Interim Report 2013 - Ocean Wilsons Holdings Ltd

Ocean Wilsons Holdings LimitedInterim Report 2013

Contents1 Interim Statement12 Consolidated Statement of Comprehensive Income13 Consolidated Statement of Financial Position14 Consolidated Statement of Changes in Equity15 Consolidated Cash Flow Statement16 Notes to the Accounts37 Directors and Advisers

Ocean Wilsons Holdings Limited/Interim Report 2013Interim StatementOcean Wilsons Holdings LimitedOcean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) is aBermuda based investment holding company and, through its subsidiaries,operates a maritime services company in Brazil and holds a portfolio ofinternational investments. The Company is listed on both the Bermuda StockExchange and the London Stock Exchange. It has two principal subsidiaries:Wilson Sons Limited “Wilson Sons” and Ocean Wilsons Investments Limited(together with the Company and their subsidiaries, the “Group”).Wilson Sons Limited (“Wilson Sons”) is an autonomous Bermuda companylisted on the Sao Paulo Stock Exchange (BOVESPA) and Luxembourg StockExchange. Ocean Wilsons holds a 58.25% interest in Wilson Sons, which isfully consolidated in the Group accounts with a 41.75% non-controllinginterest. Wilson Sons is one of the largest providers of maritime services inBrazil. Wilson Sons activities include harbour and ocean towage, containerterminal operation, offshore support services, logistics, small vesselconstruction and ship agency. Wilson Sons has over six thousand employees.Ocean Wilsons Investments Limited is a wholly owned Bermuda investmentcompany. The company holds a portfolio of international investments.ObjectiveOcean Wilsons is run on a long term basis. This applies to both theinvestment portfolio and our investment in Wilson Sons. The long term viewtaken by the Board has allowed Wilson Sons to grow and develop itsbusinesses without being pressured to produce short term results at theexpense of long term value creation. The same long term view allows ourinvestment managers to make investment decisions that create long-termcapital growth.Chairman’s StatementIntroductionThe first half of 2013 produced another solid operating performance for theGroup. The successful completion of the new shipyard in Guarujá in the periodadded much needed capacity to a growing business. Wilson Sons continues toinvest in developing and expanding its businesses although at a reduced pacefollowing completion of the Tecon Salvador expansion and Guarujá shipyard.We are confident both these projects will add significant value to the Group.The investment portfolio performance in the period was relatively flat sufferingfrom the poor returns from Emerging Markets and our overweight exposure tothis sector.Group ResultsRevenue from maritime services increased by 3% to US$306.4 millioncompared with US$297.1 million in the first six months of 2012, dueprincipally to higher shipyard and towage revenue. Shipyard revenue grew56% in the period benefitting from the new dry-dock facility opened in thefourth quarter of 2012 and the continued strong demand for new vessels fromthe offshore oil and gas industry. A fire at our new shipyard warehouse in Maydestroyed large parts of our material inventory. Some delays are expected toour vessel delivery schedule although components lost in the fire are beingsubstituted by items already included in our supply chain for future vesselconstruction. There were no injuries as a result of the fire and the Group holdsinsurance to cover the warehouse damage and materials inventory. Towagerevenues increased mainly as a result of differentiated pricing for larger ships,heavier average dead-weights and higher volumes in 2013. Revenue at ourterminal business for the period was in line with 2012 with strongerwarehousing income offset by lower revenue at our offshore oil & gas supportbase, Brasco. However Brasco revenue is recovering with second quarterrevenue in 2013 28% higher than the comparative period in 2012 driven byhigher waste management and tank cleaning operations. Container volumesat 425,000 TEU’s (twenty foot equivalent units) were in line prior year (2012:426,400 TEU’s). Logistics revenue was down due to the reduction in thenumber of dedicated operations.Operating profit for the period at US$50.4 million was US$20.3 million higherthan the comparative period in 2012 (US$30.1 million) principally due toprofit on the disposal of property plant, and equipment of US$9.8 million(2012: US$12,000) and a credit to the long term incentive plan accrual in theperiod of US$5.0 million (2012: US$3.7 million charge). After adjusting for theimpact of these two items operating profit at US$35.5 million wasUS$1.7 million higher than prior year (2012: US$33.8 million). Operatingmargins for the period at 11.6% were in line with 2012 (11.4%).The profit on the disposal of property, plant and equipment arises principallyfrom the sale of surplus commercial real estate in downtown Rio de Janeiro.The credit to the long term incentive plan accrual (share based paymentexpense) is based on an actuarial valuation performed at each period andfluctuates depending on a number of variables, including the closing WilsonSons Limited share price. The credit in the period is mainly due to the fall inthe Wilson Sons Limited share price at period end (R$24.50) compared withthe share price at 31 December 2012 of R$31.99.Depreciation and amortisation in the period increased 4% to US$27.8 millionfrom US$26.8 million in 2012 reflecting the investment undertaken by theGroup.Other operating expenses increased US$9.2 million to US$96.9 million fromUS$87.7 million due to higher tug rental costs to attend increased demandand additional service expenses from our expanded shipyard and containerterminal operations.1

Ocean Wilsons Holdings Limited/Interim Report 2013Interim StatementThe share of results of joint ventures is Wilson Sons’ 50% share of net profitfor the period from our offshore joint venture. From 1 January 2013 the jointventure is accounted for on an equity basis. Increased revenue and operatingprofit at the joint venture was offset by negative foreign exchange movementson deferred tax and monetary items.Investment revenues at US$7.7 million were in line with prior period(2012: US$7.6 million).Other gains of US$0.4 million (2012: US$1.8 million) arise from the Group’sportfolio of trading investments and reflect the profit realized on disposal oftrading investments in the period plus the movement in the fair value oftrading investments at period end.Finance costs increased US$6.2 million from US$5.1 million to US$11.3 millionfor the period mainly as a result of exchange losses on foreign currencyborrowings of US$5.6 million (2012: US$20,000 gain).Exchange losses on monetary items of US$12.6 million(2012: US$13.7 million) arise from the Group’s foreign currencymonetary items and principally reflect the depreciation of the Brazilian Realagainst the US dollar during the period.Profit before tax increased by US$13.7 million from US$20.8 million toUS$34.5 million due principally to the increase in operating profit.The tax charge for the period at US$21.3 million was US$4.2 million higherthan the comparative period in 2012 (US$17.1 million) due to higher currentand deferred tax charges. The effective tax rate in the period of 62% is higherthan the corporate tax rate prevailing in Brazil of 34% principally due to theeffect of exchange movements on the translation of property plant andequipment. The Group’s property plant and equipment is located in Brazil andtherefore have Brazilian Real currency “BRL” based tax deductions for thedeprecation of fixed assets. When the BRL depreciates against the US Dollar,the future tax deductions allowable for Brazilian tax purposes is unchanged inBRL terms but reduced when converted into our reporting currency, USDollars. This reduction in value creates a notional deferred tax liability andgenerates a deferred tax charge in the income statement.Basic earnings per share for the period were 20.8 cents (2012: 4.0 cents).Investment portfolio performanceThe trading investment portfolio and cash under management at 30 June2013 amounted to US$233.5 million, a decrease of US$4.2 million sinceyearend (US$237.7 million) primarily due to a capital redemption ofUS$5.0 million made to the parent company, Ocean Wilson Holding Limited.Cash flow and debtNet cash flow from operating activities for the period at US$37.9 million wasUS$8.6 million lower than prior period (2012: US$46.5 million) principally dueto adverse working capital movements and higher income tax paid.Investments in capital expenditure during the period at US$36.3 million wereUS$25.9 million lower than 2012 (US$62.2 million). Investment was primarilyon expanding our container depot in Salvador in support of Tecon Salvadorand towage vessel construction. New loans of US$18.1 million (2012: US$30.7million) were raised in the period to finance capital expenditure with capitalrepayments on existing loans of US$18.1 million (2012: US$11.0 million).At 30 June 2013 the Group had US$152.7 million in cash and cashequivalents (31 December 2012: US$136.7 million). At 30 June 2013 theGroup’s borrowings (including obligations under finance leases) wereUS$364.9 million (31 December 2012: US$363.7 million). The Group’sborrowings do not include US$238.4 million of debt from the Company’s50% share of borrowing in the Offshore Vessels joint venture.Balance sheetNet equity attributable to equity holders of the parent company decreasedUS$8.0 million from US$531.9 million at the beginning of the year toUS$523.9 million at period end year end due principally to dividends paid ofUS$13.4 million and a negative currency translation adjustment ofUS$1.8 million less profit for the period of US$7.4 million. The currencytranslation adjustment arises from exchange differences on the translation ofoperations with a functional currency other than US Dollar. On a per sharebasis net equity is the equivalent of US$14.82 per share (31 December2012: US$15.04 per share).Net asset valueAt the close of business on the 6 August 2013, the Wilson Sons share pricewas R$25.80, resulting in a market value for the Ocean Wilsons holding of41,444,000 shares (58.25% of Wilson Sons) of approximatelyUS$464.9 million which is the equivalent of US$13.15 (GBP8.59) perOcean Wilsons Holdings Limited share.The investment portfolio valuation at 30 June 2013 of US$233.5 million isequivalent to US$6.60 (GBP4.32) per Ocean Wilsons Holdings Limited share.Adding together the market value of Wilsons Sons and the investmentportfolio results in a net asset value per Ocean Wilsons Holdings Limited shareof approximately US$19.75 (GBP12.91). The Ocean Wilsons Holdings Limitedshare price of GBP 9.40 at 6 August 2013 represents an implied discount of27%.2

Ocean Wilsons Holdings Limited/Interim Report 2013Interim Statementand construct vessels for third parties. We signed a US$131 million contract toconstruct 3 offshore service vessels (OSVs) for Geonavegação S.A furtherexpanding our order book. The completion of the acquisition of the Briclogoffshore supply base in July offers important additional operational capacity ina growing market.Wilson Sons LimitedThe Wilson Sons 2nd quarter 2013 Earnings Report released on 14 August2013 is available on the Wilson Sons Limited website: www.wilsonsons.com:In it Cezar Baião, CEO of Operations in Brazil said:“Brazil has so far seen a challenging 2013, with soft trade flow, persistentinflation, and weak GDP forecasts. This macroeconomic environment, togetherwith recent US Federal reserve announcements, produced abrupt currencyfluctuations, which negatively impacted our bottom-line this quarter. Despitethis, Wilson Sons delivered another solid operational result.We remain confident that our range of services provide us with diverseopportunities to meet the demand driven by trade flow and the Brazilian oil &gas industry. A good example is our Brasco business that recently announcedthe conclusion of the Briclog acquisition, a brown field Oil & Gas support basedevelopment with a privileged location to attend the Campos and Santos oilproducing basins.Another recent positive highlight is our shipyard business which signed aUSD 131 million contract for the construction of 3 OSVs with GeonavegaçãoS.A., ratifying our strategy to increase construction of own and third-partyvessels. These actions, along with the conclusion of Tecon Salvador expansion,are consistent with Wilson Sons long history of growth in areas in which theCompany has key competitive advantages and strategic assets”.Investment Managers ReportHanseatic Asset Management LBG the manager of the Group’s investmentportfolio reports as follows:Investment ObjectiveThe Investment Objective is to achieve real returns through long-term capitalgrowth, whilst emphasising preservation of capital. Investment views areexpressed through an unconstrained globally diversified portfolio, withoutregard to short-term moves in equity markets or any benchmark allocation.An individual opportunity is considered on the contribution that theinvestment’s expected return would make to the overall portfolio set againstthe potential impact of a permanent loss of capital.Performance is measured against an absolute benchmark of one-yearUS Dollar LIBOR (prevailing on 1 January each year) plus 2%. This benchmarkreflects the portfolio’s long-term time horizon and unconstrained mandatewhere there is no compulsion to invest in any specific asset class orgeographic region. Moreover, the Board is more concerned about absoluteloss of capital rather than any short-term underperformance versus an index.Investment PolicyThe Investment Manager will seek to achieve the Investment Objectivethrough investments in publically quoted and private (unquoted) assets acrossfour ‘sub-portfolios’: public equities, private assets (predominantly privateequity), market neutral funds and bonds. Cash levels will be managed to meetfuture commitments (e.g. to private assets), whilst maintaining an appropriatebalance for opportunistic investments.Commensurate with the long-term horizon, it is expected that the majority ofinvestments will be concentrated in equity, across both ‘public’ and ‘private’markets. In most cases, investments will be made either through collectivefunds or limited partnership vehicles, working alongside expert managers inspecialised sectors or markets to access the best opportunities.The Investment Manager maintains a global network to find the bestopportunities across the four sub-portfolios worldwide. The portfolio contains ahigh level of investments which would not normally be readily accessible toinvestors without similar resources. Furthermore, a large number of holdingsare closed to new investors. There is currently no gearing although the Boardwould, under the appropriate circumstances, be open-minded to modest levelsof gearing. Likewise, the Board may, from time to time, permit the InvestmentManager to opportunistically use derivative instruments (such as index hedgesusing call and put options) to actively protect the portfolio.Investment ProcessManager selection is central to the successful management of the investmentportfolio. Potential individual investments are considered based on their riskadjustedexpected returns in the context of the portfolio as a whole.Initial meetings are usually a result of: (i) a ‘top-down’ led search for exposureto a certain geography or sector, (ii) referrals from the Investment Manager’sglobal network or (iii) relationships from sell-side institutions and otherintroducers. The Investment Manager reviews numerous investmentopportunities each year, favouring active specialist managers who candemonstrate an ability to add value over the longer-term, often combining aconviction-based approach, an unconstrained mandate and the willingness totake unconventional decisions (e.g. investing according to conviction and notfear of short-term under performance versus an index).4

Ocean Wilsons Holdings Limited/Interim Report 2013Excessive size is often an impediment to continued outperformance and thebias is therefore towards managers who are prepared to restrict their assetsunder management to a level deemed appropriate for the underlyingopportunity set. Track records are important but transparency is an equallyimportant consideration. Alignment of interest is essential and the InvestmentManager will always seek to invest on the best possible terms. Subjectivefactors are also important in the decision making process – these qualitativeconsiderations would include an assessment of the integrity, skill andmotivation of a fund manager.Towards the end of the first quarter, investors increasingly focused on theseemingly intractable European crisis, with the bailout of Cyprus a particularcause of negative investor sentiment. As the second quarter progressed,volatility spiked, as investors reacted to comments made by Ben Bernanke inhis testimony to Congress on 21 May, which implied a ‘tapering’ in theFederal Reserve’s $85 billion monthly bond purchase programme as early asSeptember 2013. These comments prompted a sharp rise in bond yields,which in turn triggered a liquidity withdrawal from Emerging Markets andmost commodity markets.When the Investment Manager believes there is a potential fit, thorough duediligence is performed to verify the manager’s background and identify theprincipal risks. The due diligence process would typically include visiting themanager in their office (in whichever country it may be located), onsite visitsto prospective portfolio companies, taking multiple references and seeking alegal opinion on all relevant documentation.All investments are reviewed on a regular basis to monitor the on-goingcompatibility with the portfolio, together with any ‘red flags’ such as signs of‘style drift’, personnel changes or lack of focus. Whilst the InvestmentManager is looking to cultivate long term partnerships, every potential repeatinvestment with an existing manager is assessed as if it were a newrelationship.Portfolio CharacteristicsThe portfolio has several similarities to the ‘endowment model’. Thesesimilarities include an emphasis on generating real returns, a perpetual timehorizon and broad diversification, whilst avoiding asset classes with lowexpected returns (such as government bonds in the current environment). Thisdiversification is designed to make the portfolio less vulnerable to permanentloss of capital through inflation, adverse interest rate fluctuations and currencydevaluation and to take advantage of market and business cycles. TheInvestment Manager believes that outsized returns can be generated frominvestments in illiquid asset classes (such as private equity). In comparison topublic markets, the pricing of assets in private markets is less efficient and theoutperformance of superior managers is more pronounced.Market BackgroundThe first two months of the year were characterised by a relatively benignmarket environment, with a broadly linear appreciation of the major equityindices. This owed much to the perception of steadily improvingmacroeconomic conditions as well as a continuation of the more proactiveapproach from Japanese policy makers, which began following the election ofPresident Abe in December 2012. The aggressive ‘three arrows’ programmeincludes provisions to double the monetary base and reach an inflation targetof 2% by 2014.The MSCI World (Developed) Index rose 8.4% during the first half of 2013,whilst the MSCI All Country World Index rose 6.1%. Japan was the strongestperforming market, with the MSCI Japan Index gaining 16.5% (34.0% in Yenterms). The S&P 500 Index rose 13.8%, reaching its highest ever level duringthe second quarter, whilst the NASDAQ Index rose 12.7%. The MSCI Europeex UK Index rose 3.2%. The MSCI Emerging Markets Index was the majorlaggard, falling -9.6%.The Japanese equity market continued its march higher during the first half ofthe year, as the expansive monetary policy initiated in 2012 began to impacton the real economy, although markets peaked in late May and then fellthrough to the end of June. Visibility on the potential for a return to moderateinflation triggered further falls in the Yen, which declined -13.3% to ¥99 to theDollar, marking a decline of -24.1% since the high of ¥76 in October 2011.Emerging Markets sold off substantially during the first half of the year, as aresult of a combination of fears including a potential tightening in USmonetary policy, a slowdown in Chinese economic growth and a sharpincrease in Chinese inter-bank lending rates. The Ibovespa was the worstperforming of the ‘BRIC’ markets during the period, falling -28.4%, with theRTS falling -16.5%, the CSI 300 -10.2% and the Sensex -8.3%. By contrast,Frontier Markets outperformed both Emerging and Developed Markets, withthe MSCI Frontier Markets Index rising 11.1%.Commodity markets have seen significant price falls this year with metals,both industrial and precious, the hardest hit. The gold price had its worstquarter on record, falling -22.8% during the second quarter for a -26.3% yearto date decline (ending the period at $1,235/oz), while copper fell -11.1% for a-16.9% year to date decline (to $6,731/tonne). The Brent oil price fell -6.5%during the second quarter and finished -8.7% (to $102/bbl) lower than at thestart of the year.Bond markets have seen significant falls since May, when investors began tocontemplate the removal of the Federal Reserve’s support for fixed incomemarkets. Emerging Market Bonds have been hit particularly hard, with the JPMEMBI (US Dollar) Index falling -8.2% year to date. The perceived safe haven of5

Ocean Wilsons Holdings Limited/Interim Report 2013Interim StatementUS Treasuries has also experienced rising yields, with the 10-year yield risingfrom 1.63% in early May to 2.49% at the end of the second quarter, whileindices representing global Investment Grade and High Yield bonds have seenyear to date falls of -3.6% and -0.1% respectively.The US Dollar appreciated against all major currencies during the first half ofthe year (with the exception of the Renminbi). The Dollar’s relativeattractiveness increased as the perceived likelihood of the Federal Reservetightening its ultra-loose monetary policies grew and there were signs ofsteady, if unspectacular, improvements in underlying US economic growth.The appreciation of the Dollar was particularly marked against the Yen(+14.3%), the Brazilian Real (+8.8%) and Sterling (+6.8%).Note: All Index performance numbers are in US dollar terms, unlessspecifically stated in local currency terms.Portfolio ConstructionThe net asset value at the end of June 2013 was $233.5 million. The portfoliois comprised of four ‘sub-portfolios’ as detailed below:By investing in Private Assets it is often possible to access differentiatedopportunities and fast growing businesses that are not normally availablethrough public markets. For example, many Emerging Market countries haverelatively immature capital markets, which can make it difficult to access themost attractive sectors in the public markets at reasonable valuations.Furthermore, Private Assets often exhibit low correlation to public securitymarkets and the phased drawdown of capital helps to reduce market timingrisk.● 23 commitments (totalling $98.3 million) have been made as at30 June 2013.● $66.4 million has been drawn down.● Outstanding commitments of $41.6 million (the majority of which willbe drawn down over the next five years) are covered by cash andinvestments in market neutral funds. In addition, based on conservativeestimates, distributions from the current private assets portfolio shouldenable this sub-portfolio to become increasingly self-funding.Sub-Portfolio $m % NAVGlobal Equities 133.7 57.3Private Assets 52.6 22.5Market Neutral Funds 19.1 8.1Bonds/Other 28.1 12.1Total 233.5 1001) ‘Global Equities’ is comprised of holdings that are sensitive to stock marketmovements and may take the form of long-only or long/short funds, as wellas direct quoted equities. There is a strong bias towards fundamental,research-driven stock-pickers with a proven ability to produce attractivecompounded returns.2) ‘Private Assets’ contains fixed life investments typically with lives ofapproximately ten years and often structured through commitments to limitedpartnership vehicles that make investments in private equity, real assets (suchas property and natural resources) and private debt.These investments are driven by a ‘bottom-up’ analysis of the manager’s valuecreation attributes, regardless of the prevailing economic climate. Managersdependent on financial engineering as a primary driver of returns are avoided.Moreover, it is essential that the manager provides more than capital to itsportfolio companies – e.g. strong operational capabilities. Investments shouldbe made into companies where there is a clearly defined exit route, which isnot solely reliant on IPO markets.● To date, cumulative distributions received total $16.7 million.3) ‘Market Neutral Funds’ contains generally lower volatility investments in asmall number of funds that engage in a variety of trading strategies acrossasset classes. Each market neutral fund has a different investment mandateand it is expected that their collective performance will not be dependent onthe direction of global security markets. What they have in common is a focuson generating positive absolute returns while seeking to provide downsideprotection in volatile markets.In addition, Market Neutral Funds act as a backstop to cash in covering longtermcapital commitments (thus helping to avoid excessive cash drag –especially in the current environment of near-zero interest rates) and otheropportunistic investments. In short, the Investment Manager believes that theyprovide a better risk/reward allocation than other investments that areperceived to be ‘lower risk’ such as government bonds.4) ‘Bonds/Other’ – Bonds are comprised of two constituents: (i) InvestmentGrade Bonds and (ii) High Yield Bonds. Returns may be generated from risingcapital value and coupons as well as currency exposure.Investment Grade Bonds (0% of NAV) would contain investments in sovereign(government) bonds as well as corporate bonds with high credit ratings(typically at least ‘BBB’ as defined by Standard & Poor’s).6

Ocean Wilsons Holdings Limited/Interim Report 2013High Yield Bonds $14.9 million, (6.4% of NAV) include investments inEmerging Market (sovereign and corporate debt) and other Developed Markethigh yield corporate debt.‘Other’ is comprised of cash valued at $13.2 million (5.7% of NAV).Cumulative Portfolio Returns Since Inception(1 November 2000)Performance (Time-weighted)Since InceptionPortfolio Performance 120.7Performance Benchmark 64.9MSCI World (Developed) Index 41.5The first six months of 2013 saw marked underperformance of EmergingMarkets relative to Developed Markets, as evidenced by the MSCI EmergingMarkets Index declining by -9.6%. In this context, the portfolio suffered fromits long-term overweight position to Emerging Markets, which together withthe related sector of Metals & Mining comprised c44% of net asset value as at30 June. The Investment Manager discusses the attractiveness of investmentsin Emerging Markets in the ‘Market Outlook’ section.Despite the majority of the portfolio’s investments in Emerging Marketsoutperforming the regional indices, the portfolio’s significant exposure tothose markets detracted from performance. However, there were still somestrong performers in the region, including VinaCapital Vietnam OpportunityFund Ltd +15.5% and NTAsian Discovery Fund +14.7%.30 June 2013 ReturnsPerformance (Time-weighted)YTDPortfolio Performance 0.8%Performance Benchmark* 1.4%MSCI World (Developed) Index 8.4%MSCI All Country World Index 6.1%MSCI Emerging Markets Index (9.6%)*Note: Performance is measured against an absolute benchmark of one-yearUS Dollar LIBOR (prevailing on 1 January each year) plus 2%.Portfolio ReviewThe portfolio generated a time weighted return of 0.8% in the first half of2013, compared to 1.4% for the performance benchmark.The net asset value at 30 June 2013 was $233.5 million, a reduction of$4.2 million from the 31 December 2012 valuation of $237.7 million. Thereduction in net asset value is comprised of: (i) a $5 million dividend paid inApril to Ocean Wilson Holdings Ltd, (ii) expenses of $1.3 million and (iii) a$2.1 million positive contribution from the portfolio. See below performancebreakdown of the four ‘sub-portfolios’ over the first six months of 2013:Sub-Portfolio Valuation Weighting Performance Contribution30 June 2013 $m % % $mGlobal Equities 133.7 57.3 1.9 2.0Private Assets 52.6 22.5 4.2 2.1Market Neutral Funds 19.1 8.1 -6.6 -1.3Bonds/Other 28.1 12.1 -2.2 -0.7Total 233.5 100 0.8 2.1The strongest major equity markets thus far in 2013 have been the US andJapan. While the portfolio has had some good performances in these markets,the average weightings of 16.9% in North America and 2.4% in Japan aresignificantly underweight compared to the MSCI All Country World Index.However, the two biggest contributors to performance were investments inthese markets: Findlay Park American Fund +13.5% and Instinct DarkHorse Fund +29.0%.Other strong performances came from the UK and Developed Europe, wherethere were strong returns from long/short hedge funds such as LansdowneDeveloped Markets Fund +17.4%, Egerton European Dollar Fund +13.5%and Odey Absolute Return Fund +11.1%.The weakest sector this year has been Materials, which has lagged the rest ofthe market by a wide margin. The portfolio’s 12.8% average exposure toNatural Resources (equities in Metals & Mining and Energy) has therefore beena negative contributor. In particular, BlackRock World Mining Trust Plc -29.9%and BlackRock Mining Opportunities Fund -35.4% were hit hard over thesix month period.In aggregate, holdings in Market Neutral Funds, particularly the macrohedge funds, performed poorly over the period. This was due, at least in part,to rising correlations across asset classes following the Federal Reserve’scomments regarding the potential ‘tapering’ of its quantitative easingprogramme. The Investment Manager notes the generally strong performanceof the underlying managers in the weaker market environments of 2008 and2011 and continues to believe that the holdings in this sub-portfolio offer abetter risk/reward allocation than other investments perceived to be ‘lowerrisk’ such as government bonds.7

Ocean Wilsons Holdings Limited/Interim Report 2013Interim StatementThe top five contributors to the overall portfolio performance were:Top Five Contributors (in USD) Contribution Performance Gain% %/X $mFindlay Park American Fund 0.7 13.5% 1.8Instinct Dark Horse Fund 0.6 29.0% 1.5Egerton European Dollar Fund 0.5 13.5% 1.4Lansdowne Developed Markets Fund 0.5 17.4% 1.3African Development Partners I, LLC* 0.5 1.4x 1.3Total 2.8 7.3*Note: Performance for Private Assets Investments is measured as a multiple(since inception of the investment, not the period) based on the followingequation: Cash Multiple = (Profit/Loss + Drawn Capital)/Drawn Capital whereProfit/Loss = (Investment Value + Distributions) – (Initial Costs + Taxes).Private Assets (22.5% of net asset value – assuming current portfoliovaluation, this would rise to 40.3% on a fully drawn basis) – overall, theunderlying limited partnerships are showing increasing visibility on theirpotential for value creation and the Investment Manager remains confidentthat the significant capital deployed into post-crisis vintages represent anattractive store of future value. During the first half of 2012, distributionsreceived and drawdowns paid out were almost exactly matched at$4.5 million.Portfolio Activity – for the Half Year ended 30 June 2013During the first half of 2013, there were total purchases of $14.3 million andtotal sales of $19.0 million.PurchasesNew Positions $mBlackRock European Hedge Fund 5.0Odey Absolute Return Fund 5.0SalesThere were sales totalling $19.0 million during the first half of 2013.Private Assets – CommitmentsThere were three new commitments made in the first half of 2013, totalling$13.2 million.New Commitments $mNavegar I, LP 5.0NG Capital Partners II, LP 5.0Silver Lake Partners IV, LP 3.2Total 13.2Navegar I, LP will make minority growth capital investments in privatecompanies operating in the Philippines. The country has seen considerableeconomic and political progress, which provides a solid backdrop forinvestment in the Philippines. The young population is a central driver to thecountry’s projected multi-year growth and offers a powerful tailwind for localconsumer businesses.NG Capital Partners II, LP will make control investments in privatecompanies operating in Peru. In many respects, Peru is a catch-up story as ittraces the economic path of Chile. The investment case is supported by astrong Peruvian economy, which remains at an early stage of its development.In particular, businesses engaged in the provision of goods and services to theemerging consumer are expected to exhibit strong growth.Silver Lake Partners IV, LP will invest globally in businesses operating in thetechnology, technology-enabled and technology-related sectors. The managerwill take both minority and control positions. Typical investments will be inlarge market leading companies with strong growth characteristics.Additions to Existing InvestmentsPrusik Asian Smaller Companies Fund 2.0Phaunos Timber Fund 1.8Prince Street Opportunities Fund 0.5Total 14.3Odey Absolute Return Fund – is a Developed Market long/short equitieshedge fund.BlackRock European Hedge Fund – is a European (including UK) long/shortequities hedge fund.8

Ocean Wilsons Holdings Limited/Interim Report 2013Asset Allocation as at 30 June 2013Private RealAssets 3.3%Private Debt3.6%Private Equity15.6%Deposits 5.7%Market Neutral –High YieldOther LiquidityCorporate (DM)8.1%3.7%Emerging Market(Sovereign &Corporate) 2.7%Long OnlyEquities 35.5%Long/ShortHedge Funds21.8%Geographical Distribution as at 30 June 2013 Underlying Liquidity as at 30 June 2013EM – Latin America6.4%EM – Africa 3.9%EM – Middle East0.7%EM – Emerging Europe4.8%Natural Resources11.5%Cash/LiquidityFunds 5.7%Market Neutral8.1%North America18.2%Fixed Life inInvestmentPeriod 13.2%Fixed LifeInvestmentPeriod Complete9.3%>1 year4.9% Redemptionoutstanding 0.3%Daily 28.3%EM – Emerging Asia19.6%DevelopedEurope ex UK6.5%Quarterly9.5%Weekly2.1%Fortnightly1.3%EM – Developed Asiaex Japan 5.0%UK 6.7%Japan 2.9%Monthly 31.1%9

Ocean Wilsons Holdings Limited/Interim Report 2013Interim StatementInvestment Portfolio at 30 June 2013Market Value% of$000 NAV Primary FocusFindlay Park American Fund 14,952 6.4 US equities – long-onlyEgerton European Dollar Fund 11,721 5.0 Europe/US equities – hedgedLansdowne Developed Markets Fund 8,750 3.8 Europe/US equities – hedgedOaktree CM Value Opportunities Fund 8,711 3.7 US high yield corporate debt – hedgedAR New Asia Fund 8,014 3.4 Asia ex-Japan equities – long-onlyNTAsian Discovery Fund 7,618 3.3 Asia ex-Japan equities – long-onlyBlueCrest AllBlue Leveraged Feeder 7,528 3.2 Market Neutral – multi-strategyBlackRock UK Emerging Companies HF 7,246 3.1 UK equities – hedgedInstinct Dark Horse Fund 6,800 2.9 Japan equities – hedgedSchroder ISF Asian Total Return Fund 6,387 2.7 Asia ex-Japan equities – long-onlyTop 10 Holdings 87,727 37.5BlueBay Macro Fund 6,371 2.7 Market Neutral – EM-biased macroArtemis Global Energy Fund 6,355 2.7 Energy equities – long-onlyProsperity Quest Fund 5,931 2.5 Russian equities – long-onlyOdey Absolute Return Fund 5,538 2.4 Europe/US equities – hedgedAfrican Development Partners I, LLC 5,354 2.3 Private Assets – AfricaBlackRock European Hedge Fund 5,256 2.3 Europe equities – hedgedQFR Victoria Fund 5,183 2.2 Market Neutral – EM-biased macroChina Harvest Fund II, LP 5,055 2.2 Private Assets – ChinaPrusik Asian Smaller Companies Fund 4,998 2.1 Asia ex-Japan equities – long-onlyBlueBay EM Corporate Alpha Fund 4,782 2.1 EM high yield corporate debt – hedgedTop 20 Holdings 142,550 61.0CCI Technology Partners II 4,775 2.0 Technology equities – hedgedPrince Street Opportunities Fund 4,715 2.0 Emerging Markets equities – long-onlyGreenspring Global Partners IV, LP 4,498 1.9 Private Assets – US Venture CapitalR/C Global Energy & Power Fund IV, LP 3,969 1.7 Private Assets – EnergySchroder ISF Global Energy Fund 3,905 1.7 Energy equities – long-onlyL Capital Asia, LP 3,527 1.5 Private Assets – Asia (Consumer)Oaktree Principal Fund V, LP 3,521 1.5 Private Assets – US distressed debtPhaunos Timber Fund 3,135 1.3 Timber – long-onlyNYLIM Jacob Ballas India III, LLC 3,107 1.3 Private Assets – IndiaAvigo SME Fund III, LLC 3,059 1.3 Private Assets – IndiaTop 30 Holdings 180,761 77.226 remaining holdings 39,571 17.1Cash 13,215 5.7Total 233,548 100.0Market OutlookFollowing a period of strength for risk assets in 2012, which continued into2013, investors enter the second half of the year on the back of renewedvolatility. Investors have been fearful that the US Federal Reserve’s potential‘tapering’ of its quantitative easing programme, albeit subject to sufficientimprovement in economic data, marks the beginning of the end of itsultra-accommodative monetary policy. However, given that the global traderecovery remains in its infancy and inflation continues to track below thetarget rates of most major Central Banks, while heavily-indebted DevelopedMarket governments cannot afford elevated borrowing costs, it is unlikely thatincremental tightening will be undertaken at a time when deflationary pressuresremain. Currently, it is expected that the Fed’s balance sheet will continue toexpand as a percentage of US GDP until at least the middle of 2014.The improving outlook for the US consumer is underpinning the early stagesof a global economic recovery. Activity in US housing remains in anacceleration phase, household net worth has reached new highs andunemployment, whilst still elevated at 7.6%, is hovering around its lowestlevel in four years. US economic output now exceeds its pre-crisis peak, whilstthe on-going ‘re-shoring’ of manufacturing is indicative of an increasinglycompetitive domestic labour market. Moreover, there are positive structuralfactors at play such as technological developments which are enabling theextraction of the country’s vast endowment of oil and gas held in shaleformations. Talk of energy independence may be premature but it is clear thatthe US is experiencing a rare positive shock for a mature economy. In short,after a lost decade for US equities following the dot-com bubble, the USeconomy appears to be well-placed to resume its protagonist role over themedium-term, providing a supportive backdrop for the uptrend in the Dollar.Meanwhile, Europe remains in the doldrums and is well behind the US both interms of addressing its banking crisis and in its broader path to recovery. Theregion remains a major source of global deflationary pressures with half of the10

Ocean Wilsons Holdings Limited/Interim Report 201317 Eurozone members officially in recession, including three of the fourlargest member economies: France, Italy and Spain. Growth is stubbornly lowand there are no short-term fixes available to counter the vicious circle of lowgrowth and high debt. Double-digit unemployment remains a dominantfeature in the ‘PIIGS’ with extraordinarily high levels in the younger segmentof the workforce. Austerity fatigue is creating political pressure to repeat themistakes of the past and in France, the region’s second largest economy,President Hollande appears to lack the political courage to take the unpopulardecisions necessary to address deep structural flaws. Germany remains crucialto the viability of the trading bloc and the country’s federal elections inSeptember will test the public’s support of Chancellor Merkel’s crisismanagement efforts towards the bailout countries. Whilst there is relativevaluation support for European equities, a prolonged recession remains aserious threat and there is little visibility on any meaningful political measuresto address the widespread lack of competitiveness.Elsewhere in Developed Markets, policy support in Japan has provided asignificant tailwind for the world’s third largest economy. The backdrop forJapanese equities is attractive, although the hedging of currency exposureremains an important consideration, as the material depreciation of the Yen sincethe fourth quarter of 2012 may have further to run. Structural reform remains thegreatest obstacle for the debt-ridden Japanese government whose country suffersfrom a large number of embedded problems such as restrictive labour laws(where immigrants comprise less than 2% of the labour pool), a decliningpopulation and government debt more than twice the level of GDP. Manyinvestors are scarred by previous experiences in Japan and while they haveshown their initial appreciation for the greater sense of urgency, the journey outof deflation will inevitably face multiple challenges and unknown consequences.Equities in Emerging Markets, especially those of the major ‘BRIC’ economies,have performed poorly in 2013. Following a decade of dramatic wealthtransfer from West to East, many emerging economies are facing growingpains such as a pick-up in inflationary pressures. Recent social unrest incountries such as Brazil, Turkey and Egypt has exacerbated the already weaksentiment. A major source of investor concern has been policy risk emanatingfrom China, as the new government attempts to rein in the shadow bankingsystem and rebalance the economy towards domestic consumption.Addressing the dominance of an uncompetitive State Owned Enterprisessector and other excesses will take time. Chinese equity markets arediscounting an extended period of economic weakness with no further stimulus.In spite of this, Chinese GDP growth is forecast to exceed 7% in 2013 andbeyond, an enviable level in comparison to all other major economies.For investors in Emerging Markets, the combination of valuation support andlow expectations offers an appealing entry point for contrarians. Goingforwards, it is clear that the one way bet is behind us and investors will mostlikely be rewarded for showing greater discretion outside of the largestemerging economies. For example, there are powerful early stage domesticconsumption stories in the ‘ASEAN’ region (South East Asian trading blocwhich includes Indonesia, Philippines, Thailand and Vietnam), Latin Americaex-Brazil (especially Mexico, Colombia and Peru) and select African countries.Likewise, a divergence in performance is expected between commodityconsuming countries and commodity producing countries as the latter willlikely lag until the global economic recovery takes a significant hold. Finally,it is worth restating that Emerging Markets account for only c13% of theMSCI All Country World Index, yet represent more than half of global GDPand approximately three-quarters of global GDP growth.In summary, global growth is showing tentative signs of stabilisation and it isexpected that policy makers will continue to support ultra-low interest rates.The recent uplift in yields will likely prove to be one in a series of small risesover time, as the global economic recovery gradually strengthens. For longterminvestors, there is a compelling relative valuation argument for equitiesover government bonds, with the latter offering minimal upside for potentiallyhigh levels of risk. Given the cautious optimism on the improving state of theglobal economy, the Investment Manager believes that the more cyclicalsectors have strong catch-up potential versus their more defensive peers,many of which are trading on premium valuations. At the current juncture,Emerging Markets appear oversold and it will be interesting to observe howpolicy makers in those countries, which enjoy generally strong financial healthand considerable scope for orthodox monetary easing, react to generallysofter growth environments.Ultimately, there are three solutions for the overly indebted advancedeconomies: inflation, reform and default. However, what remains unknown isthe eventual mix. Despite multiple uncertainties, dislocations provideopportunities for patient investors and the Investment Manager remainsconfident that the portfolio is well-positioned to benefit over the longer-term.Hanseatic Asset Management LBGAugust 2013Going concernThe Group closely monitors and manages its liquidity risk. The Group hasconsiderable financial resources including US$152.7 million in cash and cashequivalents and the Group’s borrowings have a long maturity profile. TheGroup’s business activities together with the factors likely to affect its futuredevelopment and performance are set out in Chairman’s statement, operatingreview and investment manager’s report. The financial position, cash flowsand borrowings of the Group are also set out in the Chairman’s statement.Details of the Group’s borrowings are set out in note 15. Based on the Group’scash forecasts and sensitivities run, the Directors have a reasonableexpectation that the Company and the Group have adequate resources tocontinue in operation for the foreseeable future. For this reason, they continueto adopt the going concern basis in preparing the accounts.Responsibility statementThe Directors confirm that to the best of our knowledge:(a) the condensed set of financial statements has been prepared inaccordance with IAS 34;(b) the interim management report includes a fair review of the informationrequired by DTR 4.2.7R; and(c) the interim management report includes a fair review of the informationrequired by DTR 4.2.8RJ F Gouvêa VieiraChairman13 August 201311

Ocean Wilsons Holdings Limited/Interim Report 2013Consolidated Statement of Comprehensive Incomefor the six months ended 30 June 2013UnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)Notes US$’000 US$’000Revenue 3 306,414 297,121Raw materials and consumables used (35,877) (32,971)Employee benefits expense 5 (105,321) (119,513)Depreciation & amortisation expense 4 (27,814) (26,790)Other operating expenses (96,859) (87,739)Profit on disposal of property, plant and equipment 9,812 12Operating profit 50,355 30,120Share of results of joint ventures (45) 263Investment revenue 6 7,720 7,558Other gains and losses 7 361 1,763Finance costs 8 (11,315) (5,088)Foreign exchange losses on monetary items (12,559) (13,814)Profit before tax 34,517 20,802Income tax expense 9 (21,266) (17,070)Profit for the year 13,251 3,732Other comprehensive income: items that may be reclassified subsequently to profit and lossExchange differences arising on translation of foreign operations (3,420) (7,665)Other comprehensive loss for the period (3,420) (7,665)Total comprehensive income/(loss) for the period 9,831 (3,933)Profit for the period attributable to:Equity holders of parent 7,368 1,424Non-controlling interests 5,883 2,30813,251 3,732Total comprehensive income/(loss) for the period attributable to:Equity holders of parent 5,583 (2,902)Non-controlling interests 4,248 (1,031)9,831 (3,933)Earnings/(loss) per shareBasic and diluted 11 20.8c 4.0c12

Ocean Wilsons Holdings Limited/Interim Report 2013Consolidated Balance Sheetas at 30 June 2013UnauditedUnauditedas atas at30 June 31 December2013 2012(Restated)Notes US$’000 US$’000Non-current assetsGoodwill 15,612 15,612Other intangible assets 26,648 29,345Property, plant and equipment 12 590,045 596,015Deferred tax assets 30,269 29,647Trade and other receivables 14 15,677 16,923Investment in joint ventures 16 – 22Other non-current assets 9,880 9,215688,131 696,779Current assetsInventories 40,602 37,453Trading investments 13 220,953 241,582Trade and other receivables 14 193,081 198,348Cash and cash equivalents 152,743 136,680607,379 614,063Total assets 1,295,510 1,310,842Current liabilitiesTrade and other payables (157,066) (173,219)Current tax liabilities (2,468) (3,234)Obligations under finance leases (1,295) (1,234)Bank overdrafts and loans 15 (38,097) (35,497)(198,926) (213,184)Net current assets 408,453 400,879Non-current liabilitiesTrade and other payables (1,045) (1,134)Investment in joint ventures 16 (7,471) –Bank loans 15 (320,772) (324,138)Deferred tax liabilities (19,974) (15,043)Provisions (10,385) (10,966)Obligations under finance leases (4,742) (2,809)(364,389) (354,090)Total liabilities (563,315) (567,274)Net assets 732,195 743,568Capital and reservesShare capital 11,390 11,390Retained earnings 476,728 482,798Capital reserves 31,760 31,760Translation and hedging reserve 4,051 5,966Equity attributable to equity holders of the parent 523,929 531,914Non-controlling interests 208,266 211,654Total equity 732,195 743,56813

Ocean Wilsons Holdings Limited/Interim Report 2013Consolidated Statement of Changes in Equityas at 30 June 2013AttributableHedging and to equity Non-Share Retained Capital Translation holders of controlling Totalcapital earnings reserves reserve the parent interests equityFor the six months ended 30 June 2012 (unaudited) US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000Balance at 1 January 2012 11,390 453,205 31,760 9,831 506,186 201,936 708,122Currency translation adjustment – – – (4,326) (4,326) (3,339) (7,665)Profit for the period – 1,424 – – 1,424 2,308 3,732Total income and expense for the period – 1,424 – (4,326) (2,902) (1,031) (3,933)Dividends – (10,255) – – (10,255) (7,543) (17,798)Balance at 30 June 2012 11,390 444,374 31,760 5,505 493,029 193,362 686,391For the six months ended 30 June 2013 (unaudited)Balance at 1 January 2013 11,390 482,798 31,760 5,966 531,914 211,654 743,568Currency translation adjustment – – – (1,785) (1,785) (1,635) (3,420)Profit for the year – 7,368 – – 7,368 5,883 13,251Total income and expense for the period – 7,368 – (1,785) 5,583 4,248 9,831Dividends – (13,438) – – (13,438) (7,543) (20,981)Derivatives – – – (130) (130) (93) (223)Balance at 30 June 2013 11,390 476,728 31,760 4,051 523,929 208,266 732,195Share capitalThe Group has one class of ordinary share which carries no right to fixed income.Capital reservesThe 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 andother profits not available for distribution; and(b)Wilson Sons Limited bye-laws require the company to credit an amount equal to 5% of the company’s net profit to a retained earnings account to becalled legal reserve until such amount equals 20% of the Wilson Sons Limited share capital.Hedging and translation reserveThe hedging and translation reserve arises from exchange differences on the translation of operations with a functional currency other than US Dollars andeffective movements on hedging instruments.Amounts in the statement of changes in equity are stated net of tax where applicable.14

Ocean Wilsons Holdings Limited/Interim Report 2013Consolidated Cash Flow Statementfor the six months ended 30 June 2013UnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)Notes US$’000 US$’000Net cash inflow from operating activities 17 37,908 46,543Investing activitiesInterest received 4,891 8,089Dividends received from trading investments 2,604 1,660Proceeds on disposal of trading investments 40,390 80,869Proceeds on disposal of property, plant and equipment 14,662 55Purchases of property, plant and equipment (36,292) (62,212)Purchase of intangible asset (914) (3,959)Purchases of trading investments (19,400) (50,179)Net cash used in investing activities 5,941 (25,677)Financing activitiesDividends paid 10 (13,438) (10,255)Dividends paid to non-controlling interests in subsidiary (7,543) (7,543)Repayments of borrowings (18,194) (10,958)Repayments of obligations under finance leases (812) (1,221)New bank loans raised 18,065 30,674Decrease in bank overdrafts – (132)Net cash from financing activities (21,922) 565Net increase in cash and cash equivalents 21,927 21,431Cash and cash equivalents at beginning of period 136,680 113,643Effect of foreign exchange rate changes (5,864) (12,867)Cash and cash equivalents at end of period 152,743 122,20715

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accountsfor the six months ended 30 June 20131 General informationThe interim financial information is not the Company’s statutory accounts. The auditors of the Company have not made any report thereon under section 90(2) ofthe Bermuda Companies Act.Ocean Wilsons Holdings Limited is a company incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991.These financial statements are presented in US Dollars because that is the currency of the primary economic environment in which the Group operates.2 Accounting policiesThe condensed consolidated interim financial report of the Company for the six months ended 30 June 2013 comprises the Company and its subsidiaries(together referred to as the ‘Group’) and the Group’s interests in associates and jointly controlled entities.The condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS’s) and inaccordance with IAS 34 – Interim Financial Reporting. For these purposes, IFRS comprise the standards issued by the International Accounting Standards Board(“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).The condensed set of financial statements have been prepared on the basis of accounting policies consistent with those applied to the financial statements forthe year ended 31 December 2012 except for the new standards and interpretations adopted as described below.New standards and interpretations adoptedIn the current year the following new and revised standards and interpretations have been adopted which have affected the amounts reported in theseconsolidated financial statements.IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements.IFRS 10 introduces a single control model to determine whether an investee should be consolidated.As a result, the Group evaluated its consolidation conclusions in respect of its joint arrangements, which resulted in changes to the way joint arrangements areaccounted for.Under IFRS 11, the structure of the joint arrangement, although still an important consideration, is no longer the main factor in determining the type of jointarrangement and therefore the subsequent accounting.●The Group’s interest in a joint operation, which is an arrangement in which the parties have rights to the assets and obligations for the liabilities, will beaccounted for on the basis of the Group’s interest in those assets and liabilities.●The Group’s interest in a joint venture, which is an arrangement in which the parties have rights to the net assets, will be equity-accounted.These standards are effective for annual periods beginning on or after 1 January 2013.Comparison of the financial statements adjusted to IFRS10 and 11 and those published.Under the new standards the Group’s Joint Ventures are accounted for using the equity method of accounting. The impact of the adoption of these new standardsare set out in the tables below.16

Ocean Wilsons Holdings Limited/Interim Report 20132 Accounting policies (continued)Change in presentationForeign exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the statement ofcomprehensive income for the period. These exchange differences have previously been allocated to foreign currency monetary items based on estimated ratios.In the current year the Group is ceasing the allocation of foreign exchange differences to revenues and costs, and reporting them in one line, exchange gain/(loss)on monetary items. The comparative has been restated to reflect this change. There is no impact on net profit, comprehensive income or the Group’s BalanceSheet.Consolidated Statement of Comprehensive Incomefor the six months ended 30 June 2012As previously Impact of Change inreported new standards accounting policy RestatedUS$’000 US$’000 US$’000 US$’000Revenue 311,161 (16,918) 2,878 297,121Raw materials and consumables used (37,550) 1,289 3,290 (32,971)Employee benefits expense (127,921) 8,408 – (119,513)Depreciation & amortisation expense (31,553) 4,763 – (26,790)Other operating expenses (90,498) 2,759 – (87,739)Profit on disposal of property, plant and equipment 5 7 – 12Operating profit 23,644 308 6,168 30,120Share of results of joint ventures – 263 – 263Investment revenue (1,168) 1,080 7,646 7,558Other gains and losses 1,763 – – 1,763Finance costs (7,840) 2,752 – (5,088)Exchange losses on monetary items – – (13,814) (13,814)Profit before tax 16,399 4,403 – 20,802Income tax expense (14,149) (2,921) – (17,070)Profit for the year 2,250 1,482 – 3,732Other comprehensive incomeExchange differences arising on translation of foreign operations (7,540) (125) – (7,665)Other comprehensive loss for the year (7,540) (125) – (7,665)Total comprehensive income/(loss) for the year (5,290) 1,357 – (3,933)Profit/(loss) for the period attributable to:Equity holders of parent 1,424 – – 1,424Non-controlling interests 826 1,482 – 2,3082,250 1,482 – 3,732Total comprehensive income/(loss) for the period attributable to:Equity holders of parent (2,902) – – (2,902)Non-controlling interests (2,388) 1,357 – (1,031)(5,290) 1,357 – (3,933)Earnings/(loss) per shareBasic and diluted 4.0 – – 4.0c17

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts2 Accounting policies (continued)Consolidated Balance Sheetas at 31 December 2012As previouslyImpact ofreported new standards RestatedUS$’000 US$’000 US$’000Non-current assetsGoodwill 15,612 – 15,612Other intangible assets 29,899 (554) 29,345Property, plant and equipment 828,764 (232,749) 596,015Deferred tax assets 29,827 (180) 29,647Trade and other receivables 18,015 (1,092) 16,923Long term investments 1,072 (1,072) –Investment in joint ventures – 22 22Other non-current assets 9,197 18 9,215932,386 (235,607) 696,779Current assetsInventories 27,697 9,756 37,453Trading investments 241,582 – 241,582Trade and other receivables 168,267 30,081 198,348Cash and cash equivalents 141,335 (4,655) 136,680578,881 35,182 614,063Total assets 1,511,267 (200,425) 1,310,842Current liabilitiesTrade and other payables (163,762) (9,457) (173,219)Current tax liabilities (3,124) (110) (3,234)Obligations under finance leases (1,222) (12) (1,234)Bank overdrafts and loans (43,179) 7,682 (35,497)(211,287) (1,897) (213,184)Net current assets 367,594 (33,285) 400,879Non-current liabilitiesTrade and other payables (1,134) – (1,134)Bank loans (524,908) 200,770 (324,138)Deferred tax liabilities (17,802) 2,759 (15,043)Provisions (10,872) (94) (10,966)Obligations under finance leases (2,800) (9) (2,809)(557,516) 203,426 (354,090)Total liabilities (768,803) 201,529 (567,274)Net assets 742,464 1,104 743,568Capital and reservesShare capital 11,390 – 11,390Retained earnings 482,798 – 482,798Capital reserves 31,760 – 31,760Translation and hedging reserve 5,966 – 5,966Equity attributable to equity holders of the parent 531,914 – 531,914Non-controlling interests 210,550 1,104 211,654Total equity 742,464 1,104 743,56818

Ocean Wilsons Holdings Limited/Interim Report 20132 Accounting policies (continued)Consolidated Cash Flow Statementfor the six months ended 30 June 2012As previouslyImpact ofreported new standards RestatedUS$’000 US$’000 US$’000Net cash inflow from operating activities 39,827 6,716 46,543Investing activitiesInterest received 8,113 (24) 8,089Dividends received from trading investments 1,660 – 1,660Proceeds on disposal of trading investments 80,869 – 80,869Proceeds on disposal of property, plant and equipment 55 – 55Purchases of property, plant and equipment (74,820) 12,608 (62,212)Purchase of intangible asset (3,959) – (3,959)Purchases of trading investments (50,179) – (50,179)Net cash used in investing activities (38,261) 12,584 (25,677)Financing activitiesDividends paid (10,255) – (10,255)Dividends paid to non-controlling interests in subsidiary (7,543) – (7,543)Repayments of borrowings (14,627) 3,669 (10,958)Repayments of obligations under finance leases (1,221) – (1,221)New bank loans raised 49,618 (18,944) 30,674(Decrease)/increase in bank overdrafts (132) – (132)Net cash from financing activities 15,840 (15,275) 565Net decrease in cash and cash equivalents 17,406 4,025 21,431Cash and cash equivalents at beginning of period 119,323 (5,680) 113,643Effect of foreign exchange rate changes (10,941) (1,926) (12,867)Cash and cash equivalents at end of period 125,788 (3,581) 122,2073 RevenueAn analysis of the Group’s revenue is as follows:UnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)Note US$’000 US$’000Sales of services 263,972 270,325Revenue from construction contracts 42,442 26,796306,414 297,121Investment income 6 7,720 7,558314,134 304,679All revenue is derived from continuing operations.19

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts4 Business and geographical segments)Business segmentsOcean Wilsons Holdings Limited has two reportable segments: Maritime services and investments. The maritime services segment provides towage, portterminals, ship agency, offshore, logistics and shipyard services in Brazil through Wilson Sons Limited. The investment segment holds a portfolio of internationalinvestments through Ocean Wilsons Investments Limited.Segment information relating to these businesses is presented below.For the six months ended 30 June 2013 (unaudited)Maritimeservices Investment Unallocated Consolidatedsix months to six months to six months to six months to30 June 30 June 30 June 30 June2013 2013 2013 2013US$’000 US$’000 US$’000 US$’000Revenue 306,414 – – 306,414ResultSegment result 52,826 (1,398) (1,073) 50,355Share of joint venture results (45) – – (45)Investment revenue 5,074 2,644 2 7,720Other gains and losses – 361 – 361Finance costs (11,315) – – (11,315)Exchange losses on monetary items (12,761) (166) 368 (12,559)Profit before tax 33,779 1,441 (703) 34,517Tax (21,266) – – (21,266)Profit after tax 12,513 1,441 (703) 13,251Other informationCapital additions (37,206) – – (37,206)Depreciation and amortization (27,813) – (1) (27,814)Balance SheetAssetsSegment assets 1,056,045 235,312 4,153 1,295,510LiabilitiesSegment liabilities (562,978) (306) (31) (563,315)20

Ocean Wilsons Holdings Limited/Interim Report 20134 Business and geographical segments (continued)For the six months ended 30 June 2012 (unaudited) (Restated)Maritimeservices Investment Unallocated Consolidatedsix months to six months to six months to six months to30 June 30 June 30 June 30 June2012 2012 2012 2012US$’000 US$’000 US$’000 US$’000Revenue 297,121 – – 297,121ResultSegment result 33,092 (1,342) (1,630) 30,120Share of joint venture results 263 – – 263Investment revenue 6,003 1,553 2 7,558Other gains and losses – 1,763 – 1,763Finance costs (5,088) – – (5,088)Exchange losses on monetary items (13,814) – – (13,814)Profit before tax 20,456 1,974 (1,628) 20,802Tax (17,070) – – (17,070)Profit after tax 3,386 1,974 (1,628) 3,732Other informationCapital additions (66,171) – – (66,171)Depreciation and amortisation (26,789) – (1) (26,790)Balance SheetAssetsSegment assets 985,985 258,712 4,814 1,249,511LiabilitiesSegment liabilities (529,134) (253) (5,254) (534,641)Finance costs and associated liabilities have been allocated to reporting segments where interest costs arise from loans used to finance the construction of fixedassets in that segment.21

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts4 Business and geographical segments (continued)Geographical SegmentsThe Group’s operations are located in Bermuda, Brazil, United Kingdom and Guernsey.All of 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 and intangible assets, analysed by thegeographical area in which the assets are located.Additions to property, plant and equipmentand intangible assetsCarrying amount of Unaudited Unauditedsegment assets six months to six months toUnauditedUnaudited30 June 31 December 30 June 30 June2013 2012 2013 2012(Restated)(Restated)US$’000 US$’000 US$’000 US$’000Brazil 1,035,900 1,076,449 37,206 66,171Bermuda 258,612 233,124 – –Other 998 1,269 – –1,295,510 1,310,842 37,206 66,1715 Employee benefits expenseUnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Aggregate remuneration comprised:Wages and salaries 93,257 92,069Share based payment expense (5,002) 3,712Social security costs 16,314 23,028Other pension costs 752 704105,321 119,5136 Investment revenueUnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Interest on bank deposits 4,201 5,244Exchange losses on cash (390) (1,996)Dividends from equity investments 2,604 1,660Other interest 1,305 2,6507,720 7,55822

Ocean Wilsons Holdings Limited/Interim Report 20137 Other gains and lossesUnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Increase/(decrease) in fair value of trading investments held at year end 266 (3,028)Profit on disposal of trading investments 95 4,791361 (1,763)Other gains and losses form part of the movement in trading investments.8 Finance costsUnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Interest on bank overdrafts and loans 5,789 4,859Exchange loss/(gain) on foreign currency borrowings 5,638 (19)Interest on obligations under finance leases 292 490Total borrowing costs 11,719 5,330Other interest (404) (242)11,315 5,0889 TaxationUnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Current taxationBrazilian taxation:Corporation tax 13,212 12,072Social contribution 5,082 4,057Total current tax 18,294 16,129Deferred taxCharge for the period in respect of deferred tax liabilities 13,772 20,337(Credit) for the period in respect of deferred tax assets (10,800) (19,396)Total deferred tax 2,972 941Total taxation 21,266 17,070Brazilian corporation tax is calculated at 25% (2012: 25%) of the assessable profit for the year.Brazilian social contribution tax is calculated at 9% (2012: 9%) 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 thecompany. In the event that such taxes are levied, the company has received an undertaking from the Bermuda Government exempting it from all such taxes until31 March 2035.23

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts10 DividendsUnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Amounts recognised as distributions to equity holders in the period:Final dividend paid for the year ended 31 December 2012 of 38.0c (2011: 29.0c) per share 13,438 10,255Proposed interim dividend for the year ended 31 December 2013 of 0.0c (2012: 4.0c) per share – 1,41511 Earnings per shareThe calculation of the basic and diluted earnings per share is based on the following data:UnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Earnings:Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent 7,368 1,424Number of shares:Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share 35,363,040 35,363,04012 Property, plant and equipmentDuring the period the Group spent approximately US$36.3 million mainly on vessel construction and terminal equipment.At 30 June 2013, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to US$8.2 million.13 InvestmentsUnauditedUnauditedsix months toyear to30 June 31 December2013 2012(Restated)US$’000US$’000Trading investmentsAt 1 January 241,582 251,297Additions, at cost 19,400 114,458Disposals, at market value (40,390) (140,567)(Decrease)/increase in fair value of trading investments held at year end 266 3,005Profit on disposal of trading investments 95 13,389At period end 220,953 241,582Ocean Wilsons Investment Limited Portfolio 220,953 221,582Wilson Sons Limited – 20,000Trading investments held at fair value at 31 December 220,953 241,58224

Ocean Wilsons Holdings Limited/Interim Report 201313 Investments (continued)Wilson Sons LimitedDuring 2012 Wilson Sons Limited invested in Real denominated and US Dollar denominated fixed rate certificates. The Wilson Sons Limited investments are heldand managed separately from the Ocean Wilsons Investment Portfolio.Ocean Wilsons Investment PortfolioThe Group has not designated any financial assets that are not classified as trading investments as financial assets at fair value through profit or loss.Trading investments above represent investments in listed equity securities, funds and unquoted equities that present the Group with opportunity for returnthrough dividend income and capital appreciation.Included in trading investments are open ended funds whose shares may not be listed on a recognised stock exchange but are redeemable for cash at thecurrent net asset value at the option of the company. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted marketprices where available. Where quoted market prices are not available fair values are determined using various valuation techniques that include inputs for theasset or liability that are not based in observable market data (unobservable inputs).14 Trade and other receivablesUnauditedUnauditedperiod endedyear ended30 June 31 December2013 2012(Restated)US$’000US$’000Trade and other receivablesAmount receivable for the sale of services 70,161 66,026Allowance for doubtful debts (1,792) (2,506)68,369 63,520Income taxation recoverable 12,933 11,239Prepayments and other 27,034 43,211Other recoverable taxes and levies 39,006 44,819Other 61,416 52,482208,758 215,271Total current 193,081 198,348Total non-current 15,677 16,923208,758 215,271Non-current trade receivables relate to: recoverable taxes with maturity dates in excess of one year, which comprise mainly PIS, COFINS, ISS and INSS, customerswith maturities over one year, and receivables from Intermarítima relating to the sale of the non-controlling interest in Tecon Salvador. There are no indicators ofimpairment related to these receivables.Included in the Group’s trade receivable balances are debtors with a carrying amount of US$8.0 million (2012: US$16.3 million) which are past due but notimpaired at the reporting date for which the Group has not provided as there has not been a change in credit quality and the Group believes the amounts are stillrecoverable.The Group does not hold any collateral over these balances.25

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts14 Trade and other receivables (continued)UnauditedUnauditedperiod endedyear ended30 June 31 December2013 2012(Restated)Ageing of past due but not impaired trade receivables US$’000 US$’000From 0 – 30 days 5,584 8,670From 31 – 90 days 1,926 4,043From 91 – 180 days 483 3,549more than 180 days – –Total 7,993 16,262Included in the Group’s allowance for doubtful debts are individually impaired trade receivables with a balance of US$1.8 million which are aged greater than180 days. The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expectedsettlement proceeds. The Group does not hold any collateral over these balances.UnauditedUnauditedperiod endedyear ended30 June 31 December2013 2012(Restated)Ageing of impaired trade receivables US$’000 US$’000From 0 – 30 days – –From 31 – 90 days – –From 91 – 180 days – –more than 180 days 1,792 2,506Total 1,792 2,506In determining recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initiallygranted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated except for one customer whichaccounts for 12% of Group revenue. The directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.The directors consider that the carrying amount of trade and other receivables approximates their fair value.26

Ocean Wilsons Holdings Limited/Interim Report 201315 Bank loans and overdraftsUnauditedUnauditedperiod endedyear ended30 June 31 December2013 2012(Restated)Annual Interest rate US$’000 US$’000Unsecured borrowingsBank overdrafts 0.00% – –Secured borrowingsTowage, offshore and shipyardBNDES – FMM linked to US$ 2.07% to 6.00% 219,721 213,999Banco do Brasil – FMM linked to US$ 2.00% to 3.00% 3,382 –BNDES – FMM linked to $Real 9.71% 3,557 3,994Total towage, offshore and shipyard 226,660 217,993Port operations and logisticsIFC – US$ 3.20% to 8.50% 76,400 77,606BNDES – FINAME $Real 4.50% to 12.50% 13,750 19,401Eximbank – US$ 2.19% 12,617 13,686BNDES – linked to US$ 5.07% to 5.36% 12,684 13,821BNDES $Real 6.89% 3,324 3,604IFC – $Real 14.09% 2,144 2,655Finimp – US$ 2.09% to 4.30% 11,134 10,605Caterpillar – $Real 4.41% to 7.44% 156 264Total port operations and logistics 132,209 141,642Total secured borrowings 358,869 359,635Total borrowings 358,869 359,635Period endedYear ended30 June 31 December2013 2012(Restated)US$’000US$’000The borrowings are repayable as follows:On demand or within one year 38,097 35,497In the second year 37,186 38,358In the third to fifth years inclusive 103,458 102,608After five years 180,128 183,172Total borrowings 358,869 359,635Amounts due for settlement within 12 months (38,097) (35,497)Amounts due for settlement after 12 months 320,772 324,13827

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts15 Bank loans and overdrafts (continued)Analysis of borrowings by currency:$Reallinked to$Real US Dollars US Dollars TotalUS$’000 US$’000 US$’000 US$’00030 June 2013 (unaudited)Bank loans 22,931 235,787 101,151 358,869Total 22,931 235,787 101,151 358,86931 December 2012 (unaudited) (Restated)Bank loans 29,919 227,820 101,896 359,635Total 29,919 227,820 101,896 359,635The Group’s main sources of financing are:BNDES (Banco Nacional de Desenvolvimento Economico e Social) acts as an agent for the “FMM” (Fundo de Marinha Mercante) financing tug boats, platformsupply vessel and shipyard construction. Loans are secured by mortgages on the vessels financed. Loans received from the BNDES are predominantly $Realdenominated loans linked to the US Dollar and are monetarily corrected by the movement in the US Dollar/$Real exchange rate and bear interest of between2.07% and 6.0% per annum. The amounts outstanding at 30 June 2013 are repayable over periods varying up to 20 years.The BNDES FINAME credit line through various agents finances equipment for logistics and port operations. The $Real denominated loans bear interest ratesbetween 4.5% and 12.0% a year.Banco do Brasil acts as agent for the “FMM” (Fundo de Marinha Mercante). Banco do Brasil finances tugboat construction and secure mortgages on the vesselsfinanced. Loans received from the Banco do Brasil are $Real denominated loans linked to the US Dollar and are monetarily corrected by the movement in the USDollar/$Real exchange rate and bear a fixed interest rate of between 2.0% and 3% per annum. The amounts outstanding at 30 June 2013 are repayable overperiods varying up to 16 years.IFC (International Finance Corporation). The IFC finances the Group’s two container terminals, Tecon Rio Grande and Tecon Salvador. The majority of these loansare project finance to fund the expansion of the container terminal at Salvador and have no recourse to other companies in the Group. US dollar denominatedloans consist of variable rate and fixed rate loans. Variable rate loans bear interest of US Dollar six month Libor per annum plus 2.75%. US dollar denominatedfixed rate loans bear interest of 8.50% per annum. Real denominated loans bear interest at 14.09% per annum. The amounts outstanding at 30 June 2013 arerepayable over periods varying up to 6 years.The Export-Import Bank of China (Eximbank) finances Tecon Rio Grande’s equipment. The amounts outstanding at 30 June 2013 are repayable over periodsvarying up to 6 years and bear interest of US Dollar six month libor per annum plus 1.7%. The loans are secured by a bank guarantee with Eximbank asbeneficiary at a cost of 2% per year.The Banco Itau BBA S.A. provides financing through an import finance facility (Finimp) to finance equipment for Tecon Rio Grande. The amounts outstanding at30 June 2013 are repayable over periods varying up to 4 years and bears interest of between US Dollar six month libor per annum plus 1.63% and plus 3.8%.For the loan paying six month libor plus 1.63% there is also a 1.75% annual commission.At 30 June 2013, the Group had available US$247.8 million of undrawn committed borrowings facilities available. For each disbursement there are a set ofconditions precedent that must be satisfied.28

Ocean Wilsons Holdings Limited/Interim Report 201315 Bank loans and overdrafts (continued)GuaranteesAll loans with the BNDES are guaranteed by the Brazilian holding Company, Wilson Sons Administracao e Comercio Ltda. For some contracts the corporateguarantee is in addition to: (i) a mortgage on the respective tug boat (ii) lien of logistics or port operation equipment financed.Loans from the Banco do Brasil rely on a corporate guarantee from Wilson Sons Administracao e Commercio Ltda and a pledge of the respective financed tugboat.The subsidiaries Tecon Rio Grande and Tecon Salvador have specific restrictive clauses in their financing contracts with financial institutions related, basically, tothe maintenance of liquidity ratios. The Brazilian holding Company, Wilson Sons de Administracao e Commercio Ltda also has specific restrictive covenantsrelating to financing for the shipyards. At 30 June 2013, the Group was in accordance with all clauses of these contracts.The IFC loans to Tecon Salvador and Tecon Rio Grande are guaranteed by shares of each company, the terminals’ cash flows, equipment and buildings.The loan with “The Export-Import Bank of China” is guaranteed by a “Standby Letter of Credit” issued for Tecon Rio Grande by Banco Itaú BBA S.A., with thefinancing bank as beneficiary, as counter-guarantee, Tecon Rio Grande obtained a formal authorization from IFC trustee to pledge the equipment funded by “TheExport-Import Bank of China” to Banco Itaú BBA S.A.Loan with Itaú BBA S.A. is guaranteed by the corporate guarantee from Wilson Sons de Administração e Comércio Ltda. The contract signed on 6 January, 2012is additionally guaranteed by promissory note and pledge of the respective financed equipment.Debt CovenantsThe financing agreements entered into by subsidiaries Tecon Rio Grande, Tecon Salvador with financial institutions contain specific financial covenants. Wilson,Sons de Administração e Comércio Ltda. also has to comply with specific financial covenants.16 Joint venturesJoint operationsThe following amounts are included in the Group’s financial statements as a result of proportionate consolidation of joint operations.UnauditedUnauditedsix months toyear to30 June 31 December2013 2012(Restated)US$’000US$’000Current assets 4,543 4,827Non-current assets 1,666 2,114Current liabilities (6,138) (6,913)Non-current liabilities (71) (28)2013 2012US$’000US$’000Income 5,753 7,084Expenses (5,753) (7,084)29

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts16 Joint ventures (continued)Joint venturesThe following amounts are not consolidated in the Group’s financial statements as they are considered joint ventures. The Group’s interest on joint ventures areequity accounted as described in note 2.UnauditedUnauditedsix months toyear to30 June 31 December2013 2012(Restated)US$’000US$’000Current assets 37,662 36,750Non-current assets 579,132 511,060Current liabilities (92,439) (87,489)Non-current liabilities (487,007) (422,442)2013 2012US$’000US$’000Income 49,556 42,766Expenses (49,646) (42,240)Investments in joint venturesJoint ventures accounted for under the equity method.UnauditedUS$’000CostAt 1 January 2012 7,661Share of results of joint ventures 690Elimination on construction contracts (8,552)Change in fair value of derivatives 223At 31 December 2012 22Share of results of joint ventures (45)Elimination on construction contracts (7,225)Change in fair value of derivatives (223)At 30 June 2013 (7,471)The Group has the following significant interests in joint operations and joint ventures.Place of Proportion of Method usedincorporation effective to accountand operation interest for investmentWilson Sons Ulratug Particapacoes S.A. Brazil 29.13% EquityOffshoreaccountedConsorcio de Rebocadores Baia de São Marcos Brazil 29.13% EquityTug operatoraccountedAllink Transportes Internacionais Limitada Brazil 29.13% ProportionalNon-vessel operating common carrierconsolidationConsorcio de Rebocadores Barra de Coqueiros Brazil 29.13% EquityTug operatoraccountedAtlantic Offshore S.A. Panama 29.13% EquityOffshoreaccounted30

Ocean Wilsons Holdings Limited/Interim Report 201317 Notes to the cash flow statementUnauditedUnauditedsix months to six months to30 June 30 June2013 2012(Restated)US$’000US$’000Reconciliation from profit before tax to net cash from operating activitiesProfit before tax 34,517 20,802Share of joint venture results 45 (263)Investment revenues (7,720) (7,558)Other gains and losses (361) (1,763)Finance costs 11,315 5,088Exchange losses on monetary items 12,559 13,814Operating profit 50,355 30,120Adjustments for:Depreciation of property, plant and equipment 25,118 24,971Amortisation of intangible assets 2,696 1,819Share based payment expense (5,002) 3,712Gain on disposal of property, plant and equipment (9,812) (12)Increase/(decrease) in provisions (581) 1,020Operating cash flows before movements in working capital 62,774 61,630(Increase)/decrease in inventories (3,149) 6,403Decrease/(increase) in receivables 12,974 (6,112)(Decrease)/increase in payables (11,151) 5,258Increase in other non-current assets (665) (381)Cash generated by operations 60,783 66,798Income taxes paid (16,431) (13,801)Interest paid (6,444) (6,454)Net cash from operating activities 37,908 46,54331

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts18 CommitmentsAt 30 June 2013 the Group had entered into twenty one commitment agreements with respect to twenty one separate trading investments. These commitmentsrelate to capital subscription agreements entered into by Ocean Wilsons Investments Limited.The details of these commitments are as follows:UnauditedUnauditedOutstanding at Outstanding at30 June 31 DecemberCommitment 2013 2012(Restated)$’000 US$’000 US$’000Expiry date01 February 2013 5,000 – 1,25013 March 2013 5,000 – 1,01330 March 2013 5,000 – 64121 May 2013 4,994 – 41122 October 2013 5,000 1,550 1,55008 December 2013 5,000 2,540 2,27431 December 2013 4,650 824 1,76631 March 2014 5,000 1,725 2,10015 May 2014 3,000 68 6803 August 2014 3,000 840 1,41023 February 2015 5,000 1,214 1,82331 December 2016 3,000 271 27117 February 2017 3,000 2,042 2,25322 February 2017 3,350 284 –28 March 2017 5,000 4,938 –30 April 2017 7,500 5,675 6,3045 December 2017 5,000 433 47330 March 2018 5,000 921 –21 December 2018 5,000 891 –21 June 2019 5,000 4,043 4,39215 December 2021 5,000 4,172 4,22801 February 2023 5,000 1,000 –TBD 3,200 3,200 –TBD 5,000 5,000 –TBD 5,000 5,000 –Total 46,631 32,22732

Ocean Wilsons Holdings Limited/Interim Report 201319 Related party transactionsTransactions between this company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.Transactions between the group and its associates, joint ventures and others investments are disclosed below.Dividends received/Amounts paid/Revenue of servicesCost of servicesUnaudited Unaudited Unaudited Unaudited30 June 30 June 30 June 30 June2013 2012 2013 2012(Restated)(Restated)US$’000 US$’000 US$’000 US$’000Joint ventures1. Allink Transportes Internacionais Limitada 18 10 – –2. Consórcio de Rebocadores Barra de Coqueiros 175 144 – –3. Consórcio de Rebocadores Baía de São Marcos 5 4 (1,098) (573)4. Wilson Sons Ultratug 43,049 27,321 – –Others5. Hanseatic Asset Management – – (1,338) (1,259)6. Gouvêa Vieira Advogados – – (167) (112)7. CMMR Intermediacao Comercial Limitada – – (189) (75)8. Jofran Services – – (87) (122)Amounts owedAmounts owedby related partiesto related partiesUnaudited Unaudited Unaudited Unaudited30 June 31 December 30 June 31 December2013 2012 2013 2012(Restated)(Restated)US$’000 US$’000 US$’000 US$’000Joint ventures1. Allink Transportes Internacionais Limitada 3 1 – –2. Consórcio de Rebocadores Barra de Coqueiros 103 64 – –3. Consórcio de Rebocadores Baía de São Marcos 1,802 2,497 – –4. Wilson Sons Ultratug – – (24,606) (12,909)Others5. Hanseatic Asset Management – – (265) –6. Gouvêa Vieira Advogados – – (18) (204)7. CMMR Intermediacao Comercial Limitada – – (25) –8. Jofran Services – – – –1. Mr A C Baião is a shareholder and Director of Allink Transportes Internacionais Limitada. Allink Transportes Internacionais Limitada is 50% owned by theGroup and rents office space from the Group.1-4. The transactions with the joint ventures are disclosed as a result of proportionate amounts not eliminated on consolidation. The proportion of ownershipinterest in each joint venture is described in note 17.5. Mr W H Salomon is Chairman of Hanseatic Asset Management. Fees were paid to Hanseatic Asset Management for acting as investment managers of theGroup’s investment portfolio and administration services.6. Mr J F Gouvêa Vieira is a partner in the law firm Gouvêa Vieira Advogados. Fees were paid to Gouvêa Vieira Advogados for legal services.7. Mr C M Marote is a shareholder and Director of CMMR Intermediacao Comercial Limitada. Fees were paid to CMMR Intermediacao Comercial Limitada forconsultancy services.8. Mr J F Gouvêa Vieira is a Director of Jofran Services. Directors’ fees and consultancy fees were paid to Jofran Services.33

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts20 Financial instrumentsCapital risk managementThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital structure of the Group consists of debt,which includes the borrowings disclosed in note 15, cash and cash equivalents and equity attributable to equity holders of the parent comprising issued capital,reserves and retained earnings and the consolidated statement of changes in equity.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 byoperating revenues.Externally imposed capital requirementThe Group is not subject to externally imposed capital requirements.Financial risk management objectivesThe Group’s Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets and manages thefinancial risks relating to the operations of the Group through internal reports. These risks include market risk, (including currency risk, interest rate risk and pricerisk) credit risk and liquidity risk.The Group may use derivative financial instruments to hedge these risk exposures, with Board approval.The Group does not enter into trading financial instruments, including derivative financial instruments for speculative purposes.Credit riskThe Group’s principal financial assets are cash, trade and other receivables and trading investments.The Group’s credit risk is primarily attributable to its bank balances, trade receivables and investments. The amounts presented as receivables in the balancesheet are net of allowances for doubtful receivables as outlined above.The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The creditrisk on investments held for trading is limited because the counterparties with whom the Group transacts are regulated institutions or banks with high credit ratings.The company’s appointed investment manager, Hanseatic Asset Management LBG, evaluates the credit risk on trading investments prior to and during theinvestment period.The Group has no significant concentration of credit risk except for one large customer, which makes up 12% of revenue. On going credit evaluation isperformed on the financial condition of accounts receivable.Market riskThe Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.Foreign currency risk managementThe Group undertakes certain transactions denominated or linked to foreign currencies and therefore exposures to exchange rate fluctuations arise. The Groupoperates principally in Brazil with a substantial proportion of the Group’s revenue, expenses, assets and liabilities denominated in the Real. Due to the cost ofhedging the Real, the Group does not normally hedge its net exposure to the Real as the Board does not consider it economically viable.Interest rate risk managementThe Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.The Group borrows from the BNDES (Banco Nacional de Desenvolvimento Econômico e Social) and Banco do Brasil to finance vessel construction. These loansare fixed interest rates loans linked to the US Dollar. Due to the favourable rates offered by these institutions, in the Group’s opinion, there is minimal marketinterest rate risk.The Group’s strategy for managing interest rate risk is to maintain a balanced portfolio of fixed and floating interest rates in order to balance both cost andvolatility. The Group may use derivative instruments to reduce cash flow interest rate attributable to interest rate volatility.As at 30 June 2013 the Company had no outstanding interest rate swap contracts.34

Ocean Wilsons Holdings Limited/Interim Report 201320 Financial instruments (continued)Market price sensitivityThe Group is exposed to equity price risks arising from equity trading investments.The trading investments represent investments in listed equity securities, funds and unquoted equities and that present the Group with opportunity for returnthrough dividend income and trading gains. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market priceswhere available.By the nature of its activities the Group’s investments are exposed to market price fluctuations. However the portfolio as a whole does not correlate exactly to anystock exchange index, as it is invested in a diversified range of markets. The investment manager and the Board monitor the portfolio valuation on a regularbasis and consideration is given to hedging the portfolio against large market movements.Credit risk managementCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group has adopted a policyof only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.The Group’s sales policy is subordinated to the credit sales rules set by management, which seeks to mitigate any loss from customers’ delinquency.Trade receivables consist of a large number of customers except for one large customer, which makes up 12% of revenue (2012 12%). On going creditevaluation is performed on the financial condition accounts receivable.Liquidity risk managementUltimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining adequate reserves,banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assetsand liabilities.The Group has access to financing facilities, the total unused amount which is US$500.5 million at the balance sheet date. The Group expects to meet its otherobligations from operating cash flows and proceeds of maturing financial assets.Fair value of financial instrumentsThe fair value of non-derivative financial assets traded on active liquid markets are determined with reference to quoted market prices.The carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair value.35

Ocean Wilsons Holdings Limited/Interim Report 2013Notes to the Accounts21 Subsequent eventThe Group has completed, through its subsidiary Brasco Logística Offshore Limitada (“Brasco”), the acquisition of all the shares representing the capital of BrazilianIntermodal Complex S/A (“Briclog”), concluding the acquisition on July 1, 2013. The closing price of the acquisition of shares was US$40.5 million (R$89.8 million)with debt of US$14.5 million (R$32.1 million) assumed on acquisition and contemplated adjustment of the previously agreed price in function of the revision ofthe commercial conditions.The acquisition is payable in three amounts, including US$4.5 million (R$10 million) paid on June, 2011, US$10.2 million (R$22.5 million) paid on the closing andUS$25.9 million (R$57.3 million) that will be paid 300 days from the closing adjusted for movement in the Brazilian index of consumer prices (IPCA) from thedate of closing.There is no contingent consideration. The main reason for the acquisition included a 30-year lease right to operate in a sheltered area of Guanabara Bay, Rio deJaneiro, Brazil with privileged location to attend the Campos and Santos oil producing basins.In 2012, Briclog’s audited net revenue totaled US$19.2 million (R$42.5 million) and EBITDA US$2.5 million (R$5.6 million), numbers which reflect the utilizationof the base without any gain of scale in relation to planned expansions.The main amounts of the financial statements of Briclog as at 31 December, 2012 are as follow:Unaudited31 December2012US$’000Property, plant and equipment 13,429Other current assets 1,026Trade and other receivables 1,146Total assets 15,601Bank overdrafts and loans 3,062Taxes 3,075Provision for tax, labor and civil risk 1,036Other non-current liabilities 813Trade and other payables 6,521Equity 1,094Total equity and liabilities 15,60131 December2012US$’000Income 19,190Expenses (18,886)36

Ocean Wilsons Holdings Limited/Interim Report 2013Directors and AdvisersDirectorsJ F Gouvêa Vieira* (Chairman)W H Salomon* (Deputy Chairman)K W MiddletonC F A Cooper*A Rozental*C Townsend*C Maltby**Non-executiveSecretaryMalcolm S MitchellOcean Wilsons Dividend AddressOcean Wilsons Dividend ElectionCapita RegistrarsThe Registry34 Beckenham RoadBeckenhamKent BR3 4TUAuditorKPMG LLP15 Canada SquareLondon E14 5GLBermuda OfficePO Box HM 2250Richmond House12 Par-la-Ville RoadHamilton HM JXBermudaWebsite: www.oceanwilsons.bmBankersDeutsche Bank International LimitedJerseyInvestment ManagersHanseatic Asset Management LBGGuernsey, Channel IslandsBrazilian Business Websitewww.wilsonsons.com.brRegistered OfficePO Box HM 1022Clarendon HouseChurch StreetHamilton HM DXBermudaRegistrarsCodan Services LimitedClarendon HouseChurch StreetHamilton HM 11BermudaUK Transfer AgentCapita RegistrarsThe Registry34 Beckenham RoadKent BR3 4TU37

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