Company Announcements

Preliminary results for the period end 30 Jun 2024

Source: RNS
RNS Number : 7990Z
Ocean Wilsons Holdings Ltd
09 August 2024
 

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

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

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

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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