Ocean Wilson Holdings Limited - Chairman's Interim Statement

Hamilton, Bermuda: 11 October, 2006 -- Ocean Wilson Holding Limited (OCN.BH) announced to the Exchange that the Group produced a good performance in the first half of 2006.  Group turnover increased by 21% to US$150.4 million, compared with US$ 123.8 million in the first six months of 2005 driven principally by growth in the port operations and logistics business. Operating profit increased by 20% from US$19.7 to US$23.7 million mainly as a result of profit on disposal of our interest in the joint venture, WR Operações Portuárias Ltda and the release of surplus on the acquisition of our subsidiary, Brasco. Adjusting for these non-repeating items, operating profit at US$ 19.1 million was in line with the comparative period in 2005. The decline in margins from prior period reflects the increased market pressures, sales mix and currency movements.

Towage revenue in US Dollars for the six months to 30 June 2006 grew 12% compared with prior period due to a stronger Real and an increase in the average size of vessels attended. Volumes were similar to 2005 with a fall in our overall market share.  Margins have declined as a result of increased costs, principally fuel, maintenance and service costs. During the period the 73 ton bollard pull tugboats, Aquarius and Volans were completed at our shipyard as part of our ongoing tug fleet renewal programme and construction commenced on our third platform supply vessel.

The first six months of 2006 were more difficult than expected for the ship agency division. Turnover remained in line with the comparative period in 2005 although margins were impacted by a fall in international freight rates and the stronger Real.

Following eight years of double digit growth, volumes handled at Tecon Rio Grande decreased for the first time, 5% compared with the equivalent period in 2005 to 297,178 TEUs (Twenty foot equivalent units), (2005: 311,901). The downturn in volumes was caused principally by the strong Real, Asian bird flu crisis and continuing drought, which depressed exports from the region. Despite the fall in volumes operating margins and turnover improved driven by  a recovery in tariffs that partially offset the price erosion of recent years. Construction of the third berth to expand the terminal is underway and is forecast for completion by the end of 2007.

Tecon Salvador had another satisfactory result, reporting a 9% rise in container throughput to 100,205 TEUs. Turnover was 36% higher than first half  2005 mainly as the result of higher volumes and the appreciation of the Real against the US Dollar.  

Our joint venture dredging company, Dragaport reported substantially improved results in the period with dredging work performed in Angra dos Reis, Santos and Rio Grande.

Investment revenues decreased from US$10.4 million to US$ 7.1million, due to a fall in revenue from underwriting activities and reduced exchange gains on cash and cash equivalents.

Other gains arise from the Group's portfolio of trading investments comprising; increases in the fair value of trading investments held at period end; exchange gains on trading investments and profits on disposal of trading investments. As result of higher exchange gains in the period, other gains at US$ 4.0 million were US$3.1 million higher than prior year (2005 US$0.9 million).

Finance costs were unchanged at US$3.2 million (2005: US$3.1 million).

The resulting profit before tax for the period was US$31.5. million (2005: US$27.9 million) benefiting from the higher operating profit. Earnings per share based on ordinary activities after taxation and minority interests were 66.6 cents (2005: 54.1cents).

Exchange rates

In the six months to 30 June 2006 the Real appreciated 8% against the US Dollar from 2.34 at 1 January 2006 to 2.16 at the period end.

Dividend

The board has declared an interim dividend of  2.0cents per share (2005: 2.0 cents per share) be paid on 27 October 2006 to shareholders on the register at close of business on 6 October 2006.

Cash flow and debt

Net cash flows from operations were US$13.6 million in the first six months of 2006 compared with US$ 10.2 million in the same period last year, reflecting the improved operating results, lower tax payments and working capital movements.

Capital expenditure of  US$ 16.3 million (2005: US$ 18.9 million) was used mainly in vessel construction and the expansion of Tecon Rio Grande. During the first half of 2006  the Group sold its interest in the joint venture, WR Operações Portuárias Ltda. The net cash inflows included in the period from this disposal were US$ 1.3 million

Repayments of borrowings and finance leasing obligations in the period were US$ 8.1 million in accordance with debt repayment schedules (2005: US$6.8 million). Total Group borrowings (including obligations under finance leases) at 30 June 2006 were US$102.0 million (31 December 2005: - US$ 109.4 million).

Investment Portfolio

At 31 August 2006 the investment portfolio (including cash under management of US$1.3 million) held outside Brazil was approximately US$73.4 million, a gain of 6.9% since year end.

Balance Sheet

Net equity (equity attributable to ordinary shareholders of the Company) increased from US$ 170.1 million at the beginning of the year to US$ 189.5 million mainly due to the profit in the period after minority interests less the ordinary dividend in respect of  2005.  Minority interests increased from US$1.3 million at the beginning of the year to US$ 3.1 million, principally due to the sale of a 25% minority interest in the Group's subsidiary Brasco.

At 30 June 2006, the Group's net assets amounted to US$ 192.6 million (31 December 2005: - US$ 171.4 million).  This is the equivalent of  545 cents per share (31 December 2005: - 485 cents). Net assets located in Brazil account for 352 cents per share (31 December 2005: - 303 cents) and net assets outside Brazil 193 cents per share (31 December 2005: - 182 cents). 

Future Prospects

The operating results for July and August are ahead of the same period in 2005. However the unevenness in Brazilian regional growth and currency movements may still adversely impact the Group's full year results. 

J F Gouvêa Vieira

26 September 2006