The Australian towage sector in which we mainly operate continued to grow in 2012. Demand for marine logistics from oil and gas construction projects remained strong with a number of LNG projects in various stages of construction. The harbour towage sector demonstrated good growth.

OFFSHORE TOWAGE AND INFRASTRUCTURE SUPPORT

Major Australian oil and gas developments in Western Australia and Queensland continued to drive a surge in demand for offshore marine logistics in 2012. Other North West Shelf LNG projects have also progressed further into their construction stage thus also contributing to growing demand. The Middle East market saw some increase in demand but remains difficult due to excessive supply.

HARBOUR TOWAGE

Australian harbour towage activity in 2012 was supported by increased volumes and market share in the main liner ports as well as by an increase in commodity exports through the bulk ports we serve.

SUPPLY

The relatively high cost of operating in Australia continues to represent a barrier to entry for new entrants in the Australian domestic market. However, increased domestic competition was apparent in 2012 as existing operators invested in new vessels. Competition also characterised the market for international tug and barge project transportation into Australia.