Ocean Wilsons Holdings Limited's Chairman Announces Preliminary Interim Results

The first half of the year has seen good revenue growth compared to the same period last year.  Revenue increased by 32% to US$ 123.8 million (2004: US$ 93.8million) with increases in most key businesses. As a result of changes in the sales mix and the appreciation of the $Real, operating margins were slightly down. Nevertheless Group operating profit improved 23% to US$19.0 million (2004: US$ 15.4 million).

The towage business continued to perform strongly. Towage revenue increased 14% in US Dollar terms driven by an increase in the number of vessels attended and towage support for salvage operations although operating margins were adversely affected by the appreciation of the $Real against the US Dollar. The shipyard generated significant revenue in the period, with work continuing on the modernisation and conversion of the platform supply vessels for Delba Maritima and Companhia Brasileira de Offshore (CBO). The Tugboats Haris and Cetus were completed at our shipyard as part of our ongoing tug fleet renewal programme.

The ship agency division's turnover increased 26% in US Dollar terms compared to the same period last year due to higher volumes and pricing adjustments. 

In Tecon Rio Grande volumes were up 11% at 311,901TEUs (Twenty foot equivalent units), (2004: 280,015 TEUs). The expansion of Tecon Rio Grande commenced in February with the signing of a contract to deliver two new super post panamax cranes in March 2006; construction of the new berth is forecast to begin in early 2006. Project finance of US$16.2 million for the project is being provided by the International Finance Corporation (IFC), a member of the World Bank.

Revenue at Tecon Salvador grew 54% over first half 2004, influenced by growth in higher priced ocean going traffic, the appreciation of the $Real and increased volumes.  

Investment revenues in the first half of 2005 were US$ 11.3 million, compared with US$ 4.2 million in the first half of 2004. Higher investment revenue resulted mainly from increases in the fair value of the investment portfolio, exchange gains on cash and trading investments and improved income from our underwriting subsidiary at Lloyds. Investment revenue will remain sensitive to movements in the US Dollar /$Real exchange rate.

Finance costs amounted to US$3.1 million (2004: US$4.3 million) benefiting from exchange gains on the US Dollar borrowings held by $Real functional currency businesses, principally Tecon Salvador and Dragaport.

Profit before taxation was US$27.8. million (2004: US$17.2 million) reflecting the higher operating profit and investment revenues. Earnings per share based on ordinary activities after taxation and minority interests were 54.1cents (2004: 27.0cents).

Exchange rates

The $Real appreciated 12% against the US Dollar from 2.66 at 1 January 2005 to 2.35 at the period end.

Strategic review

In September 2005 the Board of Ocean Wilsons Holdings Limited announced that it had concluded the review of its strategic options in relation to the Company's Brazilian operations and had decided to continue to remain focused on its current operations and to invest in their future development.

The acquisition of a further 33% equity interest in Tecon Rio Grande S.A. announced in August 2005 for $Real 55.5 million, approximately US$23.7 million is consistent with the Board's strategy and strengthens the Company's position in the growing container terminal market in Brazil.  For the six months ended 30 June 2005 Tecon Rio Grande was consolidated 100% with a 33% minority interest.

The Board believes that the strength of our Brazilian business continues to present exciting opportunities for future growth and remains committed to creating long term value for shareholders.

Dividend

The board has resolved that an interim dividend of 2.00cents per share (2004: 2.00 cents per share) be paid on 30 November 2005 to shareholders on the register at close of business on 11 November 2005. As previously stated future dividend payments will be determined by the Board taking into consideration all aspects of the Group's business, but primarily profitability and free cash flow.

Cash flow and capital expenditure

Net cash inflow from operating activities was US$10.2 million in the first six months of 2005 compared with US$ 7.4 million in the same period last year, reflecting the improved operating result and normal working capital movements. Capital expenditure in the period amounted to US$18.9 million (2004: US$ 6.6 million), the major elements being expenditure on tug construction and equipment for the expansion of Tecon Rio Grande. At 30 June 2005 Group debt was US$99.6 million (31 December 2004: - US$ 99.7 million).

Investment Portfolio

At 31 August 2005 the investment portfolio (including cash under management of US$3.1 million) held outside Brazil was approximately US$65.1 million, a gain of 4.7% since year end.

Balance sheet  

Equity increased from US$ 147.4 million at the beginning of the year to US$ 167.3 million mainly due to the profit in the period less the dividend in respect of 2004 which was approved and paid in the first half of 2005. At 30 June 2005, the Group's net assets amounted to US$ 167.3 million (31 December 2004: - US$ 147.4 million).  This is the equivalent of  $4.73 per share (31 December 2004: - $4.17). Net assets located in Brazil account for $3.13  (31 December 2004: - $2.64) and net assets outside Brazil $1.60 (31 December 2004: - $1.53 cents).

International Financial Reporting Standards

The financial information contained in this interim report, including all comparatives, has been prepared in accordance with International Financial Reporting Standards ("IFRS") in place of UK GAAP. Further details are given in the IAS interim restatement available on the Company's website and released to the London and Bermuda stock exchanges. The Group also published financial information in accordance with IFRS for the year ended 31 December 2004 on the 11 October 2005.

IFRS have had and will continue to have a significant impact on the Group's accounts and I encourage all shareholders to read the details contained in these news releases.

Future Prospects

The operating results for the third quarter are marginally down on the same period in 2004 although we remain positive. The Groups results remain sensitive to movements in the $Real exchange rate. 

Signed by:

J F Gouvêa Vieira

26 October 2005