TIDMOCN
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
30 June 2022 30 June 2021 Change
-------------------------------- --------------- --------------- -------
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 At 31 December
2022 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
30 June 2022 30 June 2021 Change
------------------- ---------------- --------------- -----------------
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 At 31 December
2022 2021 Change
----------------------------- ----------- --------------- -----------
Share discount 39.3% 41.6% (2.3%)
----------- --------------- -----------
Implied net asset value per GBP 15.50 GBP 15.95 GBP (0.45)
share
----------- --------------- -----------
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
3 Years 5 Years
Performance (Time-weighted) YTD 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 % of
Value US$000 NAV Primary Focus
--------------------------------- -------------- ------ -----------------------------------
Findlay Park American Fund 27,967 9.4 US Equities - Long Only
Private Assets - US Venture
Stepstone Global Partners 15,778 5.3 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
Private Assets - Global Emerging
Pangaea II, LP 8,619 2.9 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 Asia ex-Japan Equities - Long
Fund 6,771 2.3 Only
GAM Star Fund PLC - Disruptive Technology Equities - Long
Growth 6,758 2.3 Only
KKR America 6,661 2.2 Private Assets - North America
Asia ex-Japan Equities - Long
NTAsian Discovery Fund 5,179 1.7 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 Financials Equities - Long
Fund 4,768 1.6 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 Healthcare Equities - Long
PLC 3,192 1.1 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)
Unaudited Unaudited
Note 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)
Audited
Unaudited 31 December
Note 30 June 2022 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)
Hedging and Attributable to
Retained Translation equity holders Non-controlling
Share capital earnings reserve of the Company 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)
Unaudited Unaudited
Note 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 -
Maritime Services Bermuda - Investments Unallocated Consolidated
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Result for the period
ended 30 June 2022
(unaudited)
Sale of services 210,980 - - 210,980
Net return on investment
portfolio at fair value
through profit or loss - (50,525) - (50,525)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Profit/(loss) before tax 43,047 (50,740) (2,023) (9,716)
Tax expense (10,723) - - (10,723)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Profit/(loss) after tax 32,324 (50,740) (2,023) (20,439)
------------------------- ---------------------- ---------------------- ---------------------- -------------------
Financial position at 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 -
Maritime Services Bermuda - Investments Unallocated Consolidated
------------------------------------------------ ------------------ --------------------- ----------- ------------
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 loss (68,036) 23,398
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 profit
or loss (68,036) 33,850
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
----------------------------
Unaudited Unaudited
Place of incorporation and operation 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 Vehicles, plant Assets under
buildings Floating Craft and equipment construction Total
--------------- ----------------------- --------------------- --------------------- --------------------- ---------
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 Floating Vehicles, plant
facilities craft Buildings and equipment Total
------------------- ------------------- ----------------- ------------------ ------------------ -----------------
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:
Unaudited Audited
Discount rate 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:
Concession-
Computer Software rights Other Total
--------------------------------- ----------------- ----------- ----- -------
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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