Final Results
Ocean Wilsons Holdings Ld
26 April 2004
Ocean Wilsons Holdings Limited
Preliminary Announcement
Chairman's Statement
Chairman's Statement
Introduction
I am pleased to report another year of excellent progress by your Company
following the strong performance reported at the half year. We have improved our
performance against all the key measures, including profit before tax and
earnings per share, whilst the balance sheet has also strengthened reflecting
strong cash generation combined with the strengthening of the $Real over the
year.
This improvement was due to both the strong market positions of the Group's
businesses in Brazil as the macroeconomic background improved, as well as
actions taken by the Group to enhance its performance, thus evidencing the
excellent progress made by our core businesses during the year. Additionally, we
benefited from the appreciation of the Brazilian Real against the US Dollar
which substantially reversed the 2002 currency losses.
Reporting currency
As we announced in February 2004, the Board approved a change in the Group's
reporting currency for the year ended 31 December 2003 from Sterling to US
Dollars. As the majority of the Group's transactions are in US Dollars and
currencies linked to it, the Board considers that US Dollar reporting reflects
the Group's financial position and performance more appropriately than Sterling
reporting. Prior year comparatives have been represented accordingly.
However, there remains the potential for large swings in foreign exchange rates
to impact the Group from time to time, given its exposure to the Brazilian Real
('$Real'). Under United Kingdom Generally Accepted Accounting Principles the
Group will continue to be required to recognise the impact of such fluctuations
in its annual results.
Results
Following the strong first half performance reported in September, operating
profit for the year as a whole remained broadly unchanged at US$27.7m (2002:
US$27.2m) on turnover that increased by 20.0% to US$144.5m (2002: US$120.5m). In
local currency terms, turnover increased 26.2% largely reflecting increased
volumes and improved market conditions.
At the pre-tax level, the Group benefited from a 22% appreciation of the $Real
against the US Dollar, which resulted in a net exchange gain of US$17.8m (2002:
US$35.2m loss) during the year, a significant swing compared to last year of
US$53.0m. Thus profit before tax was US$51.8m (2002: US$0.2m loss). Earnings
per share benefited similarly increasing to 83.89 cents (2002: 3.53 cents).
Brazil
2003 was a critical year for Brazil following the election of a new government
in October 2002. Despite a change in the political complexion of the winning
party, markets have reacted favourably to continuity in key areas of economic
policy and continued success in running a budget surplus and meeting the
conditions of Brazil's IMF loan. The $Real has responded positively to these
developments as well as benefiting from the weakness of the US Dollar.
Nominal interest rates fell during the year but remain high at 16.0%, and with
inflation running at around 6%, real interest rates are high, although this is
helping to keep inflation under control. The export sector, which has been an
important driver of the Group's activities, is undergoing a significant boom
driven in part by increased world demand for commodities; Brazil is running a
large trade surplus as a result.
Exchange rates
The $Real appreciated 22% against the US Dollar from 3.54 at 1 January 2003 to
2.89 by the year end. The average rate of exchange in the year used to translate
the Group's Brazilian results into US Dollars depreciated by 5% against the US
Dollar from 2.92 to 3.07.
The Group's Brazilian subsidiaries continue to have significant US Dollar loans
and $Real denominated loans that are monetarily corrected by the movement in the
US Dollar/ $Real exchange rate. The appreciation of the $Real against the US
Dollar has generated a US$17.8 million gain (2002: US$35.2 million loss) on the
Group's US Dollar and US dollar linked loans. Under UK GAAP the Group is
required to recognise this result in the profit and loss account in the period
in which it occurs.
The cash flow effect of these exchange movements will only be realised over the
life of the loans when repayments are made. Whilst the value of the loans remain
unchanged in US Dollars, repayments need to be made in local currency. The
Board, in internally evaluating the Group's performance, spreads the exchange
gain / loss on borrowings over the remaining life of the loans. On the basis of
spreading the exchange gains / losses, the portion of current exchange gains and
past exchange losses attributable to the period would be a loss of US$3.0
million as compared to the reported exchange gain of US$17.8 million.
Balance sheet and cash flow
One of the financial features of the Group is that it is highly cash generative,
and 2003 was no exception with operating cash flow once again exceeding
operating profits. This strong cash flow enables the Group to increase
dividends, having continued to invest in the core business by means of capital
expenditure in core assets, and whilst repaying its loans on schedule. Net debt
during the year thus declined by US$9.2million to US$40.2million (2002:
US$49.4million), representing net gearing, being the ratio of net debt to net
assets, of 37% (2002: 76%).
The Group continues to be conservatively financed, with strong cash balances, in
part held outside Brazil, and long maturity profiles for its debt repayments.
In addition the Group continues to hold an investment portfolio outside of
Brazil valued at US$42.9million (2002: US$26.1 million).
At the year end the Group's net assets amounted to US$114.6million (2002:
US$67.7million). This increase is attributable to the combination of strong
underlying profits and to the appreciation of the $Real as the greater part of
the Group's net assets are $Real denominated and financed in US Dollars. This
translates into net assets per share of 324.0c per share (31 December 2002:
191.5c). Net assets located in Brazil account for 193.2c (31 December 2002:
76.7c) and net assets outside Brazil for 130.8c (31 December 2002: 114.8c). The
investment portfolio (including cash under management) represented 149.3c per
share (2002: 97.5c).
Dividends
The Board is recommending payment of a final dividend of 16 cents per share
(2002: 7.52 cents per share) to be paid on 18 June 2004 to shareholders on the
register at close of business on 28 May 2004, making a total dividend for the
year of 17.6 cents per share (2002: 9.03 cents per share). The increase reflects
the excellent performance of the Group during the year and the Board's
confidence in the future prospects of your Company.
Shareholders will continue to receive dividends in sterling determined by
reference to the exchange rate applicable to the US Dollar on the dividend
record date, except for those shareholders that elect to receive dividends in US
dollars. The Chairman has already written to shareholders explaining the
procedure for electing to receive a dividend in US Dollars.
The Board's dividend practice takes into consideration all aspects of the
Group's financial performance and prospects, but especially profitability and
free cash flow. However, shareholders need to appreciate that in future the
level of the dividend payment in sterling terms will depend on the exchange rate
between sterling and the US Dollar.
Corporate social responsibility
As part of our corporate strategy, the Board is committed to being a socially
responsible corporate citizen and is pleased to include a review of its
activities in this area in this year's Annual Report, which will continue to be
a feature in years to come.
Taxes
In 2003 the Group paid more than US$ 39.4 million in Brazilian income, payroll
and sales taxes.
Local employment
We directly employed more than 2,900 people in Brazil at the end of 2003 and
created numerous additional employment opportunities through our suppliers and
sub-contractors.
We continue to have an active and constructive relationship with the local and
national trade unions in Brazil that represent our employees and negotiate wage
agreements on their behalf.
Best employment practice
As part of our commitment to best employment practice, all employees and their
dependants (6,088 people) receive private medical cover at a cost of US$2.2
million to the Group. A further US$1.2 million is spent on food assistance and
US$268,000 on education and professional development for employees. The Group
will continue to invest heavily in these areas.
Charitable donations
In line with our policy to support local charities, the Group gave financial
support totalling US$ 117,000 for charitable purposes in Brazil during the year.
The emphasis of our charitable efforts is directed towards projects helping
homeless children and adolescents. Principal among these charities were Pastoral
do Menor and Casa Jimmy in Rio de Janeiro and Casa da Crianca in Salvador. As
well as lending financial support, the Group encourages employees to participate
in social programmes. The Group intends to continue to provide support in these
areas.
Strategy
The Groups' strategy is to build upon its position as the leading supplier of
maritime services in Brazil by continuing to focus on its core business
activities of Towage services and Shipyards, Ship Agency services, Port
Operations and Logistics. The Group operates through three divisions based on
these areas of activity.
The Group's activities are focused in the export / imports sectors and as a
result are most affected by the level of Brazilian trade. The Board believes
that the Group is well positioned to take advantage of the rapid growth of the
Brazilian export sector. Exports are currently booming largely due to
increased demand for commodities and a pick up in demand for iron ore and steel
products from China.
The Board intends to continue implementing its successful growth strategy of
developing the Group by organic investment in its operations, particularly by
replacing and building up its tug fleet, through capital expenditure on new
equipment and facilities.
Management and staff
On behalf of the Board and shareholders, I would like to thank our management
and staff for their efforts and support during the year and for delivering a
successful performance. We continue to invest in their futures through training
and incentive programmes.
Future prospects
The Group entered 2004 in its strongest position for many years, and is
expecting to benefit from the management actions it took last year as well as
the continued improvements in the performance of the Brazilian export sector.
In 2004, the Board is reviewing a number of further opportunities for organic
investment including further investment in Platform Supply Vessels to serve the
offshore oil and gas industry and expansion of the Tecon Rio Grande container
terminal.
Results for the first quarter of 2004 have made good underlying progress, but
are below the corresponding period in 2003 due to changes in federal tax
legislation. The $Real continues to trade around 2.90 to the US Dollar, similar
to its year end level.
In conclusion, we are confident of another strong year for the Group.
Operating Review
Introduction
The Group is the leading supplier of maritime services in Brazil and as such is
the largest provider of Towage services, as well as being a significant Ship
Agent, and operator of Ports and Logistics businesses.
Towage and shipyard
The Towage business had another very busy and successful year. Revenue in US
Dollar terms rose 11%, although in local currency terms margins fell due to the
appreciation of the $Real against the US Dollar and because $Real denominated
operating costs rose some 10%, largely due to local inflationary pressures.
Although market share was relatively unchanged, we increased the number of
vessels attended, benefiting from a good Brazilian soya bean harvest and
increases in exports of iron ore and steel products to China. In addition, we
saw increased towage support for offshore platforms mainly in Rio de Janeiro and
Sepetiba on the back of the booming Brazilian offshore oil and gas market. We
also completed the construction of two PSV's (Platform Supply Vessels) begun
last year at our own Guaruja shipyard, and as expected these two ships are now
being successfully operated on charter to Petrobras (the Brazilian oil and gas
major).
The Group's strategy is to link towage tariffs to the cost of finance where
possible, providing a natural hedge for the US Dollar linked borrowings used to
finance the construction of our tug fleet. Management successfully implemented
this strategy in 2002 and 2003, so that some 75% of our towage income is now
linked to the US Dollar.
From January 2004 the Brazilian federal government extended the ISS service tax
to the majority of services rendered in Brazil including towage at the rate of
2% to 5% and increased the Cofins sales tax from 3% to 7.6 %. Management expect
that this tax increase will have an adverse impact on our costs.
Our towage joint venture, Consorcio Baia de Sao Marcos, continued to perform
well, increasing its volumes due to an increase in iron ore exports, with an 8%
increase in ships attended.
The two PSV's (Platform Supply Vessels), PSV Albatroz and PSV Gaivota
constructed at our shipyard in Guaruja were completed during the year. Both
vessels are under long term, six year contracts to Petrobras operating out of
Macae in the state of Rio de Janeiro. Performance is in line with expectations.
The Group's planned tug fleet renewal programme recommenced in earnest in 2003
and will continue in 2004. The first tug Plutao was completed at our shipyard in
August. Two further tugs are forecast for delivery in July 2004 and December
2004, respectively, which will be followed by a second phase of a further two
tugs.
Dragaport
Adverse market conditions continued to impact results at our associate dredging
company, Dragaport. In the first half of 2003 no dredging tenders were issued by
either the federal or state governments or any private terminals. Performance
improved in the second half of the year, but without a significant improvement
in market conditions, prospects remain poor.
Ship agency
The ship agency division had a good year due to the growing Brazilian export
market, a full year of CCL's new trade to the Caribbean and Central America and
an increase in the number of tramp vessels attended. Revenue increased 19% in US
Dollar terms but margins declined due to the appreciation of the $Real against
the US Dollar. Revenue is mainly received in US Dollars, whereas costs are
largely $Real denominated.
The Group attended 4,930 vessels in 2003, an increase of 267 over 2002. Our
market share for tramp vessels continued to increase from 10% to 13% following
our active marketing in this area.
Port operations and logistics
Tecon Rio Grande
2003 was another record year for Tecon Rio Grande as it moved its one millionth
container since privatisation in 1997. Tecon Rio Grande continued to perform
ahead of expectations with volumes handled at the terminal increasing 22% to
542,630 TEUs (twenty-foot equivalent units). Due to the strong growth in recent
years, the terminal is now operating above optimal capacity, which has adversely
affected margins. To meet the excess demand, a new Gottwald crane was purchased
during the year and the Group is evaluating extending the existing berth and
investing in additional equipment to expand capacity in anticipation of our
obligation under the concession agreement.
Tecon Salvador
Tecon Salvador continued to make good progress in 2003 with a substantial
improvement in the second half of the year. Volumes increased 35%, as a result
of which both turnover and profit improved over 2002. Market share remained
unchanged at 86%.
Logistics
The new Logistics business continued to make encouraging progress obtaining a
number of new clients. Revenue growth was strong although increased headcount
and new client start up costs adversely affected margins. We continue to develop
our approach to this market. To improve commercial and operational synergy, we
reorganised Eadi Santo Andre, CD Brasil and our road transport operation into
one commercial and administrative structure. Eadi Santo Andre was a considerable
disappointment during 2003 and we are taking action to improve the commercial
performance and bring the cost base into line with current market conditions.
Allink
As expected operating profits at our NVOCC Allink (non-vessel operating cargo
consolidator) were lower than last year. Strong market pressures caused
significant price reductions causing revenues and profits to suffer accordingly.
Brasco
Revenues at our associate company, Brasco, were also below expectations due to
the reduction in clients' drilling operations in the second half of 2003. The
new onshore base in Niteroi, Rio de Janeiro, supports the offshore oil and gas
markets including operations for Campos and Santos. However, we remain
optimistic about the future, as fields move from the exploration to the
development phase and clients seek longer-term supply contracts.
WR Operadores Portuarios Limitada (WR)
Our joint venture WR, operating in the port of Sao Francisco do Sul, Santa
Catarina had an excellent year. Turnover and margins benefited from the
successful renegotiations of tariffs undertaken at the beginning of 2003.
Volumes handled by the joint venture in 2003 at 252,361 TEU's were in line with
2002 at 258,826 TEU's.
Insurance
The traditional accounting for Lloyds insurance market is three years in arrears
to permit a proper evaluation of the development of the underwriting of that
year. Our underwriting subsidiary at Lloyd's has produced a break-even result in
2001 (its first year of trading). This is a very creditable result when the
events of that year are considered. In this year's interim report we anticipate
being able to provide detailed results on 2001.
At this time we can say the 2002 year of account looks set to produce a
commendable profit and the outlook for 2003 is also encouraging at this early
stage. It is too early to make meaningful comment on the 2004 year of account
except to say that underwriting rates held up better than expected and we have
made a modest reduction in our level of underwriting.
Investment portfolio
Hanseatic Asset Management LBG which manages the Group's investment portfolio
report as follows:
General
The fortunes of equity markets reversed in 2003. The unprecedented level of
policy reflation in the United States finally achieved traction and this,
together with rapid growth in China, were the themes that dominated markets.
The Federal Reserve Board in America continued its low interest rate policy and
additional stimulus to the economy was provided by tax cuts, higher government
spending and a lower dollar.
After a nervous start to the year ahead of military action in Iraq, bourses
rallied around the world and the MSCI World Equity Index posted a gain of 19.3%
expressed in sterling. This was the first positive annual return since 1999.
Europe, especially some of the severely depressed areas such as Germany,
produced the best returns amongst developed markets. However, it was also a
very good year for emerging markets, which again outperformed developed ones.
The Far Eastern markets were strong after a difficult start to the year caused
by the SARS epidemic. The prospect of a recovery in world economic activity,
together with the breathtaking pace of industrialisation in China in particular,
is propelling the Asian region, including Japan.
The dollar continued to fall against most currencies over the year, the Euro
appreciating by 19.6%. Oil prices remained firm in dollar terms but the largest
moves in commodity prices occurred in the industrial metals sector. Rising
demand levels from China helped drive prices forward. For instance, copper
appreciated by 47.5% and nickel by 131.4% during the year.
Performance
The portfolio performed well in this environment. Despite exposure to hedge
funds and cash accounting for almost half of its value, it matched the gain in
the MSCI index and rose by 19.8%. Both asset allocation and investment
selection contributed positively. The portfolio benefited from its overweight
exposure to the Far East and emerging markets. Stock selection added value both
within funds, notably the Close Finsbury Japan Fund, but also direct holdings
such as Scientific Games in the United States and Amersham and Galen in the
United Kingdom.
Portfolio activity
During the year there were purchases totalling US$11.0 million, sales proceeds
of US$ 5.2 million and additional resources of US$6.5 million were placed
under management.
New purchases included two additional funds in the Far East, SR Asia and
Aberdeen Asia, an additional fund in Japan managed by Orbis and the Merrill
Lynch World Mining Trust. Two recently formed hedge funds were also added to
the portfolio, Valu-Trac Strategic and Russian Century managed by Alfa Bank.
The more significant sales included the Finsbury Smaller Quoted investment trust
following a decision for it to wind up, and the Mariner Fund after disappointing
performance. Profits were realised in several positions, notably Gartmore Irish
and Amersham International.
Outlook
It seems prudent to anticipate a more 'mixed' year for equities in 2004. A
revival in the global economy and the pressures to pursue accommodative policies
in an electoral year in the United States form a generally supportive backdrop.
However, short term interest rates are lower than economically justified.
Equity markets risk being unsettled by rate rises.
The strategy employed at present is to continue to favour the Far East markets
specifically and emerging markets generally and to reduce volatility through
holdings in hedge funds. However, it needs to be acknowledged that although the
Far East and Emerging Markets continue to have strong fundamentals a more
bullish consensus has emerged over this than certainly was the case a year ago
implying lower levels of gains in prospect. The Japanese exposure has been
increased as underweight local institutions, together with attractive
valuations, should underpin the rally in Japanese shares.
Financial Review
Revenues
Revenues benefited from a better macroeconomic environment following the
continued improvement in the Brazilian economy and the start of a global
economic resurgence led by the USA. In addition, the many management actions
taken by Group were also a significant contributor.
Specific contributors to increased revenues were the renegotiation of towage
tariffs and an increase in volumes across all operating divisions. The start up
of the new PSV operations was another important factor.
Operating margins and profit
Operating margins for the year remained strong at 19.2% although lower than the
22.6% reported for 2002. This was principally due to the appreciation of the
$Real against the US Dollar combined with Brazilian inflationary pressures and
increased personnel costs. As the majority of our tariffs are linked to the US
Dollar, any $Real appreciation against the US Dollar reduces revenue in $Real
terms. At the same time operating costs, which rose due to the inflation
referred to above, are priced in $Real.
Group margins were also impacted by Tecon Rio Grande's reduced productivity
caused by capacity constraints.
Operating profit remained broadly unchanged at US$27.7 million (2002: US$27.2
million).
Share of operating profit from joint ventures and associates fell from US$ 5.0
million to US$ 3.9 million. This was due to the poor results from our associate
company Dragaport. Dividends received from joint ventures were significantly
higher at US$4.5 million (2002: US$2.5 million).
At the pre-tax level, the Group benefited from a strengthening of the $Real
against the US Dollar, which resulted in a net exchange gain relating to
borrowings of US$17.8m (2002: US$35.2m loss) during the year, a significant
swing of US$53.0m.
Profit on disposal of interest in associate
A profit of US$ 0.6 million was recorded from the disposal of our interest in
NST, a paper terminal operator.
Interest
The Group's net interest receivable was US$0.7 million (2002: US$1.7 million).
This excludes the net exchange movements on foreign currency borrowings held by
the Brazilian subsidiaries, which are shown separately in the profit and loss
account.
The Group's Brazilian subsidiaries have significant US dollar loans and $Real
denominated loans that are monetarily corrected by the movement in the US dollar
/ $Real exchange rate. The Group assumes this risk as there is no long-term
financing denominated in $Real available to it for capital expenditure. Current
interest rates on $Real commercial borrowings in Brazil are in excess of 25% per
annum. Due to the prohibitive cost of hedging the $Real, the Group does not
hedge its long term net exposure, although management use available instruments
to manage the short term cash flow exchange risk on the current repayments.
The table below shows the forecast interest payments for the next five years
based on the Group's debt profile at 31 December 2003 and using year end
interest and exchange rates.
US$ million 2004 2005 2006 2007 2008
Interest payments 3.9 3.7 3.6 3.3 3.0
Taxation
The US$ 19.1 million tax charge (2002: US$0.3 million credit) for the year
represents an effective tax rate for the period of 37%. The corporate tax rate
prevailing in Brazil is 34%, although there is no Group tax relief so that
losses and profits in separate companies cannot be offset. Corporation and
social contribution tax paid in the period was US$11.2 million (2002: US$6.9
million) a significant increase, due to the improvement in profit before tax.
Cash flow
Cash flow performance was again excellent. Operating net cash inflow of US$36.4
million (2002: US$37.1million) once again exceeded operating profits of US$28.3
million (2002: US$27.3 million), having reversed the adverse movement in working
capital reported at the half year.
Free cash flow, defined as net cash inflow from operations US$36.4 million
(2002: US$37.1 million) less net capex US$ 13.3 million (2002: US$ 20.3
million), tax payments US$11.1 million (2002: US$6.9 million) and net interest
payable US$0.1 million (2002: receivable US$2.6 million), was US$11.9 million
(2002: US$12.5 million). Higher tax payments and interest were offset by lower
capital expenditure.
Capital expenditure of US$14.0 million (2002: US$21.1 million) was invested
mainly in vessel construction and terminal equipment. Budgeted capital
expenditure in 2004 is US$21.6 million.
Debt
Net debt during the year declined by US$9.2 million to US$40.2 million (2002:
US$49.4 million), representing gearing of 37% (2002: 76%). The Group continues
to be conservatively financed, with strong cash balances, in part held outside
Brazil, and long maturity profiles for its debt repayments.
The majority of the Group's debt, US$65.1 million, has been used to finance
vessel construction and is repayable over periods up to 16 years with an average
maturity of 13.7 years.
During 2003 the Group made capital repayments on existing loans in accordance
with repayment schedules of US$10.8 million (2002: US$8.8 million) and raised
new loans of US$0.5 million (2002: US$15.6 million).
Risk management
Treasury
The Group has a centralised Treasury operation in Brazil, which manages the
investment of surplus funds and borrowings. Clear guidelines have been
established relating to cash management authority levels and investment limits.
The guidelines prohibit taking speculative financial instrument positions and
regular financial management reports are supplied to senior management.
The main financial risks facing the Group are those related to funding, interest
rate, currency and market price.
Funding risk
The Group trades principally in Brazil and holds a portfolio of internationally
listed investments outside Brazil. The Group borrows to fund capital projects
and looks to cash flow from these projects to meet repayments. Working capital
is funded through cash generated by operating revenues.
There is limited long term commercial funding available in Brazil except from
the Banco Nacional do Desenvolvimento Economico e Social (BNDES). All long term
funding is obtained by our Brazilian subsidiaries from the BNDES or
International Finance Corporation (IFC, part of the World Bank) except for
specific equipment supplier financing when available at favourable terms. The
Board will not consider short-term borrowing in the Brazilian commercial markets
while prohibitive interest rates prevail.
At year end the Group had US$100.8 million in borrowings repayable over periods
of up to 16 years.
The Group also held approximately US$47.7 million in $Real denominated cash
deposits in Brazil and US$12.6 million in sterling and US Dollar denominated
deposits outside Brazil. The company maintains these large cash balances as it
continues to look for investment opportunities in Brazil and to manage short
term fluctuations in cash flow.
Interest rate risk
During 2003 the Group did not use interest rate swaps, options or forward rate
agreements to manage interest rate exposure on its debt positions. However the
Group actively reviews risk profiles and considers undertaking interest rate
swaps if necessary subject to Board approval.
The Group has three main types of borrowings, $Real denominated, $Real
denominated linked to the US Dollar and US Dollar borrowings.
Currency risk
The Group operates principally in Brazil with a substantial proportion of the
Group's revenue, expenses and assets denominated in $Real. Consequently currency
translation movements can significantly affect the Group's income and balance
sheet and the Group faces significant currency exposures when translating
results into US Dollars. Due to the prohibitive cost of hedging the $Real, the
Group does not hedge its net exposure to the $Real as the Board considers it
uneconomic. The Group's US Dollar debt has defined repayments during the life of
the loans. Management reviews hedging these repayments for periods of up to one
year by investing surplus funds in US Dollar linked Brazilian Government bonds
or by purchasing foreign exchange options.
The Group has significant long-term borrowings in US Dollars and in $Real
denominated loans linked to the US Dollar. These are used to finance $Real
denominated capital projects. This exposes the Group to a potential currency
mismatch of costs and revenues. The Group undertakes this risk as there is no
source of long term financing denominated in $Real available to the Group.
The $Real denominated loans linked to the US Dollar are monetarily corrected by
the movement in the US Dollar/$Real exchange rate and bear interest of between
2.0 - 4.5 % per annum.
The majority of the Group's US Dollar loans bear interest between Libor + 2.75%
and Libor + 4.0 % and are repayable in periods up to six years. In addition the
Group has loans, which bear interest linked to the performance of Tecon RG, that
vary between Libor +2.0% and Libor +6.0%.
Cash and investments held outside Brazil are principally in US Dollar and
Sterling denominated assets.
Market price risk
The Group invests in internationally listed securities or funds principally for
the long-term. The Group's exposure to market price risk arises mainly from
potential loss the Group may suffer through holding market positions due to
price movements or currency fluctuations.
Ocean Wilsons Holdings Limited
Preliminary Announcement
At a board meeting held on 23 April 2004 the following announcement of the unaudited results of the
Company and its subsidiary companies for the year ended 31 December 2003 were approved by the
Directors.
Consolidated Profit and Loss Account
Unaudited Audited
year to 31 year to 31
December December
2003 2002
US$'000 US$'000
Turnover
Turnover and share of joint ventures' turnover 160,952 133,528
Less: share of joint venture turnover (16,442) (13,005)
Existing operations
Acquisitions
Group turnover 144,510 120,523
Operating costs (109,301) (86,436)
Depreciation (7,505) (6,848)
Amortisation
Operating profit
Existing operations
Acquisitions
Group operating profit 27,704 27,239
Share of operating profit in joint ventures 4,973 4,286
Share of operating (loss)/profit in associates (1,052) 728
Income from fixed asset investments 307 689
Realised surpluses on sale of investments 633 293
Profit on disposals of fixed assets 188 42
Profit on disposal of interest in associate 595 -
Interest receivable and similar income 6,650 7,032
Interest payable (5,948) (5,368)
Net exchange gain/(loss) on foreign currency 17,795 (35,180)
borrowings
Profit/(loss) on ordinary activities before taxation 51,845 (239)
Taxation on profit/(loss) on ordinary activities (19,132) 336
Profit on ordinary activities after taxation 32,713 97
Minority interests (3,048) 1,151
Profit for the year 29,665 1,248
Dividends
Paid and Payable (6,247) (3,194)
Retained profit/(loss) for the year 23,418 (1,946)
Earnings per share basic and diluted 83.89c 3.53c
Ocean Wilsons Holdings Limited
Preliminary Announcement
Consolidated Statement of Total Recognised Gains and Losses
Unaudited Audited
year to 31 year to 31
December December 2002
2003
US$'000 US$'000
Profit for the financial year 29,665 1,248
Unrealised gains/(losses) on investments 6,975 (3,901)
Exchange differences 12,204 (11,599)
Total gains and losses recognised since last annual report 48,844 (14,252)
Ocean Wilsons Holdings Limited
Preliminary Announcement
Consolidated Balance Sheet
Unaudited
as at 31 Audited
as at 31
December December
2003 2002
US$'000 US$'000
Fixed Assets 113,072 85,189
Investments 45,171 28,931
Current Assets
Stocks 3,166 2,000
Debtors 45,152 30,356
Investment held for resale 2,919 2,384
Cash at Bank 60,302 53,586
111,539 88,326
Creditors (amounts falling due within one year) (56,323) (37,790)
Net current assets 55,216 50,536
Total assets less current liabilities 213,459 164,656
Creditors (amounts falling due after one year) (88,391) (92,726)
Provisions for liabilities and charges (10,480) (4,210)
Net assets 114,588 67,720
Capital and reserves
Called up share capital 11,390 11,390
Profit and loss account 66,239 37,598
Capital reserves 22,665 15,535
Revaluation reserve 7,411 585
Equity shareholders' funds 107,705 65,108
Minority interests 6,883 2,612
114,588 67,720
Net assets per share 324.0c 191.5c
Ocean Wilsons Holdings Limited
Preliminary Announcement
Consolidated Cash flow Statement
for the year ended 31 December 2003
Unaudited Audited
Year to Year to
31 December 31
December
2003 2002
US$'000 US$'000
Net cash inflow from operating activities 36,421 37,126
Dividends from joint ventures 4,582 2,545
Returns on investments and servicing of finance 267 3,262
Taxation (11,191) (6,944)
Capital expenditure and financial investment (19,171) (19,904)
Acquisitions and disposals 1,090 (69)
Equity dividends paid (3,470) (3,194)
Cash inflow before management of liquid resources and financing 8,528 12,822
Management of liquid resources (27) (17,332)
Financing (10,326) 6,870
(Decrease)/increase in cash in year (1,825) 2,360
Ocean Wilsons Holdings Limited
Preliminary Announcement
Notes to the Preliminary Accounts
1. Basis of Accounting
The preliminary accounts have been prepared under the historical cost convention
(except for the valuation of listed investments, which are shown in the accounts
at market value at the end of the year) and the accounting policies set out on
pages 21 to 24 of the Annual Report and Accounts for the year ended 31st
December 2002.
The Group has changed its functional currency to US Dollars. Since the US Dollar
and currencies closely linked to it form the main currency in which the Group's
business is transacted, the Group changed its reporting currency from pounds
Sterling to US Dollars, with effect from 1st January 2003. For comparative
purposes, the 2002 profit and loss account previously reported in pounds
sterling has been translated into US Dollars at the average exchange rate for
the year and the balance sheets have been translated into US Dollars at the
closing rate as at 31st December 2002.
2. Basis of Preparation
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31st December 2003 or 2002.
The financial information for the year ended 31st December 2002 is derived from
the statutory accounts for that year. The auditors reported on those accounts;
their report was unqualified. The statutory accounts for the year ended 31st
December 2003 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement.
3. Reconciliation of Operating Profit to net cash inflow from activities
Unaudited Audited
year to 31 year to 31 December
December 2003
2003
US$ '000 US$ '000
Operating profit 27,704 27,239
Depreciation 7,505 6,848
Amortisation 53 56
(Increase)/decrease in stocks (1,166) 5
(Increase)/decrease in debtors (8,745) 2,345
Increase in creditors 10,423 853
Increase/(decrease) in provisions 647 (220)
Net cash inflow from operating activities 36,421 37,126
4. Dividends
The proposed final dividend of 16.00c per share will be paid on 18th June 2004
to shareholders on the register at close of business on 28th May 2004 if
approved by shareholders at the annual general meeting to be held on the 18th
June 2004.
5. Other information
Additional copies of this announcement can be obtained from the Company's
registered office, Clarendon House, Church Street, Hamilton, Bermuda or from the
Company's UK transfer agent, Capita Registrars Group Plc, The Registry 34
Beckenham Road, Beckenham, Kent BR3 4TU.
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 13th May 2024
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