REG - Ocean Wilsons Hldgs - 2022 Interim Statement
11/08/2022 07:00
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RNS Number : 6165V Ocean Wilsons Holdings Ltd 11 August 2022
2022 Interim Statement
About Ocean Wilsons Holdings Limited
Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") is a Bermuda
holding company which, through its subsidiaries, holds a portfolio of
international investments and operates a maritime services company in Brazil.
The Company is a premium listed entity on the London Stock Exchange and is
also listed on the Bermuda Stock Exchange.
It has two principal subsidiaries: Ocean Wilsons (Investments) Limited
("OWIL") and Wilson Sons Holdings Brasil S.A. ("Wilson Sons") (together with
the Company and their subsidiaries, the "Group"). OWIL is wholly owned, and
Wilson Sons is 57% owned and therefore is fully consolidated in the accounts
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
Ocean Wilsons focuses on long-term performance and value creation. This
approach applies to both the investment portfolio and our investment in Wilson
Sons. This longer-term view of the Board results in an investment strategy
whereby we hold a balanced thematic portfolio of funds leveraging our
long-standing investment market relationships and supported by detailed
insights and analysis. The Wilson Sons maritime logistic services investment
strategy focuses on providing best in class innovative solutions in a rapidly
growing market.
Data Highlights
KEY OPERATING DATA (in US$ millions)
6 months ended 6 months ended Change
30 June 2022 30 June 2021
Revenue 211.0 188.9 22.1
Operating profit 54.7 53.6 1.1
Return of investment portfolio (48.9) 29.5 (78.4)
(Loss) /Profit after tax (20.4) 51.8 (72.2)
Net cash inflow from operating activities (24.7) 41.6 (16.9)
KEY FINANCIAL POSITION DATA (in US$ millions)
At 30 June 2022 At 31 December 2021 Change
Investment portfolio assets including cash and cash equivalents 296.9 351.8 (54.9)
Net Assets 729.3 783.7 (54.4)
Debt net of cash and cash equivalents 492.8 440.9 51.9
SHARE DATA
6 months ended 6 months ended Change
30 June 2022 30 June 2021
Dividend per share US 70 cents US 70 cents -
Earnings per share US (98.0) cents US 111.7 cents US (209.7) cents
At 30 June 2022 At 31 December 2021 Change
Share discount 39.3% 41.6% (2.3%)
Implied net asset value per share GBP 15.50 GBP 15.95 GBP (0.45)
Share price GBP 9.40 GBP 9.32 GBP 0.12
Chair's Statement
The Group has delivered a mixed financial performance for the period which is
not unexpected given the market conditions in the first half of 2022. Global
supply chain challenges and continued container shortages, that we saw at the
end of 2021 are still impacting the financial results of Wilson Sons. Despite
these headwinds, Wilson Sons maintained its operating profit when compared to
the prior period due primarily to the resilience of its operations and
improved revenue mix in its various business lines that offset the impact of
lower container volumes. The performance is a direct result of the Management
team's continued focus on business growth and driving innovation at all levels
of the organization.
Whilst the investment portfolio results were loss making, in the context of
the overall market and our consistent strategy, the Board is pleased with the
Investment Manager's performance and by the underlying performance of some of
the specific fund holdings. With the market backdrop of geo-political
instability and surging inflation, the performance of the portfolio for the
remainder of the year will continue to be challenging. The Investment Manager
provides more context with regards to the underlying investments results for
the period. The portfolio strategy continues to be focused on producing
returns with a long-term view.
Environmental, Social and Governance ("ESG")
The Board's commitment to further enhance its ESG practices is evidenced with
several initiatives producing tangible outcomes during the period. At Wilson
Sons, there was the launch of a new tug, one of six, which substantially
reduces emissions over the older fleet. In addition, Wilson Sons continues to
electrify its terminal operating machines with the order placement of new
machinery at its Salvador terminals. The Investment Manager, as part of the
Hanseatic Group, has applied to become a signatory to the United Nations'
Principles for Responsible Investment.
Investment Manager's Report
Market backdrop
Stock markets have declined through the first half of 2022, with the MSCI ACWI
+ FM Index declining by 20.2%, as persistently high inflation caused investors
to worry about the threat of rising interest rates and their possible impact
on economic growth. The US, Europe and Japan have all fallen broadly in line
with the global index, while emerging markets have fallen by slightly less
(-17.6%). Emerging markets have been helped by China's relatively stronger
performance so far this year (-11.3%), after it significantly underperformed
last year. Additionally, and unusually, bonds have not been a haven this
period, with US Treasuries down 9.1% year-to-date (YTD), while investment
grade and high yield bonds have fallen further. Commodities have been one area
of strength, with the Bloomberg Commodity Index up 18.4%, but even here gold
and copper have declined over the last six months, while the main contributors
have been energy commodities, such as WTI crude oil which has gained 37.4%.
It has been pleasing to see the portfolio's basket of less-correlated
investments resist the steep falls of both the equity and bond markets so far
this year, with this part of the portfolio down just 1.1% YTD. The
trend-following CTA funds have done very well in this environment, with the
GAM Systematic Core Macro Fund up 9.2% and Schroder GAIA Blue Trend Fund up
4.6% since its purchase in April. Keynes Systematic Absolute Fund return
(+8.8%) and MKP Opportunity Fund (+6.3%) are other notable performers.
The private equity part of the portfolio has held up better than public
markets and gained 1.1% over the last six months. There have been significant
contributions from funds such as Pangaea II and Great Point Partners III
thanks to recent exits.
With equity markets falling sharply YTD, many of the portfolio's long-only
regional exposures declined as a result. Findlay Park American Fund fell
23.8%, while in Japan, Goodhart Partners: Hanjo Fund declined 23.1%. The
thematic exposures saw mixed returns, with the passive exposure to the energy
sector benefiting as the iShares MSCI World Energy ETF gained 5.4%, but funds
focusing on the healthcare and technology sectors have fallen in value.
Outlook
With markets having already entered a bear market, the question now is how
close are they to the bottom. While some comfort can be taken from the fact
that the current fall of 23% from the peak of the MSCI World Index is greater
than the 19% average fall of previous declines, this may be overly optimistic
if central banks engage in more aggressive policy measures in their battle
against inflation. The outcome from here is very dependent on the path of
inflation and interest rates, although continued volatility in markets seems
likely, whatever happens. However, with a portfolio comprised of a variety
of risk-on and risk-off assets and with a blend of sectors including growth
and value, we will hopefully stand in reasonable stead for the challenging
months ahead.
Cumulative Portfolio Returns
Performance (Time-weighted) YTD 3 Years 5 Years
p.a. p.a.
OWIL -14.1% 5.3% 5.6%
OWIL (net)* -14.5% 3.9% 4.3%
Absolute Performance Benchmark** 7.7% 8.0% 6.9%
60:40 Composite of MSCI ACWI and Bloomberg Global Treasury -18.0% 2.2% 3.9%
MSCI ACWI + FM -20.2% 6.2% 7.0%
MSCI Emerging Markets -17.6% 0.6% 2.2%
Notes:
*Net of management and performance fees
**The OWIL Performance Benchmark is an absolute benchmark of US CPI Urban
Consumers NSA +3% p.a.
Investment Portfolio at 30 June 2022
Market Value US$000 % of NAV Primary Focus
Findlay Park American Fund 27,967 9.4 US Equities - Long Only
Stepstone Global Partners 15,778 5.3 Private Assets - US Venture Capital
BlackRock Strategic Equity Hedge Fund 13,838 4.7 Europe Equities - Long/Short
Silver Lake Partners 11,939 4.0 Private Assets - Global Technology
Egerton Long - Short Fund Limited 11,807 4.0 Europe/US Equities - Long/Short
iShares Core MSCI Europe UCITS ETF 10,917 3.7 Europe Equities - Long Only
Select Equity Offshore, Ltd 10,406 3.5 US Equities - Long Only
Pangaea II, LP 8,619 2.9 Private Assets - Global Emerging Markets
NG Capital Partners II, LP 8,159 2.7 Private Assets - Latin America
TA Associates 7,144 2.4 Private Assets - Global Growth
Top 10 Holdings 126,574 42.6
Schroder ISF Asian Total Return Fund 6,771 2.3 Asia ex-Japan Equities - Long Only
GAM Star Fund PLC - Disruptive Growth 6,758 2.3 Technology Equities - Long Only
KKR America 6,661 2.2 Private Assets - North America
NTAsian Discovery Fund 5,179 1.7 Asia ex-Japan Equities - Long Only
Hudson Bay International Fund Ltd 5,116 1.7 Market Neutral - Multi-Strategy
Pershing Square Holdings Ltd 5,012 1.7 US Equities - Long Only
Goodhart Partners: Hanjo Fund 4,849 1.6 Japan Equities - Long Only
Polar Capital Global Insurance Fund 4,768 1.6 Financials Equities - Long Only
Helios Investors II, LP 4,525 1.5 Private Assets - Africa
PAI Europe 4,415 1.5 Private Assets - Europe
Top 20 Holdings 180,628 60.7
Indus Japan Long Only Fund 4,135 1.4 Japan Equities - Long Only
Baring Asia Private Equity Fund VII, LP 3,813 1.3 Private Assets - Asia
Global Event Partners Ltd 3,603 1.2 Market Neutral - Event-Driven
Reverence Capital Partners Opportunities 3,339 1.1 Private Assets - North America
L Capital Asia 3,223 1.1 Private Assets - Asia
Worldwide Healthcare Trust PLC 3,192 1.1 Healthcare Equities - Long Only
Schroder GAIA BlueTrend 3,137 1.1 Market Neutral - Multi-Strategy
EQT Mid Market Europe, LP 3,086 1.0 Private Assets - Europe
Dynamo Brasil VIII 3,048 1.0 Brazil Equities - Long Only
GAM Systematic Core Macro (Cayman) Fund 3,005 1.0 Market Neutral - Multi-Strategy
Top 30 Holdings 214,209 72.1
Remaining Holdings 71,691 24.2
Cash and Cash Equivalents 11,046 3.7
TOTAL 296,946 100.0
Wilson Sons' Management Report
The Wilson Sons second quarter 2022 earnings report released on 11 August 2022
is available on the Wilson Sons website: www.wilsonsons.com.br.
In the report, Fernando Salek, CEO, said:
"Wilson Sons' 2Q22 revenues US$211.0 million are 11.7% higher than the prior
year period of US$188.9 million.
Towage results were resilient with an increased average revenue per manoeuvre,
despite higher fuel costs. Towage revenues increased by 9.5% to US$101.7
million in the period.
Container terminal results were impacted by the limited availability of empty
containers and global logistics bottlenecks causing vessel call cancellations.
We believe that this challenging scenario could show some signs of improvement
in the second half of 2022 depending on the resolution of port closures in
China.
During the second quarter, our shipyard delivered WS Centaurus, the most
powerful tugboat in Brazil and the first of a series of six 90-tonne bollard
pull vessels joining our fleet over the next two years. The vessels' design
comply with the International Maritime Organization (IMO) Tier III standard,
and improves hull efficiency for an estimated reduction of up to 14.0% in
greenhouse gas emissions compared to previous technology. In addition to the
launch of the new tugboat, the Salvador terminal signed a contract to acquire
12 fully electric yard tractors to further support our commitment to reduce
our carbon footprint.
In July, Wilson Sons launched the first innovation hub focused on making port
and maritime operations in Latin America more efficient, safe and sustainable.
The initiative aims to integrate different ends of the ecosystem to accelerate
innovation and foster the development of start-ups dedicated to our industry.
We are pleased to have delivered these financial results together with
important operating milestones which adds to the safe and efficient offering
we provide our clients and to minimize our impact on the environment. We
continue to strive to improve the world-class performance of our
infrastructure, our portfolio of activities, and the resilience and
versatility of our services which we believe is the best possible way to
address our sector challenges, transforming, over time, the maritime transport
and creating a better future."
Fernando Salek,
CEO
Financial Report
Revenue
Revenues in this section relate to the sales of services by Wilson Sons which
increased by 11.7% compared to the first half of the prior year to US$211.0
million (2021: US$188.9 million). Towage and ship agency services were $106.3
million for the period (2021: US$97.2 million), an increase of 9.3% driven by
higher average revenues per manoeuvre in towage services and by reductions in
operating expenses for shipping agency services, improving the overall margin.
Despite global container availability challenges resulting in lower container
volumes, financial results remained resilient in the Port terminal division
with revenues at US$77.5 million for the period (2021: US$72.5 million) due to
increased storage times driving warehousing revenues higher.
Logistics revenues increased 51.2% to $24.2 million (2021: US$16.0 million)
due to favourable conditions in both volumes and pricing for the international
logistics business.
Operating volumes (to 30 June) 2022 2021 % Change
Container Terminals (container movements in TEU '000s)* 458.1 538.6 (14.9%)
Towage (number of harbour manoeuvres performed) 26,746 26,957 (0.8%)
Offshore Vessels (days in operation) 3,104 2,573 20.6%
*TEUs stands for "twenty-foot equivalent units".
Operating Profit
Operating profit was close to flat at US$54.7 million (2021: US$53.6 million).
Raw materials and consumables increased US$3.8 million over the prior period
driven by higher fuel costs in the towage division and employee costs
increased US$8.6 million over the prior period; these costs were expected to
increase as the workforce resumed activity post pandemic and increasing cost
of living expenses driven by inflation. Other operating expenses increased
US$7.9 million due to higher international freight rates in the logistics
division and increases in utilities costs with longer refrigerated
warehousing. The depreciation and amortisation expense at US$31.7 million was
US$0.4 million higher than the comparative period (2021: US$31.3million) due
to additions of fixed assets. Foreign currency exchange gains of US$2.0
million (2021: US$2.3 million) arose from the Group's foreign currency
monetary items and reflect the movement of the BRL against the USD during the
period.
Share of results of joint ventures
The share of results of joint ventures is Wilson Sons' 50% share of the net
results for the period from our offshore support vessel joint venture. The net
profit attributable to Wilson Sons for the period was US$0.5 million (2021:
US$0.8million loss) as vessel turnaround times increased and the start of two
new drilling campaigns by international oil companies.
Returns on the investment portfolio at fair value through profit and loss
The loss for the period on the investment portfolio of US$48.9 million (2021:
gain of US$29.5 million) comprises unrealised losses on financial assets at
fair value through profit and loss of US$68.0 million (2021: US$23.4 million
profit), net investment income of US$7.6 million (2021: US$1.2 million) and
realised profits on the disposal of financial assets at fair value through
profit and loss of US$15.6 million (2021: US$5.0 million).
Finance costs
Finance costs for the period were US$3.5 million more than the comparative
period at US$18.1 million (2021: US$14.6 million). In the prior period lenders
in Brazil were extending Covid-19 relief on repayment of borrowings which are
no longer in effect.
Exchange rates
The Group reports in USD and has revenue, costs, assets and liabilities in
both BRL and USD. Therefore, movements in the USD/BRL exchange rate impact
from period to period. In the six months to 30 June 2022 the BRL appreciated
8.1% against the USD from R$5.71 at 1 January 2022 to R$5.25 at the period
end. In the comparative period in 2021 the BRL depreciated 3.8% against the
USD from R$5.00 to R$5.20.
Profit/(Loss) before tax
Loss before tax was US$9.7 million compared with prior year (2021: profit
US$66.2 million) with this sharp decrease mainly attributable to the negative
return on the investment portfolio of US$48.9 million and finance costs
increased US$3.5 million to US$18.1 million for the period.
Taxation
The corporate tax rate prevailing in Brazil is 34%. The Group recorded an
income tax expense for the period of US$10.7 million (2021:US$14.4 million).
The principal items not included in determining taxable profit in Brazil are
foreign exchange gains/losses, share of results of joint ventures, 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$14.2 million (2021: US$12.3 million), the loss attributable to equity
holders of the Company is US$34.7 million (2021: US$39.5 million profit). The
earnings per share for the period was US 98.0 cents loss (2021: US 111.7 cents
profit).
Investment portfolio performance
As markets struggle with inflation and uncertainty, the investment portfolio
and cash under management was US$54.9 million lower at US$296.9 million as at
30 June 2022 (31 December 2021: US$351.8 million), after paying dividends of
US$2.5 million to the parent company and deducting management and other fees
of US$1.6 million.
Cash flow and debt
Net cash inflow from operating activities for the period was US$24.7 million
(2021: US$41.6 million). Dividends of US$24.8 million were paid to
shareholders in the period (2021: US$24.8 million) with a further US$18.5
million paid to non-controlling interests in our subsidiaries (2021: US$14.9
million). At 30 June 2022, the Group had cash and cash equivalents of US$12.8
million (31 December 2021: US$28.6 million). Group borrowings including lease
liabilities at the period end were US$505.6 million (31 December 2021:
US$469.4 million). New loans were raised in the period of US$20.5 million
(2021: US$8.0 million) while capital repayments on existing loans in the
period of US$24.3 million (2021: US$41.1 million) were made.
Balance sheet
Equity attributable to shareholders at the balance sheet date was US$539.0
million compared with US$593.7 million at 31 December 2021. The main movements
in equity for the half year was the loss for the period attributable to
shareholders of US$34.7 million, dividends paid of US$24.8 million and a
positive currency translation adjustment of US$4.1 million. The currency
translation adjustment arises from exchange differences on the translation of
operations with a functional currency other than USD.
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 2021. A detailed description can be found in the Report of Directors
of the 2021 Annual Report and Financial Statements which are available on the
website at www.oceanwilsons.bm.
The Board notes that there is an increase in the financial risk exposure
detailed in the 2021 annual report, due to the current geo-political risk and
inflationary environment on our investments. The Board continues to receive
regular reports from Wilson Sons on their cash and debt management as well as
impacts of domestic and international trade volumes on their operations, As
previously noted in this report, reductions in container volumes are being
offset with other revenues streams and cashflow forecasts remain unchanged.
The Investment Manager's report provides a commentary on the financial
markets' reaction to the current economic and political environments and an
outlook for the remainder of the year that is very dependent on the direction
that central banks take as it relates to interest rates. The Board is actively
engaged with the Investment Manager to discuss ongoing strategy and to
consider any adjustments in the portfolio weighting to balance risk exposure
across the investment holdings.
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$12.8 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 and Investment Manager's 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, being the parent company along with
OWIL and Wilson Sons.
OWIL
OWIL has no debts but has made commitments in respect of investment
subscriptions amounting to US$45.3 million, details are provided in note 7.
The timing of the 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 Wilsons Sons and its subsidiaries and their creditors or
lenders. Therefore, in the unlikely circumstance that Wilsons 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 2022.
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
10 August 2022
Interim Consolidated Financial Statements
Interim Consolidated Statement of Profit or Loss and Other Comprehensive
Income
(Unaudited) for the 6 months ended 30 June 2022
(Expressed in thousands of US Dollars)
Note Unaudited Unaudited
30 June 2022 30 June 2021
Sales of services 4 210,980 188,877
Raw materials and consumables used (15,014) (11,216)
Employee charges and benefits expense (62,012) (53,369)
Other operating expenses (49,717) (41,805)
Depreciation of owned assets 10 (23,706) (23,896)
Depreciation of right-of-use assets 11 (6,805) (5,982)
Amortisation of intangible assets 12 (1,175) (1,374)
Gain on disposal of property, plant and equipment and intangible assets 88 2
Foreign exchange gains on monetary items 2,018 2,315
Operating profit 54,657 53,552
Share of results of joint ventures 9 529 (749)
Return on investment portfolio at fair value through profit or loss 4 (48,899) 29,548
Investment portfolio performance and management fees (1,626) (2,872)
Other investment income 4 3,693 1,307
Finance costs 5 (18,070) (14,584)
(Loss)/profit before tax (9,716) 66,202
Tax expense 6 (10,723) (14,424)
(Loss)/profit for the period (20,439) 51,778
Other comprehensive income:
Items that will be or may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations 7,272 4,804
Effective portion of changes in fair value of derivatives 9 106
Other comprehensive income for the period 7,281 4,910
Total comprehensive (loss)/income for the period (13,158) 56,688
(Loss)/profit for the period attributable to:
Equity holders of the Company (34,673) 39,516
Non-controlling interests 14,234 12,262
(20,439) 51,778
Total comprehensive (loss)/income for the period attributable to:
Equity holders of the Company (30,558) 42,284
Non-controlling interests 17,400 14,404
(13,158) 56,688
Earnings per share:
Basic and diluted 19 (98.0)c 111.7c
Interim Consolidated Statement of Financial Position
(Unaudited) at 30 June 2022
(Expressed in thousands of US Dollars)
Note Unaudited Audited
30 June 2022 31 December 2021
Current assets
Cash and cash equivalents 12,761 28,565
Financial assets at fair value through profit and loss 7 307,406 392,931
Recoverable taxes 28,529 25,380
Trade and other receivables 8 70,663 59,350
Inventories 15,844 12,297
435,203 518,523
Non-current assets
Other trade receivables 8 1,538 1,580
Related party loans receivable 17 13,517 10,784
Other non-current assets 16 3,845 3,582
Recoverable taxes 14,033 12,816
Investment in joint ventures 9 67,108 61,553
Deferred tax assets 23,986 22,332
Property, plant and equipment 10 578,471 563,055
Right-of-use assets 11 185,285 157,869
Other intangible assets 12 14,759 14,981
Goodwill 13 13,411 13,272
915,953 861,824
Total assets 1,351,156 1,380,347
Current liabilities
Trade and other payables 14 (48,198) (58,513)
Tax liabilities (7,694) (8,057)
Lease liabilities 11 (24,438) (19,449)
Bank overdrafts and loans 15 (57,859) (45,287)
(138,189) (131,306)
Net current assets 297,014 387,217
Non-current liabilities
Bank loans 15 (248,703) (256,312)
Post-employment benefits (1,741) (1,562)
Deferred tax liabilities (49,265) (50,194)
Provisions for legal claims 16 (9,406) (8,907)
Lease liabilities 11 (174,571) (148,394)
(483,686) (465,369)
Total liabilities (621,875) (596,675)
Capital and reserves
Share capital 11,390 11,390
Retained earnings 619,271 678,006
Translation and hedging reserve (91,623) (95,739)
Equity attributable to equity holders of the Company 539,038 593,657
Non-controlling interests 190,243 190,015
Total equity 729,281 783,672
Interim Consolidated Statement of Changes in Equity
(Unaudited) for the 6 months ended 30 June 2022
(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 2021 11,390 635,987 (91,595) 555,782 187,925 743,707
Currency translation adjustment - - 2,708 2,708 2,096 4,804
Effective portion of changes in fair value of derivatives - - 60 60 46 106
Profit for the period - 39,516 - 39,516 12,262 51,778
Total comprehensive income for the period - 39,516 2,768 42,284 14,404 56,688
Dividends (note 18) - (24,754) - (24,754) (14,948) (39,702)
Share options exercised in subsidiary - 3,025 - 3,025 3,860 6,885
Share based payment expense in subsidiary - - - - 113 113
Balance at 30 June 2021 11,390 653,774 (88,827) 576,337 191,354 767,691
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)
Share options exercised in subsidiary - 1,261 - 1,261 1,565 2,826
Share buyback in subsidiary - (569) - (569) (436) (1,005)
Share based payment expense in subsidiary - - - - 173 173
Balance at 30 June 2022 11,390 619,271 (91,623) 539,038 190,243 729,281
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.
Transactions in subsidiary
Wilson Sons Holdings Brasil S.A. (WSSA), 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 2022, 2,808,840 share options of WSSA
were exercised (2021: 6,743,100) and 601,400 shares of WSSA were repurchased
(2021: none), resulting in a net increase in non-controlling interest of 0.28%
(2021: 0.89%).
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 2022
(Expressed in thousands of US Dollars)
Note Unaudited Unaudited
30 June 2022 30 June 2021
Operating activities
(Loss)/profit for the period (20,439) 51,778
Adjustment for:
Depreciation & amortisation 10,11,12 31,686 31,252
Gain on disposal of property, plant and equipment and intangible assets (88) (2)
Share of results of joint ventures 9 (529) 749
Returns on investment portfolio at fair value through profit or loss 7 48,899 (29,548)
Other investment income 4 (3,693) (1,307)
Finance costs 5 18,070 14,584
Foreign exchange gains on monetary items (2,018) (2,315)
Share based payment expense 173 113
Tax expense 6 10,723 14,424
Changes in:
Inventories (3,547) (894)
Trade and other receivables 8,17 (14,004) (15,521)
Other current and non-current assets (4,629) (715)
Trade and other payables 14 (10,678) 5,524
Provisions for legal claims 16 499 (703)
Taxes paid (10,848) (13,814)
Interest paid (14,872) (12,023)
Net cash inflow from operating activities 24,705 41,582
Investing activities
Income received from trading investments 9,563 2,023
Purchase of trading investments (59,418) (14,429)
Proceeds on disposal of trading investments 88,448 56,036
Purchase of property, plant and equipment 10 (27,513) (16,585)
Proceeds on disposal of property, plant and equipment 270 49
Purchase of intangible assets 12 (575) (405)
Proceeds on disposal of intangible assets - 4
Investment in joint ventures 9 (4,937) (9,985)
Net cash inflow from investing activities 5,838 16,708
Financing activities
Payments of lease liabilities 11 (4,399) (4,376)
Repayments of borrowings 15 (24,312) (41,059)
New bank loans drawn down 15 20,476 7,978
Dividends paid to equity holders of the Company 18 (24,754) (24,754)
Dividends paid to non-controlling interests in subsidiary (18,473) (14,948)
Shares repurchased in subsidiary (1,005) -
Share options exercised in subsidiary 2,826 6,885
Net cash used in financing activities (49,641) (70,274)
Net decrease in cash and cash equivalents (19,098) (11,984)
Cash and cash equivalents at the beginning of the period 28,565 63,255
Effect of foreign exchange rate changes 3,294 4,345
Cash and cash equivalents at the end of the period 12,761 55,616
Notes to the Interim Consolidated Financial Statements
(Unaudited) for the 6 months ended 30 June 2022
(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 10
August 2022.
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 2021 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 2021 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 portfolio of international investments and is a
Bermuda based company.
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 30 June 2022 (unaudited)
Segment assets 1,052,805 297,566 785 1,351,156
Segment liabilities (620,485) (1,167) (223) (621,875)
Brazil - Bermuda - Investments Unallocated Consolidated
Maritime Services
Result for the period ended 30 June 2021 (unaudited)
Sale of services 188,877 - - 188,877
Net return on investment portfolio at fair value through profit or loss - 26,676 - 26,676
Profit/(loss) before tax 41,849 26,598 (2,245) 66,202
Tax expense (14,424) - - (14,424)
Profit/(loss) after tax 27,425 26,598 (2,245) 51,778
Financial position at 31 December 2021 (audited)
Segment assets 1,025,791 351,774 2,782 1,380,347
Segment liabilities (594,218) (2,211) (246) (596,675)
4 Revenue
An analysis of the Group's revenue is as follows:
Unaudited Unaudited
30 June 2022 30 June 2021
Sale of services 210,980 188,877
Net income from underlying investment vehicles 7,596 1,162
Profit on disposal of financial assets at fair value through profit or loss 15,618 4,988
Unrealised (losses)/gains on financial assets at fair value through profit or (68,036) 23,398
loss
Write down of Russia-focused investments (note 7) (4,077) -
Returns on investment portfolio at fair value through profit or loss (48,899) 29,548
Interest on bank deposits 1,720 705
Other interest 1,973 602
Other investment income 3,693 1,307
Total Revenue 165,774 219,732
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 2022 30 June 2021
Harbour manoeuvres 94,462 83,776
Special operations 7,258 9,156
Ship agency 4,542 4,247
Towage and ship agency services 106,262 97,179
Container handling 36,250 36,453
Warehousing 21,107 16,426
Ancillary services 9,868 10,622
Offshore support bases 4,504 3,183
Other services 5,814 5,830
Port terminals 77,543 72,514
Logistics 24,210 16,012
Shipyard 2,965 3,172
Total Revenue from contracts with customers 210,980 188,877
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$48.4 million (31 December 2021: US$49.1 million). These amounts include
US$10.9 million (31 December 2021: US$13.5 million) of contract assets
(unbilled accounts receivables). There were no contract liabilities as of 30
June 2022 (31 December 2021: 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 2022 30 June 2021
At a point of time 208,015 185,705
Over time 2,965 3,172
Total Revenue from contracts with customers 210,980 188,877
5 Finance costs
Finance costs are classified as follows:
Unaudited Unaudited
30 June 2022 30 June 2021
Interest on lease liabilities (7,843) (6,790)
Interest on bank overdrafts and loans (9,771) (7,755)
Other interest costs (456) (39)
Finance costs (18,070) (14,584)
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. The Company has
received an undertaking from the Bermuda Government exempting it from all such
taxes until 31 March 2035.
Tax expense
The reconciliation of the amounts recognised in profit or loss is as follows:
Unaudited Unaudited
30 June 2022 30 June 2021
Current tax expense
Brazilian corporation tax (7,999) (10,549)
Brazilian social contribution (3,859) (4,035)
Total current tax expense (11,858) (14,584)
Deferred tax - origination and reversal of timing differences
Charge for the period in respect of deferred tax liabilities (7,987) (3,448)
Credit for the period in respect of deferred tax assets 9,122 3,608
Total deferred tax credit 1,135 160
Total tax expense (10,723) (14,424)
Brazilian corporation tax is calculated at 25% (2021: 25%) of the taxable
profit for the year. Brazilian social contribution tax is calculated at 9%
(2021: 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 2022 31 December 2021
Opening balance - 1 January 392,931 347,464
Additions, at cost 59,418 72,811
Disposals, at market value (88,448) (73,064)
(Decrease)/increase in fair value of financial assets at fair value through (68,036) 33,850
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 15,618 11,870
Closing balance 307,406 392,931
Bermuda - Investments segment 285,900 349,613
Brazil - Maritime services segment 21,506 43,318
(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.
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 2022 31 December 2021
Within one year 5,008 5,219
In the second to fifth year inclusive 3,493 2,946
After five years 36,825 35,056
Total 45,326 43,221
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 US Dollar denominated 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 2022 31 December 2021
Non-current
Other trade receivables 1,538 1,580
Total other trade receivables 1,538 1,580
Current
Trade receivable for the sale of services 38,231 35,915
Unbilled trade receivables 10,857 13,517
Total gross current trade receivables 49,088 49,432
Allowance for expected credit loss (660) (338)
Total current trade receivables 48,428 49,094
Prepayments 9,244 6,646
Insurance claim receivable 1,056 632
Employee advances 1,814 1,236
Proceed receivable from disposal of financial instruments 7,009 -
Other receivables 3,112 1,742
Total other current receivables 22,235 10,256
Total trade and other receivables 70,663 59,350
The aging of the trade receivables is as follows:
Unaudited Audited
30 June 2022 31 December 2021
Current 41,349 43,160
From 0 - 30 days 5,494 4,098
From 31 - 90 days 1,015 858
From 91 - 180 days 499 988
More than 180 days 731 328
Total gross trade receivables 49,088 49,432
The movement in allowance for expected credit loss is as follows:
Unaudited Audited
30 June 2022 31 December 2021
Opening balance - 1 January (338) (554)
(Increase)/decrease in allowance recognised in profit or loss (300) 188
Exchange differences (22) 28
Closing balance (660) (338)
9 Joint arrangements
The Group holds the following significant interests in joint operations and
joint ventures at the end of the reporting period:
Proportion of ownership
Place of incorporation and operation Unaudited Unaudited
30 June 2022 30 June 2021
Joint operations
Towage
Consórcio de Rebocadores Baia de São Marcos(1) Brazil - 50%
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%
(1) The joint operation was terminated in December 2021.
Joint ventures
The aggregated Group's interests in joint ventures are equity accounted. The
Group has not given separate disclosure of each material joint ventures
because they belong to the same economic group. The financial information of
the joint ventures and reconciliations to the share of result of joint
ventures and the investment in joint ventures recognised for the period are as
follows:
Unaudited Unaudited
30 June 2022 30 June 2021
Sales of services 77,097 55,389
Operating expenses (39,143) (31,992)
Depreciation and amortisation (31,499) (24,582)
Foreign exchange gains on monetary items 6,274 4,217
Results from operating activities 12,729 3,032
Finance income 2,409 48
Finance costs (9,245) (7,948)
Profit/(loss) before tax 5,893 (4,868)
Tax (expense)/credit (4,835) 3,368
Profit/(loss) for the period 1,058 (1,500)
Participation 50% 50%
Share of result of joint ventures 529 (749)
Unaudited Audited
30 June 2022 31 December 2021
Non-current assets 680,438 584,886
Other current assets 36,936 46,548
Cash and cash equivalents 5,741 7,541
Total assets 723,115 638,975
Non-current liabilities 430,808 375,988
Other current liabilities 48,875 49,173
Trade and other payables 86,820 66,567
Total liabilities 566,503 491,728
Total net assets 156,612 147,247
Participation 50% 50%
Group's share of net assets 78,306 73,624
Cumulative elimination of profit on construction contracts (11,198) (12,071)
Investment in joint ventures 67,108 61,553
The movement in investment in joint ventures is as follows:
Unaudited Audited
30 June 2022 31 December 2021
Opening balance - 1 January 61,553 26,185
Share of result of joint ventures 529 (5,029)
Capital increase 4,937 40,207
Elimination of profit on construction contracts (55) 17
Post-employment benefits - 10
Translation reserve 144 163
Closing balance 67,108 61,553
Guarantees
The joint venture Wilson, Sons Ultratug Participações S.A. has loans with
the Brazilian Development Bank which are 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$151.5 million (31 December 2021: US$160.4
million).
The joint venture 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 Petrobas. The joint venture has to maintain a cash
reserve account, presented as long-term investment, until full repayment of
the loan agreement, amounting to US$2.0 million (31 December 2021: US$2.1
million).
Covenants
As of 30 June 2022, a subsidiary of the joint venture Wilson Sons Ultratug
Participações S.A. was not in compliance with one of its covenants' ratios.
In the event of non-compliance, the joint venture has to increase its capital
within a year to reach US$5.4 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
as of 30 June 2022.
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 2021 279,313 525,484 209,034 292 1,014,123
Additions 8,992 22,152 6,919 9,289 47,352
Transfers from joint operations - 1,350 32 - 1,382
Transfers (16) 1,462 (1,446) - -
Disposals (1,998) (9,196) (4,607) - (15,801)
Exchange differences (11,608) - (11,468) - (23,076)
At 1 January 2022 274,683 541,252 198,464 9,581 1,023,980
Additions 4,474 9,286 1,978 11,775 27,513
Transfers to intangible assets - - (43) - (43)
Disposals (16) (2,303) (540) - (2,859)
Exchange differences 10,418 - 10,188 - 20,606
At 30 June 2022 289,559 548,235 210,047 21,356 1,069,197
Accumulated depreciation
At 1 January 2021 79,628 245,583 109,774 - 434,985
Charge for the period 7,989 26,070 12,572 - 46,631
Elimination on construction contracts - 25 - - 25
Disposals (1,193) (6,842) (3,053) - (11,088)
Exchange differences (3,773) - (5,855) - (9,628)
At 1 January 2022 82,651 264,836 113,438 - 460,925
Charge for the period 4,267 13,316 6,123 - 23,706
Elimination on construction contracts - 42 - - 42
Disposals (16) (2,251) (410) - (2,677)
Exchange differences 3,397 - 5,333 - 8,730
At 30 June 2022 90,299 275,943 124,484 - 490,726
Carrying Amount
At 31 December 2021 192,032 276,416 85,026 9,581 563,055
At 30 June 2022 199,260 272,292 85,563 21,356 578,471
Land and buildings with a net book value of US$0.2 million (31 December 2021:
US$0.2 million) and plant and equipment with a carrying amount of US$0.1
million (31 December 2021: US$0.1 million) have been given in guarantee for
various legal processes.
The Group has pledged assets with a carrying amount of US$257.2 million (31
December 2021: US$251.6 million) to secure loans granted to the Group.
No borrowing costs were capitalised for the period ended 30 June 2022 and
2021.
The Group has contractual commitments to suppliers for the acquisition and
construction of property, plant and equipment amounting to US$20.3 million (31
December 2021: US$14.2 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 2021 154,710 7,278 5,697 9,749 177,434
Additions - 7,353 176 189 7,718
Contractual amendments 33,466 (838) 119 40 32,787
Terminated contracts (15,662) - (177) (806) (16,645)
Exchange differences (5,396) (716) (427) (326) (6,865)
At 1 January 2022 167,118 13,077 5,388 8,846 194,429
Additions 17,213 5,793 50 12 23,068
Contractual amendments - 2,702 1,291 490 4,483
Terminated contracts - (2,796) (50) (44) (2,890)
Exchange differences 9,594 475 79 173 10,321
At 30 June 2022 193,925 19,251 6,758 9,477 229,411
Accumulated depreciation
At 1 January 2021 13,739 4,750 2,421 7,246 28,156
Charge for the period 7,410 4,187 980 748 13,325
Terminated contracts (3,264) - (504) (598) (4,366)
Exchange differences 413 (743) 63 (288) (555)
At 1 January 2022 18,298 8,194 2,960 7,108 36,560
Charge for the period 4,122 2,414 533 412 7,481
Terminated contracts - (1,226) (34) (37) (1,297)
Exchange differences 994 217 46 125 1,382
At 30 June 2022 23,414 9,599 3,505 7,608 44,126
Carrying Amount
At 31 December 2021 148,820 4,883 2,428 1,738 157,869
At 30 June 2022 170,511 9,652 3,253 1,869 185,285
Lease liabilities
Lease liabilities are classified as follows:
Discount rate Unaudited Audited
30 June 2022 31 December 2021
Operational facilities 5.17% - 9.33% 184,803 159,444
Floating craft 7.75% - 10.52% 9,321 4,823
Buildings 4.41% - 17.19% 3,164 2,139
Vehicles, plant and equipment 4.87% - 12.9% 1,721 1,437
Total lease liabilities 199,009 167,843
Total current lease liabilities 24,438 19,449
Total non-current lease liabilities 174,571 148,394
The maturity analysis of contractual undiscounted cash flows is as follows:
Unaudited Audited
30 June 2022 31 December 2021
Within one year 25,659 20,323
In the second year 46,278 37,535
In the third to fifth years inclusive 88,227 32,767
After five years 310,193 313,102
Total cash flows 470,357 403,727
Adjustment to present value (271,348) (235,884)
Total lease liabilities 199,009 167,843
12 Other intangible assets
Other intangible assets are classified as follows:
Computer Software Concession- Other Total
rights
Cost
At 1 January 2021 41,107 16,013 47 57,167
Additions 1,375 - - 1,375
Disposals (925) - - (925)
Exchange differences (634) (512) (2) (1,148)
At 1 January 2022 40,923 15,501 45 56,469
Additions 575 - - 575
Transfers from property, plant and equipment 43 - - 43
Disposals (192) - - (192)
Exchange differences 526 254 2 782
At 30 June 2022 41,875 15,755 47 57,677
Accumulated amortisation
At 1 January 2021 34,348 5,852 - 40,200
Charge for the period 2,298 420 - 2,718
Disposals (695) - - (695)
Exchange differences (411) (324) - (735)
At 1 January 2022 35,540 5,948 - 41,488
Charge for the period 962 213 - 1,175
Disposals (192) - - (192)
Exchange differences 358 89 - 447
At 30 June 2022 36,668 6,250 - 42,918
Carrying amount
At 31 December 2021 5,383 9,553 45 14,981
At 30 June 2022 5,207 9,505 47 14,759
13 Goodwill
Goodwill is classified as follows:
Tecon Rio Grande Tecon Salvador Total
Carrying amount
At 1 January 2021 10,949 2,480 13,429
Exchange differences (157) - (157)
At 1 January 2022 10,792 2,480 13,272
Exchange differences 139 - 139
At 30 June 2022 10,931 2,480 13,411
The goodwill associated with each cash-generating unit "CGU" (Tecon Salvador
and Tecon Rio Grande) 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 2022 31 December 2021
Trade payables (19,555) (29,242)
Accruals (8,538) (7,424)
Other payables (350) (441)
Provisions for employee benefits (17,927) (19,547)
Deferred income (1,828) (1,859)
Total trade and other payables (48,198) (58,513)
15 Bank loans and overdrafts
The movement in bank loans and overdrafts is as follows:
Unaudited Audited
30 June 2022 31 December 2021
Opening balance - 1 January (301,599) (342,661)
Additions (20,476) (19,438)
Principal amortisation 24,312 57,926
Interest amortisation 6,527 10,390
Accrued interest (9,807) (16,246)
Exchange difference (5,519) 8,430
Closing balance (306,562) (301,599)
The breakdown of bank loans and overdrafts by maturity is as follows:
Unaudited Audited
30 June 2022 31 December 2021
Within one year (57,859) (45,287)
In the second year (38,374) (47,961)
In the third to fifth years (inclusive) (94,014) (86,671)
After five years (116,315) (121,680)
Total bank loans and overdrafts (306,562) (301,599)
Amounts due for settlement within 12 months (57,859) (45,287)
Amounts due for settlement after 12 months (248,703) (256,312)
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 2022 and 31 December 2021, 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 2022 (6,190) (1,295) (1,422) (8,907)
Additional provisions (217) (1,022) (198) (1,437)
Unused amounts reversed 1,120 107 139 1,366
Utilisation of provisions 111 - - 111
Exchange difference (389) (60) (90) (539)
At 30 June 2022 (5,565) (2,270) (1,571) (9,406)
The contingent liabilities at the end of each period are as follows:
Labour claims Tax cases Civil and environmental cases Total
At 31 December 2021 (14,881) (52,793) (4,968) (72,642)
At 30 June 2022 (12,140) (57,781) (5,439) (75,360)
Other non-current assets of US$3.8 million (31 December 2021: US$3.6 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 2022 30 June 2021 30 June 2022 31 December 2021
Joint arrangements
Wilson, Sons Ultratug Participações S.A.(1) 1,729 262 13,501 10,784
Porto Campinas, Logística e Intermodal Ltda - - 16 -
Others
Hanseatic Asset Management LBG(2) (1,626) (1,329) (279) (2,133)
Hansa Capital GMBH(3) (40) - - -
Jofran Services(4) (41) - - -
Gouvêa Vieira Advogados(5) (17) (13) - -
1. Related party loans with Wilson, Sons Ultratug Participações S.A. (interest
- 0.3% per month with no maturity date).
2. Mr. W H Salomon is chairman of Hanseatic Asset Management LBG. Fees were paid
to Hanseatic Asset Management LBG for acting as Investment Manager of the
Group's investment portfolio.
3. Mr. C Townsend is a Director of Hansa Capital GmbH. Directors' fees were paid
to Hansa Capital GmbH.
4. Mr. J F Gouvêa Vieira is a Director of Jofran Services. Directors' fees were
paid to Jofran Services.
5. Mr. J F Gouvêa Vieira is a partner in the law firm Gouvêa Vieira Advogados.
Fees were paid to Gouvêa Vieira Advogados for legal services.
Remuneration of key management personnel
The remuneration of the executives and other key management of the Group is as
follows:
Unaudited Unaudited
30 June 2022 30 June 2021
Short-term employee benefits (2,445) (3,762)
Post-employment benefits (35) (164)
Share based payment expense (153) (88)
Total remuneration of key management (2,633) (4,014)
18 Dividends
The following dividends were declared and paid by the Company:
Unaudited Unaudited
30 June 2022 30 June 2021
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 2022 30 June 2021
(Loss)/profit for the period attributable to equity holders of the Company (34,673) 39,516
Weighted average number of ordinary shares 35,363,040 35,363,040
Earnings per share - basic and diluted (98.0)c 111.7c
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 2022 Audited 31 December 2021
Carrying value Fair value Carrying value Fair value
Financial assets
Trade and other receivables 70,663 70,663 59,350 59,350
Financial assets at fair value through profit and loss 307,406 307,406 392,931 392,931
Cash and cash equivalents 12,761 12,761 28,565 28,565
Financial liabilities
Trade and other payables (48,198) (48,198) (58,513) (58,513)
Bank overdraft and loans (306,562) (306,749) (301,599) (301,763)
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 and overdrafts 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 2022 (unaudited)
Financial assets at fair value through profit and loss 53,737 127,321 126,348 307,406
Bank loans and overdrafts - (306,562) - (306,562)
31 December 2021 (audited)
Financial assets at fair value through profit and loss 67,177 196,069 129,685 392,931
Bank loans and overdrafts - (301,599) - (301,599)
During the period ended 30 June 2022, no financial instruments were
transferred between Level 1 and Level 2 (2021: none). The movement in Level 3
financial instruments is as follows:
Unaudited Audited
30 June 2022 31 December 2021
Opening balance - 1 January 129,685 99,137
Transfers from Level 2 to Level 3 - 77
Purchases of investments and drawdowns of financial commitments 7,695 15,379
Sales of investments and repayments of capital (5,185) (12,992)
Realised gains 3,020 6,873
Unrealised (losses)/gains (8,867) 21,211
Closing balance 126,348 129,685
Cost 131,513 125,983
Cumulative unrealised (losses)/gains (5,165) 3,702
Investment 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 2022 31 December 2021
5% scenario (6,317) (6,484)
10% scenario (12,635) (12,968)
20% scenario (25,270) (25,936)
Enquiries:
Company Contact:
Leslie Rans, CPA 1 (441) 295 1309
Media:
Haggie Partners LLP 020 7562 4444
David Haggie
Brokers:
Peel Hunt 020
7418 8900
Edward Allsopp, Charles Batten
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