REG - Ocean Wilsons Hldgs - 2023 Interim Statement
10/08/2023 07:00
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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
KEY OPERATING DATA (in US$ millions)
6 months ended 6 months ended Change
30 June 2023 30 June 2022
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 2023 At 31 December 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 Change
30 June 2023 30 June 2022
Proposed/Actual dividend per share (USD) 70 cents 70 cents -
Earnings per share (USD) 86.2 cents (98.0) cents +184.2 cents
At 30 June 2023 At 31 December 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
YTD 2022 3 Years 5 Years
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 US$000 % of 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
NG Capital Partners II, LP 7,272 2.4 Private Assets - Latin America
iShares Core MSCI Europe UCITS ETF 6,493 2.2 Europe Equities - Long Only
Schroder ISF Global Recovery 6,204 2.1 Global Equities - Long Only
Pershing Square Holdings Ltd 6,152 2.0 US Equities - Long Only
Schroder ISF Asian Total Return Fund 6,106 2.0 Asia ex-Japan Equities - Long Only
Pangaea II, LP 6,085 2.0 Private Assets - GEM
Top 10 Holdings 100,710 33.6
Stepstone Global Partners VI, LP 5,709 1.9 Private Assets - US Venture Capital
Polar Capital Global Insurance Fund 5,394 1.8 Financials Equities - Long Only
Hudson Bay International Fund Ltd 5,385 1.8 Market Neutral - Multi-Strategy
NTAsian Discovery Fund 5,380 1.8 Asia ex-Japan Equities - Long Only
Egerton Long - Short Fund Limited 5,331 1.8 Europe/US Equities - Hedge
Armistice Capital Offshore Fund Ltd 5,250 1.7 US Equities - Hedge
Silver Lake Partners IV, LP 5,059 1.7 Private Assets - Global 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
Indus Japan Long Only Fund 4,729 1.6 Japan Equities - Long Only
Top 20 Holdings 152,856 51.0
KKR Americas XII, LP 4,609 1.5 Private Assets - North America
GAM Star Fund PLC - Disruptive Growth 4,187 1.4 Technology Equities - Long Only
TA Associates XIII-A, LP 4,141 1.4 Private Assets - Global 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
Goodhart Partners: Hanjo Fund 3,559 1.2 Japan Equities - Long 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
Silver Lake Partners V, LP 3,420 1.1 Private Assets - Global 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)
Note Unaudited Unaudited
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)
Note Unaudited Audited
30 June 2023 31 December 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)
Share capital Retained earnings Hedging and Translation reserve Attributable to equity holders of the Company Non-controlling 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)
Note Unaudited Unaudited
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 - Bermuda - Investments Unallocated Consolidated
Maritime Services
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 - Bermuda - Investments Unallocated Consolidated
Maritime Services
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 10,453 (68,036)
loss
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 10,453 (79,995)
profit or loss
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
Place of incorporation and operation Unaudited Unaudited
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 Floating Craft Vehicles, plant Assets under Total
buildings and equipment construction
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 facilities Floating Buildings Vehicles, plant and equipment Total
craft
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:
Computer Software Concession- Total
rights
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:
Labour claims Tax cases Civil and environmental 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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