Ocean Wilsons Holdings Limited
Preliminary results for the period ended 30 June 2024
About Ocean Wilsons Holdings Limited
Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") is a Bermuda investment holding company which, through its subsidiaries, holds a portfolio of international investments and operates a maritime services company in Brazil. The Company is listed on both the London Stock Exchange and the Bermuda Stock Exchange.
Principal Activities
The Company's principal activities are the management of a diverse global investment portfolio and the provision of maritime and logistics services in Brazil.
Ocean Wilsons has two operating subsidiaries: Ocean Wilsons (Investments) Limited ("OWIL") and Wilson Sons S.A. ("Wilson Sons") (together with the Company and their subsidiaries, the "Group").
The Company owns 100% of OWIL and 57% of Wilson Sons which is fully consolidated in the financial statements with a 43% non-controlling interest. Wilson Sons is one of the largest providers of maritime services in Brazil with activities including towage, container terminals, offshore oil and gas support services, small vessel construction, logistics and ship agency.
Objective
The Company's objective is to focus on long-term value creation through both the investment portfolio and the investment in Wilson Sons. This longer-term view directs an OWIL investment strategy of a balanced thematic portfolio of funds leveraging our long-standing investment market relationships and through detailed insights and analysis. The Wilson Sons strategy focuses on providing best in class or innovative solutions in a rapidly growing maritime logistics market.
Data Highlights
KEY DATA (in US$ millions) |
|
6 months ended 30 June 2024 |
6 months ended 30 June 2023 |
Change |
Revenue |
262.4 |
229.7 |
+32.7 (+14.2%) |
Operating profit |
68.4 |
55.9 |
+12.5 (+22.4%) |
Profit after tax |
38.4 |
47.9 |
-9.5 (-19.8%) |
Investment portfolio net return |
10.7 |
11.2 |
-0.5 (-4.5%) |
Net cash inflow from operating activities |
90.5 |
45.5 |
+45.0 (+98.9%) |
|
At 30 June 2024 |
At 31 December 2023 |
Change |
Investment portfolio assets |
319.6 |
310.9 |
+8.7 (+2.8%) |
Net assets |
789.8 |
815.8 |
-26.0 (-3.2%) |
Net debt |
436.7 |
479.1 |
-42.4 (-8.8%) |
SHARE DATA |
|
6 months ended 30 June 2024 |
6 months ended 30 June 2023 |
Change |
Dividend paid per share (USD) |
85 cents |
70 cents |
+15 cents (+21.4%) |
Earnings per share (USD) |
71.1 cents |
86.2 cents |
-15.1 cents (-17.5%) |
|
12 months ended 31 December 2023 |
Earnings per share (USD) |
189.6 cents |
|
At 30 June 2024 |
At 31 December 2023 |
Change |
Share price (GBP) |
12.90 |
12.00 |
+0.90 (+7.5%) |
Chair's Statement
I am pleased to report that Ocean Wilsons Holdings Limited has delivered a robust performance for the first half of 2024, underscored by the strong operating results from Wilson Sons driven by its strategic growth initiatives and operational resilience.
Wilson Sons has delivered a 14.2% growth in revenues period on period, with a particular highlight being the addition of a new feeder route in South America and two new direct services connecting Asia to both Rio Grande and Salvador. These developments have significantly boosted container volumes, offsetting the temporary slowdown from the severe floods in the southern region of Brazil. Wilson Sons' growth strategy for its container terminals has proven to be highly successful and its other business lines are also continuing to produce solid results, leading to strong cash generation. More details are provided in the Wilson Sons' management report.
Our investment portfolio delivered a 3.9% gross return for the six-month period which was in line with the absolute benchmark return and significantly ahead of the equal weighted 60:40 comparable benchmark. As shareholders are aware, our investment strategy is intentionally designed to have a balanced portfolio of assets generating sustainable but less volatile returns over the long term. We remain confident in our investment approach which combines exposure to both public and private markets as well as a defensive allocation to assets providing uncorrelated returns and our focus remains on sustainable, long-term growth. A key strength of our investment manager is its preferred access to individual funds in both public and private markets due to the strength of its long-term relationships. Private markets have performed exceptionally well over the long term, albeit they are lagging public markets at present, with the latter driven by the "Magnificent Seven". Typically these lags in performance are temporary affairs. The portfolio commentary in this document provides more specifics. We believe that the ever more uncertain geopolitical backdrop at present is likely to drive longer-term asset returns, reinforcing the resilience of this strategy, particularly as interest rates are expected to decline through 2025.
Strategic Review
Our strategic review of our investment in Wilson Sons continues, albeit not as swiftly as we had initially anticipated. However, we remain on track to announce the outcome of this review before the end of 2024. Both external factors and the excellent performance of Wilson Sons are playing into these considerations. The Board compliments the Wilson Sons management team for its steadfast commitment and focus on delivering its strategy without distraction during this review period. This measured strategic review remains focused on ensuring that we continue to align both of our sectors with our long-term objectives and deliver value to our shareholders.
Wilson Sons has generated significant cash during the period and has distributed dividends in excess of those in previous periods and to an earlier timeframe. Currently our own dividend policy remains unchanged and will be reviewed in conjunction with the completion of the strategic review.
In summary, the first half of 2024 has been a period of strong operational performance for Ocean Wilsons Holdings Limited, primarily driven by the resilience and strategic advancements of Wilson Sons, supported by an investment return benchmarked to the market with a lower risk profile. We remain committed to our growth strategy and investment strategy and are optimistic about the future.
Investment Manager's Report
Market Backdrop
Global markets remained remarkably strong in the first half of the year with the US continuing to lead the way on the back of robust economic performance and the enthusiasm for Artificial Intelligence (AI). High expectations of interest rate cuts coming into the year were tempered by an unexpected increase in US inflation with the market now more realistic. This change created a challenging environment for bonds with yields rising across the board although corporate bonds performed markedly better than government bonds.
While headline equity market performance was impressive and the MSCI ACWI + FM index had a strong start to the year gaining 11.3%, much of this return came from only seven technology stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) known as the Magnificent 7. However, if you mute the outsized weighting of these companies in the index by looking at the MSCI ACWI Equal Weighted index, the return was only 0.9% showing the market was actually significantly more difficult than on first glance.
Against this backdrop, the investment portfolio's gross return of 3.9% and net return of 3.3% was pleasing and compared well to the 3.9% return of the absolute benchmark (US CPI Urban Consumers NSA + 3%) which is inflation driven. The investment portfolio was significantly ahead of the 60:40 MSCI ACWI Equal Weighted : Bloomberg Global Treasury which declined 1.5%.
Portfolio Commentary
Public Equity and Directional Hedge Funds
The investment portfolio's strongest performance was in the public equity and directional hedge funds. Positioning in the US market and the technology sector continued to be the primary contributors. BlackRock Strategic Equity Hedge Fund, which has large positions in both Microsoft and Alphabet, performed particularly well gaining 17.0%. Polar Capital Global Technology (+25.7%) benefitted from having leant into AI with a significant amount of its holdings positioned to directly profit from the increased investor interest in the area. Its top 10 holdings also include five of the Magnificent 7.
There was more mixed performance within our Japanese holdings with the more esoteric fund, Simplex Value Up, gaining 10.5% with strong stock picking being the major driver. Our larger cap holdings were more mixed with Arcus Japan, Alma Eikoh Japan Large Cap and Indus Japan returning 2.6%, 1.9% and -2.7%, respectively. This was due to these funds broadly avoiding the handful of mega cap stocks that drove the Japanese market so far this year.
Private Markets
Private markets continued to experience their usual time lag behind public markets but some of the portfolio's newer investments materially gained in value. Private markets more broadly continued to be subdued with higher interest rates leading to less transaction activity which in turn has slowed the pace of fundraising for many managers. Within our portfolio there was noticeably strong performance from financials specialist Reverence Capital Partners Opportunities Fund V and healthcare specialist OrbiMed Private Investment IX which both saw material valuation increases. No new commitments were made in the first half of the year.
Defensive Positioning
The defensive silo contributed positively on an absolute basis and continues to outperform global treasury bonds. Several of the fund's fixed income positions performed very strongly this year with Selwood AM - Liquid Credit Strategy, a specialist in trading investment grade credit default swaps (CDXs) which are a type of insurance against corporate defaults, gaining 4.5%. The increase in geopolitical risk in Europe over the last few months has meant that demand for CDX protection is higher and the coupons have increased. Nephila Iron Catastrophe Fund, a specialist strategy investing in catastrophe bonds, gained 6.0% reflecting an extremely strong pricing environment.
Lazard Convertible Bond Fund had a poor start to the year declining 2.7% as the holding's growth bias gave it higher exposure to equity markets, but not the Magnificent 7 stocks. We decided to fully redeem our holding in Keynes Dynamic Beta Strategy after a poor run over the last couple of years. Brevan Howard Absolute Return Government Bond Fund was also sold as we felt the returns were not justifying the fees that are significantly higher than just holding a government bond ETF.
Looking forward
The near-term outlook for stock markets will continue to be driven by the inflation/interest rate dynamic, economic growth and the outlook for the Magnificent 7. With interest rates likely to be heading down rather than up - albeit not to the degree by which markets thought they would at the start of the year - and economic and corporate growth largely supportive, this should help underpin share prices. Clearly there are risks though with the current low volatility seeming inappropriate given the number of challenges faced in the world and we are also becoming a little wary about the ongoing strength of the Magnificent 7 and the rush into AI.
However, whilst the economic backdrop might continue to drive shorter-term returns, increasing geopolitical uncertainty is likely to impact longer term asset returns. Ultimately, governments and their policies determine the long-term growth prospects of a country, the environment in which corporates operate and the risks faced. It is this, combined with relatively high valuations and the supernormal returns of the last couple of decades as rates fell to zero, that leads us to conclude that stock market returns, whilst still positive, are likely to be somewhat lower in the future.
Investment Portfolio Returns
|
30 June 2024 |
30 June 2023 |
3 Years p.a. |
5 Years p.a. |
Gross return |
3.9% |
4.5% |
1.5% |
6.0% |
Net return* |
3.3% |
3.9% |
0.3% |
4.8% |
|
|
|
|
|
Performance Benchmark** |
3.9% |
3.7% |
8.0% |
7.2% |
60:40 MSCI ACWI and Bloomberg Global Treasury |
4.5% |
8.4% |
0.2% |
5.0% |
60:40 MSCI ACWI Equal Weighted and Bloomberg Global Treasury |
-1.5% |
3.1% |
-4.8% |
1.0% |
MSCI ACWI Equal Weighted |
0.9% |
4.7% |
-3.3% |
3.7% |
MSCI ACWI + FM NR US$ |
11.3% |
13.9% |
5.4% |
10.7% |
Bloomberg Global Treasury TR US$ (Unhedged) |
-4.9% |
0.6% |
-7.2% |
-3.4% |
MSCI Emerging Markets NR US$ |
7.5% |
4.9% |
-5.1% |
3.1% |
* Net of management and performance fees. No performance fees were earned in 2024 and 2023 as the high-water mark was not exceeded.
** The OWIL Performance Benchmark is an absolute benchmark of US CPI Urban Consumers NSA +3% p.a.
Investment Portfolio at 30 June 2024
Holding |
Market Value US$000 |
% of NAV |
Primary Focus |
|
Findlay Park American Fund |
33,188 |
10.4 |
US Equities - Long Only |
|
BlackRock Strategic Equity Hedge Fund |
17,582 |
5.5 |
Europe Equities - Hedge |
|
Select Equity Offshore, Ltd |
12,531 |
3.9 |
US Equities - Long Only |
|
BA Beutel Goodman US Value Fund |
10,326 |
3.2 |
US Equities - Long Only |
|
Pershing Square Holdings Ltd |
9,137 |
2.9 |
US Equities - Long Only |
|
iShares Core MSCI Europe UCITS ETF |
7,268 |
2.3 |
Europe Equities - Long Only |
|
Schroder ISF Asian Total Return Fund |
7,010 |
2.2 |
Asia ex-Japan Equities - Long Only |
|
NG Capital Partners II, LP |
6,843 |
2.1 |
Private Assets - Latin America |
|
Schroder ISF Global Recovery |
6,634 |
2.1 |
Global Equities - Long Only |
|
Polar Capital Global Insurance Fund |
6,504 |
2.0 |
Financials Equities - Long Only |
|
Top 10 Holdings |
117,023 |
36.6 |
|
|
Polar Capital Global Technology Fund |
6,254 |
2.0 |
Technology Equities - Long Only |
|
Navegar I, LP |
6,195 |
1.9 |
Private Assets - Asia |
|
iShares Core S&P 500 UCITS ETF |
6,101 |
1.9 |
US Equities - Long Only |
|
NTAsian Discovery Fund |
5,563 |
1.8 |
Asia ex-Japan Equities - Long Only |
|
Armistice Capital Offshore Fund Ltd |
5,315 |
1.7 |
US Equities - Hedge |
|
Stepstone Global Partners VI, LP |
4,922 |
1.5 |
Private Assets - US Venture Capital |
|
Indus Japan Long Only Fund |
4,812 |
1.5 |
Japan Equities - Long Only |
|
Silver Lake Partners IV, LP |
4,805 |
1.5 |
Private Assets - Global Technology |
|
KKR Americas XII, LP |
4,587 |
1.4 |
Private Assets - North America |
|
Pangaea II, LP |
4,320 |
1.4 |
Private Assets - GEM |
|
Top 20 Holdings |
169,897 |
53.2 |
|
|
RA Capital International Healthcare Fund |
4,312 |
1.3 |
Healthcare Equities - Long Short |
|
TA Associates XIII-A, LP |
4,266 |
1.3 |
Private Assets - Global Growth |
|
Simplex Value Up Company |
4,239 |
1.3 |
Japan Equities - Long Only |
|
Selwood AM - Liquid Credit Strategy |
4,194 |
1.3 |
Market Neutral - Global Bonds |
|
Global Event Partners Ltd |
4,004 |
1.3 |
Market Neutral - Event-Driven |
|
Worldwide Healthcare Trust PLC |
3,890 |
1.2 |
Healthcare Equities - Long Only |
|
TA Associates XIV-B, LP |
3,581 |
1.1 |
Private Assets - Global Growth |
|
BPEA Private Equity Fund VII, L.P. |
3,471 |
1.1 |
Private Assets - Asia |
|
Reverence Capital Partners Opportunities Fund II |
3,427 |
1.1 |
Private Assets - Financials |
|
Silver Lake Partners VI, LP |
3,383 |
1.1 |
Private Assets - Global Technology |
|
Top 30 Holdings |
208,664 |
65.3 |
|
|
Remaining Holdings |
104,952 |
32.8 |
|
|
Cash and Cash Equivalents |
5,948 |
1.9 |
|
|
TOTAL |
319,564 |
100.0 |
|
|
Wilson Sons' Management Report
The Wilson Sons June 2024 Earnings Report was released on 8 August 2024 and is posted on www.wilsonsons.com.br. In the report, Mr Fernando Salek, CEO of Wilson Sons, said:
"Wilson Sons' 30 June 2024 net revenues of US$262.4 million were 14.2% higher than the comparative period (2023: US$229.7 million), mainly due to excellent container terminal and towage results.
Towage revenues increased 8.4% driven by volume growth and improved mix. Volume growth of 6.7% was primarily driven by a greater number of ships carrying grains, iron ore and breakbulk cargo. The decrease in special operations revenue was largely attributed to lower salvage assistance activity. In late August 2024, our fleet will welcome the WS Onix, a 90-tonne bollard pull tug built at our shipyard.
Container terminal revenues surged 29.0% driven by robust growth in transshipment and gateway volumes, higher revenues from ancillary services and fixed cost dilution. Aggregate volumes increased 24.7% to an all-time high propelled by exceptional performances at both terminals. In May 2024, Rio Grande launched a new deep-sea route and feeder solution for cargo from Argentina, Uruguay and southern Brazil, further cementing its status as a key hub port on South America's east coast. In July 2024, Salvador welcomed Brazil's first regular call by a New Panamax vessel, establishing a direct link to Asian markets and strategically positioning the terminal to handle substantial gateway and transshipment volumes from the country's northern and northeastern regions.
Offshore support vessel revenues increased 21.2% driven by improved fleet utilisation and higher daily rates. Operating days rose 6.0% driven by new hires and contract renewals.
Workplace safety for the twelve months ended 30 June 2024 was stable at 0.25 incidents per million hours worked, in line with the rate observed in March 2024 and continuing to outperform the world-class benchmark of 0.50. Our unwavering commitment to safety is a cornerstone of our operations, with the well-being of our employees paramount.
As we conclude the first half of 2024, I am pleased to report that Wilson Sons continues to deliver robust growth and operational excellence. The strength of our core businesses has been remarkable, showcasing not only the vigour of our operating model but also the effectiveness of our strategy. Looking ahead, we remain firmly committed to our principles of stringent safety standards, optimal asset utilisation and disciplined capital allocation. I am quite optimistic about the prospects ahead and confident in our ability to navigate towards an even brighter future."
Operating volumes (to 30 June) |
2024 |
2023 |
Change |
Towage |
|
|
|
Number of harbour manoeuvres |
28,900 |
27,079 |
+6.7% |
Offshore support bases |
|
|
|
Number of vessel turnarounds |
570 |
554 |
+2.9% |
Number of operating days |
3,875 |
3,657 |
+6.0% |
Container terminal - aggregated Volumes |
|
|
|
Exports - full containers |
158.6 |
139.4 |
+13.8% |
Imports - full containers |
75.6 |
62.4 |
+21.2% |
Cabotage - full containers |
67.1 |
63.3 |
+6.0% |
Inland Navigation - full containers* |
12.1 |
13.4 |
-9.7% |
Transhipment - full containers |
144.3 |
59.8 |
+141.3% |
Empty containers |
154.0 |
152.2 |
+1.2% |
Total Volume |
611.7 |
490.5 |
+24.7% |
*Inland navigation volumes decreased due to temporary flood-driven impacts in May 2024
Financial Report
Operating profit
Operating profit of US$68.4 million represents a 22.4% increase from US$55.9 million for the comparative period. Revenue increased 14.2% while operating expenses increased by 11.6% resulting in an operating margin of 26.1% (2023: 24.3%).
Total operating expenses of US$194.0 million (2023: US$173.8 million) mainly include raw material and consumables used of US$18.2 million (2023: US$17.7 million), employee charges and benefits expenses of US$75.0 million (2023: US$67.6 million), other operating expenses of US$62.5 million (2023: US$55.2 million), and depreciation and amortisation charges of US$37.1 million (2023: US$35.7 million). Foreign currency exchange loss of US$1.2 million (2023: US$0.7 million gain) included in operating profit arose from the Group's foreign currency monetary items and reflect the movement of the BRL against the USD during the period.
Revenue from maritime services
Revenue for the period increased by 14.2% compared to the first half of the prior year to US$262.4 million (2023: US$229.7 million). Container terminal revenues increased 29.0% driven by growth in transshipment and gateway volumes, higher revenues from ancillary services and fixed cost dilution. Towage revenues increased 8.4% driven by volume growth of 6.7% driven by a greater number of ships carrying grains, iron ore and breakbulk cargo. Offshore support vessel revenues increased 21.2% driven by improved fleet utilisation and higher daily rates while operating days rose 6.0%.
Returns on the investment portfolio
The gain for the period on the investment portfolio of US$12.3 million (2023: US$12.7 million) comprises an unrealised gain of US$5.8 million (2023: US$10.5 million), net investment income of US$0.1 million (2023: US$0.7 million) and profit on disposal of US$6.4 million (2023: US$1.5 million). The investment portfolio and cash under management was US$8.7 million higher at US$319.6 million at 30 June 2024 (31 December 2023: US$310.9 million).
Share of results of joint ventures and associates
The share of results of joint ventures and associates is comprised of Wilson Sons' 50% share of the net results for the period from the offshore support vessel joint ventures and 32.32% share of the net results for the period from the associate Argonáutica. The net profit attributable to Wilson Sons for the period was US$0.1 million (2023: US$6.0 million); this reduction is mostly attributable to a significant increase in foreign exchange losses on monetary items within the joint ventures due to the depreciation of the BRL against the USD.
Exchange rates
The Group reports in USD and has revenue, costs, assets and liabilities in both BRL and USD. In the six months to 30 June 2024 the BRL depreciated 14.9% against the USD from R$4.84 at 1 January 2024 to R$5.56 at the period end. In the comparative period in 2023 the BRL appreciated 7.7% against the USD from R$5.22 to R$4.82.
Profit before tax
Profit before tax increased US$7.4 million to US$65.7 million compared to US$58.3 million for the comparative period, mainly driven by a US$12.5 million increase in operating profit which was offset by a US$5.9 million decrease in share of results of joint ventures and associates.
Taxation
The Group is taxed on its maritime services operations in Brazil at a combined corporation and social contribution tax rate of 34%. The total tax expense for the period of US$27.2 million (2023: US$10.4 million) comprises the current tax expense of US$13.1 million (2023: US$13.8 million) and the deferred tax expense resulting from timing differences of US$14.1 million (2023: credit of US$3.3 million).
Profit for the period
After deducting the profit attributable to non-controlling interests of US$13.3 million (2023: US$17.4 million), the profit for the period attributable to equity holders of the Company is US$25.2 million (2023: US$30.5 million). The earnings per share for the period was US 71.1 cents (2023: US 86.2 cents).
Cash flow and debt
At 30 June 2024, the Group had cash and cash equivalents of US$66.2 million (30 June 2023: US$14.9 million). Net cash inflow from operating activities for the period was US$90.5 million (2023: US$45.5 million). Disposal of investment portfolio assets, net of purchases, were US$7.7 million (2023: net purchase of US$30.2 million). Purchase of property, plant and equipment was US$26.3 million for the period (2023: US$31.7 million). Dividends of US$30.1 million were paid to equity holders of the Company (2023: US$24.8 million) with a further US$17.7 million paid to non-controlling interests in our subsidiaries (2023: US$12.4 million). Borrowings including lease liabilities were US$502.8 million at the end of the period (31 December 2023: US$548.5 million). New loans of US$13.1 million were raised in the period (2023: US$29.0 million) while capital repayments on existing loans of US$26.0 million were made in the period (2023: US$36.2 million).
Balance sheet
Equity attributable to equity holders of the Company at the end of the period was US$587.2 million compared to US$601.5 million at 31 December 2023. The main movements in equity for the half year was the profit for the period attributable to equity holders of the Company of US$25.2 million, dividends paid of US$30.1 million and a negative currency translation adjustment of US$9.4 million.
Other matters
Principal risks
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 December 2023. A detailed description can be found in the Report of Directors of the 2023 Annual Report and Financial Statements which are available on the Company website at www.oceanwilsons.bm.
The Board notes that there have been no substantive changes to the risk assessment during the reporting period.
Related party transactions
Related party transactions during the period are set out in note 18 of the interim consolidated financial statements.
Going concern
The Group closely monitors and manages its liquidity risk. The Group has considerable financial resources including US$66.2 million in cash and cash equivalents and the majority of the Group's borrowings have a long maturity profile. The Group's business activities together with the factors likely to affect its future development and performance are set out in the Chair's statement together with the Investment Manager's report and the Wilson Sons' report. Details of the Group's borrowings are set out in note 16 of the interim consolidated financial statements. Based on the Group's year to date results and cash forecasts, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future.
The Group manages its liquidity risk and does so in a manner that reflects its structure and two distinct businesses.
OWIL
OWIL has no debt. It has outstanding commitments of US$47.8 million in respect of investment subscriptions, for which details are provided in note 8. The timing of these investment commitments may be accelerated or delayed in comparison with those indicated in note 8.
However, highly liquid investments held are significantly in excess of the commitments. Neither Ocean Wilsons nor OWIL have made any commitments or have obligations towards Wilson Sons and its subsidiaries and their creditors or lenders. Therefore, in the unlikely circumstance that Wilson Sons was to encounter financial difficulty, the parent company and its investment subsidiary have no obligations to provide support and have sufficient cash and other liquid resources to continue as a going concern on a standalone basis.
Wilson Sons
Wilson Sons has adequate cash, other liquid resources and undrawn credit facilities to enable it to meet its obligations as they fall due in order to continue its operations. All of the debt, as set out in note 16, and all of the lease liabilities, as set out in note 12, 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 16, which were satisfied at 30 June 2024.
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 consolidated financial statements.
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 consolidated 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
8 August 2024
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income
(Unaudited) for the 6 months ended 30 June 2024
(Expressed in thousands of US Dollars)
|
Note |
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Sales of services |
4 |
262,363 |
229,663 |
Raw materials and consumables used |
|
(18,216) |
(17,749) |
Employee charges and benefits expense |
|
(74,961) |
(67,592) |
Other operating expenses |
|
(62,543) |
(55,190) |
Depreciation of owned assets |
11 |
(28,749) |
(27,665) |
Depreciation of right-of-use assets |
12 |
(7,427) |
(6,943) |
Amortisation of intangible assets |
13 |
(876) |
(1,047) |
Gain on disposal of property, plant and equipment |
|
29 |
1,716 |
Foreign exchange (loss)/gain on monetary items |
|
(1,224) |
678 |
Operating profit |
|
68,396 |
55,871 |
Share of results of joint ventures and associates |
10 |
103 |
6,045 |
Return on investment portfolio |
4 |
12,308 |
12,694 |
Investment portfolio management fees |
|
(1,581) |
(1,477) |
Other income |
4 |
4,944 |
3,233 |
Finance costs |
5 |
(18,512) |
(18,059) |
Profit before tax |
|
65,658 |
58,307 |
Tax expense |
6 |
(27,231) |
(10,442) |
Profit for the period |
|
38,427 |
47,865 |
|
|
|
|
Other comprehensive income: |
|
|
|
Items that will be or may be reclassified subsequently to profit or loss |
|
|
|
Exchange differences arising on translation of foreign operations |
|
(16,764) |
9,426 |
Other comprehensive (loss)/income for the period |
|
(16,764) |
9,426 |
Total comprehensive income for the period |
|
21,663 |
57,291 |
|
|
|
|
Profit for the period attributable to: |
|
|
|
Equity holders of the Company |
|
25,153 |
30,492 |
Non-controlling interests |
|
13,274 |
17,373 |
|
|
38,427 |
47,865 |
Total comprehensive income for the period attributable to: |
|
|
|
Equity holders of the Company |
|
15,704 |
35,813 |
Non-controlling interests |
|
5,959 |
21,478 |
|
|
21,663 |
57,291 |
Earnings per share: |
|
|
|
Basic and diluted |
20 |
71.1c |
86.2c |
The accompanying notes are an integral part of these interim consolidated financial statements.
Interim Consolidated Statement of Financial Position
(Unaudited) at 30 June 2024
(Expressed in thousands of US Dollars)
|
Note |
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Current assets |
|
|
|
Cash and cash equivalents |
7 |
66,183 |
69,367 |
Investment portfolio |
8 |
313,616 |
309,158 |
Recoverable taxes |
|
28,704 |
47,708 |
Trade receivables |
9 |
64,680 |
65,694 |
Other current assets |
|
19,049 |
13,281 |
Inventories |
|
17,632 |
18,171 |
|
|
509,864 |
523,379 |
Non-current assets |
|
|
|
Other receivables |
9 |
13,053 |
13,041 |
Other non-current assets |
|
3,235 |
5,792 |
Recoverable taxes |
|
23,403 |
20,680 |
Investment in joint ventures and associates |
10 |
95,657 |
96,084 |
Deferred tax assets |
|
23,075 |
22,827 |
Property, plant and equipment |
11 |
584,814 |
614,099 |
Right-of-use assets |
12 |
180,789 |
198,508 |
Other intangible assets |
13 |
12,316 |
13,858 |
Goodwill |
14 |
13,281 |
13,597 |
|
|
949,623 |
998,486 |
Total assets |
|
1,459,487 |
1,521,865 |
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
15 |
(70,978) |
(71,768) |
Bank loans |
16 |
(79,476) |
(70,856) |
Tax liabilities |
|
(9,471) |
(10,831) |
Lease liabilities |
12 |
(25,865) |
(28,783) |
|
|
(185,790) |
(182,238) |
|
|
|
|
Net current assets |
|
324,074 |
341,141 |
|
|
|
|
Non-current liabilities |
|
|
|
Bank loans |
16 |
(220,899) |
(253,345) |
Deferred tax liabilities |
|
(77,264) |
(65,596) |
Lease liabilities |
12 |
(176,608) |
(195,503) |
Provisions for legal claims |
17 |
(7,251) |
(7,322) |
Post-employment benefits |
|
(1,864) |
(2,047) |
|
|
(483,886) |
(523,813) |
Total liabilities |
|
(669,676) |
(706,051) |
|
|
|
|
Capital and reserves |
|
|
|
Share capital |
|
11,390 |
11,390 |
Retained earnings |
|
671,956 |
676,817 |
Translation reserve |
|
(96,152) |
(86,703) |
Equity attributable to equity holders of the Company |
|
587,194 |
601,504 |
Non-controlling interests |
|
202,617 |
214,310 |
Total equity |
|
789,811 |
815,814 |
The accompanying notes are an integral part of these interim consolidated financial statements.
Signed on behalf of the Board
F. Beck A. Berzins
Director Director
Interim Consolidated Statement of Changes in Equity
(Unaudited) for the 6 months ended 30 June 2024
(Expressed in thousands of US Dollars)
|
Share capital |
Retained earnings |
Translation reserve |
Attributable to equity holders of the Company |
Non-controlling interests |
Total equity |
Balance at 1 January 2023 |
11,390 |
634,910 |
(91,692) |
554,608 |
199,518 |
754,128 |
Currency translation adjustment |
- |
- |
5,320 |
5,320 |
4,106 |
9,426 |
Profit for the period |
- |
30,492 |
- |
30,492 |
17,373 |
47,865 |
Total comprehensive income for the period |
- |
30,492 |
5,320 |
35,812 |
21,479 |
57,291 |
Dividends (note 19) |
- |
(24,754) |
- |
(24,754) |
(12,394) |
(37,148) |
Equity transactions in subsidiary |
- |
(467) |
- |
(467) |
68 |
(399) |
Balance at 30 June 2023 |
11,390 |
640,181 |
(86,372) |
565,199 |
208,671 |
773,870 |
|
|
|
|
|
|
|
Balance at 1 January 2024 |
11,390 |
676,817 |
(86,703) |
601,504 |
214,310 |
815,814 |
Currency translation adjustment |
- |
- |
(9,449) |
(9,449) |
(7,315) |
(16,764) |
Profit for the period |
- |
25,153 |
- |
25,153 |
13,274 |
38,427 |
Total comprehensive income/(loss) for the period |
- |
25,153 |
(9,449) |
15,704 |
5,959 |
21,663 |
Dividends (note 19) |
- |
(30,059) |
- |
(30,059) |
(17,686) |
(47,745) |
Equity transactions in subsidiary |
- |
45 |
- |
45 |
34 |
79 |
Balance at 30 June 2024 |
11,390 |
671,956 |
(96,152) |
587,194 |
202,617 |
789,811 |
The accompanying notes are an integral part of these interim consolidated financial statements.
Translation reserve
The translation reserve arises from exchange differences on the translation of operations with a functional currency other than US Dollars.
Equity transactions in subsidiary
Wilson Sons S.A. ("Wilson Sons"), a controlled subsidiary listed on the Novo Mercado exchange, has in place a share option plan and a share buyback plan. During the period ended 30 June 2024, no share options of Wilson Sons were exercised and no shares of Wilson Sons were repurchased. During the period ended 30 June 2023, 1,680,600 share options of Wilson Sons were exercised and 1,150,500 shares of Wilson Sons were repurchased, resulting in a net increase in non-controlling interest of 0.06%.
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 2024
(Expressed in thousands of US Dollars)
|
Note |
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Operating activities |
|
|
|
Profit for the period |
|
38,427 |
47,865 |
|
|
|
|
Adjustment for: |
|
|
|
Depreciation & amortisation |
11,12,13 |
37,052 |
35,655 |
Gain on disposal of property, plant and equipment |
|
(29) |
(1,716) |
Provisions for legal claims |
17 |
896 |
(616) |
Share of results of joint ventures and associates |
10 |
(103) |
(6,045) |
Returns on investment portfolio |
8 |
(12,308) |
(12,694) |
Other income |
4 |
(4,944) |
(3,233) |
Finance costs |
5 |
18,512 |
18,059 |
Foreign exchange (loss)/gain on monetary items |
|
1,224 |
(678) |
Share based payment expense in subsidiary |
|
79 |
152 |
Tax expense |
6 |
27,231 |
10,442 |
|
|
|
|
Changes in: |
|
|
|
Inventories |
|
539 |
1,047 |
Trade and other receivables |
9 |
1,002 |
(16,693) |
Other current and non-current assets |
|
(3,211) |
(1,043) |
Trade and other payables |
15 |
10,655 |
5,188 |
|
|
|
|
Interest paid |
|
(16,284) |
(16,495) |
Taxes paid |
|
(8,240) |
(13,681) |
Net cash inflow from operating activities |
|
90,498 |
45,514 |
|
|
|
|
Investing activities |
|
|
|
Income received from financial assets |
|
3,152 |
2,049 |
Purchase of investment portfolio assets |
|
(20,346) |
(42,402) |
Proceeds on disposal of investment portfolio assets |
|
28,077 |
12,249 |
Purchase of property, plant and equipment |
11 |
(26,334) |
(31,714) |
Proceeds on disposal of property, plant and equipment |
|
122 |
1,852 |
Purchase of intangible assets |
13 |
(147) |
(290) |
Investment in joint ventures and associates |
10 |
- |
(4,986) |
Net cash outflow from investing activities |
|
(15,476) |
(63,242) |
|
|
|
|
Financing activities |
|
|
|
Dividends paid to equity holders of the Company |
19 |
(30,059) |
(24,754) |
Dividends paid to non-controlling interests in subsidiary |
|
(17,686) |
(12,394) |
Repayments of bank loans principal |
16 |
(26,043) |
(36,218) |
Payments of lease liabilities |
12 |
(5,656) |
(4,927) |
New bank loans drawn down |
16 |
13,067 |
29,024 |
Shares repurchased in subsidiary |
|
- |
(2,338) |
Issue of new shares in subsidiary under employee share option plan |
|
- |
1,787 |
Net cash outflow from financing activities |
|
(66,377) |
(49,820) |
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
8,645 |
(67,548) |
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
69,367 |
75,724 |
|
|
|
|
Effect of foreign exchange rate changes |
|
(11,829) |
6,686 |
|
|
|
|
Cash and cash equivalents at the end of the period |
|
66,183 |
14,862 |
The accompanying notes are an integral part of these interim consolidated financial statements.
Notes to the Interim Consolidated Financial Statements
(Unaudited) for the 6 months ended 30 June 2024
(Expressed in thousands of US Dollars)
1 General Information
Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") is a Bermuda investment holding company which, through its subsidiaries, operates a maritime services company in Brazil and holds a portfolio of international investments. The Company is incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991. The Company's registered office is Clarendon House, 2 Church Street, Hamilton, Bermuda. These interim consolidated financial statements comprise the Company and its subsidiaries (the "Group").
These interim consolidated financial statements were approved by the Board on 8 August 2024.
2 Material 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 Company's 31 December 2023 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 Company's 31 December 2023 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 investments segment holds a portfolio of international investments and is a Bermuda based company. The corporate segment includes the unallocated corporate costs.
|
Brazil - maritime services |
Bermuda - investments |
Corporate |
Consolidated |
Result for the period ended 30 June 2024 (unaudited) |
|
|
|
|
Sale of services |
262,363 |
- |
- |
262,363 |
Net return on investment portfolio |
- |
10,727 |
- |
10,727 |
|
|
|
|
|
Profit/(loss) before tax |
57,247 |
10,583 |
(2,172) |
65,658 |
Tax expense |
(27,231) |
- |
- |
(27,231) |
Profit/(loss) after tax |
30,016 |
10,583 |
(2,172) |
38,427 |
|
|
|
|
|
Financial position at 30 June 2024 (unaudited) |
|
|
|
|
Segment assets |
1,126,396 |
320,480 |
12,611 |
1,459,487 |
Segment liabilities |
(668,388) |
(1,232) |
(56) |
(669,676) |
|
Brazil - maritime services |
Bermuda - investments |
Corporate |
Consolidated |
Result for the period ended 30 June 2023 (unaudited) |
|
|
|
|
Sale of services |
229,663 |
- |
- |
229,663 |
Net return on investment portfolio |
- |
11,217 |
- |
11,217 |
|
|
|
|
|
Profit/(loss) before tax |
49,402 |
11,060 |
(2,155) |
58,307 |
Tax expense |
(10,442) |
- |
- |
(10,442) |
Profit/(loss) after tax |
38,960 |
11,060 |
(2,155) |
47,865 |
|
|
|
|
|
Financial position at 31 December 2023 (audited) |
|
|
|
|
Segment assets |
1,191,179 |
310,944 |
19,742 |
1,521,865 |
Segment liabilities |
(704,976) |
(779) |
(296) |
(706,051) |
4 Revenue
An analysis of the Group's revenue is as follows:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Sale of services |
262,363 |
229,663 |
Net income from investment portfolio |
119 |
746 |
Profit on disposal of investment portfolio assets |
6,390 |
1,495 |
Unrealised gain on investment portfolio assets |
5,799 |
10,453 |
Returns on investment portfolio |
12,308 |
12,694 |
Income generated by cash and cash equivalents |
2,790 |
2,058 |
Tax credits and legal deposits monetary adjustments |
1,488 |
839 |
Other income |
666 |
336 |
Other income |
4,944 |
3,233 |
Total Revenue |
279,615 |
246,780 |
All revenue for the period ended 30 June 2024 and 2023 was derived from continuing operations.
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 30 June 2024 |
Unaudited 30 June 2023 |
Harbour manoeuvres |
113,547 |
102,935 |
Special operations |
10,695 |
11,730 |
Ship agency |
6,130 |
5,230 |
Towage and ship agency services |
130,372 |
119,895 |
Container handling |
48,724 |
39,852 |
Warehousing |
24,585 |
19,194 |
Ancillary services |
14,854 |
10,263 |
Offshore support bases |
10,086 |
8,324 |
Other port terminal services |
11,432 |
7,898 |
Port terminals |
109,681 |
85,531 |
Logistics |
16,647 |
19,946 |
Shipyard |
5,663 |
3,803 |
Other services |
- |
488 |
Total Revenue from contracts with customers |
262,363 |
229,663 |
At 30 June 2024 and 2023, there were no warranties or refund obligations associated with shipyard contracts, for which performance obligation are satisfied over time.
The revenue from contracts with customers based on the timing of performance obligations can be disaggregated as follows:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
At a point in time |
256,700 |
225,860 |
Over time |
5,663 |
3,803 |
Total Revenue from contracts with customers |
262,363 |
229,663 |
Contract balance
Operational trade receivables are generally due and received within 30 days. The carrying amount of operational trade receivables at the end of the reporting period was US$64.7 million (31 December 2023: US$65.7 million). These amounts include US$19.6 million (31 December 2023: US$20.9 million) of contract assets (unbilled accounts receivables). There were no contract liabilities as of 30 June 2024 (31 December 2023: none).
5 Finance costs
Finance costs are classified as follows:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Interest on lease liabilities |
(8,716) |
(8,211) |
Interest on borrowings |
(8,266) |
(9,079) |
Exchange loss on foreign currency borrowings |
(1,026) |
(367) |
Other finance costs |
(504) |
(402) |
Finance costs |
(18,512) |
(18,059) |
6 Taxation
At the present time, no income, profit, capital or capital gain taxes are applicable to the Group's operations in Bermuda and accordingly, no expenses or provisions for such taxes have 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. The Company is currently not in scope for the Bermuda Corporate Income Tax Act of 2023, as such the exemptions provided by the Bermuda government undertaking still apply.
The reconciliation of the tax expense recognised in profit or loss is as follows:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Current tax expense |
|
|
Brazilian corporation tax |
(9,101) |
(9,962) |
Brazilian social contribution |
(4,008) |
(3,824) |
Total current tax expense |
(13,109) |
(13,786) |
Deferred tax - origination and reversal of timing differences |
|
|
Charge for the period in respect of deferred tax liabilities |
(15,340) |
(7,961) |
Credit for the period in respect of deferred tax assets |
1,218 |
11,305 |
Total deferred tax (expense)/credit |
(14,122) |
3,344 |
Total tax expense |
(27,231) |
(10,442) |
Brazilian corporation tax is calculated at 25% (2023: 25%) of the taxable profit for the period. Brazilian social contribution tax is calculated at 9% (2023: 9%) of the taxable profit for the period.
7 Cash and cash equivalents
The composition of cash and cash equivalents is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Cash and bank deposits |
24,721 |
19,799 |
Time deposits |
8,150 |
19,920 |
Fixed income investments |
33,312 |
29,648 |
Total cash and cash equivalents |
66,183 |
69,367 |
Fixed income investments include an investment fund and an exchange traded fund both privately managed within the Brazil - maritime service segment. The funds underlying investments are highly liquid and readily convertible.
8 Investment portfolio
The movement in the investment portfolio is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Opening balance - 1 January |
309,158 |
272,931 |
Additions, at cost |
20,346 |
42,674 |
Disposals, at market value |
(28,077) |
(33,545) |
Profit on disposal of investment portfolio assets |
6,390 |
9,080 |
Unrealised gain on investment portfolio assets |
5,799 |
18,018 |
Closing balance |
313,616 |
309,158 |
The investment portfolio is held in the Bermuda - investments segment and presents the Group with opportunity for return through generated income and capital appreciation. It includes investments in listed equity securities, open ended funds, limited partnerships and other private equity funds.
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 30 June 2024 |
Audited 31 December 2023 |
Within one year |
4,051 |
4,557 |
In the second to fifth year inclusive |
6,348 |
4,621 |
After five years |
37,425 |
44,585 |
Total |
47,824 |
53,763 |
9 Trade and other receivables
Trade and other receivables are classified as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Current |
|
|
Trade receivable for the sale of services |
46,823 |
46,381 |
Unbilled trade receivables |
19,616 |
20,936 |
Total gross current trade receivables |
66,439 |
67,317 |
Allowance for expected credit loss |
(1,759) |
(1,623) |
Trade receivables |
64,680 |
65,694 |
Non-current |
|
|
Receivables from related parties (note 18) |
11,664 |
11,494 |
Other receivables |
1,389 |
1,547 |
Total other receivables |
13,053 |
13,041 |
Total trade and other receivables |
77,733 |
78,735 |
The ageing of the trade receivables is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Current |
52,876 |
48,593 |
From 0 - 30 days |
8,066 |
9,313 |
From 31 - 90 days |
2,089 |
6,561 |
From 91 - 180 days |
1,530 |
954 |
More than 180 days |
1,878 |
1,896 |
Total gross trade receivables |
66,439 |
67,317 |
The movement in allowance for expected credit loss is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Opening balance - 1 January |
(1,623) |
(792) |
Increase in allowance recognised in profit or loss |
(228) |
(733) |
Exchange differences |
92 |
(98) |
Closing balance |
(1,759) |
(1,623) |
10 Joint ventures and associates
The Group holds the following significant interests in joint ventures and associates at the end of the reporting period:
|
|
Proportion of ownership |
|
|
Place of incorporation and operation |
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Joint ventures |
|
|
|
Logistics |
|
|
|
Porto Campinas, Logística e Intermodal Ltda |
Brazil |
50% |
50% |
Offshore |
|
|
|
Wilson Sons Ultratug Participações S.A. |
Brazil |
50% |
50% |
Atlantic Offshore S.A. |
Panamá |
50% |
50% |
Associates |
|
|
|
Argonáutica Engenharia e Pesquisas S.A. |
Brazil |
32.32% |
32.32% |
The financial information of the joint ventures and associates and its reconciliation to the share of result of joint ventures and associates is as follows:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Sales of services |
122,439 |
106,209 |
Operating expenses |
(78,670) |
(64,981) |
Depreciation and amortisation |
(28,522) |
(25,363) |
Foreign exchange (loss)/gain on monetary items |
(8,641) |
6,245 |
Results from operating activities |
6,606 |
22,110 |
Finance income |
374 |
725 |
Finance costs |
(6,084) |
(5,533) |
Profit before tax |
896 |
17,302 |
Tax expense |
(544) |
(5,165) |
Total profit for the period generated by joint ventures and associates |
352 |
12,137 |
|
|
|
Joint ventures reconciliation: |
|
|
Total (loss)/profit for the period |
(57) |
12,004 |
Participation |
50% |
50% |
Share of result for the period from joint ventures |
(29) |
6,002 |
Associates reconciliation: |
|
|
Total profit for the period |
409 |
133 |
Participation |
32.32% |
32.32% |
Share of result for the period for associates |
132 |
43 |
Share of result of joint ventures and associates |
103 |
6,045 |
The financial information of the joint ventures and associates and its reconciliation to the investment in joint ventures and associates is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Cash and cash equivalents |
23,197 |
19,410 |
Other current assets |
66,953 |
65,531 |
Non-current assets |
517,794 |
528,271 |
Total assets |
607,944 |
613,212 |
Trade and other payables |
(25,066) |
(32,019) |
Other current liabilities |
(60,291) |
(58,779) |
Non-current liabilities |
(318,915) |
(316,248) |
Total liabilities |
(404,272) |
(407,046) |
Total net assets of joint ventures and associates |
203,672 |
206,166 |
|
|
|
Joint ventures reconciliation: |
|
|
Total net assets |
201,770 |
204,655 |
Participation |
50% |
50% |
Group's share of net assets of joint ventures |
100,885 |
102,328 |
Associates reconciliation: |
|
|
Total net assets |
1,902 |
1,511 |
Participation |
32.32% |
32.32% |
Group's share of net assets of associates |
615 |
488 |
Adjustments for: |
|
|
Goodwill and surplus |
1,825 |
1,862 |
Cumulative elimination of profit on construction contracts |
(7,668) |
(8,594) |
Total adjustments |
(5,843) |
(6,732) |
Investment in joint ventures and associates |
95,657 |
96,084 |
The movement in investment in joint ventures and associates is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Opening balance - 1 January |
96,084 |
81,863 |
Share of result of joint ventures and associates |
103 |
6,447 |
Elimination of profit on construction contracts |
(1) |
(81) |
Share of other comprehensive income of joint ventures and associates |
(529) |
335 |
Capital increase |
- |
7,520 |
Closing balance |
95,657 |
96,084 |
Guarantees, covenants and capital commitments
Wilson Sons Ultratug Participações S.A. has loans with the Brazilian Development Bank guaranteed by a lien on the financed supply vessels and by a corporate guarantee from its participants, proportionate to their ownership. The Group's subsidiary Wilson Sons S.A. is guaranteeing US$153.6 million (31 December 2023: US$155.3 million).
Wilson Sons Ultratug Participações S.A. has a loan with Banco do Brasil guaranteed by a pledge on the financed offshore support vessels, a letter of credit issued by Banco del Estado de Chile and its long-term contracts with Petrobras. The joint venture also has to maintain a cash reserve account until full repayment of the loan agreement amounting to US$1.8 million (31 December 2023: US$1.8 million) presented as long-term investment.
On 30 June 2024 and 31 December 2023, Wilson Sons Ultratug Participações S.A. was in compliance with all of its covenants related to its loans with the Brazilian Development Bank and with Banco do Brasil.
There were no capital commitments for the joint ventures and associates as of 30 June 2024 and 31 December 2023.
11 Property, plant and equipment
Property, plant and equipment are classified as follows:
|
Land, buildings and leasehold improvements |
Floating Craft |
Vehicles, plant and equipment |
Assets under construction |
Total |
Cost |
|
|
|
|
|
At 1 January 2023 |
294,535 |
576,891 |
211,985 |
14,391 |
1,097,802 |
Additions |
12,096 |
12,547 |
16,662 |
23,831 |
65,136 |
Transfers |
(27) |
22,248 |
(1,284) |
(20,937) |
- |
Transfers from intangible assets |
25 |
- |
8 |
- |
33 |
Disposals |
(511) |
(75) |
(1,985) |
- |
(2,571) |
Exchange differences |
14,238 |
- |
13,664 |
- |
27,902 |
At 1 January 2024 |
320,356 |
611,611 |
239,050 |
17,285 |
1,188,302 |
Additions |
2,187 |
12,133 |
7,960 |
4,054 |
26,334 |
Transfers |
(1) |
10,694 |
1 |
(10,694) |
- |
Transfers from intangible assets |
190 |
- |
19 |
- |
209 |
Disposals |
(81) |
(60) |
(1,317) |
- |
(1,458) |
Exchange differences |
(26,404) |
- |
(25,362) |
- |
(51,766) |
At 30 June 2024 |
296,247 |
634,378 |
220,351 |
10,645 |
1,161,621 |
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
At 1 January 2023 |
93,168 |
288,328 |
126,677 |
- |
508,173 |
Charge for the period |
9,330 |
33,647 |
12,489 |
- |
55,466 |
Elimination on construction contracts |
- |
2 |
- |
- |
2 |
Disposals |
(406) |
(70) |
(1,850) |
- |
(2,326) |
Exchange differences |
5,008 |
- |
7,880 |
- |
12,888 |
At 1 January 2024 |
107,100 |
321,907 |
145,196 |
- |
574,203 |
Charge for the period |
4,933 |
17,704 |
6,112 |
- |
28,749 |
Elimination on construction contracts |
- |
14 |
- |
- |
14 |
Transfers |
3 |
- |
(3) |
- |
- |
Disposals |
(85) |
(59) |
(1,221) |
- |
(1,365) |
Exchange differences |
(9,697) |
- |
(15,097) |
- |
(24,794) |
At 30 June 2024 |
102,254 |
339,566 |
134,987 |
- |
576,807 |
|
|
|
|
|
|
Carrying Amount |
|
|
|
|
|
At 31 December 2023 (audited) |
213,256 |
289,704 |
93,854 |
17,285 |
614,099 |
At 30 June 2024 (unaudited) |
193,993 |
294,812 |
85,364 |
10,645 |
584,814 |
Land and buildings with a net book value of US$0.2 million (31 December 2023: US$0.2 million) and plant and equipment with a carrying amount of US$0.04 million (31 December 2023: US$0.05 million) have been given in guarantee for various legal processes.
The amount of borrowing costs capitalised in the period ending 30 June 2024 was US$0.1 million at an average interest rate of 4.8% (30 June 2023: US$0.1 million, 5.4%).
The Group has contractual commitments to suppliers for the acquisition and construction of property, plant and equipment amounting to US$5.5 million (31 December 2023: US$7.9 million).
12 Lease arrangements
Right-of-use assets
Right-of-use assets are classified as follows:
|
Operational facilities |
Floating craft |
Buildings |
Vehicles, plant and equipment |
Total |
Cost |
|
|
|
|
|
At 1 January 2023 |
195,332 |
19,602 |
3,081 |
10,132 |
228,147 |
Additions |
83 |
2,136 |
61 |
1,254 |
3,534 |
Contractual amendments |
9,146 |
10,197 |
70 |
(93) |
19,320 |
Terminated contracts |
- |
- |
(368) |
(763) |
(1,131) |
Exchange differences |
14,839 |
706 |
229 |
417 |
16,191 |
At 1 January 2024 |
219,400 |
32,641 |
3,073 |
10,947 |
266,061 |
Additions |
- |
- |
948 |
28 |
976 |
Contractual amendments |
7,418 |
4,309 |
400 |
185 |
12,312 |
Terminated contracts |
- |
- |
(3,303) |
(325) |
(3,628) |
Exchange differences |
(27,623) |
(1,261) |
2,739 |
(735) |
(26,880) |
At 30 June 2024 |
199,195 |
35,689 |
3,857 |
10,100 |
248,841 |
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
At 1 January 2023 |
27,646 |
12,035 |
1,511 |
8,256 |
49,448 |
Charge for the period |
8,973 |
5,351 |
498 |
915 |
15,737 |
Terminated contracts |
- |
- |
(326) |
(651) |
(977) |
Exchange differences |
2,300 |
492 |
198 |
355 |
3,345 |
At 1 January 2024 |
38,919 |
17,878 |
1,881 |
8,875 |
67,553 |
Charge for the period |
4,568 |
2,925 |
268 |
413 |
8,174 |
Terminated contracts |
- |
- |
(3,224) |
(269) |
(3,493) |
Exchange differences |
(5,159) |
(1,122) |
2,719 |
(620) |
(4,182) |
At 30 June 2024 |
38,328 |
19,681 |
1,644 |
8,399 |
68,052 |
|
|
|
|
|
|
Carrying Amount |
|
|
|
|
|
At 31 December 2023 (audited) |
180,481 |
14,763 |
1,192 |
2,072 |
198,508 |
At 30 June 2024 (unaudited) |
160,867 |
16,008 |
2,213 |
1,701 |
180,789 |
The reconciliation of depreciation of right-of-use assets is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Depreciation of right-of-use assets |
(8,174) |
(15,737) |
PIS and COFINS taxes |
747 |
1,432 |
Net depreciation of right-of-use assets |
(7,427) |
(14,305) |
Lease liabilities
Lease liabilities are classified as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Operational facilities |
(182,670) |
(204,424) |
Floating craft |
(15,411) |
(15,625) |
Buildings |
(2,632) |
(1,984) |
Vehicles, plant and equipment |
(1,760) |
(2,253) |
Total |
(202,473) |
(224,286) |
Total current |
(25,865) |
(28,783) |
Total non-current |
(176,608) |
(195,503) |
The movement in lease liabilities is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Opening balance - 1 January |
(224,286) |
(196,176) |
Additions |
(976) |
(3,534) |
Contracts remeasurement |
(12,312) |
(19,320) |
Termination of contracts |
135 |
154 |
Gain/(loss) on termination of contracts1 |
60 |
(2) |
Discounts |
95 |
183 |
Principal amortisation |
15,018 |
28,384 |
Interest |
(9,362) |
(18,297) |
Exchange differences |
29,155 |
(15,678) |
Closing balance |
(202,473) |
(224,286) |
1. Included in other finance costs (note 5 - finance costs)
The reconciliation of interest on lease liabilities is as follow:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Interest on lease liabilities |
(9,362) |
(18,297) |
PIS and COFINS taxes |
646 |
1,199 |
Net interest on lease liabilities |
(8,716) |
(17,098) |
The contractual undiscounted cash flows related to leases liabilities are as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Within one year |
(27,128) |
(30,196) |
In the second year |
(24,723) |
(27,100) |
In the third to fifth years inclusive |
(62,763) |
(68,652) |
After five years |
(337,862) |
(382,424) |
Total cash flows |
(452,476) |
(508,372) |
Adjustment to present value |
250,003 |
284,086 |
Total lease liabilities |
(202,473) |
(224,286) |
13 Other intangible assets
Other intangible assets are classified as follows:
|
Computer Software |
Concession- rights |
Total |
Cost |
|
|
|
At 1 January 2023 |
41,822 |
15,825 |
57,647 |
Additions |
1,132 |
- |
1,132 |
Transfers to property, plant and equipment |
(33) |
- |
(33) |
Disposals |
(41) |
- |
(41) |
Exchange differences |
735 |
462 |
1,197 |
At 1 January 2024 |
43,615 |
16,287 |
59,902 |
Additions |
147 |
- |
147 |
Transfers to property, plant and equipment |
(209) |
- |
(209) |
Disposals |
(3) |
- |
(3) |
Exchange differences |
(1,364) |
(825) |
(2,189) |
At 30 June 2024 |
42,186 |
15,462 |
57,648 |
|
|
|
|
Accumulated amortisation |
|
|
|
At 1 January 2023 |
36,781 |
6,474 |
43,255 |
Charge for the period |
1,570 |
427 |
1,997 |
Disposals |
(41) |
- |
(41) |
Exchange differences |
574 |
259 |
833 |
At 1 January 2024 |
38,884 |
7,160 |
46,044 |
Charge for the period |
663 |
213 |
876 |
Disposals |
(3) |
- |
(3) |
Exchange differences |
(1,108) |
(477) |
(1,585) |
At 30 June 2024 |
38,436 |
6,896 |
45,332 |
|
|
|
|
Carrying amount |
|
|
|
At 31 December 2023 (audited) |
4,731 |
9,127 |
13,858 |
At 30 June 2024 (unaudited) |
3,750 |
8,566 |
12,316 |
14 Goodwill
Goodwill is classified as follows:
|
Tecon Rio Grande |
Tecon Salvador |
Total |
Carrying amount |
|
|
|
At 1 January 2023 |
10,940 |
2,480 |
13,420 |
Exchange differences |
177 |
- |
177 |
At 1 January 2024 |
11,117 |
2,480 |
13,597 |
Exchange differences |
(316) |
- |
(316) |
At 30 June 2024 |
10,801 |
2,480 |
13,281 |
The goodwill associated with each cash-generating unit "CGU" (Tecon Rio Grande and Tecon Salvador) is attributed to the Brazil - maritime services segment.
15 Trade and other payables
Trade and other payables are classified as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Trade payables and accruals |
(44,048) |
(43,420) |
Payables from related parties (note 18) |
(271) |
(820) |
Deferred income |
(3,927) |
(2,084) |
Provisions for employee benefits |
(19,961) |
(25,279) |
Other payables |
(2,771) |
(165) |
Total trade and other payables |
(70,978) |
(71,768) |
16 Bank loans
The movement in bank loans is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Opening balance - 1 January |
(324,201) |
(321,891) |
Additions |
(13,067) |
(53,259) |
Principal amortisation |
26,043 |
61,148 |
Interest amortisation |
6,922 |
14,088 |
Accrued interest |
(8,325) |
(17,140) |
Exchange difference |
12,253 |
(7,147) |
Closing balance |
(300,375) |
(324,201) |
The analysis of bank loans by maturity is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Within one year |
(79,476) |
(70,856) |
In the second year |
(34,829) |
(54,121) |
In the third to fifth years (inclusive) |
(85,665) |
(91,027) |
After five years |
(100,405) |
(108,197) |
Total bank loans |
(300,375) |
(324,201) |
Guarantees and covenants
The Group has pledged assets with a carrying value of US$257.9 million (31 December 2023: US$252.9 million) to secure loans granted to the Group.
A portion of the loan agreements relies on corporate guarantees from the Group's subsidiary party to the agreement. For some agreements, the corporate guarantees are in addition to the assignment of receivables, a pledge of the respective financed tugboat or a lien over the logistics and port operations equipment financed (note 11).
At 30 June 2024 and 31 December 2023, the Group was in compliance with all covenants related to its loan agreements.
17 Provisions and contingent liabilities for 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, given many are deemed to have little substance or merit, and to 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 cases |
Total |
At 1 January 2024 |
(4,205) |
(1,476) |
(1,641) |
(7,322) |
Additional provisions |
(361) |
(1,204) |
(203) |
(1,768) |
Unused amounts reversed |
782 |
- |
79 |
861 |
Utilisation of provisions |
3 |
- |
8 |
11 |
Exchange difference |
506 |
234 |
227 |
967 |
At 30 June 2024 |
(3,275) |
(2,446) |
(1,530) |
(7,251) |
The contingent liabilities at the end of each period are as follows:
|
Labour claims |
Tax cases |
Civil cases |
Total |
At 31 December 2023 |
(7,312) |
(75,982) |
(13,536) |
(96,830) |
At 30 June 2024 |
(7,065) |
(65,997) |
(5,902) |
(78,964) |
Other non-current assets of US$2.7 million (31 December 2023: US$3.1 million) represent legal deposits required by the Brazilian legal authorities as security to contest legal actions.
18 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 30 June 2024 |
Unaudited 30 June 2023 |
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Joint ventures and associates |
|
|
|
|
Wilson Sons Ultratug Participações S.A.1 |
571 |
602 |
11,644 |
11,437 |
Argonáutica Engenharia e Pesquisas S.A.2 |
(25) |
- |
(4) |
(4) |
Porto Campinas Logística e Intermodal Ltda3 |
- |
- |
15 |
- |
Others |
|
|
|
|
Hanseatic Asset Management LBG4 |
(1,581) |
(1,477) |
(262) |
(759) |
Hansa Capital Partners LLP5 |
(32) |
(30) |
- |
- |
1. Related party loan (interest - 3.6% per year with no maturity date) and services provided by the Group.
2. Contract for the implementation of a port traffic monitoring and port traffic intelligence system.
3. Advance for future capital increase.
4. Mr William Salomon (Board Director) is chair and Mr Christopher Townsend (Board Director) is a director of Hanseatic Asset Management LBG, to which fees were paid for acting as Investment Manager of the Group's investment portfolio.
5. Mr Salomon is a senior partner of Hansa Capital Partners LLP. Office facilities charges were paid to Hansa Capital Partners LLP
Remuneration of key management personnel
The remuneration of the executives and other key management of the Group is as follows:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Short-term employee benefits |
(3,807) |
(2,459) |
Post-employment benefits |
(32) |
(35) |
Share based payment expense |
(79) |
(153) |
Total remuneration of key management |
(3,918) |
(2,647) |
19 Dividends
The following dividends were declared and paid by the Company:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
85c per share (2023: 70c per share) |
30,059 |
24,754 |
20 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
|
Unaudited 30 June 2024 |
Unaudited 30 June 2023 |
Profit for the period attributable to equity holders of the Company |
25,153 |
30,492 |
Weighted average number of ordinary shares |
35,363,040 |
35,363,040 |
Earnings per share - basic and diluted |
71.1c |
86.2c |
The Company has no dilutive or potentially dilutive ordinary shares.
21 Financial instruments
The carrying and fair value of financial instruments are as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
||
|
Carrying value |
Fair value |
Carrying value |
Fair value |
Financial assets |
|
|
|
|
Cash and cash equivalents |
66,183 |
66,183 |
69,367 |
69,367 |
Investment portfolio |
313,616 |
313,616 |
309,158 |
309,158 |
Trade and other receivables |
77,733 |
77,733 |
78,735 |
78,735 |
|
|
|
|
|
Financial liabilities |
|
|
|
|
Trade and other payables |
(70,978) |
(70,978) |
(71,768) |
(71,768) |
Bank loans |
(300,375) |
(300,106) |
(324,201) |
(323,904) |
The carrying value of cash and cash equivalents, trade and other receivables, and trade and other payable is a reasonable approximation of their fair value.
The fair value of bank loans was established as their present value determined by future cash flows and interest rates applicable to instruments of similar nature, terms and risks or at market quotations of these securities.
The fair value of the investment portfolio assets 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. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates.
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 open ended funds, 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.
The Group 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 underlying funds use a blend of methods to determine the value of their own NAV by valuing underlying investments using methodology consistent with the International Private Equity and Venture Capital Valuation Guidelines ('IPEV'). IPEV guidelines generally provides five ways to determine the fair market value of an investment: (i) binding offer on the company, (ii) transaction multiples, (iii) market multiples, (iv) net assets and (v) discounted cash flows. Such valuations are necessarily dependent upon the reasonableness of the valuations by the fund managers of the underlying investments. In the absence of contrary information, these values are relied upon.
The financial instruments recognised in the statement of financial position, by level of hierarchy, excluding financial instruments for which the carrying amount is a reasonable approximation of fair value, are as follows:
|
Level 1 |
Level 2 |
Level 3 |
Total |
30 June 2024 (unaudited) |
|
|
|
|
Investment portfolio |
37,302 |
158,692 |
117,622 |
313,616 |
Bank loans |
- |
(300,375) |
- |
(300,375) |
|
|
|
|
|
31 December 2023 (audited) |
|
|
|
|
Investment portfolio |
34,058 |
156,829 |
118,271 |
309,158 |
Bank loans |
- |
(324,201) |
- |
(324,201) |
During the period ended 30 June 2024, no financial instruments were transferred between Level 1 and Level 2 (2023: none).
The movement in Level 3 financial instruments is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Opening balance - 1 January |
118,271 |
120,366 |
Transfers from Level 3 to Level 2 |
- |
(5,266) |
Purchases of investments and drawdowns of financial commitments |
5,961 |
8,153 |
Sales of investments and repayments of capital |
(5,968) |
(8,314) |
Realised gain |
3,239 |
3,943 |
Unrealised loss |
(3,881) |
(611) |
Closing balance |
117,622 |
118,271 |
Cost |
134,159 |
130,927 |
Cumulative unrealised losses |
(16,537) |
(12,656) |
Investments in private equity funds require a long-term commitment with no certainty of return. The Group's intention is to hold Level 3 investments to maturity. In the unlikely event that the Group is required to liquidate these investments, the proceeds received may be less than the carrying value due to their illiquid nature.
The sensitivity of the Level 3 investments to changes in fair value due to illiquidity and its impact on proceeds received, while all other variables are held constant, is as follows:
|
Unaudited 30 June 2024 |
Audited 31 December 2023 |
Decrease of 5% |
(5,881) |
(5,914) |
Decrease of 10% |
(11,762) |
(11,827) |
Decrease of 20% |
(23,524) |
(23,654) |
ENQUIRIES
Company Contact
Leslie Rans, CPA
1 (441) 295 1309
Media
David Haggie
Haggie Partners LLP
020 7562 4444
Brokers
Peel Hunt
Edward Allsopp/Charles Batten
020 7418 8900
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