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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ocean Wilsons (holdings) Ld | LSE:OCN | London | Ordinary Share | BMG6699D1074 | ORD 20P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -5.00 | -0.36% | 1,365.00 | 1,360.00 | 1,365.00 | 1,370.00 | 1,345.00 | 1,370.00 | 12,726 | 16:29:45 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Towing And Tugboat Services | 440.11M | -18.68M | -0.5281 | -25.85 | 482.71M |
From Apr 2019 to Apr 2024
TIDMOCN
RNS Number : 4466N
Ocean Wilsons Holdings Ld
09 August 2017
Ocean Wilsons Holdings Limited
Interim Management Statement for the six months ended 30 June 2017
Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") today provides its interim management statement for the six months ended 30 June 2017.
Key points
-- Profit for the period up 39% to US$55.4 million (2016: US$39.9 million).
-- Investment portfolio increased US$20.1 million to US$259.0 million (31 December 2016: US$238.9 million) after dividends paid from the portfolio of US$3.5 million.
-- Revenue in US Dollar terms 14% higher at US$245.8 million (2016: US$214.7 million) benefitting from the lower average US Dollar/Brazilian Real exchange rate and a strong operating performance.
-- Earnings per share for the period of 116.9 US cents per share (2016: 56.0 US cents). -- Dividends paid to shareholders in the period of US$22.3 million (2016: US$22.3 million).
Chairman's Statement
Introduction
The first half of 2017 produced another solid result from both our Brazilian and investment portfolio businesses. Group revenue rose 14%, supported by a strong operating performance at our towage and container terminals businesses and a lower average US Dollar/Brazilian Real "USD/BRL" exchange rate. Despite the challenging economic environment in Brazil, operating margins for the period remained a healthy 20% (2016: 21%). Earnings per share rose 109% to 116.9 US cents per share (2016: 56.0 US cents), driven by the strong operating performance and improved returns from our investment portfolio which returned an encouraging 10.3% in the period.
Group Results
Revenue
Revenue for the six months ended 30 June 2017 increased 14% to US$245.8 million (2016: US$214.7 million), driven by higher port terminals and logistics revenue. Port terminals and logistics revenue grew 28% to US$124.9 million (2016: US$97.6 million), mainly due to the lower average USD/BRL exchange rate used to convert revenue into our reporting currency and higher container terminal revenue. The average USD/BRL exchange rate in the period was 14% lower than the comparative period in 2016, (3.18 v 3.70). Container volumes handled at Tecon Rio Grande and Tecon Salvador for the period, at 503,400 "TEUs" (twenty-foot equivalent units) were in line with prior period, (2016: 503,500 TEUs) although revenue increased benefitting from a more favourable sales mix with increases in import and cabotage volumes and lower empty container movements. Brasco revenue declined to US$7.8 million (2016: US$11.0 million), reflecting the weak demand from the Brazilian offshore oil and gas industry. Towage and ship agency revenue at US$108.5 million was US$2.5 million higher than the prior period (2016: US$106.0 million), with stronger harbour towage volumes offsetting weak demand for towage special operations in the period. Harbour towage manoeuvres performed in the period were 6% higher at 29,902 (2016: 28,214). Shipyard third party revenue remains depressed at US$12.4 million (2016: US$11.0 million) impacted by the weak market for vessel construction in Brazil.
Operating Profit
Operating profit for the period at US$48.9 million was US$4.3 million higher than the comparative period in 2016 (US$44.6 million) principally due to the increase in revenue. Operating margins for the period at 20% were marginally down on the prior year (21%) although excluding the loss on disposal of property, plant and equipment operating margins were unchanged at 21%. Raw materials and consumables used were US$2.5 million higher than the prior period at US$18.8 million (2016: US$16.3 million) due to a slight increase in shipyard activity and higher fuel costs associated with the increase in harbour manoeuvres. Employee expenses were 23% higher than the prior period at US$83.8 million (2016: US$68.3 million), due to the effect of the stronger USD/BRL exchange rate and redundancy costs associated with corporate restructuring. From 1 July 2017 the temporary payroll tax exemption granted to some business sectors in Brazil is being ended by the Brazilian government. We estimate the potential impact of this change in legislation will increase employee costs in the second half of 2017 by US$5.8 million although the company is seeking to overturn the government's decision and its effects. Other operating expenses were 4% higher at US$63.4 million (2016: US$61.2 million), with exchange rate impacts partly offset by reduced tug rental costs, (following the acquisition of six tugboats in 2016 that were previously leased), lower service costs and a non-recurring US$3.9 million provision reversal. The depreciation and amortisation expense in the period increased US$4.5 million to US$28.9 million from US$24.4 million in 2016 because of the stronger BRL and larger towage fleet. Loss on disposal of property, plant and equipment includes a US$2.3 million write down on leasehold improvements no longer used by the Group.
Share of results of joint ventures
The share of results of joint ventures is Wilson Sons' 50% share of net profit for the period from our offshore support vessel joint venture. Operating profit for a 50% share in the joint venture in the period was US$2.4 million higher at US$9.2 million (2016: US$6.8 million) supported by two new long-term platform supply vessel (PSV) contracts starting in late 2016, (Larus and Pinguim) and efficient cost management. Net profit attributable to Wilson Sons decreased US$1.1 million to US$1.8 million (2016: US$2.9 million) as 2016 benefitted from a foreign exchange gain on monetary items of US$5.1 million compared with a US$0.5 million loss in the current year. Total operating days in the period at 3,144 were 5% higher than the comparative period in 2016 of 2,990 although we currently have four vessels off hire.
Investment revenues
Investment revenues were US$3.8 million higher at US$9.8 million (2016: US$6.0 million) mainly due to increased dividends from equity investments of US$4.8 million, (2016 US$2.0 million).
Investment gains and losses
Other gains of US$20.3 million (2016: US$7.3 million loss) arose from the Group's portfolio of trading investments and reflect the profit realised on the disposal of trading investments in the period of US$5.9 million (2016: US$1.0 million) plus the increase in the fair value of trading investments at the period end of US$14.4 million (2015: US$8.3 million loss).
Finance costs
Finance costs for the period were US$15.9 million higher at US$8.1 million compared with a US$7.8 million positive charge for the comparative period in 2016, principally due to exchange movements on foreign currency borrowings. In the current period there was a US$1.1 million exchange loss compared with a US$13.9 million gain in the prior year comparative.
Exchange rates
The Group reports in USD and has revenue, costs, assets and liabilities in both BRL and USD. Therefore movements in the USD/BRL exchange rate can impact the Group both positively and negatively from year to year. In the six months to 30 June 2017 the BRL depreciated 3% against the USD from R$3.27 at 1 January 2017 to R$3.31 at the period end. In the comparative period in 2016 the BRL appreciated 18% against the USD from R$3.91 to R$3.21.
The principal effects from the movement of the BRL against the USD on the income statement are:
Hot Features
Premium
2017 2016
US$ million US$ million
------------------------------------------- ----------- -----------
Exchange gain on monetary items (i) 2.2 3.1
Exchange (loss)/gain on foreign currency
borrowings (1.1) 13.9
Deferred tax on retranslation of fixed
assets (ii) 0.2 22.2
Deferred tax on exchange variance on loans
(iii) (0.2) (14.4)
------------------------------------------- ----------- -----------
Total 1.1 24.8
------------------------------------------- ----------- -----------
(i) This arises from the translation of BRL denominated monetary items in USD functional currency entities.
(ii) The Group's fixed assets are located in Brazil and therefore future tax deductions from depreciation used in the Group's tax calculations are denominated in BRL. When the BRL depreciates against the US Dollar the future tax deduction in BRL terms remain unchanged but is reduced in US Dollar terms and vice versa.
(iii) Deferred tax credit arising from the exchange losses on USD denominated borrowings in Brazil.
The average USD/BRL exchange rate in the period at 3.18 was 14% lower (2016: 3.70) than the comparative period in 2016. A lower average exchange rate positively impacts BRL denominated revenues and adversely impacts BRL denominated costs when converted into our reporting currency, the USD.
Foreign exchange gains on monetary items
Foreign exchange gains on monetary items of US$2.2 million (2016: US$3.1 million) arose from the Group's foreign currency monetary items and largely reflect the movement of the BRL against the USD during the period.
Profit before tax
Profit before tax was US$17.8 million higher at US$74.9 million compared to the first half of 2016 (US$57.1 million). The improvement is principally due to the US$27.6 million movement in other gains and losses from the investment portfolio, a US$4.3 million increase in operating profit and a US$3.8 million increase in investment revenue. These gains were partially offset by a US$15.9 million increase in finance costs, as the prior period benefitted from a US$13.9 million exchange gain on foreign currency borrowings compared with a US$1.1 million loss in the current period. Share of results from joint ventures and foreign exchange gains on monetary items were US$1.1 million and US$0.9 million lower respectively.
Taxation
The tax charge for the period of US$19.4 million represents an effective tax rate in the period of 26% (2016: 30%) compared to the corporate tax rate prevailing in Brazil of 34%. The difference in the effective tax rate periods is due to the mix of income and expenses that are not included in determining taxable profit. The improvement in the current period is primarily attributable to the increase in income at our Bermudian companies that are not subject to income tax. Current taxation at US$16.7 million was US$0.7 million lower than the comparative period in 2016 (US$17.4 million).
Profit for the period
Profit attributable to equity holders of the parent is US$41.4 million (2016: US$19.8 million) after deducting profit attributable to non-controlling interests of US$14.1 million (2016: US$20.1 million). Non-controlling interests at 25% are a lower percentage of the Group profit for the period (2016: 50%), as the improved returns from the investment portfolio in the period are fully attributable to equity holders of the parent.
Earnings per share for the period was 116.9 cents (2016: 56.0 cents).
Investment portfolio performance
The trading investment portfolio and cash under management of Ocean Wilsons (Investments) Limited "OWIL" grew US$20.1 million to US$259.0 million at period end. (31 December 2016: US$238.9 million).
Cash flow and debt
Net cash inflow from operating activities for the period at US$33.1 million was US$15.2 million lower than the comparative period in 2016, (US$48.3 million) mainly due to a negative working capital movement in the period of US$26.7 million. (2016: US$6.2 million). Capital expenditure in the period at US$13.1 million was US$48.1 million lower than the comparative period in 2016 (US$61.2 million), due to less vessel construction and US$17.1 million of container terminal equipment delivered in the period where the financier directly paid the supplier. Capital additions per note 12 were US$33.5 million (2016: US$ 74.0 million). Dividends of US$22.3 million were paid to shareholders in the period (2016: US$22.3 million) with a further US$15.8 million paid to non-controlling interests in our subsidiaries (2016: US$14.9 million). The Group made capital repayments on existing loans in the period of US$27.9 million (2016: US$20.3 million).
At 30 June 2017 the Group had US$63.0 million in cash and cash equivalents (31 December 2016: US$77.3 million). The Group's borrowings at period end were US$364.6 million (31 December 2016: US$375.5 million). In addition to the Group's borrowings, the Company's 50% share of our offshore vessel joint venture's debt is US$247.9 million.
Net asset value
At the close of business on 31 July 2017, the Wilson Sons share price was R$35.21, resulting in a market value for the Ocean Wilsons holding of 41,444,000 shares (58.25% of Wilson Sons) totalling approximately US$466.2 million which is the equivalent of US$13.18 (GBP9.98) per Ocean Wilsons Holdings Limited share.
Adding together the market value per share of Wilsons Sons, US$13.18 and the investment portfolio per share of US$7.32 results in a net asset value per Ocean Wilsons Holdings Limited share of approximately US$20.51 (GBP15.52). The Ocean Wilsons Holdings Limited share price of GBP10.50 at 31 July 2017 represented an implied discount of 32%. Based on the current share price the 2016 dividend of 63 US cents represents an attractive dividend yield of approximately 4.5%.
Outlook
Brazil continues to face a challenging economic environment and continued political uncertainty. Our core container terminal and towage businesses continue to perform well although prospects for an improvement in demand for offshore support services and small vessel construction remain weak. At period end the shipyard orderbook consists of five vessels, including two tugboats for Wilson Sons and three tugs for third party delivery, in addition to dry-docking operations. Our belief in the fundamental strengths and value of our Brazilian business remain unchanged.
Wilson Sons Limited
The Wilson Sons 2nd quarter 2017 Earnings Report released on 9 August 2017 is available on the Wilson Sons Limited website: www.wilsonsons.com.br
In it Cezar Baião, CEO of Operations in Brazil said:
"Wilson Sons 2Q17 EBITDA of US$44.7M was up 21.1% with solid results in the Towage and Terminals businesses. The highlight in Container Terminals was the 17.6% growth in import volumes at Tecon Rio Grande. New terminal equipment became operational in April, further improving operational productivity at both Rio Grande and Salvador in the quarter.
The Towage division produced robust results with increased harbour manoeuvres more than offsetting a reduction in special operations. Our Offshore Support Vessels business benefitted from the two new long-term contracts commencing in late 2016. Although some potential contract opportunities are arising for off-hire vessels, daily rates remain under pressure.
Once more we are very grateful for the efforts of all our staff for their contribution to this solid result despite a continuing weak Brazilian macroeconomic scenario and stress throughout the oil and gas services market."
Investment Managers Report
Hanseatic Asset Management LBG, the Manager of the Group's investment portfolio reports as follows:
Market Commentary
Stock markets have produced strong returns during the first half of the year, following their more muted performances last year. The MSCI ACWI +FM Index of global equities has risen 11.5% over the last six months. The information technology sector has been particularly strong, rising by more than 20% over this time, followed by the health care sector that is up almost 16%. Energy has been the weakest sector, registering a decline of 8.6%.
There has been a notable weakening of the US dollar against most other currencies this year, which has had the effect of boosting the performance of overseas assets when measured in dollars. Emerging markets have outperformed developed markets with a return of 18.4% versus 10.7%, with particularly strong performance coming from Asian markets. Equity markets in Europe rose by 17.5%, while UK and Japan were both up 10% and North America was up 9%.
We believe the stock market cycle is undoubtedly maturing, with valuations rising and the current cycle looking rather long in the tooth. We note however that accurately predicting the tops of cycles is extremely challenging, and few have done it consistently well. While at this point we do not see those factors normally associated with market tops, particularly by looking outside of the US, it is still possible to find some attractive areas for investment.
Portfolio activity
The portfolio has produced strongly positive returns year-to-date, with a rise of 10.3%. During the same period the Performance Benchmark has risen by 2.9%. The strongest contribution to performance came from the portfolio's largest position, with Findlay Park American Fund rising by 11.6%. The strong performance of European and emerging markets meant that some of the portfolio's strongest contributors were holdings with exposure to these areas. There was also some pleasing improvement in performance by holdings that had gone through a weak patch in 2016, with the long-only Adelphi European Select Equity Fund returning 15.9% and the long-short Egerton Long-Short Fund and BlackRock European Hedge Fund rising by 13.1% and 12.2%, respectively. Within emerging markets, NTAsian Discovery Fund and Schroder Asian Total Return Fund were among the biggest contributors to performance with returns of 13.4% and 23.0%, respectively.
There has been weaker performance this year from the CTA fund, Schroder GAIA BlueTrend, which was down 6.7% in what has been a difficult environment for trend-following strategies. The other CTA holding, Cantab Core Macro Fund, was able to deliver a small positive return of 2.7%, assisted by its exposure to value strategies. Argentière Fund, which seeks to trade on volatility, has struggled with a return of -4.2% over the period, as realised volatility has persisted at very low levels. Within the private assets portfolio, L Capital Asia 2 and Hony Capital Fund V contributed positively to performance over the six month period, and are now held at 1.23x and 1.47x cost, respectively. On the other hand, China Harvest Fund II and Capital International Private Equity Fund V detracted from performance in the first half of the year, although they are both still held at positive multiples of 1.28x and 1.07x cost, respectively.
CUMULATIVE PORTFOLIO RETURNS
3 Years 5 Years 10 Years
Performance (Time-weighted) YTD p.a. p.a. p.a.
---------------------------- ----- ------- ------- --------
OWIL 10.3% 4.1% 6.3% 2.8%
Performance Benchmark * 2.9% 4.3% 3.8% 4.0%
MSCI ACWI + FM 11.5% 4.8% 10.5% 3.7%
MSCI Emerging Markets 18.4% 1.1% 4.0% 1.9%
*Notes:
The OWIL Performance Benchmark which came in to effect on the 1st January 2015 is US CPI Urban Consumers NSA +3% p.a. This has been combined with the old benchmark (USD 12 Month LIBOR +2%) for periods prior to the adoption of the new benchmark.
Investment Portfolio at 30 June 2017
Market
Value % of
$000 NAV Primary Focus
-------------------------------- ------- ----- -------------------------------
Findlay Park American
Fund 19,549 7.5 US equities - long-only
Egerton Long - Short Europe/US equities
Fund 13,172 5.1 - hedge
Adelphi European Select Europe equities -
Equity Fund 12,378 4.8 long-only
Asia ex-Japan equities
NTAsian Discovery Fund 11,092 4.3 - long-only
BlackRock European Hedge Europe equities -
Fund 9,017 3.5 hedge
Lansdowne Developed Markets Europe/US equities
Fund 8,498 3.3 - hedge
Goodhart Partners: Hanjo
Fund 8,367 3.2 Japan equities - long-only
Hony Capital Fund V,
LP 7,391 2.9 Private Assets - China
Helios Investors II,
LP 6,958 2.7 Private Assets - Africa
Schroder ISF Asian Total Asia ex-Japan equities
Return Fund 6,360 2.5 - long-only
Top 10 Holdings 102,782 39.7
-------------------------------- ------- ----- -------------------------------
Private Assets - Asia
L Capital Asia, LP 6,070 2.3 (Consumer)
Select Equity Offshore,
Ltd 5,925 2.3 US equities - long-only
Indus Japan Long Only
Fund 5,881 2.3 Japan equities - long-only
Pangaea II, LP 5,837 2.3 Private Assets - GEM
Gramercy Distressed Opportunity Private Assets - distressed
Fund II, LP 5,793 2.2 debt
Greenspring Global Partners Private Assets - US
IV, LP 5,752 2.2 Venture Capital
Vulcan Value Equity Fund 5,727 2.2 US equities - long-only
GAM Star Technology 5,716 2.2 Technology - long-only
Prince Street Opportunities Emerging Markets equities
Fund 5,695 2.2 - long-only
Global Event Partners Global equities -
Ltd 5,325 2.1 long-short
Top 20 Holdings 160,503 62.0
-------------------------------- ------- ----- -------------------------------
Hudson Bay International
Fund 5,181 2.0 Market Neutral - multi-strategy
KKR Special Situations Private Assets - distressed
Fund, LP 4,850 1.9 debt
Navegar I, LP 4,283 1.7 Private Assets - Philippines
NG Capital Partners II, Private Assets - Latin
LP 4,219 1.6 America
China Harvest Fund II,
LP 4,211 1.6 Private Assets - China
AMED Fund, SICAR 4,118 1.6 Private Assets - Africa
Private Assets - Asia
L Capital Asia 2, LP 3,414 1.3 (Consumer)
NYLIM Jacob Ballas India
III, LLC 3,311 1.3 Private Assets - India
Dynamo Brasil VIII 3,290 1.3 Brazil - long only
African Development Partners
I, LLC 2,991 1.2 Private Assets - Africa
-------------------------------- ------- ----- -------------------------------
Top 30 Holdings 200,371 77.4
-------------------------------- ------- ----- -------------------------------
35 remaining holdings 50,459 19.5
-------------------------------- ------- ----- -------------------------------
Cash 8,132 3.1
-------------------------------- ------- ----- -------------------------------
TOTAL 258,962 100.0
-------------------------------- ------- ----- -------------------------------
Hanseatic Asset Management LBG
August 2017
Going concern
The Group closely monitors and manages its liquidity risk. The Group has considerable financial resources including US$63.0 million in cash and cash equivalents and the Group's borrowings have a long maturity profile. The Group's business activities together with the factors likely to affect its future development and performance are set out in the Chairman's statement and investment manager's report. The financial position, cash flows and borrowings of the Group are also set out in the Chairman's statement. Details of the Group's borrowings are set out in note 15. Based on the Group's cash forecasts and sensitivities run, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.
Responsibility statement
The Directors confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R; and
(c) the interim management report includes a fair review of the information required by DTR 4.2.8R.
J F Gouvêa Vieira
Chairman
8 August 2017
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2017
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
Notes US$'000 US$'000
--------------------------------------- ----- ---------- ----------
Revenue 3 245,753 214,670
Raw materials and consumables used (18,817) (16,313)
Employee benefits expense 5 (83,797) (68,255)
Depreciation & amortisation expense 4 (28,949) (24,405)
Other operating expenses (63,354) (61,198)
(Loss)/profit on disposal of property,
plant and equipment (1,962) 67
--------------------------------------- ----- ---------- ----------
Operating profit 48,874 44,566
Share of results of joint ventures 1,808 2,881
Investment revenue 6 9,777 5,965
Other gains/(losses) 7 20,280 (7,329)
Finance costs 8 (8,090) 7,852
Foreign exchange gains on monetary
items 2,203 3,143
--------------------------------------- ----- ---------- ----------
Profit before tax 74,852 57,078
Income tax expense 9 (19,403) (17,219)
--------------------------------------- ----- ---------- ----------
Profit for the period 55,449 39,859
--------------------------------------- ----- ---------- ----------
Other comprehensive income: items
that may be reclassified subsequently
to profit and loss
Exchange differences arising on
translation of foreign operations (4,970) 36,892
Effective portion of changes in
fair value of derivatives 141 427
--------------------------------------- ----- ---------- ----------
Other comprehensive (loss)/income
for the period (4,829) 37,319
--------------------------------------- ----- ---------- ----------
Total comprehensive income for
the period 50,620 77,178
--------------------------------------- ----- ---------- ----------
Profit for the period attributable
to:
Equity holders of parent 41,348 19,808
Non-controlling interests 14,101 20,051
--------------------------------------- ----- ---------- ----------
Profit for the period 55,449 39,859
--------------------------------------- ----- ---------- ----------
Total comprehensive income for
the period attributable to:
Equity holders of parent 38,524 41,457
Non-controlling interests 12,096 35,721
--------------------------------------- ----- ---------- ----------
Total comprehensive income for
the period 50,620 77,178
--------------------------------------- ----- ---------- ----------
Earnings per share
Basic and diluted 11 116.9c 56.0c
Consolidated Balance Sheet
as at 30 June 2017
Unaudited Audited
as at as at
30 June 31 December
2017 2016
Notes US$'000 US$'000
-------------------------------------- ----- --------- -----------
Non-current assets
Goodwill 30,318 30,607
Other intangible assets 29,646 30,444
Property, plant and equipment 12 646,093 646,926
Deferred tax assets 29,175 29,055
Trade and other receivables 14 52,777 55,070
Investment in joint ventures 16 24,091 22,230
Other non-current assets 13,497 13,408
-------------------------------------- ----- --------- -----------
825,597 827,740
-------------------------------------- ----- --------- -----------
Current assets
Inventories 15,947 15,427
Trading investments 13 270,953 276,181
Trade and other receivables 14 93,269 81,265
Cash and cash equivalents 62,981 77,314
-------------------------------------- ----- --------- -----------
443,150 450,187
-------------------------------------- ----- --------- -----------
Total assets 1,268,747 1,277,927
-------------------------------------- ----- --------- -----------
Current liabilities
Trade and other payables (55,986) (68,257)
Derivatives (834) (712)
Current tax liabilities (2,238) (3,299)
Obligations under finance leases (1,218) (1,211)
Bank overdrafts and loans 15 (56,541) (49,780)
-------------------------------------- ----- --------- -----------
(116,817) (123,259)
-------------------------------------- ----- --------- -----------
Net current assets 326,333 326,928
-------------------------------------- ----- --------- -----------
Non-current liabilities
Bank loans 15 (308,048) (325,750)
Derivatives (828) (1,182)
Employee benefits (674) (648)
Deferred tax liabilities (51,560) (48,974)
Provisions (19,657) (20,037)
Obligations under finance leases (504) (1,085)
-------------------------------------- ----- --------- -----------
(381,271) (397,676)
-------------------------------------- ----- --------- -----------
Total liabilities (498,088) (520,935)
-------------------------------------- ----- --------- -----------
Net assets (770,659) 756,992
-------------------------------------- ----- --------- -----------
Capital and reserves
Share capital 11,390 11,390
Retained earnings 540,947 521,878
Capital reserves 31,760 31,760
Translation and hedging reserve (32,509) (29,685)
-------------------------------------- ----- --------- -----------
Equity attributable to equity holders
of the parent 551,588 535,343
Non-controlling interests 219,071 221,649
-------------------------------------- ----- --------- -----------
Total equity 770,659 756,992
-------------------------------------- ----- --------- -----------
Consolidated Statement of Changes in Equity
as at 30 June 2017
Hedging Attributable
and to equity Non-
Share Retained Capital Translation holders of controlling Total
capital earnings reserves reserve the parent interests Equity
---------------------------------------
For the six months ended 30 June 2016
(unaudited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
Balance at 1 January 2016 11,390 501,426 31,760 (49,542) 495,034 185,448 680,482
Currency translation adjustment - - - 21,378 21,378 15,514 36,892
Effective portion of changes in fair
value of derivatives - - - 271 271 156 427
Profit for the period - 19,808 - - 19,808 20,051 39,859
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
Total income and expense for the period - 19,808 - 21,649 41,457 35,721 77,178
Dividends - (22,279) - - (22,279) (14,850) (37,129)
Derivatives - - - (43) (43) (30) (73)
Acquisition of non-controlling interest - (2,988) - - (2,988) (2,411) (5,399)
Share based expense - - - - - 1,649 1,649
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
Balance at 30 June 2016 11,390 495,967 31,760 (27,936) 511,181 205,527 716,708
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
For the six months ended 30 June 2017
(unaudited)
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
Balance at 1 January 2017 11,390 521,878 31,760 (29,685) 535,343 221,649 756,992
Currency translation adjustment - - - (2,906) (2,906) (2,064) (4,970)
Effective portion of changes in fair
value of derivatives - - - 82 82 59 141
Profit for the period - 41,348 - - 41,348 14,101 55,449
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
Total income and expense for the period - 41,348 - (2,824) 38,524 12,096 50,620
Dividends - (22,279) - - (22,279) (15,845) (38,124)
Derivatives - - - - - - -
Acquisition of non-controlling interest - - - - - - -
Share based expense - - - - - 1,171 1,171
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
Balance at 30 June 2017 11,390 540,947 31,760 (32,509) 551,588 219,071 770,659
--------------------------------------- ------- -------- -------- ----------- ------------ ----------- --------
Share capital
The Group has one class of ordinary share which carries no right to fixed income.
Capital reserves
The 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 and other 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 be called legal reserve until such amount equals 20% of the Wilson Sons Limited share capital.
Hedging and translation reserve
The hedging and translation reserve arises from exchange differences on the translation of operations with a functional currency other than US Dollars and effective movements on hedging instruments.
Amounts in the statement of changes in equity are stated net of tax where applicable.
Consolidated Cash Flow Statement
for the six months ended 30 June 2017
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
Notes US$'000 US$'000
-------------------------------------------- ----- ---------- ----------
Net cash inflow from operating activities 17 33,091 48,255
Investing activities
Interest received 4,050 3,109
Dividends received from trading investments 4,772 1,973
Proceeds on disposal of trading investments 64,822 29,620
Proceeds on disposal of property,
plant and equipment 473 1,482
Purchases of property, plant and
equipment (13,142) (61,216)
Purchase of intangible asset (1,626) (3,576)
Purchases of trading investments (39,314) (14,314)
Acquisition of non-controlling interest - (1,855)
-------------------------------------------- ----- ---------- ----------
Net cash used in investing activities 20,035 (44,777)
-------------------------------------------- ----- ---------- ----------
Financing activities
Dividends paid 10 (22,279) (22,279)
Dividends paid to non-controlling
interests in subsidiary (15,845) (14,850)
Repayments of borrowings (27,883) (20,319)
Repayments of obligations under finance
leases (448) (641)
Derivative paid (302) (421)
New bank loans raised - 23,385
-------------------------------------------- ----- ---------- ----------
Net cash used in financing activities (66,757) (35,125)
-------------------------------------------- ----- ---------- ----------
Net (decrease)/increase in cash and
cash equivalents (13,631) (31,647)
-------------------------------------------- ----- ---------- ----------
Cash and cash equivalents at beginning
of period 77,314 97,561
Effect of foreign exchange rate changes (702) 12,709
Cash and cash equivalents at end
of period 62,981 78,623
-------------------------------------------- ----- ---------- ----------
Notes to the Accounts
for the six months ended 30 June 2017
1 General information
The 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) of the 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 policies
The condensed consolidated interim financial report of the Company for the six months ended 30 June 2017 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 (IFRSs) and in accordance 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 for the year ended 31 December 2016.
3 Revenue
An analysis of the Group's revenue is as follows:
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
Note US$'000 US$'000
------------------------------------ ---- ---------- ----------
Sales of services 233,382 203,683
Revenue from construction contracts 12,371 10,987
------------------------------------ ---- ---------- ----------
245,753 214,670
Investment income 6 9,790 5,965
------------------------------------ ---- ---------- ----------
255,543 220,635
------------------------------------ ---- ---------- ----------
All revenue is derived from continuing operations.
4 Business and geographical segments
Business segments
Ocean Wilsons Holdings Limited has two reportable segments: Maritime services and investments. The maritime services segment provides towage, port terminals, ship agency, offshore, logistics and shipyard services in Brazil through Wilson Sons Limited. The investment segment holds a portfolio of international investments through Ocean Wilsons (Investments) Limited.
Segment information relating to these businesses is presented below.
For the six months ended 30 June 2017 (unaudited)
Maritime
services Investment Unallocated Consolidated
six months six months six months six months
to to to to
30 June 30 June 30 June 30 June
2017 2017 2017 2017
US$'000 US$'000 US$'000 US$'000
------------------------------ ---------- ---------- ----------- ------------
Revenue
Result 245,753 - - 245,753
Segment result 51,302 (1,330) (1,098) 48,874
Share of joint venture
results 1,808 - - 1,808
Investment revenue 4,992 4,772 13 9,777
Other gains and losses - 20,280 - 20,280
Finance costs (8,090) - - (8,090
Exchange gains/(losses)
on monetary items 2,253 13 (63) 2,203
------------------------------ ---------- ---------- ----------- ------------
Profit before tax 52,265 23,735 (1,148) 74,852
Tax (19,403) - - (19,403)
------------------------------ ---------- ---------- ----------- ------------
Profit after tax 32,862 23,735 (1,148) 55,449
------------------------------ ---------- ---------- ----------- ------------
Other information
Capital additions (33,524) - - (33,524)
Depreciation and amortization (28,948) - (1) (28,949)
Balance Sheet
Assets
Segment assets 1,005,915 259,109 3,723 1,268,747
------------------------------ ---------- ---------- ----------- ------------
Liabilities
Segment liabilities (497,633) (233) (222) (498,088)
------------------------------ ---------- ---------- ----------- ------------
For the six months ended 30 June 2016 (unaudited)
Maritime
services Investment Unallocated Consolidated
six months six months six months six months
to to to to
30 June 30 June 30 June 30 June
2016 2016 2016 2016
US$'000 US$'000 US$'000 US$'000
------------------------------ ---------- ---------- ----------- ------------
Revenue 214,670 - - 214,670
Result
Segment result 46,867 (1,267) (1,034) 44,566
Share of joint venture
results 2,881 - - 2,881
Investment revenue 3,977 1,984 4 5,965
Other gains and losses - (7,329) - (7,329)
Finance costs 7,852 - - 7,852
Exchange gains/(losses)
on monetary items 3,513 30 (400) 3,143
------------------------------ ---------- ---------- ----------- ------------
Profit before tax 65,090 (6,582) (1,430) 57,078
Tax (17,219) - - (17,219)
------------------------------ ---------- ---------- ----------- ------------
Profit after tax 47,871 (6,582) (1,430) 39,859 ------------------------------ ---------- ---------- ----------- ------------ Other information Capital additions (73,970) - - (73,970) Depreciation and amortisation (24,404) - (1) (24,405) Balance Sheet Assets Segment assets 1,031,761 234,328 3,242 1,269,331 ------------------------------ ---------- ---------- ----------- ------------ Liabilities Segment liabilities (551,954) (456) (213) (552,623) ------------------------------ ---------- ---------- ----------- ------------
Finance costs and associated liabilities have been allocated to reporting segments where interest costs arise from loans used to finance the construction of fixed assets in that segment.
Geographical Segments
The Group's operations are located in Bermuda and Brazil.
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 the geographical area in which the assets are located.
Additions to property,
plant and
Carrying amount of equipment and intangible
segment assets assets
Unaudited Unaudited
six months six months
Unaudited Unaudited to to
30 June 30 June 30 June 30 June
2017 2016 2017 2016
US$'000 US$'000 US$'000 US$'000
-------- --------- --------- ------------ ------------
Brazil 983,289 992,917 33,524 64,791
Bermuda 285,458 276,414 - -
-------- --------- --------- ------------ ------------
1,268,747 1,269,331 33,524 64,791
-------- --------- --------- ------------ ------------
5 Employee benefits expense
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
---------------------------------- ---------- ----------
Aggregate remuneration comprised:
Wages and salaries 68,232 55,787
Share based payment expense 1,180 1,649
Social security costs 13,863 10,353
Other pension costs 522 466
---------------------------------- ---------- ----------
83,797 68,255
---------------------------------- ---------- ----------
6 Investment revenue
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
---------------------------------- ---------- ----------
Interest on bank deposits 2,670 2,918
Dividends from equity investments 4,772 1,973
Other interest 2,335 1,074
---------------------------------- ---------- ----------
9,777 5,965
---------------------------------- ---------- ----------
7 Other gains and losses
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
------------------------------------------ ---------- ----------
Increase/(decrease) in fair value of
trading investments held at period end 14,384 (8,274)
Profit on disposal of trading investments 5,896 945
------------------------------------------ ---------- ----------
20,280 (7,329)
------------------------------------------ ---------- ----------
Other gains and losses form part of the movement in trading investments.
8 Finance costs
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
----------------------------------------- ---------- ----------
Interest on bank overdrafts and loans 6,716 5,676
Exchange (gain)/loss on foreign currency
borrowings 1,110 (13,920)
Interest on obligations under finance
leases 143 219
Other interest 121 173
----------------------------------------- ---------- ----------
8,090 (7,852)
----------------------------------------- ---------- ----------
9 Taxation
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
------------------------------------------ ---------- ----------
Current taxation
Brazilian taxation:
Corporation tax 11,858 12,379
Social contribution 4,891 4,988
------------------------------------------ ---------- ----------
Total current tax 16,749 17,367
------------------------------------------ ---------- ----------
Deferred tax
Charge/(credit) for the period in respect
of deferred tax liabilities 4.255 (17,367)
(Credit)/charge for the period in respect
of deferred tax assets (1,601) 17,219
------------------------------------------ ---------- ----------
Total deferred tax 2,654 (148)
------------------------------------------ ---------- ----------
Total taxation 19,403 17,219
------------------------------------------ ---------- ----------
Brazilian corporation tax is calculated at 25% (2016: 25%) of the assessable profit for the year.
Brazilian social contribution tax is calculated at 9% (2016: 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 the company. In the event that such taxes are levied, the company has received an undertaking from the Bermuda Government exempting it from all such taxes until 31 March 2035.
10 Dividends
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
----------------------------------------- ---------- ----------
Amounts recognised as distributions
to equity holders in the period:
Final dividend paid for the year ended
31 December 2016 of 63.0c (2015: 63.0c)
per share 22,279 22,279
----------------------------------------- ---------- ----------
11 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
-------------------------------------------- ------------ ----------
Earnings:
Earnings for the purposes of basic earnings
per share being net profit attributable
to equity holders of the parent 41,348 19,808
Number of shares:
Weighted average number of ordinary
shares for the purposes of basic and
diluted earnings per share 35,363,040 35,363,040
-------------------------------------------- ------------ ----------
12 Property, plant and equipment
During the period, the Group spent approximately US$33.5 million mainly on vessel construction and terminal equipment.
At 30 June 2017, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to US$13.1 million.
13 Investments
Unaudited Audited
six months
to year to
30 June 31 December
2017 2016
US$'000 US$'000
------------------------------------------ ---------- -----------
Trading investments
At 1 January 276,181 276,878
Additions, at cost 39,314 67,101
Disposals, at market value (64,822) (63,664)
Increase/(decrease) in fair value of
trading investments held at period end 14,384 (6,030)
Profit on disposal of trading investments 5,896 1,896
------------------------------------------ ---------- -----------
At period end 270,953 276,181
------------------------------------------ ---------- -----------
Ocean Wilsons (Investments) Limited
Portfolio 253,553 238,781
Wilson Sons Limited 17,400 37,400
------------------------------------------ ---------- -----------
Trading investments held at fair value
at period end 270,953 276,181
------------------------------------------ ---------- -----------
Wilson Sons Limited
The Wilson Sons Limited investments are held and managed separately from the Ocean Wilsons (Investments) Limited Portfolio and consist of US Dollar denominated depository notes.
Ocean Wilsons (Investments) Limited Portfolio
The 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 return through 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 the current 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 market prices where available. Where quoted market prices are not available, fair values are determined using various valuation techniques that include inputs for the asset or liability that are not based in observable market data (unobservable inputs).
14 Trade and other receivables
Unaudited Audited
period ended year ended
30 June 31 December
2017 2016
US$'000 US$'000
------------------------------------------- ------------ -----------
Trade and other receivables
Amount receivable for the sale of services 62,277 55,434
Allowance for doubtful debts (731) (1,187)
------------------------------------------- ------------ -----------
61,546 54,247
Income taxation recoverable 6,267 7,466
Other recoverable taxes and levies 37,691 36,571
Loans to related parties 29,250 28,995
Prepayments 1,889 4,031
Other 9,403 5,025
------------------------------------------- ------------ -----------
146,046 136,335
------------------------------------------- ------------ -----------
Total current 93,269 81,265
Total non-current 52,777 55,070
------------------------------------------- ------------ -----------
146,046 136,335
------------------------------------------- ------------ -----------
Non-current trade receivables relate to: recoverable taxes with maturity dates in excess of one year, which comprise mainly PIS, COFINS, ISS and INSS, customers with maturities over one year. There are no indicators of impairment related to these receivables.
As a matter of routine, the Group reviews taxes and levies impacting its business to ensure that payments of such amounts are correctly made and that no amounts are paid unnecessarily. The Group is developing a plan to use its tax credits, respecting the legal term for using tax credits from prior years, and if unable to recover by compensation, requesting reimbursement of these values from the Receita Federal do Brasil (Brazilian Inland Revenue Service).
Included in the Group's trade receivable balances are debtors with a carrying amount of US$9.6 million (2016: US$9.2 million) which are past due but not impaired at the reporting date for which the Group has not provided as there has not been a change in credit quality and the Group believes the amounts are still recoverable.
The Group does not hold any collateral over these balances.
Unaudited Audited
period ended year ended
30 June 31 December
2017 2016
Ageing of past due but not impaired
trade receivables US$'000 US$'000
------------------------------------ ------------ -----------
From 0 - 30 days 6,475 6,177
From 31 - 90 days 2,442 2,178
From 91 - 180 days 716 844
more than 180 days - -
------------------------------------ ------------ -----------
Total 9,633 9,199
------------------------------------ ------------ -----------
Included in the Group's allowance for doubtful debts are individually impaired trade receivables with a balance of US$1.2 million that are aged greater than 180 days. The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected settlement proceeds. The Group does not hold any collateral over these balances.
Unaudited Audited
period ended year ended
30 June 31 December
2017 2016
Ageing of impaired trade receivables US$'000 US$'000
------------------------------------- ------------ -----------
From 0 - 30 days - -
From 31 - 90 days - -
From 91 - 180 days - -
more than 180 days 731 1,187
------------------------------------- ------------ -----------
Total 731 1,187
------------------------------------- ------------ -----------
In determining recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. The directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
15 Bank loans and overdrafts
Unaudited Audited
period
ended year ended
30 June 31 December
2017 2016
Annual Interest
rate US$'000 US$'000
----------------------------- --------------- --------- -----------
Secured borrowings
BNDES - FMM linked to US$
(1) 2.07% to 6.00% 160,978 168,385
BNDES Real 7.50% - 9.69% 23,048 25,466
BNDES - linked to US$ 5.07% - 5.36% 3,982 5,069
BNDES - FINAME Real 4.50% - 13.72% 2,010 1,133
BNDES - FMM Real (1) 8.90% - 10.21% 1,722 1,838
Total BNDES 191,740 201,891
----------------------------- --------------- --------- -----------
Banco do Brasil - FMM linked
to US$ 2.00% - 3.00% 83,803 85,576
IFC - US$ 5.25% 42,117 48,571
Santander 3.20% 30,011 14,005
China Construction Bank -
US$ 4.36% 12,697 19,047
Eximbank - US$ 2.56% 4,221 5,270
Finimp - US$ 4.65% - 1,170
Total others 172,849 173,639
----------------------------- --------------- --------- -----------
Total borrowings 364,589 375,530
----------------------------- --------------- --------- -----------
(1) As an agent of Fundo da Marinha Mercante's (FMM), BNDES finances the construction of tugboats and shipyard facilities.
Unaudited Audited
Period
ended Year ended
30 June 31 December
2017 2016
US$'000 US$'000
-------------------------------------------- --------- -----------
The borrowings are repayable as follows:
On demand or within one year 56,541 49,780
In the second year 51,921 49,029
In the third to fifth years inclusive 98,127 105,953
After five years 158,000 170,768
-------------------------------------------- --------- -----------
Total borrowings 364,589 375,530
-------------------------------------------- --------- -----------
Amounts due for settlement within 12 months 56,541 49,780
-------------------------------------------- --------- -----------
Amounts due for settlement after 12 months 308,048 325,750
-------------------------------------------- --------- -----------
Analysis of borrowings by currency:
$Real
linked
to
$Real US Dollars US Dollars Total
US$'000 US$'000 US$'000 US$'000
--------------------------- ------- ---------- ---------- -------
30 June 2017 (unaudited)
Bank loans 26,780 248,763 89,046 364,589
--------------------------- ------- ---------- ---------- -------
Total 26,780 248,763 89,046 364,589
--------------------------- ------- ---------- ---------- -------
31 December 2016 (audited)
Bank loans 28,437 259,030 88,063 375,530
--------------------------- ------- ---------- ---------- -------
Total 28,437 259,030 88,063 375,530
--------------------------- ------- ---------- ---------- -------
Guarantees
Loans with BNDES rely on a corporate guarantee from Wilson Sons de Administração e Comércio Ltda. For some contracts, the corporate guarantee is additional to: (i) pledge of the respective financed tugboat, (ii) lien of logistics and port operations equipment financed.
Loans with Banco do Brasil rely on a corporate guarantee from Wilson, Sons de Administração e Comércio Ltda. and pledge of the respective financed tugboat.
The loans that Tecon Salvador holds with IFC are guaranteed by shares of the company, projects' cash flows, equipment and buildings.
The loan agreement that Tecon Rio Grande has with the Export-Import Bank of China for equipment is guaranteed by a standby letter of credit issued by Banco Itaú BBA S.A which in turn has the pledge on the financial equipment.
The loan agreement between Tecon Rio Grande and Santander for equipment acquisition relies on a corporate guarantee from Wilson, Sons de Administração e Comércio Ltda.
Undrawn credit facilities
At 30 June 2017, the Group had available US$67.5 million of undrawn borrowing facilities. For each disbursement, there is a set of precedent conditions that must be satisfied.
Covenants
The Wilson, Sons de Administração e Comércio Ltda. ("WSAC") holding company, as corporate guarantor, has to comply with financial covenants in both Wilson Sons Estaleiros Ltda and Brasco Logística Offshore Ltda loan agreements signed with BNDES. The subsidiary Tecon Salvador has to observe affirmative and negative covenants stated in its loan agreement with the International Finance Corporation - IFC including the maintenance of specific liquidity ratios and a capital structure requirements.
Tecon Rio Grande has to comply with financial covenants in its respective loan agreements with the BNDES and Santander including a minimum liquidity ratio and capital structure. At 31 December 2016, according to the BNDES view, Tecon Rio Grande was not in compliance with the loan agreement minimum Net Equity / Total Assets ratio of 0.6. If a waiver or prepayment of the debt were not employed the subsidiary could be required to provide additional guarantees of at least 130% of the debt's outstanding value by the 4 September 2017 or be subject to a penalty of an additional 1% interest on the outstanding loan until such time as the loan is in compliance. The value of the loan at 30 June 2017 was US$4.0 million.
At 31 December 2016, with the exception of the above covenant breach, the Company was in compliance with all other loan contracts.
Fair value
Management estimates the fair value of the Group's borrowings as follows:
Unaudited Audited
30 June 31 December
2017 2016
US$'000 US$'000
------------------ --------- -----------
Bank loans
BNDES 191,740 201,891
Banco do Brasil 83,803 85,576
IFC 42,117 48,571
Santander 30,011 14,005
CCB 12,697 19,047
Eximbank 4,221 5,270
Finimp - 1,170
------------------ --------- -----------
Total 364,589 375,530
------------------ --------- -----------
16 Joint ventures
The Group holds the following significant interests in joint operations and joint ventures at the end of the reporting period:
Proportion of ownership
Place of interest
incorporation 30 June 30 June
and operation 2017 2016
---------------------------------------------- -------------- ------------ -----------
Towage
Consórcio de Rebocadores Barra
de Coqueiros (3) Brazil 29.13% 29.13%
Consórcio de Rebocadores Baia
de São Marcos (3) Brazil 29.13% 29.13%
---------------------------------------------- -------------- ------------ -----------
Logistics
Porto Campinas, Logística
e Intermodal Ltda (3) Brazil 29.13% 29.13%
---------------------------------------------- -------------- ------------ -----------
Offshore
Wilson, Sons Ultratug Participações
S.A. (1) Brazil 29.13% 29.13%
Atlantic Offshore S.A. (2) Panama 29.13% 29.13%
---------------------------------------------- -------------- ------------ -----------
(1) Wilson, Sons Ultratug Participações S.A. controls Wilson, Sons Offshore S.A. and Magallanes Navegação Brasileira S.A. These latter two companies are indirect joint ventures of the Company.
(2) Atlantic Offshore S.A. controls South Patagonia S.A. This company is an indirect joint venture of Wilson Sons Limited.
(3) Joint Operations.
The Group's interests in joint ventures are equity accounted.
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
------------------------------------------------- ---------- ----------
Revenue 75,074 63,162
Raw materials and consumable used (4,404) (3,454)
Employee benefits expense (23,754) (18,812)
Depreciation and amortisation expenses (20,007) (17,371)
Other operating expenses (8,493) (7,798)
Loss on disposal of property, plant and
equipment (11) (2,136)
------------------------------------------------- ---------- ----------
Profits from operating activities 18,405 13,591
Finance income 987 887
Finance costs (9.909) (10,872)
Foreign exchange gains/(losses) on monetary
items (973) 10,225
------------------------------------------------- ---------- ----------
Profit before tax 8,510 13,831
Income tax expense (4,894) (8,069)
------------------------------------------------- ---------- ----------
Profit for the period 3,616 5,762
------------------------------------------------- ---------- ----------
Participation (before non-controlling interests) 50% 50%
Equity result 1,808 2,881
------------------------------------------------- ---------- ----------
Unaudited Audited
Period
ended Year ended
30 June 31 December
2017 2016
US$'000 US$'000
------------------------------ --------- -----------
Property, plant and equipment 657,992 674,476
Long-term investment 2,103 2,066
Other current assets 3,796 3,752
Trade and other receivables 38,534 42,494
Derivatives 201 261
Cash and cash equivalents 19,683 10,859
------------------------------ --------- -----------
Total assets 722,309 733,908
------------------------------ --------- -----------
Bank overdrafts and loans 517,562 533,731
Other non-current liabilities 34,563 30,295
Trade and other payables 80.764 82,114
Equity 89,420 87,728
------------------------------ --------- -----------
Total liabilities 722,309 733,908
------------------------------ --------- -----------
Guarantees
Wilson Sons Offshore S.A. loan agreements with BNDES are guaranteed by a lien on the financed supply vessel and, in the majority of the contracts, a corporate guarantee from both Wilson Sons de Adminisração e Comércio Ltda and Rebocadores Ultratug Ltda, each guaranteeing 50% of its subsidiary's debt balance with BNDES.
Magallanes Navegação Brasileira S.A.'s loan agreement with Banco do Brasil is guaranteed by a lien on the financed supply vessels. The security package also includes a standby letter of credit issued by Banco de Crédito e Inversiones - Chile for part of the debt balance, assignment of Petrobras' long-term contracts and a corporate guarantee issued by Inversiones Magallanes Ltda - Chile. A cash reserve account, accounted for under long-term investments and funded with US$2.1 million, should be maintained until full repayment of the loan agreement.
The loan agreement that Atlantic Offshore S.A. has with Deutsche Verkehrs-Bank "DVB" and Norddeutsche Landesbank Girozentrale Trade "Nord/LB" for the financing of the offshore support vessel "Pardela" is guaranteed by a pledge on the vessel, the shares of Atlantic Offshore and a corporate guarantee for half of the credit from Wilson Sons de Administração Ltda e Comércio. Remolcadores Ultratug Ltda, which is the partner in the business, guarantee the other half of the loan.
Covenants
The joint venture Magallanes Navegação Brasileira S.A. has to comply with specific financial covenants. At 30 June 2017, the company was in compliance with all clauses in the loans contracts.
Atlantic Offshore S.A. has to comply with specific financial covenants on its two loan agreements with Deutsche Verkehrs-Bank "DVB" and Norddeutsche Landesbank Girozentrale Trade "Nord/LB". At 30 June 2017, the company was in compliance with all clauses in the loans contracts.
Provisions for tax, labour and civil risks
In the normal course of business in Brazil, the Group remains exposed to numerous local legal claims. It is the Group's policy to vigorously contest such claims, many of which appear to have little substance in merit, and to manage such claims through its legal counsel.
In addition to the cases for which the Group has made provision, there are other tax, civil and labour disputes amounting to US$14.7 million (2016: US$13.9 million), whose probability of loss was estimated by the legal counsel as possible.
Unaudited Audited
Period
ended Year ended
30 June 31 December
2017 2016
US$'000 US$'000
-------------- --------- -----------
Civil cases 1 -
Tax cases 10,334 10,066
Labour claims 4,395 3,784
-------------- --------- -----------
Total 14,730 13,850
-------------- --------- -----------
17 Notes to the cash flow statement
Unaudited Unaudited
six months six months
to to
30 June 30 June
2017 2016
US$'000 US$'000
---------------------------------------------- ---------- ----------
Reconciliation from profit before tax to
net cash from operating activities
Profit before tax 74,852 57,078
Share of joint venture results (1,808) (2,881)
Investment revenues (9,777) (5,965)
Other gains/(losses) (20,280) 7,329
Finance costs 8,090 (7,852)
Exchange (losses)/gains on monetary items (2,203) (3,143)
---------------------------------------------- ---------- ----------
Operating profit 48,874 44,566
Adjustments for:
Depreciation of property, plant and equipment 26,910 21,767
Amortisation of intangible assets 2,039 2,638
Share based payment expense 1,180 1,649
Gain/(loss) on disposal of property, plant
and equipment 1,962 (67)
Increase/(decrease) in provisions 295 3,679
---------------------------------------------- ---------- ----------
Operating cash flows before movements in
working capital 81,260 74,232
Increase in inventories (520) (3,217)
Increase in receivables (11,036) (14,194)
(Decrease)/increase in payables (15,036) 13,726
Increase in other non-current assets (89) (2,474)
---------------------------------------------- ---------- ----------
Cash generated by operations 54,579 68,073
Income taxes paid (14,518) (13,640)
Interest paid (6,970) (6,178)
---------------------------------------------- ---------- ----------
Net cash from operating activities 33,091 48,255
---------------------------------------------- ---------- ----------
18 Commitments
At 30 June 2017, the Group has thirty outstanding commitment agreements. These commitments relate to capital subscription agreements entered into by Ocean Wilsons (Investments) Limited.
The details of these commitments are as follows:
Unaudited Audited
Outstanding Outstanding
at at
30 June 31 December
Commitment 2017 2016
$'000 US$'000 US$'000
----------------- ---------- ----------- -----------
Expiry date
31 December 2016 3,000 - 68
05 December 2017 5,000 845 859
30 March 2018 5,000 834 834
4 June 2018 5,000 1,468 1,468
18 July 2018 5,000 682 677
21 December 2018 5,000 277 313
31 December 2018 4,650 68 123
22 November 2019 5,000 550 550
08 December 2019 5,000 100 -
31 December 2019 3,000 30 60
31 January 2020 4,500 170 246
20 February 2020 4,994 128 117
18 December 2021 5,000 143 347
17 February 2022 3,000 541 781
30 April 2022 7,500 2,332 2,793
11 July 2022 4,963 1,239 2,070
01 February 2023 5,000 300 300
28 March 2023 5,000 1,726 1,785
01 April 2023 5,000 1,349 2,081
05 June 2023 3,200 1,147 1,399
21 August 2024 5,005 2,089 2,431
22 August 2024 5,000 136 336
12 March 2025 2,954 1,729 1,826
23 June 2025 1,800 1,246 1,436
14 July 2025 2,500 1,817 2,044
11 April 2029 3,000 810 960
19 October 2030 500 285 360
To be confirmed 750 750 -
To be confirmed 4,000 4,000 4,000
To be confirmed 4,004 4,004 3,672
To be confirmed 3,000 3,000 -
----------------- ---------- ----------- -----------
Total 137,129 33,907 33,936
----------------- ---------- ----------- -----------
19 Related party transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Transactions between the group and its associates, joint ventures and others investments are disclosed below.
Dividends received/ Amounts paid/
Revenue of services Cost of services
Unaudited Unaudited Unaudited Unaudited
30 June 30 June 30 June 30 June
2017 2016 2017 2016
US$'000 US$'000 US$'000 US$'000
------------------------------------- ---------- ---------- --------- ---------
Joint ventures
Allink Transportes Internacionais
1. Limitada 1 - (10) (24)
Consórcio de Rebocadores
2. Barra de Coqueiros - - - -
Consórcio de Rebocadores
3. Baía de São Marcos 290 333 - (5)
4. Wilson Sons Ultratug 1,031 9,021 - -
5. Atlantic Offshore - - - -
Others
Hanseatic Asset Management
6. LBG - - (1,241) (1,214)
7. Gouvêa Vieira Advogados - - (37) (20)
CMMR Intermediacao Comercial
8. Limitada - - (100) (85)
9. Jofran Services - - (87) (87)
--------------------------------- ---------- ---------- --------- ---------
Amounts owed Amounts owed
by to
related parties related parties
Unaudited Unaudited Unaudited Audited
30 June 30 June 30 June 31 December
2017 2016 2017 2016
US$'000 US$'000 US$'000 US$'000
------------------------------------- --------- --------- --------- -----------
Joint ventures
Allink Transportes Internacionais
1. Limitada - 2 - -
Consórcio de Rebocadores
2. Barra de Coqueiros 78 148 - -
Consórcio de Rebocadores
3. Baía de São Marcos 2,547 2,370 - -
4. Wilson Sons Ultratug 13,546 3,227 - -
5. Atlantic Offshore 15,667 8,857 - -
Others
Hanseatic Asset Management
6. LBG - - (233) (202)
7. Gouvêa Vieira Advogados - - - -
CMMR Intermediacao Comercial
8. Limitada - - - -
9. 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 the Group and rents office space from the Group.
6. Mr W H Salomon is Chairman of Hanseatic Asset Management LBG. Fees were paid to Hanseatic Asset Management LBG for acting as investment managers of the Group's investment portfolio and administration services.
7. 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.
8. Mr C M Marote is a shareholder and Director of CMMR Intermediacao Comercial Limitada. Fees were paid to CMMR Intermediacao Comercial Limitada for consultancy services.
9. Mr J F Gouvêa Vieira is a Director of Jofran Services. Directors' fees and consultancy fees were paid to Jofran Services.
21 Financial instruments
Capital risk management
The 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 by operating revenues.
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.
Financial risk management objectives
The Group's Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets and manages the financial risks relating to the operations of the Group through internal reports. These risks include market risk, (including currency risk, interest rate risk and price risk) 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 risk
The 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 balance sheet 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 credit risk 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 the investment period.
In addition the Company invests in Limited Partnerships and other similar investment vehicles. The level of credit risk associated with such investments is dependent upon the terms and conditions and the management of the investment structures. The Board reviews all investments at its regular meetings from reports prepared by the Company's Investment Manager.
The Group has no significant concentration of credit risk. Ongoing credit evaluation is performed on the financial condition of accounts receivable.
Market risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
Foreign currency risk management
The Group undertakes certain transactions denominated or linked to foreign currencies and therefore exposures to exchange rate fluctuations arise. The Group operates principally in Brazil with a substantial proportion of the Group's revenue, expenses, assets and liabilities denominated in the Brazilian Real. Due to the cost of hedging the Brazilian Real, the Group does not normally hedge its net exposure to the Brazilian Real as the Board does not consider it economically viable.
Cash flows from investments in fixed assets are denominated in Real and US Dollars. These investments are subject to currency fluctuations between the time that the price of goods or services are settled and the actual payment date. The resources and their application are monitored with purpose of matching the currency cash flows and due dates. The Group has contracted US Dollar-denominated and Real-denominated debt, and the cash and cash equivalents balances are also US Dollar-denominated and Real-denominated.
In general terms, for operating cash flows, the Group seeks to neutralise the currency risk by matching assets (receivables) and liabilities (payments). Furthermore the Group seeks to generate an operating cash surplus in the same currency in which the debt service of each business is denominated.
Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The Group holds most of its debts linked to fixed rates. Most of the Group's fixed rates loans are with the FMM (Fundo da Marinha Mercante).
The Group holds most of its debts linked to fixed rates. Most of the Group's fixed rates loans are with the FMM (Fundo da Marinha Mercante).
Other loans exposed to floating rates are as follows:
TJLP (Brazilian Long-Term Interest Rate) for Brazilian Real denominated funding through FINAME credit line to Port and Logistics operations.
DI (Brazilian Interbank Interest Rate) for Brazilian Real denominated funding in Logistics operations, and 6-month LIBOR (London Interbank Offered Rate) for US Dollar denominated funding for Port Operations. (Eximbank)
The Real-denominated investments yield interest rates corresponding to the DI daily fluctuation for privately issued securities and/or "Selic-Over" government-issued bonds. The US Dollar-denominated investments are part in time deposits, with short-term maturities.
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 and volatility. The Group may use cash flow hedges to limit its exposure that may result from the variation of floating interest rates.
The Group has floating rate financial assets consisting of bank balances principally denominated in US Dollars and Real that bear interest at rates based on the banks floating interest rate.
Market price sensitivity
The 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 that provide the Group with opportunities for return through dividend income and trading gains. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market prices where 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 any Stock Exchange Index as it is invested in a diversified range of markets. The Investment Manager and the Board monitor the portfolio valuation on a regular basis and consideration is given to hedging the portfolio against large market movements.
Credit risk management
Credit 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 policy of 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. Ongoing credit evaluation is performed on the financial condition of accounts receivable.
Ocean Wilsons (Investments) Limited primarily transacts with regulated institutions on normal market terms which are trade date plus one to three days. The levels of amounts outstanding from brokers are regularly reviewed by the Investment Manager. The duration of credit risk associated with the investment transaction is the period between the date the transaction took place, the trade date and the date the stock and cash are transferred, and the settlement date. The level of risk during the period is the difference between the value of the original transaction and its replacement with a new transaction.
In addition Ocean Wilsons (Investments) Limited invests in Limited Partnerships and other similar investment vehicles. The level of credit risk associated with such investments is dependent upon the terms and conditions and the management of the investment structures. The Board reviews all investments at its regular meetings from reports prepared by the company's Investment Manager.
Liquidity risk management
Liquidity risk is the risk that the Group will encounter difficulty in fulfilling obligations associated with its financial liabilities that are settled with cash payments or other financial asset. The Group's approach in managing liquidity is to ensure that the Group always has sufficient liquidity to fulfil the obligations that expire, under normal and stress conditions, without causing unacceptable losses or risk damage to the reputation of the Group.
Ultimate responsibility for liquidity risk management rests with the Board. 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 assets and liabilities.
Normally the Group ensures it has sufficient cash reserves to meet the expected operational expenses, including financial obligations. This practice excludes the potential impact of extreme circumstances that cannot be reasonably foreseen.
Fair value of financial instruments
The 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.
Company Contact
Keith Middleton 1 441 295 1309
Media
David Haggie 020 7562 4444
Haggie Partners LLP
Cantor Fitzgerald Europe 020 7894 7000
David Foreman, Will Goode, Rick Thompson - Corporate Finance
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCDMGGRKRZGNZM
(END) Dow Jones Newswires
August 09, 2017 02:00 ET (06:00 GMT)
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