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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,295.00 | 1,295.00 | 1,300.00 | 1,310.00 | 1,265.00 | 1,300.00 | 26,897 | 16:25:09 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Towing And Tugboat Services | 494.44M | 67.05M | 1.8960 | 6.83 | 457.95M |
From Dec 2022 to Dec 2024
TIDMOCN
RNS Number : 8507I
Ocean Wilsons Holdings Ltd
10 August 2023
2023 Interim Statement
About Ocean Wilsons Holdings Limited
Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") is a Bermuda investment holding company which, through its subsidiaries, holds a portfolio of international investments and operates a maritime services company in Brazil. The Company is listed on both the London Stock Exchange and the Bermuda Stock Exchange.
Principal Activities
The Company's principal activities are the management of a diverse global investment portfolio and the provision of maritime and logistics services in Brazil.
Ocean Wilsons has two operating subsidiaries: Ocean Wilsons (Investments) Limited ("OWIL") and Wilson Sons S.A. ("Wilson Sons") (together with the Company and their subsidiaries, the "Group").
The Company owns 57% of Wilson Sons which is fully consolidated in the financial statements with a 43% non-controlling interest. Wilson Sons is one of the largest providers of maritime services in Brazil with activities including towage, container terminals, offshore oil and gas support services, small vessel construction, logistics and ship agency.
Objective
The Company's objective is to focus on long-term value creation through both the investment portfolio and the investment in Wilson Sons. This longer-term view directs an OWIL investment strategy of a balanced thematic portfolio of funds leveraging our long-standing investment market relationships and through detailed insights and analysis. The Wilson Sons' strategy focuses on providing best in class or innovative solutions in a rapidly growing maritime logistics market.
Data Highlights
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KEY OPERATING DATA (in US$ millions)
6 months ended 6 months ended
30 June 2023 30 June 2022 Change
-------------------------------- --------------- --------------- -------
Revenue 229.7 211.0 +18.7
--------------- --------------- -------
Operating profit 54.7 54.7 -
--------------- --------------- -------
Investment portfolio net
return 11.2 (50.5) +61.7
--------------- --------------- -------
Profit/(loss) after tax 47.9 (20.4) +68.3
--------------- --------------- -------
Net cash inflow from operating
activities 44.3 24.7 +19.6
--------------- --------------- -------
KEY FINANCIAL POSITION DATA (in US$ millions)
At 30 June At 31 December
2023 2022 Change
----------------------------- ----------- --------------- -------
Investment portfolio assets 299.6 293.8 +5.8
----------- --------------- -------
Net assets 773.9 754.1 +19.8
----------- --------------- -------
Net debt 525.9 442.3 +83.6
----------- --------------- -------
SHARE DATA
6 months ended 6 months ended
30 June 2023 30 June 2022 Change
------------------------- --------------- --------------- -------------
Proposed/Actual dividend 70 cents 70 cents -
per share (USD)
--------------- --------------- -------------
Earnings per share (USD) 86.2 cents (98.0) cents +184.2 cents
--------------- --------------- -------------
At 30 June At 31 December
2023 2022 Change
----------------------------- ----------- --------------- -------
Share price discount to net
asset value 56.55% 50.5% +6.05%
----------- --------------- -------
Implied net asset value per
share* (GBP) 22.10 18.78 +3.32
----------- --------------- -------
Share price (GBP) 9.60 9.30 +0.30
----------- --------------- -------
*net asset value per share of Ocean Wilsons based on the market value of each operating subsidiary
Chair's Statement
Our financial result for the first half of 2023 has improved substantially from the loss for the same period last year. This result is a clear affirmation of both the robust business model at Wilson Sons which is continuing to go from strength-to-strength post Covid, and the longer-term balanced wealth creation strategy of our investment portfolio.
Our financial assets portfolio delivered a $12.7 million contribution to profit for the period, representing a gross overall return of 4.5% and returning to a positive performance after the challenging prior year comparative period which reported a loss of $48.9 million. The diversified nature of the portfolio means that when equity markets sharply rise, as they have done this period, it is unlikely our performance will keep up but, similarly, when markets fall our portfolio declines will be less correlated. During the period our core regional funds have been the main driver of returns, while in 2022 the portfolio's defensive and private equity holdings were instrumental in mitigating the decline of global markets. We strongly believe that this is key to delivering on our strategy of long-term value creation and leads to the best outcome for shareholders.
Our operating profit of US$54.7 million for the period is almost entirely due to the performance of Wilson Sons and is identical to the same metric in the prior year period. The result, however, masks some offsetting trends where we saw revenue growth across the major business lines of towage and container terminals and, most notably, the offshore support bases which delivered an operating profit for the first time. The overall 9% growth in revenues was offset by higher operating costs, due almost entirely to the wage and raw materials cost inflation continuing to bite across the world in most sectors. It was very pleasing however to see that, even with these inflationary costs, key operating margins and profits were maintained. We believe this demonstrates both the financial resilience of Wilson Sons, and the success of our strategy of driving revenue growth, continuing to find operating efficiencies and maintaining our focus on innovation and sustainability. As well as our own operating performance, our results are beginning to reflect the increasing stability in Brazil demonstrated by both the relatively low level of inflation compared to the more developed markets in the US and Europe, and the appreciation of the BRL versus the USD.
The Board continues to recognise that there are divergent views among our shareholders regarding our non-correlated asset holdings. We announced on 12 June 2023 that the Board has instigated a strategic review of the Company's investment in Wilson Sons. This review is intended to provide a platform for us to optimise our asset mix, enhance returns, and drive growth in the longer term. We will communicate the findings of this review once completed and we appreciate your patience during this period.
Our healthy financial results for this half-year illustrate our solid business model and our capacity to deliver returns. We remain focused on delivering strong performance from the whole business in the belief that the market will eventually recognise the attractiveness of our investment proposition and the level of dividends we are able to consistently deliver.
Investment Manager's Report
Portfolio Review
The investment portfolio returned 4.5% over the first six months of 2023. With equity markets performing strongly so far this year, many of the portfolio's core regional exposures have performed well with this investment silo gaining 9.9%. The thematic exposures saw lower returns of 1.9% and the private equity segment of the portfolio gained 1.3% over the last six months. Private markets normally lag behind the public markets and some of our newer private equity commitments have seen their valuations increase notably.
Market Backdrop
The first half of 2023 was strong for global stock markets with the MSCI ACWI + FM Index gaining 13.9%. Most developed markets performed strongly with the US and Eurozone leading the way as the biggest technology companies saw increased investor interest in artificial intelligence boost their share prices in the US and some large semiconductor companies seeing increases in their share prices driving performance in the Eurozone. This came against a backdrop of moderating inflation in the US and signs that the economy may be more resilient than previously thought. Emerging markets lagged, mainly due to China's COVID recovery being weaker than expected. Government bond yields slightly declined since year end in most markets with the Global Treasury Index up 0.6%. All major central banks continued to raise interest rates but many started to slow the pace.
Corporate bonds gained as recession fears eased with high yield bonds outperforming their investment grade peers. Commodities declined 7.8% driven by a fall in demand for both crude oil and gas with industrial metals also performing poorly. Gold, however, was up 5.2%, driven mainly by uncertainty in the banking sector early in the year.
Outlook
We continue to execute our strategy of diversification and balance at both the country, asset class and style level. Specifically, bonds have increasingly returned to being a viable asset class and the approach whereby "there is no alternative" to equities is no longer the case. Similarly at the country level, countries other than the US are increasingly attractive as they are both cheaper in valuation and have improving investment stories in many instances. Stylistically, value investing is again becoming attractive having suffered years of underperformance as a low duration asset class. Hence whilst this new backdrop might generate returns that are somewhat lower than those generated by equity markets over the past ten years, we still view them as being attractive.
Cumulative Portfolio Returns
3 Years 5 Years
YTD 2022 p.a. p.a.
----------------------------- ----- ------ ------- -------
Gross return 4.5% -13.8% 7.2% 4.9%
----------------------------- ----- ------ ------- -------
Net return* 3.9% -14.7% 5.9% 3.7%
----------------------------- ----- ------ ------- -------
Performance Benchmark** 4.2% 9.5% 8.8% 6.9%
MSCI ACWI + FM NR US$ 13.9% -18.4% 11.0% 8.1%
----------------------------- ----- ------ ------- -------
Bloomberg Global Treasury TR
US$ (Unhedged) 0.6% -17.5% -6.3% -2.1%
----------------------------- ----- ------ ------- -------
MSCI Emerging Markets NR US$ 4.9% -20.1% 2.3% 0.9%
----------------------------- ----- ------ ------- -------
*Net of management fees and performance fees. No performance fees were earned in 2023 and 2022.
** The OWIL Performance Benchmark is an absolute benchmark of US CPI Urban Consumers NSA +3% p.a.
Investment Portfolio at 30 June 2023
Market
Value % of
US$000 NAV Primary Focus
------------------------------------------ -------- ------ --------------------------------
Findlay Park American Fund 27,754 9.3 US Equities - Long Only
BlackRock Strategic Equity Hedge
Fund 14,299 4.8 Europe Equities - Hedge
Select Equity Offshore, Ltd 11,270 3.8 US Equities - Long Only
BA Beutel Goodman US Value Fund 9,075 3.0 US Equities - Long Only
Private Assets - Latin
NG Capital Partners II, LP 7,272 2.4 America
iShares Core MSCI Europe UCITS Europe Equities - Long
ETF 6,493 2.2 Only
Global Equities - Long
Schroder ISF Global Recovery 6,204 2.1 Only
Pershing Square Holdings Ltd 6,152 2.0 US Equities - Long Only
Schroder ISF Asian Total Return Asia ex-Japan Equities
Fund 6,106 2.0 - Long Only
Pangaea II, LP 6,085 2.0 Private Assets - GEM
------------------------------------------ -------- ------ --------------------------------
Top 10 Holdings 100,710 33.6
------------------------------------------ -------- ------ --------------------------------
Stepstone Global Partners VI, Private Assets - US Venture
LP 5,709 1.9 Capital
Polar Capital Global Insurance Financials Equities -
Fund 5,394 1.8 Long Only
Hudson Bay International Fund
Ltd 5,385 1.8 Market Neutral - Multi-Strategy
Asia ex-Japan Equities
NTAsian Discovery Fund 5,380 1.8 - Long Only
Europe/US Equities -
Egerton Long - Short Fund Limited 5,331 1.8 Hedge
Armistice Capital Offshore Fund
Ltd 5,250 1.7 US Equities - Hedge
Private Assets - Global
Silver Lake Partners IV, LP 5,059 1.7 Technology
Navegar I, LP 5,046 1.7 Private Assets - Asia
iShares Core S&P 500 UCITS ETF 4,863 1.6 US Equities - Long Only
Japan Equities - Long
Indus Japan Long Only Fund 4,729 1.6 Only
------------------------------------------ -------- ------ --------------------------------
Top 20 Holdings 152,856 51.0
------------------------------------------ -------- ------ --------------------------------
Private Assets - North
KKR Americas XII, LP 4,609 1.5 America
GAM Star Fund PLC - Disruptive Technology Equities -
Growth 4,187 1.4 Long Only
Private Assets - Global
TA Associates XIII-A, LP 4,141 1.4 Growth
Baring Asia Private Equity Fund
VII, LP 4,018 1.3 Private Assets - Asia
Global Event Partners Ltd 3,691 1.2 Market Neutral - Event-Driven
Japan Equities - Long
Goodhart Partners: Hanjo Fund 3,559 1.2 Only
Reverence Capital Partners Opportunities
Fund II 3,502 1.2 Private Assets - Financials
Schroder GAIA BlueTrend 3,477 1.2 Market Neutral - Multi-Strategy
GAM Systematic Core Macro (Cayman)
Fund 3,440 1.2 Market Neutral - Multi-Strategy
Private Assets - Global
Silver Lake Partners V, LP 3,420 1.1 Technology
------------------------------------------ -------- ------ --------------------------------
Top 30 Holdings 190,900 63.7
------------------------------------------ -------- ------ --------------------------------
Remaining Holdings 108,686 36.3
------------------------------------------ -------- ------ --------------------------------
Cash and cash equivalents 61 0.02
------------------------------------------ -------- ------ --------------------------------
TOTAL 299,647 100.0
------------------------------------------ -------- ------ --------------------------------
Wilson Sons' Management Report
Wilson Sons' net revenues of US$229.7 million were 8.9% higher than the six months of 2022 (US$211.0 million), mainly driven by excellent towage results, container terminal operational growth and a strong recovery in offshore energy-linked services.
Towage revenues rose 12.7% year-over-year with higher volume and an increase in average revenue per manoeuvre and special operations. In April, we added a new 91-tonne bollard pull tug to our which fleet to serve large iron ore carriers and tankers. In July, the company implemented a new tugboat fleet management system developed in partnership with Argonáutica, a leading provider of digital solutions for the maritime and port sectors, which will allow us to continue seeking operational efficiencies, improving margins and providing better services to customers.
Container terminal revenues increased 5.7% with volumes up 7.1%. The Rio Grande terminal reported an 11.9% increase in overall handling mainly due to higher empty, export, inland navigation, import and transshipment flows. The Salvador terminal registered flat volumes, as the increase in empty, cabotage and export flows was offset by lower imports and transshipment. The completion of the quay reinforcement in August 2023 will support improved service offering in the Salvador terminal through the second half of the year.
Demand for our offshore energy-linked services improved markedly as vessel turnarounds in the offshore support bases increased 68.4% and operating days in the offshore support vessel joint venture rose 17.8% year-over-year.
Overall, the first-half performance demonstrates strong organic growth. We remain positive on the fundamentals of our trade flow-related businesses of towage and container terminals which, together with rebounding demand for our offshore energy-linked services, will provide the basis for a superior performance of our assets. In addition to this positive market environment we are confident our continued focus on security, growing utilisation rate of assets, cost control and disciplined approach to capital allocation will yield results for clients and other stakeholders of the business.
Financial Report
Operating Profit
Operating profit remained unchanged from the 2022 comparative period at US$54.7 million. Overall operating expenses increased 11.8%. Raw material expenses rose 18.2% mainly due to higher fuel consumption and increased operational activity in the towage division. Employee benefit expenses rose 9.0% mainly due to annual inflation-linked adjustments to salary and benefits and payroll tax provisions. Other operating expenses increased 13.4% principally due to increased operating activity and inflation with higher rental costs of tugs from third-party chartering in the towage business, higher container handling costs and increased utilities expenses.
The depreciation and amortisation expense at US$35.7 million was US$4.0 million higher than the comparative period (2022: US$31.7 million) driven by the two new tugs in operation. Foreign currency exchange gains of US$0.6 million (2022: US$2.0 million) arose from the Group's foreign currency monetary items and reflect the movement of the BRL against the USD during the period.
Revenue from Maritime Services
Revenue for the period increased by 8.9% compared to the first half of the prior year to US$229.7 million (2022: US$211.0 million). Revenue growth was generated across all divisions, except for logistics, with higher volume and a better revenue mix in the towage division; higher revenues from handling and ancillary services in the container terminal business; increased operational activity in the offshore support base unit and increased conversions and dry-docking for third parties in the shipyard business. The logistics division saw a decline in revenues of 17.6% reflecting the decline in volumes and rates at both the logistics centre and international logistics businesses.
Operating volumes (to 30 June) 2023 2022 % Change ----------------------- ------ ------ -------- Container Terminals (container movements in TEU '000s)* 490.5 458.1 7.1% ----------------------- ------ ------ -------- Towage (number of harbour manoeuvres performed) 27,079 26,746 1.2% ----------------------- ------ ------ -------- Offshore Vessels (days in operation) 3,657 3,104 17.8% ----------------------- ------ ------ --------
*TEUs stands for "twenty-foot equivalent units".
Returns on the Investment Portfolio
The gain for the period on the investment portfolio of US$12.7 million (2022: loss of US$48.9 million) comprises unrealised gains of US$10.5 million (2022: loss of US$72.1 million), net investment income of US$0.7 million (2022: US$7.6 million) and realised profits on disposal of US$1.5 million (2022: US$15.6 million).
Share of results of joint ventures and associates
The share of results of joint ventures and associates is Wilson Sons' 50% share of the net results for the period from the offshore support vessel joint ventures and 32.32% share of the net results for the period from the associate Argonáutica. The net profit attributable to Wilson Sons for the period was US$6.0 million (2022: US$0.5million). Average operating days were up 7.2% with the impact of contracts that were signed in 2022 becoming operational. At the end of the period, the joint venture had 22 active vessels (2022: 21 active vessels) of a total fleet of 25 OSVs including two third-party vessels.
Exchange rates
The Group reports in USD and has revenue, costs, assets and liabilities in both BRL and USD. In the six months to 30 June 2023 the BRL appreciated 7.7% against the USD from R$5.22 at 1 January 2023 to R$4.82 at the period end. In the comparative period in 2022 the BRL appreciated 5.9% against the USD from R$5.58 to R$5.25.
Profit/(Loss) before tax
Profit before tax was US$58.3 million compared with the prior period loss of US$9.7 million. This significant increase is driven by the US$12.7 million positive return of the investment portfolio when compared to the US$48.9 million loss in the prior period as well as the improved share of results of joint ventures and associates from US$0.5 million to US$6.0 million.
Taxation
The corporate tax rate in Brazil is 34%. The Group recorded an income tax expense for the period of US$10.4 million (2022: US$10.7 million). The principal items not included in determining taxable profit in Brazil are foreign exchange gains/losses, share of results of joint ventures and associates, and deferred tax items. These are mainly deferred tax charges or credits arising on the retranslation in USD of BRL denominated fixed assets, tax depreciation, foreign exchange variance on borrowings, prior periods accumulated tax losses, and profit on construction contracts.
Profit/(Loss) for the period
After deducting the profit attributable to non-controlling interests of US$17.4 million (2022: US$14.2 million), the profit for the period attributable to equity holders of the Company is US$30.5 million (2022: loss US$34.7 million). The earnings per share for the period was US 86.2 cents (2022: US 98.0 cents loss).
Investment portfolio performance
The investment portfolio and cash under management was US$5.9 million higher at US$299.7 million at 30 June 2023 (31 December 2022: US$293.8 million), after paying dividends of US$5.5 million to the parent company and deducting management and other fees of US$1.6 million.
Cash flow and debt
At 30 June 2023, the Group had cash and cash equivalents of US$14.9 million (30 June 2022: US$12.8 million). Net cash inflow from operating activities for the period was US$44.3 million (2022: US$24.7 million). Purchase of trading investments, net of disposals, were US$30.2 million (2022: net disposal of US$ 29.0 million). Dividends of US$24.8 million were paid to equity holders of the Company in both periods with a further US$12.4 million paid to non-controlling interests in our subsidiaries (2022: US$18.5 million). Group borrowings including lease liabilities at the period end were US$540.7 million (31 December 2022: US$518.1 million). New loans of US$29.0 million were raised in the period (2022: US$20.5 million) while capital repayments on existing loans in the period of US$36.2 million were made (2022: US$24.3 million).
Balance sheet
Equity attributable to equity holders of the Company at the end of the period was US$565.2 million compared with US$554.6 million at 31 December 2022. The main movements in equity for the half year was the profit for the period attributable to equity holders of the Company of US$30.5 million, dividends paid of US$24.8 million and a positive currency translation adjustment of US$5.3 million.
Other matters
Principal risks
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 December 2022. A detailed description can be found in the Report of Directors of the 2022 Annual Report and Financial Statements which are available on the Company website at www.oceanwilsons.bm.
The Board notes that there has been no substantive changes to the risk assessment during the reporting period.
Related party transactions
Related party transactions during the period are set out in note 17.
Going concern
The Group closely monitors and manages its liquidity risk. The Group has considerable financial resources including US$14.9 million in cash and cash equivalents and the majority of 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 Chair's statement together with the Investment Manager's report and the Wilson Sons report. Details of the Group's borrowings are set out in note 15 to the accounts. Based on the Group's year to date results and cash forecasts, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future.
The Group manages its liquidity risk and does so in a manner that reflects its structure and two distinct businesses.
OWIL
OWIL has no debt but has outstanding commitments of US$55.3 million in respect of investment subscriptions, for which details are provided in note 7. The timing of these investment commitments may be accelerated or delayed in comparison with those indicated in note 7.
However, highly liquid investments held are significantly in excess of the commitments. Neither Ocean Wilsons nor OWIL have made any commitments or have obligations towards Wilson Sons and its subsidiaries and their creditors or lenders. Therefore, in the unlikely circumstance that Wilson Sons was to encounter financial difficulty, the parent company and its investment subsidiary have no obligations to provide support and have sufficient cash and other liquid resources to continue as a going concern on a standalone basis.
Wilson Sons
Wilson Sons has adequate cash, other liquid resources and undrawn credit facilities to enable it to meet its obligations as they fall due in order to continue its operations. All of the debt, as set out in note 15, and all of the lease liabilities, as set out in note 11, relate to Wilson Sons, and generally have a long maturity profile. The debt held by Wilson Sons is subject to covenant compliance tests as summarised in note 15, which were satisfied at 30 June 2023.
Based on the Board's review of Wilson Sons' going concern assessment and the liquidity and cash flow reviews of the Company and its subsidiary OWIL, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the Interim report and accounts.
Responsibility statement
The Directors confirm that this interim financial information has been prepared in accordance with IAS 34 and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and their impact on the set of interim financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.
Caroline Foulger
Chair
9 August 2023
Interim Consolidated Financial Statements
Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income
(Unaudited) for the 6 months ended 30 June 2023
(Expressed in thousands of US Dollars)
Unaudited Unaudited
Note 30 June 2023 30 June 2022
------------------------------------------------------- ---- ------------------ -------------------
Sales of services 4 229,663 210,980
Raw materials and consumables used (17,749) (15,014)
Employee charges and benefits expense (67,592) (62,012)
Other operating expenses (56,380) (49,717)
Depreciation of owned assets 10 (27,665) (23,706)
Depreciation of right-of-use assets 11 (6,943) (6,805)
Amortisation of intangible assets 12 (1,047) (1,175)
Gain on disposal of property, plant and equipment
and intangible assets 1,716 88
Foreign exchange gains on monetary items 678 2,018
------------------------------------------------------- ---- ------------------ -------------------
Operating profit 54,681 54,657
Share of results of joint ventures and associates 9 6,045 529
Return on investment portfolio at fair value
through profit or loss 4 12,694 (48,899)
Investment portfolio management fees (1,477) (1,626)
Other investment income 4 4,423 3,693
Finance costs 5 (18,059) (18,070)
------------------------------------------------------- ---- -------------------
Profit/(loss) before tax 58,307 (9,716)
Tax expense 6 (10,442) (10,723)
------------------------------------------------------- ---- ------------------ -------------------
Profit/(loss) for the period 47,865 (20,439)
------------------------------------------------------- ---- ------------------ -------------------
Other comprehensive income:
Items that will be or may be reclassified subsequently
to profit or loss
Exchange differences arising on translation
of foreign operations 9,426 7,272
Effective portion of changes in fair value of
derivatives - 9
------------------------------------------------------- ---- ------------------ -------------------
Other comprehensive income for the period 9,426 7,281
------------------------------------------------------- ---- ------------------ -------------------
Total comprehensive income/(loss) for the period 57,291 (13,158)
------------------------------------------------------- ---- ------------------ -------------------
Profit/(loss) for the period attributable to:
Equity holders of the Company 30,492 (34,673)
Non-controlling interests 17,373 14,234
------------------------------------------------------- ---- ------------------ -------------------
47,865 (20,439)
------------------------------------------------------- ---- ------------------ -------------------
Total comprehensive income/(loss) for the period
attributable to:
Equity holders of the Company 35,813 (30,558)
Non-controlling interests 21,478 17,400
------------------------------------------------------- ---- ------------------ -------------------
57,291 (13,158)
------------------------------------------------------- ---- ------------------ -------------------
Earnings per share:
Basic and diluted 19 86.2c (98.0)c
------------------------------------------------------- ---- ------------------ -------------------
Interim Consolidated Statement of Financial Position
(Unaudited) at 30 June 2023
(Expressed in thousands of US Dollars)
Audited
Unaudited 31 December
Note 30 June 2023 2022
---------------------------------------------- ---- ------------------- -----------------
Current assets
Cash and cash equivalents 14,862 75,724
Financial assets at fair value through profit
and loss 7 317,181 275,080
Recoverable taxes 26,399 34,515
Trade and other receivables 8 81,042 67,136
Inventories 16,532 17,579
---------------------------------------------- ---- -----------------
456,016 470,034
---------------------------------------------- ---- ------------------- -----------------
Non-current assets
Other trade receivables 8 1,630 1,456
Related party loans receivable 17 13,789 11,176
Other non-current assets 16 3,499 3,506
Recoverable taxes 24,309 15,143
Investment in joint ventures and associates 9 92,805 81,863
Deferred tax assets 22,500 21,969
Property, plant and equipment 10 609,503 589,629
Right-of-use assets 11 193,587 178,699
Other intangible assets 12 13,986 14,392
Goodwill 13 13,608 13,420
---------------------------------------------- ---- -----------------
989,216 931,253
---------------------------------------------- ---- ------------------- -----------------
Total assets 1,445,232 1,401,287
---------------------------------------------- ---- ------------------- -----------------
Current liabilities
Trade and other payables 14 (64,196) (58,337)
Tax liabilities (9,619) (10,290)
Lease liabilities 11 (26,859) (24,728)
Bank loans 15 (51,625) (59,881)
---------------------------------------------- ---- -----------------
(152,299) (153,236)
---------------------------------------------- ---- ------------------- -----------------
Net current assets 303,717 316,798
---------------------------------------------- ---- ------------------- -----------------
Non-current liabilities
Bank loans 15 (272,666) (262,010)
Post-employment benefits (1,973) (1,737)
Deferred tax liabilities (46,446) (49,733)
Provisions for legal claims 16 (8,381) (8,997)
Lease liabilities 11 (189,597) (171,448)
---------------------------------------------- ---- -----------------
(519,063) (493,925)
---------------------------------------------- ---- ------------------- -----------------
Total liabilities (671,362) (647,161)
---------------------------------------------- ---- ------------------- -----------------
Capital and reserves
Share capital 11,390 11,390
Retained earnings 640,181 634,910
Translation and hedging reserve (86,372) (91,692)
---------------------------------------------- ---- ------------------- -----------------
Equity attributable to equity holders of
the Company 565,199 554,608
---------------------------------------------- ---- ------------------- -----------------
Non-controlling interests 208,671 199,518
---------------------------------------------- ---- ------------------- -----------------
Total equity 773,870 754,126
---------------------------------------------- ---- ------------------- -----------------
Signed on behalf of the Board
F. Beck A. Berzins Director Director
Interim Consolidated Statement of Changes in Equity
(Unaudited) for the 6 months ended 30 June 2023
(Expressed in thousands of US Dollars)
Hedging and Attributable to
Retained Translation equity holders Non-controlling
Share capital earnings reserve of the Company interests Total equity
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 1
January 2022 11,390 678,006 (95,739) 593,657 190,015 783,672
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Currency
translation
adjustment - - 4,111 4,111 3,161 7,272
Effective portion
of changes in
fair value of
derivatives - - 5 5 4 9
(Loss)/profit for
the period - (34,673) - (34,673) 14,234 (20,439)
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Total
comprehensive
(loss)/income
for the period - (34,673) 4,116 (30,557) 17,399 (13,158)
Dividends (note
18) - (24,754) - (24,754) (18,473) (43,227)
Equity
transactions in
subsidiary - 692 - 692 1,302 1,994
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 30
June 2022 11,390 619,271 (91,623) 539,038 190,243 729,281
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 1
January 2023 11,390 634,910 (91,692) 554,608 199,518 754,128
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Currency
translation
adjustment - - 5,320 5,320 4,106 9,426
Profit for the
period - 30,492 - 30,492 17,373 47,865
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Total
comprehensive
income for the
period - 30,492 5,320 35,812 21,479 57,291
Dividends (note
18) - (24,754) - (24,754) (12,394) (37,148)
Equity
transactions in
subsidiary - (467) - (467) 68 (399)
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 30
June 2023 11,390 640,181 (86,372) 565,199 208,671 773,870
----------------- ------------- ---------------- ---------------- ---------------- ---------------- ------------
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 designated hedging relationships.
Equity transactions in subsidiary
Wilson Sons S.A. ("Wilson Sons"), a controlled subsidiary listed on the Novo Mercado exchange, has in place a share option plan and a share buyback plan. During the period ended 30 June 2023, 1,680,600 share options of Wilson Sons were exercised (2022: 2,808,840) and 1,150,500 shares of Wilson Sons were repurchased (2022: 601,400), resulting in a net increase in non-controlling interest of 0.06% (2022: increase of 0.28%).
Amounts in the statement of changes of equity are stated net of tax where applicable.
Interim Consolidated Statement of Cash Flow
(Unaudited) for the 6 months ended 30 June 2023
(Expressed in thousands of US Dollars)
Unaudited Unaudited
Note 30 June 2023 30 June 2022
------------------------------------------------------------------------ -------- ------------- ----------------
Operating activities
Profit/(loss) for the period 47,865 (20,439)
Adjustment for:
Depreciation & amortisation 10,11,12 35,655 31,686
Gain on disposal of property, plant and equipment and intangible assets (1,716) (88)
Share of results of joint ventures and associates 9 (6,045) (529)
Returns on investment portfolio at fair value through profit or loss 7 (12,694) 48,899
Other investment income 4 (4,423) (3,693)
Finance costs 5 18,059 18,070
Foreign exchange gains on monetary items (678) (2,018)
Share based payment expense 152 173
Tax expense 6 10,442 10,723
Changes in:
Inventories 1,047 (3,547)
Trade and other receivables 8,17 (16,693) (14,004)
Other current and non-current assets (1,043) (4,629)
Trade and other payables 14 5,188 (10,678)
Provisions for legal claims 16 (616) 499
Taxes paid (13,681) (10,848)
Interest paid (16,495) (14,872)
Net cash inflow from operating activities 44,324 24,705
------------------------------------------------------------------------ -------- ------------- ----------------
Investing activities
Income received from trading investments 3,239 9,563
Purchase of trading investments (42,402) (59,418)
Proceeds on disposal of trading investments 12,249 88,448
Purchase of property, plant and equipment 10 (31,714) (27,513)
Proceeds on disposal of property, plant and equipment 1,852 270
Purchase of intangible assets 12 (290) (575)
Investment in joint ventures and associates 9 (4,986) (4,937)
Net cash (outflow)/inflow from investing activities (62,052) 5,838 ------------------------------------------------------------------------ -------- ------------- ---------------- Financing activities Dividends paid to equity holders of the Company 18 (24,754) (24,754) Dividends paid to non-controlling interests in subsidiary (12,394) (18,473) Repayments of borrowings 15 (36,218) (24,312) Payments of lease liabilities 11 (4,927) (4,399) New bank loans drawn down 15 29,024 20,476 Shares repurchased in subsidiary (2,338) (1,005) Issue of new shares in subsidiary under employee share option plan 1,787 2,826 ------------------------------------------------------------------------ -------- ------------- ---------------- Net cash used in financing activities (49,820) (49,641) ------------------------------------------------------------------------ -------- ------------- ---------------- Net decrease in cash and cash equivalents (67,548) (19,098) ------------------------------------------------------------------------ -------- ------------- ---------------- Cash and cash equivalents at the beginning of the period 75,724 28,565 ------------------------------------------------------------------------ -------- ------------- ---------------- Effect of foreign exchange rate changes 6,686 3,294 ------------------------------------------------------------------------ -------- ------------- ---------------- Cash and cash equivalents at the end of the period 14,862 12,761 ------------------------------------------------------------------------ -------- ------------- ----------------
Notes to the Interim Consolidated Financial Statements
(Unaudited) for the 6 months ended 30 June 2023
(Expressed in thousands of US Dollars)
1 General Information
Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") is a Bermuda investment holding company which, through its subsidiaries, operates a maritime services company in Brazil and holds a portfolio of international investments. The Company is incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991. The Company's registered office is Clarendon House, 2 Church Street, Hamilton, Bermuda. These interim consolidated financial statements comprise the Company and its subsidiaries (the "Group").
These interim consolidated financial statements were approved by the Board on 9 August 2023.
2 Significant accounting policies
These interim consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting and follow the same accounting policies disclosed in the 31 December 2022 annual report. These interim consolidated financial statements do not include all the information required in the annual report and should be read in conjunction with the 31 December 2022 annual report.
3 Business and geographical segments
The Group has two reportable segments: maritime services and investments. These segments report their financial and operational data separately to the Board. The Board considers these segments separately when making business and investment decisions. The maritime services segment provides towage and ship agency, port terminals, offshore, logistics and shipyard services in Brazil. The investment segment holds a diverse global portfolio of international investments with an investment strategy of a balanced thematic portfolio of funds and is a Bermuda based company.
Brazil -
Maritime Services Bermuda - Investments Unallocated Consolidated
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Result for the period
ended 30 June 2023
(unaudited)
Sale of services 229,663 - - 229,663
Net return on investment
portfolio at fair value
through profit or loss - 11,217 - 11,217
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Profit/(loss) before tax 49,402 11,060 (2,155) 58,307
Tax expense (10,442) - - (10,442)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Profit/(loss) after tax 38,960 11,060 (2,155) 47,865
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Financial position at 30
June 2023 (unaudited)
Segment assets 1,142,811 299,530 2,891 1,445,232
Segment liabilities (669,942) (762) (658) (671,362)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Brazil -
Maritime Services Bermuda - Investments Unallocated Consolidated
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Result for the period
ended 30 June 2022
(unaudited)
Sale of services 210,980 - - 210,980
Net return on investment
portfolio at fair value
through profit or loss - (50,525) - (50,525)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Profit/(loss) before tax 43,047 (50,740) (2,023) (9,716)
Tax expense (10,723) - - (10,723)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Profit/(loss) after tax 32,324 (50,740) (2,023) (20,439)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Financial position at 31
December 2022 (audited)
Segment assets 1,098,393 293,717 9,177 1,401,287
Segment liabilities (646,339) (509) (313) (647,161)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
4 Revenue
An analysis of the Group's revenue is as follows:
Unaudited Unaudited
30 June 2023 30 June 2022
----------------------------------------------------------------------------------- ------------- -------------
Sale of services 229,663 210,980
----------------------------------------------------------------------------------- ------------- -------------
Net income from underlying investment vehicles 746 7,596
Profit on disposal of financial assets at fair value through profit or loss 1,495 15,618
Unrealised gains/(losses) on financial assets at fair value through profit or loss 10,453 (68,036)
Write down of Russia-focused investments (note 7) - (4,077)
----------------------------------------------------------------------------------- ------------- -------------
Returns on investment portfolio at fair value through profit or loss 12,694 (48,899)
----------------------------------------------------------------------------------- ------------- -------------
Interest on bank deposits 2,058 1,720
Other interest 2,365 1,973
----------------------------------------------------------------------------------- ------------- -------------
Other investment income 4,423 3,693
----------------------------------------------------------------------------------- ------------- -------------
Total Revenue 246,780 165,774
----------------------------------------------------------------------------------- ------------- -------------
The Group derives its revenue from contracts with customers from the sale of services in its Brazil - Maritime services segment. The revenue from contracts with customers can be disaggregated as follows:
Unaudited Unaudited
30 June 2023 30 June 2022
-------------------------------------------- ---------------- -------------
Harbour manoeuvres 102,935 94,462
Special operations 11,730 7,258
Ship agency 5,230 4,542
-------------------------------------------- ---------------- -------------
Towage and ship agency services 119,895 106,262
-------------------------------------------- ---------------- -------------
Container handling 39,852 36,250
Warehousing 19,194 21,107
Ancillary services 10,263 9,868
Offshore support bases 8,324 4,504
Other port terminal services 7,898 5,814
-------------------------------------------- ---------------- -------------
Port terminals 85,531 77,543
-------------------------------------------- ---------------- -------------
Logistics 19,946 24,210
-------------------------------------------- ---------------- -------------
Shipyard 3,803 2,965
-------------------------------------------- ---------------- -------------
Other services 488 -
-------------------------------------------- ---------------- -------------
Total Revenue from contracts with customers 229,663 210,980
-------------------------------------------- ---------------- -------------
Contract balance
Trade receivables are generally received within 30 days. The net carrying amount of operational trade receivables at the end of the reporting period was US$60.4 million (31 December 2022: US$54.5 million). These amounts include US$17.3 million (31 December 2022: US$12.0 million) of contract assets (unbilled accounts receivables). There were no contract liabilities as of 30 June 2023 (31 December 2022: none).
Performance obligations
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when it transfers control over a good or service to a customer, and the payment is generally due within 30 days. The disaggregation of revenue from contracts with customers based on the timing of performance obligations is as follows:
Unaudited Unaudited
30 June 2023 30 June 2022
-------------------------------------------- ------------- -------------
At a point of time 225,860 208,015
Over time 3,803 2,965
Total Revenue from contracts with customers 229,663 210,980
-------------------------------------------- ------------- -------------
5 Finance costs
Finance costs are classified as follows:
Unaudited Unaudited
30 June 2023 30 June 2022
--------------------------------------------- ------------- -------------
Interest on lease liabilities (8,211) (7,843)
Interest on bank loans (9,079) (9,771)
Exchange loss on foreign currency borrowings (367) -
Other interest costs (402) (456)
--------------------------------------------- ------------- -------------
Finance costs (18,059) (18,070)
--------------------------------------------- ------------- -------------
6 Taxation
At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and accordingly, no expenses or provisions for such taxes has been recorded by the Group for its Bermuda operations.
Tax expense
The reconciliation of the amounts recognised in profit or loss is as follows:
Unaudited Unaudited
30 June 2023 30 June 2022
--------------------------------------------------------------- ------------- -------------
Current tax expense
Brazilian corporation tax (9,962) (7,999)
Brazilian social contribution (3,824) (3,859)
--------------------------------------------------------------- ------------- -------------
Total current tax expense (13,786) (11,858)
--------------------------------------------------------------- ------------- -------------
Deferred tax - origination and reversal of timing differences
Charge for the period in respect of deferred tax liabilities (7,961) (7,987)
Credit for the period in respect of deferred tax assets 11,305 9,122
--------------------------------------------------------------- ------------- -------------
Total deferred tax credit 3,344 1,135
--------------------------------------------------------------- ------------- -------------
Total tax expense (10,442) (10,723)
--------------------------------------------------------------- ------------- -------------
Brazilian corporation tax is calculated at 25% (2022: 25%) of the taxable profit for the year. Brazilian social contribution tax is calculated at 9% (2022: 9%) of the taxable profit for the year.
7 Financial assets at fair value through profit or loss
The movement in financial assets at fair value through profit or loss is as follows:
Unaudited Audited
30 June 2023 31 December 2022
------------------------------------------------------------------------------------ ------------- -----------------
Opening balance - 1 January 275,080 392,931
Additions, at cost 42,402 70,864
Disposals, at market value (12,249) (128,959)
Increase/(decrease) in fair value of financial assets at fair value through profit
or loss 10,453 (79,995)
Write down of Russia-focused investments(1) - (4,077)
Profit on disposal of financial assets at fair value through profit or loss 1,495 24,316
------------------------------------------------------------------------------------ ------------- -----------------
Closing balance 317,181 275,080
------------------------------------------------------------------------------------ ------------- -----------------
Bermuda - Investments segment 299,585 272,931
Brazil - Maritime services segment 17,596 2,149
------------------------------------------------------------------------------------ ------------- -----------------
(1) During the period ended 30 June 2022, the Company wrote down the full value of its investment in Prosperity Quest Fund, a Russia-focused equity fund held within the investments segment portfolio, following the issue of an investor notice announcing the suspension of its net asset valuation, subscriptions and redemptions. At 30 June 2023, the suspension is still in effect and the book value of the investment is nil.
Bermuda - Investments segment
The financial assets at fair value through profit or loss held in this segment represent investments in listed equity securities, funds and unquoted equities that present the Group with opportunity for return through dividend income and capital appreciation.
At the end of the reporting period, the Group had entered into commitment agreements with respect to the investment portfolio for capital subscriptions. The classification of those commitments based on their expiry date is as follows:
Unaudited Audited
30 June 2023 31 December 2022
-------------------------------------- -------------- -----------------
Within one year 9,295 5,951
In the second to fifth year inclusive 4,417 2,346
After five years 41,552 42,129
-------------------------------------- -------------- -----------------
Total 55,264 50,426
-------------------------------------- -------------- -----------------
Brazil - Maritime Services segment
The financial assets at fair value through profit or loss held in this segment are held and managed separately from the Bermuda - Investments segment portfolio and consist of depository notes, an investment fund and an exchange fund both privately managed.
8 Trade and other receivables
Trade and other receivables are classified as follows:
Unaudited Audited
30 June 2023 31 December 2022
---------------------------------------------------------- ------------- -----------------
Non-current
Other trade receivables 1,630 1,456
---------------------------------------------------------- ------------- -----------------
Total other trade receivables 1,630 1,456
---------------------------------------------------------- ------------- -----------------
Current
Trade receivable for the sale of services 44,931 43,293
Unbilled trade receivables 17,265 12,036
---------------------------------------------------------- ------------- -----------------
Total gross current trade receivables 62,196 55,329
Allowance for expected credit loss (1,788) (792)
---------------------------------------------------------- ------------- -----------------
Total current trade receivables 60,408 54,537
---------------------------------------------------------- ------------- -----------------
Prepayments 11,580 4,887
Insurance claim receivable 2,940 981
Employee advances 3,232 1,449
Proceed receivable from disposal of financial instruments 61 2,181
Other receivables 2,821 3,101
---------------------------------------------------------- ------------- -----------------
Total other current receivables 20,634 12,599
---------------------------------------------------------- ------------- -----------------
Total trade and other receivables 81,042 67,136
---------------------------------------------------------- ------------- -----------------
The aging of the trade receivables is as follows:
Unaudited Audited
30 June 2023 31 December 2022
------------------------------ ------------- -----------------
Current 50,235 44,699
From 0 - 30 days 5,259 5,997
From 31 - 90 days 4,218 2,461
From 91 - 180 days 592 1,236
More than 180 days 1,892 936
------------------------------ ------------- -----------------
Total gross trade receivables 62,196 55,329
------------------------------ ------------- -----------------
The movement in allowance for expected credit loss is as follows:
Unaudited Audited
30 June 2023 31 December 2022
--------------------------------------------------- ----------------- ------------------
Opening balance - 1 January (792) (338)
Increase in allowance recognised in profit or loss (879) (419)
Exchange differences (117) (35)
--------------------------------------------------- ----------------- ------------------
Closing balance (1,788) (792)
--------------------------------------------------- ----------------- ------------------
9 Joint ventures and associates
The Group holds the following significant interests in joint ventures and associates at the end of the reporting period:
Proportion of ownership
----------------------------
Unaudited Unaudited
Place of incorporation and operation 30 June 2023 30 June 2022
------------------------------------------------- ------------------------------------- ------------- -------------
Joint ventures
Logistics
Porto Campinas, Logística e Intermodal
Ltda Brazil 50% 50%
Offshore
Wilson, Sons Ultratug Participações
S.A. Brazil 50% 50%
Atlantic Offshore S.A. Panamá 50% 50%
Associates
Argonáutica Engenharia e Pesquisas S.A. Brazil 32.32% -
------------------------------------------------- ------------------------------------- ------------- -------------
The aggregated Group's interests in joint ventures and associates are equity accounted. The financial information of the joint ventures and associates and reconciliations to the share of result of joint ventures and associates and the investment in joint ventures and associates recognised for the period are as follows:
Unaudited Unaudited
30 June 2023 30 June 2022
-------------------------------------------------- -------------- -------------
Sales of services 106,209 77,097
Operating expenses (64,981) (39,143)
Depreciation and amortisation (25,363) (31,499)
Foreign exchange gains on monetary items 6,245 6,274
-------------------------------------------------- -------------- -------------
Results from operating activities 22,110 12,729
-------------------------------------------------- -------------- -------------
Finance income 725 2,409
Finance costs (5,533) (9,245)
Profit before tax 17,302 5,893
-------------------------------------------------- -------------- -------------
Tax expense (5,165) (4,835)
-------------------------------------------------- -------------- -------------
Profit for the period 12,137 1,058
-------------------------------------------------- -------------- -------------
Total profit for the period - joint ventures 12,004 1,058
Participation 50% 50%
Share of profit for the period for joint ventures 6,002 529
-------------------------------------------------- -------------- -------------
Total profit for the period - associates 133 -
Participation 32.32% -
Share of profit for the period for associates 43 -
-------------------------------------------------- -------------- -------------
Share of result of joint ventures and associates 6,045 529
-------------------------------------------------- -------------- -------------
Unaudited Audited
30 June 2023 31 December 2022
----------------------------------------------------------- ------------- -----------------
Cash and cash equivalents 17,439 5,747
Other current assets 56,171 51,260
Non-current assets 536,503 551,921
----------------------------------------------------------- ------------- -----------------
Total assets 610,113 608,928
----------------------------------------------------------- ------------- -----------------
Trade and other payables (25,283) (46,506)
Other current liabilities (54,304) (56,833)
Non-current liabilities (328,656) (324,012)
Total liabilities (408,243) (427,351)
----------------------------------------------------------- ------------- -----------------
Total net assets 201,870 181,577
----------------------------------------------------------- ------------- -----------------
Total net assets - joint ventures 200,738 180,079 Participation 50% 50% Group's share of net assets - joint ventures 100,369 90,040 ----------------------------------------------------------- ------------- ----------------- Total net assets - associates 1,132 1,498 Participation 32.32% 32.32% Group's share of net assets - associates 366 484 ----------------------------------------------------------- ------------- ----------------- Goodwill and surplus generated on associate purchase 1,607 1,711 Cumulative elimination of profit on construction contracts (9,537) (10,372) ----------------------------------------------------------- ------------- ----------------- Investment in joint ventures and associates 92,805 81,863 ----------------------------------------------------------- ------------- -----------------
The movement in investment in joint ventures and associates is as follows:
Unaudited Audited
30 June 2023 31 December 2022
------------------------------------------------------------------------- ------------- -----------------
Opening balance - 1 January 81,863 61,553
Share of result of joint ventures and associates 6,045 3,165
Capital increase 4,986 17,016
Elimination of profit on construction contracts (167) (158)
Purchase price adjustment and surplus amortisation on associate purchase (195) 159
Translation reserve 273 128
Closing balance 92,805 81,863
------------------------------------------------------------------------- ------------- -----------------
Change in capital
Guarantees
Wilson, Sons Ultratug Participações S.A. has loans with the Brazilian Development Bank guaranteed by a lien on the financed supply vessel and by a corporate guarantee from its participants, proportionate to their ownership. The Group's subsidiary Wilson Sons Holdings Brasil Ltda. is guaranteeing US$159.3 million (31 December 2022: US$163.7 million).
Wilson, Sons Ultratug Participações S.A. has a loan with Banco do Brasil guaranteed by a pledge on the financed offshore support vessels, a letter of credit issued by Banco de Crédito e Inversiones and its long-term contracts with Petrobras. The joint venture has to maintain a cash reserve account until full repayment of the loan agreement amounting to US$1.7 million (31 December 2022: US$1.7 million) presented as long-term investment.
Covenants
On 30 June 2023 and 31 December 2022, Wilson Sons Ultratug Participações S.A. was not in compliance with one of its covenants' ratios with Banco do Brasil, resulting in a required increase in capital within a year of US$5.0 million (31 December 2022: US$1.8 million). As the capital will be increased to that amount within a year, management will not negotiate a waiver letter from Banco do Brasil. There are no other capital commitments for the joint ventures and associates as of 30 June 2023 (31 December 2022: none).
10 Property, plant and equipment
Property, plant and equipment are classified as follows:
Land and Vehicles, plant Assets under
buildings Floating Craft and equipment construction Total
---------------------------------------- ---------- -------------- --------------- ------------- ----------
Cost
At 1 January 2022 274,683 541,252 198,464 9,581 1,023,980
Additions 10,835 15,493 9,936 27,004 63,268
Transfers (112) 24,623 (2,317) (22,194) -
Transfers to intangible assets - - (60) - (60)
Disposals (1,955) (4,477) (4,892) - (11,324)
Exchange differences 11,084 - 10,854 - 21,938
At 1 January 2023 294,535 576,891 211,985 14,391 1,097,802
Additions 6,060 5,879 7,030 12,745 31,714
Transfers (123) 11,823 (1,323) (10,377) -
Transfers from intangible assets 25 - 8 - 33
Disposals (506) (44) (939) - (1,489)
Exchange differences 15,085 - 14,445 - 29,530
---------------------------------------- ---------- -------------- --------------- ------------- ----------
At 30 June 2023 315,076 594,549 231,206 16,759 1,157,590
---------------------------------------- ---------- -------------- --------------- ------------- ----------
Accumulated depreciation
At 1 January 2022 82,651 264,836 113,438 - 460,925
Charge for the period 8,518 27,831 12,124 - 48,473
Elimination on construction contracts - 87 - - 87
Disposals (1,645) (4,426) (4,609) - (10,680)
Exchange differences 3,644 - 5,724 - 9,368
---------------------------------------- ---------- -------------- --------------- ------------- ----------
At 1 January 2023 93,168 288,328 126,677 - 508,173
Charge for the period 4,578 16,638 6,449 - 27,665
Disposals (403) (40) (908) - (1,351)
Exchange differences 5,280 - 8,320 - 13,600
At 30 June 2023 102,623 304,926 140,538 - 548,087
---------------------------------------- ---------- -------------- --------------- ------------- ----------
Carrying Amount
At 31 December 2022 (audited) 201,367 288,563 85,308 14,391 589,629
---------------------------------------- ---------- -------------- --------------- ------------- ----------
At 30 June 2023 (unaudited) 212,453 289,623 90,668 16,759 609,503
---------------------------------------- ---------- -------------- --------------- ------------- ----------
Land and buildings with a net book value of US$0.2 million (31 December 2022: US$0.2 million) and plant and equipment with a carrying value of US$0.1 million (31 December 2022: US$0.1 million) have been given in guarantee for various legal processes.
The Group has pledged assets with a carrying value of US$252.9 million (31 December 2022: US$230.2 million) to secure loans granted to the Group.
The amount of borrowing costs capitalised in the period ending 30 June 2023 was US$0.1 million at an average interest rate of 5.4%. No borrowing costs were capitalised for the period ended 30 June 2022.
The Group has contractual commitments to suppliers for the acquisition and construction of property, plant and equipment amounting to US$19.6 million (31 December 2022: US$19.9 million).
11 Lease arrangements
Right-of-use assets
Right-of-use assets are classified as follows:
Operational Floating Vehicles, plant
facilities craft Buildings and equipment Total
------------------- ------------------ ----------------- ------------------ ------------------ ------------------
Cost
At 1 January 2022 167,118 13,077 5,388 8,846 194,429
Additions - 3,018 1,305 899 5,222
Contractual
amendments 17,901 5,793 63 117 23,874
Terminated
contracts - (2,796) (3,771) (58) (6,625)
Exchange
differences 10,313 510 96 328 11,247
------------------- ------------------ ----------------- ------------------ ------------------ ------------------
At 1 January 2023 195,332 19,602 3,081 10,132 228,147
Additions 8,648 - 82 (113) 8,617
Contractual
amendments 83 - 61 43 187
Terminated
contracts - - (326) (4) (330)
Exchange
differences 15,793 753 232 440 17,218
------------------ ----------------- ------------------ ------------------ ------------------
At 30 June 2023 219,856 20,355 3,130 10,498 253,839
------------------- ------------------ ----------------- ------------------ ------------------ ------------------
Accumulated
depreciation
At 1 January 2022 18,298 8,194 2,960 7,108 36,560
Charge for the
period 8,244 4,825 912 916 14,897
Terminated
contracts - (1,226) (2,424) (44) (3,694)
Exchange
differences 1,104 242 63 276 1,685
------------------- ------------------ ----------------- ------------------ ------------------ ------------------
At 1 January 2023 27,646 12,035 1,511 8,256 49,448
Charge for the
period 4,371 2,487 271 501 7,630
Terminated
contracts - - (290) (3) (293)
Exchange
differences 2,379 508 202 378 3467
At 30 June 2023 34,396 15,030 1,694 9,132 60,252
------------------- ------------------ ----------------- ------------------ ------------------ ------------------
Carrying Amount
At 31 December 2022
(audited) 167,686 7,567 1,570 1,876 178,699
------------------- ------------------ ----------------- ------------------ ------------------ ------------------
At 30 June 2023
(unaudited) 185,460 5,325 1,436 1,366 193,587
------------------- ------------------ ----------------- ------------------ ------------------ ------------------
Lease liabilities
Lease liabilities are classified as follows:
Average Unaudited Average Audited
discount rate 30 June 2023 discount rate 31 December 2022
------------------------------------ -------------- ------------- -------------- -----------------
Operational facilities 8.52% (207,004) 8.55% (184,591)
Floating craft 9.60% (5,723) 9.60% (7,605)
Buildings 11.10% (2,221) 9.75% (2,121)
Vehicles, plant and equipment 15.27% (1,509) 12.12% (1,859)
------------------------------------ -------------- ------------- -------------- -----------------
Total lease liabilities (216,457) (196,176)
------------------------------------ -------------- ------------- -------------- -----------------
Total current lease liabilities (26,859) (24,728)
Total non-current lease liabilities (189,597) (171,448)
------------------------------------ -------------- ------------- -------------- -----------------
The contractual undiscounted cash flows related to leases liabilities are as follows:
Unaudited Audited
30 June 2023 31 December 2022
-------------------------------------- ------------- -----------------
Within one year (28,159) (25,958)
In the second year (24,043) (23,101)
In the third to fifth years inclusive (61,913) (56,682)
After five years (393,235) (355,360)
-------------------------------------- ------------- -----------------
Total cash flows (507,350) (461,101)
-------------------------------------- ------------- -----------------
Adjustment to present value 290,894 264,925
-------------------------------------- ------------- -----------------
Total lease liabilities (216,456) (196,176)
-------------------------------------- ------------- -----------------
12 Other intangible assets
Other intangible assets are classified as follows:
Concession-
Computer Software rights Total
----------------------------------------------- ----------------- --------------- --------------------
Cost
At 1 January 2022 40,968 15,501 56,469
Additions 1,386 - 1,386
Transfers from right-of-use 60 - 60
Disposals (1,105) - (1,105)
Exchange differences 560 277 837
----------------------------------------------- ----------------- --------------- --------------------
At 1 January 2023 41,869 15,778 57,647
Additions 290 - 290
Transfers from property, plant and equipment (33) - (33)
Disposals (28) - (28)
Exchange differences 775 381 1,156
At 30 June 2023 42,873 16,159 59,032
----------------------------------------------- ----------------- --------------- --------------------
Accumulated amortisation
At 1 January 2022 35,540 5,948 41,488
Charge for the period 1,965 424 2,389
Disposals (1,105) - (1,105)
Exchange differences 381 102 483
----------------------------------------------- ----------------- --------------- --------------------
At 1 January 2023 36,781 6,474 43,255
Charge for the period 834 213 1,047
Disposals (28) - (28)
Exchange differences 603 169 772
----------------------------------------------- ----------------- --------------- --------------------
At 30 June 2023 38,190 6,856 45,046
----------------------------------------------- ----------------- --------------- --------------------
Carrying amount
At 31 December 2022 (audited) 5,088 9,304 14,392
----------------------------------------------- ----------------- --------------- --------------------
At 30 June 2023 (unaudited) 4,683 9,303 13,986
----------------------------------------------- ----------------- --------------- --------------------
13 Goodwill
Goodwill is classified as follows:
Tecon Rio Grande Tecon Salvador Total
----------------------- ---------------- -------------- ------------
Carrying amount
At 1 January 2022 10,792 2,480 13,272
Exchange differences 148 - 148
----------------------- ---------------- -------------- ------------
At 1 January 2023 10,940 2,480 13,420
Exchange differences 188 - 188
----------------------- ---------------- -------------- ------------
At 30 June 2023 11,128 2,480 13,608
----------------------- ---------------- -------------- ------------
The goodwill associated with each cash-generating unit "CGU" (Tecon Rio Grande and Tecon Salvador) is attributed to the Brazil - Maritime Services segment.
14 Trade and other payables
Trade and other payables are classified as follows:
Unaudited Audited
30 June 2023 31 December 2022
--------------------------------- ------------- -----------------
Trade payables (28,779) (25,583)
Accruals (10,753) (8,550)
Other payables (193) (479)
Provisions for employee benefits (20,347) (21,365)
Deferred income (4,124) (2,360)
Total trade and other payables (64,196) (58,337)
--------------------------------- ------------- -----------------
15 Bank loans
The movement in bank loans is as follows:
Unaudited Audited
30 June 2023 31 December 2022
---------------------------- ------------- -----------------
Opening balance - 1 January (321,891) (301,599)
Additions (29,024) (59,793)
Principal amortisation 36,218 49,349
Interest amortisation 7,112 13,333
Accrued interest (9,229) (17,437)
Exchange difference (7,477) (5,744)
---------------------------- ------------- -----------------
Closing balance (324,291) (321,891)
---------------------------- ------------- -----------------
The breakdown of bank loans by maturity is as follows:
Unaudited Audited
30 June 2023 31 December 2022
---------------------------------------- ------------- -----------------------
Within one year (51,625) (59,881)
In the second year (70,822) (56,022)
In the third to fifth years (inclusive) (89,335) (91,037)
After five years (112,509) (114,951)
---------------------------------------- ------------- -----------------------
Total bank loans (324,291) (321,891)
---------------------------------------- ------------- -----------------------
Guarantees
A portion of the loan agreements relies on corporate guarantees from the Group's subsidiary party to the agreement. For some contracts, the corporate guarantee is in addition to a pledge of the respective financed tugboat or a lien over the logistics and port operations equipment financed (note 10).
Covenants
Some of the loan agreements include obligations related to financial indicators, including Net Debt/EBITDA, PL/Total Debt, current liquidity ratio and debt service coverage ratio. At 30 June 2023 and 31 December 2022, the Group was in compliance with all covenants related to its loan agreements.
16 Legal claims
In the normal course of its operations in Brazil, the Group is exposed to numerous local legal claims. The Group's policy is to vigorously contest those claims, many of which appear to have little substance or merit, and manage such claims through its legal counsel.
The movement in the carrying amount of each class of provision for legal claims for the period is as follows:
Civil and environmental
Labour claims Tax cases cases Total
--------------------------- ------------------- ------------------- -------------------------- -------------------
At 1 January 2023 (4,978) (2,732) (1,287) (8,997)
Additional provisions (424) (1,512) (263) (2,199)
Unused amounts reversed 1,408 159 468 2,035
Utilisation of provisions 520 4 30 554
Exchange difference (1,421) 2,062 (415) 226
--------------------------- ------------------- ------------------- -------------------------- -------------------
At 30 June 2023 (4,895) (2,019) (1,467) (8,381)
--------------------------- ------------------- ------------------- -------------------------- -------------------
The contingent liabilities at the end of each period are as follows:
Labour claims Tax cases Civil and environmental cases Total
-------------------- ----------------- ------------------ ----------------------------- ------------------
At 31 December 2022 (6,002) (66,071) (11,158) (83,231)
At 30 June 2023 (6,561) (72,172) (12,392) (91,125)
-------------------- ----------------- ------------------ ----------------------------- ------------------
Other non-current assets of US$3.5 million (31 December 2022: US$3.5 million) represent legal deposits required by the Brazilian legal authorities as security to contest legal actions.
17 Related party transactions
Transactions between the Group and its subsidiaries which are related parties have been eliminated on consolidation and are not disclosed in this note. Transactions and outstanding balances between the Group and its related parties are as follows:
Revenues/(Expenses) Receivable/(Payable)
------------------------------------ ----------------------------------
Unaudited Unaudited Unaudited Audited
30 June 2023 30 June 2022 30 June 2023 31 December 2022
-------------------------------------------- ---------------- ------------------ --------------- -----------------
Joint arrangements
Wilson, Sons Ultratug
Participações S.A.(1) 602 1,729 13,772 11,176
Porto Campinas, Logística e Intermodal
Ltda(2) - - 18 -
Others
Hanseatic Asset Management LBG(3) (1,477) (1,626) (496) (484)
Hansa Capital Partners(4) (30) (32) - -
Gouvêa Vieira Advogados(5) - (17) - -
-------------------------------------------- ---------------- ------------------ --------------- -----------------
1. Related party loans (interest - 3.6% per year with no maturity date) and advance for future capital increase.
2. Advance for future capital increase.
3. Mr. W Salomon (Deputy Chair of the Company) is chairman and Mr. C Townsend (Director of the Company) is a director of Hanseatic Asset Management LBG. Fees were paid to Hanseatic Asset Management LBG for acting as Investment Manager of the Group's investment portfolio.
4. Mr. W Salomon is a partner of Hansa Capital Partners. Office facilities charges were paid to Hansa Capital Partners.
5. Mr. J F Gouvêa Vieira (Director of Wilson Sons) is a partner in the law firm Gouvêa Vieira Advogados. Fees were paid to Gouvêa Vieira Advogados for legal services.
Mr. C Townsend is a Director of Hansa Capital GmbH. During the period ended 30 June 2023, directors' fees of US$0.05 million were paid to Mr. C Townsend through Hansa Capital GmbH (2022: US$0.04 million).
Remuneration of key management personnel
The remuneration of the executives and other key management of the Group is as follows:
Unaudited Unaudited
30 June 2023 30 June 2022
------------------------------------- ---------------- ---------------
Short-term employee benefits (2,459) (2,445)
Post-employment benefits (35) (35)
Share based payment expense (153) (153)
------------------------------------- ---------------- ---------------
Total remuneration of key management (2,647) (2,633)
------------------------------------- ---------------- ---------------
18 Dividends
The following dividends were declared and paid by the Company:
Unaudited Unaudited
30 June 2023 30 June 2022
------------------------------------ ------------- -------------
70c per share (2021: 70c per share) 24,754 24,754
------------------------------------ ------------- -------------
19 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Unaudited Unaudited
30 June 2023 30 June 2022
--------------------------------------------------------------------------- ------------- -------------
Profit/(loss) for the period attributable to equity holders of the Company 30,492 (34,673)
Weighted average number of ordinary shares 35,363,040 35,363,040
--------------------------------------------------------------------------- ------------- -------------
Earnings per share - basic and diluted 86.2c (98.0)c
--------------------------------------------------------------------------- ------------- -------------
The Company has no dilutive or potentially dilutive ordinary shares.
20 Financial instruments
The carrying value and fair value of financial instruments is as follows:
Unaudited 30 June 2023 Audited 31 December 2022
-------------------------- ---------------------------
Carrying value Fair value Carrying value Fair value
------------------------------------------------------- -------------- ---------- --------------- ----------
Financial assets
Cash and cash equivalents 14,862 14,862 75,724 75,724
Financial assets at fair value through profit and loss 317,181 317,181 275,080 275,080
Trade and other receivables 81,042 81,042 67,136 67,136
Financial liabilities
Trade and other payables (64,196) (64,196) (58,337) (58,337)
Bank loans (324,291) (324,263) (321,891) (322,058)
------------------------------------------------------- -------------- ---------- --------------- ----------
The carrying value of trade and other receivables, cash and cash equivalents and trade and other payable is a reasonable approximation of fair value.
The fair value of bank loans was established as their present value determined by future cash flows and interest rates applicable to instruments of similar nature, terms and risks or at market quotations of these securities.
The fair value of financial assets at fair value through profit and loss are based on quoted market prices at the close of trading at the end of the period if traded in active markets and based on valuation techniques if not traded in active markets.
Fair value measurements recognised in the consolidated financial statements are grouped into levels based on the degree to which the fair value is observable.
Financial instruments whose values are based on quoted market prices in active markets are classified as Level 1. These include active listed equities.
Financial instruments that trade in markets that are not considered active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified as Level 2. These include certain private investments that are traded over the counter and debt instruments.
Financial instruments that have significant unobservable inputs as they trade infrequently and are not quoted in an active market are classified as Level 3. These include investments in limited partnerships and other private equity funds which may be subject to restrictions on redemptions such as lock up periods, redemption gates and side pockets.
Valuations are the responsibility of the Board of Directors of the Company. The Group's Investment Manager considers the valuation techniques and inputs used in valuing these funds as part of its due diligence prior to investing to ensure they are reasonable and appropriate. Therefore, the net asset value ("NAV") of these funds may be used as an input into measuring their fair value. In measuring this fair value, the NAV of the funds is adjusted, if necessary, for other relevant factors known of the fund. In measuring fair value, consideration is also paid to any clearly identifiable transactions in the shares of the fund.
Depending on the nature and level of adjustments needed to the NAV and the level of trading in the fund, the Group classifies these funds as either Level 2 or Level 3. As observable prices are not available for these securities, the Group values these based on an estimate of their fair value. The Group obtains the fair value of their holdings from valuation statements provided by the managers of the invested funds. Where the valuation statement is not stated at the reporting date, the Group adjusts the most recently available valuation for any capital transactions made up to the reporting date. When considering whether the NAV of the underlying managed funds represent fair value, the Investment Manager considers the valuation techniques and inputs used by the managed funds in determining their NAV.
The following table provides an analysis of financial instruments recognised in the statement of financial position by the level of hierarchy, excluding financial instruments for which the carrying amount is a reasonable approximation of fair value:
Level 1 Level 2 Level 3 Total
------------------------------------------------------- ------- ---------- -------- ----------
30 June 2023 (unaudited)
Financial assets at fair value through profit and loss 48,671 145,368 123,142 317,181
Bank loans - (324,291) - (324,291)
------------------------------------------------------- ------- ---------- -------- ----------
31 December 2022 (audited)
Financial assets at fair value through profit and loss 31,925 122,789 120,366 275,080
Bank loans - (321,891) - (321,891)
------------------------------------------------------- ------- ---------- -------- ----------
During the period ended 30 June 2023, no financial instruments were transferred between Levels (2022: none). The movement in Level 3 financial instruments is as follows:
Unaudited Audited
30 June 2023 31 December 2022
---------------------------------------------------------------- ------------- -----------------
Opening balance - 1 January 120,366 129,685
Purchases of investments and drawdowns of financial commitments 4,818 12,830
Sales of investments and repayments of capital (3,081) (9,231)
Realised gains 1,477 4,526
Unrealised losses (438) (17,444)
---------------------------------------------------------------- ------------- -----------------
Closing balance 123,142 120,366
---------------------------------------------------------------- ------------- -----------------
Cost 133,397 130,183
Cumulative unrealised losses (10,255) (9,816)
---------------------------------------------------------------- ------------- -----------------
Investments in private equity funds require a long-term commitment with no certainty of return. The Group's intention is to hold Level 3 investments to maturity. In the unlikely event that the Group is required to liquidate these investments, the proceeds received may be less than the carrying value due to their illiquid nature.
The following table summarises the sensitivity of the Company's Level 3 investments to changes in fair value due to illiquidity:
Unaudited Audited
30 June 2023 31 December 2022
------------- ------------- -----------------
5% scenario (6,157) (6,018)
10% scenario (12,314) (12,037)
20% scenario (24,628) (24,073)
------------- ------------- -----------------
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