Final Results

RNS Number : 0215A
Ocean Wilsons Holdings Ld
26 March 2012
 



OCEAN WILSONS HOLDINGS LIMITED

Preliminary announcement

 

CHAIRMAN'S STATEMENT

 

Overview

 

Ocean Wilsons Holdings Limited ("Ocean Wilsons or the Company") is a Bermuda based investment holding ccompany, and through its subsidiaries, operates a maritime services company in Brazil and holds a portfolio of international investments. The Company is listed on both the Bermuda Stock Exchange and the London Stock Exchange. It has two principal subsidiaries: Wilson Sons Limited and Ocean Wilsons Investments Limited.

 

Wilson Sons Limited ("Wilson Sons") is an autonomous Bermuda company listed on the Sao Paulo Stock Exchange (BOVESPA) and Luxembourg Stock Exchange. Ocean Wilsons holds a 58.25% interest in Wilson Sons, which is fully consolidated in the Group  accounts with a 41.75% non- controlling interest. Wilson Sons is one of the largest providers of maritime services in Brazil. Wilson Sons activities include harbour and ocean towage, container terminal operation, offshore support services, logistics, small vessel construction and ship agency.  Wilson Sons has over 6,000 thousand employees.   

 

Ocean Wilsons Investments Limited is a wholly owned Bermuda investment company. The company holds a portfolio of international investments.

 

Introduction

 

2011 was a mixed year for Ocean Wilsons. Wilson Sons produced strong operating results with robust revenue growth across all businesses lines. However the depreciation of the Brazilian Real against the US Dollar at year end resulted in a decline in financial revenues and increases in our deferred tax charge that adversely impacted bottom line earnings. The fall in global equity markets impacted the investment portfolio which declined by 9.6% on a time weighted basis. Wilson Sons continues to invest heavily in expanding their businesses and we remain confident that the Group is well positioned to take advantage of the many market opportunities in Brazil.

 

Group Results 

 

Strong revenue growth from Wilson Sons terminal and logistics businesses was predominantly responsible for revenue increasing 21% to US$698.0 million (2010: US$575.6 million) although it was pleasing to see growth from all business lines.

 

Operating profit for the year increased US$29 million from US$67.9 million to US$96.9 million due to a credit to the long-term incentive plan accrual in the period of US$7.9 million (2010: US$16.5 million charge) and higher turnover. Operating profit margins for the year at 14% were 2 % higher than prior year (2010: 12%). However adjusting for the effect of the long-term incentive plan, operating margins were 2 % lower at 13% (2010: 15%), principally due to changes in the sales mix, the strength of the Brazilian Real against our reporting currency the US Dollar during the year and increased depreciation and amortisation.

 

The higher depreciation charge reflects the significant capital investment made in recent years in developing and expanding the Wilson Sons business. In the five years to 31 December 2011 the Group invested US$740.0 million in capital additions of which US$461 million was financed through new loans raised during the same period. Consequently depreciation and amortisation has risen from 4.7% of revenue in 2007 (US$19.1 million) to 8.5% in 2011 (US$59.5million). We are expecting capital investment to continue and are looking forward to the Company seeing the benefit in the future.

 

The higher operating profit was offset by losses on the investment portfolio (a substantial proportion of which are unrealised), lower investment revenues and increased finance costs. Additionally in 2010 there was a US$20.4 million profit realised on formation of the offshore joint venture. As a result profit before tax decreased US$58.6 million to US$58.6 million from US$117.2million.

 

The income tax expenses of US$51.6 million and profits attributable to non-controlling interests of US$15.6 million resulted in a loss attributable to equity holders of the parent of US$8.6 million.

Losses per share based on ordinary activities after taxation and non-controlling interests were 24.4 cents (2010: Earnings 160.8 cents).

 

 

Briclog acquisition

 

In June 2011, we announced that Brasco Logística Offshore Limitada (Brasco) signed a contract for the acquisition of 100% of the issued share capital of Bric Brazilian Intermodal Complex S/A. (Briclog) for R$125 million (approximately US$80 million). Briclog provides port services to the offshore oil & gas industry. The acquisition is subject to various conditions precedent including a 30-year lease right to operate a 67,000 square metre area in the Bay of Guanabara, Rio de Janeiro, Brazil, together with the assignment of certain other lease contracts to Briclog.

 

Consideration is payable in three tranches, R$10 million paid in June 2011, R$60 million on satisfaction of all conditions precedent, and the balance of R$55 million, three hundred and sixty days from the contract signature. The last two payments are adjusted for movement in the Brazilian consumer price index (IPCA).

 

To date the acquisition is not finalised as there are still conditions precedent to be satisfied and so the R$10 million payment made in June 2011 has been treated as a prepayment in the Group's accounts.

 

Tecon Salvador

In January 2011 the Group disposed of a 7.5% share interest in Tecon Salvador S.A to Intermarítima Terminais Ltda ("Intermarítima"), reducing our ownership to 92.5% for US$6.7 million.  Intermarítima is an important inland and port logistics operator with activities in the major ports of Bahia state - Salvador, Aratu and Ilhéus. This alliance will facilitate the continued growth of Tecon Salvador as well as the exploration of new general and bulk cargo opportunities in Bahia, the sixth largest Brazilian state economy according to data from the Brazilian Institute of Geography and Statistics.

 

The profit net of tax between the increase in the non-controlling interests and the consideration received, has been credited to retained earnings in the consolidated statement of changes in equity.

 

Investment Portfolio

 

Investment managers

 

The Group's investment portfolio is held by Ocean Wilson Investments Limited ("OWIL"), a wholly owned subsidiary registered in Bermuda. OWIL appointed Hanseatic Asset Management LBG, a Guernsey registered and regulated investment group as its Investment Manager in November 2000.

 

Investment strategy

 

The Board of OWIL determines investment guidelines and restrictions in conjunction with the investment manager, these together with the investment manager's reports are reviewed at the OWIL board meetings.

 

The investment strategy agreed with the Company's investment manager's is to maximise the total return on assets, by investing in a portfolio of diversified assets including global equities, fixed income and alternative assets with a particular emphasis on emerging markets. Investments are intended to add value over the medium to longer-term through a non-market correlated, conviction based investment style.

 

Investment portfolio performance

 

The fall in global equity markets, (MSCI World Equity Index down 7.4%) and particularly the fall in emerging markets, (MSCI Emerging Markets Index down 18.4%), caused the trading investment portfolio and cash under management to decrease by US$33.5 million (including capital redemptions of US$7.5 million) from US$263.4 million at 31 December 2010 to US$229.4 million at 31 December 2011. The portfolio generated a time weighted return of negative 9.6% in the year. As at the 1 March 2012 the portfolio valuation had recovered US$16.6 million to US$246.5 million benefitting from the rebound in equity markets at the start of 2012.

 

The portfolio remains weighted to emerging markets with exposure approaching 45% of net asset value. The portfolio at year end was principally invested in global equities, 51%, with 17% in alternative assets, 20% in market neutral funds and the balance of 12% in bonds, cash and liquidity funds.

 

 

Wilson Sons Limited

 

At the close of business on the 21 March 2012, the Wilson Sons share price was Real 29.50 resulting in a market value for the Ocean Wilsons holding of 41,444,000 shares (58.25% of Wilson Sons) of approximately US$669.6 million which is the equivalent of US$18.93 per Ocean Wilsons Holdings Limited share.

 

Brazil

 

In 2011, Brazil overtook the United Kingdom to become the world's sixth largest economy. Following growth of 7.5% in 2010, GDP growth slowed to 2.7% as the economy suffered the effects from government implemented measures to control inflation and the global economic crisis. During the year the government raised interest rates, implemented lending restrictions and budget cuts in an attempt to control inflationary pressures. Inflation as measured by the consumer price index is currently running at just over 6% per annum having been over 7% earlier in the year. Following the slowing of the economy in the second half of 2011 the government began easing monetary policy to stimulate growth and reduce upward pressure on the currency with interest rates falling for the fifth consecutive time in March 2012 to 9.75 %, from their peak of 12.5% in July 2011. It is reported that the government is considering reducing fiscal spending to allow further cuts in Brazils' interest rates which remain amongst the world's highest.


The currency remains strong, pushed by high commodity prices, direct foreign investment and foreign capital inflows attracted by the high real interest rates. The strong currency is adversely impacting the competitiveness of some Brazilian industries. In a bid to reduce speculative capital inflows and pressures on the Real, the Government made a number of public statements criticising the quantitative easing occurring in some developed economies and increased taxes on short term foreign borrowings to discourage inflows.

 

 

Dividend

 

In light of the value of  the investment portfolio and the dividend to be received from Wilson Sons Limited, the Board is declaring a final dividend of 29 cents per share (2010: 38 cents per share) to be paid on the 25 May 2012, to shareholders of the Company as of the close of business on 4 May 2012, making a total dividend for the year of 33 cents per share (2010: 42 cents per share). 

 

The dividend for the year represents the full dividend to be received from Wilson Sons relating to 2011 plus a percentage of the average capital employed in the investment portfolio. This is consistent with the Board's dividend policy in respect of each financial year is to pay the Company's full dividend to be received from Wilson Sons in the period plus a percentage of the average capital employed in the investment portfolio to be determined annually by the Board. Due to the recent adverse environment in capital markets a reduced payment is being made in respect of the average capital employed in the investment portfolio for 2011.

 

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 who elect to receive dividends in US Dollars.

 

The 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.

 

Long term incentive plan

 

Ocean Wilsons Holdings Limited implemented a cash settled phantom option scheme that was approved by shareholders at the Special General Meeting held on 19 April 2007. The scheme is for selected senior management and the options provide for the option holder to receive on exercise the difference between the option price and the market value of Wilson Sons per Ocean Wilsons share at the time of exercise.                                                    

 

During the year participants exercised 280,280 options. The final tranche of options issued under the scheme vests in April 2012 and the total options outstanding under the scheme is 296,038. The maximum remaining liability under the plan is US$4.2 million based on the Wilson Sons IPO offer price. An accrual of US$3.7 million (2010: US$6.7 million) has been included in the 2011 accounts for benefits accruing under the plan. 

 

Charitable donations

 

Throughout the Group, our offices are actively engaged with the local community. We are proud to support a variety of local causes. Group donations for charitable purposes amounted to US$42,000 (2010: US$105,000). The Group's principal contributions in 2011 were:

 

Criando Lacos - Through our corporate programme 'Criando Lacos" (Creating ties), the Group provides financial support and promotes voluntary employee involvement in social initiatives.

 

Rio Voluntario - Supports and provides assistance to voluntary organisations.

                                                                                                           

                                                                                                Website: Riovoluntario.org.br

 

 

 

 

 

Corporate governance

 

The Board has put in place corporate governance arrangements which it believes are appropriate for the operation of your Company.  The Board has considered the principles and recommendations of the 2010 UK Corporate Governance Code ("the Code") issued by the Financial Reporting Council and decided to apply those aspects which are appropriate to the business.  This reflects the fact that Ocean Wilsons Holdings Limited is an investment holding company incorporated by an act of parliament in Bermuda with significant subsidiary operations in Brazil. The Company complies with the Code where it is beneficial for its business to do so, and has done so throughout the year and up to the date of this report, but it does not fully comply with the Code. The position is regularly reviewed and monitored by the Board.

 

 

Board of Directors

 

In August 2011 we were pleased to welcome Mr Christopher Townsend as a non-executive Director of Ocean Wilsons Holdings Limited. Mr Christopher Townsend is aged 38 and is a qualified solicitor. He has an MA from Peterhouse, Cambridge and an MBA from the London Business School. He is currently an investment director at Hanseatic Asset Management Limited Consulting GmbH and previously worked as a principal in the investment team at Coller Capital Limited and as a solicitor at Ashurst Morris Crisp.

 

Mr Christopher Townsend is the son of Mrs C A Townsend who is interested in the 8,364,113 shares registered in the name of Nicholas B Dill Jnr and Codan Trustees (BVI) Limited.

 

Outlook

 

In March 2012 we announced that our joint venture Wilson, Sons Ultratug Offshore, signed a contract with Petrobras for the construction and operation of four large platform supply vessels.The Company will finance the four vessels through the Marine Merchant Fund (FMM). The vessels will be built at the Wilson Sons Shipyard in Guarujá, São Paulo, and are expected to be delivered by 2015. Wilson, Sons Ultratug Offshore intends to operate more than 30 offshore support vessels by 2017.

 

The expansion of the Tecon Salvador container terminal and the completion of the additional capacity at our shipyard at Guarujá are both forecast to be completed in the beginning of the second half of 2012. Following completion of the Tecon Salvador expansion capacity will increase from 300,000 TEUs to 500,000 TEUs. . The expanded shipyard will double our shipbuilding capacity and significantly enhance our ability to maintain our offshore fleet.

 

Management and staff

 

On behalf of your Board, I would like to thank our management, staff and partners for their hard work and dedication throughout the year.

 

 

J. F. Gouvêa Vieira

Chairman

24 March 2012

 

FINANCIAL REVIEW

 

Revenue

 

Group revenue for the year was US$698.0 million, a 21% increase over the US$575.6 million reported in 2010. Revenue grew in all our Brazilian business lines with particularly strong growth at our port terminals, logistics and shipyard businesses. Container terminal revenue benefitted from improved pricing, better sales mix and strong import warehousing revenue. Robust revenue growth at our oil and gas terminal business, Brasco was driven by increases in the number of vessel turnarounds and strong demand for auxiliary services. Logistics revenue grew 37% in the year to US$140.5 million (2010: US$102.4 million). Shipyard revenue increase driven by third party sales to our offshore joint venture. All Group revenue is derived from Wilson Sons operations in Brazil.

 

Operating profit

 

Operating profit for the year was up 43% from US$67.9 million to US$96.9 million, an increase of US$29 million. The improvement in operating profit was mainly due to movement in the share based payment expense and the higher turnover.

 

The share based payment expense in 2011 was a US$7.9 million credit, US$24.4 million lower than prior year (2010: US$16.5 million charge). Adjusting for the share based payment expense effect, operating profit at US$ 89.0 million was up 5% against US$ 84.4 million in 2010 (see further analysis below). Employee expenses excluding share based payment expense for the year rose 31% to US$247.4 million (2010: US$188.9 million) due to increased headcount to attend the new logistic and terminal business (average headcount during the year was 6,157 compared with 4,936 in 2010, an increase of 25%), collective labour agreements and a lower average US Dollar/Brazilian Real exchange rate.

 

Other operating expenses increased US$29.1 million to US$221.2 million from US$192.1 million in 2010 due to increased business volumes and a stronger average Brazilian Real against our reporting currency, the US Dollar.

 

Depreciation and amortisation in the year increased 39% to US$59.5 million from US$42.9 million in 2010, reflecting the continued investment undertaken by the Group in developing our business.

 

Raw materials and consumables used increased from US$67.2 million to US$82.9 million principally on the back of increased shipyard sales.

 

Share based payment expense

 

The Group operates two cash settled phantom option schemes. An Ocean Wilsons scheme and a Wilson Sons scheme. Both schemes are for selected senior management and the options provide for the option holder to receive on exercise the difference between the option price and the market value of Wilson Sons shares at the time of exercise.                                                 

 

As both the Ocean Wilsons and Wilson Sons long term incentive schemes are cash settled phantom option schemes, International Accounting Standards require that the fair value is determined at each accounting date. Movements in the Wilson Sons share price at reporting date can generate significant movements in the fair value of the two incentive schemes at the reporting date with associated charges or credits to income. In 2011 the fair value of the two schemes  decreased in value principally due to the decrease in the Wilson Sons Limited share price from R$32.00 at 31 December 2010 to R$25.40 at 31 December 2011. This generated a US$7.9 million credit to the income statement in the period.

 

The table below shows the Wilsons Sons share price in Brazilian Real at each accounting date and the impact on the Group operating profit over the last five years in US$ millions.

 

 

 

Year

2007

2008

2009

2010

2011

Wilson Sons share price in $Real

25.95

10.95

21.48

32.00

25.40








US$ m

US$ m

US$ m

US$ m

US$ m

Share based payment expense/(credit )

12.6

(8.1)

17.2

16.5

(7.9)







Group operating profit reported

58.5

98.3

79.3

67.9

96.9

Plus share based payment expense/(credit)

12.6

(8.1)

17.2

16.5

(7.9)

Adjusted group operating profit

71.1

90.2

96.5

84.4

89.0







 

 

 

 

Exchange rates

 

The Group reports in US Dollars and has revenue, costs, assets and liabilities in both Brazilian Real and US Dollars. Therefore movements in the US Dollar / Brazilian Real exchange rate can impact the Group both positively and negatively from year to year. In 2011 the Brazilian Real depreciated 12.6% against the US Dollar from R$1.66 at 1 January 2011 to R$1.88 at the year end.

 

The principal effects from the depreciation of the Brazilian Real against the US Dollar at year end on the income statement are a net exchange loss of US$7.3 million (2010: US$4.0 million gain) on the Group's Real-denominated cash balances and a US$5.3 million net exchange loss on loans (2010: US$0.2 million gain). The exchange loss on loans arises principally on US Dollar borrowings at one of our Brazilian Real functional currency businesses, Tecon Salvador. In addition there is a currency translation adjustment loss to equity of US$12.3 million (2010 US$4.6 million gain) on the translation of operations with a functional currency other than US Dollars.

 

The average Brazilian Real/US Dollar exchange rate during the year was 1.67, 5% lower than the comparative period in 2010, of 1.76. A lower average exchange rate benefits Real denominated revenues when converted into our reporting currency, US Dollars, and adversely impacts Real denominated costs when converted into our reporting currency.

 

Investment revenues

 

Overall investment revenue in the year decreased US$7.8 million to US$10.2 million from US$18.0 million in 2010. Higher interest from bank deposits of US$13.5 million (2010:US$10.2 million) was offset by unfavourable foreign exchange movements on cash and cash equivalents of US$ 7.3 million, principally from Brazilian Real denominated cash balances (2010: US$4.0 million gain). Dividends from equity investments received by the investment portfolio at US$4.0 million were broadly in line with 2010, US$3.8 million.

 

 

Other gains and losses

 

Other losses of US$27.8 million are mainly unrealised losses arising from the Group's portfolio of trading investments and reflect the decline in emerging markets during the year. (2010: US$22.5 million gain). At year end the fair value of trading investments held in the portfolio was US$226.8 million compared with US$260.5 million in 2010.

 

 

Finance costs

 

Finance costs in the year increased by US$9.1 million to US$20.7 million from US$11.6 million. The increase is principally attributable to exchange losses on foreign currency borrowings and higher interest payments on higher debt levels used to fund capital expenditure.

 

Profit before tax

 

Profit before tax decreased by 50% to US$58.6 million (2010: US$117.2 million). The US$29 million increase in operating profit was offset by the decreased investment revenues in the period (US$7.8 million lower), negative returns from the investment portfolio (US$50.3 million adverse movement compared to prior year), higher finance costs (US$9.1 million higher) and a one off US$20.4 million profit in 2010 realised on formation of the offshore joint venture.

 

Taxation

 

The tax charge for the year at US$51.6 million was US$21.0 million higher than last year, US$30.6 million. This represents an effective tax rate for the period of 88% (2010: 26%) The corporate tax rate prevailing in Brazil is 34%. The difference in the effective tax rate principally reflects losses arising in our Bermudian companies that are not subject to income or capital gains tax, increases in Brazilian current and deferred tax and the US$20.4 million profit on the formation of the joint venture in 2010 was not included in determining taxable profit.

 

Net losses in our Bermudian companies in 2011 were US$ 26.6 million compared to a US$0.9 million net gain in 2010. Current tax in Brazil increased by US$10.1 million to US$41.3 million (2010: US$31.2 million) due to a less favourable profit/loss mix in Brazil in the year. In Brazil there is no Group relief, so that profits and losses in separate companies cannot be offset. The deferred tax charge at US$10.3 million was US$11 million higher than 2010, US$0.7 million credit. The deferred tax charge is principally attributable to an IFRS deferred tax charge on the retranslation of the non-current assets caused by the depreciation of the Real against the US Dollar at year end.  This IFRS deferred tax adjustment is calculated on the difference between the historical US Dollar balances recorded in the Group's accounts and the Brazilian Real balances used in the Group's tax calculations. This IFRS deferred tax effect is partly offset by a deferred tax charge or credit arising from the exchange variance on foreign currency borrowings that are not deductible for tax in the period they arise. Exchange gains on these loans are taxable when settled and not in the period in which gains arise. In 2010 the appreciation of the Real generated an IFRS deferred tax credit.

 

Profit for the year

 

Although the Group has a profit for the year of US$7.0 million, there is a loss attributable to equity holders of the parent of US$ 8.6 million because of losses arising in 100% owned subsidiaries that have no non-controlling interest. Profit attributable to non-controlling interests was US$15.5 million.

 

Earnings per share

 

Basic losses per share for the year were 24.4 cents, compared with earnings per share of 160.8 cents in 2010.

 

Cash flow

 

Net cash flow from operating activities for the year at US$70.5 million was US$15.0 million lower than prior year (2010: US$85.5 million). The improved cash generated by operations in the year was consumed by higher income tax and interest payments.

 

The Group continued to invest heavily in expanding our business. Capital expenditure during the year of US$234.0 million remains considerably higher than depreciation. Investment was mainly on the expansion of Tecon Salvador, the development of the new shipyard in Guarujá and new vessels for offshore and towage.

 

During 2011, the Group raised new loans of US$196.0 million (2010: US$77.7 million) to finance capital expenditure. Capital repayments on existing loans in the year in accordance with debt repayment schedules were US$28.4 million (2010: US$19.0 million). An additional US$6.3 million was utilised in repaying bank overdrafts at our offshore joint venture.

 

The Company and its subsidiaries ended the year with US$119.3 million in cash and cash equivalents (31 December 2010: US$130.1 million) of which US$7.5 million was in US Dollar denominated assets and US$111.8 million in Brazilian Real denominated assets.

 

Balance sheet

 

Net equity attributable to equity holders of the parent decreased from US$535.1 million at the beginning of the year to US$506.2 million at year end principally due to losses in the period attributable to the parent, a negative currency translation adjustment and dividends paid. Currency translation adjustment arises from exchange differences on the translation of operations with a functional currency other than US Dollars. On a per share basis net equity is the equivalent of US$14.31 per share (31 December 2010: US$15.13 per share). Included in this are trading investments plus cash held by Ocean Wilsons Investments Limited of US$229.4 million which equates to US$6.50 per share.

 

Included in the Group's trading investments of US$251.3 million at 31 December 2011 is US$24.5 million in US Dollar denominated fixed rate certificates held by Wilson Sons Limited. These investments are not part of the Group's investment portfolio managed by Hanseatic Asset Management LBG and are intended to fund Wilson Sons Limited operations in Brazil.

 

Debt

 

The Group's borrowings are used principally to finance vessel construction, the development of the container terminals at Rio Grande and Salvador and equipment for logistic operations. The majority of debt has long maturity profiles with fixed debt repayment schedules. At 31 December 2011 the Group's borrowings (including obligations under finance leases) were US$491.1 million (31 December 2010: US$325.3 million). During the year new loans were mainly raised to fund the expansion of Tecon Salvador, the new shipyard in Guarujá and vessel construction. At year end 93% of debt is non-current.

 

All debt at year end is held in the Wilson Sons Limited Group and has no recourse to the parent company, Ocean Wilsons Holdings Limited, or the investment portfolio held by Ocean Wilsons Investments Limited.

 

 

 

 

 

 

 

 

 

WILSON SONS LIMITED OPERATING REVIEW

 

We have summarised the following highlights from the Wilson Sons 2011 Earnings Report released on 24 March 2012. Wilson Sons represents one segment for IFRS 8 segmental reporting purposes in the Ocean Wilsons Holdings Limited accounts. The full report is available on the Wilson Sons Limited website: www.wilsonsons.com:

 

Cezar Baião, CEO of Operations in Brazil said:

 

"Our long term approach combined with a resilient strategy warranted us another positive year in 2011. There are achievements to celebrate in each one of our business. In the past, we have made commitments to modernize and expand our terminals, to increase the productivity of our port assets, and to renew and enlarge our fleets. This year's accomplishments are directly related to those past commitments.

 

Brazil's vibrant economy continues to offer outstanding conditions, enabling us to capture new market opportunities despite the clear challenges ahead.

 

For 175 years, we have built service excellence and solid relationships forged on values ​​and principles. What Wilson Sons is today is mainly the result of the engagement of our employees, whom we thank for their exceptional commitment to the Company throughout our history. Additionally, we like to thank all of our stakeholders for the trust they have in the Wilson Sons management team."

 


 


Net Revenues

 

Record revenues of $698.0 million for 2011, up 21% year on year, reflect increases in all businesses. Port Terminals revenues have increased by 19% year on year, benefiting from a better service mix and pricing, intensified warehousing of imported cargo at both Tecons, and strong activity at Brasco. Full year comparisons for the Offshore business are positive as a result of the larger operating fleet. Logistics year on year revenues are up due to strong demand at our bonded warehouse (EADI Santo Andre) and the size and scope of dedicated logistic operations increased.

 

 

EBITDA, Adjusted EBITDA, and Operating Profit

 

EBITDA has increased significantly compared to prior year. Adjusted EBITDA also increased 15%, against 2011. Adjusted EBITDA excludes provisions for cash-settled stock options of the Long-Term Incentive Plan (LTIP) which fluctuate based on several variables, including the closing share price. Logistics delivered impressive increases for the full year comparison, due to continued demand for warehousing and integrated logistics solutions. Higher Operating Profit in Port Terminals for 2011 was due to a better pricing mix at Tecon RG, higher warehousing volumes at both container terminals, and Brasco's operation at the public port of Rio de Janeiro (that ended in October 2011).


 


CAPEX

 

Tecon Salvador's expansion, the new Guarujá II shipyard, and new Offshore and Towage vessels are the major contributors to the full-year capex of US$262.9 million.  Towage capex includes US$24.0 million for the acquisition of tugboats from Navemar, announced in August 2011. The majority of Port Terminals expenditures were linked to the expansion of Tecon Salvador - the expansion area of the terminal is expected to be operational by the beginning of the second half of 2012. Civil works for the new Guarujá II shipyard intensified and are expected to come to an end by the second half of 2012.

 

Port Terminals

 

Wilson Sons port terminals operates two container terminals, located in Rio Grande, Rio Grande do Sul and Salvador in Bahia, Brazil (Tecon Rio Grande and Tecon Salvador). Both terminals, offer assistance in port operations for loading and unloading of vessels, storage, and auxiliary services. Wilson Sons also operates Brasco, located in Rio de Janeiro, which provides support services to the oil and gas industry

Year on year revenue comparison shows an impressive 19% increase from US$228.0 million to US$271.8 million. year on year EBITDA is 20% higher, helped by better pricing, increased import warehousing, and improved deep-sea and cabotage volumes in the container terminals business.

 

Container Terminals delivered healthy revenues of US$203.5 million for 2011. Despite a weaker Brazilian Real against the US Dollar in the year, imports continued to be strong, with improved revenues from warehousing. Better pricing also helped results. Container terminal volumes at 901,300 TEUs are 2.9% down on 2010, 928,700 TEUs mainly as a result of a fall in transhipment levels. More importantly, deep-sea and cabotage volumes for the year are still up, even when considering the challenging fourth quarter environment.

 

 

Brasco revenues grew 39% for the year to US$68.3 million compared with US$49.2 million with solid demand from oil companies. Fourth quarter turnarounds fell 20% as the contract for the operation in the public port of Rio de Janeiro ending in October 2011.

 

Port terminal EBITDA for the year is up 20% to US$91.3 million (2010 US$76.3 million).

 

 

 

 

 

Logistics

 

Wilson Sons develops and provides differentiated logistics solutions for the management of the supply chain of our clients and the distribution of products, including a number of logistics services, such as, storage, customs storage, distribution, highway transportation, multimodal transportation and NVOCC - Non Vessel Operating Common Carrier.

 

Logistic revenues grew strongly in the year by US$ 38.1 million to US$ 140.5 million. (2010: US$102.4 million).

 

EBITDA year on year is up significantly, moving ahead by 86%, as a result of strong activity at the EADI and in-house operations that either began or intensified in the period. Imports remained strong, impacting positively on the performance of the EADI Santo André, the largest bonded warehouse in the state of São Paulo. Margins improved as WSLog concentrated its efforts on more profitable operations, reducing head office costs, and discontinuing some transportation contracts.


 

Towage

 

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

 

In 2011 revenues increased 7% from US$156.2 million to US$167.4 million helped by, higher harbour manoeuvre volumes, and an increase in the average deadweight of vessels served. Special Operations as a percentage of the Towage revenues at 14%, decreased slightly compared to 2010, 16% due to short-term demand volatility. The overall expansion in maritime activity in Brazil continues to provide the base for growth of this service.

 

 

Offshore

 

Through our 50/50 joint venture Wilson, Sons Ultratug (WSUT), Wilson Sons operates platform supply vessels (PSVs), to transport equipment and supplies to and from offshore oil and gas installations.

 

The financial figures correspond to Wilson, Sons 50% participation in the joint venture. Full year revenues increased 48% to US$41.4 million (2010: US$ 28.0 million) as result of a larger fleet - 2 owned PSVs and 5 chartered AHTS were added in 2011, and higher average daily rate for the fleet due to price renegotiation. EBITDA for the year decreased due to the formation of the JV in May 2010 and vessels that migrated from spot contracts to long-term contracts with Petrobras (which carry lower daily rates than spot market rates). Five foreign-flagged AHTS vessels were chartered from abroad to provide general support to clients in Brazil. The AHTS contracts have lower margins than PSVs as the vessels incur lease costs, thus impacting overall operating margins. At year end 2 PSVs were in different stages of construction at the Wilson, Sons Guarujá Shipyard.

 

 

 

 

Shipyard

 

Revenues, Operating Profit, and EBITDA figures for 2011 are all up compared to 2010 as a result of increased vessel construction for third-parties (following the formation of the offshore joint venture in May 2010, 50% of shipyard construction for the WSUT joint venture is considered third-party). Two PSVs were delivered in 2011, while another 2 PSVs are expected to be launched in 2012. Construction of tugboats for the Wilson, Sons Towage business is considered intercompany.

 

Ship Agency

 

Wilson Sons acts as the ship owners' representative as well providing the following services to ship owners: commercial representation, cargo documentation, container control and vessel support.

 

Ship Agency revenue for 2011 increased 15% to US$20.3 million as a result of higher overall volumes and increased average price for some services. Domestic and international shipping demand in Brazil continues strong. A credit to the income statement associated with the cash-settled stock options (LTIP) plan helped EBITDA improve by US$1.9 million from US$0.8 million in 2010 to US$2.5 million in 2011.


Hanseatic Asset Management LBG that manages the Group's investment portfolio reports as follows:

 

MARKET BACKGROUND

 

2011 was a difficult year for equity investors and a 'dramatic' one in terms of news flow.  The 'Arab Spring' saw uprisings spread through Tunisia, Egypt, Libya, Syria and Bahrain and resulted in the overthrow of the seemingly intractable regimes of Mubarak and Gaddafi.  The tsunami in Japan caused widespread disruption to industry's global supply chain and led to Germany abandoning its nuclear programme.  Intransigent politics in the US led to the loss of 'AAA' status for US government debt.  However, it was the danger of a meltdown in the European banking system, as the fault lines underlining the EEC and the Euro deepened and widened, that caused markets to fear the onset of a global slump and a repeat of the financial crisis of 2008.

 

The MSCI World Equity Index declined by 7.4% but the USA, where equities were marginally positive over the year, makes up nearly half of this index.  Losses elsewhere in the world were much more severe.  In particular, the 'BRIC' markets of Brazil, Russia, India and China which fell by 27%, 22%, 36% and 22% respectively.  The MSCI Japan Index lost 15.0% in US dollars and the MSCI Europe ex UK Index declined by 15.3%, also in US dollar terms.  The US dollar itself was generally stable, rising by 3.3% against the Euro, recovering by 12.4% against the Brazilian Real and declining by approximately 5% against the currencies of Japan and China.

 

The commodity complex was mixed.  Contracting economic activity was negative for industrial metals, with Copper, for example, declining by 22%.  Oil prices defied the economic environment with a barrel of Brent Crude rising by 14.1%.  Disruption to oil supply due to unrest in the Middle East and escalating tensions with Iran supported spot prices.  Food prices were weaker, falling by 11.3% from their peak in February due to more normalised climatic conditions in the summer and increased acreage in response to the price rises of previous years.  The bull market in Gold continued, supported by the monetary environment and bearish sentiment towards the integrity of the financial system.

 

Although events in Europe dominated much of the macroeconomic commentary in 2011, the most pronounced feature was the weakness in the Emerging Markets, particularly the major ones making up the 'BRIC' bloc.  In part, this can be explained by their inherently higher beta, which magnified price moves as investors sought to reduce risk - perceived as well as actual.  However, growth rates have slowed significantly in the developing economies as well as the developed ones and policy makers will be challenged to ensure 'soft' over 'hard' landings for their respective economies.  Tightening policies in China slowed the rate of growth in both money supply and credit.  The Chinese housing sector in particular was a source of concern with the contraction in home sales permeating beyond Tier One metropolitan areas to become a national phenomenon.  Manufacturing in China has clearly been impacted by the fragile state of the world economy and the new orders component of the Purchasing Managers Index has retraced to the levels of early 2009.

 

Share prices were even weaker in India as the aftermath of the corruption scandals has led to a total paralysis of decision making with regard to new projects.  Rates of inflation have proved stubborn and 14 separate interest rate increases were a further obstacle for the markets there.  Moreover, the Rupee was a significant headwind to returns in 2011, declining by 16.0% versus the US dollar.  In Brazil, US dollar denominated returns were also undermined by a weaker exchange rate although this was long overdue for many sectors of the economy.  Softer demand for raw materials as a result of the slowing pace of economic activity in China undermined sentiment toward Brazil and also Russia.

 

The key error for most investors and commentators in 2011 though, was to underestimate the escalation that occurred in the Euro area debt crisis.  The issues soon became much greater than the inability of Greece to address its lack of competitiveness, together with its unsustainable fiscal policy mix.  The distrust of the capital markets towards Greece spread rapidly to include Spain and Italy.  By the end of November, Italian government bond yields had risen to 7.6%.  Debt downgrades followed in France and Austria.  The lack of political leadership or any clear vision in Europe, together with confused policy signals from the ECB, compounded market anxiety.  Whilst the single currency has helped to ensure a convergence in inflation levels, it has masked a massive divergence in competitiveness.  Markets could see that something had to give and Greece's future within the Euro looked highly questionable.  Clearly, this has major implications for Greece's creditors - mostly European financial institutions.  Since approximately one third of all global trade is financed by European banks, the potential ramifications of these issues have spread far and wide.

 

The other major surprise of 2011 was the continued strength in the US Treasury market.  Partly this was to do with general risk aversion.  The sluggish economy helped to depress yields and private sector credit growth remained weak.  There were also technical factors holding bond yields at levels that leave no margin for error.  Quantitative Easing allowed banks to rebuild capital ratios, enjoying a free carry trade with the Federal Reserve effectively subsidising their bond purchases.

 

 

Note:       All Index performance numbers are in US dollar terms, unless specifically stated in local currency terms.

 

PORTFOLIO CONSTRUCTION

 

The portfolio's net asset value at the end of 2011 was $229.4m, which is comprised of four 'sub-portfolios':

 

i.    Global Equities

ii.    Fixed Life Alternative Assets

iii.   Market Neutral Funds

iv.    Bonds / Other

Global Equities (including listed real assets) $117.8m (51.4% of NAV) is comprised of holdings that are sensitive to stock market movements and may take the form of investments in open-ended funds, closed-ended listed funds (such as Investment Trusts), UCITS funds, long / short directional hedge funds as well as direct quoted equities.  Global Equities also includes investments in 'Listed Real Assets' (e.g. property and natural resources) which are quoted on a stock market.

 

Fixed Life Alternative Assets $39.8m (17.3% of NAV) contains fixed life investments typically with lives of approximately ten years and often structured through commitments to Limited Partnership vehicles that make investments in private equity, private real assets (such as property and natural resources) and private debt (such as distressed debt and mezzanine financing).  These investments offer access to longer cycle plays, typically with lower correlation to public security markets.  They also provide access to businesses at potentially lower valuations than in public markets and access to high quality management teams often not available through more liquid vehicles.  Finally, phased drawdown of capital helps to eliminate market timing risk.  The first commitment to Fixed Life Alternative Assets was made in 2007.  A total of 17 commitments (totalling $79.1m) have been made as at 31 December 2011.  $46.1m has been drawn down, indicating that these investments are (collectively) at an immature stage of value realisation.

 

Market Neutral Funds $45.7m (19.9% of NAV) contains lower volatility holdings in funds that engage in a variety of trading strategies across asset classes.  Each market neutral fund has a different investment mandate and it is expected that their collective performance will not be dependent on the direction of global security markets.  What they have in common is a focus on seeking to generate positive absolute returns and good downside protection in volatile markets.  In addition, Market Neutral Funds act as a secondary backstop to cash in covering long term capital commitments - thus helping to avoid excessive cash drag (especially in the current environment of near-zero interest rates).  They provide a better risk/reward allocation than other 'lower risk' investments such as investment grade bonds (where the current risk/reward offers an unattractive investment proposition).

 

Bonds / Other $26.1m (11.4% of NAV) is comprised of two constituents: (i) High Yield Bonds and (ii) Investment Grade Bonds.  Returns may be generated from an increased capital value, coupons as well as currency exposure.  High Yield Bonds $23.5m (10.2% of NAV) contains investments in Emerging Market (sovereign and corporate debt) and other Developed Market high yield corporate debt.  Investment Grade Bonds (0% of NAV) contains investments in sovereign (government) bonds as well as corporate bonds with high credit ratings (typically at least 'BBB' as defined by Standard & Poor's).  'Other' is comprised of cash valued at $2.6m (1.2% of NAV).



 

CUMULATIVE RETURNS SINCE INCEPTION

 

Performance

Since Inception

(Time-weighted)

Portfolio Performance

100.9%

MSCI World (Developed) Index

12.7%

Performance Benchmark

57.6%

 

 

 

2011 RETURNS

 

*Note:    Performance information for the MSCI All Country World Index, which includes Developed, Emerging and Frontier Markets (weighted by market capitalisation), is only available from 31 May 2002.

 

Performance

2011

(Time-weighted)

Portfolio Performance

-9.6%

MSCI World (Developed) Index

-5.5%

MSCI All Country World Index

-7.4%

MSCI Emerging Markets Index

-18.4%

Performance Benchmark

2.8%

 

The portfolio generated a time weighted return of -9.6% in 2011.

 

Cash represented approximately 1.2% of the portfolio's NAV at year end.  In comparison, the MSCI Emerging Markets Index, to which the portfolio has significant exposure (approaching 45% of net asset value), declined by -18.4%, whilst the MSCI All Country World Index (includes Developed, Emerging and Frontier Markets - weighted by market capitalisation and therefore approaching 50% in US) declined by -7.4%.

 

Since 2007, the portfolio has emphasised investments in Emerging Markets.  The reasons underpinning the case for Emerging Markets remain intact today, namely:

 

·      Growing share of global GDP

·      Strong balance sheets across the government, corporates and households, supporting future credit cycles

·      A multi-year urbanisation trend

·      Favourable demographics with low dependency rates

·      A rapidly growing middle class and development of the local consumer

·      Competitive labour costs and the need to diversify economically into value added goods and services

·      A backlog of infrastructure spending

·      Significantly undervalued currencies, many of which are pegged to the US dollar

·      Several emerging economies (e.g. Russia, Brazil and Indonesia) are backed by vast and largely untapped natural resources

 

 

 

 

 

 

 

The top contributors were:

 

Top Five Contributors (in USD)

Contribution

Performance

 

Gain

 

%

%

 

$m

Winton Futures Fund

0.2

6.3

0.3

QFR Victoria Fund

0.2

4.4

0.3

BlueBay Macro Fund

0.2

6.7

0.3

BlueCrest AllBlue

0.1

1.8

0.2

Gramercy EM Debt Allocation

0.1

3.6

0.2

TOTAL

0.8

 

 

1.3

 

In a very weak equity market environment, Market Neutral Funds (c20% of overall portfolio net asset value) posted the strongest positive contributions, including BlueBay Macro Fund (+6.7%), Winton Futures Fund (+6.3%), QFR Victoria Fund (+4.4%) and BlueCrest AllBlue (+1.8%).  These holdings collectively generated positive absolute returns in 2011.

 

 

PORTFOLIO ACTIVITY - for the year to 31 December 2011

 

During 2011, there were total purchases of $28.6m and total sales of $28.6m.

 

Within the portfolio's illiquid investments, there were new commitments to Private Assets of $17.5m and capital contributions to Private Asset of $16.0m.  During 2011, investments in Private Assets returned distributions of $3.5m.

 

Dividends - during 2011, $7.5m of assets were liquidated for payment of dividends to the shareholders of Ocean Wilsons Holdings Ltd.

 

Significant Purchases

 

New Positions

 

$m

Artemis Global Energy Fund

 

5.0

Gramercy Emerging Markets Debt - Allocation Fund

 

5.0

Schroder GAIA - Egerton European Equity Fund

 

5.0

Dynamo Brasil VIII, LLC

 

3.0

Findlay Park Latin America Fund

 

3.0

Prince Street Opportunities Fund

 

3.0

Others

 

4.6

Total

 

$28.6

 

Artemis Global Energy Fund was purchased at launch to diversify the portfolio's energy exposure.  The portfolio is concentrated and weighted towards mid and small caps.  One of the main differentiation points from other energy funds is that its major focus is not on North America but rather on Europe and Russia.  The Fund has daily liquidity.

 

Gramercy Emerging Market Debt (Allocation Fund) was purchased to diversify the portfolio's exposure to Emerging Market Debt from the sole holding in Capital International Emerging Markets Debt Fund.  The Allocation Fund provides exposure to four sub-funds investing in Local Currency Sovereign Debt, Hard Currency (USD denominated) Sovereign Debt, Corporate Debt and Distressed Debt.  The allocation to each strategy may range from 0-50%.  Cash can be up to 35%.  The Fund has monthly liquidity.

 

Schroder GAIA - Egerton European Equity Fund is a long/short UCITS vehicle.  Investments are primarily in European equities although the manager is only compelled to invest 51% in Europe.  The manager has been closed to new investors for several years.  The Fund has weekly liquidity.

 

Dynamo Brasil VIII, LLC invests in a concentrated portfolio of Brazilian quoted equities although up to 35% of its net asset value may be invested in unlisted companies.  This investment may be liquidated over a period of approximately four years.

 

Findlay Park Latin American Fund invests in a portfolio of equities across Latin America with an emphasis on Brazil.  The Fund has daily liquidity.

 

Prince Street Opportunities Fund was purchased as a differentiated fund investing in global Emerging and Frontier Market equities with a bias towards small and mid-caps.  The Fund is now closed to new investors and has quarterly liquidity.

 

Sales

 

There were sales totalling $28.6m in 2011.

 

Private Assets - Commitments

 

There were three new commitments to fixed life alternative assets in 2011:

 

New Commitments

$m

Gramercy Distressed Opportunity Fund Ltd

5.0

Hony Capital Fund V, LP

5.0

Pangaea Two, LP

7.5

Total

17.5

 

Gramercy Distressed Opportunity Fund Ltd invests in event driven distressed debt in Emerging Markets.  The Fund invests in corporate, sovereign and quasi-sovereign entities, seeking to extract value by playing an active role in the restructuring of these assets.  The manager proactively leads creditor committees and implements restructuring proposals on defaulted securities.  A global macro hedge may be utilised through Credit Default Swaps.

 

Hony Capital Fund V, LP will invest in a portfolio of private companies operating in Greater China and, to a lesser extent, in companies based outside of Greater China but with a significant 'China angle' (i.e. cross-border deals) across several sectors.  The Fund will make investments in state-owned-enterprises ("SOE's") restructurings and (ii) growth capital opportunities.  In addition, the Fund will seek to make cross-border investments by assisting Chinese companies to conduct business overseas ('outbound') and by offering multinational companies access to the Chinese market ('inbound') through the formation of strategic local partnerships.  The Fund is sponsored by Legend Holdings Ltd.

 

Pangaea Two, LP invests opportunistically across global Emerging Markets in businesses which exhibit both long-term continuities and short-term dislocations, continuing the same strategy employed since 1996.  The focus is on minority control investing, specialising in family and closely held companies and with an emphasis on building transnational and transregional rather than purely national or regional market leaders.

 

 

ANALYSIS OF FIXED LIFE ALTERNATIVE ASSETS

 

Investments in Fixed Life Alternative Assets are at a relatively immature stage of value realisation.  With a high allocation to post-2008 vintages, the Manager believes these holdings, in aggregate, represent an attractive store of future value.

 

Outstanding commitments of $33.0m are well covered by cash and investments in market neutral funds ($2.6m and $45.7m respectively).

 

Commitments and Cover

Value

 

Weighting

 

$m

 

%

Total level of commitments

 

 

 

 

 

 

 

Drawn - Investment Value

39.8

 

17.3

Undrawn

33.0

 

14.4

 

 

 

 

Cash and liquidity funds

2.6

 

1.2

Market Neutral funds (see table below)

45.7

 

19.9

 

Market Neutral Funds

Liquidity

 

Value

 

 

 

$m

BlueCrest AllBlue

Quarterly

 

11.8

BlueBay Macro Fund

Monthly


5.3

GLG Emerging Currency and Fixed Income Fund

Daily


10.9

QFR Victoria Fund

Quarterly


8.0

Schroder ISF EM Debt Absolute Return

Daily


3.9

Winton Futures Fund

Monthly


5.8

Total



45.7

 

 

INVESTMENT PORTFOLIO at 31 December 2011

 Market Value 

 

% of

 

 $000

 

NAV

BlueCrest AllBlue Leveraged Feeder Fund

11,790

 

5.1

Findlay Park American Fund

11,330

 

4.9

GLG Emerging Currency and Fixed Income Fund

10,860

 

4.7

Lansdowne UK Equity Fund

9,170

 

4.0

BlackRock World Mining Trust Plc

9,060

 

3.9

QFR Victoria Fund

7,990

 

3.5

AR New Asia Fund

7,590

 

3.3

Oaktree CM Value Opportunities Fund Ltd

7,140

 

3.1

BlackRock UK Emerging Companies Hedge Fund

6,650

 

2.9

Capital International Emerging Markets Debt Fund

6,100

 

2.7

 Top 10 Holdings

87,680

 

38.1%

Winton Futures Fund

5,800

 

2.5

Jupiter European Opportunities Trust Plc

5,710

 

2.5

Aberdeen Global - Asia Pacific Fund

5,410

 

2.4

BlueBay Macro Fund

5,340

 

2.3

SR Global Fund - Emerging Markets

5,240

 

2.3

Gramercy Emerging Market Debt (Allocation Fund)

5,180

 

2.3

Gramercy Distressed Opportunity Fund Ltd

5,000

 

2.2

Schroder GAIA - Egerton European Equity

4,720

 

2.1

Schroder ISF Global Energy Fund

4,530

 

2.0

Prosperity Quest Fund

4,260

 

1.9

 Top 20 Holdings

138,870

 

60.6%

R/C Global Energy and Power Fund IV, LP

4,210

 

1.8

Artemis Global Energy Fund

4,170

 

1.8

Capital International Private Equity Fund V, LP

4,130

 

1.8

Schroder ISF Emerging Markets Debt Absolute Return

3,890

 

1.7

JO Hambro Japan Fund

3,890

 

1.7

Pacific Alliance China Land Ltd

3,840

 

1.7

China Harvest Fund II, LP

3,750

 

1.6

Neptune Russia & Greater Russia Fund

3,590

 

1.6

Greenspring Global Partners IV, LP

3,350

 

1.5

Investec GSF Enhanced Global Energy Fund

3,340

 

1.5

 Top 30 Holdings

177,030

 

77.3%

 

 

 

 

31 remaining holdings

49,770

 

21.5%

 

 

 

 

Cash

2,640

 

1.2%

 

 

 

 

 TOTAL

229,440

 

100.0%

 

MARKET OUTLOOK

 

Politics are set to be a dominant feature of the market landscape in the coming year.  Important leadership elections are in prospect in the USA, France, Russia, India, China and Greece.  In the USA, election years are typically characterised by benign policy settings and the US economy, which has shown greater resilience last year, is likely to outperform other developed economies in 2012.

 

Offsetting the deflationary impact of private sector deleveraging is likely to remain the central concern of monetary policy.  Consequently, the distortions and misallocations that have accompanied negative real rates of interest look set to persist.  The bull markets in gold and US government bonds are examples of this.  So thin is the value proposition in these two asset classes that they remain hugely vulnerable to any normalisation in interest rates.  Ironically, despite the very high level of risk inherent in current levels both asses classes are perceived as 'safe havens'.

 

An environment of monetary and fiscal laxity should be broadly supportive for equities in the US and the improving trend seen recently in employment and consumer spending should continue.  The US has clear leadership in the two sectors, healthcare and technology, which stood out last year.  A combination of favourable demographics in the case of healthcare and product innovation in the case of technology underpins these sectors and by extension should be positive for US equities.  What will be more challenging however for the US market is sustaining the current levels of corporate profitability.  Profit margins are currently equivalent to 7.2% of GDP, their highest level in 50 years.  Threats could come from a number of directions.  Profits in the financial sector have been boosted by the US Federal Reserve effectively financing 'free' investment in the US treasury market and many distressed assets have yet to be marked to market realistically.  The disparity between the top levels of pay and general employee compensation has never been wider and is an issue that has now entered the political arena.  Export revenues are under pressure from the recession in Europe and the slowdown in Asia.  Finally, all oil-importing countries are under threat as a result of the tension with Iran and potential for oil supply interruption.  Going forwards, whoever is elected will have to address the fact that policy in the US is on an unsustainable footing with no debt ceiling.  Greater austerity or higher taxes cannot be postponed indefinitely and the capital markets are likely to focus on this at some point in 2012.

 

Looking further ahead for the US, it is interesting to note that BP Plc forecasts that unconventional ('shale') supplies of energy will make the US self-sufficient by 2030.  The BP report forecasts a growth in unconventional energy sources "including US shale oil and gas, Canadian oil sands and Brazilian deepwater, plus a gradual decline in demand, that would see the western hemisphere become almost totally energy self-sufficient" in two decades.  This potential development has significant geopolitical implications for the US economy and the country's relations with the Middle East and 'OPEC' countries in particular.

 

After negative growth in the fourth quarter, it seems inevitable that Europe has entered a recession.  The problems facing the region go beyond the failings of the peripheral economies.  Even in Germany, which had been the standout performer, recent economic data such as the leading indicators and sentiment surveys point to a rapid deceleration and confirm that Germany is not immune to the downward spiral in confidence currently afoot in Euroland.  Most economists expect Greece to depart the Euro as releasing itself from what has become a straightjacket may be its only option.  Whether or not this occurs, the crisis has highlighted much broader strains in the Euro.  Monetary union without fiscal union was always going to be problematic.  It is hard to believe that a choice between prolonged severe austerity or continued bailouts from Germany to the weaker economies is going to be politically acceptable anywhere.  In Spain, youth unemployment is estimated to be running at 40% and at the other end of the age spectrum, there is an ever growing number of retirees in Europe who are planning to live for the next 30 years on government pensions.

 

In December 2011, it seemed inevitable in the face of these severe pressures that the ECB would need to change tack and pursue more accommodative policies.  The recent actions of the ECB under Mario Draghi, who took over the ECB Presidency from Jean-Claude Trichet in November 2011, have brought some relief to capital markets but potentially at the expense of a strong Euro whose resilience thus far has been difficult to understand.  Specifically, the ECB's €1trn Long Term Refinancing Operations ("LTRO") have provided cheap (three year) liquidity to ailing banks, which in turn have invested much of these proceeds in sovereign bonds.  This infusion has led to significant reductions in the borrowing costs of Italy and Spain and temporarily allayed market and sovereign risk tensions.

 

Against this background, constructing a positive case for equity investing in 2012 is challenging.  However, it is because the risk of escalating financial crisis remain so high that monetary policy globally is likely to remain loose.  Whatever their ideology, it should become apparent to politicians that an exclusive focus on austerity is likely to be self-defeating.  If markets see the prospect of some improvement in economic growth in a low interest rate and low inflation environment, this should revive an appetite for risk assets.  After the intensity of bearishness in 2011 and the severity of market falls, equities offer good value in most markets.  Whilst the US tends to lead the global economy, the recovery potential remains greatest in many of the Emerging Markets.  Equity markets usually start to rise when the headlines are at their blackest as evidenced by the strong start to 2012 where Emerging Markets, in particular, have rebounded strongly.

 

 

 

 

Hanseatic Asset Management LBG                          March 2012

 

 

 

 

 

 

 

Ocean Wilsons Holdings Limited

Consolidated statement of comprehensive income

for the year ended 31 December 2011

 

 





Year to


 

Year to






31 December


31 December






2011


2010






US$'000


US$'000












Notes














Revenue

3


698,044


575,551










Raw materials and consumables used



(82,889)


(67,222)


Employee benefits expense

6


(239,543)


(205,486)


Depreciation & amortisation expense

5


(59,479)


(42,923)


Other operating expenses



(221,159)


(192,090)


Profit on disposal of property, plant and equipment



1,959


90


Operating profit



96,933


67,920


Profit realised on formation of joint venture

14


-


20,407


Investment revenue

7


10,203


17,982


Other gains and losses

8


(27,818)


22,460


Finance costs

9


(20,741)


(11,611)


Profit before tax



58,577


117,158


Income tax expense

10


(51,615)


(30,564)


Profit for the year



6,962


86,594


Other comprehensive income







Exchange differences arising on translation of







foreign operations



(12,277)


4,644


Other  comprehensive (loss) / income for the year



(12,277)


4,644


Total  comprehensive (loss) / income for the year



(5,315)


91,238


(Loss) / profit for the period attributable to:







Equity holders of parent



(8,639)


56,879


Non-controlling interests



15,601


29,715






6,962


86,594


Total comprehensive (loss) / income for the period attributable to:







Equity holders of parent



(15,708)


59,749


Non-controlling interests



10,393


31,489






(5,315)


 91,238










(Loss) / earnings per share







Basic and diluted

12


(24.4c)


160.8c

 

Ocean Wilsons Holdings Limited

Consolidated Balance Sheet

As at 31 December 2011




As at


As at




31 December


31 December




2011


2010




US$'000


US$'000

Non-current assets






Goodwill

13

15,612


15,612


Other intangible assets


28,546


16,841


Property, plant and equipment


725,869


560,846


Deferred tax assets


28,525


28,923


Trade and other receivables


28,240


6,400


Long term investments


1,072


-


Other non-current assets


8,412


6,550




836,276


635,172

Current assets






Inventories


21,142


20,147


Trading investments


251,297


297,273


Trade and other receivables


135,574


129,242


Cash and cash equivalents


119,323


130,071




527,336


576,733







Total assets


1,363,612


1,211,905







Current liabilities






Trade and other payables


(120,324)


(126,656)


Current tax liabilities


(3,472)


(3,354)


Obligations under finance leases


(3,787)


(4,847)


Bank overdrafts and loans


(32,672)


(25,565)




(160,255)


(160,422)







Net current assets


367,081


416,311







Non-current liabilities






Trade and other payables


(2,471)


-


Bank loans


(451,381)


(288,596)


Deferred tax liabilities


(26,093)


(15,073)


Provisions


(13,378)


(12,289)


Obligations under finance leases


(3,278)





(496,601)


(322,263)







Total liabilities


(656,856)


(482,685)







Net assets


706,756


729,220







Capital and reserves






Share capital


11,390


11,390


Retained earnings


453,205


475,042


Capital reserves


31,760


31,760


Translation reserve


9,831


16,900

Equity attributable to equity holders of the parent


506,186


535,092

Non-controlling interests


200,570


194,128

Total equity


706,756


729,220

 

 

 

Ocean Wilsons Holdings Limited

Consolidated Statement of Changes in Equity

As at 31 December 2011






Attributable








to equity




Share

Retained

Capital

Translation

holders of

Non-controlling

Total


capital

earnings

reserves

reserve

the parent

interests

equity


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

For the year ended 31 December 2010








Balance at 1 January 2010

11,390

435,844

31,760

14,030

493,024

180,221

673,245

Currency translation adjustment

 -

 -

 -

2,870

2,870

1,774

4,644

Profit for the period

 -

56,879

 -

 -

56,879

29,715

86,594

Total income and expense for the period

-

56,879

-

2,870

59,749

31,489

91,238

Dividends

 -

(14,853)

-

 -

(14,853)

(11,405)

(26,258)

Acquisition of non-controlling interest

 -

(2,828)

 -

 -

(2,828)

(6,177)

(9,005)

Balance at 31 December 2010

11,390

475,042

31,760

16,900

535,092

194,128

729,220









For the year ended 31 December 2010








Balance at 1 January 2011

11,390

475,042

31,760

16,900

535,092

194,128

729,220

Currency translation adjustment

 -

 -

 -

(7,069)

(7,069)

(5,208)

(12,277)

(Loss) / profit for the period

 -

(8,639)

 -

 -

(8,639)

15,601

6,962

Total income and expense for the period

-

(8,639)

-

(7,069)

(15,708)

10,393

(5,315)

Dividends

 -

(14,853)

-

 -

(14,853)

(7,543)

(22,396)

Sale of non-controlling interest

 -

1,655

 -

 -

1,655

3,592

5,247

Balance at 31 December 2011

11,390

453,205

31,760

9,831

506,186

200,570

706,756

 

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 subsidiaries and Brazilian holding company which in prior periods were required by law to be transferred to capital reserves and other profits not available for distribution; and

(b) Wilson Sons Limited byelaws require the company to credit an amount equal to 5% of the company's net profit to a retained earnings account to be called legal reserve until such amount equals 20% of the Wilson Sons Limited share capital.

 

Translation reserve

The translation reserve arises from exchange differences on the translation of operations with a functional currency other than US Dollars.

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

 

 

 

 

 

 

 

 

Ocean Wilsons Holdings Limited

Consolidated Cash Flow Statement

For the year ended 31 December 2011




Year to


Year to




31 December


31 December




2011


2010



Notes

US$'000


US$'000







Net cash inflow from operating activities

16

70,533


85,538







Investing activities





Interest received


10,158


10,159

Dividends received from trading investments


4,002


3,795

Proceeds on disposal of trading investments


98,323


120,849

Proceeds on disposal of property, plant and equipment


7,384


959

Purchases of property, plant and equipment


(234,009)


(161,971)

Purchase of intangible asset


(6,807)


(14,546)

Purchases of trading investments


(81,237)


(145,884)

Net cash inflow arising from creation of joint venture


-


5,040

Prepayment on Briclog acquisition


(5,331)


-

Net cash used in investing activities

(207,517)


(181,599)












Financing activities





Dividends paid

11

(14,853)


(14,853)

Dividends paid to non-controlling interests in subsidiary


(7,543)


(11,405)

Repayments of borrowings


(28,415)


(18,953)

Repayments of obligations under finance leases


(5,940)


(3,969)

New bank loans raised


195,979


77,650

(Decrease) / increase in bank overdrafts


(6,347)


6,252

Net cash outflow arising on purchase of non-controlling interest

-


(9,005)

Net cash inflow arising on sale of non-controlling interest


670


-

Net cash from financing activities


133,551


25,717






Net decrease in cash and cash equivalents


(3,433)


(70,344)






Cash and cash equivalents at beginning of year


130,071


196,428

Effect of foreign exchange rate changes


(7,315)


3,987







Cash and cash equivalents at end of year


119,323


130,071

 

   

 

 

Ocean Wilsons Holdings Limited 
Notes to the Accounts 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.
General information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The financial statements have been prepared on the historical cost basis except for the revaluation of financial investments. The accounting policies are consistent with those set out in the 2010 Group annual report.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.
Basis of Preparation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The financial information set out in this announcement does not constitute the Group’s statutory financial statements for the years ended 31 December 2011 or 2010, but is derived from those accounts. The auditors have reported on those accounts and their reports were unqualified.
 
The Group closely monitors and manages its liquidity risk. The Group has considerable financial resources including US$119.3 million in cash and cash equivalents and the Groups borrowings have a long maturity profile. Based on the Group’s cash forecasts and sensitivities run the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.
 
 
Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.

3.

Revenue














Year ended


Year ended


An analysis of the Group's revenue is as follows:

31 December


31 December




2011


2010




US$'000


US$'000








Sales of services


642,680


536,258


Revenue from construction contracts


55,364


39,293




698,044


575,551


Investment income (note 7)


10,203


17,982




708,247


593,533


All revenue is derived from continuing operations




 

4.
Business and geographical segments
 
 
 
Business segments
 
Ocean Wilsons Holdings has two reportable segments: Maritime services and investments.
 
The maritime services segment provides towage, port terminals, ship agency, offshore, logistics and vessel construction services in Brazil.
 
The investment segment holds a portfolio of international investments.
 
 
Segment information relating to these businesses is presented below.

 
 
 
 
 
 
 
For the year ended 31 December 2011
 
 
 
 
 
 
 
 
 
 
Maritime
 
 
 
 
 
 
 
 
Services
 
Investment
 
Unallocated
 
Consolidated
 
 
Year ended
 
Year ended
 
Year ended
 
Year ended
 
 
31 December
 
31 December
 
31 December
 
31 December
 
 
2011
 
2011
 
2011
 
2011
 
 
US$'000
 
US$'000
 
US$'000
 
US$'000
 
 
 
 
 
 
 
 
 
Revenue
 
698,044
 
-
 
-
 
698,044
Result
 
 
 
 
 
 
 
 
Segment result
 
103,789
 
(2,800)
 
(4,056)
 
96,933
Investment revenue
 
6,068
 
4,129
 
6
 
10,203
Other gains and losses
 
 -
 
(27,818)
 
 -
 
(27,818)
Finance costs
 
(20,741)
 
-
 
-
 
(20,741)
Profit before tax
 
89,116
 
(26,489)
 
(4,050)
 
58,577
Tax
 
(51,615)
 
0
 
-
 
(51,615)
Profit after tax
 
37,501
 
(26,489)
 
(4,050)
 
6,962
 
 
 
 
 
 
 
 
 
Other information
 
 
 
 
 
 
 
 
Capital additions
 
(262,934)
 
-
 
-
 
(262,934)
Depreciation and amortisation
 
(59,478)
 
-
 
(1)
 
(59,479)
 
 
 
 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Segment assets
 
1,130,328
 
230,848
 
2,436
 
1,363,612
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Segment liabilities
 
(650,667)
 
(300)
 
(5,889)
 
(656,856)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended 31 December 2010
 
 
 
 
 
 
 
 
 
 
Maritime
 
 
 
 
 
 
 
 
Services
 
Investment
 
Unallocated
 
Consolidated
 
 
Year ended
 
Year ended
 
Year ended
 
Year ended
 
 
31 December
 
31 December
 
31 December
 
31 December
 
 
2010
 
2010
 
2010
 
2010
 
 
US$'000
 
US$'000
 
US$'000
 
US$'000
 
 
 
 
 
 
 
 
 
Revenue
 
575,551
 
-
 
-
 
575,551
Result
 
 
 
 
 
 
 
 
Segment result
 
78,456
 
(2,930)
 
(7,606)
 
67,920
Profit realised on formation of joint venture
 
20,407
 
-
 
-
 
20,407
Investment revenue
 
13,940
 
3,953
 
89
 
17,982
Other gains and losses
 
 -
 
22,460
 
 -
 
22,460
Finance costs
 
(11,611)
 
-
 
-
 
(11,611)
Profit before tax
 
101,192
 
23,483
 
(7,517)
 
117,158
Tax
 
(30,564)
 
0
 
-
 
(30,564)
Profit after tax
 
70,628
 
23,483
 
(7,517)
 
86,594
 
 
 
 
 
 
 
 
 
Other information
 
 
 
 
 
 
 
 
Capital additions
 
(181,285)
 
-
 
-
 
(181,285)
Depreciation and amortisation
 
(42,922)
 
-
 
(1)
 
(42,923)
 
 
 
 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Segment assets
 
939,521
 
265,023
 
7,361
 
1,211,905
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Segment liabilities
 
(472,309)
 
(505)
 
(9,871)
 
(482,685)
 
 
 
 
 
 
 
 
 

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.

 

Unallocated corporate costs, assets and liabilities include the Ocean Wilsons Holdings Limited long-term incentive plan. The long-term incentive plan is a cash settled phantom option scheme linked to the Wilson Sons Limited share price. The scheme is fair valued using a Binomial model at each reporting date.

 

 

 

 

 

 

 

 

 

 

 

Geographical Segments  

The Group's operations are located in Bermuda, Brazil, 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









Year ended


Year ended





31 December


31 December


31 December


31 December





2011


2010


2011


2010





US$'000


US$'000


US$'000


US$'000

Brazil




1,062,836


869,766


262,934


181,285

Bermuda




299,314


340,527


-


-

Other




1,462


1,612


 -


 -





1,363,612


1,211,905


262,934


181,285











 

 

 

 

 

5.   

Profit for the year












Year ended


Year ended


Profit for the year has been arrived at after charging:


2011


2010






US$'000


US$'000


Net foreign exchange losses




(12,618)


4,214


Depreciation of property plant and equipment




56,779


42,435


Amortisation of intangible assets




2,700


488


Operating lease rentals




17,520


14,528


Auditors' remuneration for audit services (see below)


903


894


Non-executive directors emoluments




283


259










A more detailed analysis of auditors remuneration is provided below:













Statutory audit




756


806


Further assurance services




141


75


Other services




6


13






903


894

 

 

 

 

 

 

 

 

 

6.

 

 

 

 

 

 

 

 

 

Employee benefits expense






Year ended


Year ended



31 December


31 December



2011


2010



US$'000


US$'000


Aggregate remuneration comprised:





Wages and salaries

197,591


149,582


Share based payment expense

(7,880)


16,545


Social security costs

48,604


38,474


Other pension costs

1,228


885



239,543


205,486



7.

Investment revenue








Year ended


Year ended




31 December


31 December




2011


2010




US$'000


US$'000








Interest on bank deposits


13,463


10,159


Exchange (losses) / gains on cash


(7,315)


3,987


Dividends from equity investments


4,002


3,795


Investment revenues from underwriting activities

53


 41




10,203


17,982

8.

 

Other gains and losses










Year ended


Year ended





31 December


31 December





2011


2010





US$'000


US$'000









(Decrease) / increase in fair value of trading investments held at year end

(28,148)


21,332


(Loss) / profit on disposal of trading investments


330


1,128





(27,818)


22,460

 

9.

Finance costs






Year ended


Year ended



31 December


31 December



2011


2010



US$'000


US$'000







Interest on bank overdrafts and loans

13,034


9,354


Exchange loss / (gain) on foreign currency borrowings

5,303


(227)


Interest on obligations under finance leases

1,433


1,848


Total borrowing costs

19,770


10,975


Other interest

971


636



20,741


11,611

Borrowing costs incurred on qualifying assets of US$4,000,000 (2010: US$1,889,000) were capitalised in the year at an average interest rate of 3.37% (2010:3.83%)


10.

Taxation










Year ended


Year ended





31 December


31 December





2011


2010





US$'000


US$'000


Current







Brazilian taxation







   Corporation tax



30,408


22,747


   Social contribution



10,933


8,492


Total current tax



41,341


31,239


Deferred tax







  (Credit) / charge for the year in respect of deferred tax liabilities

(12,700)


7,353


Charge / (credit) for the year in respect of deferred tax assets

22,974


(8,028)


Total deferred tax



10,274


(675)









Total taxation



51,615


30,564

Brazilian corporation tax is calculated at 25 percent (2010: 25 percent) of the assessable profit for the year.

Brazilian social contribution tax is calculated at 9 percent (2010: 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 31 March 2035.

 

The charge for the year can be reconciled to the profit per the statement of comprehensive income as follows:




31 December


31 December




2011


2010




US$'000


US$'000








Profit before tax


58,577


117,158








Tax at the standard Brazilian tax rate of 34% (2010 - 34%)


19,916


39,834








Tax effect of expenses / income that are not included in determining taxable profit


23,738


(9,292)


Effect of different tax rates of subsidiaries operating in other jurisdictions


7,961


22








Tax expense and effective rate for the year


51,615


30,564


Effective rate for the year


88%


26%














The Group earns its profits primarily in Brazil. Therefore, the tax rate used for tax on profit on ordinary activities is the standard rate in Brazil of 34%, consisting of corporation tax, 25% and social contribution 9%.


 

 

 

 





11.

Dividends








Year ended


Year ended




31 December


31 December




2011


2010




US$'000


US$'000








Amounts recognised as distributions to equity holders in the period 












Final dividend paid for the year ended 31 December 2010 of 38.0c (2009: zero) per share


13,438

 


-


Second interim dividend paid for the year ended 31 December 2009 of 38.0c per share


-


13,438


First interim dividend paid for the year ended 31 December 2011 of 4.0c per share (2010: 4.0c)


1,415

 


1,415

 




14,853

 


14,853


Proposed final dividend for the year ended 31 December 2011 of 26.0c (2010: 38c) per share


  10,255


13,438



 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

 

12.

Earnings per share


The calculation of the basic and diluted earnings per share is based on the following data:




















Year ended


Year ended









31 December


31 December









2011


2010


Earnings :







US$'000


US$'000













Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of parent.                                              

(8,639)


56,879













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

 

13.

 

Goodwill








2011


2010




US$'000


US$'000


Cost and carrying amount






At 1 January and 31 December


15,612


15,612








Goodwill attributed to Tecon Rio Grande


13,132


13,132


Goodwill attributed to Tecon Salvador


2,480


2,480

 

The Group tests annually for impairment or more frequently if there are indications that goodwill might be impaired.

 

 

For the purposes of testing goodwill for impairment the Group prepares cash flow forecasts for the relevant cash generating unit (Tecon Rio Grande and Tecon Salvador) derived from the most recent financial budget for the next year and extrapolates cash flows for the remaining life of the concession based on an estimated annual growth of between 8% and 9% for Tecon Rio Grande (2010: 8% to 10%) and 7% to 8% for Tecon Salvador (2010: 7% to 10%). This rate does not exceed the average long-term historical growth rate for the relevant market. Management estimates growth rates based on past performance, current market conditions and expectations of future market changes.

The rate used after tax to discount forecast cash flows is 12% (2010: 13%)

 

 

14.

Joint venture formation













 

On 28 May 2010 the Group finalised the offshore joint venture "Wilson, Sons Ultratug Participacoes S.A" with Remolcadores Ultratug Ltda, a subsidiary of Ultratug Ltda, a Chilean Group.

 

The Group contributed its 50% participation of the joint venture with the issued shares of Wilson, Sons Offshore S.A., the company that owns and operates the Group's offshore supply vessels. The Ultratug Group contributed its 50% participation of the joint venture with the issued shares of Magallanes Navegacao Brasileira S.A., the owner of the Ultratug Group's offshore operations in Brazil and US$14.3 million in cash.

 

A gain of US$20.4 million was realised on formation of the joint venture.







 

 

15.

 

Sale of non-controlling interest


 

On January 26th 2011, Intermarítima Terminais Ltda ("Intermarítima") exercised a call option granted by the Group to buy 7.5% of the ordinary shares of Tecon Salvador S.A, a subsidiary of the Company, at a price of US$6.7million of which US$0.7 million was received in 2011. The right of Intermarítima to exercise this option was subject to the Company gaining the right to operate exclusively in the area of Salvador's Port referred to as "Ponta Norte".

Following the sale of the 7.5% interest the Group retained a 53.88% interest in Tecon Salvador S.A.

The difference between the consideration received and the book value of the net assets disposed of US$2.8 million has been recognised in equity.

 




Total consideration




6,710

Net assets disposed off




(2,408)

Taxation




(1,463)

Gain recognised in equity


2,839

Net assets disposed of recognised in equity


2,408

Positive movement recognised in equity


5,247




Positive movement attributable to equity holders of parent


1,655

Positive movement attributable to non-controlling interest


3,592

 

 



16.

Notes to the cash flow statement














Year ended


Year ended







31 December


31 December







2011


2010


Reconciliation from profit before tax to net cash from operating activities

US$'000


US$'000











Profit before tax





58,577


117,158


Profit realised on formation of joint venture





-


(20,407)


Investment revenues





(10,203)


(17,982)


Other gains and losses





27,818


(22,460)


Finance costs





20,741


11,611


Operating profit





96,933


67,920


Adjustments for:









Depreciation of property, plant and equipment





56,779


42,435


Amortisation of intangible assets





2,700


488


Share based payment expense





(7,880)


16,545


Gain on disposal of property, plant and equipment




(1,959)


(90)


Increase / (decrease) in provisions





1,089


2,458


Operating cash flows before movements in working capital



147,662


129,756











Increase in inventories





(995)


25


Increase in receivables





(17,466)


(28,487)


Increase in payables





(4,556)


9,117


(Increase) / decrease in other non-current assets




(1,862)


3,922


Cash generated by operations





122,783


114,333











Income taxes paid





(34,654)


(20,908)


Interest paid





(17,596)


(7,887)











Net cash from operating activities





70,533


85,538

 

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 
Wilson Sons Limited has investments in private investment funds that are consolidated in the financial statements as cash equivalents.
The private investment funds are considered as cash equivalents as despite the certificates of deposit having maturities up to March 2018, 95% of funds invested are available on call and the balance on one day’s notice. The intention of the Group is that these resources will be used in the trading activities of the Group. These private investment funds comprise certificates of deposit and equivalent instruments with final maturities ranging from January 2012 to May 2014 and government securities with final maturities ranging from March 2013 to March 2018. 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.
These 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.
 
Cash and cash equivalents held in Brazil amount to US$111.8 million (2010: US$ 85.8 million).
Cash equivalents are held for the purpose of meeting short term cash commitments and not for cash investment purposes.
Additions to plant and equipment during the year amounting to US$3.1 million (2010: US$1.9 million) were financed by new finance leases.
 

 

 

 

 

Company Contact

 

Keith Middleton                                                             1 441 295 1309

 

Seymour Pierce Limited                                                 020 7107 8000

 

Guy Peters - Corporate Finance

David Banks - Corporate Broking

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR BKPDDNBKBPNB
UK 100

Latest directors dealings