Interim Statement
Interim statement
Ocean Wilsons Holdings Limited
Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") is a Bermuda based investment holding company and, through its subsidiaries, operates a maritime services company in Brazil and holds a portfolio of international investments. The Company is listed on both the Bermuda Stock Exchange and the London 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").
Wilson Sons Limited ("Wilson Sons") is an autonomous Bermuda company listed on the Sao Paulo Stock Exchange (BOVESPA) and Luxembourg Stock Exchange. Ocean Wilsons holds a 58.25% interest in Wilson Sons, which is fully consolidated in the Group accounts with a 41.75% non-controlling interest. Wilson Sons is one of the largest providers of maritime services in Brazil. Wilson Sons activities include harbour and ocean towage, container terminal operation, offshore support services, logistics, small vessel construction and ship agency. Wilson Sons has over six thousand employees.
Ocean Wilsons Investments Limited is a wholly owned Bermuda investment company. The company holds a portfolio of international investments.
Objective
Ocean Wilsons is run on a long term basis. This applies to both the investment portfolio and our investment in Wilson Sons. The long term view taken by the Board has allowed Wilson Sons to grow and develop its businesses without being pressured to produce short term results at the expense of long term value creation. The same long term view allows our investment managers to make investment decisions that create long-term capital growth.
Chairman's Statement
Introduction
The first half of 2013 produced another solid operating performance for the Group. The successful completion of the new shipyard in Guarujá in the period added much needed capacity to a growing business. Wilson Sons continues to invest in developing and expanding its businesses although at a reduced pace following completion of the Tecon Salvador expansion and Guarujá shipyard. We are confident both these projects will add significant value to the Group. The investment portfolio performance in the period was relatively flat suffering from the poor returns from Emerging Markets and our overweight exposure to this sector.
Group Results
Revenue from maritime services increased by 3% to US$306.4 million compared with US$297.1 million in the first six months of 2012, due principally to higher shipyard and towage revenue. Shipyard revenue grew 56% in the period benefitting from the new dry-dock facility opened in the fourth quarter of 2012 and the continued strong demand for new vessels from the offshore oil and gas industry. A fire at our new shipyard warehouse in May destroyed large parts of our material inventory. Some delays are expected to our vessel delivery schedule although components lost in the fire are being substituted by items already included in our supply chain for future vessel construction. There were no injuries as a result of the fire and the Group holds insurance to cover the warehouse damage and materials inventory. Towage revenues increased mainly as a result of differentiated pricing for larger ships, heavier average dead-weights and higher volumes in 2013. Revenue at our terminal business for the period was in line with 2012 with stronger warehousing income offset by lower revenue at our offshore oil & gas support base, Brasco. However Brasco revenue is recovering with second quarter revenue in 2013 28% higher than the comparative period in 2012 driven by higher waste management and tank cleaning operations. Container volumes at 425,000 TEU's (twenty foot equivalent units) were in line prior year (2012: 426,400 TEU's). Logistics revenue was down due to the reduction in the number of dedicated operations.
Operating profit for the period at US$50.4 million was US$20.3 million higher than the comparative period in 2012 (US$30.1 million) principally due to profit on the disposal of property plant, and equipment of US$9.8 million (2012: US$12,000) and a credit to the long term incentive plan accrual in the period of US$5.0 million (2012: US$3.7 million charge). After adjusting for the impact of these two items operating profit at US$35.5million was US$1.7 million higher than prior year (2012: US$33.8million). Operating margins for the period at 11.6% were in line with 2012 (11.4%).
The profit on the disposal of property, plant and equipment arises principally from the sale of surplus commercial real estate in downtown Rio de Janeiro. The credit to the long term incentive plan accrual (share based payment expense) is based on an actuarial valuation performed at each period and fluctuates depending on a number of variables, including the closing Wilson Sons Limited share price. The credit in the period is mainly due to the fall in the Wilson Sons Limited share price at period end (R$24.50) compared with the share price at 31 December 2012 of R$31.99.
Depreciation and amortisation in the period increased 4% to US$27.8 million from US$26.8 million in 2012 reflecting the investment undertaken by the Group.
Other operating expenses increased US$9.2 million to US$96.9 million from US$87.7 million due to higher tug rental costs to attend increased demand and additional service expenses from our expanded shipyard and container terminal operations.
The share of results of joint ventures is Wilson Sons' 50% share of net profit for the period from our offshore joint venture. From 1 January 2013 the joint venture is accounted for on an equity basis. Increased revenue and operating profit at the joint venture was offset by negative foreign exchange movements on deferred tax and monetary items.
Investment revenues at US$7.7 million were in line with prior period (2012: US$ 7.6 million)
Other gains of US$0.4 million (2012: US$1.8 million) arise from the Group's portfolio of trading investments and reflect the profit realized on disposal of trading investments in the period plus the movement in the fair value of trading investments at period end.
Finance costs increased US$6.2 million from US$5.1 million to US$11.3 million for the period mainly as a result of exchange losses on foreign currency borrowings of US$5.6 million (2012: US$20,000 gain).
Exchange losses on monetary items of US$12.6 million (2012: US$13.7 million) arise from the Group's foreign currency monetary items and principally reflect the depreciation of the Brazilian Real against the US dollar during the period.
Profit before tax increased by US$13.7 million from US$20.8 million to US$34.5 million due principally to the increase in operating profit.
The tax charge for the period at US$21.3 million was US$4.2 million higher than the comparative period in 2012 (US$17.1 million) due to higher current and deferred tax charges. The effective tax rate in the period of 62% is higher than the corporate tax rate prevailing in Brazil of 34% principally due to the effect of exchange movements on the translation of property plant and equipment. The Group's property plant and equipment is located in Brazil and therefore have Brazilian Real currency "BRL" based tax deductions for the deprecation of fixed assets. When the BRL depreciates against the US Dollar, the future tax deductions allowable for Brazilian tax purposes is unchanged in BRL terms but reduced when converted into our reporting currency, US Dollars. This reduction in value creates a notional deferred tax liability and generates a deferred tax charge in the income statement.
Basic earnings per share for the period were 20.8 cents (2012: 4.0 cents).
Investment portfolio performance
The trading investment portfolio and cash under management at 30 June 2013 amounted to US$233.5 million, a decrease of US$4.2 million since yearend (US$237.7 million) primarily due to a capital redemption of US$5.0 million made to the parent company, Ocean Wilson Holding Limited.
Cash flow and debt
Net cash flow from operating activities for the period at US$37.9 million was US$8.6 million lower than prior period (2012: US$46.5 million) principally due to adverse working capital movements and higher income tax paid.
Investments in capital expenditure during the period at US$36.3 million were US$25.9 million lower than 2012 (US$62.2 million). Investment was primarily on expanding our container depot in Salvador in support of Tecon Salvador and towage vessel construction. New loans of US$18.1 million (2012: US$30.7 million) were raised in the period to finance capital expenditure with capital repayments on existing loans of US$18.1 million (2012: US$11.0 million).
At 30 June 2013 the Group had US$152.7 million in cash and cash equivalents (31 December 2012: US$136.7 million). At 30 June 2013 the Group's borrowings (including obligations under finance leases) were US$364.9 million (31 December 2012: US$363.7 million). The Group's borrowings do not include US$238.4 million of debt from the Company's 50% share of borrowing in the Offshore Vessels joint venture.
Balance sheet
Net equity attributable to equity holders of the parent company decreased US$8.0 million from US$531.9 million at the beginning of the year to US$523.9 million at period end year end due principally to dividends paid of US$13.4 million and a negative currency translation adjustment of US$1.8 million less profit for the period of US$7.4 million. The currency translation adjustment arises from exchange differences on the translation of operations with a functional currency other than US Dollar. On a per share basis net equity is the equivalent of US$14.82 per share (31 December 2012: US$15.04 per share).
Net asset value
At the close of business on the 6 August 2013, the Wilson Sons share price was R$25.80, resulting in a market value for the Ocean Wilsons holding of 41,444,000 shares (58.25% of Wilson Sons) of approximately US$464.9 million which is the equivalent of US$13.15 (GBP8.59) per Ocean Wilsons Holdings Limited share.
The investment portfolio valuation at 30 June 2013 of US$233.5 million is equivalent to US$6.60 (GBP4.32) per Ocean Wilsons Holdings Limited share.
Adding together the market value of Wilsons Sons and the investment portfolio results in a net asset value per Ocean Wilsons Holdings Limited share of approximately US$19.75 (GBP12.91). The Ocean Wilsons Holdings Limited share price of GBP 9.40 at 6 August 2013 represents an implied discount of 27%.
Exchange rates
The Group reports in US Dollars "USD" and has revenue, costs, assets and liabilities in both Brazilian Real "BRL" and USD. Therefore movements in the USD/BRL exchange rate can impact the Group both positively and negatively from year to year. In the six months to 30 June 2013 the BRL depreciated 9% against the USD from R$2.04 at 1 January 2013 to R$2.22 at the period end.
The average USD/BRL exchange rate in the period was 9% higher at 2.03 (2012: 1.87). A higher average exchange rate adversely impacts BRL denominated revenues and benefits BRL denominated costs when converted into our reporting currency the USD.
The principal effects from the depreciation of the BRL against the USD on the income statement are a net exchange loss on monetary items of US$12.8 million (2012: US$13.3 million) and a US$5.6 million net exchange gain on USD loansin BRD functional currency businesses (2012: US$0.1 million gain). A currency translation adjustment loss of US$3.4 million (2012: US$7.7 million) on the translation of operations with a functional currency other than USD is included in other comprehensive income and charged to equity.
Dividend
Dividends are set in US Dollars and to date have been paid twice yearly. The Board is not declaring an interim dividend. As stated in the 2012 annual report from 2013 onwards the Directors have decided to no longer pay an interim dividend and combine the normal interim dividend payment of 4 cents a share into the final dividend for 2013.
Accounting Policies
Adoption of new standards
In the current year the Group adopted the revised IFRS 10 "Consolidated Financial Statements" and IFRS 11 "Joint Arrangements". As a result, the Group evaluated its consolidation conclusions in respect of its joint arrangements, which resulted in changes to the way joint arrangements are accounted for with the comparative similarly adjusted for the new treatment. The principal change under the new standards is that the Group´s offshore joint ventures which were previously proportionally consolidated on a line by line basis are now accounted for using the equity method of accounting with a single line item in the Income Statement and Balance Sheet to reflect the Group's 50% participation. Allink, a 50% controlled Non-Vessel Operating Common Carrier ("NVOCC") which was previously proportionally consolidated on a line by line basis is now consolidated 100% in the Consolidated Financial Statements, with the 50% non-controlling interest identified separately from the Group's equity.
Change in accounting policy
Foreign exchange gains and losses arising from the Group's foreign currency monetary items (cash, debtor, creditor balances and inventory) have previously been allocated to revenues, costs, and financial results in the income statement based on estimated ratios. To improve transparency and readability of the financial statements the Group will no longer allocate these foreign exchange gains and losses but report them in one line in the income statement, "Foreign exchange gain/(loss) on monetary items". The presentation of prior year comparatives has been restated to reflect this change. Reporting of other foreign exchange impacts relating to the currency translation account, deferred tax and loans will not change as a result of this new treatment. There is no impact on the Company's Balance Sheet or Net Profit.
The impact of the adoption of these new standards and change in accounting policy are set out in note 2 to the accounts.
Briclog
In July we were pleased to announce that, further to previous announcements, that on the 1 July 2013, through our subsidiary Brasco Logística Offshore Limitada ("Brasco"), we concluded the acquisition of Brazilian Intermodal Complex S/A ("Briclog"). The closing acquisition price was R$89.8 million (US$40.5 million) with debt of R$32.1 million (US$14.5 million) assumed on acquisition. Included as part of the acquisition is a 30-year lease to operate in a sheltered area of Guanabara Bay, Rio de Janeiro, Brazil with privileged access to the Campos and Santos oil producing basins. The original price announced on the 2 June 2011 was adjusted for movements in Briclog's balance sheet during the period between the original announcement and closing.
Brasco intends to phase investments in the expansion of Briclog by extending the existing berth a further 428m to 500m and reforming the retro-area. The civil works are expected to commence in the third quarter of 2013, with no impact on the operations of existing customers. With the acquisition and expansion of Briclog, Brasco will consolidate its position as one of the largest offshore support base operators for the Oil and Gas industry in Brazil.
In 2012, Briclog's audited net revenue totalled R$42.5 million (US$19.2 million), EBITDA of R$5.6 million (US$2.5 million) and has 137 direct employees.
Brazilian Port law
In June Brazilian President Dilma Rousseff signed into law new regulations aimed at increasing private investment in Brazilian ports and improving efficiency. The new laws introduces a number of changes to the existing regulatory regime. However it will take time to evaluate how this will impact the port terminal market.
Outlook
The new shipyard at Guarujá doubled our shipbuilding capacity and significantly enhanced our ability to maintain our joint venture offshore fleet and construct vessels for third parties. We signed a US$131 million contract to construct 3 offshore service vessels (OSVs) for Geonavegação S.A further expanding our order book. The completion of the acquisition of the Briclog offshore supply base in July offers important additional operational capacity in a growing market.
J F Gouvêa Vieira
Chairman
13 August 2013
Wilson Sons Limited
The Wilson Sons 2nd quarter 2013 Earnings Report released on the 14th August 2013 is available on the Wilson Sons Limited website: www.wilsonsons.com:
In it Cezar Baião, CEO of Operations in Brazil said:
"Brazil has so far seen a challenging 2013, with soft trade flow, persistent inflation, and weak GDP forecasts. This macroeconomic environment, together with recent US Federal reserve announcements, produced abrupt currency fluctuations, which negatively impacted our bottom-line this quarter. Despite this, Wilson Sons delivered another solid operational result.
We remain confident that our range of services provide us with diverse opportunities to meet the demand driven by trade flow and the Brazilian oil & gas industry. A good example is our Brasco business that recently announced the conclusion of the Briclog acquisition, a brown field Oil & Gas support base development with a privileged location to attend the Campos and Santos oil producing basins.
Another recent positive highlight is our shipyard business which signed a USD 131 million contract for the construction of 3 OSVs with Geonavegação S.A., ratifying our strategy to increase construction of own and third-party vessels. These actions, along with the conclusion of Tecon Salvador expansion, are consistent with Wilson Sons´ long history of growth in areas in which the Company has key competitive advantages and strategic assets".
Investment Managers Report
Hanseatic Asset Management LBG the manager of the Group's investment portfolio reports as follows:
Investment Objective
The Investment Objective is to achieve real returns through long-term capital growth, whilst emphasising preservation of capital. Investment views are expressed through an unconstrained globally diversified portfolio, without regard to short-term moves in equity markets or any benchmark allocation. An individual opportunity is considered on the contribution that the investment's expected return would make to the overall portfolio set against the potential impact of a permanent loss of capital.
Performance is measured against an absolute benchmark of one-year US Dollar LIBOR (prevailing on 1 January each year) plus 2%. This benchmark reflects the portfolio's long-term time horizon and unconstrained mandate where there is no compulsion to invest in any specific asset class or geographic region. Moreover, the Board is more concerned about absolute loss of capital rather than any short-term underperformance versus an index.
Investment Policy
The Investment Manager will seek to achieve the Investment Objective through investments in publically quoted and private (unquoted) assets across four 'sub-portfolios': public equities, private assets (predominantly private equity), market neutral funds and bonds. Cash levels will be managed to meet future commitments (e.g. to private assets), whilst maintaining an appropriate balance for opportunistic investments.
Commensurate with the long-term horizon, it is expected that the majority of investments will be concentrated in equity, across both 'public' and 'private' markets. In most cases, investments will be made either through collective funds or limited partnership vehicles, working alongside expert managers in specialised sectors or markets to access the best opportunities.
The Investment Manager maintains a global network to find the best opportunities across the four sub-portfolios worldwide. The portfolio contains a high level of investments which would not normally be readily accessible to investors without similar resources. Furthermore, a large number of holdings are closed to new investors. There is currently no gearing although the Board would, under the appropriate circumstances, be open-minded to modest levels of gearing. Likewise, the Board may, from time to time, permit the Investment Manager to opportunistically use derivative instruments (such as index hedges using call and put options) to actively protect the portfolio.
Investment Process
Manager selection is central to the successful management of the investment portfolio. Potential individual investments are considered based on their risk-adjusted expected returns in the context of the portfolio as a whole.
Initial meetings are usually a result of: (i) a 'top-down' led search for exposure to a certain geography or sector, (ii) referrals from the Investment Manager's global network or (iii) relationships from sell-side institutions and other introducers. The Investment Manager reviews numerous investment opportunities each year, favouring active specialist managers who can demonstrate an ability to add value over the longer-term, often combining a conviction-based approach, an unconstrained mandate and the willingness to take unconventional decisions (e.g. investing according to conviction and not fear of short-term under performance versus an index).
Excessive size is often an impediment to continued outperformance and the bias is therefore towards managers who are prepared to restrict their assets under management to a level deemed appropriate for the underlying opportunity set. Track records are important but transparency is an equally important consideration. Alignment of interest is essential and the Investment Manager will always seek to invest on the best possible terms. Subjective factors are also important in the decision making process - these qualitative considerations would include an assessment of the integrity, skill and motivation of a fund manager.
When the Investment Manager believes there is a potential fit, thorough due diligence is performed to verify the manager's background and identify the principal risks. The due diligence process would typically include visiting the manager in their office (in whichever country it may be located), onsite visits to prospective portfolio companies, taking multiple references and seeking a legal opinion on all relevant documentation.
All investments are reviewed on a regular basis to monitor the on-going compatibility with the portfolio, together with any 'red flags' such as signs of 'style drift', personnel changes or lack of focus. Whilst the Investment Manager is looking to cultivate long term partnerships, every potential repeat investment with an existing manager is assessed as if it were a new relationship.
Portfolio Characteristics
The portfolio has several similarities to the 'endowment model'. These similarities include an emphasis on generating real returns, a perpetual time horizon and broad diversification, whilst avoiding asset classes with low expected returns (such as government bonds in the current environment). This diversification is designed to make the portfolio less vulnerable to permanent loss of capital through inflation, adverse interest rate fluctuations and currency devaluation and to take advantage of market and business cycles. The Investment Manager believes that outsized returns can be generated from investments in illiquid asset classes (such as private equity). In comparison to public markets, the pricing of assets in private markets is less efficient and the outperformance of superior managers is more pronounced.
MARKET BACKGROUND
The first two months of the year were characterised by a relatively benign market environment, with a broadly linear appreciation of the major equity indices. This owed much to the perception of steadily improving macroeconomic conditions as well as a continuation of the more proactive approach from Japanese policy makers, which began following the election of President Abe in December 2012. The aggressive 'three arrows' programme includes provisions to double the monetary base and reach an inflation target of 2% by 2014.
Towards the end of the first quarter, investors increasingly focused on the seemingly intractable European crisis, with the bailout of Cyprus a particular cause of negative investor sentiment. As the second quarter progressed, volatility spiked, as investors reacted to comments made by Ben Bernanke in his testimony to Congress on 21 May, which implied a 'tapering' in the Federal Reserve's $85bn monthly bond purchase programme as early as September 2013. These comments prompted a sharp rise in bond yields, which in turn triggered a liquidity withdrawal from Emerging Markets and most commodity markets.
The MSCI World (Developed) Index rose 8.4% during the first half of 2013, whilst the MSCI All Country World Index rose 6.1%. Japan was the strongest performing market, with the MSCI Japan Index gaining 16.5% (34.0% in Yen terms). The S&P 500 Index rose 13.8%, reaching its highest ever level during the second quarter, whilst the NASDAQ Index rose 12.7%. The MSCI Europe ex UK Index rose 3.2%. The MSCI Emerging Markets Index was the major laggard, falling -9.6%.
The Japanese equity market continued its march higher during the first half of the year, as the expansive monetary policy initiated in 2012 began to impact on the real economy, although markets peaked in late May and then fell through to the end of June. Visibility on the potential for a return to moderate inflation triggered further falls in the Yen, which declined -13.3% to ¥99 to the Dollar, marking a decline of -24.1% since the high of ¥76 in October 2011.
Emerging Markets sold off substantially during the first half of the year, as a result of a combination of fears including a potential tightening in US monetary policy, a slowdown in Chinese economic growth and a sharp increase in Chinese inter-bank lending rates. The Ibovespa was the worst performing of the 'BRIC' markets during the period, falling -28.4%, with the RTS falling -16.5%, the CSI 300 -10.2% and the Sensex -8.3%. By contrast, Frontier Markets outperformed both Emerging and Developed Markets, with the MSCI Frontier Markets Index rising 11.1%.
Commodity markets have seen significant price falls this year with metals, both industrial and precious, the hardest hit. The gold price had its worst quarter on record, falling -22.8% during the second quarter for a -26.3% year to date decline (ending the period at $1,235/oz), while copper fell -11.1% for a -16.9% year to date decline (to $6,731/tonne). The Brent oil price fell -6.5% during the second quarter and finished -8.7% (to $102/bbl) lower than at the start of the year.
Bond markets have seen significant falls since May, when investors began to contemplate the removal of the Federal Reserve's support for fixed income markets. Emerging Market Bonds have been hit particularly hard, with the JPM EMBI (US Dollar) Index falling -8.2% year to date. The perceived safe haven of US Treasuries has also experienced rising yields, with the 10-year yield rising from 1.63% in early May to 2.49% at the end of the second quarter, while indices representing global Investment Grade and High Yield bonds have seen year to date falls of -3.6% and -0.1% respectively.
The US Dollar appreciated against all major currencies during the first half of the year (with the exception of the Renminbi). The Dollar's relative attractiveness increased as the perceived likelihood of the Federal Reserve tightening its ultra-loose monetary policies grew and there were signs of steady, if unspectacular, improvements in underlying US economic growth. The appreciation of the Dollar was particularly marked against the Yen (+14.3%), the Brazilian Real (+8.8%) and Sterling (+6.8%).
Note: All Index performance numbers are in US dollar terms, unless specifically stated in local currency terms.
Portfolio Construction
The net asset value at the end of June 2013 was $233.5m. The portfolio is comprised of four 'sub-portfolios' as detailed below:
|
Sub-Portfolio |
$m |
% NAV |
|
Global Equities |
133.7 |
57.3 |
|
Private Assets |
52.6 |
22.5 |
|
Market Neutral Funds |
19.1 |
8.1 |
|
Bonds / Other |
28.1 |
12.1 |
|
Total |
$233.5m |
100% |
1) 'Global Equities' is comprised of holdings that are sensitive to stock market movements and may take the form of long-only or long / short funds, as well as direct quoted equities. There is a strong bias towards fundamental, research-driven stock-pickers with a proven ability to produce attractive compounded returns.
2) 'Private Assets' contains fixed life investments typically with lives of approximately ten years and often structured through commitments to limited partnership vehicles that make investments in private equity, real assets (such as property and natural resources) and private debt.
These investments are driven by a 'bottom-up' analysis of the manager's value creation attributes, regardless of the prevailing economic climate. Managers dependent on financial engineering as a primary driver of returns are avoided. Moreover, it is essential that the manager provides more than capital to its portfolio companies - e.g. strong operational capabilities. Investments should be made into companies where there is a clearly defined exit route, which is not solely reliant on IPO markets.
By investing in Private Assets it is often possible to access differentiated opportunities and fast growing businesses that are not normally available through public markets. For example, many Emerging Market countries have relatively immature capital markets, which can make it difficult to access the most attractive sectors in the public markets at reasonable valuations. Furthermore, Private Assets often exhibit low correlation to public security markets and the phased drawdown of capital helps to reduce market timing risk.
· 23 commitments (totalling $98.3m) have been made as at 30 June 2013.
· $66.4m has been drawn down.
· Outstanding commitments of $41.6m (the majority of which will be drawn down over the next five years) are covered by cash and investments in market neutral funds. In addition, based on conservative estimates, distributions from the current private assets portfolio should enable this sub-portfolio to become increasingly self-funding.
· To date, cumulative distributions received total $16.7m.
3) 'Market Neutral Funds' contains generally lower volatility investments in a small number of funds that engage in a variety of trading strategies across asset classes. Each market neutral fund has a different investment mandate and it is expected that their collective performance will not be dependent on the direction of global security markets. What they have in common is a focus on generating positive absolute returns while seeking to provide downside protection in volatile markets.
In addition, Market Neutral Funds act as a backstop to cash in covering long-term capital commitments (thus helping to avoid excessive cash drag - especially in the current environment of near-zero interest rates) and other opportunistic investments. In short, the Investment Manager believes that they provide a better risk/reward allocation than other investments that are perceived to be 'lower risk' such as government bonds.
4) 'Bonds / Other' - Bonds are comprised of two constituents: (i) Investment Grade Bonds and (ii) High Yield Bonds. Returns may be generated from rising capital value and coupons as well as currency exposure.
Investment Grade Bonds (0% of NAV) would contain investments in sovereign (government) bonds as well as corporate bonds with high credit ratings (typically at least 'BBB' as defined by Standard & Poor's).
High Yield Bonds $14.9m, (6.4% of NAV) include investments in Emerging Market (sovereign and corporate debt) and other Developed Market high yield corporate debt.
'Other' is comprised of cash valued at $13.2m (5.7% of NAV).
CUMULATIVE PORTFOLIO RETURNS SINCE INCEPTION (1 November 2000)
|
Performance |
Since Inception |
|
(Time-weighted) |
|
|
Portfolio Performance |
120.7 |
|
Performance Benchmark |
64.9 |
|
MSCI World (Developed) Index |
41.5 |
30 June 2013 RETURNS
|
Performance |
YTD |
|
(Time-weighted) |
|
|
Portfolio Performance |
0.8% |
|
* Performance Benchmark |
1.4% |
|
MSCI World (Developed) Index |
8.4% |
|
MSCI All Country World Index |
6.1% |
|
MSCI Emerging Markets Index |
(9.6%) |
* Note: Performance is measured against an absolute benchmark of one-year US Dollar LIBOR (prevailing on 1 January each year) plus 2%.
Portfolio Review
The portfolio generated a time weighted return of 0.8% in the first half of 2013, compared to 1.4% for the performance benchmark.
The net asset value at 30 June 2013 was $233.5m, a reduction of $4.2m from the 31 December 2012 valuation of $237.7m. The reduction in net asset value is comprised of: (i) a $5m dividend paid in April to Ocean Wilson Holdings Ltd, (ii) expenses of $1.3m and (iii) a $2.1m positive contribution from the portfolio. See below performance breakdown of the four 'sub-portfolios' over the first six months of 2013:
|
Sub-Portfolio |
|
Valuation |
|
Weighting |
|
Performance |
|
Contribution |
|
30 June 2013 |
|
$m |
|
% |
|
% |
|
$m |
|
Global Equities |
|
133.7 |
|
57.3 |
|
1.9 |
|
2.0 |
|
Private Assets |
|
52.6 |
|
22.5 |
|
4.2 |
|
2.1 |
|
Market Neutral Funds |
|
19.1 |
|
8.1 |
|
-6.6 |
|
-1.3 |
|
Bonds / Other |
|
28.1 |
|
12.1 |
|
-2.2 |
|
-0.7 |
|
Total |
|
$233.5m |
|
100% |
|
0.8% |
|
$2.1m |
The first six months of 2013 saw marked underperformance of Emerging Markets relative to Developed Markets, as evidenced by the MSCI Emerging Markets Index declining by -9.6%. In this context, the portfolio suffered from its long-term overweight position to Emerging Markets, which together with the related sector of Metals & Mining comprised c44% of net asset value as at 30 June. The Investment Manager discusses the attractiveness of investments in Emerging Markets in the 'Market Outlook' section.
Despite the majority of the portfolio's investments in Emerging Markets outperforming the regional indices, the portfolio's significant exposure to those markets detracted from performance. However, there were still some strong performers in the region, including VinaCapital Vietnam Opportunity Fund Ltd +15.5% and NTAsian Discovery Fund +14.7%.
The strongest major equity markets thus far in 2013 have been the US and Japan. While the portfolio has had some good performances in these markets, the average weightings of 16.9% in North America and 2.4% in Japan are significantly underweight compared to the MSCI All Country World Index. However, the two biggest contributors to performance were investments in these markets: Findlay Park American Fund +13.5% and Instinct Dark Horse Fund +29.0%.
Other strong performances came from the UK and Developed Europe, where there were strong returns from long/short hedge funds such as Lansdowne Developed Markets Fund +17.4%, Egerton European Dollar Fund +13.5% and Odey Absolute Return Fund +11.1%.
The weakest sector this year has been Materials, which has lagged the rest of the market by a wide margin. The portfolio's 12.8% average exposure to Natural Resources (equities in Metals & Mining and Energy) has therefore been a negative contributor. In particular, BlackRock World Mining Trust Plc -29.9% and BlackRock Mining Opportunities Fund -35.4% were hit hard over the six month period.
In aggregate, holdings in Market Neutral Funds, particularly the macro hedge funds, performed poorly over the period. This was due, at least in part, to rising correlations across asset classes following the Federal Reserve's comments regarding the potential 'tapering' of its quantitative easing programme. The Investment Manager notes the generally strong performance of the underlying managers in the weaker market environments of 2008 and 2011 and continues to believe that the holdings in this sub-portfolio offer a better risk/reward allocation than other investments perceived to be 'lower risk' such as government bonds.
The top five contributors to the overall portfolio performance were:
|
Top Five Contributors (in USD) |
Contribution |
Performance |
|
Gain |
|
|
% |
%/X |
|
$m |
|
Findlay Park American Fund |
0.7 |
13.5% |
1.8 |
|
|
Instinct Dark Horse Fund |
0.6 |
29.0% |
1.5 |
|
|
Egerton European Dollar Fund |
0.5 |
13.5% |
1.4 |
|
|
Lansdowne Developed Markets Fund |
0.5 |
17.4% |
1.3 |
|
|
African Development Partners I, LLC *(i) |
0.5 |
1.4x |
1.3 |
|
|
Total |
2.8 |
|
|
7.3 |
*Note:
(i) Performance for Private Assets Investments is measured as a multiple (since inception of the investment, not the period) based on the following equation: Cash Multiple = (Profit / Loss + Drawn Capital) / Drawn Capital where Profit / Loss = (Investment Value + Distributions) - (Initial Costs + Taxes).
Private Assets (22.5% of net asset value - assuming current portfolio valuation, this would rise to 40.3% on a fully drawn basis) - overall, the underlying limited partnerships are showing increasing visibility on their potential for value creation and the Investment Manager remains confident that the significant capital deployed into post-crisis vintages represent an attractive store of future value. During the first half of 2012, distributions received and drawdowns paid out were almost exactly matched at $4.5m.
PORTFOLIO ACTIVITY - for the Half Year ended 30 June 2013
During the first half of 2013, there were total purchases of $14.3m and total sales of $19.0m.
Purchases
|
New Positions |
|
$m |
|
BlackRock European Hedge Fund |
|
5.0 |
|
Odey Absolute Return Fund |
|
5.0 |
|
Additions to Existing Investments |
|
|
|
Prusik Asian Smaller Companies Fund |
|
2.0 |
|
Phaunos Timber Fund |
|
1.8 |
|
Prince Street Opportunities Fund |
|
0.5 |
|
Total |
|
14.3 |
Odey Absolute Return Fund - is a Developed Market long / short equities hedge fund.
BlackRock European Hedge Fund - is a European (including UK) long / short equities hedge fund.
Sales
There were sales totalling $19.0m during the first half of 2013.
Private Assets - Commitments
There were three new commitments made in the first half of 2013, totalling $13.2m.
|
New Commitments |
$m |
|
Navegar I, LP |
5.0 |
|
NG Capital Partners II, LP |
5.0 |
|
Silver Lake Partners IV, LP |
3.2 |
|
Total |
13.2 |
Navegar I, LP will make minority growth capital investments in private companies operating in the Philippines. The country has seen considerable economic and political progress, which provides a solid backdrop for investment in the Philippines. The young population is a central driver to the country's projected multi-year growth and offers a powerful tailwind for local consumer businesses.
NG Capital Partners II, LP will make control investments in private companies operating in Peru. In many respects, Peru is a catch-up story as it traces the economic path of Chile. The investment case is supported by a strong Peruvian economy, which remains at an early stage of its development. In particular, businesses engaged in the provision of goods and services to the emerging consumer are expected to exhibit strong growth.
Silver Lake Partners IV, LP will invest globally in businesses operating in the technology, technology-enabled and technology-related sectors. The manager will take both minority and control positions. Typical investments will be in large market leading companies with strong growth characteristics.
|
INVESTMENT PORTFOLIO |
Market Value |
% of |
|
|
|
30 June 2013 |
$000 |
NAV |
Primary Focus |
|
|
Findlay Park American Fund |
14,952 |
6.4 |
US equities - long-only |
|
|
Egerton European Dollar Fund |
11,721 |
5.0 |
Europe / US equities - hedged |
|
|
Lansdowne Developed Markets Fund |
8,750 |
3.8 |
Europe / US equities - hedged |
|
|
Oaktree CM Value Opportunities Fund |
8,711 |
3.7 |
US high yield corporate debt - hedged |
|
|
AR New Asia Fund |
8,014 |
3.4 |
Asia ex-Japan equities - long-only |
|
|
NTAsian Discovery Fund |
7,618 |
3.3 |
Asia ex-Japan equities - long-only |
|
|
BlueCrest AllBlue Leveraged Feeder |
7,528 |
3.2 |
Market Neutral - multi-strategy |
|
|
BlackRock UK Emerging Companies HF |
7,246 |
3.1 |
UK equities - hedged |
|
|
Instinct Dark Horse Fund |
6,800 |
2.9 |
Japan equities - hedged |
|
|
Schroder ISF Asian Total Return Fund |
6,387 |
2.7 |
Asia ex-Japan equities - long-only |
|
|
Top 10 Holdings |
87,727 |
37.5 |
|
|
|
BlueBay Macro Fund |
6,371 |
2.7 |
Market Neutral - EM-biased macro |
|
|
Artemis Global Energy Fund |
6,355 |
2.7 |
Energy equities - long-only |
|
|
Prosperity Quest Fund |
5,931 |
2.5 |
Russian equities - long-only |
|
|
Odey Absolute Return Fund |
5,538 |
2.4 |
Europe / US equities - hedged |
|
|
African Development Partners I, LLC |
5,354 |
2.3 |
Private Assets - Africa |
|
|
BlackRock European Hedge Fund |
5,256 |
2.3 |
Europe equities - hedged |
|
|
QFR Victoria Fund |
5,183 |
2.2 |
Market Neutral - EM-biased macro |
|
|
China Harvest Fund II, LP |
5,055 |
2.2 |
Private Assets - China |
|
|
Prusik Asian Smaller Companies Fund |
4,998 |
2.1 |
Asia ex-Japan equities - long-only |
|
|
BlueBay EM Corporate Alpha Fund |
4,782 |
2.1 |
EM high yield corporate debt - hedged |
|
|
Top 20 Holdings |
142,550 |
61.0 |
|
|
|
CCI Technology Partners II |
4,775 |
2.0 |
Technology equities - hedged |
|
|
Prince Street Opportunities Fund |
4,715 |
2.0 |
Emerging Markets equities - long-only |
|
|
Greenspring Global Partners IV, LP |
4,498 |
1.9 |
Private Assets - US Venture Capital |
|
|
R/C Global Energy & Power Fund IV, LP |
3,969 |
1.7 |
Private Assets - Energy |
|
|
Schroder ISF Global Energy Fund |
3,905 |
1.7 |
Energy equities - long-only |
|
|
L Capital Asia, LP |
3,527 |
1.5 |
Private Assets - Asia (Consumer) |
|
|
Oaktree Principal Fund V, LP |
3,521 |
1.5 |
Private Assets - US distressed debt |
|
|
Phaunos Timber Fund |
3,135 |
1.3 |
Timber - long-only |
|
|
NYLIM Jacob Ballas India III, LLC |
3,107 |
1.3 |
Private Assets - India |
|
|
Avigo SME Fund III, LLC |
3,059 |
1.3 |
Private Assets - India |
|
|
Top 30 Holdings |
180,761 |
77.2 |
|
|
|
|
|
|
|
|
|
26 remaining holdings |
39,571 |
17.1 |
|
|
|
|
|
|
|
|
|
Cash |
13,215 |
5.7 |
|
|
|
|
|
|
|
|
|
Total |
233,548 |
100.0 |
|
|
MARKET OUTLOOK
Following a period of strength for risk assets in 2012, which continued into 2013, investors enter the second half of the year on the back of renewed volatility. Investors have been fearful that the US Federal Reserve's potential 'tapering' of its quantitative easing programme, albeit subject to sufficient improvement in economic data, marks the beginning of the end of its ultra-accommodative monetary policy. However, given that the global trade recovery remains in its infancy and inflation continues to track below the target rates of most major Central Banks, while heavily-indebted Developed Market governments cannot afford elevated borrowing costs, it is unlikely that incremental tightening will be undertaken at a time when deflationary pressures remain. Currently, it is expected that the Fed's balance sheet will continue to expand as a percentage of US GDP until at least the middle of 2014.
The improving outlook for the US consumer is underpinning the early stages of a global economic recovery. Activity in US housing remains in an acceleration phase, household net worth has reached new highs and unemployment, whilst still elevated at 7.6%, is hovering around its lowest level in four years. US economic output now exceeds its pre-crisis peak, whilst the on-going 're-shoring' of manufacturing is indicative of an increasingly competitive domestic labour market. Moreover, there are positive structural factors at play such as technological developments which are enabling the extraction of the country's vast endowment of oil and gas held in shale formations. Talk of energy independence may be premature but it is clear that the US is experiencing a rare positive shock for a mature economy. In short, after a lost decade for US equities following the dot-com bubble, the US economy appears to be well-placed to resume its protagonist role over the medium-term, providing a supportive backdrop for the uptrend in the Dollar.
Meanwhile, Europe remains in the doldrums and is well behind the US both in terms of addressing its banking crisis and in its broader path to recovery. The region remains a major source of global deflationary pressures with half of the 17 Eurozone members officially in recession, including three of the four largest member economies: France, Italy and Spain. Growth is stubbornly low and there are no short-term fixes available to counter the vicious circle of low growth and high debt. Double-digit unemployment remains a dominant feature in the 'PIIGS' with extraordinarily high levels in the younger segment of the workforce. Austerity fatigue is creating political pressure to repeat the mistakes of the past and in France, the region's second largest economy, President Hollande appears to lack the political courage to take the unpopular decisions necessary to address deep structural flaws. Germany remains crucial to the viability of the trading bloc and the country's federal elections in September will test the public's support of Chancellor Merkel's crisis management efforts towards the bailout countries. Whilst there is relative valuation support for European equities, a prolonged recession remains a serious threat and there is little visibility on any meaningful political measures to address the widespread lack of competitiveness.
Elsewhere in Developed Markets, policy support in Japan has provided a significant tailwind for the world's third largest economy. The backdrop for Japanese equities is attractive, although the hedging of currency exposure remains an important consideration, as the material depreciation of the Yen since the fourth quarter of 2012 may have further to run. Structural reform remains the greatest obstacle for the debt-ridden Japanese government whose country suffers from a large number of embedded problems such as restrictive labour laws (where immigrants comprise less than 2% of the labour pool), a declining population and government debt more than twice the level of GDP. Many investors are scarred by previous experiences in Japan and while they have shown their initial appreciation for the greater sense of urgency, the journey out of deflation will inevitably face multiple challenges and unknown consequences.
Equities in Emerging Markets, especially those of the major 'BRIC' economies, have performed poorly in 2013. Following a decade of dramatic wealth transfer from West to East, many emerging economies are facing growing pains such as a pick-up in inflationary pressures. Recent social unrest in countries such as Brazil, Turkey and Egypt has exacerbated the already weak sentiment. A major source of investor concern has been policy risk emanating from China, as the new government attempts to rein in the shadow banking system and rebalance the economy towards domestic consumption. Addressing the dominance of an uncompetitive State Owned Enterprises sector and other excesses will take time. Chinese equity markets are discounting an extended period of economic weakness with no further stimulus. In spite of this, Chinese GDP growth is forecast to exceed 7% in 2013 and beyond, an enviable level in comparison to all other major economies.
For investors in Emerging Markets, the combination of valuation support and low expectations offers an appealing entry point for contrarians. Going forwards, it is clear that the one way bet is behind us and investors will most likely be rewarded for showing greater discretion outside of the largest emerging economies. For example, there are powerful early stage domestic consumption stories in the 'ASEAN' region (South East Asian trading bloc which includes Indonesia, Philippines, Thailand and Vietnam), Latin America ex-Brazil (especially Mexico, Colombia and Peru) and select African countries. Likewise, a divergence in performance is expected between commodity consuming countries and commodity producing countries as the latter will likely lag until the global economic recovery takes a significant hold. Finally, it is worth restating that Emerging Markets account for only c13% of the MSCI All Country World Index, yet represent more than half of global GDP and approximately three-quarters of global GDP growth.
In summary, global growth is showing tentative signs of stabilisation and it is expected that policy makers will continue to support ultra-low interest rates. The recent uplift in yields will likely prove to be one in a series of small rises over time, as the global economic recovery gradually strengthens. For long-term investors, there is a compelling relative valuation argument for equities over government bonds, with the latter offering minimal upside for potentially high levels of risk. Given the cautious optimism on the improving state of the global economy, the Investment Manager believes that the more cyclical sectors have strong catch-up potential versus their more defensive peers, many of which are trading on premium valuations. At the current juncture, Emerging Markets appear oversold and it will be interesting to observe how policy makers in those countries, which enjoy generally strong financial health and considerable scope for orthodox monetary easing, react to generally softer growth environments.
Ultimately, there are three solutions for the overly indebted advanced economies: inflation, reform and default. However, what remains unknown is the eventual mix. Despite multiple uncertainties, dislocations provide opportunities for patient investors and the Investment Manager remains confident that the portfolio is well-positioned to benefit over the longer-term.
Hanseatic Asset Management LBG August 2013
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2013
|
|
|
Unaudited six months to |
Unaudited six months to |
|
|
|
30June |
30 June |
|
|
|
2013 |
2012 |
|
|
Notes |
US$'000 |
(Restated) US$'000 |
|
Revenue |
3 |
306,414 |
297,121 |
|
Raw materials and consumables used |
|
(35,877) |
(32,971) |
|
Employee benefits expense |
5 |
(105,321) |
(119,513) |
|
Depreciation & amortisation expense |
4 |
(27,814) |
(26,790) |
|
Other operating expenses |
|
(96,859) |
(87,739) |
|
Profit on disposal of property, plant and equipment |
|
9,812 |
12 |
|
Operating profit |
|
50,355 |
30,120 |
|
Share of results of joint ventures |
|
(45) |
263 |
|
Investment revenue |
6 |
7,720 |
7,558 |
|
Other gains and losses |
7 |
361 |
1,763 |
|
Finance costs |
8 |
(11,315) |
(5,088) |
|
Foreign exchange losses on monetary items |
|
(12,559) |
(13,814) |
|
Profit before tax |
|
34,517 |
20,802 |
|
Income tax expense |
9 |
(21,266) |
(17,070) |
|
Profit for the year |
|
13,251 |
3,732 |
|
Other comprehensive income: : items that may be reclassified subsequently to profit and loss |
|
|
|
|
Exchange differences arising on translation of foreign operations |
|
(3,420) |
(7,665) |
|
Other comprehensive loss for the period |
|
(3,420) |
(7,665) |
|
Total comprehensive income/(loss) for the period |
|
9,831 |
(3,933) |
|
Profit for the period attributable to: |
|
|
|
|
Equity holders of parent |
|
7,368 |
1,424 |
|
Non-controlling interests |
|
5,883 |
2,308 |
|
|
|
13,251 |
3,732 |
|
Total comprehensive income / (loss) for the period attributable to: |
|
|
|
|
Equity holders of parent |
|
5,583 |
(2,902) |
|
Non-controlling interests |
|
4,248 |
(1,031) |
|
|
|
9,831 |
(3,933) |
|
Earnings / (loss) per share |
|
|
|
|
Basic and diluted |
11 |
20.8c |
4.0c |
Consolidated Balance Sheet
as at 30 June 2013
|
|
|
Unaudited as at |
Unaudited as at |
|
|
|
30 June |
31 December |
|
|
|
2013 |
2012 |
|
|
|
|
(Restated) |
|
|
Notes |
US$'000 |
US$'000 |
|
Non-current assets |
|
|
|
|
Goodwill |
|
15,612 |
15,612 |
|
Other intangible assets |
|
26,648 |
29,345 |
|
Property, plant and equipment |
12 |
590,045 |
596,015 |
|
Deferred tax assets |
|
30,269 |
29,647 |
|
Trade and other receivables |
14 |
15,677 |
16,923 |
|
Investment in joint ventures |
16 |
- |
22 |
|
Other non-current assets |
|
9,880 |
9,215 |
|
|
|
688,131 |
696,779 |
|
Current assets |
|
|
|
|
Inventories |
|
40,602 |
37,453 |
|
Trading investments |
13 |
220,953 |
241,582 |
|
Trade and other receivables |
14 |
193,081 |
198,348 |
|
Cash and cash equivalents |
|
152,743 |
136,680 |
|
|
|
607,379 |
614,063 |
|
Total assets |
|
1,295,510 |
1,310,842 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(157,066) |
(173,219) |
|
Current tax liabilities |
|
(2,468) |
(3,234) |
|
Obligations under finance leases |
|
(1,295) |
(1,234) |
|
Bank overdrafts and loans |
15 |
(38,097) |
(35,497) |
|
|
|
(198,926) |
(213,184) |
|
Net current assets |
|
408,453 |
400,879 |
|
Non-current liabilities |
|
|
|
|
Trade and other payables |
|
(1,045) |
(1,134) |
|
Investment in joint ventures |
16 |
(7,471) |
- |
|
Bank loans |
15 |
(320,772) |
(324,138) |
|
Deferred tax liabilities |
|
(19,974) |
(15,043) |
|
Provisions |
|
(10,385) |
(10,966) |
|
Obligations under finance leases |
|
(4,742) |
(2,809) |
|
|
|
(364,389) |
(354,090) |
|
Total liabilities |
|
(563,315) |
(567,274) |
|
Net assets |
|
732,195 |
743,568 |
|
Capital and reserves |
|
|
|
|
Share capital |
|
11,390 |
11,390 |
|
Retained earnings |
|
476,728 |
482,798 |
|
Capital reserves |
|
31,760 |
31,760 |
|
Translation and hedging reserve |
|
4,051 |
5,966 |
|
Equity attributable to equity holders of the parent |
|
523,929 |
531,914 |
|
Non-controlling interests |
|
208,266 |
211,654 |
|
Total equity |
|
732,195 |
743,568 |
Consolidated Statement of Changes in Equity
as at 30 June 2013
|
|
|
|
|
|
Attributable |
|
|
|
|
|
|
|
Hedging and |
to equity |
Non |
|
|
|
Share |
Retained |
Capital |
Translation |
holders of |
controlling |
Total |
|
For the six months ended 30 June 2012 (unaudited) |
capital |
earnings |
reserves |
reserve |
the parent |
interests |
equity |
|
Balance at 1 January 2012 |
11,390 |
453,205 |
31,760 |
9,831 |
506,186 |
201,936 |
708,122 |
|
Currency translation adjustment |
- |
- |
- |
(4,326) |
(4,326) |
(3,339) |
(7,665) |
|
Profit for the period |
- |
1,424 |
- |
- |
1,424 |
2,308 |
3,732 |
|
Total income and expense for the period |
- |
1,424 |
- |
(4,326) |
(2,902) |
(1,031) |
(3,933) |
|
Dividends |
- |
(10,255) |
- |
- |
(10,255) |
(7,543) |
(17,798) |
|
Balance at 30 June 2012 |
11,390 |
444,374 |
31,760 |
5,505 |
493,029 |
193,362 |
686,391 |
|
|
|
|
|
|
|
|
|
|
For the six months ended 30 June 2013 (unaudited) |
|
|
|
|
|
|
|
|
Balance at 1 January 2013 |
11,390 |
482,798 |
31,760 |
5,966 |
531,914 |
211,654 |
743,568 |
|
Currency translation adjustment |
- |
- |
- |
(1,785) |
(1,785) |
(1,635) |
(3,420) |
|
Profit for the year |
- |
7,368 |
- |
- |
7,368 |
5,883 |
13,251 |
|
Total income and expense for the period |
- |
7,368 |
- |
(1,785) |
5,583 |
4,248 |
9,831 |
|
Dividends |
- |
(13,438) |
- |
- |
(13,438) |
(7,543) |
(20,981) |
|
Derivatives |
- |
- |
- |
(130) |
(130) |
(93) |
(223) |
|
Balance at 30 June 2013 |
11,390 |
476,728 |
31,760 |
4,051 |
523,929 |
208,266 |
732,195 |
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 Limited bye-laws 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 Limited 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 hedging instruments.
Amounts in the statement of changes of equity are stated net of tax where applicable.
Consolidated Cash Flow Statement
for the six months ended 30 June 2013
|
|
|
Unaudited six months to |
Unaudited six months to |
|
|
|
30 June |
30 June |
|
|
|
2013 |
2012 |
|
|
|
|
(Restated) |
|
|
Notes |
US$'000 |
US$'000 |
|
Net cash inflow from operating activities |
17 |
37,908 |
46,543 |
|
Investing activities |
|
|
|
|
Interest received |
|
4,891 |
8,089 |
|
Dividends received from trading investments |
|
2,604 |
1,660 |
|
Proceeds on disposal of trading investments |
|
40,390 |
80,869 |
|
Proceeds on disposal of property, plant and equipment |
|
14,662 |
55 |
|
Purchases of property, plant and equipment |
|
(36,292) |
(62,212) |
|
Purchase of intangible asset |
|
(914) |
(3,959) |
|
Purchases of trading investments |
|
(19,400) |
(50,179) |
|
Net cash used in investing activities |
|
5,941 |
(25,677) |
|
Financing activities |
|
|
|
|
Dividends paid |
10 |
(13,438) |
(10,255) |
|
Dividends paid to non-controlling interests in subsidiary |
|
(7,543) |
(7,543) |
|
Repayments of borrowings |
|
(18,194) |
(10,958) |
|
Repayments of obligations under finance leases |
|
(812) |
(1,221) |
|
New bank loans raised |
|
18,065 |
30,674 |
|
Decrease in bank overdrafts |
|
- |
(132) |
|
Net cash from financing activities |
|
(21,922) |
565 |
|
Net increase in cash and cash equivalents |
|
21,927 |
21,431 |
|
Cash and cash equivalents at beginning of period |
|
136,680 |
113,643 |
|
Effect of foreign exchange rate changes |
|
(5,864) |
(12,867) |
|
Cash and cash equivalents at end of period |
|
152,743 |
122,207 |
Notes to the Accounts
for the six months ended 30 June 2013
1 General Information
The 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 is a company incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991.
These financial statements are presented in US Dollars because that is the currency of the primary economic environment in which the Group operates.
2 Accounting policies
The condensed consolidated interim financial report of the Company for the six months ended 30 June 2013 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's) 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 set of financial statements have been prepared on the basis of accounting policies consistent with those applied to the financial statements for the year ended 31 December 2012 except for the new standards and interpretations adopted as described below
New standards and interpretations adopted
In the current year the following new and revised standards and interpretations have been adopted which have affected the amounts reported in these consolidated financial statements.
|
|
|
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements
IFRS 10 introduces a single control model to determine whether an investee should be consolidated.
As a result, the Group evaluated its consolidation conclusions in respect of its joint arrangements, which resulted in changes to the way joint arrangements are accounted for.
Under IFRS 11, the structure of the joint arrangement, although still an important consideration, is no longer the main factor in determining the type of joint arrangement and therefore the subsequent accounting.
· The Group's interest in a joint operation, which is an arrangement in which the parties have rights to the assets and obligations for the liabilities, will be accounted for on the basis of the Group's interest in those assets and liabilities.
· The Group's interest in a joint venture, which is an arrangement in which the parties have rights to the net assets, will be equity-accounted.
These standards are effective for annual periods beginning on or after 1 January 2013.
Comparison of the financial statements adjusted to IFRS10 and 11 and those published
Under the new standards the Group´s Joint Ventures are accounted for using the equity method of accounting. The impact of the adoption of these new standards are set out in the tables below.
Change in presentation
Foreign exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the statement of comprehensive income for the period. These exchange differences have previously been allocated to foreign currency monetary items based on estimated ratios. In the current year the Group is ceasing the allocation of foreign exchange differences to revenues and costs, and reporting them in one line, exchange gain/(loss) on monetary items. The comparative has been restated to reflect this change. There is no impact on net profit, comprehensive income or the Group's Balance Sheet.
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2012
|
|
|
|
|
|
|
|
As previously reported |
Impact of new standards |
Change in accounting policy |
Restated |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Revenue |
311,161 |
(16,918) |
2,878 |
297,121 |
|
Raw materials and consumables used |
(37,550) |
1,289 |
3,290 |
(32,971) |
|
Employee benefits expense |
(127,921) |
8,408 |
- |
(119,513) |
|
Depreciation & amortisation expense |
(31,553) |
4,763 |
- |
(26,790) |
|
Other operating expenses |
(90,498) |
2,759 |
|
(87,739) |
|
Profit on disposal of property, plant and equipment |
5 |
7 |
- |
12 |
|
Operating profit |
23,644 |
308 |
6,168 |
30,120 |
|
Share of results of joint ventures |
- |
263 |
- |
263 |
|
Investment revenue |
(1,168) |
1,080 |
7,646 |
7,558 |
|
Other gains and losses |
1,763 |
- |
- |
1,763 |
|
Finance costs |
(7,840) |
2,752 |
- |
(5,088) |
|
Exchange losses on monetary items |
- |
- |
(13,814) |
(13,814) |
|
Profit before tax |
16,399 |
4,403 |
- |
20,802 |
|
Income tax expense |
(14,149) |
(2,921) |
- |
(17,070) |
|
Profit for the year |
2,250 |
1,482 |
- |
3,732 |
|
Other comprehensive income |
|
|
|
|
|
Exchange differences arising on translation of foreign operations |
(7,540) |
(125) |
- |
(7,665) |
|
Other comprehensive loss for the year |
(7,540) |
(125) |
- |
(7,665) |
|
Total comprehensive income/(loss) for the year |
(5,290) |
1,357 |
- |
(3,933) |
|
Profit / (loss) for the period attributable to: |
|
|
|
|
|
Equity holders of parent |
1,424 |
- |
- |
1,424 |
|
Non-controlling interests |
826 |
1,482 |
- |
2,308 |
|
|
2,250 |
1,482 |
- |
3,732 |
|
Total comprehensive income / (loss) for the period attributable to: |
|
|
|
|
|
Equity holders of parent |
(2,902) |
- |
- |
(2,902) |
|
Non-controlling interests |
(2,388) |
1,357 |
- |
(1,031) |
|
|
(5,290) |
1,357 |
- |
(3,933) |
|
Earnings / (loss) per share |
|
|
|
|
|
Basic and diluted |
4.0 |
- |
- |
4.0c |
Consolidated Balance Sheet
as at 31 December 2012
|
|
As previously reported US$'000 |
Impact of new standard US$'000 |
Restated US$'000 |
|
Non-current assets |
|
|
|
|
Goodwill |
15,612 |
- |
15,612 |
|
Other intangible assets |
29,899 |
(554) |
29,345 |
|
Property, plant and equipment |
828,764 |
(232,749) |
596,015 |
|
Deferred tax assets |
29,827 |
(180) |
29,647 |
|
Trade and other receivables |
18,015 |
(1092) |
16,923 |
|
Long term investments |
1,072 |
(1,072) |
- |
|
Investment in joint ventures |
- |
22 |
22 |
|
Other non-current assets |
9,197 |
18 |
9,215 |
|
|
932,386 |
(235,607) |
696,779 |
|
Current assets |
|
|
|
|
Inventories |
27,697 |
9,756 |
37,453 |
|
Trading investments |
241,582 |
- |
241,582 |
|
Trade and other receivables |
168,267 |
30,081 |
198,348 |
|
Cash and cash equivalents |
141,335 |
(4,655) |
136,680 |
|
|
578,881 |
35,182 |
614,063 |
|
Total assets |
1,511,267 |
(200,425) |
1,310,842 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
(163,762) |
(9,457) |
(173,219) |
|
Current tax liabilities |
(3,124) |
(110) |
(3,234) |
|
Obligations under finance leases |
(1,222) |
(12) |
(1,234) |
|
Bank overdrafts and loans |
(43,179) |
7,682 |
(35,497) |
|
|
(211,287) |
(1,897) |
(213,184) |
|
Net current assets |
367,594 |
(33,285) |
400,879 |
|
Non-current liabilities |
|
|
|
|
Trade and other payables |
(1,134) |
- |
(1,134) |
|
Bank loans |
(524,908) |
200,770 |
(324,138) |
|
Deferred tax liabilities |
(17,802) |
2,759 |
(15,043) |
|
Provisions |
(10,872) |
(94) |
(10,966) |
|
Obligations under finance leases |
(2,800) |
(9) |
(2,809) |
|
|
(557,516) |
203,426 |
(354,090) |
|
Total liabilities |
(768,803) |
201,529 |
(567,274) |
|
Net assets |
742,464 |
1,104 |
743,568 |
|
Capital and reserves |
|
|
|
|
Share capital |
11,390 |
- |
11,390 |
|
Retained earnings |
482,798 |
- |
482,798 |
|
Capital reserves |
31,760 |
- |
31,760 |
|
Translation and hedging reserve |
5,966 |
- |
5,966 |
|
Equity attributable to equity holders of the parent |
531,914 |
- |
531,914 |
|
Non-controlling interests |
210,550 |
1,104 |
211,654 |
|
Total equity |
742,464 |
1,104 |
743,568 |
Consolidated Cash Flow Statement
for the six months ended 30 June 2012
|
|
As previously reported |
Impact of new standards |
Restated |
|
|
US$'000 |
US$'000 |
US$'000 |
|
Net cash inflow from operating activities |
39,827 |
6,716 |
46,543 |
|
Investing activities |
|
|
|
|
Interest received |
8,113 |
(24) |
8,089 |
|
Dividends received from trading investments |
1,660 |
- |
1,660 |
|
Proceeds on disposal of trading investments |
80,869 |
- |
80,869 |
|
Proceeds on disposal of property, plant and equipment |
55 |
- |
55 |
|
Purchases of property, plant and equipment |
(74,820) |
12,608 |
(62,212) |
|
Purchase of intangible asset |
(3,959) |
- |
(3,959) |
|
Purchases of trading investments |
(50,179) |
- |
(50,179) |
|
Net cash used in investing activities |
(38,261) |
12,584 |
(25,677) |
|
Financing activities |
|
|
|
|
Dividends paid |
(10,255) |
- |
(10,255) |
|
Dividends paid to non-controlling interests in subsidiary |
(7,543) |
- |
(7,543) |
|
Repayments of borrowings |
(14,627) |
3,669 |
(10,958) |
|
Repayments of obligations under finance leases |
(1,221) |
- |
(1,221) |
|
New bank loans raised |
49,618 |
(18,944) |
30,674 |
|
(Decrease)/increase in bank overdrafts |
(132) |
- |
(132) |
|
Net cash from financing activities |
15,840 |
(15,275) |
565 |
|
Net decrease in cash and cash equivalents |
17,406 |
4,025 |
21,431 |
|
Cash and cash equivalents at beginning of period |
119,323 |
(5,680) |
113,643 |
|
Effect of foreign exchange rate changes |
(10,941) |
(1,926) |
(12,867) |
|
Cash and cash equivalents at end of period |
125,788 |
(3,581) |
122,207 |
3 Revenue
An analysis of the Group's revenue is as follows:
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Sales of services |
263,972 |
270,325 |
|
Revenue from construction contracts |
42,442 |
26,796 |
|
|
306,414 |
297,121 |
|
Investment income (note 6) |
7,720 |
7,558 |
|
|
314,134 |
304,679 |
All revenue is derived from continuing operations.
4 Business and geographical segments
Business segments
Ocean Wilsons Holdings Limited has two reportable segments: Maritime services and investments. The maritime services segment provides towage, port terminals, ship agency, offshore, logistics and shipyard services in Brazil through Wilson Sons Limited. The investment segment holds a portfolio of international investments through Ocean Wilsons Investments Limited.
Segment information relating to these businesses is presented below.
For the six months to 30 June 2013 (Unaudited)
|
|
Maritime |
|
|
|
|
|
Services |
Investment |
Unallocated |
Consolidated |
|
|
six months to |
six months to |
six months to |
six months to |
|
|
30 June |
30 June |
30 June |
30 June |
|
|
2013 |
2013 |
2013 |
2013 |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Revenue |
306,414 |
- |
- |
306,414 |
|
Result |
|
|
|
|
|
Segment result |
52,826 |
(1,398) |
(1,073) |
50,355 |
|
Share of joint venture results |
(45) |
- |
- |
(45) |
|
Investment revenue |
5,074 |
2,644 |
2 |
7,720 |
|
Other gains and losses |
- |
361 |
- |
361 |
|
Finance costs |
(11,315) |
- |
- |
(11,315) |
|
Exchange losses on monetary items |
(12,761) |
(166) |
368 |
(12,559) |
|
Profit before tax |
33,779 |
1,441 |
(703) |
34,517 |
|
Tax |
(21,266) |
- |
- |
(21,266) |
|
Profit after tax |
12,513 |
1,441 |
(703) |
13,251 |
|
Other information |
|
|
|
|
|
Capital additions |
(37,206) |
- |
- |
(37,206) |
|
Depreciation and amortization |
(27,813) |
- |
(1) |
(27,814) |
|
Balance Sheet |
|
|
|
|
|
Assets |
|
|
|
|
|
Segment assets |
1,056,045 |
235,312 |
4,153 |
1,295,510 |
|
Liabilities |
|
|
|
|
|
Segment liabilities |
(562,978) |
(306) |
(31) |
(563,315) |
For the six months to 30 June 2012 (unaudited) (restated)
|
|
Maritime |
|
|
|
|
|
Services |
Investment |
Unallocated |
Consolidated |
|
|
six months to |
six months to |
six months to |
six months to |
|
|
30 June |
30 June |
30 June |
30 June |
|
|
2012 |
2012 |
2012 |
2012 |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Revenue |
297,121 |
- |
- |
297,121 |
|
Result |
|
|
|
|
|
Segment result |
33,092 |
(1,342) |
(1,630) |
30,120 |
|
Share of joint venture results |
263 |
- |
- |
263 |
|
Investment revenue |
6,003 |
1,553 |
2 |
7,558 |
|
Other gains and losses |
- |
1,763 |
- |
1,763 |
|
Finance costs |
(5,088) |
- |
- |
(5,088) |
|
Exchange losses on monetary items |
(13,814) |
- |
- |
(13,814) |
|
Pro-fit before tax |
20,456 |
1,974 |
(1,628) |
20,802 |
|
Tax |
(17,070) |
- |
- |
(17,070) |
|
Profit after tax |
3,386 |
1,974 |
(1,628) |
3,732 |
|
Other information |
|
|
|
|
|
Capital additions |
(66,171) |
- |
- |
(66,171) |
|
Depreciation and amortisation |
(26,789) |
- |
(1) |
(26,790) |
|
Balance Sheet |
|
|
|
|
|
Assets |
|
|
|
|
|
Segment assets |
985,985 |
258,712 |
4,814 |
1,249,511 |
|
Liabilities |
|
|
|
|
|
Segment liabilities |
(529,134) |
(253) |
(5,254) |
(534,641) |
Finance costs and associated liabilities have been allocated to reporting segments where interest costs arise from loans used to finance the construction of fixed assets in that segment.
Geographical Segments
The Group's operations are located in Bermuda, Brazil, United Kingdom and Guernsey.
All of the Group's sales are derived in Brazil.
The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and intangible assets, analysedby the geographical area in which the assets are located.
|
|
|
Additions to |
||
|
|
Carrying amount of |
property, plant and equipment |
||
|
|
segment assets |
and intangible assets |
||
|
|
Unaudited |
Unaudited |
Unaudited Six months ended |
Unaudited Six months ended |
|
|
30 June |
30 June |
30June |
30 June |
|
|
2013 |
2012 |
2013 |
2012 |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|
|
(restated) |
|
(restated) |
|
Brazil |
1,035,900 |
1,076,449 |
37,206 |
66,171 |
|
Bermuda |
258,612 |
233,124 |
- |
- |
|
Other |
998 |
1,269 |
- |
- |
|
|
1,295,510 |
1,310,842 |
37,206 |
66,171 |
5 Employee benefits expense
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Aggregate remuneration comprised: |
|
|
|
Wages and salaries |
93,257 |
92,069 |
|
Share based payment expense |
(5,002) |
3,712 |
|
Social security costs |
16,314 |
23,028 |
|
Other pension costs |
752 |
704 |
|
|
105,321 |
119,513 |
6 Investment revenue
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Interest on bank deposits |
4201 |
5,244 |
|
Exchange losses on cash |
(390) |
(1,996) |
|
Dividends from equity investments |
2,604 |
1,660 |
|
Other interest |
1,305 |
2,650 |
|
|
7,720 |
7,558 |
7 Other gains and losses
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Increase/(decrease) in fair value of trading investments held at year end |
266 |
(3,028) |
|
Profit on disposal of trading investments |
95 |
4,791 |
|
|
361 |
(1,763) |
Other gains and losses form part of the movement in trading investments.
8 Finance costs
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Interest on bank overdrafts and loans |
5,789 |
4,859 |
|
Exchange loss / (gain) on foreign currency borrowings |
5,638 |
(19) |
|
Interest on obligations under finance leases |
292 |
490 |
|
Total borrowing costs |
11,719 |
5,330 |
|
Other interest |
(404) |
(242) |
|
|
11,315 |
5,088 |
9 Taxation
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Current taxation |
|
|
|
Brazilian taxation : |
|
|
|
Corporation tax |
13,212 |
12,072 |
|
Social contribution |
5,082 |
4,057 |
|
Total current tax |
18,294 |
16,129 |
|
Deferred tax |
|
|
|
Charge / (credit) for the period in respect of deferred tax liabilities |
13,772 |
20,337 |
|
(Credit) / charge for the period in respect of deferred tax assets |
(10,800) |
(19,396) |
|
Total deferred tax |
2,972 |
941 |
|
Total taxation |
21,266 |
17,070 |
Brazilian corporation tax is calculated at 25% (2012: 25%) of the assessable profit for the year.
Brazilian social contribution tax is calculated at 9% (2012: 9%) of the assessable profit for the year.
At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and accordingly, no provision for such taxes has been recorded by the company. In the event that such taxes are levied, the company has received an undertaking from the Bermuda Government exempting it from all such taxes until 31 March 2035.
10 Dividends
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Amounts recognised as distributions to equity holders in the period: |
|
|
|
Final dividend paid for the year ended 31 December 2012 of 38.0c |
13,438 |
10,255 |
|
Proposed interim dividend for the year ended 31 December 2013 of 0.0c (2012: 4.0c) per share |
- |
1,415 |
11 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
|
(Restated) |
|
|
US$'000 |
US$'000 |
|
Earnings: |
|
|
|
Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent |
7,368 |
1,424 |
|
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 |
12 Property, plant and equipment
During the period the Group spent approximately US$36.3 million mainly on vessel construction and terminal equipment.
At 30 June 2013, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to US$8.2 million.
13 Investments
|
|
Unaudited six months to 30 June 2013 |
Unaudited year to 31 December 2012 |
|
|
US$'000 |
(Restated) US$'000 |
|
Trading investments |
|
|
|
At 1 January |
241,582 |
251,297 |
|
Additions, at cost |
19,400 |
114,458 |
|
Disposals, at market value |
(40,390) |
(140,567) |
|
(Decrease)/increase in fair value of trading investments held at year end |
266 |
3,005 |
|
Profit on disposal of trading investments |
95 |
13,389 |
|
At period end |
220,953 |
241,582 |
|
Ocean Wilsons Investment Limited Portfolio |
220,953 |
221,582 |
|
Wilson Sons Limited |
- |
20,000 |
|
Trading investments held at fair value at 31 December |
220,953 |
241,582 |
Wilson Sons Limited
During 2012 Wilson Sons Limited invested in Real denominated and US Dollar denominated fixed rate certificates. The Wilson Sons Limited investments are held and managed separately from the Ocean Wilsons Investment Portfolio.
Ocean Wilsons Investment Portfolio
The Group has not designated any financial assets that are not classified as trading investments as financial assets at fair value through profit or loss.
Trading investments above represent investments in listed equity securities, funds and unquoted equities that present the Group with opportunity for return through dividend income and capital appreciation.
Included in trading investments are open ended funds whose shares may not be listed on a recognised stock exchange but are redeemable for cash at the current net asset value at the option of the company. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market prices where available. Where quoted market prices are not available fair values are determined using various valuation techniques that include inputs for the asset or liability that are not based in observable market data (unobservable inputs)
14 Trade and other receivables
|
|
|
|
|
|
Unaudited period ended 30 June |
Unaudited year ended December |
|
|
2013 |
2012 |
|
|
US$'000 |
(Restated) US$'000 |
|
Trade and other receivables |
|
|
|
Amount receivable for the sale of services |
70,161 |
66,026 |
|
Allowance for doubtful debts |
(1,792) |
(2,506) |
|
|
68,369 |
63,520 |
|
Income taxation recoverable |
12,933 |
11,239 |
|
Prepayments and other |
27,034 |
43,211 |
|
Other recoverable taxes and levies |
39,006 |
44,819 |
|
Other |
61,416 |
52,482 |
|
|
208,758 |
215,271 |
|
Total current |
193,081 |
198,348 |
|
Total non-current |
15,677 |
16,923 |
|
|
208,758 |
215,271 |
Non-current trade receivables relate to: recoverable taxes with maturity dates in excess of one year, which comprise mainly PIS, COFINS, ISS and INSS, customers with maturities over one year, and receivables from Intermarítima relating to the sale of the non-controlling interest in Tecon Salvador. There are no indicators of impairment related to these receivables.
Included in the Group's trade receivable balances are debtors with a carrying amount of US$8.0 million (2012: US$16.3 million) which are past due but not impaired at the reporting date for which the Group has not provided as there has not been a change in credit quality and the Group believes the amounts are still recoverable.
The Group does not hold any collateral over these balances.
|
|
Unaudited period ended 30 June 2013 |
Unaudited year ended December 2012 |
|
|
|
(Restated) |
|
Ageing of past due but not impaired trade receivables |
US$'000 |
US$'000 |
|
From 0 - 30 days |
5,584 |
8,670 |
|
From 31 - 90 days |
1,926 |
4,043 |
|
From 91 - 180 days |
483 |
3,549 |
|
more than 180 days |
- |
- |
|
Total |
7,993 |
16,262 |
Included in the Group's allowance for doubtful debts are individually impaired trade receivables with a balance of US$1.8 million which are aged greater than 180 days. The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected settlement proceeds. The Group does not hold any collateral over these balances.
|
|
Unaudited period ended 30 June 2013 |
Unaudited year ended December 2012 |
|
Ageing of impaired trade receivables |
US$'000 |
(Restated) US$'000 |
|
From 0 - 30 days |
- |
- |
|
From 31 - 90 days |
- |
- |
|
From 91 - 180 days |
- |
- |
|
more than 180 days |
1,792 |
2,506 |
|
Total |
1,792 |
2,506 |
In determining recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated except for one customer which accounts for 12% of Group revenue. The directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
15 Bank loans and overdrafts
|
|
|
Unaudited period ended |
Unaudited Year ended |
|
|
|
30 June |
31 December |
|
|
|
2013 |
2012 |
|
|
Annual Interest rate |
US$'000 |
(Restated) US$'000 |
|
Unsecured borrowings |
|
|
|
|
Bank overdrafts |
0.00% |
- |
- |
|
Secured borrowings |
|
|
|
|
Towage, offshore and shipyard |
|
|
|
|
BNDES - FMM linked to US$ |
2.07% to 6.00% |
219,721 |
213,999 |
|
Banco do Brasil - FMM linked to US$ |
2.00% to 3.00% |
3,382 |
- |
|
BNDES - FMM linked to $Real |
9.71% |
3,557 |
3,994 |
|
Total towage, offshore and shipyard |
|
226,660 |
217,993 |
|
|
|
|
|
|
Port operations and logistics |
|
|
|
|
IFC - US$ |
3.20% to 8.50% |
76,400 |
77,606 |
|
BNDES - FINAME $Real |
4.50% to 12.50% |
13,750 |
19,401 |
|
Eximbank - US$ |
2.19% |
12,617 |
13,686 |
|
BNDES - linked to US$ |
5.07% to 5.36% |
12,684 |
13,821 |
|
BNDES $Real |
6.89% |
3,324 |
3,604 |
|
IFC - $Real |
14.09% |
2,144 |
2,655 |
|
Finimp - US$ |
2.09% to 4.30% |
11,134 |
10,605 |
|
Caterpillar - $Real |
4.41% to 7.44% |
156 |
264 |
|
Total port operations and logistics |
|
132,209 |
141,642 |
|
Total secured borrowings |
|
358,869 |
359,635 |
|
Total borrowings |
|
358,869 |
359,635 |
|
|
|
|
Period ended |
Year ended |
|
|
|
|
30 June |
31 December |
|
|
|
|
2013 |
2012 |
|
|
|
|
US$'000 |
(Restated) US$'000 |
|
The borrowings are repayable as follows: |
|
|
|
|
|
On demand or within one year |
|
|
38,097 |
35,497 |
|
In the second year |
|
|
37,186 |
38,358 |
|
In the third to fifth years inclusive |
|
|
103,458 |
102,608 |
|
After five years |
|
|
180,128 |
183,172 |
|
Total borrowings |
|
|
358,869 |
359,635 |
|
Amounts due for settlement within 12 months |
|
|
(38,097) |
(35,497) |
|
Amounts due for settlement after 12 months |
|
|
320,772 |
324,138 |
|
Analysis of borrowings by currency: |
|
|
|
|
|
|
|
$Real |
|
|
|
|
|
linked to |
|
|
|
|
$Real |
US Dollars |
US Dollars |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
30 June 2013 (unaudited) |
|
|
|
|
|
Bank loans |
22,931 |
235,787 |
101,151 |
358,869 |
|
Total |
22,931 |
235,787 |
101,151 |
358,869 |
|
|
|
|
|
|
|
31 December 2012 unaudited (Restated) |
|
|
|
|
|
Bank loans |
29,919 |
227,820 |
101,896 |
359,635 |
|
Total |
29,919 |
227,820 |
101,896 |
359,635 |
The Group's main sources of financing are:
BNDES (Banco Nacional de Desenvolvimento Economico e Social) acts as an agent for the "FMM" (Fundo de Marinha Mercante) financing tug boats, platform supply vessel and shipyard construction. Loans are secured by mortgages on the vessels financed. Loans received from the BNDES are predominantly $Real denominated loans linked to the US Dollar and are monetarily corrected by the movement in the US Dollar/$Real exchange rate and bear interest of between 2.07% and 6.0% per annum. The amounts outstanding at 30 June 2013 are repayable over periods varying up to 20 years.
The BNDES FINAME credit line through various agents finances equipment for logistics and port operations. The $Real denominated loans bear interest rates between 4.5% and 12.0% a year.
Banco do Brasil acts as agent for the "FMM" (Fundo de Marinha Mercante). Banco do Brasil finances tugboat construction and secure mortgages on the vessels financed. Loans received from the Banco do Brasil are $Real denominated loans linked to the US Dollar and are monetarily corrected by the movement in the US Dollar/$Real exchange rate and bear a fixed interest rate of between 2.0% and 3% per annum. The amounts outstanding at 30 June 2013 are repayable over periods varying up to 16 years.
IFC (International Finance Corporation). The IFC finances the Group's two container terminals, Tecon Rio Grande and Tecon Salvador. The majority of these loans are project finance to fund the expansion of the container terminal at Salvador and have no recourse to other companies in the Group. US dollar denominated loans consist of variable rate and fixed rate loans. Variable rate loans bear interest of US Dollar six month Libor per annum plus 2.75%. US dollar denominated fixed rate loans bear interest of 8.50% per annum. Real denominated loans bear interest at 14.09% per annum. The amounts outstanding at 30 June 2013 are repayable over periods varying up to 6 years.
The Export- Import Bank of China (Eximbank) finances Tecon Rio Grande's equipment. The amounts outstanding at 30 June 2013 are repayable over periods varying up to 6 years and bear interest of US Dollar six month libor per annum plus 1.7%. The loans are secured by a bank guarantee with Eximbank as beneficiary at a cost of 2% per year.
The Banco Itau BBA S.A. provides financing through an import finance facility (Finimp) to finance equipment for Tecon Rio Grande. The amounts outstanding at 30 June 2013 are repayable over periods varying up to 4 years and bears interest of between US Dollar six month libor per annum plus 1.63% and plus 3.8%. For the loan paying six month libor plus 1.63% there is also a 1.75% annual commission.
At 30 June 2013, the Group had available US$247.8 million of undrawn committed borrowings facilities available. For each disbursement there are a set of conditions precedent that must be satisfied.
Guarantees
All loans with the BNDES are guaranteed by the Brazilian holding Company, Wilson Sons Administracao e Comercio Ltda. For some contracts the corporate guarantee is in addition to: (i) a mortgage on the respective tug boat (ii) lien of logistics or port operation equipment financed.
Loans from the Banco do Brasil rely on a corporate guarantee from Wilson Sons Administracao e Commercio Ltda and a pledge of the respective financed tug boat.
The subsidiaries Tecon Rio Grande and Tecon Salvador have specific restrictive clauses in their financing contracts with financial institutions related, basically, to the maintenance of liquidity ratios. The Brazilian holding Company, Wilson Sons de Administracao e Commercio Ltda also has specific restrictive covenants relating to financing for the shipyards. At 30 June 2013, the Group was in accordance with all clauses of these contracts.
The IFC loans to Tecon Salvador and Tecon Rio Grande are guaranteed by shares of each company, the terminals' cash flows, equipment and buildings.
The loan with "The Export-Import Bank of China" is guaranteed by a "Standby Letter of Credit" issued for Tecon Rio Grande by Banco Itaú BBA S.A., with the financing bank as beneficiary, as counter-guarantee, Tecon Rio Grande obtained a formal authorization from IFC trustee to pledge the equipment funded by "The Export-Import Bank of China" to Banco Itaú BBA S.A.
Loan with Itaú BBA S.A. is guaranteed by the corporate guarantee from Wilson Sons de Administração e Comércio Ltda. The contract signed on 6 January, 2012 is additionally guaranteed by promissory note and pledge of the respective financed equipment.
Debt Covenants
The financing agreements entered into by subsidiaries Tecon Rio Grande, Tecon Salvador with financial institutions contain specific financial covenants. Wilson, Sons de Administração e Comércio Ltda. also has to comply with specific financial covenants.
16 Joint ventures
Joint operations
The following amounts are included in the Group's financial statements as a result of proportionate consolidation of joint operations.
|
|
|
Unaudited six months to 30 June 2013 |
Unaudited year to 31 December 2012 |
|
|
|
US$'000 |
(Restated) US$'000 |
|
Current assets |
|
4,543 |
4,827 |
|
Non-current assets |
|
1,666 |
2,114 |
|
Current liabilities |
|
(6,138) |
(6,913) |
|
Non-current liabilities |
|
(71) |
(28) |
|
|
|
2013 |
2012 |
|
|
|
US$'000 |
US$'000 |
|
Income |
|
5,753 |
7,084 |
|
Expenses |
|
(5,753) |
(7,084) |
Joint ventures
The following amounts are not consolidated in the Group's financial statements as they are considered joint ventures. The Group's interest on joint ventures are equity accounted as described in note 2.
|
|
|
Unaudited six months to 30 June 2013 |
Unaudited year to 31 December 2012 |
|
|
|
US$'000 |
(Restated) US$'000 |
|
Current assets |
|
37,662 |
36,750 |
|
Non-current assets |
|
579,132 |
511,060 |
|
Current liabilities |
|
(92,439) |
(87,489) |
|
Non-current liabilities |
|
(487,007) |
(422,442) |
|
|
|
2013 |
2012 |
|
|
|
US$'000 |
US$'000 |
|
Income |
|
49,556 |
42,766 |
|
Expenses |
|
(49,646) |
(42,240) |
Investments in joint ventures
Joint ventures accounted for under the equity method.
|
|
Unaudited US$'000 |
|
Cost |
|
|
At 1 January 2012 |
7,661 |
|
Share of results of joint ventures Elimination on construction contracts Change in fair value of derivatives |
690 (8,552) 223 |
|
At 31 December 2012 |
22 |
|
Share of results of joint ventures Elimination on construction contracts Change in fair value of derivatives |
(45) (7,225) (223) |
|
At 30 June 2013 |
(7,471) |
The Group has the following significant interests in joint operations and joint ventures.
|
|
Place of |
Proportion of |
Method used |
|
|
incorporation |
effective |
to account |
|
|
and operation |
interest |
for investment |
|
Wilson Sons Ulratug Particapacoes S.A. |
Brazil |
29.13% |
Equity |
|
Offshore |
|
|
accounted |
|
Consorcio de Rebocadores Baia de São Marcos |
Brazil |
29.13% |
Equity |
|
Tug operator |
|
|
accounted |
|
Allink Transportes Internacionais Limitada |
Brazil |
29.13% |
Equity |
|
Non-vessel operating common carrier |
|
|
accounted |
|
Consorcio de Rebocadores Barra de Coqueiros |
Brazil |
29.13% |
Equity |
|
Tug operator |
|
|
accounted |
|
Atlantic Offshore S.A. |
Panama |
29.13% |
Equity |
|
Offshore |
|
|
accounted |
17 Notes to the cash flow statement
|
|
Unaudited six months to |
Unaudited six months to |
|
|
30 June |
30 June |
|
|
2013 |
2012 |
|
|
US$'000 |
(Restated) US$'000 |
|
Reconciliation from profit before tax to net cash from operating activities |
|
|
|
Profit before tax |
34,517 |
20,802 |
|
Share of joint venture results |
45 |
(263) |
|
Investment revenues |
(7,720) |
(7,558) |
|
Other gains and losses |
(361) |
(1,763) |
|
Finance costs |
11,315 |
5,088 |
|
Exchange losses on monetary items |
12,559 |
13,814 |
|
Operating profit |
50,355 |
30,120 |
|
Adjustments for: |
|
|
|
Depreciation of property, plant and equipment |
25,118 |
24,971 |
|
Amortisation of intangible assets |
2,696 |
1,819 |
|
Share based payment expense |
(5,002) |
3,712 |
|
Gain on disposal of property, plant and equipment |
(9,812) |
(12) |
|
Increase/(decrease) in provisions |
(581) |
1,020 |
|
Operating cash flows before movements in working capital |
62,774 |
61,630 |
|
(Increase)/decrease in inventories |
(3,149) |
6,403 |
|
Decrease/(increase) in receivables |
12,974 |
(6,112) |
|
(Decrease)/increase in payables |
(11,151) |
5,258 |
|
Increase in other non-current assets |
(665) |
(381) |
|
Cash generated by operations |
60,783 |
66,798 |
|
|
|
|
|
Income taxes paid |
(16,431) |
(13,801) |
|
Interest paid |
(6,444) |
(6,454) |
|
Net cash from operating activities |
37,908 |
46,543 |
18 Commitments
At 30 June 2013 the Group had entered into twenty one commitment agreements with respect to twenty one separate trading investments. These commitments relate to capital subscription agreements entered into by Ocean Wilsons Investments Limited.
The details of these commitments are as follows:
|
|
|
Unaudited |
Unaudited |
|
|
|
Outstanding |
Outstanding |
|
|
|
At 30 June |
At 31 December |
|
|
Commitment |
2013 |
2012 |
|
|
$'000 |
US$'000 |
(Restated) US$'000 |
|
Expiry date |
|
|
|
|
01 February 2013 |
5,000 |
- |
1,250 |
|
13 March 2013 |
5,000 |
- |
1,013 |
|
30 March 2013 |
5,000 |
- |
641 |
|
21 May 2013 |
4,994 |
- |
411 |
|
22 October 2013 |
5,000 |
1,550 |
1,550 |
|
08 December 2013 |
5,000 |
2,540 |
2,274 |
|
31 December 2013 |
4,650 |
824 |
1,766 |
|
31 March 2014 |
5,000 |
1,725 |
2,100 |
|
15 May 2014 |
3,000 |
68 |
68 |
|
03 August 2014 |
3,000 |
840 |
1,410 |
|
23 February 2015 |
5,000 |
1,214 |
1,823 |
|
31 December 2016 |
3,000 |
271 |
271 |
|
17 February 2017 |
3,000 |
2,042 |
2,253 |
|
22 February 2017 |
3,350 |
284 |
- |
|
28 March 2017 |
5,000 |
4,938 |
- |
|
30 April 2017 |
7,500 |
5,675 |
6,304 |
|
5 December 2017 |
5,000 |
433 |
473 |
|
30 March 2018 |
5,000 |
921 |
- |
|
21 December 2018 |
5,000 |
891 |
- |
|
21 June 2019 |
5,000 |
4,043 |
4,392 |
|
15 December 2021 |
5,000 |
4,172 |
4,228 |
|
01 February 2023 |
5,000 |
1,000 |
- |
|
TBD |
3,200 |
3,200 |
- |
|
TBD |
5,000 |
5,000 |
- |
|
TBD |
5,000 |
5,000 |
- |
|
Total |
|
46,631 |
32,227 |
19 Related party transactions
Transactions between this company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the group and its associates, joint ventures and others investments are disclosed below.
|
|
Dividends received/ |
Amounts paid/ |
|||
|
|
Revenue of services |
Cost of services |
|||
|
|
Unaudited 30 June |
Unaudited 30 June |
Unaudited 30 June |
Unaudited 30 June |
|
|
|
2013 |
2012 |
2013 |
2012 |
|
|
|
US$'000 |
(Restated) US$'000 |
US$'000 |
(Restated) US$'000 |
|
|
Joint ventures |
|
|
|
|
|
|
1. Allink Transportes Internacionais Limitada |
18 |
10 |
- |
- |
|
|
2. Consórcio de Rebocadores Barra de Coqueiros |
175 |
144 |
- |
- |
|
|
3. Consórcio de Rebocadores Baía de São Marcos |
5 |
4 |
(1,098) |
(573) |
|
|
4. Wilson Sons Ultratug |
43,049 |
27,321 |
- |
- |
|
|
Others |
|
|
|
|
|
|
5. Hanseatic Asset Management |
- |
- |
(1,338) |
(1,259) |
|
|
6. Gouvêa Vieira Advogados |
- |
- |
(167) |
(112) |
|
|
7. CMMR Intermediacao Comercial Limitada |
- |
- |
(189) |
(75) |
|
|
8. Jofran Services |
- |
- |
(87) |
(122) |
|
|
8 |
Amounts owed |
Amounts owed |
|||
|
|
by related parties |
to related parties |
|||
|
|
Unaudited30 June |
Unaudited 31 December |
Unaudited 30 June |
Unaudited 31 December |
|
|
|
2013 |
2012 |
2013 |
2012 |
|
|
|
US$'000 |
(Restated) US$'000 |
US$'000 |
(Restated) US$'000 |
|
|
Joint ventures |
|
|
|
|
|
|
1. Allink Transportes Internacionais Limitada |
3 |
1 |
- |
- |
|
|
2. Consórcio de Rebocadores Barra de Coqueiros |
103 |
64 |
- |
- |
|
|
3. Consórcio de Rebocadores Baía de São Marcos |
1,802 |
2,497 |
- |
- |
|
|
4. Wilson Sons Ultratug |
- |
- |
(24,606) |
(12,909) |
|
|
Others |
|
|
|
|
|
|
5. Hanseatic Asset Management |
- |
- |
(265) |
- |
|
|
6. Gouvêa Vieira Advogados |
- |
- |
(18) |
(204) |
|
|
7. CMMR Intermediacao Comercial Limitada |
- |
- |
(25) |
- |
|
|
8. Jofran Services |
- |
- |
- |
- |
|
1. Mr A C Baião is a shareholder and Director of Allink Transportes Internacionais Limitada. Allink Transportes Internacionais Limitada is 50% owned by the Group and rents office space from the Group.
1-4. The transactions with the joint ventures are disclosed as a result of proportionate amounts not eliminated on consolidation. The proportion of ownership interest in each joint venture is described in note 17.
5. Mr W H Salomon is Chairman of Hanseatic Asset Management. Fees were paid to Hanseatic Asset Management for acting as investment managers of the Group's investment portfolio and administration services.
6. Dr J F Gouvêa Vieira is a partner in the law firm Gouvêa Vieira Advogados. Fees were paid to Gouvêa Vieira Advogados for legal services.
7. Mr C M Marote is a shareholder and Director of CMMR Intermediacao Comercial Limitada. Fees were paid to CMMR Intermediacao Comercial Limitada for consultancy services.
8. Mr J F Gouvêa Vieira is a Director of Jofran Services. Directors' fees and consultancy fees were paid to Jofran Services.
20 Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 15, cash and cash equivalents and equity attributable to equity holders of the parent comprising issued capital, reserves and retained earnings and the consolidated statement of changes in equity.
The Group borrows to fund capital projects and looks to cash flow from these projects to meet repayments. Working capital is funded through cash generated by operating revenues.
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.
Financial risk management objectives
The Group's Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets and manages the financial risks relating to the operations of the Group through internal reports. These risks include market risk, (including currency risk, interest rate risk and price risk) credit risk and liquidity risk.
The Group may use derivative financial instruments to hedge these risk exposures, with Board approval.
The Group does not enter into trading financial instruments, including derivative financial instruments for speculative purposes.
Credit risk
The Group's principal financial assets are cash, trade and other receivables and trading investments.
The Group's credit risk is primarily attributable to its bank balances, trade receivables and investments. The amounts presented as receivables in the balance sheet are net of allowances for doubtful receivables as outlined above.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The credit risk on investments held for trading is limited because the counterparties with whom the Group transacts are regulated institutions or banks with high credit ratings.
The company's appointed investment manager, Hanseatic Asset Management LBG, evaluates the credit risk on trading investments prior to and during the investment period.
The Group has no significant concentration of credit risk except for one large customer, which makes up 18% of revenue. On going credit evaluation is performed on the financial condition of accounts receivable.
Market risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
Foreign currency risk management
The Group undertakes certain transactions denominated or linked to foreign currencies and therefore exposures to exchange rate fluctuations arise. The Group operates principally in Brazil with a substantial proportion of the Group's revenue, expenses, assets and liabilities denominated in the Real. Due to the cost of hedging the Real, the Group does not normally hedge its net exposure to the Real as the Board does not consider it economically viable.
Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.
The Group borrows from the BNDES (Banco Nacional de Desenvolvimento Econômico e Social) and Banco do Brasil to finance vessel construction. These loans are fixed interest rates loans linked to the US Dollar. Due to the favourable rates offered by these institutions, in the Group's opinion, there is minimal market interest rate risk.
The Group's strategy for managing interest rate risk is to maintain a balanced portfolio of fixed and floating interest rates in order to balance both cost and volatility. The Group may use derivative instruments to reduce cash flow interest rate attributable to interest rate volatility.
As at 30 June 2013 the Company had no outstanding interest rate swap contracts.
Market price sensitivity
The Group is exposed to equity price risks arising from equity trading investments.
The trading investments represent investments in listed equity securities, funds and unquoted equities and that present the Group with opportunity for return through dividend income and trading gains. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market prices where available.
By the nature of its activities the Group's investments are exposed to market price fluctuations. However the portfolio as a whole does not correlate exactly to any stock exchange index, as it is invested in a diversified range of markets. The investment manager and the Board monitor the portfolio valuation on a regular basis and consideration is given to hedging the portfolio against large market movements.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.
The Group's sales policy is subordinated to the credit sales rules set by management, which seeks to mitigate any loss from customers' delinquency.
Trade receivables consist of a large number of customers except for one large customer, which makes up 18% of revenue (2011 12%). On going credit evaluation is performed on the financial condition accounts receivable.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The Group has access to financing facilities, the total unused amount which is US$500.5 million at the balance sheet date. The Group expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
Fair value of financial instruments
The fair value of non-derivative financial assets traded on active liquid markets are determined with reference to quoted market prices.
The carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair value.
21 Subsequent event
The Group has completed, through its subsidiary Brasco Logística Offshore Limitada ("Brasco"), the acquisition of all the shares representing the capital of Brazilian Intermodal Complex S/A ("Briclog"), concluding the acquisition on July 1, 2013. The closing price of the acquisition of shares was US$ 40.5 million (R$ 89.8 million) with debt of US$ 14.5 million (R$ 32.1 million) assumed on acquisition and contemplated adjustment of the previously agreed price in function of the revision of the commercial conditions.
The acquisition is payable in three amounts, including US$ 4.5 million (R$ 10 million) paid on June, 2011, US$ 10.2 million (R$ 22.5 million) paid on the closing and US$ 25.9 million (R$ 57.3 million) that will be paid 300 days from the closing adjusted for movement in the Brazilian index of consumer prices (IPCA) from the date of closing.
There is no contingent consideration. The main reason for the acquisition included a 30-year lease right to operate in a sheltered area of Guanabara Bay, Rio de Janeiro, Brazil with privileged location to attend the Campos and Santos oil producing basins.
In 2012, Briclog's audited net revenue totaled US$ 19.2 million (R$ 42.5 million) and EBITDA US$ 2.5 million (R$ 5.6 million), numbers which reflect the utilization of the base without any gain of scale in relation to planned expansions.
The main amounts of the financial statements of Briclog as at 31 December, 2012 are as follow:
|
|
Unaudited 31 December 2012 |
|
|
|
|
|
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
13,429 |
|
|
|
|
|
Other current assets |
1,026 |
|
|
|
|
|
Trade and other receivables |
1,146 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
15,601 |
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts and loans |
3,062 |
|
|
|
|
|
Taxes |
3,075 |
|
|
|
|
|
Provision for tax, labor and civil risk |
1,036 |
|
|
|
|
|
Other non-current liabilities |
813 |
|
|
|
|
|
Trade and other payables |
6,521 |
|
|
|
|
|
Equity |
1,094 |
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
15,601 |
|
|
|
|
|
|
31 December 2012 |
|
|
|
|
|
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Income |
19,190 |
|
|
|
|
|
Expenses |
(18,886) |
|
|
|
|
Enquiries
Company Contact
Keith Middleton 1 441 295 1309
Media
David Haggie 020 7562 4444
Haggie Partners LLP
Cantor Fitzgerald Europe 020 7894 7000
David Banks - Corporate Broking
This information is provided by RNS
Latest directors dealings
- 4 hours ago Mattioli Woods
- 5 hours ago Morgan Advanced Materials
- 5 hours ago Capita
- 5 hours ago Judges Scientific
- 5 hours ago Me Group International