Interim Results

RNS Number : 1315B

Ocean Wilsons Holdings Ld

12 August 2008

 



Ocean Wilsons Holdings Limited

Preliminary Announcement

Chairman's Interim Statement

Ocean Wilsons Holdings Limited is the majority shareholder in Wilson Sons Limited 'Wilson Sons' and holds a portfolio of international investments. Wilson Sons is listed on the Luxembourg and Brazilian Stock Exchanges and is one of Brazil's largest providers of integrated port and maritime logistics and supply chain solutions.

Results  

Ocean Wilsons Holdings Limited has produced another strong financial and operational performance. Group revenue for the six months ended 30 June 2008 was up 36% at US$ 248.4 million (2007: US$ 182.7 million) driven by increases in our core businesses and the expansion of our vessel construction business

Group operating profit increased US$ 21.2million to US$40.4 million (2007: US$ 19.2 million) due principally to the strong growth in revenue, improved operating margins in towage port operations and offshore as well as lower share based payment expense, US$ 1.8 million (2007:US$ 7.8 million). Operating margins were positively impacted by favourable pricing, lower tug rentals, reversal in the provisions for doubtful debts (US$ 1.9 million) and fiscal credits (US $3.7 million). The lower share based payment expense in 2008 is principally due to a fall in the Wilson Sons share price and the 2007 charge includes additional retrospective accruals that crystallised on the implementation of the Ocean Wilsons Holdings Limited scheme. 

Investment revenues in the period increased by US$ 5.7 million to US$ 15.9 million (2007: US$ 10.2 million), principally due to higher interest receipts from bank deposits and exchange gains on cash and cash equivalents. The higher interest receipts resulted from higher average cash balances during the period compared with 2007.

Other losses of US$ 0.2 million (2007: US$ 9.9 million gain) arose from the Group's portfolio of trading investments and comprise decreases in the fair value of trading investments held at period end and profits on the disposal of trading investments. 

Finance costs for the period increased US$ 1.1 million to US$ 3.9 million (2007: US$ 2.8 million) principally due to increased interest on bank overdrafts and loans and higher other interest charges.

Profit before tax fell US$ 198.1 million to US$ 52.1 million (2007: US$ 250.3 million) as the 2007 results included the profit on the sale of minority interest of US$ 213.7 million from the IPO of Wilson Sons Limited. Removing the Wilson Sons IPO profit from the 2007 result, the comparative profit before tax for 2007 would be US$ 36.6 million.

The lower Profit before tax is reflected in lower earnings per share based on ordinary activities after taxation and minority interests of 63.5 cents (2007: 669.5 cents).

Wilson Sons Limited Initial Public Offer (IPO)

On the 30 April 2007, Ocean Wilsons Holdings Limited, ('Ocean Wilsons or the Company') successfully floated Wilson Sons, the holding company of its Brazilian business, on the Sao Paulo Stock Exchange and the Luxembourg Stock Exchange. The flotation involved the sale of 18.7 million shares by Ocean Wilsons, resulting in net proceeds to the Company of approximately US$205.6 million, and the issue of 11 million new shares by Wilson Sons, raising approximately US$119.1 million for Wilson Sons. 

Following the flotation, Ocean Wilsons retained a 58.25% holding in Wilson Sons. The Company continues to fully consolidate Wilson Sons in its accounts with a 41.75% minority interest. At the close of business on the 8th August the Wilson Sons share price was Real 18.50 resulting in a market value for the Ocean Wilsons holding of 41,444,000 shares in Wilson Sons of approximately US$ 476 million which is equivalent to US$ 13.47 per Ocean Wilsons share.

Exchange rates

In the six months to 30 June 2008 the Real appreciated 10.1% against the US Dollar from 1.77 at 1 January 2008 to 1.59 at the period end. The appreciation of the Real against the US Dollar generated a net exchange gain of US$ 6.5 million (US$3.9 million) on the Group's Real-denominated cash balances in the period. The appreciation of the Real also had an adverse affect on our Real denominated costs when converted into US Dollars which effects operating margins.

Dividend

The Board has declared an interim dividend of 4.0 cents per share (2007: 4.0 cents per share) to be paid on 26 September 2008 to shareholders on the register at close of business on 29 August 2008. 

Dividend Policy

Dividends are set in US Dollars and paid twice yearly. Shareholders receive dividends in Sterling by reference to the exchange rate applicable to the US Dollar on the dividend record date, except for those shareholders that elect to receive dividends in US Dollars.

The Company's target dividend payout in respect of each financial year is to pay the Company's full dividend received from Wilson Sons in the period plus a percentage of the average capital employed in the investment portfolio including cash under management to be determined annually by the Board. 

Your Board of Directors may review and amend the dividend policy from time to time in light of our future plans and other factors. The payment of dividends cannot be guaranteed and may be discontinued or varied at the discretion of the Board.

Cash flow and debt 

Net cash inflow from operating activities was US$ 22.0 million in the first six months of 2008 compared with US$ 18.7 million in the same period last year. The higher operating profit in the period of US$ 40.4 million (2007: US$ 19.2 million) was partially offset by adverse working capital movements and a decrease in non-cash expenses. (Share based payment expense, US$ 1.8 million, 2007: US$ 7.8 million).

Capital expenditure in the period amounted to US$36.4 million (2007: US$ 27.2 million). The major elements were the expansion of Tecon Rio Grande, equipment for Tecon Salvador, the towage fleet renewal program and offshore vessel construction. 

The Group's fourth Platform Supply Vessel (PSV), Pelicano was launched in May 2008.

Net cash outflow during the period was US$4.6 million (2007: US$321.6 million inflow). The large inflow in 2007 was principally due to the disposal of the minority interest in Wilson Sons, (US$ 324.7 million inflow).  

Group borrowings increased US$ 12.0 million at 30 June 2008 to US$161.5 million. Additional funds were released by the BNDES and IFC, to finance vessel construction and equipment for Tecon Salvador. During the period the Group made capital repayments on existing loans in accordance with repayment schedules of US$ 7.2 million

At 30 June 2008 the Company and its subsidiaries had US$229.5 million in cash and cash equivalents (31 December 2007: US$227.6 million). In addition at the balance sheet date the investment portfolio included US$120.1 million in liquidity funds.

Balance sheet 

At 30 June 2008, the Company's consolidated net assets (excluding minority interests) amounted to US$ 495.2 million (31 December 2007: US$ 478.8 million). This is the equivalent of US$ 14.00 per share (31 December 2007: US$ 13.54). Of this, trading investments of US$ 269.0 million equates to US$7.61 per share. Minority interests increased US$10.2 million to US$ 144.5 million at period end. 

At 30 June 2008 the investment portfolio including cash under management amounted to US$272 million. This is the equivalent of US$ 7.70 per share.

Wilson Sons Limited operating review

We have summarised the following highlights from the Wilson Sons 2nd quarter 2008 earnings results released on 11 August 2008. The full report is available on the Wilson Sons Limited website: www.wilsonsons.com:

Strong Earnings performance 

For the six months to 30 June 2008 Wilson Sons reported strong earnings results across its leading business segments. Consolidated revenues grew by 36% and EBITDA (Earnings before interest, tax, depreciation and amortisation) reached US$ 52.6 million, a 49% increase over the same period in 2007. Our overall positive performance supports our optimistic view of Wilson Sons' integrated business model, despite the challenging environment of a weakening US Dollar, (the 'Real', has appreciated 16% against the US Dollar since 30 June 2007), and rising inflation.  

A positive outlook going forward

Wilson, Sons is determined to take advantage of its main growth drivers. The combination of financial health and opportunities arising from increased trade flows, stable macroeconomic fundamentals in Brazil and a booming oil and gas industry, position us to grow while taking advantage of our IPO proceeds and available funding opportunities. 

Going forward, we intend to expand our shipyard, which will allow us to take advantage of opportunities in the offshore oil and gas and towage industries. The expanded shipyard will provide additional capacity to build new offshore support vessels, compete in the new Petrobras public tenders, and explore opportunities arising in the spot market for oil supply vessels (OSVs). We intend to deliver at least one new tugboat and one platform supply vessel (PSV) by the end of the year.  

As part of our tugboat fleet renewal programme, we intend to build more powerful tugboats to attend higher deadweight vessels and improve margins, and offer alternative solutions for the support of oil platform offloading activities. 

We are set to expand our container terminal capacity and continue to assess new terminal projects, both domestically and within South America. Our logistics business is seeking to broaden its portfolio of clients and to improve margins and accelerate growth.

Port Terminals

Our port terminals business includes two container terminals in Brazil (Tecon Rio Grande and Tecon Salvador), offering assistance in port operations for loading and unloading of vessels, storage, and auxiliary services. We also operate Brasco, a terminal in Rio de Janeiro which provides support services for the oil and gas industry. 

Revenue 

Revenue increased 24% compared to 2007 to US$44.8 million, benefiting from a recovery in tariffs, increased warehousing activity and improved sales mix. The positive impact from the type of container traffic handled in the period (full deep sea) compensated for the lower volumes handled. Warehousing-related services generated higher revenues, due to increased imports in the period and delayed cargo clearance from the terminals due to industrial action by the Customs and Excise officers. Growth in cabotage services positively impacted results.

EBITDA 

Although Brazilian exports in the period were adversely affected by the weakening US Dollar, volumes of full containers handled were in line with 2007. The reduction in total container volumes handled was attributable to a fall in lower margin empty container movements. EBITDA for the period at US$28.4 million also benefited from the increased revenue and fiscal credits.

Outlook going forward

Capacity at Tecon Rio Grande will increase by 60% in the second half of 2008. All necessary equipment is in place and ready to start operations, including gantry cranes and RTGs (rubber tire gantry). The challenge we now face is to implement our strategy to expand capacity at our Salvador terminal and to improve our equipment and infrastructure, so as to take advantage of market growth prospects in the northeastern region of the country.

Towage

Wilson Sons offers harbour towage, ocean towage, salvage support and maritime support to the offshore oil and gas industry.

Revenue

Net revenues improved 19% to US$77.0 million in the period, mainly due to higher tariffs, a better sales mix in harbour towage, higher average deadweight of vessels attended and an increase in the number of special operations (Offshore support, salvage and ocean towage).

EBITDA 

The combination of a successfully implemented pricing strategy and increase in higher margin business (special operations) positively impacted margins in the period. EBITDA rose 30% to US$ 27.4 million in 2008 from US$ 21.0 million in 2007. We recovered US$900,000 of doubtful debts in the period and fiscal credits of US$ 1.6 million also contributed to the improvement in margins. 

Removing the effects of the contingency provisions and fiscal credit, EBITDA would have been US$ 24.9 million, 19% higher than the comparable 2007 figure.

Outlook going forward

We intend to continue to take advantage of the premium prices available in the offshore oil & gas spot market, using the tug-boats Volans and Aquarius. 

Logistics

We provide solutions for our customers' supply chain and product distribution, including general services in storage, bonded warehousing, distribution systems, road & multimodal transportation, and Non Vessel Operating Common Carrier ('NVOCC').

Revenues

Revenues increased 52% to US$ 44.6 million in the period principally due to the appreciation of the Real against the US Dollar, new operations and increased revenue from EADI Santo André (our bonded terminal). As the majority of Logistics revenue is Real denominated, any appreciation of the Real against the US Dollar increases revenue in US Dollar terms. Our bonded terminal in Santo André (EADI) contributed through higher import and storage volumes.

EBITDA 

EBITDA at US$2.8 million was in line with 2007.

Outlook going forward

New and strategic operations are beginning in the second semester of 2008. We anticipate improved margins and profitability, in the near to medium term as new businesses mature.

Shipping Agency

Wilson Sons acts as the ship-owners representative as well as providing ship agency, commercial representation, cargo documentation and container control for ship-owners 

Revenues 

Revenue at US$9.9 million was in line with the same period in 2007. A 10% increase in the number of vessels calls attended by the ship agency division was offset by a decrease in the number of containers controlled.

To reduce our exposure to foreign exchange rate movements, we further aligned revenue with costs during the period by repricing some agency fees in Real that were previously denominated in US Dollars. The Group also increased Bill of Lading fees in the period.

EBITDA 

The weakening US Dollar and higher personnel costs from collective labour agreements adversely impacted margins in the period. EBITDA at US$1.8 million was 47% lower than the first half 2007. 

Outlook going forward

The shipping agency segment faces a challenging business environment. However, we believe that our nationwide presence, combined with longstanding expertise in operating with both liner and tramp vessels, will contribute to broadening our portfolio of clients, while focusing on efforts to rebuild margins.

Offshore

Wilson Sons operates platform supply vessels (PSVs), to transport equipment and supplies to and from offshore oil and gas installations.

Revenues 

Net revenue reached US$ 7.6 million in the period helped principally by improved tariffs, the positive impact from a weakening US Dollar and the start of operations of our fourth PSV, Pelicano in mid-May. The Pelicano is delivering premium daily rates by operating on a renewable spot contract, in place since May. 

EBITDA 

EBITDA at US$ 3.2million (2007: US$ 1.7 million) benefited from the improved tariffs and the early delivery to market of the PSV Pelicano. 

Outlook going forward

Our fifth PSV, the Atobá, is expected to be operational by September 2008 and we expect to deliver a further two PSVs by 2010. The expansion plan at our shipyard in Guaruja allows the Group to compete for additional contracts, including new Petrobras bids for PSVs and AHTSs (anchor handlers). 

Non-segmented activities

Non-segmented activities include shipyard and our joint venture dredging company Dragaport and unallocated corporate costs 

Revenues 

In late 2007, we initiated construction of four new PSVs for third parties at our shipyard, under a US$ 100.0 million contract. Net revenues from our non-segmented activities in the period were derived solely from shipyard operations, and amounted to US$ 26.7 million. 

EBITDA 

US$ 2.4 million in profit recognized in the period consisted of profits on completed PSVs and partially completed PSVs. 

Outlook going forward

Our shipyard is a strategic asset to the Company and plays an important role in the growth of our integrated businesses. The expansion of our shipyard will allow the Company's to expand its level of activity. 

Investment Portfolio

Hanseatic Asset Management LBG that manages the Groups investment portfolio reports at the period end as follows:

Market Background

'The world's share markets suffered sharp declines during the first half of 2008. In US dollar terms the MSCI World Index fell by 10.6% and the MSCI Emerging Market Index by 12.7%. In particular there were dramatic declines in the major emerging markets of Asia with the Sensex index of Indian equities falling by 39% and the Shanghai A share index for China falling by 45%. Of the developed markets Continental Europe was particularly weak with the CAC index in France declining by 14.8% and the DAX index in Germany declining by 14.2%. of the major markets Japan proved the most defensive declining by a relatively modest 5.5% as measured by MSCI Japan.

In the currency markets there was further weakness in the US dollar which declined by 7.3% against the Euro, 5% against the Yen and 10.3% against the Brazilian Real. Ten year bond yields for US treasuries declined during the first quarter from 3.5% to 2.5% but retraced that decline during the second quarter. Yields on 10 year Euro bonds also declined in the first quarter but then rose to 4.6% having started the year at 4.2%.

In the commodity complex the exponential rise in energy prices continued with a barrel of West Texas Intermediate rising by 45.6%, the copper price rose by a further 31% and an ounce of gold increased by 10.9%. In the agricultural sector there were some sharp increases with the futures price for corn rising by 51.5%, soybean by 27.5% and rice by 36%.

Two themes dominated the market background during the first half of the year - the escalating credit crisis and its impact on the financial system and the seemingly relentless rise in the oil price.

The year started with announcements of massive write downs from Citigroup ($18.0bn) and UBS ($18.4bn) as a result of sub prime losses. Both institutions announced further large write downs in the period and the headlines were dominated by rumours of troubled institutions and forced bailouts such as Bear Stearns' rescue by JP Morgan with the support of the US Federal Reserve. Banks sought to shore up battered balance sheets with injections of capital through rights issues. In April the IMF predicted that the scale of global write downs could reach US$950bn. The Federal Reserve reacted to this deteriorating background with a series of aggressive cuts in the Federal Funds rate. Consumer confidence plummeted, undermined by falling property prices as real estate values reflected the crisis in credit.

On its own the 'credit crisis' would have been bad enough for equity markets to digest but to complete what commentators have referred to as a 'perfect storm' for financial markets, oil prices continued to confound expectations and move relentlessly to record highs. A combination of moribund credit (stagnation) and out of control input costs (inflation) creates a toxic background for investment termed 'stagflation'. Both the credit crisis and record oil prices can be seen as direct consequences of excessively accommodative monetary policy since the turn of the century. Energy demand has been a leveraged function of GDP growth in countries like China and India and domestic subsidy policies have reduced price sensitivity. Ultimately demand will be constrained implying recession like conditions in developed economies and significantly lower growth in developing ones.

Performance

Against such a negative market background it is relatively reassuring to report that the investment portfolio declined in value by only 0.26% after deduction of expenses. In part the decision to hold back a substantial portion of liquid reserves from deployment helped to prevent capital losses. However the invested portfolio performed relatively well, only declining by 2.1% as opposed to a decline of 10.6% for the MSCI World and 12.7% for the MSCI Emerging Market Index.  

The top performing investments were the Harbinger Capital Partners Special Situations Fund LP (+25.1%), Gazprom ADR (+21.1%), UFG Russia Select (+15.5%) and Lansdowne UK Equity (+15.3%). The Harbinger Fund benefited from long positions in iron-ore mining, power generation and steel production. Performance on the short side has been through positions related to the fallout following the sub-prime crisis, including shorts on mortgage and monoline insurers. Both Gazprom and UFG benefited from favourable energy prices and the improving prospects for the Russian economy. The Lansdowne UK Equity Fund has been very successful in pursuing a strategy of having long exposure to natural resources and short exposure to the financial sector.  

The worst performing area of the portfolio occurred in Asia. Historically the portfolio has had an overweight exposure here owing to the favourable long term growth prospects for the region. However a combination of higher risk aversion and worries over rising fuel and food costs generated particularly severe setbacks in several of the Asian markets.

Overall, a combination of broad diversification and added value at the individual security selection level generated good relative performance.

Portfolio Activity

At the beginning of the year the portfolio had cash of $167.7m available for investment. During the period approximately $46m of this cash was deployed. Of this approximately $30m were new investments (as opposed to additions to existing holdings). At the end of June 2008 cash represented 45% of total assets, equities represented 40% with 10% in alternative assets and 5% in fixed income.

Amongst the significant new positions was Harbinger Capital Partners Special Situations Fund LP which pursues superior absolute returns through investments in a variety of instruments including distressed and high yield debt, credit default swaps and control equity stakes in special situations. Harbinger takes long and short positions. Neptune Russia Fund invests in liquid Russian equities.  Russia is clearly a major beneficiary of very high world prices for energy, industrial metals, timber, fertilisers, grains and precious metals. The domestic economy is booming, appears immune to the credit crisis unfolding internationally and equity ratings are generally attractive. Riverstone/Carlyle Global Energy and Power Fund IV, LP is a limited partnership with a ten year life making investments in exploration and production, midstream, oilfield services and power generation and transmission globally. EFG Hermes Middle East and Developing Africa Fund and BlackRock Middle East and North Africa Opportunities are both vehicles offering exposure to the burgeoning economic opportunities in the MENA region. The increasing adoption of secular, market based principles in addressing the economies of this region together with massive budget surpluses accruing from high energy prices has created investment opportunities in a broad range of sectors.

Other new investments during the period included American Depositary Receipts in Gazprom, Russia's leading energy company. An initial position was established in Atlantis China with a view to adding during the correction underway in the Chinese market. Contrarian buying into weakness was also the thinking behind investments in Aberforth Smaller Companies and Jupiter Financial Opportunities. 

As well as these new investments in the portfolio there were a number of additions to existing holdings in order to scale up their unit size in relation to the enlarged portfolio. These included BlackRock World Mining Trust, BlackRock Agriculture, Investec Global Energy, Jupiter European Opportunities and Finsbury Income & Growth Trust.  

Investment Outlook

Since the end of the reporting period the US Administration has announced a series of measures to safeguard the operations of Fannie Mae and Freddie Mac, the key mortgage institutions in the US. This commitment to stand by these major financial institutions, despite the scale of losses and write downs of value that has occurred has put, at least for now, some kind of floor under the crisis of confidence in the financial sector. The severity and duration of the 'credit crisis' has exceeded most commentators expectations and there may now be a period of respite. Any return to 'normality' in the banking system combined with any setbacks that may occur in oil prices as demand declines would be very welcome by equity markets. In particular some of the more severely depressed bourses in Asia may rally from oversold levels.  

Beyond this however the managers are cautious in their outlook for investment returns. The impact in the real economy of the contraction in credit together with higher input costs that has already occurred is likely to constrain growth for some time to come. Furthermore room for manoeuvre on the policy front appears extremely limited. Any further loosening of monetary policy is likely to be self defeating and cause oil and the other commodities to set new highs to offset excessive paper money creation. Recession cannot be postponed indefinitely and with property prices declining in the developed world consumer confidence is likely to remain fragile for some time to come.

The emerging markets will not remain unscathed in this difficult period for the world economy. Some, such as the energy producers like Russia and the Middle Eastern countries, will continue to benefit from the wealth transfer that is occurring between energy producers and energy consumers. Cost pressures are likely to be present everywhere and those markets with manufacturing bases that export to Western consumers will inevitably experience a reduction in demand. However the major themes which have driven growth in emerging markets - urbanisation, a backlog of infrastructure spending, favourable demographics, competitive labour costs and the need to diversify economically into value added goods and services - remain in place. They underpin the long term case for investment in emerging markets.  

It will take time for recent economic shocks to be absorbed and for imbalances in the world economy to be corrected. A period of slower economic activity seems inevitable. Such a period will however generate many opportunities to invest on terms more favourable to investors than have been the case in recent times. Ocean Wilsons Holdings Limited is well placed with ample cash at its disposal to exploit such opportunities and generate good returns in the medium term.'  

Responsibility statement

The Directors confirm that to the best of our knowledge:

(a)    the condensed set of financial statements has been prepared in accordance with IAS 34;

(b)   the interim management report includes a fair review of the information required by DTR 4.2.7R; and

(c)    the interim management report includes a fair review of the information required by DTR 4.2.8R

By order of the Board

Jose Francisco Gouvea Vieira

11 August 2008

This report contains certain forward looking statements with respect of the financial condition and results of Ocean Wilsons Holdings Limited. These should be treated with caution due to the inherent uncertainties, including both economic and business risk factors. Nothing in this statement should be construed as a profit forecast.

Investment Portfolio Information at 30 June 2008 - top 20 holdings:

	Value in USD	% NAV
Goldmans Sachs plc USD liquid reserves fund	41,900,976	15.4
Morgan Stanley Funds plc USD liquidity fund	41,711876	15.3
Lehman Brothers Liquidity Fund plc USD	36,477,784	13.4
BlackRock World Mining Trust	12,758,105	4.7
Lansdowne UK Equity Fund	10,748,098	4.0
Harbinger Capital Partners Special Situations Offs	6,256,379	2.3
Lansdowne European Equity Fund	6,020,550	2.2
Jupiter European Opportunities Trust PLC	5,955,332	2.2
Investec Global Strategy Fund Ltd - Global Energy	5,819,189	2.1
BlackRock Agricultural Fund Class 1 (US) Acc Shares	5,532923	2.0
Neptune Russia and Greater Russia Fund Class B acc	5,265,848	1.9
Ashmore Local Currency Debt Portfolio Incentive	4,845,925	1.8
R/C Global Energy and Power Fund IV, LP commitment	4,774,241	1.8
SR Global Fund Class G Emerging Markets	4,491,550	1.7
Findlay Park American Smaller Companies	4,471,283	1.6
JO Hambro Japan Fund	4,239,482	1.6
BlueBay European Credit Opportunity Fund	4,068,711	1.5
Finsbury Growth & Income Trust PLC	3,884,825	1.4
Ashmore Global Special Situations Fund	3,500,000	1.3
Orbis Sicav - Japan Equity	3,461,288	1.3
TOTAL TOP 20 holdings	216,154,364	79.4

The top ten contributors to the investment portfolio were:

Holding	% Contribution
BlackRock World Mining Trust	0.68
Lansdowne UK Equity Fund	0.53
Investec Global Strategy Fund Ltd	0.47
Harbinger Capital Partners Special Situations	0.47
Goldmans Sachs plc USD liquid reserves fund	0.27
Morgan Stanley Funds plc USD liquidity fund	0.26
Lehman Brothers Liquidity Fund plc USD	0.23
Lansdowne European Equity Fund	0.16
Gazsprom ADR	0.16
BlackRock Agricultural Fund Class 1 (US) Acc Shares	0.14
TOTAL	3.26

Ocean Wilsons Holdings Limited Condensed consolidated income statement for the six months ended 30 June 2008
				Unaudited		Unaudited		Audited
				six months to		six months to		Year to
				30 June		30 June		31 December
				2008		2007		2007
		Notes		US$'000		US$'000		US$'000
Revenue		3		248,443		182,671		404,046
Raw materials and consumables used				(43,901)		(22,459)		(40,464)
Employee benefits expense		5		(70,027)		(58,667)		(126,067)
Depreciation & amortisation expense				(10,636)		(8,288)		(19,066)
Other operating expenses				(83,697)		(74,544)		(164,760)
Profit on disposal of property plant and equipment				241		534		4,819
Operating profit				40,423		19,247		58,508
Investment revenue		3, 6		15,892		10,221		27,101
Other gains and losses		7		(219)		9,946		11,700
Finance costs		8		(3,951)		(2,814)		(7,566)
Profit on sale of minority interest		16		-		213,667		213,667
Profit before tax				52,145		250,267		303,410
Income tax expense		9		(13,350)		(10,167)		(25,723)
Profit for the year				38,795		240,100		277,687
Attributable to:
Equity holders of parent				22,473		236,760		258,065
Minority interests				16,322		3,340		19,622
				38,795		240,100		277,687
Earnings per share
Basic and diluted		11		63.5c		669.5c		729.8

Ocean Wilsons Holdings Limited
Condensed consolidated balance sheet
as at 30 June 2008
				Unaudited		Unaudited		Audited
				as at		as at		as at
				30 June		30 June		31 December
				2008		2007		2007
				US$'000		US$'000		US$'000
	Non-current assets
		Goodwill		13,132		13,132		13,132
		Other intangible assets		2,096		2,080		2,042
		Property, plant and equipment	12	281,899		197,200		252,113
		Deferred tax assets		19,255		10,392		12,713
		Available for sale investment	13	-		5,934		-
		Other non-current assets		13,153		9,714		11,121
				329,535		238,452		291,121
	Current assets
		Available for sale investment	13	7,204		-		6,466
		Inventories		9,308		9,126		7,379
		Trading investments	13	268,969		88,543		272,834
		Trade and other receivables	14	84,910		68,731		69,301
		Cash and cash equivalents		229,514		388,067		227,641
				599,905		554,467		583,621
	Total assets			929,440		792,919		874,742
	Current liabilities
		Trade and other payables		(95,750)		(75,420)		(85,625)
		Current tax liabilities		(2,367)		(1,502)		(766)
		Obligations under finance leases		(1,553)		(680)		(869)
		Bank overdrafts and loans	15	(15,631)		(16,069)		(14,720)
		Derivative financial instruments		-		(529)		-
				(115,301)		(94,200)		(101,980)
	Net current assets			484,604		460,267		481,641
	Non-current liabilities
		Bank loans	15	(145,982)		(108,788)		(134,744)
		Deferred tax liabilities		(11,893)		(8,571)		(11,035)
		Provisions		(11,884)		(5,808)		(12,484)
		Obligations under finance leases		(4,716)		(1,093)		(1,441)
				(174,475)		(124,260)		(159,704)
	Total liabilities			(289,776)		(218,460)		(261,684)
	Net assets			639,664		574,459		613,058
	Capital and reserves
		Share capital		11,390		11,390		11,390
		Retained earnings		426,841		402,992		419,080
		Capital reserves		31,760		25,973		29,779
		Investment revaluation reserve		2,827		2,969		2,341
		Translation reserve		22,356		13,161		16,217
	Equity attributable to equity holders of the parent			495,174		456,485		478,807
	Minority interests			144,490		117,974		134,251
	Total equity			639,664		574,459		613,058

Ocean Wilsons Holdings Limited

Condensed statement of changes in Equity

as at 30 June 2008

									Attributable
						Investment			to equity
		Share	Retained		Capital	Revaluation	Translation		holders of	Minority	Total
		capital	earnings		reserves	Reserve	reserve		the parent	interests	equity
For the six months ended 30 June 2007		US$'000	US$'000		US$'000	US$'000	US$'000		US$'000	US$'000	US$'000
Balance at 1 January 2007		11,390	173,305		25,973	2,381	8,762		221,811	3,830	225,641
Gains on available for sale investment		-	-		-	588	-		588	-	588
Currency translation adjustment		-	-		-	-	4,399		4,399	(217)	4,182
Profit for the period		-	236,760		-	-	-		236,760	3,340	240,100
Total income and expense for the period			236,760			588	4,399		241,747	3,123	244,870
Dividends		-	(7,073)		-	-	-		(7,073)	-	(7,073)
Sale of minority interest		-	-		-	-	-		-	111,021	111,021
-alance at 30 June 2007		11,390	402,992		25,973	2,969	13,161		456,485	117,974	574,459
									Attributable
						Investment			to equity
		Share	Retained		Capital	Revaluation	Translation		holders of	Minority	Total
		capital	earnings		reserves	Reserve	reserve		the parent	interests	equity
For the year ended 31 December 2007		US$'000	US$'000		US$'000	US$'000	US$'000		US$'000	US$'000	US$'000
Balance at 1 January 2007		11,390	173,305		25,973	2,381	8,762		221,811	3,830	225,641
Gains on available for sale investment		-	-		-	(40)	-		(40)	-	(40)
Currency translation adjustment		-	-		-	-	7,455		7,455	655	8,110
Profit for the period		-	258,065		-	-	-		258,065	19,622	277,687
Total income and expense for the period		-	258,065		-	(40)	7,455		265,480	20,277	285,757
Dividends		-	(8,484)		-	-	-		(8,484)	(877)	(9,361)
Acquisition of minority interest		-			-	-	-		-	111,021	111,021
Transfer to capital reserves		-	(3,806)		3,806	-	-		-	-	-
Balance at 31 December 2007		11,390	419,080		29,779	2,341	16,217		478,807	134,251	613,058
									Attributable
						Investment			to equity
		Share	Retained		Capital	revaluation	Translation		holders of	Minority	Total
		capital	earnings		reserves	reserve	reserve		the parent	interests	equity
For the six months ended 30 June 2008		US$'000	US$'000		US$'000	US$'000	US$'000		US$'000	US$'000	US$'000
Balance at 31 December 2007		11,390	419,080		29,779	2,341	16,217		478,807	134,251	613,058
Gains on available for sale investment		-	-		-	486	-		486	-	486
Currency translation adjustment		-	-		-	-	6,139		6,139	599	6,738
Profit for the period		-	22,473		-	-	-		22,473	16,322	38,795
Total income and expense for the period		-	22,473		-	486	6,139		29,098	16,921	46,019
Dividends		-	(12,731)		-	-	-		(12,731)	(6,682)	(19,413)
Transfer to capital reserves		-	(1,981)		1,981	-	-		-	-	-
Balance at 30 June 2008		11,390	426,841		31,760	2,827	22,356		495,174	144,490	639,664

Share capital

The Group has one class of ordinary share which carries no right to fixed income.

Capital reserves

The capital reserves arise principally from transfers from revenue to capital reserves made in the Brazilian subsidiaries arising in the following circumstances

(a) profits of the Brazilian holding company which are required by law to be transferred to capital reserves and other profits not available for distribution; and

(b) the accumulated profits of the Brazilian subsidiaries which have been applied in the subscription of additional share capital in those subsidiaries.

Investment revaluation reserve at the balance sheet date.

Translation reserve

Amounts in the statement of changes of equity are stated net of tax where applicable

Ocean Wilsons Holdings Limited

Condensed Cash flow statement

for the six months ended 30 June 2008

			Unaudited		Unaudited		Audited
			six months to		six months to		Year to
			30 June		30 June		31 December
			2008		2007		2007
		Note	US$'000		US$'000		US$'000
Net cash inflow from operating activities		17	21,963		18,691		56,222
Investing activities
Interest received			8,124		5,333		16,896
Dividends received from trading investments			1,247		234		1,186
Proceeds on disposal of trading investments			66,699		-		19,229
Income from underwriting activities			64		610		2,072
Proceeds on disposal of property, plant and equipment			1,130		622		8,700
Purchases of property, plant and equipment			(32,057)		(29,377)		(92,349)
Purchases of trading investments			(63,053)		(5,405)		(207,171)
Net cash inflow arising on disposal of minority interest			-		324,688		324,688
Net cash used in/(from) investing activities			(17,846)		296,705		73,251
Financing activities
Dividends paid		10	(12,731)		(7,073)		(8,484)
Dividends paid to minority shareholders in subsisdiary			(6,682)		-		(612)
Repayments of borrowings			(7,232)		(7,024)		(16,663)
Repayments of obligations under finance leases			(339)		(440)		(633)
New bank loans raised			18,172		20,382		54,882
(Decrease)/increase in bank overdrafts			111		310		(766)
Net cash from (used in)/from financing activities			(8,701)		6,155		27,724
Net (decrease)/increase in cash and cash equivalents			(4,584)		321,551		157,197
Cash and cash equivalents at beginning of year			227,641		62,599		62,599
Effect of foreign exchange rate changes			6,457		3,917		7,845
Cash and cash equivalents at end of year			229,514		388,067		227,641

Ocean Wilsons Holdings Limited

Notes to the condensed set of financial statements

1

General information

(a)

The interim finacial information is not the Company's statutory accounts.

(b)

The auditors of the Company have not made any report thereon under section 90(2) of the Bermuda Companies Act.

2

Accounting policies

The condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards ('IFRSs').

and in accordance with IAS 34 - Interim Financial Reporting. For these purposes, IFRS comprise the standards issued by the

International Accounting Standards Board ('IASB') and interpretations issued by the International Financial Reporting

Interpretations Committee ('IFRIC').

The condensed set of financial statements have been prepared on the basis of accounting policies consistent with those applied in

the financial statements for the year ended 31 December 2007.

3	Revenue
	An analysis of the Group's revenue is as follows:	Unaudited		Unaudited		Audited
		six months to		six months to		Year to
		30 June		30 June		31 December
		2008		2007		2007
		US$'000		US$'000		US$'000
	Sales of services	223,488		182,671		400,550
	Revenue from construction contracts	24,955		-		3,496
		248,443		182,671		404,046
	Investment income	15,892		10,221		27,101
		264,335		192,892		431,147
	All revenue is derived from continuing operations

4	Business and geographical segments
	Business segments
	For mangement purposes, the Group is currently organised into seven operating activities; towage, port terminals, ship agency, offshore logistics, investment and non segmented activities. These divisions are the basis on which the Group reports its primary segment information.
	Segment information relating to these businessess is presented below.

For the six months ended 30 June 2008 (Unaudited)							Non
		Port					segmented
	Towage	terminals	Ship agency	Offshore	Logistics	Investment	activities		Elimination	Consolidated
	Year  ended	Year  ended	Year  ended	Year  ended	Year  ended	Year  ended	Year  ended		Year  ended	Year  ended
	2008	2008	2008	2008	2008	2008	2008		2008	2008
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000		US$'000	US$'000
Revenue	76,983	82,670	9,933	7,563	44,583	-	26,711		-	248,443
Intersegment sales	-	-	-	-	-	-	24,395		(24,395)	-
	76,983	82,670	9,933	7,563	44,583	-	51,106		(24,395)	248,443
Result
Segment result	24,563	23,688	1,730	1,538	2,192	(1,748)	(11,540)		-	40,423
Intersegment result	-	-	-	-	-	-	5,830		(5,830)	-
	24,563	23,688	1,730	1,538	2,192	(1,748)	(5,710)		(5,830)	40,423
Investment revenue	-	-	-	-	-	1,386	14,506		-	15,892
Other gains and losses	-	-	-	-	-	(219)	-		-	(219)
Finance costs	(1,948)	(901)	(2)	(831)	(127)	-	(142)		-	(3,951)
Profit before tax	22,615	22,787	1,728	707	2,065	(581)	8,654		-	52,145
Tax										(13,350)
Profit after tax										38,795
Other information
Capital additions	(7,591)	(12,910)	(267)	(10,672)	(4,444)	-	(554)		-	(36,438)
Depreciation and amortisation	(2,814)	(4,753)	(84)	(1,708)	(586)	-	(691)		-	(10,636)
Balance Sheet
Assets
Segment assets	126,002	209,876	7,569	89,311	25,264	274,366	197,052		-	929,440
Liabilities
Segment liabilities	(77,319)	(68,732)	(7,264)	(76,812)	(13,139)	(1,119)	(45,391)		-	(289,776)

For the six months ended 30 June 2007 (Unaudited)							Non
		Port					segmented
	Towage	terminals	Ship agency	Offshore	Logistics	Investment	activities	Elimination	Consolidated
	Year  ended	Year  ended	Year ended	Year  ended	Year  ended	Year  ended	Year ended	Year  ended	activities
	2006	2006	2006	2006	2006	2006	2006	2006	2006
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Revenue	64,638	66,909	9,769	4,615	29,286	-	7,454	-	182,671
Intersegment sales	-	-	-	-	-	-	18,526	(18,526)	-
	64,638	66,909	9,769	4,615	29,286	-	25,980	(18,526)	182,671
Result
Segment result	17,886	18,295	3,135	381	1,774	(236)	(21,988)	-	19,247
Intersegment result	-	-	-	-	-	-	2,358	(2,358)	-
Operating profit	17,886	18,295	3,135	381	1,774	(236)	(19,630)	(2,358)	19,247
Investment income	-	-	-	-	-	1,109	9,112	-	10,271
Other gains and losses	-	-	-	-	-	9,946	-	-	9,946
Finance costs	(1,023)	(1,085)	-	(423)	(203)	-	(80)	-	(2,814)
Profit on sale of minority interest	-	-	-	-	-	-	213,667	-	213,667
Profit before tax	16,863	17,210	3,135	(42)	1,571	20,148	200,711	-	250,267
Tax									(10,167)
Profit after tax									240,100
Other information
Capital additions	(7,934)	(8,678)	(442)	(9,232)	(406)	-	(467)	-	(27,159)
Depreciation and amortisation	(3,109)	(2,823)	(324)	(1,315)	(281)	-	(436)	-	(8,288)
Balance Sheet
Assets
Segment assets	96,992	147,970	6,927	49,635	10,838	90,912	389,645	-	792,919
Liabilities
Segment liabilities	(56,065)	(48,282)	(336)	(57,379)	(4,300)	(920)	(51,178)	-	(218,460)

For the year ended 31 December 2007 (Audited)							Non
		Port					segmented		Consolidated
	Towage	terminals	Ship agency	Offshore	Logistics	Investment	activities	Elimination	activities
	Year ended	Year  ended	Year ended	Year ended	Year  ended	Year ended	Year ended	Year  ended	Year  ended
	2006	2006	2006	2006	2006	2006	2006	2006	2006
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Revenue	146,838	148,995	20,392	10,710	69,052	-	8,059	-	404,046
Intersegment sales	-	-	-	-	-	-	66,949	(66,949)
	146,838	148,995	20,392	10,710	69,052	-	75,008	(66,949)	404.046
Result
Segment result	45,388	40,825	2,946	1,840	4,568	(2,596)	(34,463)	-	58,508
Share of results of associates	-	-	-	-	-	-	4,033	(4,033)
Operating profit	45,388	40,825	2,946	1,840	4,568	(2,596)	(30,430)	(4,033)	58,508
Investment income	-	-	-	-	-	2,603	24,498	-	27,101
Other gains and losses	-	-	-	-	-	11,700	-	-	11,700
Finance costs	(2,752)	(2,464)	(23)	(1,313)	(412)	-	(602)	-	(7,566)
Profit on sale of minority interest	-	-	-	-	-	-	213,667	-	213,667
Profit before tax	42,636	38,361	2,923	527	4,156	11,707	207,133	-	303,410
Tax									(25,723)
Profit after tax									277,687
Other information
Capital additions	(21,082)	(26,266)	(849)	(41,965)	(1,582)	-	(840)	-	(92,584)
Depreciation and amortisation	(6,480)	(6,724)	(348)	(2,618)	(714)	-	(2,182)	-	(19,066)
Balance Sheet
Assets
Segment assets	121,422	171,027	5,682	77,417	18,289	275,907	204,998	-	874,472
Liabilities
Segment liabilities	(73,886)	(59,454)	(7,983)	(73,904)	(9,307)	(1,967)	(35,183)	-	(261,684)

Finance costs and associated liabilities have been allocated to reporting segments where interest costs arise from loans used to finance the construction of fixed assets in that segment. Investment revenues arising on bank balances held in Brazilian operating segments, including foreign exchange on cash, has not been allocated to the business segment as cash management is performed centrally by the corporate function. In 2006 the profit on disposal of the Groups interest in WR Operadores Portuárias Ltda and the release of surplus on acquisition of Brasco was recognised in port operations.  Non-segmented activities includes Shipyard, Dredges and unallocated corporate costs, assets and liabilities. Geographical Segments The Group's operations are located in Brazil, Bermuda, United Kingdom and Guernsey. All the Group's sales are derived in Brazil. The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment, analysed by the geographical area in which the assets are located.

									Additions to
					Carrying amount of				property, plant and equipment
					segment assets				and intangible assets
			30 June		30 June		31 December		six months to		six months to		Year ended
			2008		2007		2007		2008		2007		2007
			US$'000		US$'000		US$'000		US$'000		US$'000		US$'000
	Brazil		520,575		371,889		449,174		36,438		27,159		92,584
	Bermuda		405,726		418,465		422,435		-		-		-
	Other		3,139		2,565		3,133		-		-		-
			929,440		792,919		874,742		36,438		27,159		92,584
5	Employee benefits expense								Unaudited		Unaudited		Audited
									six months to		six months to		Year to
									30 June		30 June		31 December
									2008		2007		2007
									US$'000		US$'000		US$'000
	Aggregate remuneration comprised
	Wages and salaries								54,704		41,095		90,050
	Share based payment expense								1,768		7,790		12,611
	Social security costs								13,063		9,146		21,677
	Other pension costs								492		636		1,729
									70,027		58,667		126,067
6	Investment income								Unaudited		Unaudited		Audited
									six months to		six months to		Year to
									30 June		30 June		31 December
									2008		2007		2007
									US$'000		US$'000		US$'000
	Interest on bank deposits								8,124		5,333		16,896
	Exchange gains on cash								6,457		3,917		7,845
	Dividends from equity investments								1,247		234		1,186
	Investment revenues from underwriting activities								64		737		1,174
									15,892		10,221		27,101
7	Other gains and losses								Unaudited		Unaudited		Audited
									six months to		six months to		Year to
									30 June		30 June		31 December
									2008		2007		2007
									US$'000		US$'000		US$'000
	Increase in fair value of trading investments held at year end								(3,252)		9,946		11,639
	Profit on disposal of trading investments								3,033		-		61
									(219)		9,946		11,700

8	Finance costs								Unaudited		Unaudited		Audited
									six months to		six months to		Year to
									30 June		30 June		31 December
									2008		2007		2007
									US$'000		US$'000		US$'000
	Interest on bank overdrafts and loans								3,584		3,103		6,416
	Exchange gain on foreign currency borrowings								(734)		(595)		-1,075
	Interest on obligations under finance leases								158		123		313
	Total borrowing costs								3,008		2,631		5,654
	Derivative costs								-		183		412
	Other interest								943		-		1,500
									3,951		2,814		7,566

Derivative costs represent the settlement of derivative contracts and the movement in the fair value of derivatives during the year.

9	Taxation								Unaudited		Unaudited		Audited
									six months to		six months to		Year to
									30 June		30 June		31 December
									2008		2007		2007
									US$'000		US$'000		US$'000
	Current
	Brazilian taxation
	Corporation tax								13,478		9,799		21,018
	Social contribution								5,237		3,557		8,055
	Total Brazilian currrent tax								18,715		13,356		29,073
	UK corporation tax								113		373		240
	Total current tax								18,828		13,729		29,313
	Deferred tax
	Charge for the year in respect of deferred tax liabilities								5,738		4,832		11,760
	Credit for the year in respect of deferred tax assets								(11,216)		(7,683)		(15,350)
	Total deferred tax								(5,478)		(2,851)		(3,590)
	Total taxation								13,350		10,878		25,723

	Brazilian corporation tax is calculated at 25 percent (2007: 25 percent) of the assessable profit for the year.
	Brazilian social contribution tax is calculated at 9 percent (2007: 9 percent) of the assessable profit for the year.
	At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and,accordingly, no provision for   such taxes has been recorded by the company. In the event that such taxes are levied, the company has received an undertaking from the  Bermuda Government exempting it from all such taxes until 28 March 2016.

10	Dividends	Unaudited	Unaudited	Audited
		six months to	six months to	Year to
		30 June	30 June	31 December
		2008	2007	2007
		US$'000	US$'000	US$'000
		Unaudited	Unaudited	Audited
	Amounts recognised as distributions to equity holders in the period:
	Final dividend paid for the year ended 31 December 2007 of 36.0c (2006: 20.0 c ) per share	12,731	7,072	7,072
	Interim dividend paid for the year ended 31 December 2007 of 4.0c per share	-	-	1,412
		12,731	7,072	8,484
	Proposed interim dividend for the year ended 31 December 2008 of 4.0c (2007: 4.0c) per share	1,412	1,412
	Proposed final dividend for the year ended 31 December 2007 of 36.0c per share			12,731
	The proposed interim dividend was approved by the Board on the 11th August 2008 and has not been included as a liability in these financial statements

11	Earnings per share
	The calculation of the basic and diluted earnings per share is based on the following data:
								Unaudited	Unaudited
								six months to	six months to	Audited Year to
								30 June	30 June	31 December
								2008	2007	2007
	Earnings							US$'000	US$'000	US$'000
	Earnings for the purposes of basic earnings per share being net profit attributable
	to equity holders of the parent.							22,473	236,760	258,065
	Number of shares
	Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share	35,363,040	35,363,040	35,363,040
12	Property, plant and equipment

	During the period, the Group spent approximately US$ 36.4 million mainly on vessel construction and the expansion of Tecon Rio Grande.
	At 30 June 2008, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to US10.1 million.

13	Investments
		Unaudited		Unaudited		Audited
		30 June		30 June		31 December
		2008		2007		2007
	Available for sale investments	US$'000		US$'000		US$'000
	Fair value	7,204		5,934		6,466
	The available for sale investment is the Group's investment in Barcas S.A Transportes Maritimas. The sale of Barcas S.A will be completed in 2008.

				Unaudited		Unaudited		Audited
				30 June		30 June		31 December
	Trading investments			2008		2007		2007
				US$'000		US$'000		US$'000
	At 1 January			272,834		73,192		73,192
	Additions, at cost			63,053		8,751		207,171
	Disposals, at market value			(66,699)		(3,346)		(19,229)
	Increase in fair value of trading investments held at year end			(3,252)		9,946		11,631
	Profit on disposal of trading investments			3,033		-		61
	At period end			268,969		88,543		272,826
	less trading investments held at cost			(6,226)		-		(2,572)
	Trading investments held at fair value at period end			262,743		88,543		270,254

	The Group has not designated any financial assets that are not classified as trading investments as financial assets at fair value through profit or loss.
	The investments above represent investments in listed equity securities, funds and unquoted equities and that present the Group with  opportunity for return through dividend income and trading gains.
	Included in listed investments are open ended funds whose shares may not be listed on a recognised stock exchange  but are redeemable for cash at the current net asset value at the date of redemption at the option of the company.
	They have no fixed maturity or coupon rate.
	The fair values of these securities are based on quoted market prices where available.

14	Trade and other receivables
			Unaudited		Unaudited		Audited
			30 June		30 June		31 December
			2008		2007		2007
			US$'000		US$'000		US$'000
	Amount receivable for the sale of services		40,716		42,487		39,547
	Allowance for doubtful debts		(3,906)		(1,437)		(4,208)
			36,810		41,050		35,339
	Taxation recoverable		3,596		3,016		2,404
	Prepayments and accrued income		44,504		24,665		31,558
			84,910		68,731		69,301
			Unaudited		Unaudited		Audited
			30 June		30 June		31 December
	Movement in the allowance for doubtful debts		2008		2007		2007
			US$'000		US$'000		US$'000
	Balance at the beginning of the year		4,208		933		933
	Amounts written off during the period		-		-		(344)
	Increase/(reversal) in allowance recognised in profit or loss		(747)		391		3,255
	Exchange differences		445		113		364
	Balance at the end of the period		3,906		1,437		4,208

In determining recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable  from the date credit was intially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated except for one customer which accounts for 10% of Group revenue. The directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

Cash and cash equivalents

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The  carrying amount of these assets approximates their fair value.

Private investment funds

The Group has investments in private investment funds that are consolidated in the financial statements as cash equivalents. These private investment funds comprise certificates of deposit and equivalent instruments with final maturities ranging from January 2008 to November 2011. The securities included in the portfolio of the private investment funds have daily liquidity and are marked to market on a daily basis against current earnings. This private investment funds do not have significant financial obligations. Any financial obligations are limited to service fees to the asset management company employed to execute investment transactions, audit fees and other similar expenses.

Credit risk

The Group's principal financial assets are cash, trade and other receivables and trading investments. The Group's credit risk is primarily attributable to its bank balances, trade receivables and investments. The amounts presented as receivables in the balance sheet are net of allowances for doubtful receivables as outlined above.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The credit risk on investments held for trading is limited because the counterparties with whom the Group transacts are regulated institutions or banks with high credit ratings. The company's appointed investment manager, Hanseatic Asset Management LBG, evaluates the credit risk on trading investments prior to and during the investment period.  The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. As a matter of routine, the Group reviews taxes and levies impacting its businesses with a view to ensuring that payments of such amounts are correctly made and that no amounts are paid unnecessarily. In this process, where it is confirmed that taxes and/or levies have been overpaid, the Group takes appropriate measures to recover such amounts. During the year ended 31 December 2007, the Group received a response to a consultation to tax officials confirming the exemption of certain transactions to taxes which the Group had been paying through that date. This response permits the Group to recoup such amounts paid in the past provided the Group takes certain measures to demonstrate that it has met the requirements of tax regulations for such recovery. During the first half of 2008, the Group was able to meet such requirements and recognized US$3.7 million as a credit in the Consolidated Income Statement for that year. The Group expect to recover further such amounts in the future, but it is not practicable to quantify them.

15	Borrowings
						Unaudited		Unaudited		Audited
						Six months to		six months to		Year to
						30 June		30 June		31 December
						2008		2007		2007
		Interest				US$'000		US$'000		US$'000
	Unsecured borrowings
	Bank overdrafts Santander	CDI +0.16% p.m.				-		1,119		43
	Bank overdrafts Unibanco	CDI +0.1.53% p.a.				155		-		-
	Secured borrowings
	Bank loans					161,458		123,738		149,421
	BNDES	1.5% to 5% p.a				130,825		96,349		125,736
	IFC	5.33% to 9.48% p.a				30,633		27,389		23,685
						161,613		124,857		149,464
	The borrowings are repayable as follows :
	On demand or within one year					15,631		16,069		14,720
	In the second year					15,473		14,177		15,863
	In the third to fifth years inclusive					37,408		33,083		34,939
	After five years					93,101		61,528		83,942
	Total borrowings					161,613		124,857		149,464
	Amounts due for settlement within 12 months					(15,631)		(16,069)		(14,720)
	Amounts due for settlement after 12 months					145,982		108,788		134,744
	Analysis of borrowings by currency :			$Real
				linked to
		$Real		US Dollars		US Dollars		Total
	30/06/2008 (unaudited)	US$'000		US$'000		US$'000		US$'000
	Bank overdrafts	155		-		-		155
	Bank loans	5,833		130,825		24,800		161,458
	Total	5,988		130,825		24,800		161,613
	30/06/2007 (unaudited)
	Bank overdrafts	1,119		-		-		1,119
	Bank loans	-		96,349		27,389		123,738
	Total	1,119		96,349		27,389		124,857
	31/12/2007 (audited)
	Bank overdrafts	43		-		-		43
	Bank loans	-		125,736		23,685		149,421
	Total	43		125,736		23,685		149,464

The other principal features of the Group's borrowings are as follows: $Real denominated loans linked to the US dollar are monetarily corrected by the movement in the US dollar/$Real exchange rate and bear interest of between 1.5% and 5.0% per annum. These loans are to finance the building of new tugs, platform supply vessels and refurbishment of dredges and are secured by mortgages thereon. The amounts outstanding at 31 December 2007 are repayable over periods varying up to 20 years. US dollar denominated loans bear interest at between six month LIBOR plus 3.5% per annum and six month LIBOR plus 4.15%. The majority of these loans are project finance 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 31 December 2007 are repayable over periods varying up to 7 years. The subsidiaries Tecon Rio Grande and Tecon Salvador have specific restrictive clauses in their financing contracts with financial institutions related, basically, to the maintenance of liquidity ratios. At 31 December 2007, the Group is in accordance with al clauses of these contracts.

16	Disposal of minority interest
	On 30 April 2007 the Group sold a 37.11% minority interest in Wilson Sons Limited  as part of the initial public offering of that company. On 31 May 2007, the Group sold a further 4.64% minority interest.
	The cash consideration after transaction costs received for the total 41.75% minority interest in Wilson Sons Limited was US$ 324.7 million.
	Gross proceeds								348,678
	Less costs of disposal								(23,990)
	Net proceeds								324,688
	Net proceeds received by Ocean Wilsons Holdings Limited								205,615
	Net proceeds received by Wilsons Sons Limited								119,073
	Total								324,688
	Net assets disposed of at 30 April 2007 (proportional 37.11%)								98,444
	Net assets disposed of at 31 May 2007 (proportional 4.64%)								12,577
	Total net assets disposed of (proportional 41.75%)								111,021
	Total consideration satisfied by cash								324,688
	Gain on disposal								213,667

17	Notes to the cash flow statement
		Unaudited		Unaudited		Audited
		six months to		six months to		Year to
		30 June		30 June		31 December
		2008		2007		2007
	Reconciliation from profit before tax to net cash from operating activities	US$'000		US$'000		US$'000
	Profit before tax	52,145		250,267		303,410
	Less: investment revenues	(15,892)		(10,221)		(27,101)
	Less: other gains and losses	219		(9,946)		(11,700)
	Add: finance costs	3,951		2,814		7,566
	Profit on disposal of minority interest	-		(213,667)		(213,667)
	Operating profit	40,423		19,247		58,508
	Adjustments for:
	Depreciation of property, plant and equipment	10,486		8,158		18,751
	Amortisation of intangible assets	150		130		315
	Share based payment expense	1,768		7,790		12,611
	Gain on disposal of property, plant and equipment	(241)		(534)		(4,819)
	(Decrease)/increase in provisions	(600)		(100)		6,571
	Operating cash flows before movements in working capital	51,986		34,691		91,937
	Increase in inventories	(1,929)		(2,065)		(318)
	Increase in receivables	(14,417)		(11,174)		(13,915)
	Increase/(decrease) in payables	7,343		13,407		18,556
	Increase in other non-current assets	(2,032)		(1,905)		(3,312)
	Cash generated by operations	40,951		32,954		92,948
	Income taxes paid	(16,614)		(13,605)		(30,081)
	Interest paid	(2,374)		(2,671)		(6,645)
	Net cash from operating activities	21,963		16,678		56,222

18	Commitments
	At 30 June 2008 the Group had entered into six commitment  agreements with respect to six separate trading investments. The details of these commitments are as follows
					Unaudited		Unaudited		Audited
					Oustanding at		Oustanding at		Oustanding at
					30 June		30 June		31 December
					2008		2007		2007
	Expiry date		Commitment		US$'000		US$'000		US$'000
	08 November 2008		5,000		1,500		4,000		-
	08 November 2008		3,000		1,200		3,000		-
	30 June 2010		991		399		446		-
	31 October 2012		3,000		866		1,367		-
	31 October 2012		5,000		3,368		5,000		-
	13 March 2013		5,000		4,774		-		-
	Total				12,107		13,813		0

19	Related party transactions
	Transactions between this 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, joint ventures and others investments are disclosed below.
				Dividends received/				Amounts paid/
				Revenue of services				Cost of services
			30 June	30 June		31 December	30 June	30 June	31 December
			2008	2007		2007	2008	2007	2007
			US$'000	US$'000		US$'000	US$'000	US$'000	US$'000
	Joint ventures
	2.Allink Transportes Internacionais Limitada		336	332		352	-	-	(1)
	3. Consórcio de Rebocadores Barra de Coqueiros		91	149		62	-	-	(246)
	4. Consórcio de Rebocadores Baía de São Marcos		3,006	3,090		7,023	-	-	-
	5. Dragaport Limitada		-	371		297	-	(379)	-
	6. Dragaport Engenharia		-	-		-	(222)	(3)	(162)
	Others
	7. Porto Campinas		-	-		-	-	-	-
	8 Conyers Dill & Pearman		-	-		-	(8)	(363)	(373)
	9.Hanseatic Asset Management		-	-		-	(1,374)	(403)	(2,464)
	10.Escritorio de Advocacia Gouvea Vieira		-	-		-	(26)	(101)	(144)
	11 CMMR Intermediacao Comercial Limitada		-	-		-	(67)	(59)	(102)
	12. Codan Services Limited		-	-		-	(107)	(35)	(65)
	13. Internacional Financial Corporation		-	-		-	(270)	(1,323)	(2,450)
	14. Jofran Services		-	-		-	(45)	(40)	(130)
	15, Frag Consulting		-	-		-	(30)	(20)	(502)

				Amounts owed by related parties			Amounts owed to related parties
		30 June		30 June	31 December	30 June		30 June	31 December
		2008		2007	2007	2008		2007	2007
		US$'000		US$'000	US$'000	US$'000		US$'000	US$'000
Joint ventures
1.Allink Transportes Internacionais Limitada		15		3	-	-		-	(6)
2. Consórcio de Rebocadores Barra de Coqueiros		153		158	105	-		-	(137)
3. Consórcio de Rebocadores Baía de São Marcos		3,539		2,832	1,818	(121)		-	(3,649)
4. Dragaport Limitada		-		-	-	-		-	-
5. Dragaport Engenharia		-		-	378	-		-	(2,220)
Others
6. Porto Campinas		-		546	814				-
7 Conyers Dill & Pearman		-		-	-	-		(363)	-
8.Hanseatic Asset Management		-		-	-	(224)		(73)	(1,359)
9. Gouvea Vieira Advogados		-		-	-	-		(49)	-
10 CMMR Intermediacao Comercial Limitada		-		-	-	-		-	-
11. Codan Services Limited		-		-	-	(22)		(18)	(5)
12. Internacional Financial Corporation		-		-	-	(12,359)		(27,389)	(23,685)
13. Jofran Services		-		-	-	-	-	-	-
14, Frag Consulting		-		-	-	-	-	-	-

	1. Mr A C Baião is a shareholder and Director of Allink Transportes Internacionais Limitada. Allink Transportes    Internacionais Limitada is 50% owned by the Group and rents office space from the Group.
	2-6.The transactions with the joint ventures are disclosed as a result of proportionate amounts not eliminated on consolidation.    The proportion of ownership interest in each joint venture is described on note 17.
	7 Mr C F A Cooper was a partner in Conyers, Dill and Pearman. Fees were paid to Conyers Dill & Pearman for legal advice.
	8. Mr W H Salomon is Chairman of Hanseatic Asset Management. Fees were paid to Hanseatic asset management  for acting as investment managers of the Groups investment portfolio and administration services.
	9. Dr J.F. Gouvea Vieira is a managing partner in the law firm Gouvea Vieira Advogados. Fees were paid   to Gouvea Vieira Advogados for legal services.
	10. Mr C M Marote is a shareholder and Director of CMMR Intermediacao Comercial Limitada. Fees were paid to CMMR  Intermediacao Comercial Limitada for consultancy services.
	11 Mr C F A Cooper was a partner in Conyers, Dill and Pearman during the period, the owners of Codan Services.  Fees were paid to Codan services for company secretarial services.
	12. Internacional Financial Corporation (a subsidiary of the World Bank ) is the minority shareholder of Tecon Salvador S.A.    The Group has bank loans with this this financial institution.
	13. Mr J F Gouvea Vieira is a Director of Jofran Services. Directors fees and consultancy fees were paid to Jofran Services.
	14. Mr F Gros is a Director of Frag Consulting. Directors fees and consulting fees relating to the Wilson Sons IPO    were paid to Frag Consulting
20	Financial instruments
	Capital risk management
	The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern.  The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 15, cash  and cash equivalents and equity attributable to equity holders of the parent comprising issued capital, reserves  and retained earnings and the consolidated statement of changes in equity.
	The Group borrows to fund capital projects and looks to cash flow from these projects to meet repayments.  Working capital is funded through cash generated  by operating revenues.
	Externally imposed capital requirement
	The Group is not subject to externally imposed capital requirements.
	Financial risk management objectives
	The Group's Corporate Treasury function provides services to the business, co-ordinates access to domestic  and international financial markets and manages the financial risks relating to the operations of the Group through internal reports. These risks include market risk, (including currency risk, interest rate risk and price risk) credit risk, liquidity risk. The Group may use derivative financial instruments to hedge these risk exposures, with Board approval. The  Group does not enter into trade financial instruments, including derivative financial instruments for speculative purposes.
	Market risk
	The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
	Foreign currency risk management
	The Group undertakes certain transactions denominated or linked to foreign currencies and therefore exposures to exchange rate fluctuations arise. The Group operates principally in Brazil with a substantial proportion of  the Group's revenue, expenses and assets denominated in the Real. Due to the cost of hedging the Real , the  Group does not normally hedge its net exposure to the Real as the Board does not consider it economically viable.  However during 2006, the Group used immaterial currency swaps to manage its exposure on the short term  position of its US Dollar and US Dollar linked debt from Real denominated cashflows.
	Interest rate risk management
	The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.  The Group borrows from the BNDES (Banco Nacional de Desenvolvimento Economico e Social) to finance vessel  construction. These loans are fixed interest rates loans linked to the US Dollar. Due to the favourable rates offered by  the BNDES, in the Group's opinion, there is minimal market interest rate risk. The Group's strategy for managing interest rate risk is to maintain a balanced portfolio of fixed and floating interest rates in order to balance both cost and volatility.  The Group may use derivative instruments to reduce cash flow interest rate attributable to interest rate volatility. As at 31 December 2007 the Company had no outstanding interest rate swap contracts.
	Credit risk management
	Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss  to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group's sales policy is subordinated to the credit sales rules set by management, which seeks to mitigate any loss from customers' delinquency. Trade receivables consist of a large number of customers except for one large customer, which makes up 10% of revenue. Ongoing credit  evaluation is performed on the financial condition of accounts receivable.
	Liquidity risk management
	Ultimate responsibility for liquidity risk management rests with the Board of Directors . The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continously  monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
	Fair value of financial instruments
	The fair value of non-derivative financial assets and traded on active liquid markets are determined with reference to quoted market prices. The carrying amounts of financial assets and financial liabilities recorded at amortised  cost in the financial statements approximate their fair value.

 

END

 

 

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