6-K
ZIM Integrated Shipping Services Ltd. (ZIM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of November, 2021
Commission File Number: 001-39937
ZIM Integrated Shipping Services Ltd.
(Exact Name of Registrant as Specified in ItsCharter)
9 Andrei Sakharov Street
P.O. Box 15067
Matam, Haifa 3190500, Israel
+972 (4) 865-2000
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| Form 20-F | x | Form 40-F | ¨ |
|---|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
| Yes | ¨ | No | x |
|---|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
| Yes | ¨ | No | x |
|---|
On November 17, 2021, ZIM Integrated Shipping Services Ltd. (the “Company”) issued a press release announcing its consolidated results for the three months and nine months ended on September 30, 2021. A copy of this press release and the Company’s condensed consolidated unaudited interim financial statements for the period ended on September 30, 2021 are attached herewith as Exhibit 99.1 and Exhibit 99.2, respectively.
The information in this Form 6-K (including Exhibit 99.1 and Exhibit 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ZIM INTEGRATED SHIPPING SERVICES LTD. | |
|---|---|
| By: | /s/ Noam Nativ |
| Noam Nativ | |
| EVP General Counsel and Corporate Secretary |
Date: November 17, 2021
EXHIBIT INDEX
| EXHIBIT NO. | DESCRIPTION |
|---|---|
| 99.1 | Press Release dated November 17, 2021 |
| 99.2 | Condensed<br> consolidated unaudited interim financial statements for the period ended on September 30, 2021 |
Exhibit 99.1
ZIMReports Record Financial Results for theThird Quarter of 2021
GeneratedHighest Ever Quarterly Net Income of $1.46 Billion andAdjusted EBITDA^1^ of $2.08 Billion
Transitioned to Quarterly Dividend Payout, Declared Q3 2021 Dividend of $2.50 per Share, Representing Approx. 20% of Quarterly Net Income;30-50% of Total 2021 Net Income Expected to be Distributed in 2022
SignificantlyIncreased 2021 Guidance to Between $6.2 Billion and $6.4 Billion of Adjusted EBITDA and Between $5.4 Billion to $5.6 Billion of AdjustedEBIT^2^
Q32021 Carried Volume Increased 16% Year Over Year, Significantly Higher than Market Growth
Haifa, Israel, November 17, 2021 – ZIM Integrated Shipping Services Ltd. (NYSE: ZIM), a global container liner shipping company, announced today its consolidated results for the three and nine months ended September 30, 2021.
ThirdQuarter 2021 Highlights
| · | Net income for the third quarter of 2021 was $1.46<br> billion or $12.16 per diluted share^3^, compared to $144 million or $1.36 per diluted<br> share in the third quarter of 2020, a year-over-year increase of 913% and 794%, respectively. |
|---|
^1^ See disclosure regarding “Use of Non-IFRS Financial Measures” below.
^2^ See disclosure regarding “Use of Non-IFRS Measures in the Company’s 2021 Guidance” below.
^3^ Earnings per share calculation for all periods reflect a share split of 1:10 that became effective in 2021. The number of outstanding shares as of September 30, 2021, was 118,588,188.
| · | Adjusted<br> EBITDA^^ for the third quarter of 2021 was $2.08 billion, compared to $262 million<br> in the third quarter of 2020, a year-over-year increase of 693% |
|---|---|
| · | Operating<br> income (EBIT) for the third quarter of 2021 was $1.86 billion, compared to $189 million in<br> the third quarter of 2020, a year-over-year increase of 884%. Reconciliation items between<br> operating income (EBIT) and Adjusted EBIT in the third quarter of 2021 were negligible |
| --- | --- |
| · | Revenues<br> for the third quarter of 2021 were $3.14 billion, compared to $1.01 billion in the third<br> quarter of 2020, a year-over-year increase of 210% |
| --- | --- |
| · | ZIM<br> carried 884 thousand TEUs in the third quarter of 2021, a year-over-year increase of 16% |
| --- | --- |
| · | The<br> average freight rate per TEU in the third quarter of 2021 was $3,226, a year-over-year increase<br> of 174% |
| --- | --- |
| · | Net<br> leverage ratio^1^ of 0.0x at September 30, 2021, compared to 1.2x at December 31,<br> 2020 |
| --- | --- |
| · | Declared<br> a transition to interim quarterly dividend payout of approximately 20% of quarterly net income,<br> with the fourth quarter dividend payout to total 30-50% of the annual net income, including<br> the interim quarterly dividends; declared approximately $296 million, or $2.50 per share<br> Q3 dividend (representing approximately 20% of Q3 2021 net income) to be paid on December 27,<br> 2021 |
| --- | --- |
| · | Announced<br> the strategic long-term chartering agreement and option exercise with Seaspan for a total<br> of 15 x 7,000 TEU LNG-fueled vessels, further demonstrating ZIM's commitment to reducing<br> its carbon footprint |
| --- | --- |
| · | During<br> the third quarter of 2021 and subsequent to quarter end, ZIM purchased eight (8) second-hand<br> vessels for total consideration of approximately $355 million |
| --- | --- |
Eli Glickman, ZIMPresident & CEO, stated, “We are very proud of ZIM’s significant accomplishments since our IPO earlier this year. The company’s continued outstanding performance is a direct result of our team’s strong execution and success proactively capitalizing on both the highly attractive market and our differentiated approach. The exceptional results we generated in the third quarter, reflect our highest ever quarterly revenues, adjusted EBITDA, net profit and operating cash flow. Importantly, we have once again delivered industry-leading margins, outperforming the sector’s average.”
Mr. Glickman added, “During a time when we have posted record quarterly results, we are pleased to further allocate capital to enhance our commercial prospects and unlock shareholder value. Complementing our success securing our operating fleet and equipment to best serve our customers, we have distributed a $2.00 per share special dividend in September 2021 and we are now transitioning to paying quarterly dividends to provide shareholders with an immediate and more frequent return. Accordingly, we will be paying in December 2021 a $2.50 per share interim dividend for the third quarter, representing approximately 20% of quarterly net income. Based on our expectation to distribute 30-50% of 2021 net income, we are poised to return significant capital to shareholders in 2022.”
Mr. Glickman concluded, “Reflecting ZIM’s strong outlook and extremely positive container liner market fundamentals, we have once again raised our full-year 2021 guidance. As an innovative digital leader of seaborn transportation and logistics services, we are well positioned for the future. Going forward, our unrelenting focus remains on further executing our global-niche strategy to achieve superior long-term profitability, while maintaining significant fleet flexibility, promoting our ESG values as we provide a best-in-class customer experience and taking advantage of compelling growth opportunities.”
Summary of Key Financialand Operational Results
| Q3’20 | 9M’21 | 9M’20 | |||||
|---|---|---|---|---|---|---|---|
| Carried volume (K-TEUs) | 884 | 762 | 2,623 | 2,042 | |||
| Average freight rate (/TEU) | 3,226 | 1,176 | 2,510 | 1,116 | |||
| Revenue ( in millions) | 3,136 | 1,013 | 7,262 | 2,631 | |||
| Operating income (EBIT) ( in millions) | 1,859 | 189 | 3,700 | 283 | |||
| Profit before income tax ( in millions) | 1,821 | 148 | 3,577 | 169 | |||
| Net income ( in millions) | 1,463 | 144 | 2,941 | 158 | |||
| Adjusted EBITDA ( in millions) | 2,080 | 262 | 4,236 | 504 | |||
| Adjusted EBIT ( in millions) | 1,859 | 189 | 3,706 | 289 | |||
| Adjusted EBITDA margin (%) | 66 | 26 | 58 | 19 | |||
| Adjusted EBIT margin (%) | 59 | 19 | 51 | 11 | |||
| Net cash generated from operating activities ( in millions) | 2,008 | 245 | 3,966 | 466 | |||
| Earnings per share (fully diluted) () | 12.16 | 1.36 | 24.79 | 1.47 | |||
| Free cash flow1 ( in millions) | 1,720 | 237 | 3,216 | 454 | |||
| Sept 21 | Dec 20 | ||||||
| Net debt1 ( in millions) | 22 | 1,236 |
All values are in US Dollars.
Financialand Operating Results for the Third Quarter Ended September 30, 2021
Total revenues were $3.14 billion for the third quarter of 2021, compared to $1.01 billion for the third quarter of 2020, primarily driven by an increase in revenues from containerized cargo, reflecting increases in freight rates as well as in carried volume.
Operating income (EBIT) for the third quarter of 2021 was $1.86 billion, compared to $189 million for the third quarter of 2020. Operating margin for the third quarter of 2021 was 59%, compared to 19% in the third quarter of 2020.
Net income for the third quarter of 2021 was $1.46 billion, compared to $144 million for the third quarter of 2020. Net income for the third quarter of 2021 included a tax expense of $358 million.
Adjusted EBITDA was $2.08 billion for the third quarter of 2021, compared to $262 million for the third quarter of 2020. Adjusted EBIT was $1.86 billion for the third quarter of 2021, compared to $189 million for the third quarter of 2020. Adjusted EBITDA and Adjusted EBIT margins for the third quarter of 2021 were 66% and 59%, respectively. This compares to 26% and 19% for the third quarter of 2020, respectively.
Net cash generated from operating activities was $2.01 billion for the third quarter of 2021, compared to $245 million for the third quarter of 2020.
ZIM carried 884 thousand TEUs during the third quarter of 2021, compared to 762 thousand TEUs in the third quarter of 2020. The average freight rate per TEU was $3,226 for the third quarter of 2021, compared to $ 1,176 for the third quarter of 2020.
Financialand Operating Results for the Nine Months Ended September 30, 2021
Total revenues were $7.26 billion for the first nine months of 2021, compared to $2.63 billion for the first nine months of 2020, primarily driven by an increase in revenues from containerized cargo, reflecting increases in freight rates as well as in carried volume.
Operating income (EBIT) for the first nine months of 2021 was $3.70 billion, compared to $283 million for the first nine months of 2020. Operating margin for the first nine months of 2021 was 51%, compared to 11% in the first nine months of 2020.
Net income for the first nine months of 2021 was $2.94 billion, compared to $158 million for the first nine months of 2020. Net income for the nine months of 2021 included a tax expense of $636 million.
Adjusted EBITDA was $4.24 billion for the first nine months of 2021, compared to $504 million for the first nine months of 2020. Adjusted EBIT was $3.71 billion for the first nine months of 2021, compared to $289 million for the first nine months of 2020. Adjusted EBITDA and Adjusted EBIT margins for the first nine months of 2021 were 58% and 51%, respectively. This compares to 19% and 11% for the first nine months of 2020, respectively.
Net cash generated from operating activities was $3.97 billion for the first nine months of 2021, compared to $466 million for the first nine months of 2020.
ZIM carried 2,623 thousand TEUs during the first nine months of 2021, compared to 2,042 thousand TEUs in the first nine months of 2020. The average freight rate per TEU was $2,510 for the first nine months of 2021, compared to $1,116 for the first nine months of 2020.
Liquidityand Cash Flows
ZIM’s total cash position (which includes cash and cash equivalents and investments in bank deposits and other investment instruments) increased by $2.18 billion from $572 million as of December 31, 2020 to $2.76 billion at September 30, 2021. Capital expenditures, net totaled $288 million for the third quarter of 2021, compared to $8 million for the third quarter of 2020. Net debt decreased by $1.21 billion from $1.24 billion as of December 31, 2020 to $22 million as of September 30, 2021. ZIM’s net leverage ratio as of September 30, 2021 was 0.0x, compared to 1.2x as of December 31, 2020.
Dividend Policy
Commencing from the third quarter of 2021, the Company intends to distribute a dividend to its shareholders on a quarterly rather than on an annual basis. The quarterly dividend will be paid at a rate of approximately 20% of the net income derived during such fiscal quarter. The dividend payable on the fourth quarter of the fiscal year is expected to be at such rate that the cumulative annual dividend amount to be distributed by the Company (including the interim dividends) will total 30-50% of the annual net income (including in respect to 2021). All future dividends are subject to the Company’s Board discretion and to the restrictions provided by Israeli law. ****
In accordance with the new dividend policy, the Company’s Board of Directors declared a cash dividend of approximately $296 million, or $2.50 per ordinary share, reflecting approximately 20% of Q3 2021 net income, to be paid on December 27, 2021, to holders of the ordinary shares as of December 16, 2021. ****
Long-Term CharteringAgreements
In July 2021, the Company announced a second strategic agreement with Seaspan Corporation for the long-term charter of ten 7,000 TEU liquefied natural gas (LNG) dual-fuel container vessels. Subsequently, in September, the Company announced the exercise of its option to long-term charter five additional 7,000 TEU LNG dual-fuel container vessels from Seaspan, so that the total number of vessels to be chartered under this agreement is fifteen (15). These 15 vessels are intended to be deployed across ZIM’s various global trades. ZIM first strategic agreement with Seaspan was announced in February 2021, under which the Company entered into a long-term charter agreement for ten 15,000 TEU LNG dual-fuel container vessels, intended to serve on its Asia to US East Coast trade.
Second-hand Vessel Purchases
During the third quarter of 2021 and subsequent to quarter end, the Company purchased eight (8) second-hand vessels (built between 2007-2010) in a number of separate transactions. The vessels purchased include five 4,250 TEU vessels, one 2,553 TEU vessel and two 1,100 TEU vessels for a total consideration of approximately $355 million.
UpdatedFull-Year 2021 Guidance
The Company increased its full-year guidance and expects to generate in 2021 Adjusted EBITDA of between $6.2 billion and $6.4 billion and Adjusted EBIT of between $5.4 billion to $5.6 billion.
Useof Non-IFRS Measures in the Company’s 2021 Guidance
The Company only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA or Adjusted EBIT to IFRS measures, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, in particular because such reconciling items used to calculate projected net income (loss) may vary dramatically based on actual events. The Company is not able to forecast on a IFRS basis with reasonable certainty all reconciliation items needed in order to provide a IFRS calculation of projected net income (loss) or EBIT at this time. The amount of these reconciliation items can vary and may be material and, therefore, could result in projected IFRS measures being materially different than projected Adjusted EBITDA or Adjusted EBIT.
ConferenceCall Details
Management will host a conference call and webcast (along with a slide presentation) to review the results and provide a corporate update today at 8:00 AM ET.
To access the live conference call by telephone, please dial the following numbers: United States +1-855-265-6958 or +1-718-705-8796; Israel +972-3-721-9662; or UK/international +44-1-212-818-004. The call (and slide presentation) will be available via live webcast through ZIM’s website, located at the following link. Following the conclusion of the call, a replay of the conference call will be available on the Company's website.
AboutZIM
ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) is a global container liner shipping company with leadership positions in the markets where it operates. Founded in Israel in 1945, ZIM is one of the oldest shipping liners, with over 75 years of experience, providing customers with innovative seaborne transportation and logistics services with a reputation for industry leading transit times, schedule reliability and service excellence. For additional information, please visit www.zim.com.
Forward-LookingStatements
This press release contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about the Company, may include projections of the Company’s future financial results, its anticipated growth strategies and anticipated trends in its business as well as its intended dividend policy. These statements are only predictions based on the Company’s current expectations and projections about future events or results. There are important factors that could cause the Company’s actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: market changes in freight, bunker, charter and other rates or prices, new legislation or regulation affecting the Company’s operations, new competition and changes in the competitive environment, the outcome of legal proceedings to which the Company is a party, and other risks and uncertainties detailed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including under the caption “Risk Factors” in its 2020 Annual Report.
Although the Company believes that the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company assumes no duty to update any of these forward-looking statements after the date hereof to conform its prior statements to actual results or revised expectations, except as otherwise required by law.
The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
Useof Non-IFRS Financial Measures
The Company presents non-IFRS measures as additional performance measures as the Company believes that it enables the comparison of operating performance between periods on a consistent basis. These measures should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. Please note that Adjusted EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company’s use. In addition, non-IFRS financial measures, as those presented by the Company, may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated.
AdjustedEBITDA is a non-IFRS financial measure which we define as net income (loss) adjusted to exclude financial expenses (income), net, income taxes, depreciation and amortization in order to reach EBITDA, and further adjusted to exclude impairment of assets, non-cash charter hire expenses, capital gains (losses) beyond the ordinary course of business and expenses related to legal contingencies.
AdjustedEBIT is a non-IFRS financial measure which we define as net income (loss) adjusted to exclude financial expenses (income), net and income taxes, in order to reach our results from operating activities, or EBIT, and further adjusted to exclude impairment of assets, non-cash charter hire expenses, capital gains (losses) beyond the ordinary course of business and expenses related to legal contingencies.
Freecash flow is a non-IFRS financial measure which we define as net cash generated from operating activities minus capital expenditures, net.
Net debt is a non-IFRS financial measure which we define as face value of short- and long-term debt, minus cash and cash equivalents, bank deposits and other investment instruments.
Net leverage ratio is a non-IFRS financial measure which we define net debt (see above) divided by Adjusted EBITDA of the last twelve-month period.
See the reconciliation of net income to Adjusted EBITDA and Adjusted EBIT and net cash generated from operating activities to free cash flow under "Reconciliation of Non-IFRS Measures" below.
Investor Relations:
Elana Holzman
ZIM Integrated Shipping Services Ltd.
+972-4-865-2300
holzman.elana@zim.com
Leon Berman
The IGB Group
212-477-8438
lberman@igbir.com
Media:
Avner Shats
ZIM Integrated Shipping Services Ltd.
+972-4-865-2520
shats.avner@zim.com
CONSOLIDATEDBALANCE SHEET
(U.S.dollars in thousands)
| September 30 | December 31 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2020 | ||||||
| Assets | ||||||||
| Vessels | 2,280,881 | 732,654 | 948,004 | |||||
| Containers and handling equipment | 1,258,270 | 486,497 | 520,887 | |||||
| Other tangible assets | 66,428 | 70,858 | 67,133 | |||||
| Intangible assets | 68,416 | 63,963 | 66,465 | |||||
| Investments in associates | 13,349 | 8,843 | 8,441 | |||||
| Other investments | 5,567 | 4,866 | 4,888 | |||||
| Trade and other receivables | 6,463 | 4,883 | 5,293 | |||||
| Deferred tax assets | 1,491 | 1,151 | 1,502 | |||||
| Total non-current assets | 3,700,865 | 1,373,715 | 1,622,613 | |||||
| Assets classified as held for sale | 8,663 | |||||||
| Inventories | 107,293 | 47,352 | 52,237 | |||||
| Trade and other receivables | 1,234,209 | 358,200 | 520,001 | |||||
| Other investments | 345,074 | 58,947 | 58,976 | |||||
| Cash and cash equivalents | 2,454,997 | 350,285 | 570,414 | |||||
| Total current assets | 4,141,573 | 823,447 | 1,201,628 | |||||
| Total assets | 7,842,438 | 2,197,162 | 2,824,241 | |||||
| Equity | ||||||||
| Share capital and reserves | 1,994,230 | 1,787,285 | 1,790,794 | |||||
| Retained earnings (deficit) | 1,174,499 | (1,887,918 | ) | (1,523,528 | ) | |||
| Equity attributable to owners of the Company | 3,168,729 | (100,633 | ) | 267,266 | ||||
| Non-controlling interests | 6,606 | 5,539 | 7,189 | |||||
| Total equity | 3,175,335 | (95,094 | ) | 274,455 | ||||
| Liabilities | ||||||||
| Lease liabilities | 1,766,247 | 700,678 | 811,840 | |||||
| Loans and other liabilities | 126,346 | 554,184 | 519,471 | |||||
| Employee benefits | 63,612 | 61,150 | 66,626 | |||||
| Deferred tax liabilities | 85,947 | 325 | 339 | |||||
| Total non-current liabilities | 2,042,152 | 1,316,337 | 1,398,276 | |||||
| Trade and other payables | 1,052,310 | 396,657 | 398,876 | |||||
| Provisions | 29,044 | 17,284 | 21,420 | |||||
| Contract liabilities | 636,001 | 169,610 | 230,469 | |||||
| Lease liabilities | 777,304 | 258,062 | 362,176 | |||||
| Loans and other liabilities | 130,292 | 134,306 | 138,569 | |||||
| Total current liabilities | 2,624,951 | 975,919 | 1,151,510 | |||||
| Total liabilities | 4,667,103 | 2,292,256 | 2,549,786 | |||||
| Total equity and liabilities | 7,842,438 | 2,197,162 | 2,824,241 |
CONSOLIDATEDINCOME STATEMENTS
(U.S.dollars in thousands, except per share data)
| Nine months ended September 30, | Three months ended September 30, | Year ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||
| Income from voyages and related services | 7,262,304 | 2,630,850 | 3,135,958 | 1,012,505 | 3,991,696 | ||||||||||
| Cost of voyages and related services | |||||||||||||||
| Operating expenses and cost of services | (2,876,906 | ) | (2,038,970 | ) | (1,007,365 | ) | (716,757 | ) | (2,835,112 | ) | |||||
| Depreciation | (513,907 | ) | (204,322 | ) | (215,172 | ) | (68,511 | ) | (291,559 | ) | |||||
| Gross profit | 3,871,491 | 387,558 | 1,913,421 | 227,237 | 865,025 | ||||||||||
| Other operating income | 9,519 | 8,019 | 5,354 | 2,507 | 12,621 | ||||||||||
| Other operating expenses | (714 | ) | (642 | ) | (255 | ) | 1,064 | 4,272 | |||||||
| General and administrative expenses | (183,910 | ) | (114,760 | ) | (60,375 | ) | (42,721 | ) | (163,210 | ) | |||||
| Share of profit of associates | 3,123 | 2,375 | 842 | 720 | 3,341 | ||||||||||
| Results from operating activities | 3,699,509 | 282,550 | 1,858,987 | 188,807 | 722,049 | ||||||||||
| Finance income | 9,082 | 1,379 | 3,383 | (351 | ) | 8,103 | |||||||||
| Finance expenses | (131,648 | ) | (114,933 | ) | (41,452 | ) | (40,356 | ) | (189,363 | ) | |||||
| Net finance expenses | (122,566 | ) | (113,554 | ) | (38,069 | ) | (40,707 | ) | (181,260 | ) | |||||
| Profit before income taxes | 3,576,943 | 168,996 | 1,820,918 | 148,100 | 540,789 | ||||||||||
| Income taxes | (636,221 | ) | (11,195 | ) | (358,004 | ) | (3,696 | ) | (16,599 | ) | |||||
| Profit for the period | 2,940,722 | 157,801 | 1,462,914 | 144,404 | 524,190 | ||||||||||
| Attributable to: | |||||||||||||||
| Owners of the Company | 2,935,201 | 152,915 | 1,461,146 | 142,424 | 517,961 | ||||||||||
| Non-controlling interest | 5,521 | 4,886 | 1,768 | 1,980 | 6,229 | ||||||||||
| Profit for the period | 2,940,722 | 157,801 | 1,462,914 | 144,404 | 524,190 | ||||||||||
| Earnings per share | |||||||||||||||
| Basic earnings per 1 ordinary share | 25.79 | 1.53 | (*) | 12.53 | 1.42 | (*) | 5.18 | ||||||||
| Diluted earnings per 1 ordinary share | 24.79 | 1.47 | (*) | 12.16 | 1.36 | (*) | 4.96 | ||||||||
| Weighted average number of shares used to calculate basic EPS | 113,823,830 | 100,000,000 | 116,618,539 | 100,000,000 | 100,000,000 | ||||||||||
| Weighted average number of shares used to calculate diluted EPS | 118,410,226 | 100,431,079 | 120,206,306 | 100,451,384 | 104,530,892 |
(*) Reflect a share split of 1:10 that became effective in 2021, in all presented periods.
CONSOLIDATEDSTATEMENTS OF CASH FLOWS
(U.S.dollars in thousands)
| Nine months ended September 30, | Three months ended September 30, | Year ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||
| Cash flows from operating activities | |||||||||||||||
| Profit for the period | 2,940,722 | 157,801 | 1,462,914 | 144,404 | 524,190 | ||||||||||
| Adjustments for: | |||||||||||||||
| Depreciation and amortization | 530,643 | 220,878 | 220,925 | 74,274 | 314,185 | ||||||||||
| Impairment losses (recoveries) of tangible assets | 600 | (1,100 | ) | (4,329 | ) | ||||||||||
| Net finance expenses | 122,566 | 113,554 | 38,069 | 40,707 | 181,260 | ||||||||||
| Share of profits and change in fair value of investees | (4,016 | ) | (3,197 | ) | (832 | ) | (1,542 | ) | (4,143 | ) | |||||
| Capital gain | (5,107 | ) | (4,919 | ) | (3,972 | ) | (638 | ) | (8,814 | ) | |||||
| Income taxes | 636,221 | 11,195 | 358,004 | 3,696 | 16,599 | ||||||||||
| 4,221,029 | 495,912 | 2,075,108 | 259,801 | 1,018,948 | |||||||||||
| Change in inventories | (55,056 | ) | 12,990 | (7,543 | ) | (3,839 | ) | 8,105 | |||||||
| Change in trade and other receivables | (695,611 | ) | (50,583 | ) | (261,557 | ) | (80,521 | ) | (204,469 | ) | |||||
| Change in trade and other payables including contract liabilities | 506,865 | 19,862 | 206,594 | 71,808 | 68,670 | ||||||||||
| Change in provisions and employee benefits | 5,599 | (6,674 | ) | 774 | (322 | ) | (2,152 | ) | |||||||
| (238,203 | ) | (24,405 | ) | (61,732 | ) | (12,874 | ) | (129,846 | ) | ||||||
| Dividends received from associates | 3,307 | 2,708 | 1,436 | 571 | 4,360 | ||||||||||
| Interest received | 3,400 | 2,054 | 1,187 | 174 | 2,317 | ||||||||||
| Income taxes paid | (23,200 | ) | (9,840 | ) | (7,666 | ) | (2,577 | ) | (14,983 | ) | |||||
| Net cash generated from operating activities | 3,966,333 | 466,429 | 2,008,333 | 245,095 | 880,796 | ||||||||||
| Cash flows from investing activities | |||||||||||||||
| Proceeds from sale of tangible and intangible assets, investments and affiliates | 5,008 | 4,352 | 2,721 | 1,358 | 6,717 | ||||||||||
| Acquisition of tangible assets, intangible assets and investments | (755,829 | ) | (17,027 | ) | (291,342 | ) | (9,547 | ) | (42,641 | ) | |||||
| Change in other investments and other receivables | (284,210 | ) | (351 | ) | (298,536 | ) | 2,884 | 763 | |||||||
| Net cash used in investing activities | (1,035,031 | ) | (13,026 | ) | (587,157 | ) | (5,305 | ) | (35,161 | ) |
| Nine months ended September 30, | Three months ended September 30, | Year ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||
| Cash flows from financing activities | |||||||||||||||
| Receipt of long-term loans and other long-term liabilities | 50,000 | ||||||||||||||
| Issuance of share capital, net of issuance costs | 205,394 | ||||||||||||||
| Sale and lease back transactions | 9,052 | 9,052 | |||||||||||||
| Repayment of borrowings and lease liabilities | (926,481 | ) | (203,382 | ) | (234,055 | ) | (62,351 | ) | (336,225 | ) | |||||
| Change in short term loans | (16,000 | ) | 5,471 | (5 | ) | 800 | 6,071 | ||||||||
| Dividend paid to non-controlling interests | (4,702 | ) | (3,344 | ) | (3,344 | ) | |||||||||
| Dividend paid to owners of the Company | (237,030 | ) | (237,030 | ) | |||||||||||
| Interest and other financial expenses paid | (117,334 | ) | (93,903 | ) | (40,076 | ) | (32,508 | ) | (135,952 | ) | |||||
| Net cash used in financing activities | (1,046,153 | ) | (286,106 | ) | (511,166 | ) | (94,059 | ) | (460,398 | ) | |||||
| Net change in cash and cash equivalents | 1,885,149 | 167,297 | 910,010 | 145,731 | 385,237 | ||||||||||
| Cash and cash equivalents at beginning of the period | 570,414 | 182,786 | 1,545,282 | 202,848 | 182,786 | ||||||||||
| Effect of exchange rate fluctuation on cash held | (566 | ) | 202 | (295 | ) | 1,706 | 2,391 | ||||||||
| Cash and cash equivalents at the end of the period | 2,454,997 | 350,285 | 2,454,997 | 350,285 | 570,414 |
RECONCILIATIONOF NET INCOME TO ADJUSTED EBIT
(U.S.dollars in millions)
| Nine months ended September 30, | Three months ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net income | 2,941 | 158 | 1,463 | 144 | ||||||||
| Financial expenses, net | 123 | 114 | 38 | 41 | ||||||||
| Income taxes | 636 | 11 | 358 | 4 | ||||||||
| Operating income (EBIT) | 3,700 | 283 | 1,859 | 189 | ||||||||
| Non-cash charter hire expenses | 1 | 5 | 0 | 1 | ||||||||
| Impairment of assets | 0 | 1 | 0 | (1 | ) | |||||||
| Expenses related to legal contingencies | 5 | 0 | 0 | 0 | ||||||||
| Adjusted EBIT | 3,706 | 289 | 1,859 | 189 | ||||||||
| Adjusted EBIT margin | 51 | % | 11 | % | 59 | % | 19 | % |
RECONCILIATIONOF NET INCOME TO ADJUSTED EBITDA
(U.S.dollars in millions)
| Nine months ended September 30, | Three months ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net income | 2,941 | 158 | 1,463 | 144 | ||||||||
| Financial expenses, net | 123 | 114 | 38 | 41 | ||||||||
| Income taxes | 636 | 11 | 358 | 4 | ||||||||
| Depreciation & amortization | 530 | 220 | 221 | 74 | ||||||||
| EBITDA | 4,230 | 503 | 2,080 | 263 | ||||||||
| Non-cash charter hire expenses | 1 | 0 | 0 | 0 | ||||||||
| Impairment of assets | 0 | 1 | 0 | (1 | ) | |||||||
| Expenses related to legal contingencies | 5 | 0 | 0 | 0 | ||||||||
| Adjusted EBITDA | 4,236 | 504 | 2,080 | 262 | ||||||||
| Adjusted EBITDA margin | 58 | % | 19 | % | 66 | % | 26 | % |
****
RECONCILIATIONOF NET CASH GENERATED FROM OPERATING ACTIVITES TO FREE CASH FLOW
(U.S.dollars in millions)
| Nine months ended September 30, | Three months ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net cash generated from operating activities | 3,966 | 466 | 2,008 | 245 | ||||||||
| Capital expenditures, net | (750 | ) | (12 | ) | (288 | ) | (8 | ) | ||||
| Free cash flow | 3,216 | 454 | 1,720 | 237 |
Exhibit 99.2
ZIM INTEGRATEDSHIPPING SERVICES LTD
CONDENSEDCONSOLIDATED UNAUDITED INTERIM
FINANCIALSTATEMENTS
SEPTEMBER30, 2021
ZIMINTEGRATED SHIPPING SERVICES LTD.
INDEX TO CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| Page | |
|---|---|
| FINANCIAL STATEMENTS: | |
| Condensed consolidated unaudited interim Statements<br> of Financial Position | 2 |
| Condensed consolidated unaudited interim Income Statements | 3 |
| Condensed consolidated unaudited interim Statements of Comprehensive Income | 4 |
| Condensed consolidated unaudited interim Statements of Changes in Equity | 5-6 |
| Condensed consolidated unaudited interim Statements of Cash Flows | 7-8 |
| Notes to the condensed consolidated unaudited interim Financial Statements | 9-15 |
ZIM INTEGRATED SHIPPINGSERVICES LTD.
CONDENSED CONSOLIDATED UNAUDITED INTERIM STATEMENTS OF FINANCIAL POSITION
| September 30 | December 31 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2020 | ||||||
| Note | US ’000 | |||||||
| Assets | ||||||||
| Vessels | 6 | 732,654 | 948,004 | |||||
| Containers and handling equipment | 6 | 486,497 | 520,887 | |||||
| Other tangible assets | 6 | 70,858 | 67,133 | |||||
| Intangible assets | 63,963 | 66,465 | ||||||
| Investments in associates | 8,843 | 8,441 | ||||||
| Other investments | 4,866 | 4,888 | ||||||
| Trade and other receivables | 4,883 | 5,293 | ||||||
| Deferred tax assets | 1,151 | 1,502 | ||||||
| Total non-current assets | 1,373,715 | 1,622,613 | ||||||
| Assets classified as held for sale | 8,663 | |||||||
| Inventories | 47,352 | 52,237 | ||||||
| Trade and other receivables | 358,200 | 520,001 | ||||||
| Other investments | 58,947 | 58,976 | ||||||
| Cash and cash equivalents | 350,285 | 570,414 | ||||||
| Total current assets | 823,447 | 1,201,628 | ||||||
| Total assets | 2,197,162 | 2,824,241 | ||||||
| Equity | ||||||||
| Share capital and reserves | 5(a) | 1,787,285 | 1,790,794 | |||||
| Retained earnings (deficit) | (1,887,918 | ) | (1,523,528 | ) | ||||
| Equity attributable to owners of the Company | (100,633 | ) | 267,266 | |||||
| Non-controlling interests | 5,539 | 7,189 | ||||||
| Total equity | (95,094 | ) | 274,455 | |||||
| Liabilities | ||||||||
| Lease liabilities | 700,678 | 811,840 | ||||||
| Loans and other liabilities | 4(e) | 554,184 | 519,471 | |||||
| Employee benefits | 61,150 | 66,626 | ||||||
| Deferred tax liabilities | 325 | 339 | ||||||
| Total non-current liabilities | 1,316,337 | 1,398,276 | ||||||
| Trade and other payables | 396,657 | 398,876 | ||||||
| Provisions | 17,284 | 21,420 | ||||||
| Contract liabilities | 169,610 | 230,469 | ||||||
| Lease liabilities | 258,062 | 362,176 | ||||||
| Loans and other liabilities | 134,306 | 138,569 | ||||||
| Total current liabilities | 975,919 | 1,151,510 | ||||||
| Total liabilities | 2,292,256 | 2,549,786 | ||||||
| Total equity and liabilities | 2,197,162 | 2,824,241 |
All values are in US Dollars.
| /s/ Yair Seroussi | /s/ Eli Glickman | /s/ Xavier Destriau |
|---|---|---|
| Yair Seroussi | Eli Glickman | Xavier Destriau |
| Chairman of the Board of Directors | President & Chief Executive Officer | Chief Financial Officer |
Date of approval of the Financial Statements: November 17, 2021.
The accompanying Notes are an integral part of these condensed consolidated unaudited interim Financial Statements.
2
ZIM INTEGRATED SHIPPINGSERVICES LTD.
CONDENSED CONSOLIDATED UNAUDITED INTERIM INCOME STATEMENTS
| Three months ended <br><br>September 30 | Year ended<br><br> December 31 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | 2020 | 2020 | ||||||||||
| Income from voyages and related services | 2,630,850 | 3,135,958 | 1,012,505 | 3,991,696 | |||||||||
| Cost of voyages and related services | |||||||||||||
| Operating expenses and cost of services | ) | (2,038,970 | ) | (1,007,365 | ) | (716,757 | ) | (2,835,112 | ) | ||||
| Depreciation | ) | (204,322 | ) | (215,172 | ) | (68,511 | ) | (291,559 | ) | ||||
| Gross profit | 387,558 | 1,913,421 | 227,237 | 865,025 | |||||||||
| Other operating income | 8,019 | 5,354 | 2,507 | 12,621 | |||||||||
| Other operating expenses | ) | (642 | ) | (255 | ) | 1,064 | 4,272 | ||||||
| General and administrative expenses | ) | (114,760 | ) | (60,375 | ) | (42,721 | ) | (163,210 | ) | ||||
| Share of profit of associates | 2,375 | 842 | 720 | 3,341 | |||||||||
| Results from operating activities | 282,550 | 1,858,987 | 188,807 | 722,049 | |||||||||
| Finance income | 1,379 | 3,383 | (351 | ) | 8,103 | ||||||||
| Finance expenses | ) | (114,933 | ) | (41,452 | ) | (40,356 | ) | (189,363 | ) | ||||
| Net finance expenses | ) | (113,554 | ) | (38,069 | ) | (40,707 | ) | (181,260 | ) | ||||
| Profit before income taxes | 168,996 | 1,820,918 | 148,100 | 540,789 | |||||||||
| Income taxes | ) | (11,195 | ) | (358,004 | ) | (3,696 | ) | (16,599 | ) | ||||
| Profit for the period | 157,801 | 1,462,914 | 144,404 | 524,190 | |||||||||
| Attributable to: | |||||||||||||
| Owners of the Company | 152,915 | 1,461,146 | 142,424 | 517,961 | |||||||||
| Non-controlling interest | 4,886 | 1,768 | 1,980 | 6,229 | |||||||||
| Profit for the period | 157,801 | 1,462,914 | 144,404 | 524,190 | |||||||||
| Earnings per share () | |||||||||||||
| Basic earnings per 1 ordinary share (Note 10) | 1.53 | (*) | 12.53 | 1.42 | (*) | 5.18 | |||||||
| Diluted earnings per 1 ordinary share (Note 10) | 1.47 | (*) | 12.16 | 1.36 | (*) | 4.96 |
All values are in US Dollars.
(*) Restated to reflect a share split of 1:10 that became effective in 2021 (see Note 5(a)).
The accompanying Notes are an integral part of these condensed consolidated unaudited interim Financial Statements.
3
ZIM INTEGRATED SHIPPINGSERVICES LTD.
CONDENSED CONSOLIDATED UNAUDITED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
| Nine months ended <br>September 30 | Three months ended<br> September 30 | Year ended <br> December 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |||||||||
| US ’000 | |||||||||||||
| Profit for the period | 157,801 | 1,462,914 | 144,404 | 524,190 | |||||||||
| Other components of Comprehensive Income | **** | **** | |||||||||||
| Items of<br> other comprehensive income that were or will be reclassified to profit and loss: | **** | **** | |||||||||||
| Foreign<br> currency translation differences for foreign operations | ) | 363 | 706 | **** | 1,331 | 4,019 | |||||||
| Items of<br> other comprehensive income that would never be reclassified to profit and loss: | **** | **** | **** | ||||||||||
| Net change in<br> fair value of investments in equity instruments at fair value through other comprehensive income, net of tax | ) | (114 | ) | (94 | ) | 256 | 563 | ||||||
| Defined benefit pension plans actuarial gains (losses), net of tax | **** | 1,507 | **** | **** | (1,287 | ) | 174 | ||||||
| Other<br> comprehensive income for the period, net of tax | ) | 1,756 | 612 | **** | 300 | 4,756 | |||||||
| Total comprehensive income for the period | **** | 159,557 | 1,463,526 | **** | 144,704 | 528,946 | |||||||
| Attributable to: | **** | **** | **** | ||||||||||
| Owners of the Company | **** | 156,076 | 1,461,936 | **** | 143,321 | 523,815 | |||||||
| Non- controlling interests | **** | 3,481 | 1,590 | **** | 1,383 | 5,131 | |||||||
| Total comprehensive income for the period | **** | 159,557 | 1,463,526 | **** | 144,704 | 528,946 |
All values are in US Dollars.
The accompanying Notes are an integral part of these condensed consolidated unaudited interim Financial Statements.
4
ZIM INTEGRATED SHIPPING SERVICES LTD.
CONDENSED CONSOLIDATED UNAUDITED INTERIM STATEMENTS OF CHANGES IN EQUITY
| Attribute<br> to the owners of the Company | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| General | Translation | Retained <br><br>earnings | Non-<br><br> controlling | Total | |||||||||||||||
| Share<br> capital (*) | reserves<br> (**) | reserve | (deficit) | Total | interests | equity | |||||||||||||
| US<br> ’000 | |||||||||||||||||||
| For the Nine months period ended September<br> 30, 2021 | |||||||||||||||||||
| Balance at January 1, 2021 | 1,106,470 | (15,986 | ) | (1,523,528 | ) | 267,266 | 7,189 | 274,455 | |||||||||||
| Profit for the period | 2,935,201 | 2,935,201 | 5,521 | 2,940,722 | |||||||||||||||
| Other comprehensive income for<br> the period, net of tax | (1,342 | ) | (144 | ) | (1,486 | ) | (1,402 | ) | (2,888 | ) | |||||||||
| Issuance of share capital, net<br> of issuance costs | 203,513 | 203,513 | |||||||||||||||||
| Share-based compensation | 1,265 | 1,265 | 1,265 | ||||||||||||||||
| Exercise of options | (1,329 | ) | |||||||||||||||||
| Dividend<br> to owners of the Company | (237,030 | ) | (237,030 | ) | (237,030 | ) | |||||||||||||
| Dividend<br> to non-controlling interests in subsidiaries | (4,702 | ) | (4,702 | ) | |||||||||||||||
| Balance at September<br> 30, 2021 | 1,106,406 | (17,328 | ) | 1,174,499 | 3,168,729 | 6,606 | 3,175,335 | ||||||||||||
| For the three months period ended September<br> 30, 2021 | |||||||||||||||||||
| Balance at June 30, 2021 | 1,107,284 | (18,212 | ) | (279,523 | ) | 1,713,372 | 5,016 | 1,718,388 | |||||||||||
| Profit for the period | 1,461,146 | 1,461,146 | 1,768 | 1,462,914 | |||||||||||||||
| Other comprehensive income for<br> the period, net of tax | 884 | (94 | ) | 790 | (178 | ) | 612 | ||||||||||||
| Share-based compensation | 451 | 451 | 451 | ||||||||||||||||
| Exercise of options | (1,329 | ) | |||||||||||||||||
| Dividend<br> to owners of the Company | (7,030 | ) | (7,030 | ) | (7,030 | ) | |||||||||||||
| Balance at September<br> 30, 2021 | 1,106,406 | (17,328 | ) | 1,174,499 | 3,168,729 | 6,606 | 3,175,335 |
All values are in US Dollars.
(*) See Note 5(a).
(**) Include reserves related to transactions with an interested party and share-based compensation.
The accompanying Notes are an integral part of these condensed consolidated interim Financial Statements.
5
ZIM INTEGRATED SHIPPING SERVICES LTD.
CONDENSED CONSOLIDATED UNAUDITED INTERIM STATEMENTS OF CHANGES IN EQUITY
| Attribute<br> to the owners of the Company | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share<br> capital (*) | General<br><br> reserves (**) | Translation<br><br> reserve | Accumulated<br><br> deficit | Total | Non-<br><br> controlling<br><br> Interests | Total<br><br> equity | ||||||||||||
| US<br> ’000 | ||||||||||||||||||
| For the Nine months period ended September<br> 30, 2020 | ||||||||||||||||||
| Balance at January 1, 2020 | 1,105,350 | (21,103 | ) | (2,042,226 | ) | (257,669 | ) | 5,402 | (252,267 | ) | ||||||||
| Profit for the period | 152,915 | 152,915 | 4,886 | 157,801 | ||||||||||||||
| Other comprehensive income for<br> the period, net of tax | 1,768 | 1,393 | 3,161 | (1,405 | ) | 1,756 | ||||||||||||
| Transaction with an interested<br> party | 537 | 537 | 537 | |||||||||||||||
| Share-based<br> compensation | 423 | 423 | 423 | |||||||||||||||
| Dividend<br> to non-controlling interests in subsidiaries | (3,344 | ) | (3,344 | ) | ||||||||||||||
| Balance at September<br> 30, 2020 | 1,106,310 | (19,335 | ) | (1,887,918 | ) | (100,633 | ) | 5,539 | (95,094 | ) | ||||||||
| For the three months period ended September<br> 30, 2020 | ||||||||||||||||||
| Balance at June 30, 2020 | 1,106,068 | (21,263 | ) | (2,029,311 | ) | (244,196 | ) | 4,156 | (240,040 | ) | ||||||||
| Profit for the period | 142,424 | 142,424 | 1,980 | 144,404 | ||||||||||||||
| Other comprehensive income for<br> the period, net of tax | 1,928 | (1,031 | ) | 897 | (597 | ) | 300 | |||||||||||
| Transaction<br> with an interested party, net of tax | 176 | 176 | 176 | |||||||||||||||
| Share-based<br> compensation | 66 | 66 | 66 | |||||||||||||||
| Balance at September<br> 30, 2020 | 1,106,310 | (19,335 | ) | (1,887,918 | ) | (100,633 | ) | 5,539 | (95,094 | ) | ||||||||
| For the year ended December 31, 2020 | ||||||||||||||||||
| Balance at January 1, 2020 | 1,105,350 | (21,103 | ) | (2,042,226 | ) | (257,669 | ) | 5,402 | (252,267 | ) | ||||||||
| Profit for the year | 517,961 | 517,961 | 6,229 | 524,190 | ||||||||||||||
| Other comprehensive income for the year | 5,117 | 737 | 5,854 | (1,098 | ) | 4,756 | ||||||||||||
| Transaction with an interested party, net of tax | 630 | 630 | 630 | |||||||||||||||
| Share-based compensation | 490 | 490 | 490 | |||||||||||||||
| Dividend to non-controlling interests in subsidiaries | (3,344 | ) | (3,344 | ) | ||||||||||||||
| Balance at December 31, 2020 | 1,106,470 | (15,986 | ) | (1,523,528 | ) | 267,266 | 7,189 | 274,455 |
All values are in US Dollars.
(*) See Note 5(a).
(**) Include reserves related to transactions with an interested party and share-based compensation.
The accompanying Notes are an integral part of these condensed consolidated interim Financial Statements.
6
ZIM INTEGRATED SHIPPINGSERVICES LTD.
CONDENSED CONSOLIDATED UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
| **** | Nine months ended<br> <br> September 30 | **** | Three months ended September 30 | **** | Year ended December 31 | **** | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | 2021 | **** | 2020 | **** | 2021 | **** | 2020 | **** | 2020 | **** | ||||
| **** | US<br> ’000 | **** | ||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Profit for the period | 157,801 | 1,462,914 | 144,404 | 524,190 | ||||||||||
| Adjustments for: | ||||||||||||||
| Depreciation and amortization | 220,878 | 220,925 | 74,274 | 314,185 | ||||||||||
| Impairment losses (recoveries) of tangible assets | 600 | (1,100 | ) | (4,329 | ) | |||||||||
| Net finance expenses | 113,554 | 38,069 | 40,707 | 181,260 | ||||||||||
| Share of profits and change in fair value of investees | ) | (3,197 | ) | (832 | ) | (1,542 | ) | (4,143 | ) | |||||
| Capital gain | ) | (4,919 | ) | (3,972 | ) | (638 | ) | (8,814 | ) | |||||
| Income taxes | 11,195 | 358,004 | 3,696 | 16,599 | ||||||||||
| 495,912 | 2,075,108 | 259,801 | 1,018,948 | |||||||||||
| Change in inventories | ) | 12,990 | (7,543 | ) | (3,839 | ) | 8,105 | |||||||
| Change in trade and other receivables | ) | (50,583 | ) | (261,557 | ) | (80,521 | ) | (204,469 | ) | |||||
| Change in trade and other payables including contract liabilities | 19,862 | 206,594 | 71,808 | 68,670 | ||||||||||
| Change in provisions and employee benefits | (6,674 | ) | 774 | (322 | ) | (2,152 | ) | |||||||
| ) | (24,405 | ) | (61,732 | ) | (12,874 | ) | (129,846 | ) | ||||||
| Dividends received from associates | 2,708 | 1,436 | 571 | 4,360 | ||||||||||
| Interest received | 2,054 | 1,187 | 174 | 2,317 | ||||||||||
| Income taxes paid | ) | (9,840 | ) | (7,666 | ) | (2,577 | ) | (14,983 | ) | |||||
| Net cash generated from operating activities | 466,429 | 2,008,333 | 245,095 | 880,796 | ||||||||||
| Cash flows from investing activities | ||||||||||||||
| Proceeds from sale of tangible and intangible assets, investments and affiliates | 4,352 | 2,721 | 1,358 | 6,717 | ||||||||||
| Acquisition of tangible assets, intangible assets and investments | ) | (17,027 | ) | (291,342 | ) | (9,547 | ) | (42,641 | ) | |||||
| Change in other investments and other receivables | ) | (351 | ) | (298,536 | ) | 2,884 | 763 | |||||||
| Net cash used in investing activities | ) | (13,026 | ) | (587,157 | ) | (5,305 | ) | (35,161 | ) |
All values are in US Dollars.
The accompanying Notes are an integral part of these condensed consolidated unaudited interim Financial Statements.
7
ZIM INTEGRATED SHIPPINGSERVICES LTD.
CONDENSED CONSOLIDATED UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
| Nine months ended September 30 | Three months ended<br> September 30 | Year ended<br><br> December 31 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | ||||||||||
| US ’000 | ||||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Receipt of long-term loans and other long-term liabilities | ||||||||||||||
| Issuance of share capital, net of issuance costs (see Note 5(a)) | ||||||||||||||
| Sale and lease back transactions | 9,052 | 9,052 | ||||||||||||
| Repayment of borrowings and lease liabilities | ) | (203,382 | ) | (234,055 | ) | (62,351 | ) | (336,225 | ) | |||||
| Change in short term loans | ) | 5,471 | (5 | ) | 800 | 6,071 | ||||||||
| Dividend paid to non-controlling interests | ) | (3,344 | ) | (3,344 | ) | |||||||||
| Dividend paid to owners of the Company | ) | (237,030 | ) | |||||||||||
| Interest and other financial expenses paid | ) | (93,903 | ) | (40,076 | ) | (32,508 | ) | (135,952 | ) | |||||
| Net cash used in financing activities | ) | (286,106 | ) | (511,166 | ) | (94,059 | ) | (460,398 | ) | |||||
| Net change in cash and cash equivalents | 167,297 | 910,010 | 145,731 | 385,237 | ||||||||||
| Cash and cash equivalents at beginning of the period | 182,786 | 1,545,282 | 202,848 | 182,786 | ||||||||||
| Effect of exchange rate fluctuation on cash held | ) | 202 | (295 | ) | 1,706 | 2,391 | ||||||||
| Cash and cash equivalents at the end of the period | 350,285 | 2,454,997 | 350,285 | 570,414 |
All values are in US Dollars.
The accompanying Notes are an integral part of these condensed consolidated unaudited interim Financial Statements.
8
ZIM INTEGRATED SHIPPINGSERVICES LTD.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| 1 | Reporting entity |
|---|
****ZIM Integrated Shipping Services Ltd. (hereinafter - the "Company" or "ZIM") and its subsidiaries (hereinafter – "the Group" or "the Companies") and the Group’s interests in associates, operate in the field of container shipping and related services.
ZIM is a company incorporated in Israel, with limited liability. ZIM’s ordinary shares have been listed on the New York Stock Exchange (the “NYSE”) under the symbol “ZIM” on January 28, 2021. The address of the Company’s registered office is 9 Andrei Sakharov Street, Haifa, Israel.
| 2 | Basis of compliance |
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| (a) | Statement of compliance |
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These condensed consolidated unaudited interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended December 31, 2020 (hereafter – the “annual Financial Statements”). These condensed consolidated unaudited interim Financial Statements were approved by the Board of Directors on November 17, 2021.
| (b) | Estimates |
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The preparation of Financial Statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The significant judgments made by management in applying the Group’s accounting policies and the principal assumptions used in the estimation of uncertainty were the same as those applied to the annual financial statements.
| 3 | Significant accounting policies |
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The accounting policies applied by the Group in these condensed consolidated unaudited interim Financial Statements are the same as those applied by the Group in its annual Financial Statements.
| 4 | Financial position |
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| (a) | The container shipping industry<br>is characterized in recent years by volatility in freight rates, charter rates and bunker prices, accompanied by significant uncertainties<br>in the global trade (including further implications that might derive from the Covid-19 pandemic). Current market conditions impact positively,<br>resulting in improved results of the Company, mainly driven by increased freight rates and volumes of trades, partially offset by the<br>impact of increased charter hire rates and bunker prices. |
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In view of the aforementioned business environment and in order to constantly improve the Group’s results of operations and liquidity position, Management continues to optimize its network by entering into and/or expanding partnerships and cooperation agreements and by upgrading its customer’s offerings, whilst seeking operational excellence and cost efficiencies. In addition, the Company continues to explore options which may contribute to strengthen its capital and operational structure. In respect to the Company’s initial public offering, completed in February 2021 - see Note 5(a).
As part of its ongoing operational needs, the Company continues to charter additional vessels and extend vessel charter periods. Regarding long-term charter agreements, see (b) below.
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ZIM INTEGRATED SHIPPINGSERVICES LTD.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| 4 | Financial position (Cont’d) |
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As at September 30, 2021, the Company complies with its financial covenants. The Company’s liquidity amounts to US$ 2,756 million (Minimum Liquidity required is US$ 125 million) - see also Note 12(c) to the 2020 annual financial statements.
| (b) | Long-term<br> charter agreements: |
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In February 2021, the Company entered into a strategic agreement with Seaspan, for the long-term charter of ten 15,000 TEU liquefied natural gas (LNG) dual-fuel container vessels, intended to be delivered between February 2023 and January 2024. The Company intends to deploy these vessels on its Asia-US East Coast Trade, as an enhancement to its service on this strategic trade.
In July 2021, the Company entered into an additional strategic agreement with Seaspan, for the long-term charter of ten 7,000 TEU liquefied natural gas (LNG) dual-fuel container vessels, with an option for additional five of such vessels, intended to be delivered between the fourth quarter of 2023 and July 2024 and to be deployed across the Company’s various global-niche trades. In September 2021, the Company exercised the option in respect to the additional five vessels.
Pursuant to each of the agreements, the Company will charter the vessels for a period of 12 years and has secured an option to later elect a total charter period of 15 years. The Company was further granted by Seaspan a right of first refusal to purchase the chartered vessels should Seaspan choose to sell them during the charter period, and an option to purchase the vessels at the end of the charter term. The Company expects to incur, in annualized charter hire costs per vessel, approximately US$ 17 million in respect of the abovementioned 15,000 TEU vessels, and approximately US$ 13 million in respect of the abovementioned 7,000 TEU vessels, over the term of the agreements, depending on the charter period elected.
| (c) | During 2021,<br> the Company has entered into multiple agreements for the purchase of containers (mostly new-build<br> units) in an aggregate amount of US$ 898 million. During the first nine months of 2021, the<br> Company recognized an aggregated cost of US$ 689 million in respect to containers delivered,<br> out of such purchases. |
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In addition, the Company entered into a series of agreements to purchase a total of eight vessels, each with a capacity ranging between 1,100 and 4,250 TEU, for an aggregated amount of US$ 355 million. In the third quarter of 2021, the Company recognized a cost of US$ 33 million in respect to one delivered vessel, with the remaining vessels intended to be delivered between November 2021 and April 2022.
| (d) | In accordance<br> with IAS 34 (Interim financial reporting), the Company records its tax expenses based on<br> the estimated annual effective tax rate. In light of its current results (see also Note 4(a)),<br> the Company expects to utilize its carry-forward tax losses and therefore considers utilization<br> of carry-forward tax losses in its estimated annual effective tax rate. |
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| (e) | In March<br> 2021, the Company made an early repayment of US$ 85 million of its Series 1 notes (Tranche<br> C), in accordance with the related excess cash mechanism (see also Note 12(b) to the 2020<br> annual financial statements). |
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In June 2021, the Company made an additional early repayment under such mechanism, in respect of its Series 1 and Series 2 notes (Tranches C and D), in a total amount of US$ 349 million. This payment reflects a full settlement of the indebtedness related to such notes and resulted in the removal of all related provisions and limitations.
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ZIM INTEGRATED SHIPPINGSERVICES LTD.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| 4 | Financial position (Cont’d) |
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| (f) | In May 2021, the Company was served<br>with a claim for an alleged patents infringement filed against it in the US. Management, based on legal advice, believes that it has<br>good defense arguments against the claim and filed a motion to dismiss the claim. |
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In October 2021, the Israeli Supreme Court denied an appeal on the verdict of the District Court dismissing the claim, previously filed in respect to an application to approve the filing of a class action, against shipping agencies, including the Company’s wholly-owned agency in Israel, in alleged claims of overcharging customers of local charges in excess of the rates provided in the then applicable Israeli Port Regulations (see also Note 27(b) to the Company’s 2020 annual financial statements).
| (g) | Dividends: |
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In May 2021 (further to the expected full repayment of Series 1 and Series 2 notes, as later executed - see above) the Company’s Board of Directors approved a distribution of dividend of US$ 2.00 per ordinary share. The dividend in a total amount of US$ 237 million was paid on September 15, 2021, to all holders of ordinary shares on record as at August 25, 2021.
In November 2021, the Company’s Board of Directors approved an additional distribution of dividend of approximately US$ 2.50 per ordinary share (or approximately US$ 296 million, considering the number of ordinary shares outstanding as of September 30, 2021). The dividend is scheduled to be paid on December 27, 2021, to all holders of ordinary shares on record as at December 16, 2021.
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ZIM INTEGRATED SHIPPINGSERVICES LTD.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| 5 | Capital and reserves |
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| (a) | Share capital |
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In February 2021, the Company completed its initial public offering (IPO) of 15,000,000 ordinary shares (including shares issued upon the exercise of the underwriters’ option), at an offering price of US$ 15.00 per share, for gross consideration of US$ 225 million (US$ 204 million, after deducting underwriting discounts and commissions and other offering costs). The Company’s ordinary shares began trading on The New York Stock Exchange (the “NYSE”) under the symbol “ZIM” on January 28, 2021.
Further to the approval of the Company’s General meeting in December 2020 and the completion of the Company’s IPO, the Company’s ordinary shares were amended to have no par value, as well as to reflect a share split of 1:10, in the form of issuing benefit shares (nine ordinary shares issued for each existing ordinary share). Accordingly, for earnings per share, these financial statements reflect the abovementioned share split retrospectively, in all presented periods.
During the reported period, 3,588,188 ordinary shares were issued upon the cashless exercise of options, previously granted in respect to share-based payment arrangements.
| (b) | Share-Based payment arrangements |
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During the first quarter of 2021, further to prior approvals of the Company’s Compensation committee, Audit committee and Board of Directors, and concurrently with the consummation of the Company’s initial public offering, the Company granted a senior member of the Company’s Management with options exercisable to its ordinary shares, according to the below terms (which also reflect the above-mentioned share split):
| Grant<br><br> date | Instrument terms | Vesting Terms | Contractual <br><br>life | |
|---|---|---|---|---|
| January 27, 2021 | Each option is exercisable into one ordinary share, at the exercise price per the offering price of US 15.00 | 546,822 | 25% of the options shall vest upon the first anniversary of the grant date with the remaining options vesting in equal quarterly portions over the following three years period. | 5 years |
All values are in US Dollars.
Information on fair value measurement
The weighted average fair value of the options on grant date was US$ 5.32, measured using the Black & Scholes model, based on the following measurement inputs:
| Share<br> price on grant date | USD<br> 15.00 |
|---|---|
| Exercise<br> price | USD<br> 15.00 |
| Expected<br> volatility | 40.2% |
| Expected<br> life | 5<br> years |
| Expected<br> dividends | 0% |
| Risk-free<br> interest rate | 0.46% |
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ZIM INTEGRATED SHIPPINGSERVICES LTD.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| 6 | Right-of-use assets | ||||
|---|---|---|---|---|---|
| September 30 | December 31 | ||||
| --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | 2020 | |||
| US ’000 | |||||
| Vessels | 621,214 | 826,678 | |||
| Containers and handling equipment | 451,365 | 466,070 | |||
| Other tangible assets | 52,200 | 47,911 | |||
| 1,124,779 | 1,340,659 |
All values are in US Dollars.
| 7 | Segment information |
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ZIM is managed as one operating unit, generating revenues from operating a global liner service network of container shipping and related services, in which lines share the use of its resources and their performance are co-dependent. Accordingly, the chief operating decision maker manages and allocates resources to the entire liner network. As there is no appropriate allocation for the Group’s results, assets and liabilities, these are all attributed to the Group’s sole operating segment.
Freight revenues are disaggregated geographically by trade zone, as follows:
| Nine months ended <br>September 30 | Three months ended September 30 | Year ended December 31 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |||||
| US ’000 | |||||||||
| Freight Revenues from containerized cargo: | |||||||||
| Pacific | 1,193,231 | 1,640,905 | 527,652 | 1,860,554 | |||||
| Cross-Suez | 271,312 | 362,862 | 93,497 | 392,679 | |||||
| Atlantic | 428,666 | 256,690 | 137,849 | 577,443 | |||||
| Intra-Asia | 250,612 | 468,981 | 91,670 | 453,127 | |||||
| Latin America | 135,623 | 124,023 | 45,147 | 208,374 | |||||
| 2,279,444 | 2,853,461 | 895,815 | 3,492,177 | ||||||
| Other Revenues (*) | 351,406 | 282,497 | 116,690 | 499,519 | |||||
| 2,630,850 | 3,135,958 | 1,012,505 | 3,991,696 |
All values are in US Dollars.
(*) Mainly related to demurrage, value-added services and non-containerized cargo.
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ZIM INTEGRATED SHIPPINGSERVICES LTD.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| 8 | Operating expenses and cost of<br>services | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Nine months ended <br>September 30 | Three months ended September 30 | Year ended December 31 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | 2021 | 2020 | 2020 | |||||
| US ’000 | |||||||||
| Wages and expenses relating to seagoing personnel | 6,625 | 2,434 | 2,263 | 9,099 | |||||
| Maintenance and repair of vessels | 2,872 | 907 | 843 | 3,881 | |||||
| Expenses relating to fleet equipment (mainly containers and chassis) | 18,736 | 6,753 | 6,735 | 26,598 | |||||
| Fuel and lubricants | 263,548 | 196,570 | 82,652 | 361,568 | |||||
| Insurance | 7,291 | 2,433 | 2,182 | 9,586 | |||||
| Expenses related to cargo handling | 1,034,622 | 469,023 | 382,737 | 1,432,937 | |||||
| Port expenses | 149,780 | 67,204 | 54,090 | 206,946 | |||||
| Agents’ salaries and commissions | 113,852 | 53,191 | 39,562 | 159,134 | |||||
| Cost of related services and sundry | 61,426 | 46,871 | 24,843 | 100,537 | |||||
| Slot purchases and hire of vessels | 360,382 | 151,704 | 114,462 | 497,777 | |||||
| Hire of containers | 19,836 | 10,275 | 6,388 | 27,049 | |||||
| 2,038,970 | 1,007,365 | 716,757 | 2,835,112 |
All values are in US Dollars.
| 9 | Financial instruments |
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Financial instruments not measured at fair value
The carrying amounts of the Group’s financial assets and liabilities, including cash and cash equivalents, trade and other receivables, other investments, trade and other payables and loans and other liabilities, reflect reasonable approximation of their fair value.
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ZIM INTEGRATED SHIPPINGSERVICES LTD.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
| 10 | Earnings per share |
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Basic and diluted earnings per share
| Nine months ended <br>September 30 | Three months ended September 30 | Year ended December 31 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |||||
| US ’000 | |||||||||
| Profit attributable to ordinary shareholders used to calculate basic and diluted earnings per share | 152,915 | 1,461,146 | 142,424 | 517,961 | |||||
| Weighted average number of ordinary shares used to calculate basic earnings per share | 100,000,000 | 116,618,539 | 100,000,000 | 100,000,000 | |||||
| Effect of share options (*) | 431,079 | 3,587,767 | 451,384 | 4,530,892 | |||||
| Weighted average number of ordinary shares used to calculate diluted earnings per share | 100,431,079 | 120,206,306 | 100,451,384 | 104,530,892 |
All values are in US Dollars.
(*) The Company’s ordinary shares began trading on January 28, 2021. Due to the absence of a trading market for the Company’s ordinary shares prior to this date, the estimated fair value of these shares during such periods, for purposes of calculating the dilutive impact of share options, was determined by Company’s management and approved by the Company’s Board of Directors.
| 11 | Related parties |
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During the reported period, the total balance of loans and lease liabilities attributed to related parties, increased by a net amount of US$ 77 million, mainly due to charter hire of vessels - see also Note 28 to the 2020 annual financial statements.
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