"Accounts and Dividends. The unaudited accounts for the six months ended 30th June, 2000 show a profit for the period before taxation of £4,474,000 (1999 - loss £200,000) and profit after taxation of £2,683,000 (1999- loss £357,000). The principal reason for the improved result is a reduction in exchange losses on foreign currency borrowings held by our Brazilian subsidiaries. Significant exchange losses were incurred in the first half of 1999 as the $Real devalued 46% against the US dollar (from 1.21 to 1.77). The effect on the result for the period is significantly less as in the six months to 30 June 2000 the $Real devalued 1% against the US dollar (from 1.79 to 1.81). Earnings per share based on ordinary activities after taxation and minority interests of 5.98p (1999 - 1.59p negative) were 7.57p up on the same period in 1999. The board has resolved that an interim dividend of 1.00p per share be paid on the 7th of November, 2000 to shareholders on the register at close of business on 13th October 2000.
Group Net Assets. At 30th June, 2000 group net assets amounted to 168.82p per share (31st December, 1999 - 155.18p) of which 92.14p (31st December 1999 - 84.8p) was attributable to assets located in Brazil and 76.68p (31st December 1999 - 70.38p) in other, primarily financial assets outside Brazil. At 31 August 2000 the total of the investment portfolio was £16.7 million.
Brazil. The economic situation in Brazil was relatively unchanged during the first eight months of the year. The $Real remained stable against the US dollar, helped by the strong inflow of direct investments and inflation remains under control at approximately 7% for the year to date. There has been little movement on the promised fiscal reform and the Brazilian economy remains susceptible to external shocks.
Towage. Revenues and operating margins were up on the corresponding period in 1999 benefiting from higher port movements compared to the first half of 1999 and a gradual recovery in towage tariffs reflecting more stable market conditions. Ocean towage and towage support for salvage added to the divisions performance.
Shipyard. Results from the shipyard remained weak with little prospect for further third party work.
Shipping Agency Division. Revenue was up compared to the same period last year, although profitability declined as we lost business due to the acquisition of three of our major clients by other companies. New business was obtained to offset the lost revenue but at a lower margin.
Port Operations and logistics. The expansion of Tecon Rio Grande is now complete with the second berth operating since March of this year. Revenue continued to grow but operating profit was adversely affected by an increased depreciation charge.
In March of this year the Group began operations of the Salvador container and heavy cargo terminal previously acquired at public auction in December 1999. During the period substantial restructuring of the operation occurred as forecast in the business plan. Since we assumed control of the area the terminal has moved 17,733 TEUs. The terminals results for the period are shown in acquisitions in the profit and loss account.
Our associate company Brasco, created to provide logistics services to the Brazilian offshore oil and gas industry began operating its first base in Fortaleza in the north of Brazil. The company has won a further two contracts to operate bases in Rio de Janeiro, Brazil.
The excellent result achieved by our stevedoring business in 1999 was not repeated in the first half of this year.
Dragaport. The two dredgers purchased by our associate company Dragaport continued to be modernised during the period. In July of this year the first dredge, Boa Vista commenced work for the Rio Grande port authority in the south of Brazil.
Future Prospects. Traditionally the second semester produces a better performance for the Group. Results for July and August are in line with the same period in 1999."