the US$ 92.9 million recorded in the 3Q06;
Operating Profit of US$ 26.3 million, 26.5% above the US$ 20.8 million in the
3Q06;
EBITDA of US$ 30.8 million in the 3Q07, 28.9% above the US$ 23.9 million
recorded in the 3Q06;
Net income of US$ 19.2 million, 36.9% above the US$ 14.0 million in the 3Q06;
The full announcement is available on the Wilson Sons website
(www.wilsonsons.com.br) and the Brazilian and Luxembourg Stock Exchange
websites.
Wilson Sons Limited and Subsidiaries
Condensed Consolidated Financial Statements for the Nine-Month Periods
ended September 30, 2007 and 2006 and Report of Independent Auditors
Deloitte Touche Tohmatsu Auditores Independentes
AUDITORS' REPORT ON REVIEW OF INTERIM FINANCIAL STATEMENTS
To Shareholders and Management
Wilson Sons Limited and Subsidiaries
Hamilton, Bermuda
Introduction
We have reviewed the accompanying condensed consolidated balance sheet of Wilson
Sons Limited and subsidiaries ('the Group') as of September 30, 2007 and the
related condensed consolidated income statement for the three-month and
nine-month periods ended September 30, 2007 and 2006, as well as the related
condensed and consolidated statements of changes in equity and cash flows for
the nine-month periods then ended, all expressed in United States Dollars.
Management is responsible for the preparation and presentation of this interim
financial information in accordance with International Accounting Standard No.
34 ('IAS 34'), Interim Financial Reporting. Our responsibility is to express a
conclusion on this interim financial information based on our reviews.
Scope of Review
We conducted our reviews in accordance with International Standard on Review
Engagements 2410, Review of Interim Financial Information Performed by the
Independent Auditor of the Entity. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our reviews nothing has come to our attention that causes us to believe
that the accompanying interim financial information is not prepared, in all
material respects, in accordance with International Accounting Standard No. 34
(IAS 34), Interim Financial Reporting.
We have previously audited the consolidated balance sheet of Wilson Sons Limited
and subsidiaries for the year ended 31 December 2006, presented here in
condensed format for comparative purposes, and based on our audit, we issued an
unqualified opinion thereon, dated March 5, 2007.
Wilson Sons Limited and subsidiaries 2
Our reviews also comprehended the convenience translation of the presentation
currency amounts (United States dollar) into Brazilian real amounts and, based
on our reviews nothing has come to our attention that causes us to believe that
such convenience translation has not been made in conformity with the basis
stated in Note 2. The translation of the consolidated financial information
amounts into the Brazilian real has been made solely for the convenience of
readers in Brazil.
International Financial Reporting Standards vary in certain significant respects
from Brazilian accounting practices established by Brazilian Corporate Law and
standards issued by the Brazilian Securities Commission ('CVM'). The application
of the latter would have affected the determination of stockholders' equity and
financial position as of September 30, 2007 and December 31, 2006 and the
determination of net income for the nine-month periods ended September 30, 2007
and 2006 to the extent summarized in Note 23.
DELOITTE TOUCHE TOHMATSU
Auditores Independentes
Rio de Janeiro, Brazil
12 November 2007
WILSON SONS LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2007 AND 2006
(Amounts expressed in thousands, unless otherwise noted - Brazilian real amounts
are the result of a Convenience Translation: See Notes 1 and 2) (UNAUDITED)
1. GENERAL INFORMATION
Wilson Sons Limited (the 'Group') is a Company incorporated in Bermuda under the
Companies Act 1981. The address of the register office is Clarendon House, 2
Church Street, Hamilton, HM11, Bermuda. The Group is one of the largest
providers of integrated port and maritime logistics and supply chain solutions
in the Brazilian market. Throughout our 170 years operating in Brazil, we have
developed an extensive national network and provided a variety of services
related to international trade, particularly in the port and maritime sectors.
Our principal activities are divided into the following segments: operation of
ports terminals, towage services, logistics, shipping assistance and support to
offshore oil and natural gas platforms.
These condensed financial statements are presented in United States Dollars
because that is the currency of the primary economic environment in which the
Group operates. Amounts are also presented in the Brazilian real for the
convenience of readers, computed as disclosed in Note 2.
2. ACCOUNTING POLICIES
The accounting policies and most significant judgments adopted by the Group's
management were not modified in relation to those presented in the consolidated
financial statements for the year ended December 31, 2006, disclosed on 26th of
April 2007 in the Final Prospectus of the Public Offering for the Primary and
Secondary Distribution of Certificates of Deposit representative of Common
Shares of Wilson Sons Limited.
Convenience translation
The condensed financial statements, originally prepared in US Dollars, were also
translated to Brazilian Reais. For purposes of this translation, the PTAX
exchange rates were used as of the closing dates of the consolidated financial
statements, as published by the Brazilian Central Bank. On September 30, 2007,
December 31, 2006 and September 30, 2006, the applicable exchange rates were
R$1.8389, R$2.1380 e R$2.1742, respectively. The difference in these exchange
rates, between each of the referred closing dates, generates translation
variances on the beginning balances of the amounts reported in the condensed
financial statements as of the subsequent period end. The effect of such
differences was disclosed in the Condensed Consolidated Statement of Changes in
Equity and respective notes as 'Currency translation adjustment'. This
translation was carried out with the sole purpose of providing the user of the
condensed financial statements with a view of the reported amounts expressed in
the currency of the country where the Group carries out its operations.
3. BUSINESS SEGMENTS
Business segments
For management purposes, the Group is separated currently into six operating
activities; Towage, Port Terminals, Ship Agency, Offshore Support to the Oil &
Gas industry, Logistics and Non-Segmented activities. These divisions are the
basis on which the Group reports its primary segment information.
Segment information relating to these businesses is presented as follow:
Port Ship Non
segmented
September 30, 2007 Towage terminals agency Offshore Logistics activities Elimination Consolidated
(Three-month period US$ US$ US$ US$ US$ US$ US$ US$
ending)
Income statement
Revenue 41,019 40,215 5,407 3,021 18,035 (3,338) 104,359
Inter-segment sales - - - - - 27,355 (27,355) -
41,019 40,215 5,407 3,021 18,035 24,017 (27,355) 104,359
Operating profit 14,697 11,936 2,417 623 1,153 (4,553) - 26,273
Financial income - - - - - 2,232 - 2,232
Financial expenses (921) (1,002) (1) (162) (12) (112) - (2,210)
Income before taxes 13,776 10,934 2,416 461 1,141 (2,433) - 26,295
Taxes - - - - - (7,083) - (7,083)
Net income for the 13,776 10,934 2,416 461 1,141 (9,516) - 19,212
quarter
Other information:
Acquisition of fixed (2,719) (5,312) (196) (15,856) (1,022) (111) - (25,216)
assets
Depreciation and (1,737) (1,908) (162) (599) (435) (258) - (5,099)
amortization
September 30, 2006
(three-month period
ending)
Income statement
Revenue 33,333 36,831 4,069 1,927 13,372 3,352 - 92,884
Inter-segment sales - - - - - 11,467 (11,467) -
33,333 36,831 4,069 1,927 13,372 14,819 (11,467) 92,884
Operating profit 8,503 11,159 3,267 513 1,188 (3,860) - 20,770
Financial income - - - - - (154) - (154)
Financial expenses (317) (577) (4) (221) (421) (100) - (1,640)
Income before taxes 8,186 10,582 3,263 292 767 (4,114) - 18,976
Taxes - - - - - (4,947) - (4,947)
Net income for the 8,186 10,582 3,263 292 767 (9,061) - 14,029
quarter
Other information:
Acquisition of fixed (3,212) (984) (2) (6,528) (133) (1,536) - (12,395)
assets
Depreciation and (1,628) (1,475) (144) (595) (113) (488) - (4,443)
amortization
Non
Port Ship segmented
September 30, 2007 Towage terminals agency Offshore Logistics activities Elimination Consolidated
(Nine-month period US$ US$ US$ US$ US$ US$ US$ US$
ending)
Income statement
Revenue 105,657 107,124 15,176 7,636 47,321 4,116 287,030
Inter-segment sales - - - - - 45,881 (45,881) -
105,657 107,124 15,176 7,636 47,321 49,997 (45,881) 287,030
Operating profit 32,583 30,231 5,552 1,004 2,927 (19,012) 53,285
Financial income - - - - - 10,357 10,357
Financial expenses (2,192) (2,357) (1) (628) (218) (222) - (5,618)
Income before taxes 30,391 27,874 5,551 376 2,709 (8,877) 58,024
Taxes - - - - - (17,588) - (17,588)
Net income for the 30,391 27,874 5,551 376 2,709 (26,465) - 40,436
period
Other information:
Acquisition of fixed (10,653) (13,990) (638) (25,088) (1,428) (578) (52,375)
assets
Depreciation and (4,846) (4,731) (486) (1,914) (716) (694) (13,387)
amortization
September 30, 2006
(Nine-month period
ending)
Income statement
Revenue 85,912 89,843 14,633 6,684 35,506 10,572 - 243,150
Inter-segment sales - - - - - 29,111 (29,111) -
85,912 89,843 14,633 6,684 35,506 39,683 (29,111) 243,150
Operating profit 21,774 22,947 6,097 776 2,394 (9,073) - 44,915
Financial income - - - - - 7,421 - 7,421
Loss on investment - - - - - (2,822) - (2,822)
disposal
Financial expenses (1,493) (1,093) (8) (677) (574) (2,022) - (5,867)
Income before taxes 20,281 21,854 6,089 99 1,820 (6,496) - 43,647
Taxes - - - - - (12,621) - (12,621)
Net income for the 20,281 21,854 6,089 99 1,820 (19,117) - 31,026
period
Other information:
Acquisition of fixed (5,351) (8,849) (246) (14,660) (225) (1,740) (31,071)
assets
Depreciation and (4,994) (4,136) (426) (1,387) (352) (686) (11,981)
amortization
September 30, 2007
Balance sheet
Assets
Segment assets 111,587 142,643 7,002 64,610 13,543 180,899 - 520,284
Liabilities
Segment liabilities (75,606) (41,527) 914 (59,157) (5,785) (34,265) - (215,426)
December 31, 2006
Balance sheet
Assets
Segment assets 103,133 132,893 8,158 43,063 11,173 28,465 - 326,885
Liabilities
Segment liabilities (63,886) (46,268) (7,434) (42,039) (3,548) (18,710) - (181,885)
Non
Port Ship segmented
Towage terminals Agency Offshore Logistics activities Elimination Consolidated
R$ R$ R$ R$ R$ R$ R$ R$
September 30, 2007
(Three-month period
ending)
Income statement
Revenue 75,431 73,952 9,943 5,555 33,165 (6,140) - 191,906
Inter-segment sales - - - - - 50,303 (50,303) -
75,431 73,952 9,943 5,555 33,165 44,163 (50,303) 191,906
Operating profit 27,025 21,948 4,446 1,147 2,120 (8,373) - 48,313
Financial income - - - - - 4,104 4,104
Financial expenses (1,693) (1,843) (2) (298) (22) (206) - (4,064)
Income before taxes 25,332 20,105 4,444 849 2,098 (4,475) 48,353
Taxes - - - - - (13,025) - (13,025)
Net income for the 25,332 20,105 4,444 849 2,098 (17,500) - 35,328
quarter
Other information:
Acquisition of fixed (5,000) (9,768) (360) (29,158) (1,879) (204) (46,369)
assets
Depreciation and (3,194) (3,509) (298) (1,102) (800) (474) (9,377)
amortization
September 30, 2006
(Three-month period
ending)
Income statement
Revenue 72,473 80,078 8,847 4,190 29,073 7,288 - 201,949
Inter-segment sales - - - - - 24,932 (24,932) -
72,473 80,078 8,847 4,190 29,073 32,220 (24,932) 201,949
Operating profit 18,488 24,261 7,104 1,115 2,583 (8,393) - 45,158
Financial income - - - - - (335) - (335)
Financial expenses (689) (1,255) (9) (480) (915) (218) - (3.566)
Income before taxes 17,799 23,006 7,095 635 1,668 (8,946) - 41,257
Taxes - - - - - (10,756) - (10,756)
Net income for the 17,799 23,006 7,095 635 1,668 (19,702) - 30,501
quarter
Other information:
Acquisition of fixed (6,984) (2,139) (4) (14,193) (289) (3,340) - (26,949)
assets
Depreciation and (3,539) (3,207) (313) (1,294) (246) (1,061) - (9,660)
amortization
Non
Port Ship segmented
September 30, 2007 Towage terminals Agency Offshore Logistics activities Elimination Consolidated
(Nine-month period R$ R$ R$ R$ R$ R$ R$ R$
ending)
Income Statement
Revenue 194,295 196,991 27,907 14,042 87,017 7,567 - 527,819
Inter-segment sales - - - - - 84,371 (84,371) -
194,295 196,991 27,907 14,042 87,017 91,938 (84,371) 527,819
Operating Profit 59,917 55,592 10,210 1,846 5,382 (34,961) - 97,986
Financial income - - - - - 19,045 - 19,045
Financial expenses (4,030) (4,335) (2) (1,155) (401) (408) - (10,331)
Income before taxes 55,887 51,257 10,208 691 4,981 (16,324) - 106,700
Taxes - - - - - (32,343) - (32,343)
Net income for the 55,887 51,257 10,208 691 4,981 (48,667) - 74,357
period
Other Information:
Acquisition of fixed (19,591) (25,726) (1,173) (46,134) (2,626) (1,063) - (96,313)
assets
Depreciation and (8,910) (8,700) (894) (3,520) (1,317) (1,276) - (24,617)
amortization
Non
Port Ship segmented
September 30, 2006 Towage terminals Agency Offshore Logistics activities Elimination Consolidated
(Nine-month period R$ R$ R$ R$ R$ R$ R$ R$
ending)
Income statement
Revenue 186,790 195,337 31,815 14,532 77,197 22,986 - 528,657
Inter-segment sales - - - - - 63,293 (63,293) -
186,790 195,337 31,815 14,532 77,197 86,279 (63,293) 528,657
Operating profit 47,341 49,892 13,257 1,687 5,205 (19,727) - 97,654
Financial income - - - - - 16,135 - 16,135
Loss on investment - - - - - (6,136) - (6,136)
disposal
Financial expenses (3,246) (2,377) (17) (1,472) (1,248) (4,396) (12,756)
-
Income before taxes 44,095 47,515 13,240 215 3,957 (14,124) - 94,897
Taxes - - - - - (27,441) - (27,441)
Net income for the 44,095 47,515 13,240 215 3,957 (41,565) - 67,457
period
Other information:
Acquisition of fixed (11,635) (19,239) (535) (31,874) (490) (3,783) - (67,556)
assets
Depreciation and (10,858) (8,992) (926) (3,016) (765) (1,492) - (26,049)
amortization
September 30, 2007
Balance sheet
Assets
Segment assets 205,198 262,306 12,876 118,811 24,904 332,655 - 956,750
Liabilities
Segment liabilities (139,032) (76,364) 1,681 (108,784) (10,638) (63,010) - (396,147)
December 31, 2006
Balance sheet
Assets
Segment assets 220,499 284,125 17,442 92,069 23,888 60,857 - 698,880
Liabilities
Segment liabilities (136,588) (98,921) (15,894) (89,879) (7,586) (40,001) - (388,869)
Financial expenses and respective liabilities were allocated to reporting
segments where interest arises from loans used to finance the construction of
fixed assets in that segment.
Financial income arising from bank balances held in Brazilian operating
segments, including foreign exchange variation on such balances, were not
allocated to the business segments as cash management is performed centrally by
the corporate function.
4. PERSONNEL EXPENSES
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
US$ US$ US$ US$
Salaries and charges (22,122) (15,572) (63,222) (46,983)
Benefits (5,598) (5,131) (14,743) (13,725)
Pension costs (491) (220) (1,127) (665)
Long term incentive plan (778) - (1,473) -
(28,989) (20,923) (80,565) (61,373)
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
R$ R$ R$ R$
Salaries and charges (40,680) (33,857) (116,259) (102,150)
Benefits (10,294) (11,156) (27,111) (29,841)
Pension costs (903) (478) (2,072) (1,446)
Long term incentive plan (1,431) - (2,709) -
(53,308) (45,491) (148,151) (133,437)
5. OTHER OPERATING EXPENSES
The breakdown of other operating expenses is as follows:
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
US$ US$ US$ US$
Service cost (12,493) (14,183) (33,072) (38,250)
Rent of tugs (1,977) (1,971) (19,253) (17,414)
Freight (6,855) (2,139) (18,978) (5,271)
Other rentals (2,969) (2,339) (8,654) (6,648)
Utilities (2,327) (2,288) (7,018) (6,218)
Container movement (2,239) (1,980) (5,876) (5,750)
Insurance (872) (970) (3,693) (3,679)
Maintenance (1,793) (1,833) (4,630) (4,927)
Other expenses (3,125) (5,269) (7,346) (4,016)
(34,650) (32,972) (108,520) (92,173)
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
R$ R$ R$ R$
Service cost (22,973) (30,837) (60,816) (83,163)
Rent of tugs (3,636) (4,285) (35,404) (37,862)
Freight (12,606) (4,651) (34,899) (11,460)
Other rentals (5,460) (5,085) (15,914) (14,454)
Utilities (4,279) (4,975) (12,905) (13,519)
Container movement (4,117) (4,305) (10,805) (12,502)
Insurance (1,604) (2,109) (6,791) (7,999)
Maintenance (3,297) (3,985) (8,514) (10,712)
Other expenses (5,746) (11,456) (13,509) (8,732)
(63,718) (71,688) (199,557) (200,403)
6. LOSS ON INVESTMENT DISPOSAL
The loss disposal of investments in the amount of US$2,822 (R$6,136) relates to
the write-off in the first quarter of 2006 of an accounts receivable by Wilson
Sons Limited from Ocean Wilsons Investments Limited.
7. INVESTMENT AND FINANCE COSTS
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
US$ US$ US$ US$
Interest on investments 1,940 (131) 9,470 6,721
Other 292 (23) 887 700
2,232 (154) 10,357 7,421
Interest on bank loans and (1,687) (1,587) (4,789) (5,020)
overdrafts
Interest on obligations under (120) 88 (243) (422)
finance leases
Total borrowing costs (1,807) (1,499) (5,032) (5,442)
Derivative costs (403) (141) (586) (425)
(2,210) (1,640) (5,618) (5,867)
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
R$ R$ R$ R$
Interest on investments 3,567 (285) 17,414 14,613
Exchange gain on loans 537 (50) 1,631 1,522
4,104 (335) 19,045 16,135
Interest on bank loans and (3,104) (3,450) (8,806) (10,914)
overdrafts
Interest on obligations under (219) 191 (447) (918)
finance leases
Total borrowing costs (3,323) (3,259) (9,253) (11,832)
Derivative costs (741) (307) (1,078) (924)
(4,064) (3,566) (10,331) (12,756)
8. INCOME TAX AND SOCIAL CONTRIBUTION
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
US$ US$ US$ US$
Current tax
Income tax and social (6,699) (5,817) (20,055) (12,771)
contribution
Deferred tax
Income tax and social (384) 870 2,467 150
contribution
Total Income tax and social (7,083) (4,947) (17,588) (12,621)
contribution
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
R$ R$ R$ R$
Current tax
Income tax and social (12,319) (12,648) (36,880) (27,767)
contribution
Deferred tax
Income tax and social (706) 1,892 4,537 326
contribution
Total Income tax and social (13,025) (10,756) (32,343) (27,441)
contribution
The reconciliation of the combined statutory income tax and social contribution
rates with the effective income tax expense for the periods is as follows:
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
US$ US$ US$ US$
Profit before tax 26,295 18,976 58,024 43,647
Tax at the standard Brazilian tax rate of 34% 8,940 6,452 19,728 14,840
Effect of permanently non-chargeable income (1,176) (2,302) (850) (3,943)
and non-deductible expenses
Effect of differing tax rates of subsidiaries (681) 797 (1,290) 1,724
that operate in other jurisdictions
Income tax expense 7,083 4,947 17,588 12,621
Effective tax rate 27% 26% 30% 29%
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
R$ R$ R$ R$
Profit before tax 48,353 41,255 106,700 94,898
Tax at the standard Brazilian tax rate of 34% 16,440 14,027 36,278 32,265
Effect of permanently non-chargeable income
and non-deductible expenses (2,163) (5,005) (1,563) (8,574)
Effect of differing tax rates of subsidiaries
that operate in other jurisdictions (1,252) 1,734 (2,372) 3,750
Income tax expense 13,025 10,756 32,343 27,441
Effective tax rate 27% 26% 30% 29%
The Group earns its taxable income primarily in Brazil. Therefore the tax rate
used for tax on income on usual activities is the Brazilian standard rate of
34%, consisting of income tax of 25% and social contribution of 9%.
9. EARNINGS PER SHARE
The calculation of the basic income diluted per share is based as follows:
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30,2007 Sept 30, 2006
US$ US$ US$ US$
Dividends - 7,068 8,000 7,068
Undistributed earnings 18,859 6,741 31,422 23,429
Net income for the period 18,859 13,809 39,422 30,497
Weighted average number of shares 71,144,000 5,012,000 55,145,763 5,012,000
Earnings per share 0,27 2,76 0,71 6,08
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30,2007 Sept 30, 2006
R$ R$ R$ R$
Dividends - 15,367 14,711 15,367
Undistributed earnings 34,680 14,657 57,782 50,940
Net income for the period 34,680 30,024 72,493 66,307
Weighted average number of shares 71,144,000 5,012,000 55,145,763 5,012,000
Earnings per share 0,49 5,99 1,31 13,23
10. PROPERTY, PLANT AND EQUIPMENT
September 30, 2007 December 31, 2006
Cost Depreciation Net value Cost Depreciation Net value
accumulated accumulated
US$ US$ US$ US$ US$ US$
Land and buildings 61,632 (15,813) 45,819 42,982 (9,492) 33,490
Floating craft 153,398 (65,982) 87,416 126,359 (58,065) 68,294
Vehicles, plant and equipment 91,838 (32,407) 59,431 86,742 (30,068) 56,674
Assets under construction 28,611 - 28,611 17,327 - 17,327
Total 335,479 (114,202) 221,277 273,410 (97,625) 175,785
September 30, 2007 December 31, 2006
Cost Depreciation Net value Cost Depreciation Net value
accumulated accumulated
R$ R$ R$ R$ R$ R$
Land and buildings 113,335 (29,079) 84,256 91,895 (20,294) 71,601
Floating craft 282,083 (121,334) 160,749 270,156 (124,143) 146,013
Vehicles, plant and equipment 168,881 (59,593) 109,288 185,454 (64,285) 121,169
Assets under construction 52,613 - 52,613 37,045 - 37,045
Total 616,912 (210,006) 406,906 584,550 (208,722) 375,828
Assets under construction and floating craft:
The decrease in assets under construction and consequent increase in the balance
of floating craft refers, mainly to construction conclusion of the Platform
Supplier Vessel ('PSV') by the Group shipyard in the second quarter of 2007.
Guarantees:
Lands and buildings with a book value of US$304 (R$559) (December 31, 2006:
US$294 (R$629)) and tugs with a book value of US$3,340 (R$6,142) (December 31,
2006: US$3,500 (R$7,484)), were given in guarantee of several law suits.
The Group has pledged assets at the carrying amount of approximately US$39.3
million, (approximately R$72.3 million) (December 31, 2006: approximately
US$40.6 million (approximately R$86.8 million), to secure loans granted to the
Group.
11. SUBSIDIARIES
Place of Proportion of Method used
incorporation ownership to record
and operation interest the investment
WILSON SONS DE ADMINISTRACAO E COMERCIO LTDA. Brazil 100% Consolidation
Holding company
SAVEIROS CAMUYRANO SERVICOS MARITIMOS S.A. Brazil 100% Consolidation
Tug operator
WILSON, SONS S.A. COMERCIO, INDUSTRIA, E AGENCIA DE NAVEGACAO Brazil 100% Consolidation
Shipyard
WILSON SONS AGENCIA MARITIMA LTDA. Brazil 100% Consolidation
Ship agents
SOBRARE-SERVEMAR S.A. Brazil 100% Consolidation
Tug operator
WILPORT OPERADORES PORTUARIOS LTDA. Brazil 100% Consolidation
Stevedoring
COMPANHIA DE NAVEGACAO DAS LAGOAS LTDA. Brazil 100% Consolidation
Tug operator
COMPANHIA DE NAVEGACAO DAS LAGOAS NORTE LTDA. Brazil 100% Consolidation
Tug operator
WILSON, SONS LOGISTICA LTDA. Brazil 100% Consolidation
Logistics
WILSON, SONS TERMINAIS DE CARGAS LTDA. Brazil 100% Consolidation
Transport services
EADI SANTO ANDRE TERMINAL DE CARGA LTDA. Brazil 100% Consolidation
Bonded warehousing
VIS LIMITED Guernsey 100% Consolidation
Holding company
TECON RIO GRANDE S.A. Brazil 100% Consolidation
Port terminal
TECON SALVADOR S.A. Brazil 90% Consolidation
Port terminal
BRASCO LOGISTICA OFFSHORE LTDA. Brazil 75% Consolidation
Port operator
40% of Brasco Logistica Offshore Ltda. was proportionally consolidated as a
joint venture, until it was acquired as a subsidiary in March of 2006 (see Note
19).
12. JOINT VENTURES
The following amounts are included in the Group's financial statements as a
result of proportionally consolidation of joint ventures.
Sept 30, 2007 Dec 31, 2006 Sept 30, 2007 Dec 31, 2006
US$ US$ R$ R$
Current assets 4,479 3,880 8,236 8,295
Non-current assets 6,426 5,226 11,817 11,173
Current liabilities (6,274) (4,023) (11,537) (8,601)
Non-current liabilities (1,353) (1,760) (2,488) (3,763)
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
US$ US$ US$ US$
Revenues 5,082 10,313 17,123 22,354
Expenses (5,755) (4,217) (17,607) (16,069)
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
R$ R$ R$ R$
Revenues 9,346 22,422 31,488 48,602
Expenses (10,583) (9,170) (32,378) (34,938)
The Group has the following interests in joint ventures:
Place of Proportion of Method used
incorporation ownership to record
and operation interest the investment
Consorcio de Rebocadores Baia de Sao Marcos Brazil 50% Proportional
Tug operator consolidation
Allink Transportes Internacionais Limitada Brazil 50% Proportional
Non-vessel operating common carrier consolidation
Consorcio de Rebocadores Barra de Coqueiros Brazil 50% Proportional
Tug operator consolidation
Dragaport Limitada Brazil 33% Proportional
Dredge operator consolidation
Dragaport Engenharia Brazil 33% Proportional
Dredge operator consolidation
On April 7, 2006 the Group disposed of its 50% of interests in WR Operadores
Portuarios, a stevedoring and port operator.
13. TRADE AND OTHER RECEIVABLES
Sept 30, 2007 Dec 31, 2006 Sept 30, 2007 Dec 31, 2006
US$ US$ R$ R$
Accounts receivable for services 43,523 28,614 80,035 61,177
rendered
Taxation recoverable 2,317 1,304 4,261 2,788
Prepayments and recoverable 27,995 23,827 51,480 50,942
taxes
Provision for doubtful (1,059) (933) (1,948) (1,995)
receivables
72,776 52,812 133,828 112,912
14. BANK OVERDRAFTS AND LOANS
Sept 30, 2007 Dec 31, 2006 Sept 30, 2007 Dec 31, 2006
Rate - % US$ US$ R$ R$
Bank overdrafts 1,432 809 2,633 1,730
Santander CDI + 0,16% p.m. 1,432 809 2,633 1,730
Bank loans 124,223 109,352 228,434 233,794
BNDES 1,5% to 6% p.y. 101,107 78,417 185,926 167,655
IFC 5,33% to 9,48% p.y. 23,116 30,935 42,508 66,139
125,655 110,161 231,067 235,524
The breakdown of bank overdrafts and loans by maturity is as follows:
Within one year 15,901 14,945 29,240 31,952
In the second year 14,730 14,216 27,088 30,394
In the third year to fifth years 30,890 32,170 56,803 68,779
inclusive
After five years 64,133 48,830 117,936 104,399
Total 125,654 110,161 231,067 235,524
Total current 15,901 14,945 29,240 31,952
Total non-current 109,753 95,216 201,827 203,572
The breakdown of bank overdrafts and loans by currency is as follows:
$Real $Real
linked to linked to
$Real US Dollars US Dollars Total $Real US Dollars US Dollars Total
September 30, 2007 US$ US$ US$ US$ R$ R$ R$ R$
Bank overdrafts 1,432 - - 1,432 2,633 - - 2,633
Bank loans - 101,107 23,116 124,223 - 185,926 42,508 228,434
Total 1,432 101,107 23,116 125,655 2,633 185,926 42,508 231,067
December 31, 2006
Bank overdrafts 809 - - 809 1,730 - - 1,730
Bank loans - 78,417 30,935 109,352 - 167,655 66,139 233,794
Total 809 78,417 30,935 110,161 1,730 167,655 66,139 235,524
In the third quarter of 2007, the Group obtained new loans from the BNDES for
financing the construction of new vessels (platform supplier vessels.
The other main characteristics of the Group's loans are as follows:
The principal on the loans in Reais linked to US Dollars are subject to exchange
variance on the changes in the US Dollar/Real exchange rate and bear interest
between 1.5% and 6.0% per year on the US Dollar amounts. These loans are to
finance the building of new tugs, platform supply vessels and the refurbishment
of dredges. They are guaranteed by mortgage on the assets financed. The amounts
outstanding at September 30, 2007 are repayable over periods varying up to 18
years.
The loans in US Dollars bear interest at rates between six-month LIBOR plus 3.5%
per year and six-month LIBOR plus 4.15% per year. The majority of these loans
are to fund the expansion of the container terminal at Tecon Rio Grande and have
no recourse to other companies in the Group. The amounts outstanding at
September 30, 2007 are repayable over periods varying up 8 years.
The fair value of debt is as follows:
Sept 30, 2007 Dec 31, 2006 Sept 30, 2007 Dec 31, 2006
US$ US$ R$ R$
Bank overdrafts 1,432 809 2,633 1,730
Bank loans 123,046 109,304 226,269 233,691
BNDES 101,107 78,417 185,926 167,655
IFC 21,939 30,887 40,343 66,036
Total 124,478 110,113 228,901 235,421
15. FINANCIAL INSTRUMENTS AND RISK ASSESSMENT
a) Foreign exchange risk management (Forwards and Swaps)
The Group engages in forward and swap operations to mitigate and manage the
exposure to change in foreign exchange rates of loan agreements denominated in
foreign currency (in US Dollars and in Reais linked to US Dollars).
Contracts are denominated in Reais at the notional value of US$676 (R$1,243)
(December 31, 2006: US$2,038 (R$4,293)).
The fair value of forward and swap operations at 30 September 2007 is US$51
(R$94) (December 31, 2006: US$782 (R$1,673)) reported under liabilities as
Derivative Financial Instruments. The results of transactions with derivatives
terminated in the reporting periods and still in force as of each period end is
reported under Finance Costs (Note 7).
b) Fair value of financial instruments
The Group's financial instruments are recorded in balance sheet accounts at
September 30, 2007 and December 31, 2006 at amounts compatible with those
practiced in the market at those dates. These instruments are managed though
operating strategies aimed to obtain liquidity, profitability and security. The
control policy consists of an ongoing monitoring of rates agreed versus those in
force in the market and confirmation as to whether its short-term financial
investments are being properly marked to market by the institutions dealing with
its funds.
The Group does not make speculative investments in derivatives or any other risk
assets.
The determination of estimated realization values of Company's financial assets
and liabilities relies on information available in the market and relevant
assessment methodologies. Nevertheless, a considerable judgment was required
when interpreting market data to derive the most adequate estimated realization
value. Eventually, the following estimates do not necessarily indicate the
amounts that can be realized in the present foreign exchange market.
c) Criteria, assumptions and limitations used when computing market values
Cash and cash equivalents
The market values of the bank current account balances are consistent with book
balances. The market value of short-term financial investments was calculated
based on market quotations.
Investments classified as 'available for sale'
The investment available for sale is in Barcas S.A. Transportes Maritimos. Such
company does not have any market quotation, and its fair value is calculated in
accordance with criteria and assumptions set by Group management.
Intercompany loans receivable/payable
Because of the lack of similar financial instruments in the present market, the
related amounts involved are shown at book balances.
Trade accounts receivable and others/Suppliers and other payables
In the Group management's view, the book balance of trade and other accounts
receivable and suppliers and other payables approximates fair value.
Investments
Market values of Group investments are identical to book balances, since they do
not have any market quotation.
Bank Overdrafts and Loans
Market values of loans arrangements were calculated at their present value
determined by future cash flows and at interest rates applicable to instruments
of similar nature, terms and risks or at market quotations of these securities.
Market value of BNDES/FINAME financing arrangements is identical to book
balances since there are no similar instruments, with comparable maturity dates
and interest rates.
As regards the loan arrangement with the IFC, fair value was obtained at the
rate of the latest loan arrangement using the Libor rate at September 30, 2007.
Derivatives
The Company engages in derivatives operations ('swaps' and 'forwards') to hedge
against the effects from changes in foreign currency-denominated exposure.
Market value is determined at quotations reported by the financial institutions
issuing the instruments.
d) Credit Risk
The Group's credit risk can be attributed mainly to balances such as cash and
cash equivalents, investments classified as 'trading' and trade accounts
receivable.
The accounts receivable in the balance sheet are shown net of the provision for
doubtful receivables. The valuation provision is established whenever a loss is
detected, which, based on past experience, evidences impaired possibility of
recovering cash flows.
The Group's sales policy is subordinated to the credit sales rules set by
Management, which seeks to mitigate any loss from customers' delinquency.
16. TRADE AND OTHER PAYABLES
Sept 30, 2007 Dec 31, 2006 Sept 30, 2007 Dec 31, 2006
US$ US$ R$ R$
Suppliers 53,589 39,785 98,545 85,060
Other taxes 7,896 6,723 14,519 14,373
Accruals and other payables 8,608 5,997 15,830 12,823
70,093 52,505 128,894 112,256
The Group has financial risk management policies in place to ensure that
payables are paid within the credit timeframe.
17. CONTINGENT LIABILITIES
The legal situation of the Group includes labor, civil and tax processes.
Management, based on the opinion of its external legal counsel, understands that
legal procedures in each situation are sufficient to preserve the equity of the
Group, there being no need to recognize loss provisions in addition to those
entered at September 30, 2007 in the amount of US$5,665 (R$10,417), (December
31, 2006: US$5,913 (R$12,640)). Additionally, there were no significant
modifications in the legal situation of the Group subsequent to that described
in the consolidated financial statements for the year ended December 31, 2006,
as well as in the Final Prospectus of the Public Offering for the Primary and
Secondary Distribution of Certificates of Deposit representative of Common
Shares of Wilson Sons Limited, both reported on April 26, 2007.
18. SHARE CAPITAL
Sept 30, 2007 Dec 31, 2006 Sept 30, 2007 Dec 31, 2006
US$ US$ R$ R$
Issued and fully paid
60,144,000 ordinary shares
of 8 1/3 p each 9,905 8,072 18,214 17,258
On February 2007, the Group performed a twelve for one share split increasing
the number of shares from 5,012,000 to 60,144,000 and more 11,000,000 shares, on
April 19, 2007, totalizing 71,144,000 shares.
19. ACQUISITION AND DISPOSAL OF SUBSIDIARY AND JOINT VENTURE
Acquisition of subsidiary
In March 2006, the Group acquired from third parties the outstanding 60%
shareholding of its 40% owned affiliated onshore base manager and logistics
business Brasco Logistica Offshore Ltda. The consideration paid was US$1,2
million (R$2,6 million). Immediately following this acquisition, the Group sold
an interest of 25% in this Company for US$0,5 million (R$1,1 million). The
surplus on acquisition of US$1,4 million (R$3,1 million) was recognized in the
income statement, Prior to this reorganization the Group's interest in the
acquired entity had been proportionately consolidated.
Disposal of joint venture
On April 7, 2006, the Group sold its 50% shareholding in WR Operadores
Portuarios for US$4,2 million (R$8,1 million).
20. NOTES TO THE CASH FLOW STATEMENT
Three-month period ending Nine-month period ending
Sept 30, 2007 Sept 30, 2006 Sept 30, 2007 Sept 30, 2006
US$ US$ R$ R$
Operating profit 53,285 44,915 97,986 97,654
Adjustments for:
Depreciation of property, plant and 13,186 11,770 24,248 25,590
equipment
Amortization of intangible assets 201 211 370 459
Income on disposal of property, plant and (507) 75 (932) 163
equipment
Gain on disposal of joint venture - (2,965) - (6,447)
Income on disposal of investment in - (1,433) - (3,116)
subsidiary
Increase (decrease) of provisions (248) (994) (456) (2,161)
Operating cash flow before changes in
working capital 65,917 51,579 121,216 112,142
Increase in inventories (5,123) 880 (9,421) 1,913
Increase in receivables (19,135) (3,678) (35,187) (7,997)
Increase in payables 16,674 8,766 30,661 19,059
Increase in other assets non-current (2,513) (2,010) (4,621) (4,370)
Cash generated by operations 55,820 55,537 102,648 120,747
Taxes paid (18,981) (13,663) (34,904) (29,706)
Interest paid (4,209) (4,466) (7,740) (9,710)
Net cash from operating activities 32,630 37,408 60,004 81,331
21. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Group and its associates are disclosed as
follows.
Current Non-current Current Non-current Revenues Expenses
assets assets liabilities liabilities
US$ US$ US$ US$ US$ US$
Associates:
Escritorio de Advocacia Gouvea - - - - - 21
Vieira
Joint ventures:
Allink Transportes - - - - 224 1
Internacionais Ltda.
Consorcio de Rebocadores Barra - - - 281 24 -
de Coqueiros
Consorcio de Rebocadores Baia - - - 2,997 1,463 4,444
de Sao Marcos
Dragaport Ltda - - - 26 300 -
Dragaport Engenharia Ltda - - - - - 426
Others
Porto Campinas Ltda. 6 566 - - - -
International Finance - - - 28,689 - 1,171
Corporation
Ocean Wilson Holding Limited - - - - - -
September 30, 2007 6 566 - 31,993 2,011 6,063
Three-month period ended - - - - 4,867 1,035
September 30, 2007
Year ended December 31, 2006 2,118 1,953
September 30, 2006 3,548 729
Three-month period ended 4,120 1,218 1,609 30,935 - -
September 30, 2006
Current Non-current Current Non-current Revenues Expenses
assets assets liabilities liabilities
R$ R$ R$ R$ R$ R$
Associates
Escritorio de Advocacia - - - - - 38
Gouvea Vieira
Joint ventures
Allink Transportes - 1 - - 411 1
Internacionais tda.
Consorcio de Rebocadores - - - 321 44
Barra de Coqueiros
Consorcio de Rebocadores Baia - - - 5,511 2,691 8,172
de Sao Marcos
Dragaport Ltda. - - - 48 552
Dragaport Engenharia Ltda. - - - - - 784
Others
Porto Campinas Ltda. 11 1,041 - - - -
International Finance - - - - - -
Corporation
Ocean Wilson Holding Limited - - - 52,757 - 2,153
September 30, 2007 11 1,042 - 58,637 3,698 11,148
Three-month period ended - - - - 10,534 2,241
September 30, 2007
Year ended December 31, 2006 3,894 3,591
September 30, 2006 7,679 1,577
Three-month period ended 8,809 2,604 3,440 66.139 - -
September 30, 2006
22. INITIAL PUBLIC OFFERING OF SHARES (IPO)
On June 1, 2007, Wilson Sons Limited and its controlling shareholder, Ocean
Wilsons Holdings Limited (the 'Company' and the 'Selling Shareholder',
respectively) concluded the Initial Public Offering consisting of a primary and
secondary offering of Brazilian Depositary Receipts (the 'BDRs'), representing
common shares issued by the Company in accordance with the regulations of the
Brazilian Securities Commission (the 'CVM') with sales effort to international
investors as defined by international regulations applied to such operation.
The Initial Public Offering has been duly approved by the Company and the
Selling Shareholder as per the respective corporate approvals dated April 9,
2007.
Each BDR represents one common share issued by the Company and/or held by the
Selling Shareholder. The BDRs have been issued by Banco Itau S.A., as
depositary. The Company has applied to list and trade its BDRs on the Sao
Paulo Stock Exchange (the 'Bovespa') under the type Patrocinado Nivel III and
under the symbol 'WSON11'.
The shares represented by the BDRs are deposited with The Bank of New York
(Luxembourg) S.A., as custodian and has been listed to trading on the EURO MTF
market, the exchange regulated market operated by the Luxembourg Stock Exchange.
Under the primary offering 11.000.000 BDRs issued by the Company have been
traded under the offering price of US$11.74/BDR (R$23,77/BDR). The net amount
received by the Company with regard the primary offering was approximately
US$122,289 (R$251,011).
23. SUMMARY OF DIFFERENCES BETWEEN INTERNATIONAL ACCOUNTING STANDARD No, 34
(IAS 34), INTERIM FINANCIAL REPORTING, AND ACCOUNTING PRACTICES ADOPTED IN
BRAZIL ('BR GAAP')
The consolidated financial statements were prepared in accordance with
International Accounting Standard No. 34, Interim Financial Reporting, ('IFRS'),
which differs significantly from accounting practices adopted in Brazil:
a) Reconciliation of differences between net equity reported under IFRS and
net equity reported under BR GAAP:
Sept 30, 2007 Dec 31, 2006
R$ R$
Equity reported under IFRS 560,603 310,011
Adjustments for differences between the accounting practices:
Update of available investment for sale (8,121) (8,121)
Reversal of negative goodwill (4,475) (4,475)
Accumulated amortization of goodwill (3,875) (1,615)
Financial lease:
Fixed assets:
Costs (24,227) (21,067)
Accumulated depreciation 10,803 7,944
Liabilities of lease 4,301 3,642
Capitalized financial result:
Fixed assets
Cost 20,838 24,655
Accumulated amortization (8,001) (5,873)
Conversion effects 130,565 84,372
Others (366) (7,508)
Deferred income tax and social contribution on the (39,930) (30,546)
amounts of the differences
Equity reported under BR GAAP 638,115 351,419
b) Reconciliation of differences between net income reported under IFRS
and net income reported under BR GAAP:
Accumulated
Sept 30, 2007 Sept 30, 2006
R$ R$
Net income reported under IFRS 74,358 67,457
Adjustments for differences between the accounting
practices:
Goodwill amortization (2,683) -
Financial lease 175 (3,029)
Capitalized interest and exchange variation (5,779) (1,541)
Conversion and exchange rate effects 10,641 (6,548)
Cost of subscription to capital - IPO (6,128) -
Others 717 298
Deferred income tax and social contribution (1,039) 3,678
Net income reported under BR GAAP 72,340 60,317
24. SUBSEQUENT EVENTS
On October 1, 2007, with the objective of simplifying the Group's organizational
structure, Companhia de Navegacao das Lagoas and Companhia de Navegacao
das Lagoas do Norte, subsidiaries of Wilson Sons Limited, were merged into
Saveiros, Camuyrano Servicos Maritimos S/A, also a subsidiary of Wilson Sons
Limited.
This merger does not alter the shareholding in Saveiros, Camuyrano Servicos
Maritimos S/A and will not affect any shareholder rights or the rights of
bearers of Brazilian Depositary Receipts in Wilson Sons Limited.
On October 19, 2007, a memorandum of understanding was signed with Great Lakes
Dredge & Dock Company, LLC for the disposal of the dredges which are fixed
assets of Dragaport Ltda., a Company in which the Company has a shareholding of
33.33%. This transaction is expected to be concluded before the end of 2007 and
is intended to meet the strategic objective of optimizing the operations of the
Group.
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