Wallenius Wilhelmsen: Change in accounting treatment

Wallenius Wilhelmsen has decided to change the accounting treatment relating to the options over the 20% non-controlling interest in EUKOR, following a review and recommendation by the group's new auditor. As part of the required restatements, equity in 2023 and Q1-24 will be reduced by USD 977m and USD 929m, respectively. The group is financially solid, and this accounting change does not affect the group's strong performance or ability to deliver on dividend policy and planned payout. The accounting change involves recognizing a liability for the put option and removing the non-current asset currently recognized. The combined effect of these two adjustments will be recognized in equity. The required restatements of the financial statements are non-cash adjustments. The restatements will not affect the group's strong performance, the ability to deliver on dividend policy and planned payout, the ability to meet financial obligations, nor have any adverse effect on covenants in outstanding debt facilities. While the equity ratio will be reduced, the group continues to deliver on all financial targets. Background and historical accounting treatment Since 2018 Wallenius Wilhelmsen has in its financial statements recognized the put and call options relating to Hyundai Motor Group's (HMG) 20% non-controlling interest (NCI) in EUKOR, in which group owns the remaining 80%. The options have been exercisable since 2018 as a result of the group's share of HMG's transported volumes falling below 50% (currently we transport 40%). The options have since 2018 been accounted for as a one integrated derivative financial instrument, recognized as a non-current asset when the fair value of the NCI exceeds the exercise price of the put and call option. Since then, any non-cash changes in fair value of the net derivative have been recognized in the income statement as Other gain/(loss). The current accounting treatment of the options was decided by the group with the involvement and audit by the previous auditor, PwC. They also reconfirmed the treatment following a request by the group in 2022. PwC now recognizes that a change in accounting treatment is warranted. New accounting treatment From the financial year 2024, the group changed its auditor to EY. As part of their reviews, the accounting treatment for the put and call options was found not to be in accordance with IFRS accounting standards. It has been concluded that the put option liability must be recognized in full and the non-current asset currently recognized must be removed. The combined effect will be recognized in equity. Consequently, the group will restate its 2023 and Q1-24 financial statements. The restatements do not entail reissuance of the annual report for 2023, nor the report for Q1-24. The final restatement effects will be outlined in the Q2-24 financial report, which will be issued on 13 August 2024. Going forward, there will be no further gains or losses linked to change in value of the option agreement recognised in the income statement. Under the revised accounting treatment, any future changes in value of the put liability will be recognised directly in equity. As long as the option is not exercised, the associated liability is non-cash and will not be included in our net interest-bearing debt calculations. Impact of the preliminary restatement The restatement of the 2023 and Q1-24 financial statements will increase current liabilities with USD 878m and USD 847m, respectively. The original shareholders agreement stipulates that an option notice must be settled after 30 days, and the obligation will be classified as a current liability. In addition, non-current assets will be reduced by USD 98m and USD 82m, respectively, which is the value of the integrated derivative financial instrument recognized at year-end 2023 and in Q1-24 under the current accounting treatment. Consequently, equity will be reduced by USD 977m and USD 929m, respectively. In the income statement for 2023 and Q1-24, Other gain/(loss) of -USD 6m and -USD 17m, respectively, would be removed and improve EBIT, Profit before tax and Net profit by the same amounts. Note that the above amounts are preliminary effects subject to verification in the Q2-24 report. See restated amount for 2023 and Q1-24 below. 2023 preliminary restated amounts (prior values in brackets) Balance Sheet: Other non-current assets: USD 125m (USD 224m) Equity: USD 3,080m (USD 4,056m) Other current liabilities: USD 1,443m (USD 564m) Income Statement: EBIT: USD 1,224m (USD 1,218m) Profit before tax: USD 1,041m (USD 1,035m) Profit after tax: USD 974m (USD 967m) Financial targets: ROCE: 18.2% (16.2%) Equity ratio: 36.0% (46.9%) Leverage ratio: 1.1x (not affected) Q1-24 preliminary restated amounts (prior values in brackets) Balance Sheet: Other non-current assets: USD 133m (USD215m) Equity: USD 3,211m (USD 4,140m) Other current liabilities: USD 1,496m (USD 649m) Income Statement: EBIT: USD 290m (USD 273m) Profit before tax: USD 234m (USD 217m) Profit after tax: USD 201m (USD 185m) Financial targets: ROCE: 18.9% (16.6%%) Equity ratio: 36.5% (46.6%) Leverage ratio: 1.0x (not affected) In connection with the restatement of our accounts we will host a conference call for interested parties at 18:00 hrs CET on Friday, 7 June 2024. Dial-in details as follows: Norway: +47 21 95 63 42 Sweden: +46 8 1241 0952 Denmark: +45 7876 8490 UK: +44 203 769 6819 US: +1 646 787 0157 Conference code: 922654 For those missing the first call, we will host a second call Sunday, 9 June 2024 at 15:00 CET. Dial-in details and conference code for the Sunday call are the same as for the Friday call. For further information, please contact: Anders Redigh Karlsen, VP Global IR & Market Insight Tel: +47 994 20 293 Email: anders.karlsen@walwil.com Torbjørn Wist, CFO Tel: +47 906 62 222 Email: torbjorn.wist@walwil.com About Wallenius Wilhelmsen The Wallenius Wilhelmsen group is a market leader in roll-on/roll-off (RoRo) shipping and vehicle logistics, managing the distribution of cars, trucks, rolling equipment and breakbulk to customers all over the world. The group operates around 125 vessels servicing 15 trade routes to six continents, a global inland distribution network, 66 processing centers and eight marine terminals. With a head office in Oslo, Norway, the Wallenius Wilhelmsen group has 9,500 employees working across 28 countries worldwide. This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act. This stock exchange announcement was published by Anders Redigh Karlsen, VP Global IR and Market Insight on the date and time provided.

Source: NewsWeb