RNS Number : 3601I
Ocean Wilsons Holdings Ltd
12 August 2021
 

Interim Statement

Highlights

 

 

About Ocean Wilsons Holdings Limited

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 listed on both the London Stock Exchange and the Bermuda Stock Exchange. It has two principal subsidiaries: Wilson Sons Limited ("Wilson Sons") and Ocean Wilsons (Investments) Limited (together with the Company and their subsidiaries, the "Group").

At 30 June 2021 Ocean Wilsons holds a 57% interest in Wilson Sons which is fully consolidated in the Group accounts with a 43% non-controlling interest. Wilson Sons is one of the largest providers of maritime services in Brazil with over three thousand employees and 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 OWIL and our investment in Wilson Sons. The long-term strategy, managed by the Board, enables Wilson Sons' investments to grow and develop sustainable results with less pressure to produce short-term performance at the expense of longer-term value creation. This same view allows the Investment Manager of OWIL to make investment decisions to achieve long-term capital growth.

Chairman's Statement

The Group has delivered a strong financial performance with its returns on the investment portfolio and has demonstrated both operational and financial resilience with its direct investment in Wilson Sons. Against the backdrop of continuing  challenges and the recovery from the impacts of Covid-19 on our investments, the Board is pleased with the Investment Manager's performance and with the Management team of Wilson Sons continued focus on growth and innovation and their commitment to ensuring the welfare of our employees and on continuity of services to our customers

We continue to drive strategies that we consider will improve the current trading discount of our stock and improve market valuations of our investment in Wilson Sons to match its industry peers in Brazil. As such, in May of this year, we announced that Wilson Sons would undertake a corporate restructuring that includes the reverse merger of the Bermuda-registered Wilson Sons, into its Brazilian subsidiary, Wilson Sons Holdings Brasil (WS S/A), and the listing of its shares on the Novo Mercado, with former shareholders and holders of Wilson Sons BDRs receiving shares of WS S/A on a 1:1 basis. Since Wilson Sons' announcement of this restructuring, Wilson Sons' share price has increased 25% as at 31 July 2021

COVID-19

Wilson Sons provides port and maritime logistics services which is classified as essential activities by the Brazilian government limiting the negative effects of COVID-19 on the company's results up to this time. The company does not predict any material impact on its long-term performance as the global economy is expected to gradually recover in the coming years.

Regarding the progress of vaccination, government authorities prioritized the vaccination of port workers throughout the country. As such, we expect to have more than 90% of employees vaccinated by September 2021.

Environmental, Social and Governance Practices ("ESG")

The Group continues to evolve and seek improvements in its ESG practices. In 2021 Wilson Sons is participating in the S&P ESG Corporate Sustainability Assessment with results to be disclosed at year end.

In response to the Covid-19 pandemic, Wilson Sons has developed a detailed set of working practices and protocols to ensure (i) the health, safety and well-being of our employees, clients and other stakeholders     and (ii) the continuity of all our operations safely, in line with best practice, as well as health authority rules and guidance.

Workplace safety improvement reflects our relentless commitment to safety, with a reduction of 83% in lost-time injuries per one million man-hours worked between 2011 and the first half of 2021.

Wilson Sons continues to monitor its performance through various environmental and other social responsibility indicators with a number of actions and results disclosed in the Integrated Annual Report and the Bloomberg ESG Survey published on the company's investor relations website (wilsonsons.com.br/ir).

OWIL Report

Market backdrop

The past six months proved to be another positive one for stock markets. Risk assets generally continued their upward march with world equities rising by 12.3% in US dollar terms. Confounding many commentators who had expected 2021 to be less good for US equities given the market's bias towards technology and growth stocks, the US market continued to outperform and returned just under 15% for the first half of the year. Elsewhere, Europe returned 11.8% year-to-date and emerging markets a more modest 7.4% albeit with significant variation at the country level with China barely positive for the year (+1.8%) compared to +10% and +19.7% for Brazil and Russia respectively.

Bonds had a more difficult period with global treasuries down 4.6%, investment grade bonds down 1.7% while high yield bonds were up 2.1%. Similarly, US treasuries declined by 2.6% and emerging market bonds were down 1% in USD terms. Rounding-off the picture commodities delivered mixed returns with energy continuing its strong run (up 28.7% year-to-date) and industrial metals lagged although was positive while gold declined 6.8% in the first half of the year.

Portfolio commentary

While most economies started the period in lockdown, equity markets chose to look through this predicting a wave of activity as economies reopened and vaccination rates crept up. This was initially expressed by a swing towards more cyclical names further boosted by higher oil prices. However, towards the end of the period the uncertainty, and delay in some cases, of the reopening process gave markets the jitters leading to a move back to higher quality, growth stocks which led to strong performance for our active managers later in the period. The investment portfolio was up 9.5% in the first half of the year, whilst its benchmark, the US CPI Urban Consumers NSA + 3%, returned 5.7% over the same period. The MSCI ACWI gained 12.3% while the Bloomberg Barclays Global Treasury index fell by 4.5%.

Cumulative Portfolio Returns

 







3 Years

5 Years

Performance (Time-weighted)

YTD

p.a.

p.a.

OWIL (net)

9.0%

8.8%

9.1%

Performance Benchmark*

5.7%

5.5%

5.4%

MSCI ACWI + FM

12.3%

14.5%

14.6%

MSCI Emerging Markets

7.4%

11.3%

13.9%

*Notes:

The OWIL Performance Benchmark which came into effect on 1 January 2015 is US CPI Urban Consumers NSA +3% p.a. This has been combined with the old benchmark (USD 12 Month LIBOR +2%) for periods prior to the adoption of the new benchmark.

Investment Portfolio at 30 June 2021

 


Market Value




US$000

%

Primary Focus

Findlay Park American Fund

35,390

10.5

US Equities - Long Only

Adelphi European Select Equity Fund

18,216

5.4

Europe Equities - Long Only

BlackRock European Hedge Fund

15,887

4.7

Europe Equities - Hedge

GAM Star Fund PLC - Disruptive Growth

15,843

4.7

Technology Equities - Long Only

Egerton Long - Short Fund Limited

15,522

4.6

Europe/US Equities - Hedge

Select Equity Offshore, Ltd

13,251

3.9

US Equities - Long Only

Vulcan Value Equity Fund

13,197

3.9

US Equities - Long Only

Schroder ISF Asian Total Return Fund

10,202

3.0

Asia ex-Japan Equities - Long Only

Greenspring Global Partners VI, LP

7,987

2.4

Private Assets - US Venture Capital

Goodhart Partners: Hanjo Fund

7,924

2.4

Japan Equities - Long Only

Top 10 Holdings

153,419

45.7


NG Capital Partners II, LP

7,027

2.1

Private Assets - Latin America

NTAsian Discovery Fund

6,923

2.1

Asia ex-Japan Equities - Long Only

Pangaea II, LP

6,405

1.9

Private Assets - GEM

Hudson Bay International Fund Ltd

6,159

1.8

Market Neutral - Multi-Strategy

Pershing Square Holdings Ltd

6,055

1.8

US Equities - Long Only

Silver Lake Partners IV, LP

5,479

1.6

Private Assets - Global Technology

Impax Environmental Markets Fund

5,448

1.6

Environmental Equities - Long Only

Prince Street Opportunities Fund

5,357

1.6

Emerging Markets Equities - Long Only

Indus Japan Long Only Fund

5,345

1.6

Japan Equities - Long Only

KKR Americas XII, LP

5,326

1.6

Private Assets - North America

Top 20 Holdings

212,943

63.4


Remaining Holdings

121,300

36.1


Cash

1,670

0.5


TOTAL

335,913

100.0


Wilson Sons Report

The Wilson Sons second quarter 2021 earnings report released on 12 August 2021 is available on the Wilson Sons website: www.wilsonsons.com.br

In the report, Fernando Salek, CEO of Operations in Brazil said:

"Wilson Sons 2Q21 EBITDA of US$41.1 million increased 11.4% against 2Q20 (US$36.9 million) with strong operating results. In BRL terms EBITDA grew 9.8%.

Robust container terminal results were driven by import and transshipment volumes in 2Q21 with a growing domestic economic activity in the quarter, although the lack of availability of empty containers and logistic bottlenecks continues to be a challenge for export volumes. The Salvador terminal had an all-time record first half, handling 184,000 TEUs. The Rio Grande terminal total volumes grew 10.8% against 2Q20 with an emphasis on the largest simultaneous transshipment operation in terminal history, with 13,580 TEUs and two 300 metre long vessels.

Towage results continued solidly driven by commodity volumes with chemicals and oil performing well. Oil and gas services demand remains challenging, with oversupply for offshore supply vessels.

Despite the complications of the Covid-19 pandemic in Brazil, the company delivered robust growth in the quarter driven by the container terminals and towage volumes. Health and safety continue to be fundamental for our business in these difficult times and we are closely monitoring the evolution of the pandemic in the country."

Group Results

Revenue

Revenue increased by 8.4% compared to the first half of the prior year to US$188.9 million (2020: US$174.2 million). In Brazilian Real ("BRL") terms, revenues rose 19.1%. Revenues were up for all lines of business compared to the first half of the prior year, save for offshore support bases. Container terminals had increased import volumes and higher storage revenue with a 2.8% increase in revenues to US$69.3 million (2020: US$67.4 million). Logistics revenues increased 8.4% as airport imports increased correlating with the increases experienced at shipping ports. Towage revenues for the first half of the year were US$92.9 million, an increase of 12.9% (2020: US$82.3 million) as a result of both increased volumes and improving revenue per manoeuvre. Shipping agency and shipyard services both improved with the increased activity across the business lines. Offshore support bases continue to struggle with a market backdrop of the pressured oil and gas sectors. 

 

Operating volumes (to 30 June)

2021

2020

% Change

Container Terminals (container movements in TEU '000s)*

538.6

484.0

11.3%

Towage (number of harbour manoeuvres performed)

29,957

25,175

7.1%

Offshore Vessels (days in operation)

2,573

2,553

0.8%

*          TEUs stands for "twenty-foot equivalent units".

Operating profit

Operating profit was US$23.0 million better than the comparative period at US$50.7 million (2020: US$27.7 million). This favourable result is primarily driven by higher revenues and a stronger USD/BRL exchange rate for the period. Raw materials and consumables increased US$2.1 million over the prior period as economic activity is climbing to pre-pandemic levels. Employee costs decreased US$3.5 million over the prior period; however, these costs continue to climb quarterly as the workforce resumes activity with increased overtime costs as we continue to take measures to protect our employees during the pandemic by managing work crew scheduling. Other operating expenses increased 17.6% during the first half of the year as Wilson Sons had to rent tugs to manage demand while their own vessels were dry-docked for repairs and maintenance. Additionally, based on the performance of OWIL in the first half of the year, operating expenses include a US$1.2 million performance fee accrual. The depreciation and amortisation expense at US$25.3 million was US$0.5 million lower than the comparative period (2020: US$25.8million). Foreign currency exchange gains were US$2.3 million, a US$14.0 million improvement on the prior period loss (2020: US$11.7 million loss), 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 loss attributable to Wilson Sons for the period was US$0.8 million (2020: US$5.2 million loss)  principally due to improved foreign exchange gains and tax credits associate with previous losses.

Returns on the investment portfolio at fair value through profit and loss

The gain for the period on the investment portfolio of US$29.5 million (2020: US$13.8 million loss) comprises unrealised gains on financial assets at fair value through profit and loss of US$23.4 million (2020: US$18.3 million loss), investment income of US$1.2 million (2020: US$1.5 million) and realised profits on the disposal of financial assets at fair value through profit and loss of US$5.0 million (2020: US$3.0 million).

Finance costs

Finance costs for the period were US$3.2 million more than the comparative period at US$14.6 million (2020: US$11.4 million) which was driven by interest on bank loans and overdrafts which were US$3.2 million higher than the prior year at US$7.8 million (2020: US$4.6 million).

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 can impact the Group both positively and negatively from period to period. In the six months to 30 June 2021 the BRL depreciated 3.8% against the USD from R$5.00 at 1 January 2020 to R$5.20 at the period end. In the comparative period in 2020 the BRL depreciated 26.5% against the USD from R$4.03 to R$5.48.

The principal effects from the movement of the BRL against the USD on the income statement are:

 


2021

2020


US$ million

US$ million

Exchange gain/(loss) on monetary items1

2.3

(11.7)

Deferred tax on retranslation of fixed assets2

6.6

(21.2)

Deferred tax on exchange variance on loans3

(3.7)

19.6

Total

5.2

(13.3)

 

 

The average USD/BRL exchange rate in the period at R$5.39 was 9.6% higher (2020: R$4.92) than the comparative period in 2020. A higher average exchange rate negatively impacts BRL denominated revenues and benefits BRL denominated costs when converted into our reporting currency.

Profit/(Loss) before tax

Profit before tax increased US$68.0 million to US$66.2 million compared with prior year (2020: US$1.8 million loss) with this sharp increase mainly attributable to the improvement in operating profit of US$23.0 million and the results of improved stock market conditions as the investment portfolio produced returns of US$29.5 million. Additionally, losses from the share of results of joint ventures were US$0.8 million (2020: US$5.2 million loss) which was offset by increased finance costs of US$3.2 million at US$14.6 million (2020: US$11.4 million).

Taxation

The corporate tax rate prevailing in Brazil is 34%. The Group recorded an income tax expense for the period of US$14.4 million (2020:US$16.6 million). The principal net expenses not included in determining taxable profit in Brazil are foreign exchange losses on monetary items, share of results of joint ventures and deferred tax items. These are mainly deferred tax credits arising on the retranslation of BRL denominated fixed assets in Brazil and the deferred tax charge on the exchange losses on USD denominated borrowings.

Profit/(Loss) for the period

After deducting the profit attributable to non-controlling interests of US$12.3 million (2020: US$0.6 million loss), the profit attributable to equity holders of the Company is US$39.5 million (2020: US$17.8 million loss). The earnings per share for the period was US 111.7 cents (2020: US 50.2 cents loss per share).

Investment portfolio performance

As markets continue to improve while the global economy navigates its way through the pandemic recovery, the investment portfolio and cash under management was US$25.0 million higher at US$335.9 million as at 30 June 2021 (31 December 2020: US$310.9 million), after paying dividends of US$2.5 million to the parent company, deducting management and other fees of US$1.4 million and accruing US$1.2 million in performance fees year based on current performance.

Cash flow and debt

Net cash inflow from operating activities for the period was US$41.6 million (2020: US$68.5 million). Dividends of US$24.8 million were paid to shareholders in the period (2020: US$10.6 million) with a further US$14.9 million paid to non-controlling interests in our subsidiaries (2020: US$6.4 million). At 30 June 2021, the Group had cash and cash equivalents of US$55.6 million (31 December 2020: US$63.3 million). Group borrowings including lease liabilities at the period end were US$518.8 million (31 December 2020: US$500.6 million). New loans were raised in the period of US$8.0 million (2020: US$47.2 million) while capital repayments on existing loans in the period of US$41.1 million (2020: US$20.5 million) were made. The Group's reported borrowings do not include the Company's 50% share of our offshore vessel joint venture's debt being US$209.9 million.

Balance sheet

Equity attributable to shareholders at the balance sheet date was US$20.5 million higher at US$576.3 million compared with US$555.8 million at 31 December 2020. The main movements in equity for the half year was the profit for the period of US$39.5 million, dividends paid of US$24.8 million and a positive currency translation adjustment of US$2.7 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 2020. A detailed explanation can be found in the Report of Directors on pages 30 to 33 of the Annual Report and Financial Statements which are available on the website at www. oceanwilsons.bm.

Related party transactions

Related party transactions during the period are set out in note 19.

Going concern

The Group closely monitors and manages its liquidity risk. The Group has considerable financial resources including US$55.6 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 Chairman's statement and Investment Manager's report. The financial position, cash flows and borrowings of the Group are also set out in the Chairman's statement. Details of the Group's borrowings are set out in note 15 to the accounts. Based on the Group's cash forecasts and sensitivities run, 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

The parent company and OWIL have combined cash and cash equivalents of US$2.1 million. They have no debts but have made commitments in respect of investment subscriptions amounting to US$38.0 million, details are provided in note 18. The timing of the investment commitments may be accelerated or delayed in comparison with those indicated in note 18.

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 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 cash and cash equivalents of US$53.5 million. 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 in compliance with at 30 June 2021.

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.

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 condensed 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:

 

J F Gouvêa Vieira

Chairman

11 August 2021



 

 

 

Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income

for the six months ended 30 June 2021

 



Unaudited

Unaudited



six months to

six months to



30 June

30 June



2021

2020


Notes

US$'000

US$'000

Revenue

3

188,877

174,211

Raw materials and consumables used


(11,216)

(9,163)

Employee benefits expense

5

(53,369)

(56,868)

Depreciation and amortisation expense


(25,270)

(25,842)

Amortisation of right-of-use assets


(5,982)

(5,312)

Other operating expenses


(44,677)

(37,982)

Gain on disposal of property, plant and equipment


2

295

Foreign exchange gains/(losses) on monetary items


2,315

(11,657)

Operating profit


50,680

27,682

Share of results of joint ventures

16

(749)

(5,212)

Returns on investment portfolio at fair value through profit and loss

6

29,548

(13,761)

Other investment income


1,307

923

Finance costs

7

(14,584)

(11,413)

Profit/(loss) before tax


66,202

(1,781)

Income tax expense

8

(14,424)

(16,572)

Profit/(loss) for the period


51,778

(18,353)

Other comprehensive income: items that may be reclassified subsequently to profit and loss




Exchange differences arising on translation of foreign operations


4,804

(59,471)

Effective portion of changes in fair value of derivatives


106

(156)

Other comprehensive income/(loss) for the period


4,910

(59,627)

Total comprehensive income/(loss) for the period


56,688

(77,980)

Profit/(loss) for the period attributable to:




Equity holders of the Company


39,516

(17,766)

Non-controlling interests


12,262

(587)



51,778

(18,353)

Total comprehensive income/(loss) for the period attributable to:




Equity holders of the Company


42,284

(52,173)

Non-controlling interests


14,404

(25,807)



56,688

(77,980)

Earnings per share




Basic and diluted

10

111.7c

(50.2c)

 



 

Condensed Consolidated Interim Statement of Financial Position

as at 30 June 2021

 



Unaudited

Audited



as at

as at



30 June

31 December



2021

2020


Notes

US$'000

US$'000

Non-current assets




Goodwill


13,518

13,429

Right-of-use assets

11

192,922

149,278

Other intangible assets


16,190

16,967

Property, plant and equipment

12

579,229

579,138

Deferred tax assets


23,366

29,716

Investment in joint ventures

16

25,774

26,185

Related party loans


30,634

30,460

Recoverable taxes


6,170

11,006

Other non-current assets


4,749

4,905

Other trade receivables

14

11,278

9



903,830

861,093

Current assets




Inventories


12,658

11,764

Financial assets at fair value through profit and loss

13

334,243

347,464

Trade and other receivables

14

61,793

47,807

Recoverable taxes


27,036

22,479

Cash and cash equivalents


55,616

63,255



491,346

492,769

Total assets


1,395,176

1,353,862

Current liabilities




Trade and other payables


(52,823)

(47,298)

Tax liabilities


(878)

(114)

Lease liabilities

11

(23,725)

(18,192)

Bank overdrafts and loans

15

(44,514)

(58,672)



(121,940)

(124,276)

Net current assets


369,406

368,493

Non-current liabilities




Bank loans

15

(269,387)

(283,989)

Post-employment benefits


(1,739)

(1,641)

Deferred tax liabilities


(43,761)

(50,987)

Provisions for tax, labour and civil cases


(9,508)

(9,560)

Lease liabilities

11

(181,150)

(139,702)



(505,545)

(485,879)

Total liabilities


(627,485)

(610,155)

Net assets


767,691

743,707

Capital and reserves




Share capital


11,390

11,390

Retained earnings


621,783

603,996

Capital reserves


31,991

31,991

Translation and hedging reserve


(88,827)

(91,595)

Equity attributable to equity holders of the Company


576,337

555,782

Non-controlling interests


191,354

187,925

Total equity


767,691

743,707

 



 

Condensed Consolidated Statement of Changes in Equity

as at 30 June 2021

 





Hedging

Attributable







and

to equity

Non-


For the six months ended 30 June 2020 (unaudited)

Share

Retained

Capital

Translation

holders of

controlling

Total

capital

earnings

reserves

reserve

the Company

interests

equity


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Balance at 1 January 2020

11,390

588,160

31,991

(61,748)

569,793

216,067

785,860

Currency translation adjustment

-

-

-

(34,317)

(34,317)

(25,154)

(59,471)

Effective portion of changes in fair value of derivatives

-

-

-

(90)

(90)

(66)

(156)

Loss for the period

-

(17,766)

-

-

(17,766)

(587)

(18,353)

Total comprehensive loss for the period

-

(17,766)

-

(34,407)

(52,173)

(25,807)

(77,980)

Dividends (note 9)

-

(10,609)

-

-

(10,609)

(6,418)

(17,027)

Share options exercised in subsidiary

-

1,272

-

-

1,272

1,032

2,304

Share based expense (note 5)

-

-

-

-

-

105

105

Balance at 30 June 2020

11,390

561,057

31,991

(96,155)

508,283

184,979

693,262









For the six months ended 30 June 2021 (unaudited)








Balance at 1 January 2021

11,390

603,996

31,991

(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 9)

-

(24,754)

-

-

(24,754)

(14,948)

(39,702)

Share options exercised in subsidiary

-

3,025

-

-

3,025

3,860

6,885

Share based expense (note 5)

-

-

-

-

-

113

113

Balance at 30 June 2021

11,390

621,783

31,991

(88,827)

576,337

191,354

767,691

Share capital

The Group has one class of ordinary share which carries no right to fixed income.

Capital reserves

The capital reserves arise principally from transfers from revenue to capital reserves made in the Brazilian subsidiaries arising in the following circumstances:

(a)

profits of the Brazilian subsidiaries and Brazilian holding company which in prior periods were required by law to be transferred to capital reserves and other profits not available for distribution; and

(b)

Wilson Sons' byelaws require the company to credit an amount equal to 5% of the company's net profit to a retained earnings account to be called legal reserve until such amount equals 20% of the Wilson Sons share capital.

 

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.

Amounts in the statement of changes in equity are stated net of tax where applicable.



 

Condensed Consolidated Interim Statement of Cash Flows

for the six months ended 30 June 2021

 



Unaudited

Unaudited



six months to

six months to



30 June

30 June



2021

2020


Notes

US$'000

US$'000

Net cash inflow from operating activities

17

41,582

68,500

Investing activities




Interest received


861

945

Income received from underlying investment vehicles


1,162

1,513

Proceeds on disposal of financial assets at fair value through profit and loss

13

56,036

32,980

Proceeds on disposal of intangible assets


4

-

Proceeds on disposal of property, plant and equipment


49

156

Purchase of property, plant and equipment


(16,585)

(40,968)

Purchase of intangible asset


(405)

(502)

Purchase of financial assets at fair value through profit and loss

13

(14,429)

(13,407)

Advance for future capital increase in joint ventures

16

(9,985)

-

Net cash provided by/(used in) investing activities


16,708

(19,283)

Financing activities




Dividends paid

9

(24,754)

(10,609)

Dividends paid to non-controlling interests in subsidiary


(14,948)

(6,418)

Repayments of borrowings


(41,059)

(20,468)

Payments of lease liabilities


(4,376)

(3,240)

New bank loans drawn down


7,978

47,167

Net cash inflow arising from issue of new shares in subsidiary under employee stock option scheme


6,885

2,304

Net cash (used in)/provided by financing activities


(70,274)

8,736

Net (decrease)/increase in cash and cash equivalents


(11,984)

57,953

Cash and cash equivalents at beginning of period


63,255

68,979

Effect of foreign exchange rate changes


4,345

(26,517)

Cash and cash equivalents at end of period


55,616

100,415

 



 

Notes to Condensed Consolidated Interim Financial Information

for the six months ended 30 June 2021

1.   General Information

The condensed consolidated interim financial information is not the Company's statutory accounts. The auditors of the Company have not made any report thereon under section 90(2) of the Bermuda Companies Act.

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 listed on both the London Stock Exchange and the Bermuda Stock Exchange. It has two principal subsidiaries: Wilson Sons Limited ("Wilson Sons") and Ocean Wilsons (Investments) Limited ("OWIL") (together with the Company and their subsidiaries, the "Group").

Ocean Wilsons Holdings Limited is a company incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991. The condensed consolidated interim financial information is presented in US Dollars, the currency of the primary economic environment in which the Group operates.

2.   Accounting policies

The condensed consolidated interim financial information of the Company for the six months ended 30 June 2021 comprises the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and jointly controlled entities.

The condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") and in accordance with IAS 34 - Interim Financial Reporting. For these purposes, IFRS comprise the standards issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

The condensed consolidated interim financial information has been prepared on the basis of accounting policies consistent with those applied to the consolidated financial statements for the year ended 31 December 2020.

3.   Revenue

An analysis of the Group's revenue is as follows:


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Sales of services (note 3.1)

188,877

174,211

Income from underlying investment vehicles (note 6)

1,162

1,513

Other investment income

1,307

923


191,346

176,647

3.1  Disaggregated revenue information

The following is an analysis of the Group's revenue from sales of services for the period:

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Harbour manoeuvres

83,776

73,873

Special operations

9,156

8,433

Ship agency

4,247

4,006

Total Towage and ship agency services

97,179

86,312

Container handling

36,453

35,636

Warehousing

16,426

15,429

Ancillary services

10,622

8,960

Oil and Gas support base

3,183

4,535

Other services

5,830

7,371

Total Port terminals

72,514

71,931

Logistics

16,012

14,768

Total Logistics

16,012

14,768

Shipyard

3,172

1,200

Total Shipyard

3,172

1,200

Total

188,877

174,211

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Timing of revenue recognition



At a point of time

185,705

173,011

Over time

3,172

1,200


188,877

174,211

3.2  Contract balance

Trade receivables are generally received within 30 days of the invoice date. The carrying amount of operational trade receivables at the end of reporting period was US$49.6 million (31 December 2020: US$40.6 million). These amounts included US$12.7 million (31 December 2020: US$10.4 million) of contract assets (unbilled accounts receivables).

There were no contract liabilities as at 30 June 2021 (31 December 2020: nil).

4.   Business and geographical segments

Business segments

Ocean Wilsons Holdings Limited 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 through Wilson Sons. The investment segment holds a portfolio of international investments.

Segment information relating to these businesses is presented below:

 


Maritime





services

Investment

Unallocated

Consolidated


US$'000

US$'000

US$'000

US$'000

Result - six months to 30 June 2021 (unaudited)





Revenue

188,877

-

-

188,877

Segment result

53,459

(2,953)

(2,141)

48,365

Share of results of joint venture

(749)

-

-

(749)

Returns on investment portfolio at fair value through profit and loss

-

29,548

-

29,548

Other investment income

1,307

-

-

1,307

Finance costs

(14,584)

-

-

(14,584)

Foreign exchange gains/(losses) on monetary items

2,416

3

(104)

2,315

Profit/(loss) before tax

41,849

26,598

(2,245)

66,202

Tax

(14,424)

-

-

(14,424)

Profit/(loss) after tax

27,425

26,598

(2,245)

51,778

Other information - six months to 30 June 2021 (unaudited)





Capital additions

16,990

-

-

16,990

Depreciation and amortisation

(25,270)

-

-

(25,270)

Amortisation of right-of-use assets

(5,982)

-

-

(5,982)

Balance Sheet - as at June 30 2021 (unaudited)





Segment assets

1,054,889

335,913

4,374

1,395,176

Segment liabilities

(625,147)

(1,554)

(784)

(627,485)

Net Assets

429,742

334,359

3,590

767,691

 

 


Maritime





services

Investment

Unallocated

Consolidated


six months to

six months to

six months to

six months to


30 June

30 June

30 June

30 June


2020

2020

2020

2020


US$'000

US$'000

US$'000

US$'000

Result - six months to 30 June 2020 (unaudited)





Revenue

174,211

-

-

174,211

Segment result

41,906

(1,420)

(1,147)

39,339

Share of results of joint venture

(5,212)

-

-

(5,212)

Returns on investment portfolio at fair value through profit and loss

-

(13,761)

-

(13,761)

Other investment income

923

-

-

923

Finance costs

(11,413)

-

-

(11,413)

Foreign exchange (losses)/gains on monetary items

(11,653)

(12)

8

(11,657)

Profit/(loss) before tax

14,551

(15,193)

(1,139)

(1,781)

Tax

(16,572)

-

-

(16,572)

Loss after tax

(2,021)

(15,193)

(1,139)

(18,353)

Other information - six months to 30 June 2020 (unaudited)





Capital additions

43,173

-

-

43,173

Depreciation and amortisation

(25,842)

-

-

(25,842)

Amortisation of right-of-use assets

(5,312)

-

-

(5,312)

Balance Sheet - as at December 31 2020





Segment assets

1,039,374

310,882

3,606

1,353,862

Segment liabilities

(609,104)

(621)

(430)

(610,155)

Net Assets

430,270

310,261

3,176

743,707

Finance costs and associated liabilities have been allocated to reporting segments where interest costs arise from loans used to finance the construction of fixed assets in that segment.

Geographical Segments

The Group's operations are located in Bermuda and Brazil. The Group, through its participation in an offshore vessel joint venture in Panama, earns income in that country and in Uruguay. All the Group's sales are derived in Brazil.

The following is an analysis of the carrying amount of segment assets and additions to property, plant and equipment and intangible assets, analysed by the geographical area in which the assets are located.

 


Carrying amount of
segment assets


Additions to property, plant and
equipment and intangible assets





Unaudited

Unaudited


Unaudited

Audited


six months to

six months to


30 June

31 December


30 June

30 June


2021

2020


2021

2020


US$'000

US$'000


US$'000

US$'000

Brazil

1,054,889

994,826


16,990

43,173

Bermuda

340,287

359,036


-

 

-


1,395,176

1,353,862


16,990

43,173

5.   Employee benefits expense

 

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Aggregate remuneration comprised:



Wages and salaries

43,199

45,209

Share based expense

113

105

Social security costs

9,675

11,261

Other pension costs

382

293


53,369

56,868

6.   Returns on investment portfolio at fair value through profit and loss

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Unrealized gains/(losses) on financial assets at fair value through profit and loss

23,398

(18,301)

Income from underlying investment vehicles

1,162

1,513

Profit on disposal of financial assets at fair value through profit and loss

4,988

3,027


29,548

(13,761)

7.   Finance costs

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Interest on lease liabilities

6,790

6,839

Interest on bank overdrafts and loans

7,755

4,552

Other interest

39

22


14,584

11,413

8.   Taxation

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Current



Brazilian taxation:



Corporation tax

10,549

10,989

Social contribution

4,035

4,056

Total current tax

14,584

15,045

Deferred tax - origination and reversal of timing differences

(160)

1,527

Total taxation

14,424

16,572

Brazilian corporation tax is calculated at 25% (2020: 25%) of the assessable profit for the year.

Brazilian social contribution tax is calculated at 9% (2020: 9%) of the assessable profit for the year.

At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and accordingly, no provision for such taxes has been recorded by the Company. In the event that such taxes are levied, the Company has received an undertaking from the Bermuda Government exempting it from all such taxes until 31 March 2035. The Group is monitoring the ongoing development of the G20 initiative to implement a global minimum tax rate as it relates to its corporate structure.

9.   Dividends

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Dividend declared and paid to equity holders in the current period of 70 cents (2020: 30 cents) per share

24,754

10,609




10.  Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Earnings:



Earnings for the purposes of basic earnings per share being net profit/(loss) attributable to equity holders of the Company

39,516

(17,766)

Number of shares:



Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share

35,363,040

35,363,040

11.  Lease arrangements

11.1 Right-of-use assets

 


Operational



Vehicles, plant



facilities

Floating craft

Buildings

and equipment

Total


US$'000

US$'000

US$'000

US$'000

US$'000

Cost or valuation






At 1 January 2020

186,026

4,481

6,449

12,703

209,659

Transfers from property, plant and equipment

-

-

-

495

495

Contractual amendments

9,376

52

201

83

9,712

Additions

1,553

3,504

19

124

5,200

Exchange differences

(42,245)

(759)

(772)

(1,745)

(45,521)

Terminated contracts

-

-

(200)

(1,911)

(2,111)

At 31 December 2020

154,710

7,278

5,697

9,749

177,434

Contractual amendments

34,780

110

10

3

34,903

Additions

-

7,353

16

145

7,514

Exchange differences

8,255

797

(259)

182

8,975

Terminated contracts

-

-

(109)

(399)

(508)

At 30 June 2021

197,745

15,538

5,355

9,680

228,318

Accumulated amortisation






At 1 January 2020

8,269

2,276

1,469

8,634

20,648

Transfers from property, plant and equipment

-

-

-

471

471

Charge for the year

7,280

2,995

1,099

1,062

12,436

Exchange differences

(1,810)

(521)

(77)

(1,060)

(3,468)

Terminated contracts

-

-

(70)

(1,861)

(1,931)

At 31 December 2020

13,739

4,750

2,421

7,246

28,156

Charge for the year

3,639

2,042

503

424

6,608

Exchange differences

755

204

(218)

176

917

Terminated contracts

-

-

(62)

(223)

(285)

At 30 June 2021

18,133

6,996

2,644

7,623

35,396







Carrying Amount






At 30 June 2021 (unaudited)

179,612

8,542

2,711

2,057

192,922

At 31 December 2020 (audited)

140,971

2,528

3,276

2,503

149,278

Operational facilities

The main lease commitments included as operational facilities are described below:

Tecon Rio Grande

The Tecon Rio Grande lease was signed on 3 February 1997 for a period of 25 years renewable for a further 25 years. Tecon Rio Grande was granted the right to renew the lease as set out in the contract amendment signed on 7 March 2006 due to compliance with the contractual requirements to make additional investments in expanding the terminal by constructing a third berth and achieving the minimum annual container volume handled.

Tecon Salvador

Tecon Salvador S.A. has the right to lease and operate the container terminal and heavy cargo terminal in the Port of Salvador for 25 years renewed in 2016 for a further 25 years. The total lease term of 50 years, until March 2050, is provided in the second addendum to the rental agreement. This addendum requires the Group to make a minimum specified investment in expanding the leased terminal area.

Wilson Sons shipyard

Lease commitments mainly refer to a 60-year right to lease from June 2008 and operate an area located adjacent to our shipyard in Guarujá, São Paulo state. The initial lease of 30 years is renewable for a further period of 30 years at the option of the Group. The area has been used to expand and develop the Wilson Sons shipyard. Management's intention is to exercise the renewal option.

Brasco

The Brasco lease commitments mainly refers to a 30-year lease expiring in 2043 to operate a port area in Caju, Rio de Janeiro, with convenient access to service the Campos and Santos oil producing basins.

Logistics

Lease commitments mainly refer to the bonded terminals and distribution centres located in Santo André, São Paulo state and Suape, Pernambuco state with terms ranging between 18 and 24 years.

Floating craft

Variable chartering of vessels for maritime transport between port terminals. Payments made relating to the number of vessel trips were not included in the measurement of lease liabilities because they relate to variable payments.

Buildings

The Group has lease commitments for its Brazilian business headquarters, branches and commercial offices in several Brazilian cities.

Vehicles, plant and equipment

Rental contracts mainly for forklifts, vehicles for operational, commercial and administrative activities and other operating equipment.

11.2 Lease liabilities

 



Unaudited

Audited



30 June

31 December



2021

2020


Discount rate

US$'000

US$'000

Lease liabilities by class of asset




Operational facilities

5.17% - 9.33%

191,680

150,513

Buildings

4.41% - 12.9%

2,555

2,932

Vehicles, plant and equipment

4.87% - 12.9%

1,615

1,690

Floating craft

7.75% - 8.54%

9,025

2,759

Total


204,875

157,894

Total current


23,725

18,192

Total non-current


181,150

139,702

The breakdown of lease liabilities by maturity is as follows:

 


Unaudited

Audited


30 June

31 December


2021

2020


US$'000

US$'000

Maturity analysis - contractual undiscounted cash flows



Within one year

24,940

19,153

In the second year

22,807

17,365

In the third to fifth years inclusive

64,721

49,353

After five years

373,099

292,766

Total cash flows

485,567

378,637

Adjustment to present value

(280,692)

(220,743)

Total lease liabilities

204,875

157,894

Inflation adjustment of the lease liabilities

The table below presents the lease liabilities balance considering the projected future inflation rate in the discounted payment flows. For the purposes of this calculation, all other assumptions were maintained.

 


Unaudited

Audited


30 June

31 December


2021

2020


US$'000

US$'000

Actual flow

485,567

378,637

Embedded interest

(280,692)

(220,743)

Lease liabilities

204,875

157,894

11.3 Amounts recognised in profit and loss

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Amortisation of right-of-use assets

(6,608)

(6,486)

Amortisation of PIS and COFINS1

626

1,174

Net Amortisation of right-of-use assets

(5,982)

(5,312)

Interest on lease liabilities

(7,237)

(7,790)

Interest of PIS and COFINS

447

951

Variable lease payments not included in the measurement of lease liabilities 2,

(1,117)

(968)

Expenses relating to short-term leases

(13,325)

(8,953)

Expenses relating to low-value assets

(311)

(568)

Total

(27,525)

(22,640)

1.     The PIS (Program of Social Integration) and COFINS (Contribution for the Financing of Social Security) are federal taxes based on the turnover of companies

2.     The amounts refer to payments, which exceeded the minimum forecast volumes of Tecon Rio Grande and Tecon Salvador.

The Group is not able to estimate the future cash outflows related to variable lease payments due to operational, economic and foreign exchange uncertainties.

11.4 Amounts recognised in the statement of cash flows

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Payment of lease liability

(4,376)

(3,237)

Interest paid - lease liability

(7,237)

(7,805)

Short-term leases paid

(13,325)

(8,953)

Variable lease payments

(1,117)

(968)

Low-value leases paid

(311)

(568)

Total

(26,366)

(21,531)

12.  Property, plant and equipment

 


Land and


Vehicles, plant

Assets under



buildings

Floating Craft

and equipment

construction

Total


US$'000

US$'000

US$'000

US$'000

US$'000

Cost or valuation






At 1 January 2020

313,432

516,361

231,226

292

1,061,311

Additions

25,901

10,216

25,284

-

61,401

Transfers

148

(124)

(24)

-

-

Transfers to right-of-use assets

-

-

(495)

-

(495)

Transfers to intangible assets

-

-

(99)

-

(99)

Exchange differences

(56,443)

-

(42,819)

-

(99,262)

Disposals

(3,725)

(969)

(4,039)

-

(8,733)

At 1 January 2021

279,313

525,484

209,034

292

1,014,123

Additions

3,711

9,736

2,318

820

16,585

Transfers

(22)

-

22

-

-

Transfers to intangible assets

(1)

-

-

-

(1)

Exchange differences

6,717

-

6,572

-

13,289

Disposals

38

(114)

(552)

-

(628)

At 30 June 2021

289,756

535,106

217,394

1,112

1,043,368

Accumulated depreciation and impairment






At 1 January 2020

91,945

217,369

124,948

-

434,262

Charge for the year

6,774

29,030

11,989

-

47,793

Elimination on construction contracts

-

13

-

-

13

Transfers to right-of-use assets

-

-

(471)

-

(471)

Exchange differences

(16,691)

-

(22,764)

-

(39,455)

Disposals

(2,400)

(829)

(3,928)

-

(7,157)

At 1 January 2021

79,628

245,583

109,774

-

434,985

Charge for the period

3,957

13,382

6,557

-

23,896

Elimination on construction contracts

-

25

-

-

25

Exchange differences

2,234

-

3,580

-

5,814

Disposals

-

(113)

(468)

-

(581)

At 30 June 2021

85,819

258,877

119,443

-

464,139

Carrying Amount






At 30 June 2021 (unaudited)

203,937

276,229

97,951

1,112

579,229

At 31 December 2020 (audited)

199,685

279,901

99,260

292

579,138

The Group has pledged assets with a carrying amount of approximately US$252.5 million (31 December 2020: US$253.6 million) to secure loans granted to the Group.

There were no capitalised borrowing costs in 2021 (2020: US$3.0 million, at an average interest rate of 2.49%).

13.  Financial assets at fair value through profit and loss

 


Unaudited

Audited


six months to

31 December


30 June 2021

2020


US$'000

US$'000

Financial assets at fair value through profit and loss



At 1 January

347,464

298,839

Additions, at cost

14,429

63,723

Disposals, at market value

(56,036)

(45,154)

Increase/(decrease) in fair value of financial assets at fair value through profit and loss

23,398

(29,055)

Profit on disposal of financial assets at fair value through profit and loss

4,988

1,001

At period end

334,243

347,464

OWIL

334,243

307,874

Wilson Sons

-

39,590

Financial assets at fair value through profit and loss held at period end

334,243

347,464

Wilson Sons

The Wilson Sons investments are held and managed separately from the OWIL portfolio and consist of US Dollar denominated depository notes.

OWIL portfolio

The Group has not designated any financial assets that are not classified as trading investments as financial assets at fair value through profit and loss.

Financial assets at fair value through profit and loss above represent investments in listed equity securities, funds and unquoted equities that present the Group with opportunity for return through dividend income and capital appreciation.

Included in financial assets at fair value through profit and loss are open ended funds whose shares may not be listed on a recognised stock exchange but are redeemable for cash at the current net asset value at the option of the Group. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market prices where available. Where quoted market prices are not available, fair values are determined by third parties using various valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

14.  Trade and other receivables

 


Unaudited

Audited


30 June

31 December


2021

2020


US$'000

US$'000

Trade and other receivables



Other trade receivables

11,278

9

Total other non-current trade receivables

11,278

9

Amount receivable for the sale of services

49,973

41,152

Allowance for bad debts

(390)

(554)

Total current trade receivables

49,583

40,598

Prepayments

5,796

4,252

Insurance claim receivable

750

995

Other receivables

5,664

1,953

Total other current trade receivables

12,210

7,200

Total current trade and other receivables

61,793

47,807

 


Unaudited

Audited


30 June

31 December


2021

2020

Ageing of trade receivables

US$'000

US$'000

Current

43,504

34,561

From 0 - 30 days

4,170

4,800

From 31 - 90 days

1,033

852

From 91 - 180 days

786

197

More than 180 days

480

742

Total

49,973

41,152

Due to the Covid-19 pandemic, the Company has reviewed the variables that make up the methodology of measurement of estimated losses. There has been no increase in customer default rate due to the outbreak. Additionally, the Company created a credit committee to monitor and, if necessary, propose payment terms to those customers with credit risk.

The Board considers that the carrying amount of trade and other receivables approximates their fair value.

15.  Bank loans and overdrafts

 


Annual

Unaudited

30 June

Audited

   31 December


interest rate

2021

2020


%

US$'000

US$'000

Secured borrowings




BNDES - FMM linked to US Dollar1

2.07% to 5.00%

146,021

146,446

BNDES - Real

6.64% to 13.23%

57,087

55,177

BNDES - FMM Real1

8.59%

774

805

Total BNDES


203,882

202,428

Banco do Brasil - FMM linked to US Dollar1

2.00% - 4.00%

74,791

75,795

Bradesco - NCE - Real2

    5.08% - 5.45%

35,228

38,660

Itaú - NCE - Real2

3.38%

-

4,056

Santander - Real

6.44%

-

8,056

China Construction Bank - Real

5.65%

-

13,666

Total others


110,019

140,233

Total


313,901

342,661

 

 

The breakdown of bank overdrafts and loans by maturity is as follows:


Unaudited

30 June

Audited

   31 December


2021

2020


US$'000

US$'000

Within one year

44,514

58,672

In the second year

38,712

44,707

In the third to fifth years (inclusive)

95,464

96,250

After five years

135,211

143,032

Total

313,901

342,661

Amounts due for settlement within 12 months

44,514

58,672

Amounts due for settlement after 12 months

269,387

283,989

The analysis of borrowings by currency is as follows:

 



BRL





linked to




BRL

US Dollars

US Dollars

Total


US$'000

US$'000

US$'000

US$'000

30 June 2021 (unaudited)





Bank loans

93,090

220,811

-

313,901

Total

93,090

220,811

-

313,901

31 December 2020 (audited)





Bank loans

120,420

222,241

-

342,661

Total

120,420

222,241

-

342,661

Loan agreement for civil works

In December 2018, the subsidiary Tecon Salvador S.A. signed a US$67.9 million financing agreement with the BNDES to be used for civil works during the terminal's expansion. The civil works for this expansion were completed in October 2020.

Guarantees

Loans with the BNDES and Banco do Brasil rely on corporate guarantees from Wilson Sons de Administração e Comércio Ltda. 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.

The loan agreement for Tecon Rio Grande from Banco Santander for the purchase of equipment relies on a corporate guarantee from Wilson, Sons de Administração e Comércio Ltda.

The loan agreement for Tecon Rio Grande from Banco Itaú for the purchase of equipment relies on a corporate guarantee from Wilport Operadores Portuários Ltda.

The loan agreement for Tecon Salvador from Banco Bradesco for the purchase of equipment relies on a corporate guarantee from Wilport Operadores Portuários Ltda.

Undrawn credit facilities

At 30 June 2021, the Group had available US$14.5 million (31 December 2020: US$19.1 million) of undrawn borrowing facilities in relation to (i) the Salvador container terminal expansion and (ii) the dry-docking, maintenance and repair of tugboats. In addition, the Group has US$9.4 million in contracted financing for the future construction of tugboats.

Covenants

Wilson, Sons de Administração e Comércio Ltda. ("WSAC") as corporate guarantor has to comply with annual loan covenants for Wilson Sons Estaleiros, Brasco Logística Offshore and Saveiros Camuyrano Serviços Marítimos S/A in respect of loan agreements signed with BNDES.

Wilport Operadores Portuários Ltda. as corporate guarantor for loan agreements signed with both Bradesco for Tecon Salvador S.A and Tecon Rio Grande and BNDES for Tecon Salvador S.A has to comply with annual loan covenants including ratios of debt service coverage, net debt ratio over EBITDA and equity over total assets. For the BNDES agreements the Salvador container terminal has to comply with the debt service coverage ratio covenant.

At 30 June 2021, the Company was in compliance with all covenants in the above mentioned loan agreements.

Fair value

Management estimates the fair value of the Group's borrowings as follows:

 


Unaudited

Audited


30 June

31 December


2021

2020


US$'000

US$'000

Bank loans



BNDES

203,882

202,428

Banco do Brasil

74,791

75,795

Bradesco - NCE - Real

35,111

40,577

Itaú

-

4,060

Santander

-

8,045

   China Construction Bank

-

13,657

Total

313,784

344,562

16.  Joint ventures

The Group holds the following significant interests in joint operations and joint ventures at the end of the reporting period:

 


Place of


Proportion of ownership interest


incorporation


30 June

31 December


and operation


2021

2020

Towage





Consórcio de Rebocadores Baia de São Marcos3

Brazil


50%

50%

Logistics





Porto Campinas, Logística e Intermodal3

Brazil


50%

50%

Offshore





Wilson, Sons Ultratug Participações S.A.1

Brazil


50%

50%

Atlantic Offshore S.A.2

Panamá


50%

50%

 

 

The Group's interests in joint ventures are for accounted for on the equity basis.

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Revenue

55,389

60,025

Raw materials and consumables used

(4,272)

(3,498)

Employee benefits expense

(18,638)

(17,800)

Amortisation of right-of-use assets

(5,228)

(5,222)

Depreciation and amortisation

(19,355)

(20,529)

Other operating expenses

(9,082)

(7,652)

Gain on disposals of property, plant and equipment

1

-

(Loss)/profit from operating activities

(1,185)

5,324

Finance income

48

(359)

Interest on lease liabilities

(127)

(347)

Finance costs

(7,821)

(8,271)

Foreign exchange gains/(losses) on monetary items

4,217

(21,605)

Loss before tax

(4,868)

(25,258)

Income tax credit

3,368

14,834

Loss for the period

(1,500)

(10,424)

Participation

50%

50%

Equity result

(749)

(5,212)

 


Unaudited

Unaudited


30 June

30 June


2021

2020


US$'000

US$'000

Right-of-use assets

4,563

15,036

Property, plant and equipment

555,504

578,803

Long-term investment

2,146

2,103

Other current assets

9,955

10,871

Trade and other receivables

35,929

33,065

Cash and cash equivalents

28,848

23,341

Total assets

636,945

663,219

Bank loans

419,731

433,190

Lease liabilities

4,765

15,273

Other non-current liabilities

23,818

38,739

Trade and other payables

111,082

96,394

Equity

77,549

79,623

Total liabilities

636,945

663,219

We have not provided separate disclosure of all material joint ventures because they belong the same economic group and are managed on a unified basis. Wilson Sons holds a non-controlling interest in Wilson, Sons Ultratug Participações S.A and Atlantic Offshore S.A.

Wilson, Sons Ultratug Participações S.A is a controlling shareholder of Wilson, Sons Offshore S.A. and Magallanes Navegação Brasileira S.A, while Atlantic Offshore S.A. is a controlling shareholder of South Patagonia S.A.

Guarantees

Loan agreements of Wilson, Sons Ultratug Participações S.A. and subsidiaries with the BNDES are guaranteed by a lien on the financed supply vessels and in the majority of the contracts a corporate guarantee from both Wilson Sons Holdings Brasil Ltda. and Remolcadores Ultratug Ltda, each guaranteeing 50% of its subsidiary's debt balance with the BNDES.  As at 30 June 2021, Wilson Sons 50% share of the amounts outstanding under the loan agreements is US$171.0 million (2020: US$170.7 million).

Wilson, Sons Ultratug Participações S.A. subsidiary's loan agreement with Banco do Brasil is guaranteed by a pledge on the financed offshore support vessels. The security package also includes a standby letter of credit issued by Banco de Crédito e Inversiones - Chile for part of the debt balance, assignment of Petrobras' long-term contracts and a corporate guarantee issued by Inversiones Magallanes Ltda - Chile. A cash reserve account of US$2.1 million is required to be maintained until full repayment of the loan agreement. As at 30 June 2021, Wilson Sons 50% share of the loan amounts outstanding under the loan agreements is US$25.4 million (2020: US$25.7 million).  

The loan agreements for Atlantic Offshore from Deutsche Verkehrs-Bank "DVB" and Norddeutsche Landesbank Girozentrale Trade "Nord/LB" for the financing of the offshore support vessels is guaranteed by a pledge on the vessels, the shares of Atlantic Offshore and a corporate guarantee for half of the credit from Wilson Sons Holdings Brasil Ltda. and Remolcadores Ultratug Ltda, which is the partner in the business, guarantee the other half of the loans. As at 30 June 2021, Wilson Sons 50% share of the loan amounts outstanding under the loan agreements is US$10.2 million (2020: US$10.7 million).

Covenants

On 30 June 2021 Wilson Sons Ultratug Participações S.A.'s subsidiary was not in compliance with one of its covenants' ratios. On the assumption of a non-attainment, the joint venture's subsidiary has to be capitalized within a year in the amount necessary (US$6.0 million) to reach the required ratio. Since there was already a financial contribution through an advance for future capital increase in the first half of 2021 of US$9.985 million, management's understanding is that there is no breach of a clause or event that prompts negotiation or a waiver letter from Branco do Brasil. There are no other capital commitments for any of the joint ventures or joint operations.

Atlantic Offshore S.A. has to comply with specific financial covenants on its two loan agreements with Deutsche Verkehrs-Bank "DVB" and Norddeutsche Landesbank Girozentrale Trade "Nord/LB". At 30 June 2021 the subsidiary was in compliance with all loan agreement clauses.  

17.  Notes to the cash flow statement

 


Unaudited

Unaudited


six months to

six months to


30 June

30 June


2021

2020


US$'000

US$'000

Reconciliation from profit/(loss) before tax to net cash from operating activities



Profit/(loss) before tax

66,202

(1,781)

Share of results of joint venture

749

5,212

Returns on investment portfolio at fair value through profit and loss

(29,548)

13,761

Other investment income

(1,307)

(923)

Finance costs

14,584

11,413

Foreign exchange (gains)/losses on monetary items

(2,315)

11,657

Operating profit

48,365

39,339

Adjustments for:



Amortisation of right-of-use assets

5,982

5,312

Depreciation of property, plant and equipment

23,896

24,412

Amortisation of intangible assets

1,374

1,430

Share based payment expense

113

105

Gain on disposal of property, plant and equipment

(2)

(295)

(Increase)/decrease in provisions

(703)

25

Operating cash flows before movements in working capital

79,025

70,328

(Increase)/decrease in inventories

(894)

1,030

(Increase)/decrease in receivables

(15,521)

5,923

(Decrease)/increase in payables

5,524

(17)

(Increase)/decrease in other non-current assets

(715)

16,527

Cash generated by operations

67,419

93,791

Income taxes paid

(13,814)

(12,635)

Interest paid

(12,023)

(12,656)

Net cash from operating activities

41,582

68,500

18.  Commitments

At 30 June 2021 the Group had entered into commitment agreements with respect to trading investments. These commitments relate to capital subscription agreements entered into by OWIL. The expiry dates of the outstanding commitments may be analysed as follows:

 





Unaudited

Audited


30 June

31 December


2021

2020


US$'000

US$'000

Within one year

4,904

4,670

In the second to fifth year inclusive

3,726

5,153

After five years

29,391

35,495

Total

38,021

45,318

The expiry date is not indicative of when a commitment call may be made and could be accelerated. There may be situations when commitments may be extended by the manager of the underlying structure beyond the initial expiry date dependent upon the terms and conditions of each individual structure.

At 30 June 2021 the Group had contractual commitments to suppliers for the acquisition and construction of property, plant and equipment amounting to US$10.9 million (2020: US$1.6 million). The amount mainly refers to investments in the Salvador container terminal with some smaller amounts related to the Rio Grande container terminal and Offshore support bases

19.  Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Transactions between the group and its associates, joint ventures and other investments are disclosed below.

 



Dividends received/
Revenue from services


Amounts paid/
Cost of services



Unaudited

Unaudited


Unaudited

Unaudited



six months to

six months to


six months to

six months to



30 June

30 June


30 June

30 June



2021

2020


2021

2020



US$'000

US$'000


US$'000

US$'000

Joint ventures






1.

Allink Transportes Internacionais Limitada

-

-


(125)

(111)

3.

Consórcio de Rebocadores Baía de São Marcos

-

129


-

(6)

4.

Wilson Sons Ultratug Participações S.A.

262

263


-

-

Others






7.

Hanseatic Asset Management LBG

-

-


(1,329)

(1,343)

8.

Gouvêa Vieira Advogados

-

-


(13)

(16)

9.

Jofran Services

-

-


-

(92)

 



Amounts owed
by related parties


Amounts owed
to related parties



Unaudited

Unaudited


Unaudited

Unaudited



30 June

30 June


30 June

30 June



2021

2020


2021

2020



US$'000

US$'000


US$'000

US$'000

Joint ventures






1.

Allink Transportes Internacionais Limitada

-

1


(19)

-

2.

Consórcio de Rebocadores Barra de Coqueiros

-

45


-

-

3.

Consórcio de Rebocadores Baía de São Marcos

-

1,782


(335)

-

4.

Wilson Sons Ultratug Participações S.A.

20,639

10,215


-

-

5.

Atlantic Offshore S.A

20,167

20,167


-

-

6.

Porto Campinas, Logística e Intermodal Ltda.

13

10


-

-

Others






7.

Hanseatic Asset Management LBG

-

-


(276)

(235)

 

 

20.  Coronavirus ("Covid-19")  

Wilson Sons was deemed as an essential service with respect to its maritime logistics services by the Brazilian Government which allows it to operate with limited restrictions, as such our employees are prioritized for receiving vaccinations. Wilson Sons anticipates having 90% of its workforce vaccinated by September 2021 and a gradual return of office workers commencing in the fourth quarter of 2021. Wilson Sons does not predict any material impact on its long-term performance as the global economy and the interim results indicate signs of gradual recovery throughout the first half of 2021.

At the time of writing, the effects of Covid-19 have not caused any changes in the circumstances that could require an impairment charge to be made against any of the Group's assets.

Management will continue to review key assumptions used in determining value and carefully monitor short-term fluctuations and macroeconomic assumptions related to the impact of Covid-19.

Enquiries:

Company Contact:

Leslie Rans, CPA                      1 (441) 295 1309

Media:

David Haggie                            020 7562 4444

Haggie Partners LLP

 

Brokers:                                  

Peel Hunt                                  020 7418 8900

Sam Cann, Charles Batten

Investment Banking

 

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