Portek International

[dydx]

What are your thoughts on operating in developing countries? How does Portek mitigate political risk in Gabon, Algeria and Malta, or is that risk not a significant concern?

I suppose as part of its risk management, Portek will have to critically assess the country risks (political, currency conversion, nationalisation, etc.) of each of these developing countries first-hand and carefully before engaging; and after that, manage the local port operations and finances in such a way in order that the company is not taken advantage of.

We have to bear in mind ports are critical to all countries in ensuring that goods can go in and out and 2-way international trade can function efficiently. A smooth and efficient port operation nowadays is based on hardware, advanced IT, human expertise, plus a lot of operational experience gained over time and constant improvement and learning. Many developing countries just do not have that and cannot possibly attain it on their own; that's the main reason why they are willing to admit Portek, and for the bigger ports, PSA or Hutchison.

In some cases, there are local j-v partners involved. Presumably, these local partners must try to make sure that relationships with the local politicians and government are well managed.

In a worst-case scenario, in a dispute Portek can switch off the computers and ship out the cranes they have brought in, and take a financial write-off in its investment in the port. But I think this has never happened before...