Quarterly Report • Aug 4, 2016
Quarterly Report
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17 September Capital markets day 11 November Q3 2015 results and presentation
| Total income | 2016 Q 2 | 2016 Q1 | 2016 YTD 2015 YTD | 2015 Q2 | 2015 FY | |
|---|---|---|---|---|---|---|
| Total | 905 | 608 | 1.514 | 1 205 | 596 | 2 3 0 8 |
| Shipping | 372 | 357 | 729 | 930 | 470 | 1800 |
| Logistics | 167 | 259 | 425 | 289 | 134 | 537 |
| Holding | 376 | 377 | з |
| EBITDA | 2016 Q 2 | 2016 01 2016 YTD 2015 YTD | 2015 Q2 | 2015 FY | ||
|---|---|---|---|---|---|---|
| Total | 455 | 161 | 616 | 249 | 113 | 262 |
| Shipping | 72 | 61 | 133 | 191 | 96 | 182 |
| Logistics | 11 | 102 | 113 | 61 | 19 | 88 |
| Holding | 372 | (2) | 370 | (4) | (2) | (8) |
| EBIT | 2016 Q 2 | 2016 Q1 | 2016 YTD | 2015 YTD | 2015 Q2 | 2015 FY |
|---|---|---|---|---|---|---|
| Total | 417 | 126 | 543 | 171 | 73 | 103 |
| Shipping | 38 | 28 | 66 | 117 | 58 | 29 |
| Logistics | 8 | 100 | 108 | 58 | 18 | 82 |
| Holding | 372 | (2) | 370 | (4) | (2) | (8) |
| Net profit/(loss) after minority | 392 | 104 | 496 | 126 | 70 | (4) |
| Earnings per share (USD) | 1.78 | 0.47 | 2.26 | 0.57 | 0.32 | (0.02) |
The total income for the Wilh. Wilhelmsen ASA group (WWASA) was USD 905 million, up 49% from first quarter 2016. The operating profit ended at USD 417 million, up from USD 126 million in the previous quarter.
The second quarter was characterised by seasonally higher volumes, improved cargo mix and a substantial non-recurring gain of USD 375 million related to the demerger of Den Norske Amerikalinje (NAL) with its shareholding in Hyundai Glovis. The contribution from Hyundai Glovis discontinued from 17 March 2016.
Adjusted for the gain from the demerger of NAL in the second quarter 2016 and a loss on recycling of one vessel, the total income totalled USD 530 million and the operating profit totalled USD 44 million in the second quarter compared with USD 528 million and USD 50 million respectively in the first quarter where Hyundai Glovis also was inlcuded.
The total income from the shipping segment was USD 372 million and operating profit totalled USD 38 million, up 4% and 36% respectively compared with the previous quarter.
WWASA's operating entities transported 16.8 million cubic metres (CBM) of cargo in the second quarter, an 8% increase quarter on quarter driven by seasonally higher demand for transportation of cars as well as high and heavy equipment.
Reduced bunker compensation and increased bunker prices resulted in increased net bunker costs in the second quarter, which partly offset the improvement in the underlying activities.
In key markets, total light vehicle sales in the second quarter grew by 3% from the previous quarter and increased by 6% compared with the same period last year.
In the US, auto sales are slowing, although on a high level, and the growth rate continues to level off. Inventories increased and the market outlook for 2016 sales has been reduced.
Figure 1 Total income and EBIT (group)
Figure 2 Total income and EBIT (shipping)
Sales in Western Europe continued its strong development, both compared with the first quarter and the same period last year. Sales in Italy and Spain have rebounded strongly, while Germany, France and UK sales recorded solid increases.
Chinese car sales dropped from the first quarter, despite temporary tax cuts for smaller cars. Sales are slightly up compared with the second quarter last year, mainly driven by the larger car segments. The market outlook is positive.
Japanese car exports continued its stable trend in the second quarter and were slightly below volumes in the previous quarter while slightly higher than the same period last year.
Car exports out of Korea increased 7% in the second quarter from the first quarter. However, exports were 14% below the same period in 2015. The latter was mainly due to reduced volumes to South America and the Middle East.
The global construction equipment market continued in the second quarter its overall soft development, mainly driven by a drop in sales in China, North America and Japan. Demand is growing in Europe and India. The market forecasts a 3% drop in global sales in 2016.
The global demand for mining equipment remained weak in the second quarter, due to continued low commodity prices and few new mining investments. The mining industry is characterised by excess capacity and large inventories.
Demand for agriculture equipment continued the declining trend from 2015, impacted by lower crop prices forcing farmers to curb their spending. The market forecasts crop demand to be stable at the current low level for the remainder of 2016.
The total income for the logistics segment was USD 167 million, with an operating profit of USD 8 million, down 35% and 92% respectively compared with the previous quarter. In the first quarter, contribution from Hyundai Glovis was included and the group recorded a non-recurring accounting gain of USD 80 million related to the increased ownership in Vehicle Services America (VSA) and CAT-WWL. The USD 375 million non-
recurring gain from the demerger of NAL is included in the holding segment.
Adjusted for non-recurring items, the underlying results improved compared with the previous quarter and continued on a healthy level.
Net financial expenses in the second quarter amounted to USD 21 million compared with USD 15 million in the previous quarter.
Net interest expenses totalled USD 26 million, an increase from the previous quarter mainly due to higher interest bearing debt.
WWASA recorded an unrealised loss of USD 1 million on interest rate derivatives compared with an unrealised loss of USD 14 million in the first quarter. In both quarters, the company realised a loss on the interest-hedging portfolio of USD 8 million respectively.
At the end of the second quarter, the investment portfolio amounted to USD 256 million, including fixed income assets and shares. The portfolio generated a positive return mainly as result of narrowing credit spreads.
During the quarter, the USD appreciated towards EUR and NOK. Net currency items for the quarter amounted to a loss of USD 3 million. Realised losses incurred on hedging contracts, were offset by unrealised gains on hedging contracts in the second quarter.
The group recorded an expense of USD 3 million for the quarter, down compared with a tax expense of USD 6 million in first quarter.
Net profit after tax and minority interest amounted to USD 392 million, up from USD 104 million.
Earnings per share were USD 1.78 for the second quarter, up from USD 0.47 in the first quarter.
Cash and cash equivalents including the investment portfolio increased from the previous quarter, totalling USD 406 million at the end of the second quarter (USD 621 million when including the group's share of cash and cash equivalents in the joint ventures).
WWASA's equity decreased from the previous quarter by USD 331 million to USD 1 430 million, representing an equity ratio of 45% based on book values for WWASA's own account. The reduction follows the demerger of Den Norske Amerikalinje AS effective in the second quarter.
The group's gross interest bearing debt amounted to USD 1 425 million (USD 2 214 million when including share of interestbearing debt in joint ventures) at the end of the quarter, equivalent to an increase of 10% quarter on quarter. The interest bearing debt increased with USD 160 million during the quarter following the sale-leaseback of the two newbuildings delivered in the quarter.
The demerger of Den Norske Amerikalinje AS (owns the Hyundai Glovis shareholding) from the group was effective on 8 June 2016. The demerger was accounted for at fair value and contributed with a significant non-recurring gain in the second quarter of USD 375 million. The book value of equity, after the accounting again, was reduced with USD 730 million by the demerger.
The demerged entity named Treasure ASA was listed on the Oslo Stock Exchange on 8 June 2016. All shareholders of WWASA received one share in Treasure ASA for every share held in WWASA.
Visualising values for WWASA's shareholders through the spin-off, the annual general meeting held 3 May 2016 resolved not to pay dividend for the fiscal year 2015.
At the end of the quarter, the global fleet of pure car and truck carriers stood at approximately 720 vessels, with a combined lifting capacity of 3.9 mill CEU.
Six vessels entered service while five ships were sold for recycling, resulting in a net growth of only one vessel totalling 11.000 CEU.
The global orderbook counts approximately 60 vessels and 420.000 CEU, corresponding to approximately 11% of the fleet.
Negotiations to postpone deliveries are reported.
With the delivery of two Post-Panamax vessels to Wilh. Wilhelmsen ASA, Theben and Themis, in the second quarter of 2016, the combined fleet of the group companies grew to 134 vessels. The group operates approximately 22% of the global fleet.
The group has a combined lifting capacity of 889.000 CEU, up by 16.000 CEU in Q2.
The group controls 83 vessels, of which 26 were owned by WWASA.
WWL: 54 vessels, 384,000 CEU Eukor: 74 vessels, 470,000 CEU ARC: 6 vessels, 34,000 CEU
The size and capacity of the group's fleet makes the operating companies well positioned to lift all types of rolling cargoes.
The group has six vessels under construction at shipyards in Korea and China. All six vessels are large Post-Panamax, vessels with capacity for 8.000 CEU each. Four vessels are ordered by Wallenius Lines while two are under construction for EUKOR Car Carriers.
No new orders were placed by the group in the second quarter.
The group has 19 vessels on short-term charter arrangements and has the flexibility to redeliver six vessels in 2016 and nine vessels in 2017.
No group vessels were redelivered or recycled this quarter.
Worldwide, 16 car carriers have been recycled so far this year.
Approximately 5% of the global fleet are 28 years or older.
In the second quarter, the 27 WWASA owned and controlled vessels consumed 56.7 thousand tonnes fuel and carried out 3.7 million tonne miles2 of transport work. This was equal to 15.5 gram fuel consumed per cargo tonne miles down from 16.8 gram quarter on quarter. Four vessels docked in 2016 coupled with increased transport work carried out by the fleet during Q2 lead to the improved consumption per transported unit.
Correspondingly, the emitted CO2 was 48.2 gram per cargo tonnes-miles3, down from 53.6 quarter on quarter.
There were no environmental incidents in the second quarter. The fleet had 25 port state controls, up from 23 previous quarter. No vessels were detained and the deficiency rate indicates that the fleet is managed according to the group's standards.
The group's controlled vessels recorded one incident resulting in lost working time. The LTIF ratio of 0.68 for the second quarter, well below the group's target4 for the quarter.
1 HSEQ reporting is based on vessels owned and controlled by WWASA.
The joint venture companies WWL and EUKOR continues to be part of anti-trust investigations in several jurisdictions, of which the EU is among the bigger jurisdictions.
WWL reached a settlement with the US Department of Justice (DOJ) in July, agreeing to pay a fine of USD 98.9 million (USD 49.5 million for WWASAs account). WWASA made a provision for the outcome of the investigation in the third quarter of 2015. Consequently, the fine will not have a profit and loss effect for WWASA in 2016. The settlement also closed the DOJ investigation into EUKOR. EUKOR did not receive a fine.
The ongoing investigations of WWL and EUKOR are confidential. WWASA is therefore not in a position to comment on the ongoing investigations within remaining jurisdictions. The processes are expected to continue to take time, but further clarifications are expected during 2016 and 2017.
In mature markets, auto sales are expected to remain flat. The outlook for the emerging markets are mixed, with Russia and Brazil remaining weak and China and India showing slow growth.
Global construction, mining and agricultural equipment sales are forecasted to remain weak for the second half of 2016.
The board expects volume growth to remain weak over the next period.
The current global political landscape adds further uncertainties.
Lysaker, 4 August 2016 The board of directors of Wilh. Wilhelmsen ASA
Forward-looking statements presented in this report are based on various assumptions. The assumptions were reasonable when made, but are inherently subject to uncertainties and contingencies that are difficult or impossible to predict. WWASA cannot give assurances that expectations regarding the outlook will be achieved or accomplished
Joint ventures based on proportionate method
| USD mill | Shipping | Logistics | Holding | Eliminations | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Full | Full | Full | Full | Full | |||||||||||
| Q2 | Q2 | year | Q2 | Q2 | year | Q2 | Q2 | year | Q2 | Q2 | year | Q2 | Q2 | year | |
| QUARTER | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 |
| Operating revenue | 372 | 467 | 1 793 | 167 | 123 | 480 | 1 | 1 | 5 | (9) | (9) | (34) | 530 | 583 | 2 243 |
| Other income | |||||||||||||||
| Share of profit/(loss) from | |||||||||||||||
| associates | 3 | 5 | 11 | 31 | 14 | 36 | |||||||||
| Gain on sale of assets | 2 | 26 | 375 | 375 | 29 | ||||||||||
| Total income | 372 | 470 | 1 800 | 167 | 134 | 537 | 376 | 1 | 5 | (9) | (9) | (34) | 905 | 596 | 2 308 |
| Operating expenses | |||||||||||||||
| Voyage expenses | (168) | (224) | (847) | 8 | 7 | 29 | (160) | (217) | (818) | ||||||
| Vessel expenses | (20) | (22) | (85) | (20) | (22) | (85) | |||||||||
| Charter expenses | (69) | (84) | (316) | (69) | (84) | (316) | |||||||||
| Employee benefits | (28) | (31) | (125) | (10) | (9) | (36) | (2) | (2) | (7) | (40) | (42) | (168) | |||
| Other expenses | (16) | (13) | (245) | (145) | (106) | (413) | (3) | (1) | (6) | 1 | 1 | 5 | (162) | (119) | (658) |
| Depreciation and impairment | (34) | (38) | (153) | (4) | (2) | (6) | (38) | (40) | (160) | ||||||
| Total operating expenses | (334) | (412) | (1 771) | (159) | (116) | (455) | (4) | (4) | (14) | 9 | 9 | 34 | (488) | (523) | (2 205) |
| Operating profit/(loss) (EBIT)2 | 38 | 58 | 29 | 8 | 18 | 82 | 372 | (2) | (8) | (0) | 0 | 0 | 417 | 73 | 103 |
| Financial income/(expenses) | (10) | (10) | (72) | (1) | (1) | (6) | (9) | 15 | (50) | (21) | 4 | (128) | |||
| Profit/(loss) before tax | 28 | 48 | (43) | 6 | 17 | 76 | 363 | 13 | (58) | (0) | 0 | 0 | 396 | 77 | (25) |
| Tax income/(expense) | 4 | (3) | (2) | (5) | (5) | 24 | (3) | (7) | 23 | ||||||
| Profit/(loss) | 28 | 48 | (39) | 3 | 14 | 71 | 363 | 8 | (34) | (0) | 0 | 0 | 393 | 70 | (3) |
| Of which minority interest | (1) | (1) | (1) | (1) | |||||||||||
| Profit/(loss) after minority | |||||||||||||||
| interest | 27 | 48 | (39) | 2 | 14 | 69 | 363 | 8 | (34) | (0) | 0 | 0 | 392 | 70 | (4) |
1 The report is based on the proportionate method for all joint ventures.
The equity method provides a fair presentation of the group's financial position but the group's internal financial reporting is based on the proportionate method. The major contributors in the shipping and logistics segments are joint ventures and hence the proportionate method gives the chief operating decision-maker a higher level of information and a better picture of the group's operations.
2 Cash settled portion of bunker hedge swaps is included in net operating profit by reduction/(increase) of voyage related expenses.
As a result of rounding adjustments, the figures in one or more columns may not add up to the total of that column.
2016: Material gain/(loss) from disposal of assets and impairment charges
Logistics: Q1 An accounting gain of USD 80 million as a result of step acquisition in Vehicle Services Americas (VSA) and CAT-WWL, and sale of Vehicle Services Europe (VSE).
Shipping: Q1 Loss of USD 3.5 million related to recycling of three vessels.
Shipping: Q2 Loss of USD 1.5 million related to recycling of one vessel.
Holding: Q2 The demerger of Den Norske Amerikalinje AS (owns the Hyundai Glovis shareholding) contributed with a non-recurring gain of USD 375 million in the second quarter.
2015: Material gain/(loss) from disposal of assets and impairment charges
Logistics: Q1 WWASA sold 187 500 shares in Hyundai Glovis. The net gain recorded in the group's accounts amounted to USD 26 million. > Shipping: Q2 - No material gain/(loss)
Shipping: Q3 Impairment loss vessel for recycling USD 2.5 million.
Shipping: Q4 An accounting gain of USD 1.9 million as a result of a step acquisition in Armacup.
Joint ventures based on proportionate method
| USD mill | Shipping | Logistics | Holding | Eliminations | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Full | Full | Full | Full | Full | |||||||||||
| YTD | YTD | year | YTD | YTD | year | YTD | YTD | year | YTD | YTD | year | YTD | YTD | year | |
| Year to date | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 |
| Operating revenue | 728 | 925 | 1 793 | 333 | 244 | 480 | 2 | 3 | 5 | (18) | (16) | (34) | 1 046 | 1 156 | 2 243 |
| Other income | |||||||||||||||
| Share of profit/(loss) from | |||||||||||||||
| associates | 1 | 4 | 5 | 12 | 18 | 31 | 13 | 23 | 36 | ||||||
| Gain on sale of assets | 2 | 80 | 26 | 26 | 375 | 455 | 26 | 29 | |||||||
| Total income | 729 | 930 | 1 800 | 425 | 289 | 537 | 377 | 3 | 5 | (18) | (16) | (34) | 1 514 | 1 205 | 2 308 |
| Operating expenses | |||||||||||||||
| Voyage expenses | (335) | (445) | (847) | 15 | 13 | 29 | (320) | (432) | (818) | ||||||
| Vessel expenses | (40) | (45) | (85) | (40) | (45) | (85) | |||||||||
| Charter expenses | (136) | (163) | (316) | (136) | (163) | (316) | |||||||||
| Employee benefits | (59) | (62) | (125) | (21) | (18) | (36) | (3) | (4) | (7) | (83) | (84) | (168) | |||
| Other expenses | (26) | (23) | (245) | (291) | (210) | (413) | (4) | (3) | (6) | 2 | 3 | 5 | (319) | (233) | (658) |
| Depreciation and impairment | (67) | (74) | (153) | (5) | (3) | (6) | (72) | (78) | (160) | ||||||
| Total operating expenses | (663) | (813) | (1 771) | (317) | (231) | (455) | (7) | (7) | (14) | 18 | 16 | 34 | (970) | (1 034) | (2 205) |
| Operating profit/(loss) (EBIT)2 | 66 | 117 | 29 | 108 | 58 | 82 | 370 | (4) | (8) | (0) | (0) | 0 | 543 | 171 | 103 |
| Financial income/(expenses) | (28) | (24) | (72) | (2) | (6) | (9) | (16) | (50) | (36) | (42) | (128) | ||||
| Profit/(loss) before tax | 38 | 93 | (43) | 108 | 55 | 76 | 361 | (20) | (58) | (0) | (0) | 0 | 507 | 129 | (25) |
| Tax income/(expense) | (4) | (2) | 4 | (6) | (4) | (5) | 1 | 4 | 24 | (9) | (2) | 23 | |||
| Profit/(loss) | 35 | 92 | (39) | 102 | 51 | 71 | 361 | (16) | (34) | (0) | (0) | 0 | 498 | 127 | (3) |
| Of which minority interest | (1) | (1) | (1) | (1) | (2) | (1) | (1) | ||||||||
| Profit/(loss) after minority | |||||||||||||||
| interest | 34 | 92 | (39) | 101 | 51 | 69 | 361 | (16) | (34) | (0) | (0) | 0 | 496 | 126 | (4) |
1/2 Comments - see previous page
2016: Material gain/(loss) from disposal of assets and impairment charges
Logistics: Q1 - An accounting gain of USD 80 million as a result of step acquisition in Vehicle Services Americas (VSA) and CAT-WWL, and sale of Vehicle Services Europe (VSE).
Shipping: Q1 - Loss of USD 3.5 million related to recycling of three vessels.
Shipping: Q2 - Loss of USD 1.5 million related to recycling of one vessel.
Holding: Q2 - The demerger of Den Norske Amerikalinje AS (owns the Hyundai Glovis shareholding) contributed with a non-recurring gain of USD 375 million in the second quarter.
2015: Material gain/(loss) from disposal of assets and impairment charges
Logistics: Q1 - WWASA sold 0.5% shareholding in Hyundai Glovis. The net gain recorded in the group's accounts amounted to USD 26 million. > Shipping: Q2 - No material gain/(loss)
Shipping: Q3 - Impairment loss vessel for recycling USD 2.5 million.
Shipping: Q4 - An accounting gain of USD 1.9 million as a result of a step acquisition in Armacup.
Joint ventures based on proportionate method
| USD mill | Shipping | Logistics | Holding | Total incl elimination | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |
| QUARTER | 2015 | 2015 | 2016 | 2016 | 2015 | 2015 | 2016 | 2016 | 2015 | 2015 | 2016 | 2016 | 2015 | 2015 | 2016 | 2016 |
| Operating revenue | 437 | 430 | 356 | 372 | 117 | 118 | 167 | 167 | 1 | 1 | 1 | 1 | 546 | 541 | 515 | 530 |
| Other income | ||||||||||||||||
| Share of profit/(loss) from | ||||||||||||||||
| associates | 1 | 11 | 1 | 12 | 12 | 2 | 13 | |||||||||
| Gain on sale of assets | 2 | 80 | 375 | 2 | 80 | 375 | ||||||||||
| Total income | 437 | 433 | 357 | 372 | 129 | 120 | 259 | 167 | 1 | 1 | 1 | 376 | 558 | 545 | 608 | 905 |
| Operating expenses | ||||||||||||||||
| Voyage expenses | (209) | (193) | (167) | (168) | (202) | (184) | (160) | (160) | ||||||||
| Vessel expenses | (23) | (18) | (20) | (20) | (23) | (18) | (20) | (20) | ||||||||
| Charter expenses | (76) | (76) | (67) | (69) | (76) | (76) | (67) | (69) | ||||||||
| Employee benefits | (30) | (33) | (31) | (28) | (9) | (9) | (10) | (10) | (2) | (2) | (2) | (2) | (40) | (44) | (43) | (40) |
| Other expenses | (209) | (12) | (10) | (16) | (101) | (103) | (146) | (145) | (2) | (1) | (1) | (3) | (310) | (114) | (157) | (162) |
| Depreciation and impairment | (39) | (40) | (33) | (34) | (1) | (2) | (1) | (4) | (41) | (41) | (35) | (38) | ||||
| Total operating expenses | (587) | (371) | (329) | (334) | (111) | (113) | (158) | (159) | (4) | (3) | (3) | (4) | (692) | (478) | (482) | (488) |
| Operating profit/(loss) (EBIT)2 | (150) | 62 | 28 | 38 | 18 | 6 | 100 | 8 | (2) | (2) | (2) | 372 | (134) | 66 | 126 | 417 |
| Financial income/(expenses) | (41) | (7) | (17) | (10) | (2) | (1) | 2 | (1) | (29) | (5) | (9) | (73) | (13) | (15) | (21) | |
| Profit/(loss) before tax | (191) | 54 | 11 | 28 | 15 | 5 | 102 | 6 | (31) | (7) | (2) | 363 | (207) | 53 | 111 | 396 |
| Tax income/(expense) | (12) | 18 | (4) | (2) | 1 | (3) | (3) | 9 | 11 | (5) | 30 | (6) | (3) | |||
| Profit/(loss) | (203) | 72 | 7 | 28 | 13 | 6 | 99 | 3 | (22) | 4 | (1) | 363 | (212) | 82 | 105 | 393 |
| Of which minority interest | (1) | (1) | ||||||||||||||
| Profit/(loss) after minority | ||||||||||||||||
| interest | (203) | 72 | 7 | 27 | 13 | 6 | 99 | 2 | (22) | 4 | (1) | 363 | (213) | 82 | 104 | 392 |
1/2 Comments - see previous page
Joint ventures based on proportionate method
| USD mill | 01.04-30.06 | 01.04-30.06 | YTD | YTD | Full year |
|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2015 | |
| Financials | |||||
| Investment management 1 | 2.9 | (1.1) | 3.3 | 6.9 | 2.1 |
| Interest income | 1.9 | 0.8 | 3.5 | 1.9 | 3.7 |
| Other financial items | 0.2 | (0.4) | (0.8) | (1.7) | (12.0) |
| Net financial items | 5.0 | (0.8) | 6.0 | 7.1 | (6.3) |
| Net financials - interes rate | |||||
| Interest expenses | (18.0) | (14.8) | (33.3) | (28.9) | (57.3) |
| Interest rate derivatives - realised | (8.1) | (8.5) | (15.6) | (17.0) | (34.1) |
| Net interest expenses | (26.1) | (23.3) | (48.9) | (45.9) | (91.4) |
| Interest rate derivatives - unrealised | (1.1) | 18.5 | (15.4) | 19.9 | 24.3 |
| Net financial - currency | |||||
| Net currency gain/(loss) | (3.0) | (11.1) | (4.2) | (10.1) | 11.7 |
| Derivatives for hedging of cash flow risk - realised | (13.5) | (5.4) | (13.2) | (0.5) | (1.8) |
| Derivatives for hedging of cash flow risk - unrealised | 16.0 | 13.9 | 24.3 | (4.4) | (25.6) |
| Derivatives for hedging of translation risk - realised | (0.5) | (1.0) | (11.5) | ||
| Derivatives for hedging of translation risk - unrealised | (2.2) | 11.1 | 11.0 | (10.0) | (21.4) |
| Net currency items | (3.2) | 8.6 | 17.0 | (24.9) | (48.7) |
| Financial derivaties bunkers | |||||
| Valuation of bunker hedges | 5.1 | 0.9 | 6.5 | 1.7 | (6.3) |
| Realised portion of bunker hedges | (0.8) | (1.5) | |||
| Net financial derivatives bunkers | 4.3 | 0.9 | 5.1 | 1.7 | (6.3) |
| Financial income/(expenses) | (20.9) | 3.9 | (36.3) | (42.2) | (128.3) |
1 Includes financial derivatives for trading
| USD mill | 01.04-30.06 | 01.04-30.06 | YTD | YTD | Full year |
|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2015 | |
| Cash settled portion of bunker and fuel hedges | (1.4) | 1.0 | (5.0) | 1.0 | (5.3) |
Wilh. Wilhelmsen ASA group Q2 2016 Unaudited Page 15 of 30
| 2016 Q 2 | 2016 Q1 | 2016 YTD | 2015 YTD | 2015 Q 2 | 2015 FY | |
|---|---|---|---|---|---|---|
| Total income | 456 | 171 | 627 | 255 | 119 | 267 |
| EBITDA | 425 | 137 | 562 | 190 | 86 | 140 |
| EBIT | 405 | 117 | 523 | 149 | 65 | 60 |
| Net profit/(loss) | 392 | 104 | 496 | 126 | 70 | (4) |
| Earnings per share (USD) | 1.78 | 0.47 | 2.26 | 0.57 | 0.32 | (0.02) |
The second quarter was characterised by seasonally higher volumes, improved cargo mix and a substantial non-recurring gain of USD 375 million related to the demerger of Den Norske Amerikalinje (NAL) with its shareholding in Hyundai Glovis.The contribution from Hyundai Glovis was discontinued from 17 March.
The operating profit was USD 405 million based on a total income of 456 million, up from USD 117 million and USD 171 million respectively in the first quarter.
Year to date the group has seen lower volumes, a continued sub-optimal cargo mix coupled with pressure on margins. Further, the demerger of NAL resulted in the discontinuation of the contribution from Hyundai Glovis. With significant non-recurring net gains in both first and second quarter, the group recorded an increase in top line from USD 255 million in 2015 to USD 627 million for the first half of 2016. The operating profit improved from USD 149 million to USD 523 million.
Group profit before tax amounted to USD 391 million, up from USD 107 million in the first quarter. Year to date, the group profit before tax totalled USD 498 million, up from USD 123 million for the same period last year.
With a tax income of USD 1 million for the second quarter, the net profit after tax ended at USD 392 million, up USD 287 million from the first quarter. For the first six months, the group recorded a tax expense of USD 2 million leading
to a net profit of USD 496 million (USD 126 million for the first half 2015).
Net financial expenses in the second quarter amounted to USD 15 million compared with USD 10 million in the previous quarter. Year to date, the financial expenses totalled USD 25 million, one par with the first half of 2015.
Net interest expenses in the period totalled USD 19 million, up from an expense of USD 16 million in the first quarter. Year to date 2016 and 2015 net interest expenses amounted to approximately USD 35 million. There was no fair value gain or loss on interest derivatives in the second quarter, while this had an affect both in the previous quarter and year to date.
Net currency items for the quarter amounted to a loss of USD 3 million against a loss of USD 4 million in the previous quarter. For the first half 2016 and 2015 the similar figures were loss of USD 7 million and loss of USD 4 million. During the quarter, the USD appreciated towards EUR and NOK. Net currency items for the quarter amounted to a loss of USD 3 million. Realised losses incurred on hedging contracts, were offset by unrealised gains on hedging contracts in the second quarter.
The demerger of Den Norske Amerikalinje AS (owns the Hyundai Glovis shareholding) from the group was effective on 8 June 2016. The demerger was accounted for at fair value and contributed with a significant non-recurring gain in the second quarter of USD 375 million. The book value of equity, after the accounting again, was reduced with USD 730 million by the demerger.
The demerged entity named Treasure ASA was listed on the Oslo Stock Exchange on 8 June
Risk evaluation is integrated in all business operations at group and operational level.
WWASA has well established internal control systems for handling commercial, financial and operational risks.
The group is, through its global operation within ocean transportation and logistics services to the car and ro‐ro industry, exposed to certain market, operational and financial risks as described in the Annual report 2015. For a thorough explanation of the risk factors, please refer to pages 21‐22 and note 13, page 55‐60.
WWL and EUKOR are subject to investigations by competition authorities in several jurisdictions related to suspected antitrust infringements in the car carrier industry. WWASA is not in a position to comment on the ongoing investigations which WWL and EUKOR are part
Prospects
In mature markets, auto sales are expected to remain flat. The outlook for the emerging markets are mixed, with Russia and Brazil remaining weak and China and India showing slow growth.
Global construction, mining and agricultural equipment sales are forecasted to remain weak for the second half of 2016.
Visualising values for WWASA's shareholders through the spin-off, the annual general meeting held 3 May 2016 resolved not to pay dividend for the fiscal year 2015.
of. However, WWASA expects further clarification within 2016 and 2017.
WWL reached a settlement with the US Department of Justice (DOJ) in July, agreeing to pay a fine of USD 98.9 million (USD 49.5 million for WWASAs account). WWASA made a provision for the outcome of the investigation in the third quarter of 2015. Consequently, the fine will not have a profit and loss effect for WWASA in 2016. The settlement also closed the DOJ investigation into EUKOR. EUKOR did not receive a fine.
In addition, the group is exposed to a variety of non‐financial issues including political unrest in parts of the world, environmental disasters and changing legislations and/or regulatory requirements that potentially could have an impact on the group's activities and financial performance. Unethical business behavior could also impact the group's reputation and have an indirect impact on the company's profitability.
The board expects volume growth to remain weak over the next period.
The current global political landscape adds further uncertainties.
Lysaker, 4 August 2016 The board of directors of Wilh. Wilhelmsen ASA
Forward-looking statements presented in this report are based on various assumptions. The assumptions were reasonable when made, but are inherently subject to uncertainties and contingencies that are difficult or impossible to predict. WWASA cannot give assurances that expectations regarding the outlook will be achieved or accomplished.
| USD mill | Notes | 01.04-30.06 | 01.04-30.06 | YTD | YTD | Full year |
|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2015 | ||
| Operating revenue | 65 | 79 | 135 | 155 | 313 | |
| Other income | ||||||
| Share of profit/(loss) from joint ventures and associates | 15 | 40 | 118 | 73 | (72) | |
| Gain on sale of assets | 2 | 375 | 375 | 27 | 27 | |
| Total income | 456 | 119 | 627 | 255 | 267 | |
| Operating expenses | ||||||
| Vessel expenses | (9) | (11) | (19) | (23) | (42) | |
| Charter expenses | (6) | (5) | (12) | (11) | (22) | |
| Employee benefits | (12) | (14) | (24) | (26) | (52) | |
| Other expenses | (4) | (3) | (10) | (5) | (11) | |
| Depreciation and impairment | 3 | (20) | (21) | (40) | (40) | (80) |
| Total operating expenses | (50) | (54) | (104) | (105) | (207) | |
| Operating profit/(loss) (EBIT) | 405 | 65 | 523 | 149 | 60 | |
| Financial income/(expenses) | 4 | (15) | 9 | (25) | (26) | (98) |
| Profit/(loss) before tax | 391 | 74 | 498 | 123 | (38) | |
| Tax income/(expense) | 1 | (4) | (2) | 3 | 33 | |
| Profit/(loss) for the period attributable to the owners of the parent | 392 | 70 | 496 | 126 | (4) | |
| Basic and diluted earnings per share (USD)* | 1.78 | 0.32 | 2.26 | 0.57 | (0.02) |
* EPS is calculated based on 220 000 000 shares.
| USD mill | Notes | 01.04-30.06 2016 |
01.04-30.06 2015 |
YTD 2016 |
YTD 2015 |
Full year 2015 |
|---|---|---|---|---|---|---|
| Profit/(loss) for the period | 392 | 70 | 496 | 126 | (4) | |
| Other comprehensive income | ||||||
| Items that may be subsequently reclassified to the income statement | ||||||
| Cash flow hedges in joint venture, net of tax | 6 | 2 | 8 | 3 | (7) | |
| Currency translation differences in joint venture | (0) | 1 | 1 | (3) | (5) | |
| Items that will not be reclassified to the income statement | ||||||
| Remeasurement postemployment benefits, net of tax | 0 | 0 | 0 | 0 | 5 | |
| Other comprehensive income, net of tax | 6 | 3 | 9 | 0 | (8) | |
| Total comprehensive income attributable to owners of the parent | 398 | 73 | 505 | 126 | (12) |
The above consolidated income statement and comprehensive income should be read in conjunction with the accompanying notes.
| USD mill | Notes | 30.06.2016 | 30.06.2015 | 31.12.2015 |
|---|---|---|---|---|
| ASSETS | ||||
| Non current assets | ||||
| Deferred tax assets | 77 | 28 | 66 | |
| Goodwill and other intangible assets | 3 | 6 | 6 | 6 |
| Investments in vessels and other tangible assets | 3 | 1 913 | 1 853 | 1 827 |
| Investments in joint ventures and associates | 761 | 1 191 | 1 025 | |
| Other non current assets | 1 | 1 | 1 | |
| Total non current assets | 2 759 | 3 080 | 2 925 | |
| Current assets | ||||
| Current financial investments | 256 | 248 | 242 | |
| Other current assets | 21 | 31 | 24 | |
| Cash and cash equivalents | 150 | 160 | 108 | |
| Total current assets | 427 | 439 | 373 | |
| Total assets | 3 186 | 3 519 | 3 299 | |
| EQUITY and LIABILITIES | ||||
| Equity | ||||
| Share capital | 6 | 16 | 30 | 30 |
| Retained earnings and other reserves | 1 414 | 1 776 | 1 624 | |
| Total equity attributable to owners of the parent | 1 430 | 1 806 | 1 655 | |
| Non current liabilities | ||||
| Pension liabilities | 43 | 53 | 42 | |
| Non current interest-bearing debt | 8 | 1 245 | 1 277 | 1 135 |
| Other non current liabilities | 168 | 196 | 183 | |
| Total non current liabilites | 1 456 | 1 526 | 1 359 | |
| Current liabilities Current income tax liabilities |
7 | 3 | ||
| Public duties payable | 1 | 1 | 1 | |
| Other current liabilities | 292 | 186 | 281 | |
| Total current liabilities | 300 | 187 | 285 | |
| Total equity and liabilities | 3 186 | 3 519 | 3 299 |
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Joint ventures based on equity method
| USD mill | Note | 01.04-30.06 | 01.04-30.06 | YTD | YTD | Full year |
|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2015 | ||
| Cash flow from operating activities | ||||||
| Profit/(loss) before tax | 391 | 74 | 498 | 123 | (38) | |
| Financial (income)/expenses, excluding unrealised financial derivates | 33 | 34 | 55 | 33 | 68 | |
| Financial derivatives unrealised | (19) | (44) | (30) | (7) | 30 | |
| Depreciation/impairment | 4 | 20 | 21 | 40 | 40 | 80 |
| (Gain)/loss on sale of tangible assets | 3 | |||||
| Net (gain)/loss from sale of associate | (26) | (26) | ||||
| (Gain)/loss on demerger | (375) | (375) | ||||
| Change in net pension assets/liabilities | (1) | 1 | 1 | (4) | (10) | |
| Other change in working capital | 32 | (4) | 30 | (3) | (9) | |
| Share of (profit)/loss from joint ventures and associates | (15) | (40) | (118) | (73) | 72 | |
| Dividend received from joint ventures and associates | 53 | 33 | 53 | 33 | 41 | |
| Tax paid (company income tax, witholding tax) | (2) | (3) | (2) | (3) | (14) | |
| Net cash flow provided by/(used in) operating activities | 117 | 73 | 155 | 113 | 194 | |
| Cash flow from investing activities | ||||||
| Proceeds from sale of tangible assets | 13 | 7 | 7 | |||
| Investments in vessels, other tangible and intangible assets | 4 | (130) | (73) | (142) | (141) | (154) |
| Net proceeds from sale of associate | 39 | 39 | ||||
| Investments in joint ventures and associates | ||||||
| Proceeds from sale of financial investments | 33 | 23 | 46 | 48 | 94 | |
| Investments in financial investments | (42) | (36) | (59) | (72) | (127) | |
| Dividend received (financial investments) | 1 | 2 | 2 | 2 | 2 | |
| Interest received | 1 | 1 | ||||
| Changes in other investments | 1 | 1 | 1 | |||
| Net cash flow provided by/(used in) investing activities | (138) | (83) | (139) | (116) | (137) | |
| Cash flow from financing activities | ||||||
| Proceeds from issue of debt | 160 | 64 | 160 | 128 | 221 | |
| Repayment of debt | (31) | (26) | (69) | (46) | (178) | |
| Interest paid including interest derivatives | (13) | (10) | (34) | (31) | (77) | |
| Realised financial derivatives | (14) | (5) | (14) | (13) | ||
| Dividend to shareholders/ demerger Den Norske Amerikalinje AS | (17) | (28) | (17) | (28) | (41) | |
| Net cash flow provided by/(used in) financing activities | 84 | (5) | 26 | 23 | (89) | |
| Net increase in cash and cash equivalents | 63 | (16) | 42 | 20 | (32) | |
| Cash and cash equivalents, excluding restricted cash, at beginning of period | 87 | 176 | 108 | 140 | 140 | |
| Currency on cash and cash equivalents* | ||||||
| Cash and cash equivalents at end of period | 150 | 160 | 150 | 160 | 108 | |
* The group is located and operating world wide and every entity has several bank accounts in different currencies. Unrealised currency effects are included in net cash provided by operating activities.
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Joint ventures based on equity method
| USD mill | Share capital | Retained earnings | Total equity |
|---|---|---|---|
| 2016 - Year to date | |||
| Balance at 31.12.2015 | 30 | 1 623 | 1 655 |
| Profit/(loss) for the period | 496 | 496 | |
| Other comprehensive income | 9 | 9 | |
| Total comprehensive income | 0 | 505 | 505 |
| Demerger Den Norske Amerikalinje AS | (15) | (716) | (730) |
| Balance 30.06.2016 | 16 | 1 414 | 1 430 |
| 2015 - Year to date | |||
| Balance at 31.12.2014 | 30 | 1 675 | 1 707 |
| Profit/(loss) for the period | 126 | 126 | |
| Other comprehensive income | 0 | ||
| Total comprehensive income | 0 | 126 | 126 |
| Dividend to shareholders | (28) | (28) | |
| Balance 30.06.2015 | 30 | 1 775 | 1 806 |
| 2015 - Full year | |||
| Balance at 31.12.2014 | 30 | 1 675 | 1 707 |
| Profit/(loss) for the year | (4) | (4) | |
| Other comprehensive income | (8) | (8) | |
| Total comprehensive income | 0 | (12) | (12) |
| Dividend to shareholders | (41) | (41) | |
| Balance 31.12.2015 | 30 | 1 623 | 1 655 |
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Joint ventures based on equity method
This consolidated interim financial report has been prepared in accordance with International Accounting Standards (IAS 34), "interim financial reporting". The consolidated interim financial reporting should be read in conjunction with the annual financial statements for the year end 31 December 2015 for Wilh.Wilhelmsen ASA group (WWASA), which has been prepared in accordance with IFRS's endorsed by the EU.
The accounting policies implemented are consistent with those of the annual financial statements for WWASA for the year end 31 December 2015.
There are no new standards or amendments to standards released during 2016.
As a result of rounding adjustments, the figures in one or more columns may not add up to the total of that column.
The demerger of Den Norske Amerikalinje AS (owns the Hyundai Glovis shareholding) from the group was effective on 8 June 2016. The demerger was accounted for at fair value and contributed with a significant non-recurring gain in the second quarter of USD 375 million. The book value of equity, after the accounting gain, was reduced with 730 million by the demerger.
The demerged entity named Treasure ASA was listed on the Oslo Stock Exchange on 8 June 2016. All shareholders of WWASA received 1 share in Treasure ASA for every share held in WWASA.
WWL has acquired the full ownership of WWL Vehicle Services Americas (VSA), previously a joint venture, based in USA. The company employs 3 400 employees and handles some 4.7 million units annually.
With full ownership, WWL strengthens its position as a leading provider of vehicle processing for automotive manufacturers in North America.
WWL has also acquired the full ownership of CAT-WWL, previously a joint venture, based in South Africa.
With full ownership in CAT-WWL, a network of ten vehicle-processing facilities, WWL becomes one of the top independent providers of vehicle processing services to support automotive manufacturers in South Africa. The business employs more than 900 workers and handles some 680 000 units.
In addition, WWL has sold Vehicle Services Europe (VSE) to Groupe CAT. The company employs some 400 employees with truck based inland distribution in Europe and three vehicle processing centres in Germany.
In the first quarter of 2015, WWASA sold 187 500 shares in Hyundai Glovis with net proceeds of approximately USD 39 million. The net gain recorded in the 2015 group's accounts amounted to USD 26 million.
Joint ventures based on equity method
| Vessels & | ||||
|---|---|---|---|---|
| Other tangible | Newbuilding | Total tangible | Intangible | |
| USD mill | assets | contracts | assets | assets |
| 2016 - Year to date | ||||
| Cost price at 01.01 | 2 | 2 472 | 2 474 | 7 |
| Additions | 142 | 142 | ||
| Disposal | (160) | (160) | ||
| Cost price at 30.06 | 2 | 2 455 | 2 456 | 7 |
| Accumulated depreciation and impairment losses at 01.01 | (1) | (646) | (648) | (1) |
| Depreciation | (40) | (40) | ||
| Disposal Accumulated depreciation and impairment losses at 30.06 |
(1) | 143 (542) |
143 (544) |
(1) |
| Carrying amounts at 30.06 | 0 | 1 913 | 1 913 | 6 |
| 2015 - Year to date | ||||
| Cost price 01.01 | 2 | 2 400 | 2 401 | 7 |
| Additions | 141 | 141 | ||
| Disposal | (79) | (79) | ||
| Cost price at 30.06 | 1 | 2 462 | 2 463 | 7 |
| Accumulated depreciation and impairment losses 01.01 | (1) | (640) | (642) | (1) |
| Depreciation | (40) | (40) | ||
| Disposal | 72 | 72 | ||
| Accumulated depreciation and impairment losses at 30.06 | (1) | (608) | (611) | (1) |
| Carrying amounts at 30.06 | 0 | 1 853 | 1 853 | 6 |
| 2015 - Full year | ||||
| Cost price at 01.01 | 2 | 2 400 | 2 401 | 7 |
| Additions | 154 | 154 | ||
| Disposal | (81) | (82) | ||
| Cost price at 31.12 | 2 | 2 472 | 2 474 | 7 |
| Accumulated depreciation and impairment losses at 01.01 | (1) | (640) | (642) | (1) |
| Depreciation | (80) | (80) | ||
| Disposal | 75 | 75 | ||
| Accumulated depreciation and impairment losses at 31.12 | (1) | (646) | (648) | (1) |
| Carrying amounts at 31.12 | 0 | 1 827 | 1 827 | 6 |
Joint ventures based on equity method
| USD mill | 01.04-30.06 | 01.04-30.06 | YTD | YTD | Full year |
|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2015 | |
| Financials | |||||
| Investment management 1 | 2.9 | (1.4) | 3.3 | 6.7 | 1.3 |
| Interest incomes | 0.1 | 0.2 | 0.2 | 0.8 | 1.0 |
| Other financial items | (0.3) | (0.4) | (0.6) | (1.8) | (11.5) |
| Net financial items | 2.7 | (1.6) | 2.9 | 5.7 | (9.2) |
| Net financials - interes rate | |||||
| Interest expenses | (11.0) | (9.5) | (20.2) | (18.6) | (36.0) |
| Interest rate derivatives - realised Net interest expenses |
(7.8) (18.8) |
(7.9) (17.4) |
(14.8) (35.0) |
(15.8) (34.3) |
(31.5) (67.5) |
| Interest rate derivatives - unrealised | (0.3) | 17.7 | (11.8) | 20.0 | 23.6 |
| Net financial - currency | |||||
| Net currency gain/(loss) | (2.7) | (9.9) | (7.2) | (4.3) | 22.2 |
| Derivatives for hedging of cash flow risk - realised | (13.5) | (5.4) | (13.2) | (0.5) | (1.8) |
| Derivatives for hedging of cash flow risk - unrealised | 16.0 | 13.9 | 24.3 | (4.4) | (25.6) |
| Derivatives for hedging of translation risk - realised | (0.5) | (1.0) | (11.5) | ||
| Derivatives for hedging of translation risk - unrealised | (2.2) | 11.1 | 11.0 | (10.0) | (21.4) |
| Net financial - currency | (2.9) | 9.7 | 14.0 | (19.2) | (38.2) |
| Financial derivatives bunkers | |||||
| Valuation of bunker hedges | 5.1 | 0.9 | 6.5 | 1.7 | (6.3) |
| Realised portion of bunker hedges | (0.8) | (1.5) | |||
| Net financial derivatives bunkers | 4.3 | 0.9 | 5.1 | 1.7 | (6.3) |
| Financial income/(expenses) | (14.9) | 9.4 | (24.8) | (26.2) | (97.6) |
1 Includes financial derivatives for trading
The effective tax rate for the group will, from period to period, change dependent on the group gains and losses from investments inside the exemption method and tax exempt revenues from tonnage tax regimes.
Tonnage tax is considered as operating expense in the accounts.
The company's share capital is as follows:
The share capital was reduced with NOK 106 million / USD 15 million.
Number of shares NOK mill USD mill
Joint ventures based on equity method
The demerger of Den Norske Amerikalinje AS (owns the Hyundai Glovis shareholding) from the group was effective on 8 June 2016. The demerged entity named Treasure ASA was listed on the Oslo Stock Exchange on 8 June 2016. All shareholders of WWASA received 1 share in Treasure ASA for every share held in WWASA.
Visualising values for WWASA's shareholders through the spin-off, the annual general meeting held 3 May 2016 resolved not to pay dividend for the fiscal year 2015.
Dividend for fiscal year 2014 of NOK 1.00 per share, total of approximately USD 28 million, was paid to the shareholders in May 2015. The dividend had effect on retained earnings in the second quarter of 2015.
Based on the company's distributable equity as of 31 December 2014 (less dividend paid in the first half of 2015), an additional dividend of NOK 0.50 per share, total of approximately USD 13 million, was paid in November 2015. The dividend had effect on retained earnings and other reserves in the fourth quarter of 2015.
| USD mill | 30.06.2016 | 30.06.2015 | 31.12.2015 |
|---|---|---|---|
| Non current interest-bearing debt | 1 245 | 1 277 | 1 135 |
| Current interest-bearing debt | 180 | 115 | 184 |
| Total interest-bearing debt | 1 425 | 1 393 | 1 319 |
| Cash and cash equivalents | 150 | 160 | 108 |
| Current financial investments | 256 | 248 | 242 |
| Net interest-bearing debt | 1 019 | 984 | 970 |
| Net interest-bearing debt in joint ventures (group's share) | 30.06.2016 | 30.06.2015 | 31.12.2015 |
| Non current interest-bearing debt | 725 | 675 | 640 |
| Current interest-bearing debt | 64 | 87 | 67 |
| Total interest-bearing debt | 789 | 762 | 707 |
| Cash and cash equivalents | 215 | 282 | 262 |
| Current financial investments | |||
| Net interest-bearing debt | 574 | 480 | 445 |
| Specification of interest-bearing debt | 30.06.2016 | 30.06.2015 | 31.12.2015 |
| Mortgages | 997 | 1 007 | 1 049 |
| Leasing commitments | 158 | 82 | |
| Bonds | 270 | 304 | 270 |
| Total interest-bearing debt | 1 425 | 1 393 | 1 319 |
| Repayment schedule for interest-bearing debt | |||
| Due in year 1 | 125 | 52 | 184 |
| Due in year 2 | 112 | 189 | 105 |
| Due in year 3 | 290 | 101 | 279 |
| Due in year 4 | 349 | 286 | 337 |
| Due in year 5 and later | 549 | 764 | 414 |
| Total interest-bearing debt | 1 425 | 1 393 | 1 319 |
Joint ventures based on equity method
Total financial instruments and short term financial investments:
| USD mill | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value through the income statement | ||||
| Financial derivatives | 1 | 1 | ||
| Equities | 69 | 69 | ||
| Bonds | 187 | 187 | ||
| Total financial assets 30.06.2016 | 256 | 1 | 0 | 257 |
| Financial liabilities at fair value through the income statement | ||||
| Financial derivatives | 215 | 215 | ||
| Total financial liabilities 30.06.2016 | 0 | 215 | 0 | 215 |
| Financial assets at fair value through the income statement | ||||
| Financial derivatives | 2 | 2 | ||
| Equities | 72 | 72 | ||
| Bonds | 169 | 169 | ||
| Total financial assets 31.12.2015 | 241 | 2 | 0 | 243 |
| Financial liabilities at fair value through the income statement | ||||
| Financial derivatives | 246 | 246 | ||
| Total financial liabilities 31.12.2015 | 0 | 246 | 0 | 246 |
| 2016 | 2015 | |||
| Changes in level 3 instruments | ||||
| Opening balance 01.01 | 0 | 0 | ||
| Closing balance | 0 | 0 |
The fair value of financial instruments traded in an active market is based on quoted market prices at the balance sheet date. The fair value of financial instruments that are not traded in an active market (over-the-counter contracts) are based on third party quotes.
These quotes use the maximum number of observable market rates for price discovery. Specific valuation techniques used to value financial instruments include:
Quoted market prices or dealer quotes for similar instruments
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves
The fair value of interest rate swap option (swaption) contracts is determined using observable volatility, yield curve and time-to-maturity parameters at the balance sheet date, resulting in a swaption premium
The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value and
The fair value of foreign exchange option contracts is determined using observable forward exchange rates, volatility, yield curve and time-to-maturity parameters at the balance sheet date, resulting in an option premium.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis.
The quoted market price used for financial assets held by the group is the current mid price. These instruments are included in level 1. Instruments included in level 1 are listed equities and liquid investment grade bonds.
The fair value of financial instruments that are not traded in an active market are based on third-party quotes (Mark-to-Market). These quotes use the maximum number of observable market rates for price discovery. The different valuation techniques typically applied by financial counterparties (banks) were described above. These instruments - FX and IR derivatives - are included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is in level 3. Primarily illiquid investment funds and structured notes are included in level 3.
Joint ventures based on equity method
| USD mill | Shipping Logistics |
Holding | Eliminations | Total | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Full | Full | Full | Full | Full | |||||||||||
| Q2 | Q2 | year | Q2 | Q2 | year | Q2 | Q2 | year | Q2 | Q2 | year | Q2 | Q2 | year | |
| QUARTER | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 |
| Operating revenue | 65 | 79 | 312 | 1 | 1 | 5 | (1) | (1) | (5) | 65 | 79 | 313 | |||
| Share of profit/(loss) from joint | |||||||||||||||
| ventures and associates1 | 13 | 26 | (115) | 2 | 14 | 43 | 15 | 40 | (72) | ||||||
| Gain on sale of assets | 26 | 375 | 375 | 27 | |||||||||||
| Total income | 79 | 105 | 197 | 2 | 14 | 69 | 376 | 1 | 5 | (1) | (1) | (5) | 456 | 119 | 267 |
| Operating profit before | |||||||||||||||
| depreciation and impairment | 51 | 74 | 79 | 2 | 14 | 69 | 372 | (2) | (8) | 425 | 86 | 140 | |||
| Depreciation and impairment | (20) | (21) | (80) | (20) | (21) | (80) | |||||||||
| Operating profit/(loss) (EBIT) | 32 | 53 | (1) | 2 | 14 | 69 | 372 | (2) | (8) | 0 | (0) | 0 | 405 | 65 | 60 |
| Financial income/(expense) | (6) | (6) | (48) | (9) | 15 | (50) | (15) | 9 | (98) | ||||||
| Profit/(loss) before tax | 26 | 47 | (49) | 2 | 14 | 69 | 363 | 13 | (58) | 0 | (0) | 0 | 391 | 74 | (38) |
| Tax income/(expenses) | 1 | 1 | 10 | (5) | 24 | 1 | (4) | 33 | |||||||
| Profit/(loss) for the period | |||||||||||||||
| attributable to the owners of the | |||||||||||||||
| parent | 27 | 48 | (39) | 2 | 14 | 69 | 363 | 8 | (34) | 0 | (0) | (0) | 392 | 70 | (4) |
| USD mill | Shipping Logistics |
Holding | Eliminations | Total | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Full | Full | Full | Full | Full | |||||||||||
| YTD | YTD | year | YTD | YTD | year | YTD | YTD | year | YTD | YTD | year | YTD | YTD | year | |
| Year to date | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 |
| Operating revenue | 134 | 155 | 312 | 2 | 3 | 5 | (2) | (2) | (5) | 135 | 155 | 313 | |||
| Share of profit/(loss) from joint | |||||||||||||||
| ventures and associates1 | 16 | 49 | (115) | 101 | 24 | 43 | 118 | 73 | (72) | ||||||
| Gain on disposal of assets | 26 | 26 | 375 | 375 | 27 | 27 | |||||||||
| Total income | 151 | 204 | 197 | 101 | 51 | 69 | 377 | 3 | 5 | (2) | (2) | (5) | 627 | 255 | 267 |
| Operating profit before | |||||||||||||||
| depreciation and impairment | 91 | 143 | 79 | 101 | 51 | 69 | 370 | (4) | (8) | 562 | 190 | 140 | |||
| Depreciation and impairment | (40) | (40) | (80) | (40) | (40) | (80) | |||||||||
| Operating profit/(loss) (EBIT) | 52 | 103 | (1) | 101 | 51 | 69 | 370 | (4) | (8) | 0 | (0) | 0 | 523 | 149 | 60 |
| Financial income/(expenses) | (16) | (10) | (48) | (9) | (16) | (50) | (25) | (26) | (98) | ||||||
| Profit/(loss) before tax | 36 | 93 | (49) | 101 | 51 | 69 | 361 | (20) | (58) | 0 | (0) | 0 | 498 | 123 | (38) |
| Tax income/(expense) | (2) | (1) | 10 | 1 | 4 | 24 | (2) | 3 | 33 | ||||||
| Profit/(loss) for the period attributable to the owners of the |
|||||||||||||||
| parent | 34 | 92 | (39) | 101 | 51 | 69 | 361 | (16) | (34) | 0 | (0) | (0) | 496 | 126 | (4) |
1 Cash settled portion of bunker hedge swaps is included in net operating profit by reduction/(increase) of voyage related expenses.
Joint ventures based on equity method
Wilh. Wilhelmsen Holding ASA (WWH) delivers services to the WWASA group related to inter alia human resources, accounting services, tax, communication, treasury and legal services ("Shared Services") and in-house services such as canteen, post, switchboard and rent of office facilities. Generally, Shared Services are priced using a cost plus 5% margin calculation, in accordance with the
principles set out in the OECD Transfer Pricing Guidelines and are delivered according to agreements that are renewed annually. In addition, WWASA group has several transactions with associates. The contracts governing such transactions are based on commercial market terms and mainly relate to the chartering of vessels on short and long term charters.
The joint venture companies WWL and EUKOR continues to be part of anti-trust investigations in several jurisdictions, of which the EU is among the bigger jurisdictions.
The ongoing investigations of WWL and EUKOR are confidential. WWASA is therefore not in a position to comment on the ongoing investigations within remaining jurisdictions. The processes are expected to continue to take time, but further clarifications are expected during 2016 and 2017.
WWL reached a settlement with the US Department of Justice (DOJ) in July, agreeing to pay a fine of USD 98.9 million (USD 49.5 million for WWASAs account). WWASA made a provision for the outcome of the investigation in the third quarter of 2015. Consequently, the fine will not have a profit and loss effect for WWASA in 2016. The settlement also closed the DOJ investigation into EUKOR. EUKOR did not receive a fine.
No other material events occurred between the balance sheet date and the date when the accounts were presented providing new information about conditions prevailing on the balance sheet date.
We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 June 2016 have been prepared in accordance with IAS 34 – Interim Financial Reporting, and gives a true and fair view of the group's assets, liabilities, financial position and profit as a whole.
We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the set of financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year, and major related parties transactions.
Lysaker, 4 August 2016 The board of directors of Wilh. Wilhelmsen ASA
Thomas Wilhelmsen Diderik Schnitler Christian Berg Chair
Marianne Lie Bente Brevik Jan Eyvin Wang President and CEO
Wilh. Wilhelmsen ASA PO Box 33 NO-1324 Lysaker, NORWAY Tel: +47 67 58 40 00 http://www.wilhelmsenasa.com/
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