17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE_17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE 16/04/2014 10:39 Page 1
Ocean Wilsons Holdings Limited
Annual Report 2013
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Job No.: 17319
Customer: Ocean Wilsons
Proof: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE_17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE 16/04/2014 10:40 Page 2
Contents
1 Ocean Wilsons Holdings Limited
2 Chairman’s Statement
6 Financial Review
12 Investment Portfolio
13 Investment Managers Report
20 Directors and Advisers
21 Report of the Directors
28 Independent Auditors’ Report
29 Consolidated Statement of Comprehensive Income
30 Consolidated Balance Sheet
31 Consolidated Statement of Changes in Equity
32 Consolidated Cash Flow Statement
33 Notes to the Accounts
86 Statistical Statement 2008 – 2012
87 Notice of Annual General Meeting
89 Form of Proxy
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Job No.: 17319
Customer Ocean Wilsons
Proof: 5
Project Title Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T 020 7055 6500 F 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:41 Page 1
Ocean Wilsons Holdings Limited
Ocean Wilsons Holdings Limited/Annual Report 2013
Highlights
Wilson Sons Limited (“Wilson Sons”) is an autonomous Bermuda company
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Reported sales up 8% to US$660.1 million (2012: US$610.4 million)
listed on the Sao Paulo Stock Exchange (BOVESPA) and Luxembourg Stock
Exchange. Ocean Wilsons holds a 58.25% interest in Wilson Sons which is
Operating profit up 40% to US$119.0 million (2012: US$84.7 million)
fully consolidated in the Group accounts with a 41.75% non-controlling
interest. Wilson Sons is one of the largest providers of maritime services in
Dividend declared of 60 cents per share (2012: 42 cents per share)
Brazil. Wilson Sons activities include harbour and ocean towage, container
up 43%
Investment portfolio up US$11.3 million to US$249.0 million
terminal operation, offshore support services, logistics, small vessel
construction and ship agency. Wilson Sons has over six thousand employees.
(2012: US$237.7 million)
Ocean Wilsons Investments Limited is a wholly owned Bermuda investment
company. The company holds a portfolio of international investments.
Operating cash flow of US$108.4 million (2012: US$110.1 million)
Objective
Concluded Briclog acquisition in July 2013 for US$40.2 million
Ocean Wilsons Holdings Limited is run on a long-term basis. This applies
to both the investment portfolio and our investment in Wilson Sons. The
Completion of second shipyard at Guarujá, Sao Paulo
long-term view taken by the Board allows Wilson Sons to grow and develop
its businesses without being pressured to produce short-term results at the
About Ocean Wilsons Holdings Limited
expense of long-term value creation. The same long-term view allows our
Ocean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) is a
investment managers to make investment decisions that create long-term
Bermuda based investment holding company, and, through its subsidiaries,
capital growth.
operates a maritime services company in Brazil and holds a portfolio of
international investments. The Company is listed on both the Bermuda Stock
The success of this strategy is reflected in the growth in the Ocean Wilsons
Exchange and the London Stock Exchange. It has two principal subsidiaries:
share price and total returns to shareholders. In the 10 years to 31 December
Wilson Sons Limited and Ocean Wilsons Investments Limited (together with
2013 the share price has risen 585% from 152p to 1,042p and total returns
the Company and their subsidiaries, the “Group”).
to shareholders in the period (assuming dividends are reinvested in Ocean
Wilsons shares) of 806%
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
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1
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:41 Page 2
Ocean Wilsons Holdings Limited/Annual Report 2013
Chairman’s Statement
Introduction
Profit before tax at US$100.5 million was in line with 2012 (US$98.6 million).
Ocean Wilsons delivered a good performance in 2013.
The US$34.3 million increase in operating profit was partially offset by a
Wilson Sons has progressed significantly during 2013, with our shipyard,
US$11.9 million increase in finance costs and reduced gains from the
US$19.0 million increase in exchange losses on monetary items,
terminal and offshore businesses completing key steps in their growth
investment portfolio.
strategy. The year began with the successful completion of our second
shipyard, Guarujá II, in Sao Paulo state. US$60 million was invested in the
Higher deferred tax charges raised the income tax expense for the year to
facility, doubling our shipbuilding capacity. The new 26-metre wide dry dock
US$42.2 million from US$33.7 million in 2012.
permits the construction of larger and more complex vessels as evidenced by
our new contracts to build Oil Spill Recovery Vessels (OSRVs) and Remotely
Profit per share based on ordinary activities after taxation and non-controlling
Operated Vehicle Support Vessels (ROVSVs). The new shipyard is also an
interests was 107.1 cents (2012: 116.7 cents).
important addition in maintaining and repairing our fleet of towage and
offshore vessels.
Investment portfolio performance
Your Board reviews the performance of the investment portfolio over the
Five new vessels were added to our operating fleet during the year: four new
longer-term and the longer-term performance remains solid. In the ten year period
platform supply vessels (PSVs) and one new tugboat. Three of these PSVs
to 31 December 2013, the portfolio returned 106.3% against the performance
were built at the Wilson Sons shipyard for our offshore joint venture, Wilson
benchmark of 52.7% and a MSCI cumulative world index of 99.5%.
Sons Ultratug Offshore. With a top speed of thirteen knots, these vessels were
specifically designed for operations in the pre-salt oil fields located over
At 31 December 2013 the trading investment portfolio and cash under
300 kilometres from the Brazilian coast. Wilson Sons Ultratug Offshore now
management was US$249.0 million (2012: US$237.7 million). The investment
operates a fleet of eighteen PSVs and remains focused on expanding and
portfolio added US$16.3 million in value during the year (after deducting
developing its business. Our tugboat fleet remains the largest in Brazil with
expenses) representing a time weighted return of 7.7%. During the year,
63 tugboats operating in 26 ports.
capital redemptions of US$5.0 million were paid to the parent company.
Dividend income received by the portfolio increased 82% to US$5.2 million
Tecon Salvador successfully completed the first year of operation following the
(2012: US$2.8 million).
terminal expansion in 2012, moving a record 289,600 TEUs (Twenty-foot
equivalent units) in the year, a 6% increase from 2012. The terminal benefited
The best performing portfolio segments in 2013 were global equities, which
from a significant increase in import and cabotage volumes. In July Brasco
delivered an 11.4% return, and private assets, 6.7% return. Although global
completed the acquisition of Brazilian Intermodal Complex S/A (“Briclog”), an
equities was our best performing segment, returns were adversely impacted
important step in expanding our capacity to offer onshore support base
by our over weighted exposure to emerging markets and natural resources
services to the offshore oil and gas industry. The demand for onshore support
which both performed poorly in the year. Emerging markets accounted for
base services remains strong and the availability of suitable operating areas
37% and natural resources 10% of the portfolio net asset value at year end.
limited. Your Board believes the 30-year operating lease acquired will prove to
be a valuable asset for the Group. In February, Wilson Sons Logistics
Private assets are at a relatively immature stage of value realisation with
inaugurated the Suape logistics centre in Pernambuco, an important step in
approximately 80% allocated to post 2008 crisis investments. We are seeing
developing our logistics operations in the North East of Brazil. The centre
some distributions from earlier investments with US$8.0 million in
boasts a 23,000m² warehouse and a 25,000m² yard with direct access to the
distributions received in the year and cumulative distributions received of
port of Suape and the surrounding area.
US$20.2 million. Net cash flow to this segment for the year (US$3.6 million
The investment portfolio continued to grow during the year adding
yearend outstanding capital commitments were US$44.5 million. As these
US$16.3 million in value, a time weighted return of 7.7%. At 31 December
investments mature, we are confident that over the full cycle they will
2013, the investment portfolio was US$249.0 million representing
generate valuable returns for the portfolio. To date African Development
US$7.04 per share (2012: US$237.7 million and US$6.72 per share).
Partners, Greenspring Global Partners, China Harvest II and Capital
International Private Equity Fund have all performed particularly strongly.
outflow) remained negative with US$11.6 million in capital drawdowns. At
Group Results
Revenue for the full year grew 8% to US$660.1 million (2012:
At year end, the portfolio was invested in global equities, 62%, private assets
US$610.4 million) due to increased revenue from our shipyard, terminals
23%, 8% in market neutral funds and 7% in bonds and cash. The increased
and towage businesses.
weighting of the portfolio in global equities (62% v 52% in 2012) is due to
the outperformance of this asset class relative to the remainder of the portfolio
Operating profit at US$119.0 million was US$34.3 million higher
in the year and additional investments made principally in JO Hambro Japan
(2012: US$84.7 million) reflecting the higher turnover, profit on the disposal
Fund, Hirzel Capital Fund, BlackRock European Hedge Fund and Odey
of property plant and equipment and lower employee costs.
Absolute Return Fund.
2
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:41 Page 3
Ocean Wilsons Holdings Limited/Annual Report 2013
The net asset value per share at the end of December 2013 of the investment
policy follows completion of the current investment cycle in 2013 and an
portfolio was US$7.04, a 4.8% increase over 2012 (US$6.72).
expected increase in free cash flow.
Investment managers
The Ocean Wilsons Holdings Limited dividend policy is to pay the Company’s
The Group’s investment portfolio is held by Ocean Wilson Investments Limited
full dividend to be received from Wilson Sons in the period and a percentage
(“OWIL”) a wholly owned subsidiary registered in Bermuda. OWIL has
of the average capital employed in the investment portfolio to be determined
appointed Hanseatic Asset Management LBG a Guernsey registered and
annually by the Board. Dividends are set in US Dollars and paid annually. In
regulated investment group as its investment manager. During 2013,
2013, the Board decided going forward to no longer pay an interim dividend
Alec Letchfield joined the Hanseatic Asset Management Group and part of his
and combine the normal interim dividend payment of 4 cents a share into the
remit is responsibility for managing the Ocean Wilsons’ portfolio.
final dividend. This change does not affect the total dividend paid in the year.
Investment management fee
Shareholders receive dividends in Sterling by reference to the exchange rate
The investment managers receive an investment management fee based on the
applicable to the USD on the dividend record date, except for those
valuation of the funds under management and an annual performance fee of
shareholders who elect to receive dividends in USD.
10% of the annual performance which exceeds the benchmark, provided that the
high water mark has been exceeded. The investment management fee is an
The Board of Directors may review and amend the dividend policy from time to
annual rate of 1% payable monthly in arrears. The performance fee is measured
time in light of our future plans and other factors. The payment of dividends cannot
against an absolute benchmark derived from the one year USD LIBOR, prevailing
be guaranteed and may be discontinued or varied at the discretion of the Board.
at the commencement of each calendar year, plus 2%. In 2013 the investment
management fee was US$2.4 million and no performance fee was payable.
Briclog acquisition
Net asset value
In July we were pleased to announce that through our subsidiary Brasco
Logística Offshore Limitada ("Brasco"), we concluded the acquisition of
At the close of business on the 31 December 2013, the Wilson Sons’ share
Briclog for R$89.8 million (US$40.2 million) with debt of R$32.1 million
price was R$30.92, resulting in a market value for the Ocean Wilsons holding
(US$14.5 million) assumed on acquisition. In the business acquired, the Group
of 41,444,000 shares (58.25% of Wilson Sons) of approximately
obtained a 30-year lease to operate an onshore base in Guanabara Bay,
US$542.5 million which is the equivalent of US$15.34 (£9.27) per Ocean
Rio de Janeiro, Brazil with excellent access to the Campos and Santos oil
Wilsons Holdings Limited share.
producing basins. The area has been renamed Brasco Cajú.
Adding together the market value per share of Wilsons Sons, US$15.34 and
Brasco intends to phase investments in the expansion of Brasco Cajú by
the investment portfolio US$7.07 results in a net asset value per Ocean
extending the existing berth a further 428m to 500m and reforming the site.
Wilsons Holdings Limited share of approximately US$22.41 (£13.53). The
Civil works on the expansion commenced in the second half of this year,
Ocean Wilsons Holdings Limited share price of £10.43 at 31 December 2013
which when completed will triple Brasco’s capacity and consolidate Brasco’s
represented an implied discount of 23%.
position as one of the largest offshore support base operators for the Oil and
Gas industry in Brazil. Following completion of the civil works, up to six
I am pleased to note the narrowing of the implied discount from 38% at last
vessels will be able to dock at Brasco Cajú simultaneously.
yearend to the current 23%. The implied discount has fluctuated significantly
since the IPO in May 2007 but we do not seek to manage the discount, as we
Warehouse fire
believe long-term shareholder value will best benefit from the continued
A fire at our new shipyard warehouse in May destroyed large parts of our
strong performance of our underlying businesses.
material inventory. Some delays were experienced to our vessel delivery
Dividend
schedule although components lost in the fire were substituted by items
already included in our supply chain for future vessel construction. There were
The Board is declaring a full year dividend of 60 cents per share
no injuries as a result of the fire and the Group holds insurance to cover the
(2012: 42 cents per share) to be paid on 6 June 2014, to shareholders of
warehouse damage and materials inventory.
the Company as of the close of business on 9 May 2014. This represents a
43% increase over the 2012 full year dividend.
Brazilian port law
The dividend cost of US$21.2 million for the year represents the full dividend
increasing private investment in Brazilian ports and improving efficiency.
In June this year, the Brazilian congress approved a new law aimed at
to be received from Wilson Sons relating to 2013 of US$15.7 million plus
US$5.5 million in distributions from the investment portfolio.
Charitable donations
The increased dividend to be received from Wilson Sons reflects their new
Group donations for charitable purposes amounted to US$156,000
dividend policy to increase dividend payments to shareholders. This revised
(2012: US$113,000). The Group’s principal contributions in 2013 were:
We are pleased to support a number of local causes in Brazil during the year.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
3
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:41 Page 4
Ocean Wilsons Holdings Limited/Annual Report 2013
Chairman’s Statement
Escola de Gente – raising awareness and promoting social inclusion for all
considered the principles and recommendations of the 2010 and 2012 UK
parts of the community. Located in Barra da Tijuca, Rio de Janeiro.
Corporate Governance Code (“the Codes”) issued by the Financial Reporting
http://www.escoladegente.org.br/
Council and decided to apply those aspects which are appropriate to the
business. This reflects the fact that Ocean Wilsons Holdings Limited is an
De Peito Aberto – Promotes social development through educational, cultural
investment holding company incorporated by an act of parliament in Bermuda
and sporting activities.
with significant operations in Brazil. The Company complies with the Code
http://www.depeitoaberto.com.br/
where it is beneficial for both its shareholders and its business to do so, and
has done so throughout the year and up to the date of this report, but it does
Brigada Mirim ecologica – maintaining the ecology of Ilha Grande in the state
not fully comply with the Code. The areas where the Company does not
of Rio de Janeiro and raising the awareness of visitors and the local
comply with the Code, and an explanation of why we do not comply, are
population about the environment.
http://www.brigadamirim.org.br/
contained in the section on corporate governance in the Annual Report. The
position is regularly reviewed and monitored by the Board.
Criando Laços – The Wilson Sons corporate programme ‘Criando Laços”
Outlook
(Creating ties) provides financial support and promotes voluntary employee
The Group enters 2014 in a strong position with an impressive and diversified
involvement in social initiatives.
http://www.wilsonsons.com.br/
range of businesses. Demand from the offshore oil and gas sector remains
strong. Our shipyard business has a strong order book from both in-house
projects and third party orders. During the year, we expect to deliver a further
Health, safety and education
five new tugboats to our towage division as part of our fleet renewal
The safety of our workers is of utmost importance to us. The Group
programme. A further six vessels are forecast to be built in 2015 and 2016; all
implemented the WS+ safety programme to promote improved safety
have financing from the Fundo da Marinha Mercante. Our offshore joint
throughout the Group through training of Company personnel and the
venture is programmed to receive one new PSV during the year and we
promotion of a safety oriented environment and culture. In conjunction with
expect to expand the fleet further in future years. Wilson Sons Ultratug is
DuPont, the programme was developed during 2010, before a pilot project
looking to diversify its fleet away from PSVs and operate Anchor Handling Tug
was implemented at our shipyard in 2011, which was then replicated to other
Supply Vessels (AHTSs). We started civil works to extend the quay and reform
businesses across the Group. The objective is to have the project implemented
the retro area at Brasco Cajú in 2013: this work will continue throughout 2014
across the entire Group by the end of 2014. This programme has received a
and is forecast to be completed in the second quarter of 2015.
positive response from our workforce and produced excellent results. Between
January 2010 and August 2013, the Group registered a 64% decrease in the
Global equity markets performed well in 2013. We remain confident that
frequency of accidents requiring a leave of absence.
while the world economy will continue to recover from the financial crisis it
We continue to invest in the training and development of our staff. To meet
equity markets performance may continue to suffer in the short-term with
the demand for labour at our new and existing shipyards, we set up an
lower economic growth and uncertainty about the effects of continued US
in-house training centre in collaboration with SENAI (Serviço Nacional de
tapering. However, emerging markets are better placed to withstand possible
Aprendizagem Industrial) at our shipyard to train boilermakers, welders and
capital outflows than they were in previous crises and we remain positive on
will take time and growth will be uneven. Following a poor 2013, emerging
painters. Since the end of 2012 the Group has trained almost 400
their long-term prospects.
professionals. Graduating workers leave with a recognised trade qualification
from SENAI permitting holders to work at shipyards throughout Brazil.
Your board believes that the long-term outlook for the Group is strong.
Amongst our other training initiatives is a dedicated ship crew training facility
in Guarujá that uses a state of the art simulator to further train ship captains
Management and staff
and crew. In 2013 110 ship captains and 30 ship engineers completed
On behalf of your Board and shareholders, I would like to thank our
courses at our facility.
Corporate governance
management and staff for their efforts and hard work during the year.
J F Gouvêa Vieira
The Board has put in place corporate governance arrangements which it
Chairman
believes are appropriate for the operation of your Company. The Board has
28 March 2014
4
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 5
Ocean Wilsons Holdings Limited/Annual Report 2013
Tecon Salvador container terminal in Salvador, Bahia. The terminal
moved 289,600 TEUs in 2013 a 6% increase from 2012.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
5
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 6
Ocean Wilsons Holdings Limited/Annual Report 2013
Financial Review
Revenue from Maritime Services
Share of results of joint ventures
The Group has reported an 8% increase in maritime services revenue for the
The share of results of joint ventures is Wilson Sons’ 50% share of net profit
year to US$660.1 million (2012: US$610.4 million) principally due to
for the period mainly from our offshore joint venture. From 1 January 2013,
increased revenue from our shipyard, terminals and towage businesses.
the joint venture is accounted for on an equity basis (see accounting policies
Shipyard revenue increased 61% to US$ 100.3 million (2012: US$62.2 million)
below). Results at our joint venture improved due to increased revenue and
benefiting from the additional capacity available following completion of our
operating profit from our expanded fleet as four new vessels entered
new dry-dock facility in the fourth quarter of 2012. A fire at the new shipyard
operation during the year.
warehouse in May destroyed large parts of our material inventory causing
some delays to our vessel delivery schedule and impacted margins in the
Investment revenue
year. Demand for new vessel construction from the offshore oil and gas
Investment revenue for the year at US$17.8 million was in line with 2012,
industry remains robust. Revenue at our terminal business grew 6%, driven by
US$18.3 million. Higher dividends from equity investments US$5.2 million
strong demand for warehousing services, higher container volumes and better
(2012: US$2.9 million) were offset by lower interest on bank deposits of
results from our offshore oil and gas support base, Brasco. Following a slow
US$11.9 million (2012: US$14.8 million).
start to the year, Brasco recovered as the year progressed reflecting improved
pricing plus higher waste management and tank cleaning operation revenues.
Investment gains and losses
Towage revenues increased 10% due to a greater number of towage
Other gains of US$13.7 million arose from the Group’s portfolio of trading
manoeuvres, improved harbour towage sales mix and increased special
investments (2012: US$16.4 million).
operations revenue. Logistics revenue was 17% lower than prior year due to a
higher average USD/BRL exchange rate used to convert revenue into our
Finance costs
reporting currency, US Dollars and some lower margin contracts were
Finance costs for the year at US$21.9 million were US$12.0 million higher
concluded during 2012 and 2013. All Group revenue is derived from Wilson
than prior year (2012: US$9.9 million) due to exchange losses on foreign
Sons operations in Brazil.
currency borrowings of US$9.6 million (2012: US$0.7 million gain) and higher
interest on loans of US$11.6 million (2012: US$9.8 million) as a result of
Operating profit
increased debt during the year.
Operating profit grew 40% to US$119.0 million (2012: US$84.7 million)
principally due to the higher turnover, profit on the disposal of property plant
Foreign exchange losses on monetary items
and equipment, US$10.0 million (2012: US$0.5 million loss) and lower
Exchange losses on monetary items of US$30.6 million (2012:
employee expenses. The profit on the disposal of property, plant and
US$11.6 million) arise from the Group’s foreign currency monetary items and
equipment arises from the sale of surplus commercial real estate in downtown
principally reflect the depreciation of the Brazilian Real against the US dollar
Rio de Janeiro and Sao Paulo as well as towage and logistic equipment.
during the period.
Employee expenses were US$13.5 million lower at US$209.5 million
(2012: US$223.0 million) mainly due to lower social security costs and the
Exchange rates
positive impact of the share based payment expense. The lower social security
The Group reports in US Dollars “USD” and has revenue, costs, assets and
costs for the year at US$33.1 million (2012: US$44.7 million) reflect a
liabilities in both Brazilian Real “BRL” and USD. Therefore movements in the
reduction in payroll tax rates at both our towage and shipyard businesses The
USD/BRL exchange rate can impact the Group both positively and negatively
share based payment expense in the period was a US$1.4 million credit, due
from year to year. During 2013 the BRL depreciated 15% against the USD
to foreign exchange movements compared with a charge of US$2.3 million in
from R$2.04 at 1 January 2012 to R$2.34 at the year end.
the previous year, a difference of US$3.7 million. The reduction in employee
expense is reflected in improved operating margins for the year of 16.5%
The average USD/BRL exchange rate in the period was 10% higher at
which were 2.5% higher than 2012 (14%).
2.16 (2012: 1.96). A higher average exchange rate adversely affects BRL
denominated revenues and benefits BRL denominated costs when converted
Raw materials and consumables used rose from US$72.2 million to
into our reporting currency the USD.
US$94.3 million in the current year due principally to the increase in shipyard
sales.
The principal effects from the depreciation of the BRL against the USD on the
income statement are a net exchange loss on monetary items of
Depreciation and amortisation in the year increased 5% to US$58.7 million
US$30.6 million (2012: US$11.6 million) and a US$9.6 million net exchange
from US$55.9 million in 2012 because of the capital investment undertaken
loss on USD loans in BRL functional currency businesses
by the Group in recent years.
(2012: US$0.7 million gain). A currency translation adjustment loss of
US$4.1 million (2012: US$7.2 million) on the translation of operations with a
The 8% rise in other operating expenses from US$174.0 million to
functional currency other than USD is included in other comprehensive
US$188.6 million in 2013 was mainly attributable to higher cost of sales as
income and recognised directly in equity.
a result of the increased turnover and additional service costs relating to the
conclusion of the Guarujá II shipyard and Tecon Salvador expansion.
6
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 7
Ocean Wilsons Holdings Limited/Annual Report 2013
The tugboat Eridanus. Our tugboat fleet remains the largest in Brazil with
63 tugboats operating in 26 ports.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
7
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 8
Ocean Wilsons Holdings Limited/Annual Report 2013
Financial Review
Accounting Policies
Adoption of new standards
the retranslation of non-current asset values is caused by the depreciation of
the BRL against the USD at year end and reflects the difference between the
In the current year, the Group adopted, amongst others, the revised IFRS 10
historical USD denominated property plant and equipment balances recorded
“Consolidated Financial Statements” and IFRS 11 “Joint Arrangements”. As a
in the Group’s accounts and the BRL denominated property plant and
result, the Group evaluated its consolidation conclusions in respect of its joint
equipment balances used in the Group’s Brazilian tax calculations. The
arrangements which resulted in changes to the way joint arrangements are
increased charge in 2013 is mainly because the BRL depreciated 15% against
accounted for with the comparative similarly adjusted for the new treatment.
the USD in 2013 compared with a 9% devaluation in 2012.
The principal change under the new standards is that the Group’s offshore
joint ventures, which were previously proportionally consolidated on a
The US$42.2 million tax charge represents an effective tax rate for the period
line-by-line basis, are now accounted for using the equity method of
of 42% (2012: 34%). The corporate tax rate prevailing in Brazil is 34%.
accounting with a single line item in the Income Statement and Balance Sheet
to reflect the Group’s 50% participation. Allink, a 50% controlled Non-Vessel
Profit for the year
Operating Common Carrier (“NVOCC”) which was previously proportionally
Profit attributable to equity holders of the parent is US$37.9 million after
consolidated on a line by line basis is now consolidated 100% in the
deducting profit attributable to non-controlling interests of US$20.4 million.
Consolidated Financial Statements, with the 50% non-controlling interest
identified separately from the Group’s equity.
Earnings per share
Basic earnings per share for the year were 107.1 cents (2012: 116.7 cents).
Change in accounting policy
Foreign exchange gains and losses arising from the Group’s foreign currency
Cash flow
monetary items (cash, debtor, creditor balances and inventory) have
Net cash inflow from operations for the year at US$108.4 million was in line
previously been allocated to revenues, costs and financial results in the
with prior year US$110.1 million. Adverse working capital movements offset
income statement based on estimated ratios. To improve transparency and
the higher operating profit for the period.
readability of the financial statements the Group will no longer allocate these
foreign exchange gains and losses but report them in one line in the income
Capital expenditure of US$106.1 million in the year was mainly invested in
statement, “Foreign exchange gain/(loss) on monetary items”. The presentation
towage vessel construction, the expansion of Tecon Salvador and the
of prior year comparatives has been restated to reflect this change. Reporting
associated empty container depot. (2012: US$103.1 million). Following
of other foreign exchange impacts relating to the currency translation account,
completion of the current investment cycle, Wilson Sons anticipate annual
deferred tax and loans will not change as a result of this new treatment. There
capital expenditure to normalise over the next three years at approximately
is no impact on the Company’s Balance Sheet or Net Profit.
US$100 million on organic growth and capital maintenance.
The impact of the adoption of these new standards and change in accounting
Capital expenditure was partially financed by new loans raised in the period
policy are set out in note 2 to the accounts.
of US$50.8 million (2012: US$48.9 million) Capital repayments of
US$36.8 million (2012: US$30.0 million) were made on existing loans in the
Profit before tax
year in accordance with debt repayment schedules.
Profit before tax at US$100.5 million was US$2.0 million higher than prior
year, US$98.5 million. The US$34.3 million increase in operating profit was
At 31 December 2013 the Group had US$106.5 million in cash and cash
partially offset by the US$19.0 million increase in exchange losses on
equivalents (2012: US$136.7 million). Included in the Group’s trading
monetary items, US$12.0 million increase in finance costs and reduced gains
investments of US$278.0 million at 31 December 2013 is US$33.0 million
from the investment portfolio, US$2.7 million lower.
(2012: US$20 million) in USD denominated fixed rate certificates held by
Taxation
Wilson Sons Limited. These investments are not part of the Group’s investment
portfolio managed by Hanseatic Asset Management LBG and are intended to
Income tax expense for the year was US$8.5 million higher at
fund Wilson Sons Limited operations in Brazil.
US$42.2 million (2012: US$33.7 million). Within this figure current taxation
charges were in line with 2012 at US$33.5 million (2012: US$36.6 million),
Balance sheet
while deferred tax charges increased US$11.7million to US$8.7 million
At 31 December 2013 the equity attributable to equity holders of the parent
(2012: US$3.0 million credit). The increase in the deferred tax charge is
company was US$552.2 million, an increase of US$20.3 million from
mainly because the Group recognised a deferred tax asset in the prior year of
2012 (US$531.9 million) due principally to profits in the period of
US$8.1 million in respect of unused tax losses from prior periods and a higher
US$37.9 million, less dividends paid of US$13.4 million, a negative currency
deferred tax charge in 2013 compared to 2012 arising on the retranslation of
translation adjustment of US$2.0 million and employee benefits recognised in
non-current asset values.
equity of US$1.3 million. The currency translation adjustment arises from
exchange differences on the translation of operations with a functional
The unused tax losses were recognised in 2012 as there are now associated
currency other than USD. On a per share basis net equity is the equivalent of
foreseeable future taxable profit streams. The deferred tax charge arising on
US$15.61 per share (31 December 2012: US$15.04 per share).
8
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 9
Ocean Wilsons Holdings Limited/Annual Report 2013
The Brasco offshore base in Rio de Janeiro, which provides support
services to the offshore oil and gas industry.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
9
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 10
Ocean Wilsons Holdings Limited/Annual Report 2013
Financial Review
Net debt and financing
All debt at year end is held in the Wilson Sons Limited Group and has no
recourse to the parent company, Ocean Wilsons Holdings Limited, or the
investment portfolio held by Ocean Wilsons Investments Limited.
At 31 December 2013, The Group had net debt of US$239.2 million
(2012: US$207.0 million):
Debt
Short-term
Long-term
Total debt
Cash and cash equivalents*
Net debt
2013
2012
2011
US$ millions
US$ millions
US$ millions
(39.5)
(339.2)
(378.7)
139.5
(239.2)
(36.7)
(327.0)
(363.7)
156.7
(207.0)
(29.0)
(307.8)
(336.8)
113.6
(223.2)
*Included in cash and cash equivalents are short-term investments in Wilson Sons Limited which are
intended to fund Wilson Sons Limited operations in Brazil
The Group’s borrowings are used principally to finance vessel construction and
the development of our terminal business with defined repayment schedules
repayable over different periods up to 18 years. The Group’s main sources of
financing are the Fundo da Marinha Mercante, a Brazilian Government fund
dedicated to funding vessel construction in Brazil and the International
Finance Corporation. At 31 December 2013, 90% of our debt is non-current
with 51% due within 5 years. 92% of our borrowings are USD denominated
or linked to the USD with a favourable weighted average interest rate of
3.05%.
The Group’s reported borrowings do not include US$250.9 million of debt
from the Company’s 50% share of borrowings in our Offshore Vessels joint
venture.
Keith Middleton
Finance Director
10
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 11
Wilson Sons Limited
Ocean Wilsons Holdings Limited/Annual Report 2013
The Wilson Sons 2013 Earnings Report released on 28 March 2014 is
Strengthening our position as the leading provider of towage services in
available on the Wilson Sons Limited website: www.wilsonsons.com.br
the Brazilian market. We intend to continue to modernize and maintain our
fleet of tugboats in order to provide consistently high-quality service to our
In it Cezãr Baião, CEO of Operations in Brazil said:
customers and consolidate our leading position in the Brazilian towage
services market. We regularly review our fleet deployment to optimize
“The significant growth in EBITDA this year was a natural reflection of the
efficiency, and to seek out new niches in the market where we may be able to
US$1 billion invested since our IPO in 2007 by our business lines and
provide additional services. Consistent with our focus on operating on a
consequently, the development of Brazilian port and maritime infrastructure.
national scale, we seek to increase our geographical footprint of towage
services to ports in Brazil where we currently do not provide services.
This investment included an additional of 900,000 TEU of capacity in our two
Container Terminals, the Brasco-Cajú (Briclog) terminal to support the Upstream
Maximising potential of our expanded shipyard facilities and future
Oil & Gas industry, doubling the activity of shipbuilding at the Guarujá Shipyard
projects through a mix of in-house and third-party vessel construction, as well
and delivery of 39 vessels for the operating fleets of the Company, being 16
as providing repair, maintenance and dry docking services to meet the demand
PSVs and 23 azimuthal tugboats. The conclusion of these projects, and many
of national and international oil and gas companies operating in Brazil.
others of great importance, puts us on a new level of service excellence for the
benefit of our clients, staff and other stakeholders.
Continuing to expand services to offshore oil and natural gas platforms.
Using our knowledge and experience we intend to continue expanding our
With the continued growth of the Company's cash flow, we are proposing to the
activities to maintain our position amongst the leading suppliers of services to
Annual General Meeting, dividends of US$27 million, an increase of 50% over
the offshore oil and gas industry in Brazil. In addition to the supply vessels
the previous year.”
Wilson Sons Ultratug currently operates for Petrobrás, we plan to aggressively
bid to provide supply vessels to other international and local oil companies.
The Wilson Sons Strategy is to:
We will also seek opportunities to diversify our portfolio of equipment and
Continue to grow and expand the quantity and range of our services in
services.
all of the segments in which we operate.
Exploring new opportunities and strategies to provide the best and most
complete set of services to our customers. We are always looking to
Expansion of our operations in port terminals. In order to meet growing
provide new and innovative services to our customers, and to anticipate their
international trade demand, we have expanded our two container terminals.
needs. We intend to continue our strategy with shipping companies in order
In Rio Grande do Sul, we built a third berth and commissioned ship to shore
to provide a complete set of local and international trade-related services
(STS) and rubber tyred gantry (RTG) cranes. In Salvador, we expanded our
across a nationwide network. We also seek to make these services more
terminal and invested in yard equipment including RTGs and STSs. Where
efficient and cost-effective, in order to maintain our strong customer base and
opportunities arise, we will also seek new concessions in other Brazilian ports
strengthen our relationships with those customers.
and focus on developing new terminals. We will evaluate these potential
investments in light of our existing operations, and their ability to provide a
Increasing economies of scale and productivity, realization of potential
strong return on shareholders equity.
synergies and cost savings across our business segments. We continuously
seek to optimize our operations and productivity and reduce our costs through
Increasing capacity of our Upstream Oil and Gas Support Terminals
synergies and the exchange of know-how among our businesses and
(Brasco). We are developing a continuous 500 metres of berth in the
administrative areas. We are and will continue to be focused on integrating
Brasco-Caju (Briclog) base with excellent access to the Campos and Santos oil
similar activities in order to realize savings in administrative and back-office
producing basins. When completed this will triple Brasco’s capacity to attend
areas, especially in our branch offices. We seek to achieve economies of scale
offshore support vessels and consolidate Brasco’s position as one of the
and reduce costs wherever possible. We demand that the managers of our
largest offshore support base operators for the Oil and Gas industry in Brazil.
different divisions continually develop new strategies that may improve our
We are continuously monitoring offshore operations along the Brazilian coast
operations and explore new businesses.
to meet the demand for such services and create additional support bases in
order to increase our coverage area.
Health, Safety and the Environment are a priority for the execution of our
overall strategy of sustainable ethical business. We continue programmes to
promote best practice safety throughout the Group through training of our
personnel and the promotion of a safety oriented environment and culture.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
11
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 12
Ocean Wilsons Holdings Limited/Annual Report 2013
Investment Portfolio
Investment Objective
Initial meetings are usually a result of: (i) a ‘top-down’ led search for exposure
The Investment Objective is to achieve real returns through long-term capital
to a certain geography or sector, (ii) referrals from the Investment Manager’s
growth, whilst emphasising preservation of capital. Investment views are
global network or (iii) relationships from sell-side institutions and other
expressed through an unconstrained globally diversified portfolio, without
introducers. The Investment Manager reviews numerous investment
regard to short-term moves in equity markets or any benchmark allocation.
opportunities each year, favouring active specialist managers who can
An individual opportunity is considered on the contribution that the
demonstrate an ability to add value over the longer-term, often combining a
investment’s expected return would make to the overall portfolio set against
conviction-based approach, an unconstrained mandate and the willingness to
the potential impact of a permanent loss of capital.
take unconventional decisions (e.g. investing according to conviction and not
fear of short-term underperformance versus an index).
Performance is measured against an absolute benchmark of one-year US
Dollar LIBOR (prevailing on 1 January each year) plus 2%. This benchmark
Excessive size is often an impediment to continued outperformance and the
reflects the portfolio’s long-term time horizon and unconstrained mandate
bias is therefore towards managers who are prepared to restrict their assets
where there is no compulsion to invest in any specific asset class or
under management to a level deemed appropriate for the underlying
geographic region. Moreover, the Investment Manager is more concerned
opportunity set. Track records are important but transparency is an equally
about absolute loss of capital rather than any short-term underperformance
important consideration. Alignment of interest is essential and the Investment
versus an index.
Investment Policy
Manager will always seek to invest on the best possible terms. Subjective
factors are also important in the decision making process – these qualitative
considerations would include an assessment of the integrity, skill and
The Investment Manager will seek to achieve the Investment Objective
motivation of a fund manager.
through investments in publically quoted and private (unquoted) assets across
four ‘silos’: public equities, private assets (predominantly private equity),
When the Investment Manager believes there is a potential fit, thorough due
market neutral funds and bonds. Cash levels will be managed to meet future
diligence is performed to verify the manager’s background and identify the
commitments (e.g. to private assets), whilst maintaining an appropriate
principal risks. The due diligence process would typically include visiting the
balance for opportunistic investments.
manager in their office (in whichever country it may be located), onsite visits
to prospective portfolio companies, taking multiple references and seeking a
Commensurate with the long-term horizon, it is expected that the majority of
legal opinion on all relevant documentation.
investments will be concentrated in equity, across both ‘public’ and ‘private’
markets. In most cases, investments will be made either through collective
All investments are reviewed on a regular basis to monitor the on-going
funds or limited partnership vehicles, working alongside expert managers in
compatibility with the portfolio, together with any ‘red flags’ such as signs of
specialised sectors or markets to access the best opportunities.
‘style drift’, personnel changes or lack of focus. Whilst the Investment Manager
is looking to cultivate long-term partnerships, every potential repeat investment
The Investment Manager maintains a global network to find the best
with an existing manager is assessed as if it were a new relationship.
opportunities across the four silos worldwide. The portfolio contains a high
level of investments which would not normally be readily accessible to
Portfolio Characteristics
investors without similar resources. Furthermore, a large number of holdings
The portfolio has several similarities to the ‘endowment model’. These
are closed to new investors. There is currently no gearing although the Board
similarities include an emphasis on generating real returns, a perpetual time
would, under the appropriate circumstances, be open-minded to modest levels
horizon and broad diversification, whilst avoiding asset classes with low
of gearing. Likewise, the Board may, from time to time, permit the Investment
expected returns (such as government bonds in the current environment). This
Manager to opportunistically use derivative instruments (such as index hedges
diversification is designed to make the portfolio less vulnerable to permanent
using call and put options) to actively protect the portfolio.
loss of capital through inflation, adverse interest rate fluctuations and currency
Investment Process
devaluation and to take advantage of market and business cycles. The
Investment Manager believes that outsized returns can be generated from
Manager selection is central to the successful management of the investment
investments in illiquid asset classes (such as private equity). In comparison to
portfolio. Potential individual investments are considered based on their
public markets, the pricing of assets in private markets is less efficient and the
risk-adjusted expected returns in the context of the portfolio as a whole.
outperformance of superior managers is more pronounced.
12
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 13
Investment Managers Report
Ocean Wilsons Holdings Limited/Annual Report 2013
Hanseatic Asset Management LBG, the manager of the Group’s investment
stimulus led to a substantial fall in the Yen against the Dollar, which ended
portfolio report as follows:
the year at ¥105 down from ¥87 at the start of the year.
Market background
Emerging Markets suffered throughout 2013, with the MSCI Emerging Markets
2013 was characterised by a mostly positive market environment, with a
Index falling 2.6%, with particularly weak performance from the Ibovespa
broadly linear appreciation of the major equity indices. This owed much to the
(-26.8%). The Brazilian market’s poor performance was in large part due to
perception of steadily improving macroeconomic conditions as well as (in the
the performance of the Real, which weakened 13.2% against the US Dollar
near term at least) a continuation of supportive monetary policy. In addition to
following two weak years in 2011 and 2012. Investors’ appetite for Emerging
the improving US macroeconomic environment, risk markets were buoyed by
Markets has fallen steadily over recent years, due to a moderating growth
an improved outlook for the Japanese economy, the perception of reduced
trajectory, as well as substantial structural and political obstacles to their
political risk within the Eurozone, the diminished likelihood of foreign military
continued expansion.
involvement in Syria and a thawing of relations with Iran. Furthermore,
investors were able to look past both sequestration in January and the
Fixed income markets saw a pronounced divergence in returns, with high
US government shutdown in September with minimal impact on financial
yield and investment grade corporates generating positive returns of 7.3%
markets.
and 0.4% respectively. Government bonds, as measured by the Barclays
Capital Global Treasury Index, fell 4.3% (the first annual fall since 2009) with
The summer saw a temporary jump in volatility, as investors reacted to Ben
yields ending the year at 3.0% having fallen to 1.6% in May, as investors
Bernanke’s comments in his testimony to Congress on 21 May, which implied
began to anticipate the eventual withdrawal of implicit central bank support
a “tapering” in the Federal Reserve’s $85bn monthly bond purchase
for bond markets. In Emerging Markets, the JP Morgan Emerging Markets
programme as early as September 2013. These concerns prompted a sharp
Bond Index (US denominated sovereign / quasi-sovereign bonds) performed
rise in bond yields, which in turn triggered a liquidity withdrawal from
poorly, falling 6.6%, whilst local currency bonds performed even worse,
Emerging Markets and commodities.
falling 9.0%.
Emerging Markets suffered a pronounced sell-off during the summer, owing to
There were substantial falls across the commodity complex, due to a
a combination of factors, including the potential tightening in US monetary
combination of over-supply following several years of substantial investment in
policy, a slowdown in Chinese economic growth and a sharp increase in
new extraction projects as well as a more depressed demand environment as
Chinese inter-bank lending rates. There was a dispersion of returns in Emerging
the rampant Emerging Market growth of the last decade has decelerated. Gold
Markets, with those countries that have current account and budget deficits,
was the weakest of the commodities, falling 28.0%, and finishing the year
such as India, South Africa, Turkey and Indonesia, badly impacted as foreign
37.8% off its 2011 high at $1,201. The price of copper fell 8.0% whilst iron ore
capital began to exit in anticipation of tightening global liquidation conditions.
fell 7.0%. Energy markets were more mixed, with WTI Cushing rising 7.2% and
European Brent falling 1.0% ending the year at $98 and $110 respectively.
One notable absentee from the list of positive events during the year was the
anticipated improvement in corporate earnings. Whilst balance sheets remain
Notes:
strong, companies failed to grow their earnings significantly, with the result
that the entirety of the equity market performance was a result of a re-rating
(i)
All index performance numbers are in US Dollar terms, unless specifically stated in local
currency terms.
(ii)
See following pages for further details on index returns over various periods.
rather than earnings growth.
The MSCI All Country World Index rose 22.8% over the year. The US was a
notable strong performer, with the MSCI North America Index rising 29.6%.
The S&P 500 rose 32.4%, recording its best calendar year performance since
1997 and ending the year at an all-time high, whilst the Dow Jones Industrial
Average increased 26.5%.
European equity markets shrugged off the ongoing structural issues within the
Eurozone to record strong performance, with the MSCI Europe ex UK Index
rising 27.6%, driven in large part by the performance of the German and French
bourses, which rose 31.0% and 27.7% respectively. Unlike their US counterparts,
however, the European market, as measured by the Euro Stoxx 50 Index,
remains 30% below its level of 2007 and 40% below its peak in 2000.
Japanese stocks performed strongly, with the TOPIX rising 26.5% (54.4% in
Yen terms), driven by Prime Minister Abe’s drive to combat decades of
Portfolio Construction
The net asset value at the end of December 2013 was $249.0m. The portfolio
is comprised of four ‘sub-portfolios’ as detailed below:
Sub-Portfolio
Global Equities
Private Assets
Market Neutral Funds
Bonds/Other
Total
$m
% NAV
153.4
57.5
20.0
18.1
61.6
23.1
8.0
7.3
$249.0m
100.0%
1)
‘Global Equities’ is comprised of holdings that are sensitive to stock
market movements and may take the form of ‘long-only’ or ‘long/short’
funds, as well as direct quoted equities. There is a strong bias towards
fundamental, research-driven stock-pickers with a proven ability to
deflation with an unprecedented programme of monetary stimulus. The
produce attractive compounded returns.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
13
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 14
Ocean Wilsons Holdings Limited/Annual Report 2013
Investment Managers Report
2)
‘Private Assets’ contains fixed life investments typically with lives of
Investment Grade Bonds (0% of NAV) would contain investments in sovereign
approximately ten years and often structured through commitments to
(government) bonds as well as corporate bonds with high credit ratings
limited partnership vehicles that make investments in private equity, real
(typically at least ‘BBB’ as defined by Standard & Poor’s).
assets (such as property and natural resources) and private debt.
These investments are driven by a ‘bottom-up’ analysis of the manager’s value
Market (sovereign and corporate debt) and other Developed Market high yield
High Yield Bonds $14.1m, (5.7% of NAV) include investments in Emerging
creation attributes, regardless of the prevailing economic climate. Managers
corporate debt.
dependent on financial engineering as a primary driver of returns are avoided.
Moreover, it is essential that the manager provides more than capital to its
‘Other’ is comprised of cash valued at $4.0m (1.6% of NAV).
portfolio companies – e.g. strong operational capabilities. Investments should
be made into companies where there is a clearly defined exit route, which is
Cumulative portfolio returns
not solely reliant on IPO markets.
By investing in Private Assets it is often possible to access differentiated
opportunities and fast growing businesses that are not normally available
through public markets. For example, many Emerging Market countries have
relatively immature capital markets, which can make it difficult to access the
most attractive sectors in the public markets at reasonable valuations.
Furthermore, Private Assets often exhibit low correlation to public security
markets and the phased drawdown of capital helps to reduce market timing risk.
•
•
•
25 commitments (totalling $107.8m) have been made as at 31 December 2013.
$72.2m has been drawn down.
Outstanding commitments of $44.5m (the majority of which will be
drawn down over the next five years) are covered by cash and
investments in market neutral funds. In addition, based on conservative
estimates, distributions from the current private assets portfolio should
enable this sub-portfolio to become self-funding.
•
To date, cumulative distributions received total $20.2m.
3)
‘Market Neutral Funds’ contains generally lower volatility investments in
a small number of funds that engage in a variety of trading strategies
across asset classes. Each market neutral fund has a different investment
Performance (Time-weighted)
Portfolio Performance
Performance Benchmark
1 Year
7.7%
2.8%
3 Year
6.2%
9.0%
5 Year
10 Year
38.2% 106.3%
16.8%
52.7%
MSCI World (Developed) Index
26.7%
38.6%
101.4%
96.3%
MSCI Emerging Markets Index
(2.6%)
(6.5%)
99.3% 188.3%
MSCI All Country World Index
22.8%
32.0% 100.2%
99.5%
‘Other’ is comprised of cash valued at $4.0m (1.6% of NAV).
2013 Returns
Performance (Time-weighted)
Portfolio Performance
MSCI World (Developed) Index
MSCI All Country World Index
MSCI Emerging Markets Index
Performance Benchmark*
2013
7.7%
26.7%
22.8%
(2.6%)
2.8%
* Note: Performance is measured against an absolute benchmark of one-year US Dollar LIBOR
(prevailing on 1 January each year) plus 2%.
Performance Commentary
See below performance breakdown of the four ‘sub-portfolios’ over (i) the
fourth quarter (Q4) and (ii) the year ended 31 December 2013 (YTD):
Sub-Portfolio
Valuation Weighting Performance Contribution Performance Contribution
mandate and it is expected that their collective performance will not be
31 December 2013
$m
%
Q4%
Q4 $m
YTD%
YTD $m
dependent on the direction of global security markets. What they have in
common is a focus on generating positive absolute returns while
providing downside protection in volatile markets.
In addition, Market Neutral Funds act as a secondary backstop to cash in
covering long-term capital commitments (thus helping to avoid excessive cash
drag – especially in the current environment of near-zero interest rates) and
other opportunistic investments. In short, the Investment Manager believes
that they provide a better risk/reward allocation than other investments that
are perceived to be ‘lower risk’ such as government bonds.
4)
‘Bonds/Other’ – Bonds are comprised of two constituents: (i) Investment
Grade Bonds and (ii) High Yield Bonds. Returns may be generated from
rising capital value and coupons as well as currency exposure.
Global Equities
153.4
Private Assets
57.5
Market Neutral
Funds
Bonds/Other
20.0
18.1
61.6
23.1
8.0
7.3
4.5
0.4
2.6
2.8
6.5
0.2
0.5
0.5
11.4
6.7
(2.3)
0.5
14.8
3.5
(0.5)
(0.0)
Total
$249.0m 100%
3.2%
$7.7m
7.7% $17.8m
During 2013, the portfolio generated a time weighted return of +7.7%. This
compares with a +2.8% gain for the Performance Benchmark and +22.8% for
the MSCI All Country World Index.
2013 saw a divergence of performance across the portfolio’s geographic
exposures, with strong returns generated in Japan (+47.5%), Developed
Europe ex UK (+25.0%) and North America (+21.4%). However, losses were
generated by the portfolio’s exposure to Latin America, Emerging Europe and
the Middle East, which declined by 1.6%, 1.1% and 0.6% respectively. In
14
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 15
Ocean Wilsons Holdings Limited/Annual Report 2013
Performance
500
450
400
350
300
250
200
150
100
50
0
Jan-04
10 Year Cumulative Returns
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Ocean Wilson Benchmark
Ocean Wilson Investments Limited
MSCI Emerging Markets NR USD
MSCI World (Developed) Index
MSCI All Country World Index
*Note: Performance information for the MSCI All Country World Index, which includes Developed, Emerging and Frontier Markets (weighted by market capitalisation), is only available from 31 May 2002.
addition the portfolio’s exposure to Natural Resources was detrimental to
Distressed Opportunity Fund II, LP followed by $1.2m to NG Capital
performance, declining by 4.2%.
Partners II, LP).
The largest contributors to the portfolio’s performance were dominated by holdings
2013 PERFORMANCE BY SILO
exposed to Developed Market equities: Findlay Park America Fund +30.2%,
Egerton European Dollar Fund +25.7%, Lansdowne Developed Markets Fund
+33.1% and Instinct Dark Horse Fund +46.3%. In addition, a number of the
portfolio’s private asset holdings performed strongly, with Africa Development
Partners I +37.2% and Greenspring Global Partners IV +28.1%.
Cash
Bonds
Market Neutral
Global Equities
Private Assets
At the other end, the weakest performances came from holdings in the Emerging
Markets and Natural Resources: BSF Mining Opportunities Fund -27.7%,
BlackRock World Mining Trust -15.8%, Atlantis China Fund -18.1%, Avigo
SME Fund III -19.1% and Gramercy EMD Allocation Fund -9.4%.
The top contributors were:
Top Five Contributors (in USD)
Contribution
Performance
In aggregate, holdings in Market Neutral Funds recorded a loss of 2.3%, due
Findlay Park American Fund
to the disappointing performance of one holding, QFR Victoria (-13.3%),
Egerton European Dollar Fund
which has subsequently been redeemed.
Private Assets (23.1% of net asset value) – the underlying limited
partnerships are showing increasing visibility on their potential for value
creation and the Investment Manager remains confident that the significant
capital deployed into post-crisis vintages represent an attractive store of future
Lansdowne Developed Markets Fund
Instinct Dark Horse Fund
African Development Partners I, LLC *(i)
Total
*Notes:
% / X
30.2%
25.7%
33.1%
46.3%
1.5x
%
1.7
1.1
1.1
1.0
0.7
5.6
value. During 2013, the portfolio received distributions of $8.0m (the largest
(i) Performance for Private Assets Investments is measured as a multiple (since inception
inflows being $2.2m from Gramercy Distressed Opportunities Fund Ltd)
against drawdowns of $11.6m (the largest outflows being $1.7m to Gramercy
of the investment) based on the following equation: Cash Multiple = (Profit/Loss +
Drawn Capital)/Drawn Capital (since inception not for the period) where Profit/Loss =
(Investment Value + Distributions) – (Initial Costs + Taxes).
%
(0.5)
1.9
(2.3)
11.4
6.7
Gain
$m
4.0
2.6
2.5
2.4
1.7
13.2
15
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 16
Ocean Wilsons Holdings Limited/Annual Report 2013
Investment Managers Report
Portfolio activity – for the year ended 31 December 2013
Hirzel Capital Fund – research driven long/short hedge fund manager
During 2013, there were total purchases of $29.8m, including purchases of
investing in US companies, with an emphasis on mid-caps. This Fund is
new positions totalling $16.0m and total sales of $28.9m.
currently closed to new investors.
Within the portfolio’s private assets silo, there were new commitments made
BlackRock European Hedge Fund – is a European (including UK)
of $22.7m and drawdowns of $11.6m. During 2013, investments in private
long/short equities hedge fund. Reduced fees were negotiated. This Fund is
assets generated distributions of $8.0m.
currently closed to new investors.
Odey Absolute Return Fund – is a Developed Market long/short equities
hedge fund.
Sales
There were sales totalling $28.9m in 2013.
Purchases
New Positions
Hirzel Capital Fund
BlackRock European Hedge Fund
Odey Absolute Return Fund
Additions to Existing Investments
JO Hambro Japan Fund
NTAsian Discovery Fund
Prusik Asian Smaller Companies Fund
Phaunos Timber Fund Ltd
Prince Street Opportunities Fund
Total
$m
6.0
5.0
5.0
7.5
2.0
2.0
1.8
0.5
29.8
Asset Allocation (as at 31 December 2013)
Private Equity
16.2%
Deposits
1.6%
Private Real
Assets 3.4%
Private Debt
3.5%
Market Neutral –
Other Liquidity
8.0%
High Yield
Corporate (DM)
3.8%
Emerging Market
Debt (Sovereign &
Corporate) 1.9%
Long Only
Equities 36.3%
Long/Short Hedge
Funds 25.3%
Geographical Distribution (as at 31 December 2013)
Underlying Liquidity (as at 31 December 2013))
Natural Resources
10.4%
EM – Middle East
0.7%
EM – Africa
4.5%
Cash/Liquidity
Funds 1.6%
Market Neutral
8.0%
EM – Emerging
Europe 4.5%
EM – Latin
America
6.0%
EM – Emerging
Asia 16.6%
16
EM – Developed
Asia ex Japan
4.6%
Japan
6.4%
North America
24.4%
Developed
Europe
ex UK
5.4%
UK
6.9%
Fixed Life
Investment Period
Complete 9.6%
> 1 year
4.9%
Redemption
outstanding
4.2%
Daily
25.2%
Fixed Life in
Investment Period
13.4%
Weekly
2.0%
Quarterly
10.0%
Monthly
30.7%
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 17
Ocean Wilsons Holdings Limited/Annual Report 2013
Private Assets – Commitments
L Capital Asia 2, LP (sponsored by LVMH Group, the French luxury
There were five new commitments to private assets in 2013:
conglomerate) will be a continuation of the strategy of L Capital Asia’s
New Commitments
Navegar I, LP
NG Capital Partners II, LP
L Capital Asia 2, LP
KKR Special Situations Fund, LP
Silver Lake Partners IV, LP
Total
predecessor fund, investing in businesses that are direct beneficiaries of
discretionary consumer spending in Asia with a focus on the ‘Aspirational,
Affordable and Alternative’ market segment. The manager will target
investment opportunities primarily in Greater China, Southeast Asia and India,
and on a more opportunistic basis, businesses in developed Asia (e.g.
Australia, South Korea and Japan), particularly where such businesses may
benefit from expansion into Emerging Asia. The Fund is expected to make
between 12 and 15 growth equity investments.
$m
5.0
5.0
5.0
4.5
3.2
22.7
Navegar I, LP will make minority growth capital investments in private
companies operating in the Philippines. The country has seen considerable
economic and political progress, which provides a solid backdrop for
investment in the Philippines. The young population is a central driver to the
country’s projected multi-year growth and offers a powerful tailwind for local
consumer businesses.
NG Capital Partners II, LP will make control investments in private
companies operating in Peru. In many respects, Peru is a catch-up story as it
traces the economic path of Chile. The investment case is supported by a
strong Peruvian economy, which remains at an early stage of its development.
In particular, businesses engaged in the provision of goods and services to the
emerging consumer are expected to exhibit strong growth.
KKR Special Situations Fund, LP – will invest across the capital structure
with a credit orientation, with the focus primarily being on corporate
opportunities where balance sheet distress or broader market dislocation has
created mispricing of assets. The manager expects to invest approximately
two-thirds of the Fund’s assets in Europe, with the remainder being invested in
the US, Asia and Australia. The Fund is expected to make 20-25 core
investments, which will be supplemented with a number of toe-hold positions.
Silver Lake Partners IV, LP will invest globally in businesses operating in the
technology, technology-enabled and technology-related sectors. The manager
will take both minority and control positions. Typical investments will be in
large market leading companies with strong growth characteristics.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 18
Ocean Wilsons Holdings Limited/Annual Report 2013
Investment Managers Report
Investment Portfolio at 31 December 2013
Findlay Park American Fund
Egerton European Dollar Fund
Lansdowne Developed Markets Fund
NTAsian Discovery Fund
Oaktree CM Value Opportunities Fund
AR New Asia Fund
JO Hambro Japan Fund
BlueCrest AllBlue Leveraged Feeder
Instinct Dark Horse Fund
BlackRock UK Emerging Companies HF
Top 10 Holdings
BlueBay Macro Fund
Prosperity Quest Fund
Schroder ISF Asian Total Return
Odey Absolute Return Fund
Hirzel Capital Fund
BlackRock European Hedge Fund
African Development Partners I, LLC
CCI Technology Partners II
China Harvest Fund II, LP
Artemis Global Energy Fund
Top 20 Holdings
Prince Street Opportunities Fund
Greenspring Global Partners IV, LP
QFR Victoria Fund
Prusik Asian Smaller Companies Fund
BlueBay EM Corporate Alpha Fund
Oaktree CM Principal Fund V, LP
Helios Investors II, LP
R/C Global Energy and Power Fund IV, LP
Schroder ISF Global Energy Fund
L Capital Asia, LP
Top 30 Holdings
28 remaining holdings
Cash
TOTAL
Primary Focus
US equities – long-only
Europe/US equities – hedged
Europe/US equities – hedged
Asia ex-Japan equities – long-only
US high yield corporate debt – hedged
Asia ex-Japan equities – long-only
Japan equities – long-only
Market Neutral – multi-strategy
Japan equities – hedged
UK equities – hedged
Market Neutral – EM-biased macro
Russian equities – long-only
Asia ex-Japan equities – long-only
Europe/US equities – hedged
US equities – hedged
Europe equities – hedged
Private Assets – Africa
Technology equities – hedged
Private Assets – China
Energy equities – long-only
Emerging Markets equities – long-only
Private Assets – US Venture Capital
Market Neutral – EM-biased macro
Asia ex-Japan equities – long-only
EM high yield corporate debt – hedged
Private Assets – US distressed debt
Private Assets – Africa
Private Assets – Energy
Energy equities – long-only
Private Assets – Asia (Consumer)
Market Value
$000
17,156
12,980
9,922
9,728
9,338
8,498
7,908
7,739
7,712
7,648
% of
NAV
6.9
5.2
4.0
3.9
3.7
3.4
3.2
3.1
3.1
3.1
98,629
39.6
7,118
6,846
6,523
6,517
6,192
5,903
5,758
5,688
5,634
5,551
2.9
2.7
2.6
2.6
2.5
2.4
2.3
2.3
2.3
2.2
160,359
64.4
5,147
5,145
5,102
4,995
4,772
4,129
3,769
3,672
3,620
3,302
204,012
40,958
4,013
248,983
2.1
2.1
2.0
2.0
1.9
1.7
1.5
1.5
1.4
1.3
81.9
16.5
1.6
100.0
18
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 19
Ocean Wilsons Holdings Limited/Annual Report 2013
Market outlook
developed markets, historic trough valuations have been lower. In all
2013 was a robust year for global stock markets. Recovering economies and
likelihood we are not at the end of the process but remain acutely aware that
growing confidence saw investors ascribing higher ratings to many developed
such times often provide the greatest opportunities.
market equities despite the poor earnings backdrop. It was a classic recovery
phase in the stock-market cycle. Underlying this performance, however, the
At the market level, the US is now at its 10 year price/earnings average but
scene is being set for a more challenging, muted phase of the cycle, albeit
more expensive compared to many other global stock markets. However, this
one which is ultimately positive.
reflects the uncanny ability for the US economy to surprise through
productivity gains and entrepreneurship. Buoyed by this, and the likelihood
One of the most notable features of markets in recent years has been the
that US oil and gas production will match or even exceed domestic demand,
unprecedented levels of liquidity being injected by Central Banks. Through a
the manufacturing industry has undergone a renaissance and helped drive
combination of low interest rates and novel measures such as quantitative
growth ahead. Assuming this feeds through to earnings growth, this should
easing (QE), asset prices were forced up as this money percolated through the
help sustain stock market performance.
financial system. Unfortunately, markets required more and more money to
be injected into the system amid a sense that the money was having less of
In contrast, Europe is still mired in structural concerns. Whilst the risk of a full
an impact. Central Bankers’ worst fears that the process of stopping QE would
scale collapse has been averted for now, there is still considerable work to be
lead to a disorderly market decline were brought to the fore when Ben
done in strengthening the banking sector, and in many of the Southern
Bernanke, Chairman of the US Federal Reserve, raised the prospect of such an
European economies despite the progress made to date. Unlike the US
event in May of 2013. Government bond yields rose rapidly, risk assets sold
though, the valuation is lower and corporate profitability is still some way off
off and emerging markets, in particular, were impacted as investors
its historic peak, resulting in a difficult landscape, albeit one which is likely to
repatriated their money back to the developed world.
prove fruitful for the skilled stock-picker.
Subsequent to this, investors’ nerves have been somewhat soothed by the
Japan, as is so often the case, is dancing to a rather different tune. Having
promise of a period of prolonged low interest rates, enabling the US to start its
finally grasped the nettle and acknowledged the need to address the
programme of exiting QE. Whilst it is true that rates may well stay low for an
deflationary pressure and structural challenges, it is implementing an
extended period of time – it seems likely that Central Bankers will shift their
aggressive quantitative easing programme (indeed larger than the US one on
focus from inflation to the broad employment picture – it seems clear that the
a relative basis). Unlike the US, however, the Japanese QE programme is
tide is turning. Hence whilst liquidity undoubtedly remains very
expected to be sustained for some time and is being combined with other
accommodative globally, markets are typically more concerned by the
measures such as the introduction of Japanese Individual Savings Accounts
direction of travel and that direction has now changed. This has important
and encouraging public pension plans to reduce bonds in favour of equities.
implications for markets.
We feel that the situation is likely to sustain equity market performance, albeit
the jury is still out as to whether or not the long awaited structural changes
From a developed market perspective the progress in markets has been all
will be successfully completed.
about valuations being re-rated as liquidity dominated despite a backdrop of
disappointing earnings. This has broadly increased market valuations to fair
Linked to the emerging market debate is the outlook for commodities.
value (and even fully valued in the case of the US). This is fairly typical for this
Commodities experienced a prolonged period of strong demand as emerging
stage of the investment cycle but, importantly, it also means that further
markets, and China in particular, surprised the world with their growth and
progress becomes increasingly dependent on improving profitability. Without
urbanisation aspirations. As is often the case, supply initially failed to keep up
such an improvement, markets will be pushed into expensive territory and
with this demand, resulting in a period of feverish investment and capital
become a sell. Typically this stage is also characterised by more volatility and
expenditure. Unfortunately these periods rarely end well and with the recent
opportunities for stock pickers, as those companies which disappoint are
reduction in emerging market growth, coinciding with now excessive levels of
punished and those that exceed expectations are rewarded.
investment and production, a period of retrenchment has been inevitable. At
the company level, significant cuts in spending are now being made which
The outlook for emerging markets is much more nuanced. Whilst remaining
should support the cash positions of the major firms but one has to suspect
believers in the long-term structural case for the ongoing development of the
that the number of smaller miners will need to decline in the future.
emerging economies, which should translate into strong equity market
performance, we are sufficiently realistic to recognise that such processes are
In many ways our current view feels fairly consensual, which makes us
almost always interrupted by the occasional speed-bump. Undoubtedly we are
slightly uncomfortable in light of our contrarian nature. Even so, this probably
going through such a process at present and the challenge as always is to
reflects the current mid-cycle positioning where it typically pays not to fight
determine the length and scale of the bump! Our suspicion is that the process
the consensus. It also has to be acknowledged that a market setback would
will serve to bifurcate investor opinion between those structurally strong
not come as a surprise following such a prolonged period of strong market
emerging markets and those suffering from deficits, poor governance, political
performance. We would view such an event as a buying opportunity.
uncertainty, pursuing growth at the expense of returns and an over-reliance
on commodity exports. Valuations have been falling to reflect these
Hanseatic Asset Management LBG
challenges but it must be recognised that whilst they look attractive versus
March 2014
19
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 20
Ocean Wilsons Holdings Limited/Annual Report 2013
Directors and Advisers
Directors
J F Gouvêa Vieira* (Chairman)
W H Salomon* (Deputy Chairman)
K W Middleton
C F A Cooper*
C Maltby*
A Rozental*
C Townsend*
*Non-executive
Secretary
Malcolm S Mitchell
Registered Office
PO Box HM 1022
Clarendon House
Church Street
Hamilton HM DX
Bermuda
Registrars
Codan Services Limited
Clarendon House
Church Street
Hamilton HM 11
Bermuda
Profiles of Non-executive Directors
Mr J F Gouvêa Vieira is Brazilian, aged 64 and joined the Group in 1991. He is
UK Transfer Agent
a partner of the Brazilian law firm of Gouvêa Vieira Advogados. He is
Capita Asset Services
chairman of Wilson Sons Limited, a member of the Board of Concremat
The Registry
Engenharia and a number of other Companies.
34 Beckenham Road
Beckenham
Mr W H Salomon is German and British, aged 56 and joined the Group in
Kent BR3 4TU
1995. He is senior partner of Hansa Capital Partners LLP. He is also a non-
executive director of Hansa Trust PLC, Wilson Sons Limited and chairman of
Ocean Wilsons Dividend Address
New India Trust.
Ocean Wilsons Dividend Election
Capita Asset Services
Mr C F A Cooper is Bermudian, aged 71 and joined the Group in 1994. He
The Registry
was a partner of Conyers, Dill & Pearman. He is also a non-executive director
34 Beckenham Road
of Polaris Holding Company Limited.
Beckenham
Kent BR3 4TU
Mr C Maltby is aged 63, British and resident in Switzerland. He is chairman of
BlackRock Absolute Return Strategies Limited and of HarbourVest Senior Loans
Auditor
Europe Limited, a Director of BACIT Limited and Abingworth BioEquities Fund
KPMG LLP
Limited, and a member of the Supervisory Board of Bilfinger Berger Global
15 Canada Square
Infrastructure SICAV SA.
London E14 5GL
Mr A Rozental is Mexican, aged 68 and is the founding partner of Rozental &
Bankers
Asociados. He is a non-executive director of Wilson Sons Limited, chairman of
Deutsche Bank International Limited
the Board of Directors of ArcelorMittal Mexico and an independent Director of
Jersey
ArcelorMittal Brazil. He serves on the advisory boards of Kansas City Southern
de México, EADS de México, Toyota de México and is a non-executive Board
Investment Managers
member of HSBC Bank of Mexico.
Hanseatic Asset Management LBG
Guernsey, Channel Islands
Mr C Townsend is German and British and resident in Switzerland. He is aged
40 and is a solicitor and has an MBA from the London Business School. He is
investment director of Hansa Capital GmbH.
Bermuda Office
PO Box HM 2250
Richmond House
12 Par-la-Ville Road
Hamilton HM JX
Bermuda
Website: www.oceanwilsons.bm
Brazilian Business Website
www.wilsonsons.com.br
20
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 21
Report of the Directors
Ocean Wilsons Holdings Limited/Annual Report 2013
The Directors submit herewith their Report and Accounts for the year ended
Directors
31 December 2013.
The present Members of the Board are as shown on page 20.
The Group accounts, presented under International Financial Reporting
In accordance with the Company’s bye-laws, Mr A Cooper and Mr K Middleton
Standards (IFRS), comprise the Consolidated Statement of Comprehensive
retire at the next annual general meeting and, being eligible, Mr K Middleton
Income, Consolidated Balance Sheet, Consolidated Statement of Changes in
offers himself for re-election. The Directors who held office at 31 December
Equity, Consolidated Cash Flow Statement and the related notes 1-38.
2013 had the following interest in the Company shares:
Profits and Dividends
As permitted by Section 84(1A) of the Bermuda Companies Act 1981 the
Group’s accounts have been drawn up in accordance with International
C F A Cooper
Interest
Beneficial
2013
2012
46,450
46,450
J F Gouvêa Vieira
Beneficial
146,600
146,600
Financial Reporting Standards.
K W Middleton
Beneficial
10,000
10,000
The Group’s profit after tax on ordinary activities attributable to equity
shareholders amounted to US$37,873,000 (2012: US$41,264,000).
The Directors are declaring the payment of a dividend for the year of 60.0c
(2012: 42.0c) gross per share. The dividend will be paid on 6 June 2014 to all
shareholders who are on the register at close of business on 9 May 2014.
Principal Activities
The Group’s principal activities during the year were the holding of
investments and the provision of maritime and logistics services in Brazil.
The investment strategy agreed with the Company’s investment managers is
to maximise the total return on assets, by investing in a portfolio of diversified
assets including global equities, fixed income and alternative assets with a
particular emphasis on emerging markets. Investments are intended to add
value over the medium to longer-term through a non-market correlated,
conviction based investment style.
Our subsidiary, Wilson Sons Limited, has provided maritime services in Brazil
for over 175 years. The Group’s strategy is to provide maritime and logistics
services to the domestic economy, international trade and the oil and gas
market.
Details of our activities are set out in the Investment Managers report and
Financial review on pages 6 to 19.
W H Salomon*
Beneficial
4,659,349
4,659,349
C Townsend
C Maltby
Beneficial
Beneficial
40,000
33,208
5,000
–
*Additional indirect interests of W H Salomon in the Company are set out in substantial
shareholdings below.
Service Contracts
Regarding the Directors proposed for re-election at the Annual General
Meeting Mr K Middleton has terms of service, which can be terminated by the
company on not less than twelve months’ notice in writing and by the Director
on not less than six months’ notice in writing.
Employees
The average number of persons, including Directors, employed by the Group
was 6,363 (2012: 6,762).
Long-term incentive plan
On 9 April 2007, the boards of Ocean Wilsons Holding Limited and Wilson
Sons Limited approved a stock option plan that allows for the granting of
phantom options to eligible employees selected by the Wilson Sons Limited
Board. The options will provide cash payments, on exercise, based on the
number of options multiplied by the growth in the price of a Wilson Sons
Limited Brazilian Depositary Receipt “BDR” between the date of grant
(the Base Price) and the date of exercise (the Exercise Price). The plan is a
Brazilian Real denominated scheme. An accrual of US$10,898,000
(2012: US$12,328,000) has been included in the 2013 accounts for benefits
accruing under the plan.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
21
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 22
Ocean Wilsons Holdings Limited/Annual Report 2013
Report of the Directors
Auditor
KPMG LLP were appointed auditor at the 2013 annual general meeting and
•
The Code states that the Board should appoint one independent director
have expressed their willingness to continue in office as auditor and a
to be the senior independent director.
resolution to reappoint them under the provisions of Section 89 of the
Bermuda Companies Act 1981 will be proposed at the forthcoming Annual
Due to the small size of the Board and the fact that Ocean Wilsons
General Meeting.
Substantial Shareholdings
Holdings Limited is a holding company, the Board does not consider it
appropriate to appoint a senior independent non-executive director. If a
shareholder feels it is inappropriate to relay views through the chairman
As at 24 March 2014 the Company has been notified of the following
or executive director, all non-executive directors are available.
holdings of its shares, in excess of 3% of the issued ordinary share capital:
Number of shares
% held
•
The Code states the Company should have a Board nomination
Name of holder
Hansa Trust PLC
9,352,770
Codan Trust Company Limited and Helen Cooper
4,435,064
Peter A S Pearman and Codan Trust Company Limited 3,929,049
Utilico Emerging Markets Utilities Limited
Montanaro Asset Management
2,365,838
1,399,599
26.4
12.5
11.1
6.7
3.9
The Company has been advised that Mr W H Salomon is interested in
4,435,064 shares registered in the name of Codan Trust Company Limited
and Helen Cooper and Mrs C A Townsend is interested in 3,929,049 shares
registered in the name of Peter A S Pearman and Codan Trust Company
Limited. The Company has also been advised that Mr W H Salomon has an
interest in 26.4% and Mrs C A Townsend an interest in 25.9% of the voting
shares of Hansa Trust PLC. Mr C Townsend is the son of Mrs C A Townsend.
Contracts and agreements with substantial shareholders
No contracts existed at the end of the year in which a substantial shareholder
of the Company is or was materially interested.
Corporate Governance
committee.
The Board does not have a separate nomination committee as the
identification and appointment of a new Board member is a matter for
the full Board. The Board evaluates the balance of skills, experience,
independence and knowledge on the board and, in the light of this
evaluation, prepares a description of the role and capabilities required for
a particular appointment. An independent external search consultant will
conduct a search for appropriate candidates with the right blend of skills
and experience which are then submitted to the Board for evaluation.
•
The Code states that non-executive directors who have served longer
than nine years should be subject to annual re-election.
Directors serving more than nine years are not subject to annual
re-election as your Board considers continuity and knowledge of the
Company’s investments and business acquired over time is of great value.
•
The Code requires the audit committee should review arrangements by
which staff of the company may raise concerns about possible
The Board has put in place corporate governance arrangements that it
improprieties.
believes are appropriate for the operation of your Company. The Board has
considered the principles and recommendations of the 2010 and 2012 UK
Corporate Governance Codes (“the Codes”) issued by the Financial Reporting
Council and decided to apply those aspects which are appropriate to the
business. This reflects the fact that Ocean Wilsons Holdings Limited is an
investment holding Company incorporated by an act of parliament in
Bermuda with significant operations in Brazil. The Company complies with the
Codes where it is beneficial for its business to do so, and has done so
throughout the year and up to the date of this report, but as noted below, it
does not fully comply with the Codes. The position is regularly reviewed and
monitored by the Board.
Ocean Wilsons Holdings Limited does not have a whistle blowing policy,
as there is only one employee outside the Wilson Sons Limited Group.
The Wilson Sons Limited Group whistle blowing policy and procedures
enable employees who have concerns about the application of the
Group’s Code of Ethics to raise them with the Ethics Committee. The
Ethics Committee will maintain their anonymity and report back to the
employee on actions taken.
•
The Code requires that there should be a formal and transparent
procedure for developing policy on executive remuneration and for fixing
the remuneration packages of individual directors.
Below are the areas where Ocean Wilsons Holdings Limited does not comply
with the 2012 UK Corporate Governance Code and the rationale for not
complying:
As there is only one employee outside the Wilson Sons Limited Group the
group does not have a formal procedure for developing policy on
22
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Ocean Wilsons Holdings Limited/Annual Report 2013
executive remuneration and for fixing the remuneration packages of
The Ocean Wilsons Holdings Limited Board has a formal schedule of matters
individual directors. The Board of Wilson Sons Limited is responsible for
specifically reserved for its attention. As previously stated, autonomy is given
all remuneration matters relating to Wilson Sons Limited and its
to the Wilson Sons Limited Board to supervise the Wilson Sons Limited
subsidiaries.
The Board
business and decisions taken by the Wilson Sons Board do not require
ratification by the Board of Ocean Wilsons Holdings Limited. The schedule of
matters reserved for the Board of Ocean Wilsons Holdings Limited includes:
The Board currently comprises the chairman, Mr J F Gouvêa Vieira, deputy
chairman Mr W Salomon, a further four non-executive directors, Mr A Cooper,
Mr A Rozental, Mr C Townsend and Mr C Maltby and one executive director,
Mr K Middleton. Mr Rozental and Mr Maltby are considered by the Board to be
independent under the Code. The directors’ biographies appear on page 20.
All directors are subject to election by shareholders at the first AGM following
their appointment to the Board and are subject to re-election by shareholders
once every three years. Mr K Middleton is offering himself for re-election at
the next AGM. The Board considers on a regular basis how to refresh itself.
Non-executive directors hold letters of appointment. The other commitments
of directors appear on page 20 as part of their biographies and the Board is
satisfied that these commitments do not conflict with their ability to carry out
effectively their duties as directors of the Company.
The division of responsibilities between the chairman and the executive
director have been clearly established, set out in writing and agreed by the
Board. The Group does not have a chief executive.
The Board has appointed an executive director, Mr K Middleton to administer
the Holding Company.
Our maritime services subsidiary, Wilson Sons Limited (an autonomous listed
company) is supervised by the Board of Wilson Sons Limited who have
appointed Mr C Baião as chief executive to run the business in Brazil. The
chief executive in turn delegates responsibility to senior executives, in
particular strategic business unit directors. Ocean Wilsons Holdings Limited
manages its interest in Wilson Sons Limited through the appointment of three
Ocean Wilsons Holdings Limited Directors as non-executive directors of
Wilson Sons Limited, (presently Mr J F Gouvêa Vieira, Mr W Salomon and
Mr A Rozental) voting on matters requiring Wilson Sons Limited shareholder
approval and through the relationship agreement between Ocean Wilsons
Holdings Limited and Wilson Sons Limited signed following the listing of
Wilson Sons Limited on the Sao Paulo and Luxembourg Stock Exchanges. The
relationship agreement details areas of co-operation between Ocean Wilsons
Holdings Limited and Wilson Sons Limited in meeting accounting, reporting
and compliance requirements for both companies.
The Board delegates authority to manage the portfolio of investments to
Hanseatic Asset Management LBG.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Determining the overall strategy of the Group
Establishing the finance committee and their terms of reference
Determining the responsibilities of the chairman and directors
Approving changes to the capital structure of the Company or other
matters relevant to its status as a listed Company
Approving significant matters relating to capital expenditure, acquisitions
and disposals and consideration of significant financial matters outside
the Wilson Sons Limited Group
Appointment of directors to Ocean Wilsons Holdings Limited and Ocean
Wilsons Investments Limited
Appointment and removal of the company secretary
Appointment and removal of executives
To decide on potential conflicts of interest
Approval of annual and interim reports
Approving any dividends and dividend policy
Appointment of external auditor, financial advisor or corporate broker
To vote the shares in Wilson Sons Limited on matters presented to
shareholders for shareholder approval
To approve changes in Wilson Sons Limited auditor or accounting policies
Agree the strategy of Wilson Sons Limited
Undertaking a formal and rigorous annual evaluation of its own
performance and that of its committees and individual directors
Review of the Company’s overall corporate governance arrangements
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Customer: Ocean Wilsons
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23
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Ocean Wilsons Holdings Limited/Annual Report 2013
Report of the Directors
The Board of Ocean Wilsons Investments Limited is currently constituted by
The non-executive directors also meet informally, without any executives
the same directors as the Board of Ocean Wilsons Holdings Limited. The
present, to discuss matters in respect of the business.
Board delegates authority to run the investment portfolio held by Ocean
Wilsons Investments Limited to the investment manager within certain
All new directors receive an induction on joining the Company. This covers
guidelines. The Board of Ocean Wilsons Investments Limited has a formal
such matters as strategy, operation and activities of the Group and corporate
schedule of matters specifically reserved for its attention which include:
governance matters. Site visits and meetings with senior management are also
Appointment, removal and terms of an investment manager
are encouraged to visit other sites. Directors are also provided with industry
arranged. The Board as a whole make periodic operational site visits. Directors
Determine investment guidelines and restrictions in conjunction with the
investment manager
and regulatory updates.
The Board has in place a procedure for the consideration and authorisation of
conflicts or possible conflicts of interest with the Company’s interests annually.
Review the performance of the investment manager
If a director has a conflict of interest he leaves the meeting prior to discussion
unless requested to remain and leaves determination of such matters to the
Approval of the annual accounts for Ocean Wilsons Investments Limited
other directors.
Approving any dividends
Board Evaluation
•
•
•
•
•
The Company has a procedure in place by which directors can seek
and individual directors. The process involves completion of internally
independent professional advice at the Company’s expense if the need arises.
prepared questionnaires. The chairman discusses their responses with each
The Board has full and timely access to all relevant information to enable it to
director and then reports the results of the process to the Board which
perform its duties. The Company has directors and officers insurance in place.
discusses the results highlighting any areas for improvement.
The Board undertakes an annual formal performance evaluation for the Board
The executive director is responsible for advising the Board on all corporate
matters. Each director has access to the advice and services of the company
Board Diversity Policy
secretary Mr M Mitchell and the executive director.
The Board considers diversity, including the balance of skills, experience,
During 2013, four scheduled meetings of the Ocean Wilsons Holdings Limited
appointment of new Directors. The Board does not consider it appropriate to
Board were held at different locations. Details of attendance at Board
establish targets or quotas in respect of Board appointments. With respect to
meetings and meetings of the Board committees are set out below. In addition
gender diversity, the Board considers that a merit based approach is the only
to scheduled Board meetings if matters arise at short notice requiring urgent
appropriate approach for determining the composition of the Board and as
attention a telephone Board meeting is arranged. During 2013 two telephone
such has not set specific targets for gender diversity.
knowledge and nationality, amongst many other factors, when reviewing the
Board meetings were held.
Remuneration
Directors’ attendance at Board and Finance Committee meetings:
Non-executive Directors’ fees are set out within limits set in the Company’s
Articles of Association. The present limit is US$600,000 in aggregate per
Finance Committee
annum and the approval of shareholders in a General Meeting is required to
Board Meetings
attended
Meetings
attended
change this amount. We are proposing to increase this amount at the next
annual general meeting to US$700,000 to allow the appointment of further
6
6
6
6
6
5
6
3
3
3
–
3
3
3
Directors if necessary.
The Board of Wilson Sons Limited is responsible for all remuneration matters
relating to Wilson Sons Limited and its subsidiaries. Mr J F Gouvêa Vieira,
Mr W Salomon and Mr A Rozental receive directors fees from Wilson Sons
Limited in addition to their fees as directors of Ocean Wilsons Holdings Limited.
Board Committees
The Board has established a finance committee which has formal terms of reference
approved by the Board and are reviewed on an ongoing basis by the Board. The
committee’s terms of reference are available at the Company’s registered office. Mr
C Maltby an independent director is chairman of the committee.
The Board will review Board composition on an ongoing basis (including as
part of the formal Board evaluation process) and regularly consider whether
Director
Mr J F Gouvêa Vieira
Mr W Salomon
Mr A Cooper
Mr K Middleton
Mr A Rozental
Mr C Townsend
Mr C Maltby
The formal agenda for each scheduled Board meeting is set by the chairman
in consultation with the executive director. The Board of Ocean Wilsons
Holdings Limited is invited to attend Wilson Sons Limited Board meetings
where appropriate to receive operational updates, including one meeting a
year in Brazil where the Board of Ocean Wilsons Holdings Limited is invited to
attend the Wilson Sons Limited Board meeting to meet business unit directors
and receive detailed management reports on the Brazilian business.
24
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17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 25
Ocean Wilsons Holdings Limited/Annual Report 2013
any skill gap exists. The Board will evaluate the balance of skills, experience,
•
to make recommendations to the Board, for it to put to the shareholders
independence and knowledge on the Board.
for their approval in general meeting, in relation to the appointment,
reappointment and removal of the external auditor and to approve the
If the Board considers that a skill gap exists in either the Board or its
remuneration and terms of engagement of the external auditor;
committees a description of the role and capabilities required for a particular
appointment will be prepared and passed to an independent external search
•
to review and monitor the external auditor’s independence and
consultant. The external search consultant will conduct a search for
objectivity and the effectiveness of the audit process, taking into
appropriate candidates with the right blend of skills and experience which are
consideration relevant professional and regulatory requirements;
then submitted to the Board for evaluation.
Any director may suggest a person to be appointed a non-executive director
the subsidiary companies, regarding any matters arising in the course of
of the Company. The procedure to be followed is:
the annual audit which should be brought to the attention of the Board;
•
to consult with the Group’s auditor and, where necessary the auditor of
(a) The C.V. and qualifications of the candidate for the position will be
submitted to the chairman who will discuss the proposal with at least two
other directors.
(b) The candidate will be interviewed by the chairman, sponsor and at least
one other director.
(c)
If thought fit, a resolution will be submitted to the Board for the
appointment of the candidate.
Finance Committee report
•
•
•
•
to monitor the Group’s risk exposure;
to consider the need for an internal audit function;
to determine the remuneration for all executives, the chairman and
non-executive directors;
to determine the level of awards made under the Company long-term
incentive plan and performance conditions and vesting periods that
apply; and
The finance committee comprises all non-executive directors, two of whom
•
to determine bonuses payable under the Company Bonus scheme.
are considered by the Board to be independent during 2013. The Board is
satisfied that during 2013 three directors, Mr C Maltby, Mr W Salomon and
Overview of the actions taken by the Finance Committee to discharge its
Mr A Rozental, have recent and relevant financial experience as all have
duties
served on the audit committees of other listed companies. Mr Salomon
Since the beginning of 2013 the Finance committee has:
also has considerable experience in finance and investment banking and
Mr C Maltby holds an accounting qualification.
•
reviewed the December 2012 report and financial statements, the June
2013 half yearly financial report and the interim management statements
The finance committee met three times in 2013. At the request of the finance
issued in May and November. As part of the review of the December
committee the chief executive of Wilson Sons Limited, the finance director of
2012 report, the Committee received a report from the external auditor
Wilson Sons Limited and the executive director of Ocean Wilsons Holdings
on their audit of the annual report and financial statements;
Limited attended each of these meetings. The external auditor attended one
meeting.
•
reviewed the adoption of new standards and changes in accounting
policy in the period. In the current year the Group adopted the revised
The finance committee meets with the external auditor without the executive
IFRS 10 “Consolidated Financial Statements” and IFRS 11 “Joint
present.
Arrangements”. As a result, the Group has evaluated its consolidation
conclusions in respect of its joint arrangements, which resulted in
The finance committee is chaired by Mr C Maltby, an independent director.
changes to the way joint arrangements are accounted for. The principal
The committee has defined terms of reference. The principal responsibilities of
change under the new standards is that the Group’s offshore joint
the committee are:
ventures which were previously proportionally consolidated on a
line-by-line basis are now accounted for using the equity method;
•
to review the integrity of the interim and full year financial statements of
the company, reviewing significant financial reporting judgements
•
approved a change in the accounting policy of foreign exchange gains
contained in them;
and losses arising from the Group’s foreign currency monetary items.
These were previously allocated to revenues, costs, and financial results
•
to review the Company’s internal control and risk management systems;
in the income statement. To improve transparency and readability of the
financial statements the Group now report them in one line in the income
statement, “Foreign exchange gain/(loss) on monetary items”;
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Customer: Ocean Wilsons
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17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 26
Ocean Wilsons Holdings Limited/Annual Report 2013
Report of the Directors
•
reviewed and agreed the accounting treatment adopted for the Briclog
each case. The committee questioned management on their assumptions
acquisition under IFRS 3 “Business Combinations” as detailed in note 2
used in determining provisions and the procedure for classification of legal
and note 29 to the consolidated financial statements;
liabilities as probable, possible or remote loss by the external lawyers. The
committee reviewed quarterly legal reports from management on
•
reviewed the effectiveness of the Group’s internal controls and disclosures
contingencies and asked questions on the background and progress of
made in the annual report and financial statements on this matter. As
material claims. The committee evaluated the current level of provisions in
part of this review, the Committee considered a report on internal controls
light of historical trends and claim history to ensure provisions were
and the Group’s risk register and suggested amendments;
adequate. The committee further ensured that adequate resources are
allocated to recording, evaluating and monitoring legal claims to ensure the
•
•
•
•
reviewed and approved the scope of audit work to be undertaken by the
completeness of claims recorded and provisions made.
auditor;
agreed the fees to be paid to the external auditor for the audit of the
Equipment – The Group has significant Goodwill, Intangibles and
December 2013 financial statements including consideration of the levels
Property, Plant and Equipment balances. The reporting risk is that these
of non-audit fees which the committee concluded were immaterial;
balances may be overstated. Management perform impairment reviews
for Intangibles and Property, Plant and Equipment and tests goodwill as
assessed the qualification, expertise and resources, and independence of
required by IAS 36, Impairment of Assets. The impairment test is
•
Impairment Risk to Goodwill, Intangibles and Property, Plant and
the external auditor; and
performed by comparing the carrying value of goodwill to its value in
use, calculated using the discounted cash flow forecasts under the
reviewed the need for an internal audit function.
principles of IAS 36. The Committee examined and challenged
management’s key assumptions used in the impairment tests to
To fulfil its responsibility regarding the independence of the external auditor,
understand their impact on the recoverable amounts. The Committee was
the finance committee reviewed:
satisfied that the significant assumptions used were appropriate and
sufficiently robust. The Committee was further satisfied with the
•
the external auditor plan for the current year, noting the role of the audit
impairment disclosures in the financial statements.
partner, who signs the audit report and who, in accordance with
professional rules, has not held office for more than five years and any
•
Briclog Acquisition – The Group made a substantial acquisition in the
changes in key audit staff;
reporting period (Briclog). The reporting risk is that not all assets and
liabilities acquired are identified and recognised. Management reported to
•
•
a report from the external auditor describing their arrangements to
the Committee on the procedures undertaken to determine all assets and
identify, report and manage any conflicts of interest; and
liabilities acquired are identified and recognised including fair valuing the
operating lease contract acquired. As part of this process, management
the overall extent of non-audit services provided by the external auditor,
contracted an independent external specialist to determine the fair value
in addition to approving the provision of significant non-audit services by
of assets and liabilities. The committee reviewed the procedures used,
the external auditor.
questioned management on their assumptions in determining fair value
and considered the expertise of the external specialist. The committee
In addition the Group does not currently employ any former external audit
was satisfied as to the completeness and measurement used in
staff. KPMG LLP have been the Group’s auditor since 31 December 2012
determining fair value and was further satisfied with the accounting
following a competitive tender.
treatment used and disclosures made.
After discussion with both management, the Board of Wilson Sons Limited and
•
Revenue recognition – The revenue recognition risk could arise from
the external auditor, the committee determined that the key risks of
inappropriate revenue recognition policies, incorrect application of
misstatement of the Group’s financial statements relate to:
policies or cut-off errors surrounding year-end. The committee considered
•
Provisions – Legal claims against the Brazilian operations comprise civil and
compared to previous periods. The committee reviewed external auditor
environmental cases, tax cases and labour claims. The reporting risk relates
reports on revenue recognition and discussed their findings and the
to the completeness of claims recorded and the estimation of the provisions
potential risks with the external auditor and management.
the Groups’ revenue recognition policies and the level of transactions
held against these exposures. There remains a significant number of
contingent liabilities, particularly concerning labour and taxation claims.
Internal Controls
Provisions are based on prior experience, management’s best knowledge of
The Board is responsible for the system of internal control and reviewing its
the relevant facts and circumstances and expert legal advice relative to
effectiveness. The internal controls are designed to cover material risks to
26
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17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 27
Ocean Wilsons Holdings Limited/Annual Report 2013
achieving the Group’s objectives and include business, operational, financial
Going Concern
and compliance risks. These controls have been in place throughout the
The Group closely monitors and manages its liquidity risk. The Group has
year. The internal controls are designed to identify, evaluate and manage
considerable financial resources including US$106.5 million in cash and cash
rather than eliminate risk of failure to meet business objectives. The internal
equivalents and the Group’s borrowings have a long maturity profile. The
control process distinguishes between the parent group and the principal
Group’s business activities together with the factors likely to affect its future
operating subsidiary, Wilson Sons Limited, which is managed by an
development and performance are set out in the chairman’s statement,
autonomous Board.
operating review and investment managers report on pages 1 to 19. The
financial position, cash flows and borrowings of the Group are set out in the
Wilson Sons Limited is listed on both the Sao Paulo Stock Exchange
Financial review in pages 6 to 10. In addition note 37 to the financial
“BOVESPA” and Luxembourg Stock Exchange, whose rules are different from
statements include details of its financial instruments and hedging activities
the London Stock Exchange. The company’s internal control procedures, whilst
and its exposure to credit risk and liquidity risk. Details of the Group’s
sufficient for the Board of Wilson Sons Limited to identify, manage and control
borrowings are set out in note 22. Based on the Group’s forecasts and
the principal risks, may differ from the requirements of the Turnbull
sensitivities run, the directors have a reasonable expectation that the
Committee. The Board of the principal operating subsidiary is responsible for
Company and the Group have adequate resources to continue in operational
identifying key business risks and establishing and reviewing internal control
existence for the foreseeable future. For this reason, they continue to adopt
procedures.
the going concern basis in preparing the accounts.
The Board reviews the need for an internal audit department annually and
Directors’ responsibilities
considers that the parent group is not sufficiently large to justify an internal
The Directors are responsible for preparing the annual report in accordance
audit function. Wilson Sons Limited operates an internal audit function and
with applicable laws and regulations.
the Wilson Sons Limited Board monitors their internal financial control
systems through reports received from the internal audit function.
The Directors are required by Bermuda company law to lay financial
statements before the Company in a general meeting. In doing this the
In reviewing Wilson Sons Limited, the Board receives reports from the Wilson
Directors prepare accounts on a going concern basis for each financial year
Sons Limited internal audit department, legal department and the Wilson Sons
which give a true and fair view of the state of affairs of the Company and the
Limited external auditor.
Group and of the profit or loss of the Group for that period. In preparing those
accounts, the Directors have considered whether:
The parent group (including Ocean Wilsons Investments Limited) has an
ongoing process for identifying, evaluating and managing key risks including
financial, operational and compliance controls. A risk register is maintained
detailing business risks, together with controls and responsibilities. The risk
register is regularly reviewed by the finance committee.
•
•
•
suitable accounting policies have been adopted and applied consistently;
judgements and estimates are reasonable and prudent; and
applicable accounting standards have been followed, subject to any
The systems operated both by the parent group and principal operating
material departures disclosed and explained in the accounts.
subsidiary are reviewed annually. The Board is satisfied that these systems are
operating effectively.
The Board consider the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
Relations with Shareholders
shareholders to assess the company’s performance, business model and
Communications with shareholders are important to the Board. Ocean Wilsons
strategy.
Holdings Limited sends both its annual report and accounts and half year
accounts to all shareholders. To ensure Board members develop an
understanding of the views of major shareholders there is regular dialogue
By Order of the Board
with major institutional shareholders. The chairman and executive director
usually attend a number of these meetings. A report of meetings with
shareholders is distributed to all directors. All broker reports are distributed to
Malcolm Mitchell
all Board members. The Annual General Meeting of the Company will be held
Secretary
in Bermuda. The Company website oceanwilsons.bm contains copies of the
28 March 2014
annual and interim report and stock exchange announcements.
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Customer: Ocean Wilsons
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Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
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27
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Ocean Wilsons Holdings Limited/Annual Report 2013
Independent Auditor’s Report
to the Members of Ocean Wilsons Holdings Limited Only
Opinions and conclusions arising from our audit
intended. We also considered the accuracy and adequacy of disclosures
1. Our opinion on the financial statements is unmodified
made to allow users to evaluate the financial effects of adjustments
We have audited the Group financial statements (“the financial statements”) of
recognised.
Ocean Wilsons Holdings Limited (“the Group”) for the year ended 31 December
2013 which comprise the Consolidated Statement of Comprehensive Income,
Shipbuilding revenue recognition in Maritime Services segment
the Consolidated Balance Sheet, the Consolidated Statement of Changes in
(US$100.3m)
Equity, the Consolidated Cash Flow Statement and the related notes.
Refer to page 26 (Finance Committee Report), page 40 (accounting policy) and
page 46 (financial disclosures).
In our opinion the financial statements give a true and fair view of the state
of the Group’s affairs as at 31 December 2013 and of its profit for the year
•
The risk – The Group recognises shipbuilding revenue based on the
then ended in accordance with International Financial Reporting Standards as
stage of completion of contracts, which is assessed by reference to the
issued by the International Accounting Standards Board.
proportion of contract costs incurred for the work performed to the
balance sheet date relative to the estimated total contract costs to
2. Our assessment of risks of material misstatement
completion. The recognition of revenue therefore relies on estimates in
In arriving at our audit opinion above on the financial statements the risks
relation to the final out-turn of costs on each contract. Changes to these
of material misstatement that had the greatest effect on our audit were as
estimates could give rise to material variances in the amount of revenue
follows:
recognised. Cost contingencies may also be included in these estimates
to take account of specific uncertain risks, or disputed claims against the
Business combinations – acquisition of Brazilian Intermodal Complex
Group, arising within each contract. These contingencies are reviewed by
(“Briclog”) (US$40.2m)
the Group on a regular basis throughout the contract life and adjusted
Refer to page 26 (Finance Committee Report), page 38 (accounting policy) and
where appropriate. There is therefore a high degree of management
pages 68 and 69 (financial disclosures).
judgement in estimating the amount of revenue to be recognised by the
Group with respect to the final out-turn on contracts, and assessing the
•
The risk – On 1 July 2013, the Group completed the acquisition of Briclog
level of the contingencies that are appropriate in estimating the total cost.
for a total consideration of US$40.2m. Accounting for this significant
acquisition required the identification of all assets and liabilities that
• Our response – In this area our audit procedures included, among others,
existed in the acquired business and to measure them at fair value.
using both quantitative and qualitative factors to select a sample of
This involved significant judgement around the assumptions applied to
contracts and then to assess and challenge the most significant and
forecasting and discounting future cash flows, particularly in reference
complex contract estimates. We obtained the detailed project
to valuing the lease concession intangible asset. Due to the inherent
management review papers from the Group to support the estimates
uncertainty involved in these future cash flows, which form an integral
made and challenged the judgements underlying those papers with
part of the fair value model, this is one of the key judgemental areas
senior operational, commercial and financial management. Our audit
that our audit concentrated on.
procedures on this sample included, among others:
• Our response – In this area, our audit procedures included, among others,
– evaluating the financial performance of contracts against budget and
challenging the Directors on their assumptions and judgements used
historical trends;
in compiling the fair value model for the lease concession intangible
asset. We assessed the completeness and measurement of the fair
– site visits, physically inspecting the stage of completion of individual
value adjustments made by the Directors against our own expectations.
projects and identifying areas of complexity through observation and
This was compared against our knowledge and experience of the industry
discussion with site personnel;
and understanding of Briclog’s particular circumstances. The Group
employed an external expert in order to assist them with calculating
– challenging the Group’s judgement in respect of forecast contract
the fair value adjustments associated with the acquisition of Briclog.
out-turn and the recoverability of contract balances via agreement to
We used our own corporate finance valuation specialists to assist us in
third party certifications and confirmations and with reference to our
evaluating the assumptions and judgements used by the Group and
own assessments, historical outcomes and industry norms;
the expert employed by them, in particular, the projected economic
growth, inflation, exchange rates and discount rates. We compared the
– inspecting the selected contracts for key clauses, identifying relevant
Group's assumptions to externally derived data, industry norms and our
contractual mechanisms such as liquidated damages and success fees
expectations based on our knowledge of the client and experience of
and assessing whether these key clauses have been appropriately
the industry in which it operates. In addition to testing the sensitivity
reflected in the amounts recognised in the financial statements; and
of the values produced by the model to changes in certain inputs and
assumptions, in order to derive comfort over the principles underpinning
– considering the adequacy of the Group’s disclosures in respect of
the model, we performed procedures over the integrity of the design
contract accounting and the key risks relating to these amounts.
and build of the model, including verifying that formulae operated as
28
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Customer: Ocean Wilsons
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Project Title: Annual Report 2013
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Ocean Wilsons Holdings Limited/Annual Report 2013
Goodwill and intangible assets relating to acquisitions (US$37.6m and
best estimate of provisions to be made in the financial statements. This is
US$30.7m respectively)
one of the key areas that our audit concentrated on as a result of the
Refer to page 26 (Finance Committee Report), pages 38 and 39 (accounting
impact that a material claim could have on the Group’s financial position
policy) and pages 51 and 52 (financial disclosures).
and result for the year.
•
The risk – The Group’s investment in Tecon Rio Grande, Tecon Salvador
• Our response – Our audit procedures included, among others, obtaining
and Briclog all gave rise to goodwill and intangible assets on acquisition.
an understanding from the Directors and in-house legal counsel of the
These are all held in Wilson Sons Limited. The recoverable amount of
basis for their best estimates, challenging the basis used with reference
the Group’s goodwill and intangible assets relating to the acquisitions is
to the latest available corroborative information and an assessment of
assessed at a cash generating unit (“CGU “) level annually or when there
correspondence with the Group's external counsel on all significant legal
is an indication of impairment through production of a discounted future
cases and discussions with them when further clarity was deemed
cash flow model. Due to the inherent uncertainty involved in forecasting
necessary. In addition, we obtained formal confirmations from the
and discounting future cash flows, which are the basis of the assessment
Group's external counsel for all significant litigation. With regard to open
of recoverability, this is one of the key judgemental areas that our audit
tax cases, in addition to the above we used our own tax specialists to
is concentrated on. There is also a risk of irrecoverability of the Group's
assess the Group's tax positions and its correspondence with the relevant
significant goodwill and intangible balances due to possible weakening
tax authorities. We analysed and challenged the assumptions used to
demand or the variability of the cost base in this industry.
determine tax provisions based on our knowledge and experiences of
the application of the international and local legislation by the relevant
• Our response – In this area our audit procedures included, among others,
authorities and courts.
testing the Group’s forecasting process by considering the historical
accuracy of previous forecasts. We compared actual results in the current
We also assessed whether the Group's disclosures detailing significant legal
year to forecasts prepared in previous periods. We compared the Group's
proceedings adequately disclose the contingent liabilities of the Group.
assumptions to externally derived data which included contract renewal
dates, profitability, and probability of contracts being won, renewed or
3. Our application of materiality and an overview of the scope of our audit
lost. These inputs were agreed to underlying contracts and financial
The materiality for the Group financial statements as a whole was set at
analysis provided by management by the audit team.
US$7m. This has been calculated with reference to a benchmark of Group
profit before taxation (of which it represents 7%), which we consider to be
We used our own corporate finance valuation specialists to assist us in
one of the principal considerations for members of the company in assessing
evaluating the Directors’ assumptions and judgements relating to projected
the financial performance of the Group.
economic growth, inflation, exchange rates and discount rates used to derive
fair values. We compared the Group's assumptions to externally derived data,
We agreed with the finance committee to report to it all corrected and
industry norms and our expectations based on our knowledge of the client
uncorrected misstatements we identified through our audit with a value in
and experience of the industry in which it operates.
excess of US$325,000, in addition to other audit misstatements below that
threshold that we believe warranted reporting on qualitative grounds.
We considered the adequacy of the Group’s disclosures in respect of
impairment testing and whether disclosures about the sensitivity of the
Audits for Group reporting purposes were performed by component auditors
outcome of the impairment assessment to changes in key assumptions
at the key reporting component in Brazil and by the Group audit team in the
properly reflected the risks inherent in the key assumptions and the
UK, Brazil and the Channel Islands. These Group procedures covered 79%
requirements of accounting standards.
of total Group revenue; 83% of Group profit before taxation; and 90% of
total Group assets. The segment disclosures in Note 4 set out the individual
Provisions (US$10.3m)
significance of a specific segment and country.
Refer to page 26 (Finance Committee Report), page 40 (accounting policy) and
pages 66 and 67 (financial disclosures).
The audits undertaken for Group reporting purposes at the key reporting
components of the company were all performed to materiality levels set by,
•
The risk – Provisions are measured at the Directors’ best estimate of
or agreed with, the Group audit team. These materiality levels were set
the Group’s liability to settle an obligation arising from a past event.
individually for each component and ranged from US$1.4m to US$6.6m.
In the normal course of business in Brazil, legal claims against the Group
may arise from general civil proceedings, labour claims, changing tax
Detailed audit instructions were sent to the component audit team in Brazil.
legislation and environmental issues. The amounts involved are
These instructions covered the significant audit areas that should be covered
potentially significant and the application of accounting standards to
by this audit (which included the relevant risks of material misstatement
determine the amount, if any, to be provided as a liability, is inherently
detailed above) and set out the information required to be reported back to
subjective. In making these decisions, the Directors use their judgement
the Group audit team. The Group audit team visited Brazil in the year and
and where appropriate receive external advice, in order to make their
telephone meetings were also held with the auditors in this location.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
29
17319 Ocean Wilsons R&A 2013 pp1-30_17319 Ocean Wilsons R&A 2013 pp1-30 16/04/2014 10:42 Page 30
Ocean Wilsons Holdings Limited/Annual Report 2013
Independent Auditor’s Report
to the Members of Ocean Wilsons Holdings Limited Only
4. We have nothing to report in respect of the matters on which we are
Scope of an audit of financial statements performed in accordance with
required to report by exception
ISAs (UK and Ireland)
Under ISAs (UK and Ireland) we are required to report to you if, based on the
A description of the scope of an audit of financial statements is provided on
knowledge we acquired during our audit, we have identified other information
our website at www.kpmg.com/uk/auditscopeother2013. This report is made
in the annual report that contains a material inconsistency with either that
subject to important explanations regarding our responsibilities, as published
knowledge or the financial statements, a material misstatement of fact, or that
on that website, which are incorporated into this report as if set out in full and
is otherwise misleading.
should be read to provide an understanding of the purpose of this report, the
work we have undertaken and the basis of our opinions.
In particular, we are required to report to you if:
• we have identified material inconsistencies between the knowledge we
than the Company’s members as a body
acquired during our audit and the directors’ statement that they consider
This report is made solely to the Company’s members, as a body, in
that the annual report and financial statements taken as a whole is fair,
accordance with section 90 of the Bermudan Companies Act 1981. Our audit
balanced and understandable and provides the information necessary for
work has been undertaken so that we might state to the Company’s members
shareholders to assess the Group’s performance, business model and
those matters we are required to state to them in an auditor’s report and for
The purpose of this report and restrictions on its use by persons other
strategy; or
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s
•
the finance committee report does not appropriately address matters
members as a body, for our audit work, for this report, or for the opinions we
communicated by us to the finance committee.
have formed.
Under the Listing Rules we are required to review:
•
the directors’ statement, set out on page 27, in relation to going concern;
John Luke
and
for and on behalf of KPMG LLP
Chartered Accountants
•
the part of the Corporate Governance Statement on pages 22 to 27
15 Canada Square, London E14 5GL
relating to the company’s compliance with the nine provisions of the UK
28 March 2014
Corporate Governance Code specified for our review.
We have nothing to report in respect of the above responsibilities.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out
on page •, the Directors are responsible for the preparation of financial
statements which give a true and fair view. Our responsibility is to audit, and
express an opinion on, the financial statements in accordance with applicable
law and international Standards of Auditing (UK and Ireland). Those standards
require us to comply with the UK Ethical Standards for Auditors.
30
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 31
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2013
Revenue
Raw materials and consumables used
Employee benefits expense
Depreciation & amortisation expense
Other operating expenses
Profit/(loss) on disposal of property, plant and equipment
Operating profit
Share of results of joint venture
Investment revenue
Other gains and losses
Finance costs
Foreign exchange losses on monetary items
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income:
Items that maybe reclassified subsequently to profit and loss
Employee benefits
Items that maybe reclassified subsequently to profit and loss
Effective portion of changes in fair value of derivatives
Exchange differences arising on translation of foreign operations
Other comprehensive loss for the year
Total comprehensive income for the year
Profit for the period attributable to:
Equity holders of parent
Non-controlling interests
Total comprehensive income for the period attributable to:
Equity holders of parent
Non-controlling interests
Earnings per share
Basic and diluted
Ocean Wilsons Holdings Limited/Annual Report 2013
Year to
31 December
2012
(restated –
see note 2)
US$’000
610,354
(72,207)
Year to
31 December
2013
US$’000
660,106
(94,330)
(209,459)
(223,031)
(58,674)
(188,569)
9,966
119,040
2,392
17,838
13,684
(21,863)
(30,589)
100,502
(42,216)
58,286
(2,251)
(1,269)
(4,088)
(7,608)
50,678
37,873
20,413
58,286
34,580
18,349
52,929
(55,897)
(173,951)
(534)
84,734
689
18,255
16,394
(9,948)
(11,572)
98,552
(33,671)
64,881
–
–
(7,211)
(7,211)
57,670
41,264
23,617
64,881
37,269
20,401
57,670
Notes
3
6
5
7
8
9
10
5
12
107.1c
116.7c
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
31
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 32
Ocean Wilsons Holdings Limited/Annual Report 2013
Consolidated Balance Sheet
as at 31 December 2013
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Trade and other receivables
Investment in joint venture
Other non-current assets
Current assets
Inventories
Trading investments
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Derivatives
Current tax liabilities
Obligations under finance leases
Bank overdrafts and loans
Net current assets
Non-current liabilities
Trade and other payables
Bank loans
Derivatives
Employee Benefits
Deferred tax liabilities
Provisions
Obligations under finance leases
Total liabilities
Net assets
Capital and reserves
Share capital
Retained earnings
Capital reserves
Translation and hedging reserve
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Notes
13
14
15
24
21
17
27
19
18
21
As at
31 December
2012
(restated –
see note 2)
US$’000
15,612
29,345
As at
1 January
2012
(restated –
see note 2)
US$’000
15,612
28,463
594,877
538,682
29,647
16,923
27
9,210
29,507
27,965
7,661
8,429
As at
31 December
2013
US$’000
37,622
46,650
616,924
30,099
23,998
2,577
10,209
768,079
695,641
656,319
29,090
277,969
150,819
106,512
564,390
37,453
241,582
199,486
136,680
615,201
25,371
251,297
160,553
113,643
550,864
1,332,469
1,310,842
1,207,183
26
(135,920)
(173,219)
(125,454)
25
22
26
22
24
27
25
28
(110)
(210)
(1,547)
(37,997)
(175,784)
388,606
–
(3,234)
(1,234)
(35,497)
(213,184)
402,017
–
(3,545)
(3,804)
(25,185)
(157,988)
392,876
–
(1,134)
(2,471)
(334,394)
(324,138)
(304,586)
(1,130)
(2,251)
(33,761)
(10,262)
(4,812)
–
–
(15,043)
(10,966)
(2,809)
–
–
(17,260)
(13,378)
(3,293)
(386,610)
(354,090)
(340,988)
(562,394)
(567,274)
(498,976)
770,075
743,568
708,207
11,390
505,922
31,760
3,128
552,200
217,875
770,075
11,390
482,799
31,760
5,966
531,915
211,653
743,568
11,390
453,205
31,760
9,831
506,186
202,021
708,207
The accounts on pages 31 to 87 were approved by the Board on 28 March 2014. The accompanying notes are part of this Consolidated Balance Sheet.
J. F. Gouvêa Vieira
Chairman
32
K. W. Middleton
Director
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 33
Ocean Wilsons Holdings Limited/Annual Report 2013
Consolidated Statement of Changes in Equity
as at 31 December 2013
For the year ended 31 December 2012
Attributable
Hedging and
to equity
Non
Share
capital
US$’000
Retained
earnings
US$’000
Capital
Translation
holders of
controlling
reserves
US$’000
reserve
the parent
US$’000
US$’000
interests
US$’000
Total
equity
US$’000
As previously reported balance at 1 January 2012
11,390
453,205
31,760
9,831
506,186
200,570
706,756
Impact of new standards
Restated balance at 1 January 2012
Currency translation adjustment
Profit for the year
Total income and expense for the period
Dividends
Derivatives
–
–
–
–
–
1,451
1,451
11,390
453,205
31,760
9,831
506,186
202,021
708,207
–
–
–
–
–
–
41,264
41,264
(11,670)
–
–
–
–
–
–
(3,995)
(3,995)
(3,216)
(7,211)
–
41,264
(3,995)
37,269
23,617
20,401
64,881
57,670
–
130
(11,670)
(10,862)
(22,532)
130
93
223
Balance at 31 December 2012
11,390
482,799
31,760
5,966
531,915
211,653
743,568
For the year ended 31 December 2013
Balance at 1 January 2013
Currency translation adjustment
Employee benefits (note 38)
Effective portion of changes in fair value of derivatives
Profit for the year
Total income and expense for the period
Dividends
Derivatives
11,390
482,799
31,760
5,966
531,915
211,653
743,568
–
–
–
–
–
–
–
–
(1,312)
–
37,873
36,561
(13,438)
–
–
–
–
–
–
–
–
(2,024)
(2,024)
(2,064)
(4,088)
–
(684)
(1,312)
(684)
(939)
(585)
(2,251)
(1,269)
–
37,873
20,413
58,286
(2,708)
33,853
16,825
50,678
–
(13,438)
(10,510)
(23,948)
(130)
(130)
(93)
(223)
Balance at 31 December 2013
11,390
505,922
31,760
3,128
552,200
217,875
770,075
Share capital
The Group has one class of ordinary share which carries no right to fixed income.
Capital reserves
The capital reserves arise principally from transfers from revenue to capital reserves made in the Brazilian subsidiaries arising in the following circumstances:
(a) profits of the Brazilian subsidiaries and Brazilian holding company which in prior periods were required by law to be transferred to capital reserves and other
profits not available for distribution; and
(b) Wilson Sons Limited bye-laws require the company to credit an amount equal to 5% of the company’s net profit to a retained earnings account to be called
legal reserve until such amount equals 20% of the Wilson Sons Limited share capital.
Hedging and translation reserve
The hedging and translation reserve arises from exchange differences on the translation of operations with a functional currency other than US Dollars and
effective movements on hedging instruments.
Amounts in the statement of changes of equity are stated net of tax where applicable.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
33
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 34
Ocean Wilsons Holdings Limited/Annual Report 2013
Consolidated Cash Flow Statement
for the year ended 31 December 2013
Net cash inflow from operating activities
Investing activities
Acquisition of Briclog less net of cash acquired
Interest received
Dividends received from trading investments
Proceeds on disposal of trading investments
Proceeds on disposal of property, plant and equipment
Purchase of property, plant and equipment
Purchase of intangible asset
Purchase of trading investments
Additional investment in joint venture
Net cash used in investing activities
Financing activities
Dividends paid
Dividends paid to non-controlling interests in subsidiary
Repayments of borrowings
Repayments of obligations under finance leases
New bank loans raised
Decrease in bank overdrafts
Derivative paid
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Notes
30
11
Year to
31 December
2012
(restated
– see note 2
US$’000
110,091
–
9,564
2,854
134,624
1,659
Year to
31 December
2013
US$’000
108,416
(10,153)
9,938
4,664
53,701
17,912
(106,148)
(103,155)
(2,960)
(75,874)
(4,000)
(7,209)
(108,515)
–
(112,920)
(70,178)
(13,438)
(10,511)
(36,772)
(1,540)
50,752
–
(39)
(11,548)
(11,670)
(10,862)
(30,037)
(3,331)
48,925
(132)
–
(7,107)
(16,052)
32,806
136,680
113,643
(14,116)
(9,769)
106,512
136,680
34
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 35
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
for the year ended 31 December 2013
1
General Information
Ocean Wilsons Holdings Limited is a company incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991.
The address of the registered office is given on page 20. The nature of the Group’s operations and its principal activities are set out in the operating and financial
review on pages 6 to 19.
These financial statements are presented in US Dollars because that is the currency of the primary economic environment in which the Group operates. Entities
with a functional currency other than US Dollars are included in accordance with the policies set out in note 2.
2
Significant accounting policies and critical accounting judgements
Basis of accounting
The financial statements have been prepared in accordance with IFRSs adopted for use by the International Accounting Standards Board (“IASB”).
The financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments and share-based payments liability
that are measured at fair values. The principal accounting policies adopted are set out below.
Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. The directors’
assessment of going concern is included in the Report of the Directors.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to
31 December each year. The Group controls and entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members
of the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of
the amount of those interests at the date of the original business combination and the non-controlling interest’s share of changes in equity since the date of the
combination.
Where a change in percentage of interests in a controlled entity does not result in a change of control, the difference between the consideration paid for the
additional interest and the book value of the net assets in the subsidiary at the time of the transaction is taken direct to equity.
Foreign currency
The functional currency for each Group entity is determined as the currency of the primary economic environment in which it operates (its functional currency).
Transactions other than those in the functional currency of the entity are translated at the exchange rate prevailing at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are retranslated at year end exchange rates.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the statement of comprehensive
income for the period. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
On consolidation, the statement of comprehensive income items of entities with a functional currency other than US Dollars are translated into US Dollars, the
Group’s presentational currency, at average rates of exchange. Balance sheet items are translated into US Dollars at year end exchange rates. Exchange
differences arising on consolidation of entities with functional currencies other than US Dollars are classified as equity and are recognised in the Group’s
translation reserve.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
35
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 36
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
2
Significant accounting policies and critical accounting judgements (continued)
Investments in entities accounted for using the equity method
The Group’s investments in entities accounted for using the equity method include its interests in associates and jointly controlled (joint ventures) ventures.
Associates are those entities in which the Group, directly or indirectly, has significant influence but not control or joint control, over the financial and operating
policies. A jointly controlled entity is in a contractual agreement whereby the Group has joint control, where the Group is entitled to the net assets of the
contractual agreement, and not entitled to specific assets and liabilities arising from the agreement.
Investments in associates and jointly controlled entities are accounted for using the equity method. Such investments are initially recognised at cost, which
includes expenses for the transaction. After initial recognition, the financial statements include the Group’s share in the profit or loss for the year and other
comprehensive income of the investee until the date that significant influence or joint control ceases.
Investments in associates
An associate is an entity over which the Group is in a position to exert significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those
policies.
The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under this method,
investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of
the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes
any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognised.
Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.
Investments in joint ventures
Interests in joint ventures
Joint venture is a contractual agreement where the Group has rights to the net assets of the contractual arrangement and is not entitled to specific assets and
liabilities arising from the agreement.
Investments in joint venture entities are accounted for using the equity method. After initial recognition, the financial statements include the Group’s share in the
profit or loss for the year and other comprehensive income of the investee until the date that significant influence or joint control ceases.
Interests in joint operations
Joint operation is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control which is when
the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.
The joint operations assets and any liabilities incurred jointly with other ventures are recognised in the financial statements of the relevant entity and classified
according to their nature.
The Group’s share of the assets, liabilities, income and expenses of joint operation entities are combined with the equivalent items in the consolidated financial
statements on a line-by-line basis.
The consolidated financial statements include the accounts of joint ventures and joint operations which are listed in Note 17.
Employee Benefits
Short-term employee benefits
Obligations of short-term employee benefits are recognised as personnel expenses as the corresponding service is provided. The liability is recognised for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee
and the obligation can be estimated reliably.
36
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Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 37
Ocean Wilsons Holdings Limited/Annual Report 2013
2
Significant accounting policies and critical accounting judgements (continued)
Employee Benefits (continued)
Share-Based payment transactions
The fair value at grant date of share-based payments granted to employees is recognised as a personnel expense with a corresponding increase in equity over
the period that the employees unconditionally become entitled to the equity instruments. For the award of share-based payments that do not contain vesting
conditions (non-vesting conditions), the fair value at grant date of share-based payment is measured to reflect such conditions and are not made further
adjustments for differences between the expected and actual results.
The fair value of the amount payable to employees regarding the rights on the valuation of the shares, which are settled in cash, is recognised as an expense
with a corresponding increase in liabilities during the period that the employees unconditionally entitled to payment. The liability is remeasured at each balance
sheet date and at settlement date based on the fair value of the rights on valuation. Any changes in the fair value of the liability are recognised in income as
personnel expenses.
Other long-term employee benefits
The Group’s net obligation in respect of other long-term employee benefits is the amount of future benefit that employees receive in return for the service rendered
in the current year and previous years. That benefit is discounted to determine its present value. Remeasurements are recognised in the income statement.
Benefits of termination of employment relationship
The benefits of termination of employment relationship are recognised as an expense when the Group can no longer withdraw the offer of such benefits and
when the Group recognizes the costs of restructuring. If payments are settled after 12 months from the balance sheet date, then they are discounted to their
present values.
Taxation
Tax expense for the period comprises current tax and deferred tax.
Current tax is based on assessable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on temporary differences (i.e. differences between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax basis used in the computation of taxable profit). Deferred tax is accounted for using the balance sheet liability
method and is provided on all temporary differences with certain limited exceptions as follows. Deferred tax is not provided:
•
•
•
in respect of tax payable on undistributed earnings of subsidiaries, associates and joint ventures where the Group is able to control the remittance of profits
and it is probable that there will be no remittance of past profits earned in the foreseeable future;
on the initial recognition of an asset or liability in a transaction that does not affect accounting profit or taxable profit and is not a business combination; nor
is deferred tax provided on subsequent changes in the carrying value of such assets and liabilities, for example where they are depreciated; and
on the initial recognition of any non-tax deductible goodwill.
Deferred tax assets are recognised only to the extent that it is probable that they will be recovered through sufficient future taxable profit. The carrying amount of
deferred tax assets is reviewed at each balance sheet date.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates and laws
that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the statement of comprehensive income,
except when it relates to items charged or credited directly to equity, in which case the deferred tax is also taken directly to equity.
A company will normally have a legally enforceable right to set off a deferred tax asset against a deferred tax liability when they relate to income taxes levied by
the same taxation authority and the taxation authority permits the company to make or receive a single net payment. In the consolidated financial statements, a
deferred tax asset of one entity in the Group cannot be offset against a deferred tax liability of another entity in the Group, as there is no legally enforceable
right to offset tax assets and liabilities between Group companies.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
37
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 38
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
2
Significant accounting policies and critical accounting judgements (continued)
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets, other than land and assets under construction, over their estimated useful lives, using
the straight-line method as follows:
Freehold Buildings:
25 years
Leasehold Buildings:
Period of the lease
Floating Craft:
Vehicles:
25 to 35 years
5 years
Plant and Equipment:
5 to 20 years
Assets in the course of construction are carried at cost, less any recognised impairment loss. Costs include professional fees for qualifying assets. Depreciation of
these assets, on the same basis as other property assets, commences when the assets are ready for intended use.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
Dry docking costs are capitalised and depreciated over the period in which the economic benefits are received, or until the next scheduled dry dock.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the statement of comprehensive income.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Goodwill
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts are
determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rate, growth rates and
expected changes to selling prices and costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments
of the time value money and the risks specific to the cash generating unit. Growth rates are based on management’s forecasts and historical trends. Changes in
selling prices and direct costs are based on past practices and expectations of future changes in the market.
Business combinations
Business combinations are accounted using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is
calculated considering the sum of the acquisition-date fair values of assets, liabilities and the equity interests transferred to the Group when the control of the
acquisition is transferred. Acquisition-related costs are recognised in profit or loss as incurred. Any goodwill that arises is tested annually for impairment.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that deferred tax assets or liabilities,
and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement,
the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination.
Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively with corresponding
adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’
(which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments is recognised in
profit or loss.
38
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 39
Ocean Wilsons Holdings Limited/Annual Report 2013
2
Significant accounting policies and critical accounting judgements (continued)
Sale of non-controlling interest
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the
amount of those interests at the date of the original business combination and the non-controlling interest’s share of changes in equity since the date of the combination.
Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of
each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. There is no indefinite life intangible asset.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit
or loss when the asset is derecognised.
Impairment of tangible and other intangible assets
Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that their carrying
amounts may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash generating unit (“CGU”) are allocated first to reduce the carrying amount
of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Assets that are subject
to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, spare parts and, where applicable, direct labour costs and
those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling
price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.
•
•
•
•
Trade Receivables: Trade receivables, loans and other amounts receivable are stated at the initial fair value of the amounts due, less provision for impairment.
A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the
original terms of receivables. The amount of the provision is recognised in the statement of comprehensive income.
Investments: Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at the fair value, plus directly
attributable transaction costs.
Where securities are held for trading purposes, gains and losses arising from changes in fair value are included in the income statement for the period. The
fair value of financial assets traded in active markets are based on the mid market price the close of trading on the reporting date. Unquoted investments
held for trading purposes are stated at fair value through profit and loss as determined by using various valuation techniques, except where fair value cannot
be reliably measured, when the investment is held at cost less any provision for impairment.
For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in equity, until the security is disposed of or is
determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the profit or loss for the period. Fair
value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.
Cash and Cash Equivalents: Cash and cash equivalents comprise cash on hand and other short-term highly liquid investments that are convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Bank Borrowings: Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the statement of comprehensive income using
the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
39
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 40
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
2
Significant accounting policies and critical accounting judgements (continued)
Derivatives
The Group periodically uses derivative financial instruments to reduce exposure to foreign exchange and interest rate movements. Derivatives are measured at
each balance sheet date at fair value. Gains and losses arising from changes in fair value are included in the income statement for the period within investment
revenue or finance costs for exchange and interest derivatives.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely
related to those of host contracts and the host contracts are not carried at fair value, with gains or losses reported in the statement of comprehensive income.
Hedge Accounting (Cash flow hedge)
The Group seeks to apply hedge accounting (cash flow hedge) in order to manage volatility in profit or loss. When a derivative is designated as the hedging
instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast
transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and
presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that
obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and discounted
where the effect is material.
In the normal course of business in Brazil, the Group is exposed to local legal cases. Provisions for legal cases are made when the Group’s management, together
with their legal advisors, consider the probable outcome is a financial settlement against the Group. Provisions are measured at the director’s best estimate of the
expenditure required to settle the obligation based upon legal advice received. For labour claims, the provision is based on prior experience and management’s
best knowledge of the relevant facts and circumstances. For tax cases, the provision is based on managements’ best knowledge of the relevant facts and
circumstances and legal advice received.
Construction contracts
Construction contracts in progress represents the gross amount expected to be collected from customers for contract work performed to date. It is measured at
costs incurred plus profits recognised to date less progress billings and recognised losses. Cost includes all expenditure related directly to specific projects and an
allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.
Construction contracts in progress is presented as part of trade and other receivables in the statement of financial position for all contracts in which costs incurred
plus recognised profits exceed progress billings and recognised losses. If progress billings and recognised losses exceed costs incurred plus recognised profits,
then the difference is presented as deferred income/revenue in the statement of financial position. Customer advances are presented as deferred income/revenue
in the statement of financial position.
Revenue
Revenue is measured at fair value and represents amounts receivable for goods and services provided in the normal course of business net of trade discounts,
VAT and other sales related taxes. If the Group is acting solely as an agent, amounts billed to customers are offset against relevant costs.
Revenue from construction contracts is recognised in accordance with the Group’s accounting policy on construction contracts (see above).
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount.
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases
are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease, or if lower the present value of the
minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned
between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged to the statement of comprehensive income.
40
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:43 Page 41
Ocean Wilsons Holdings Limited/Annual Report 2013
2
Significant accounting policies and critical accounting judgements (continued)
Leasing (continued)
Rentals payable under finance leases are charged to income on a straight-line basis over the term of the relevant lease.
Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group’s accounting policies, which are described above, management has made the following judgements that have the most
significant effect on the amounts recognised in the financial statements.
Provisions
In the normal course of business in Brazil, the Group is exposed to local legal cases. Provisions for legal cases are made when the Group’s management, together
with their legal advisors, consider the probable outcome is a financial settlement against the Group. Provisions are measured at the directors’ best estimate of the
expenditure required to settle the obligation based upon legal advice received. For labour claims, the provision is based on prior experience and management’s
best knowledge of the relevant facts and circumstances. For tax cases the provision is based on management’s best knowledge of the relevant facts and
circumstances and legal advice received.
Brazilian taxes
There are uncertainties regarding the interpretation of complex tax regulations and the value and timing of future taxable results. Given the long-term nature and
the complexity of existing contracts, differences between the actual results and the assumptions adopted or future changes in such assumptions could require
future adjustments to the tax income and expense already recorded. The Group forms provisions, based on applicable estimates, for possible consequences of
auditing by tax authorities of the respective jurisdictions where it operates. The amount of such provisions is based on several factors, such as prior experiences
with fiscal audits and different interpretations of the tax regulations by the taxable entity and by the tax authority in question. Such differences in interpretation
may arise for the most diverse matters, depending on the conditions in force in the respective domicile of the Group’s entity.
Deferred and recoverable income tax and social contribution
The Group records assets related to deferred taxes resulting from temporary differences and tax losses between the book value of assets and liabilities and their
tax bases. Deferred tax assets are recognised to the extent that the Group expects to generate sufficient taxable profit based on projections and forecasts
prepared by Management. Such projections and forecasts include several assumptions regarding the Group’s performance, foreign exchange rates, volume of
services, other rates and factors that may differ from present estimates.
Under the current Brazilian tax legislation, tax losses do not expire for utilization. However, cumulative tax losses can only be offset by up to 30.0% of the
annual taxable profit.
Impairment of goodwill and intangibles
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Goodwill and indefinite-lived intangible assets are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or CGU
exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated
are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes.
Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values
of assets given and liabilities incurred or assumed in exchange for control of the acquiree at the date of acquisition. The fair value of assets and liabilities are
based on management’s best knowledge and expert advice.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
41
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 42
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
2
Significant accounting policies and critical accounting judgements (continued)
Revenue recognition
Construction contracts in progress represents the gross amount expected to be collected from customers for contract work performed to date. Where the outcome
of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end
of the reporting period measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs,
except where this would not be representative of the stage of completion.
Valuation of unquoted investments
The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The Company uses a variety of
methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable
recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other
valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity-specific inputs.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been
applied in preparing these consolidated financial statements. That which may be relevant to the Group is set out below.
The Group does not plan to adopt new standards in advance.
IFRS 9 Financial Instruments (2010) and IFRS 9 Financial Instruments (2009)
The new standard uses a single approach to determine whether a financial asset is measured at amortised cost or fair value. The approach in IFRS 9 (2009) is
based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. IFRS 9 (2010)
incorporates new requirements on accounting for financial liabilities. The IASB intends to expand IFRS 9 to add new requirements for impairment of financial
assets measured at amortised cost and include limited amendments to the classification and measurement requirements.
The IFRS 9 (2010 and 2009) is effective for annual periods beginning on or after 1 January 2015. The adoption of IFRS 9 (2010) might have an effect on the
classification and measurement of the Group’s financial assets, but will not have an impact on classification and measurements of financial liabilities.
New standards and interpretations adopted
In the current year the following new and revised standards and interpretations have been adopted which have affected the amounts reported in these
consolidated financial statements.
New standards issued by the IASB were effective for annual periods beginning on or after 1 January 2013 as set out in Note 2 (New standards and
interpretations) of our consolidated financial statements for the year ended 31 December 2012.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single framework for measuring and disclosure about fair value when such measurements are required or permitted by other IFRSs. It
unifies the definition of fair value as the price that would be received to sell an asset or would be paid for the transfer of a liability in an orderly transaction
between market participants at the measurement date. It replaces and expands the disclosure requirements included in other IFRSs, including the IFRS 7. As a
result, the Group has included additional disclosures in this regard (see note 23).
IAS 1 Presentation of Items in Other Comprehensive Income
As a result of the revision of IAS 1, the Group has changed the presentation of items in its statement of comprehensive income to present items that will not be
reclassified to profit and loss and those items that maybe subsequently reclassified to profit and loss. There was no information from the previous year that
required restatement for comparison purposes.
The company implemented the new standards related to the matters regarding subsidiaries and joint arrangements.
IFRS 10 introduces a single control model to determine whether an investee should be consolidated.
Under IFRS 11, the structure of joint arrangement, although still an important consideration, is no longer the main factor in determining the type of joint
arrangement and therefore the related accounting.
42
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 43
Ocean Wilsons Holdings Limited/Annual Report 2013
2
Significant accounting policies and critical accounting judgements (continued)
New standards and interpretations adopted (continued)
The Group’s interest in a joint operation, which is an arrangement in which the parties have rights to the assets and obligations for the liabilities, will be
accounted for on the basis of the Group’s interest in those assets and liabilities.
The Group’s interest in a joint venture, which is an arrangement in which the parties have rights to the net assets, will be equity accounted.
The new standard applied by the Company includes the effect of recognising the profit/loss of Wilson Sons Ultratug Offshore and Atlantic Offshore S.A. on a
single line in the Income Statement and the Balance Sheet to reflect Company’s 50% participation rather than the previous treatment with proportional
consolidation line by line. Additionally, Allink, the Company’s 50% Non-Vessel Operating Common Carrier (“NVOCC”), which previously included only 50% share
in both the Income Statement and the balance sheet, are now 100% consolidated in the financial statements, with a 50% non-controlling interest. For further
details of these entities, refer to notes 16 and 17.
The impacts of the adoption of these new standards are set out below:
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2012
Revenue
Raw materials and consumables used
Employee benefits expense
Depreciation & amortisation expense
Other operating expenses
Loss on disposal of property, plant and equipment
Operating profit
Share of results of joint ventures
Investment revenue
Other gains and losses
Finance costs
Exchange losses on monetary items
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit and loss
Exchange differences arising on translation of foreign operations
Other comprehensive loss for the year
Total comprehensive income/(loss) for the year
Profit for the period attributable to:
Equity holders of parent
Non-controlling interests
Total comprehensive income for the period attributable to:
Equity holders of parent
Non-controlling interests
Earnings per share
Basic and diluted
As previously
Impact of new
Change in
standards
accounting policy
reported
US$’000
645,327
(77,719)
(240,427)
(66,619)
(180,591)
(546)
79,425
–
6,526
16,394
(15,120)
–
87,225
(25,540)
61,685
(6,987)
(6,987)
54,698
41,263
20,422
61,685
37,268
17,430
54,698
US$’000
(38,062)
1,981
17,396
10,722
6,826
12
(1,125)
689
6,591
–
5,172
–
11,327
(8,131)
3,196
(224)
(224)
2,972
1
3,195
3,196
1
2,971
2,972
116.7c
–
US$’000
3,089
3,531
–
–
(186)
–
6,434
–
5,138
–
–
(11,572)
–
–
–
–
–
–
–
–
–
–
–
–
–
Restated
US$’000
610,354
(72,207)
(223,031)
(55,897)
(173,951)
(534)
84,734
689
18,255
16,394
(9,948)
(11,572)
98,552
(33,671)
64,881
(7,211)
(7,211)
57,670
41,264
23,617
64,881
37,269
20,401
57,670
116.7c
43
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 44
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
2
Significant accounting policies and critical accounting judgements (continued)
Consolidated Balance Sheet
as at 31 December 2012
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Trade and other receivables
Long-term investments
Investment in joint ventures
Other non-current assets
Current assets
Inventories
Trading investments
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Obligations under finance leases
Bank overdrafts and loans
Net current assets
Non-current liabilities
Trade and other payables
Bank loans
Deferred tax liabilities
Provisions
Obligations under finance leases
Total liabilities
Net assets
Capital and reserves
Share capital
Retained earnings
Capital reserves
Translation and hedging reserve
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
44
As previously
Impact of new
reported
US$’000
15,612
29,899
standards
US$’000
–
(554)
Restated
US$’000
15,612
29,345
828,764
(233,887)
594,877
29,827
18,015
1,072
–
9,197
(180)
(1,092)
(1,072)
27
13
29,647
16,923
–
27
9,210
932,386
(236,745)
695,641
27,697
241,582
168,267
141,335
578,881
9,756
–
31,219
(4,655)
36,320
37,453
241,582
199,486
136,680
615,201
1,511,267
(200,425)
1,310,842
(163,762)
(9,457)
(173,219)
(3,124)
(1,222)
(43,179)
(211,287)
367,594
(110)
(12)
7,682
(1,897)
34,423
(3,234)
(1,234)
(35,497)
(213,184)
402,017
(1,134)
–
(1,134)
(524,908)
200,770
(324,138)
(17,802)
(10,872)
(2,800)
(557,516)
(768,803)
742,464
11,390
482,798
31,760
5,966
531,914
210,550
742,464
2,759
(94)
(9)
203,426
201,529
(15,043)
(10,966)
(2,809)
(354,090)
(567,274)
1,104
743,568
–
1
–
–
1
1,103
1,104
11,390
482,799
31,760
5,966
531,915
211,653
743,568
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 45
2
Significant accounting policies and critical accounting judgements (continued)
Consolidated Balance Sheet
as at 1 January 2012
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Trade and other receivables
Long-term investments
Investment in joint ventures
Other non-current assets
Current assets
Inventories
Trading investments
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Obligations under finance leases
Bank overdrafts and loans
Net current assets
Non-current liabilities
Trade and other payables
Bank loans
Deferred tax liabilities
Provisions
Obligations under finance leases
Total liabilities
Net assets
Capital and reserves
Share capital
Retained earnings
Capital reserves
Translation and hedging reserve
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Ocean Wilsons Holdings Limited/Annual Report 2013
As previously
Impact of new
reported
US$’000
15,612
28,546
standards
US$’000
–
(83)
Restated
US$’000
15,612
28,463
725,869
(187,187)
538,682
28,525
28,240
1,072
–
8,412
982
(275)
(1,072)
7,661
17
29,507
27,965
–
7,661
8,429
836,276
(179,957)
656,319
21,142
251,297
135,574
119,323
527,336
4,229
–
24,979
(5,680)
23,528
25,371
251,297
160,553
113,643
550,864
1,363,612
(156,429)
1,207,183
(120,324)
(5,130)
(125,454)
(3,472)
(3,787)
(32,672)
(160,255)
367,081
(73)
(17)
7,487
2,267
25,795
(3,545)
(3,804)
(25,185)
(157,988)
392,876
(2,471)
–
(2,471)
(451,381)
146,795
(304,586)
(26,093)
(13,378)
(3,278)
(496,601)
(656,856)
706,756
11,390
453,205
31,760
9,831
506,186
200,570
706,756
8,833
–
(15)
155,613
157,880
(17,260)
(13,378)
(3,293)
(340,988)
(498,976)
1,451
708,207
–
–
–
–
–
1,451
1,451
11,390
453,205
31,760
9,831
506,186
202,021
708,207
45
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 46
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
2
Significant accounting policies and critical accounting judgements (continued)
Consolidated Cash Flow Statement
for the year ended 31 December 2012
Net cash inflow from operating activities
Investing activities
Interest received
Dividends received from trading investments
Proceeds on disposal of trading investments
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchase of intangible asset
Purchases of trading investments
Net cash used in investing activities
Financing activities
Dividends paid
Dividends paid to non-controlling interests in subsidiary
Repayments of borrowings
Repayments of obligations under finance leases
New bank loans raised
Decrease in bank overdrafts
Derivative paid
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of period
3
Revenue
An analysis of the Group’s revenue is as follows:
Sales of services
Revenue from construction contracts
Investment income (note 7)
All revenue is derived from continuing operations.
As previously
Impact of new
reported
US$’000
115,597
9,320
2,854
134,624
2,238
standards
US$’000
(5,506)
244
–
–
(579)
Restated
US$’000
110,091
9,564
2,854
134,624
1,659
(162,481)
59,326
(103,155)
(7,761)
(108,515)
(129,721)
(11,670)
(7,543)
(37,559)
(3,331)
108,121
(132)
(139)
47,747
33,623
119,323
(11,611)
141,335
552
–
59,543
–
(3,319)
7,522
–
(59,196)
–
139
(54,854)
(817)
(5,680)
1,842
(4,655)
(7,209)
(108,515)
(70,178)
(11,670)
(10,862)
(30,037)
(3,331)
48,925
(132)
–
(7,107)
32,806
113,643
(9,769)
136,680
Year ended
Year ended
31 December
31 December
2013
US$’000
559,825
100,281
660,106
17,838
677,944
2012
(Restated)
US$’000
548,575
61,779
610,354
18,255
628,609
46
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 47
Ocean Wilsons Holdings Limited/Annual Report 2013
4
Business and geographical segments
Business segments
Ocean Wilsons Holdings has two reportable segments: maritime services and investments. The maritime services segment provides towage, port terminals, ship
agency, offshore, logistics and shipyard services in Brazil. The investment segment holds a portfolio of international investments.
Segment information relating to these businesses is presented below.
For the year ended 31 December 2013
Revenue
Result
Segment result
Share of results of joint ventures
Investment revenue
Other gains and losses
Finance costs
Foreign exchange losses on monetary items
Profit before tax
Tax
Profit after tax
Other information
Capital additions
Depreciation and amortisation
Balance Sheet
Assets
Segment assets
Liabilities
Segment liabilities
Maritime
Services
Investment
Unallocated
Consolidated
Year ended
Year ended
Year ended
Year ended
31 December
31 December
31 December
31 December
2013
US$’000
660,106
2013
US$’000
–
2013
US$’000
2013
US$’000
–
660,106
124,080
(2,609)
(2,431)
119,040
2,392
12,621
–
(21,863)
(31,018)
86,212
(42,216)
43,996
–
5,217
13,684
–
53
–
–
–
–
376
2,392
17,838
13,684
(21,863)
(30,589)
16,345
(2,055)
100,502
–
–
16,345
(2,055)
(42,216)
58,286
(136,947)
(58,673)
–
–
–
(1)
(136,947)
(58,674)
1,079,017
249,971
3,481
1,332,469
(561,791)
(259)
(344)
(562,394)
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
47
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 48
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
4
Business and geographical segments (continued)
For the year ended 31 December 2012
Revenue
Result
Segment result
Share of results of joint venture
Investment revenue
Other gains and losses
Finance costs
Foreign exchange losses on monetary items
Profit before tax
Tax
Profit after tax
Other information
Capital additions
Depreciation and amortisation
Balance Sheet
Assets
Segment assets
Liabilities
Segment liabilities
Maritime
Services
Year ended
Investment
Year ended
Unallocated
Consolidated
Year ended
Year ended
31 December
31 December
31 December
31 December
2012
(Restated)
US$’000
–
2012
(Restated)
US$’000
2012
(Restated)
US$’000
–
610,354
(2,666)
(2,887)
–
2,851
16,394
–
(73)
16,506
–
16,506
–
–
–
7
–
–
136
(2,744)
–
(2,744)
84,734
689
18,255
16,394
(9,948)
(11,572)
98,552
(33,671)
64,881
(5)
(1)
(128,921)
(55,897)
2012
(Restated)
US$’000
610,354
90,287
689
15,397
–
(9,948)
(11,635)
84,790
(33,671)
51,119
(128,916)
(55,896)
1,068,826
238,904
3,112
1,310,842
(566,592)
(320)
(362)
(567,274)
Finance costs and associated liabilities have been allocated to reporting segments where interest costs arise from loans used to finance the construction of fixed
assets in that segment.
Geographical Segments
The Group’s operations are located in Bermuda, Brazil, and Guernsey.
All of the Group’s sales are derived in Brazil.
The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and intangible assets, analysed by the
geographical area in which the assets are located.
Additions to
Carrying amount of
property, plant and equipment
segment assets
and intangible assets
31 December
Year ended
31 December
Year ended
31 December
2012
31 December
2013
US$’000
1,032,017
300,392
60
(Restated)
US$’000
999,944
309,872
1,026
2013
US$’000
2012
(Restated)
US$’000
136,947
128,921
–
–
–
–
1,332,469
1,310,842
136,947
128,921
Brazil
Bermuda
Other
48
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 49
Ocean Wilsons Holdings Limited/Annual Report 2013
5
Profit for the year
Profit for the year has been arrived at after charging:
Net foreign exchange losses
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals
Auditor’s remuneration for audit services (see below)
Non-executive directors emoluments
A more detailed analysis of auditor’s remuneration is provided below:
Financial statement audit of group and subsidiaries
Other services
6
Employee benefits expense
Aggregate remuneration comprised:
Wages and salaries
Share based payment (credit)/expense
Social security costs
Other pension costs
7
Investment revenue
Interest on bank deposits
Dividends from equity investments
Other interest
8 Other gains and losses
Increase in fair value of trading investments held at year end
(Loss)/profit on disposal of trading investments
Other gains and losses form part of the movement in trading investments as outlined in note 18.
Year ended
Year ended
31 December
31 December
2013
US$’000
–
52,372
6,302
13,966
586
446
586
–
586
2012
(Restated)
US$’000
(10,885)
50,639
5,258
14,128
625
380
625
–
625
Year ended
Year ended
31 December
31 December
2013
US$’000
2012
(Restated)
US$’000
176,308
174,656
(1,430)
33,070
1,511
2,262
44,663
1,450
209,459
223,031
Year ended
Year ended
31 December
31 December
2013
US$’000
11,891
5,193
754
17,838
(Restated)
2012
US$’000
14,769
2,854
632
18,255
Year ended
Year ended
31 December
31 December
2013
US$’000
14,594
(910)
13,684
(Restated)
2012
US$’000
3,005
13,389
16,394
49
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 50
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
9
Finance costs
Interest on bank overdrafts and loans
Exchange loss/(gain) on foreign currency borrowings
Interest on obligations under finance leases
Year ended
Year ended
31 December
31 December
2013
US$’000
11,572
9,576
715
21,863
2012
(Restated)
US$’000
9,791
(707)
864
9,948
Borrowing costs incurred on qualifying assets of US$1.5 million (2012: US$4.3 million) were capitalised in the year at an average interest rate of 3.05%
(2012: 3.18%).
10 Taxation
Current
Brazilian taxation
Corporation tax
Social contribution
Total current tax
Deferred tax
Credit for the year in respect of deferred tax liabilities
Charge for the year in respect of deferred tax assets
Total deferred tax
Total taxation
Year ended
Year ended
31 December
31 December
2013
US$’000
2012
(Restated)
US$’000
23,610
9,898
33,508
(10,448)
19,156
8,708
42,216
26,416
10,231
36,647
(3,288)
312
(2,976)
33,671
Brazilian corporation tax is calculated at 25% (2012: 25%) of the assessable profit for the year. Brazilian social contribution tax is calculated at 9% (2012: 9%) of
the assessable profit for the year.
At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and accordingly, no provision for such taxes has been recorded by the
company. In the event that such taxes are levied, the company has received an undertaking from the Bermuda Government exempting it from all such taxes until
31 March 2035.
The charge for the year can be reconciled to the profit per the statement of comprehensive income as follows:
Profit before tax
Tax at the standard Brazilian tax rate of 34% (2012: 34%)
Tax effect of expenses/income that are not included in determining taxable profit
Effect of different tax rates of subsidiaries operating in other jurisdictions
Tax expense and effective rate for the year
Effective rate for the year
Year ended
Year ended
31 December
31 December
2013
US$’000
100,502
34,171
11,976
(3,931)
42,216
42%
2012
(Restated)
US$’000
98,552
33,508
2,091
(1,928)
33,671
34%
The Group earns its profits primarily in Brazil. Therefore, the tax rate used for tax on profit on ordinary activities is the standard rate in Brazil of 34%, consisting
of corporation tax, 25% and social contribution 9%.
50
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 51
Ocean Wilsons Holdings Limited/Annual Report 2013
11 Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend paid for the year ended 31 December 2012 of 38c (2011: 29c) per share
First interim dividend paid for the year ended 31 December 2013 of 0c per share (2012: 4c)
Proposed final dividend for the year ended 31 December 2013 of 60c (2012: 38c) per share
12 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Year ended
Year ended
31 December
31 December
2013
US$’000
13,438
–
13,438
21,218
2012
(Restated)
US$’000
10,255
1,415
11,670
13,438
Year ended
Year ended
31 December
31 December
2013
US$’000
2012
(Restated)
US$’000
Earnings:
Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent
37,873
41,264
Number of shares:
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share
35,363,040
35,363,040
13 Goodwill
Cost and carrying amount attributed to:
Tecon Rio Grande
Tecon Salvador
Brazilian Intermodal Complex (Briclog)
Total
31 December
31 December
2013
US$’000
13,132
2,480
22,010
37,622
2012
US$’000
13,132
2,480
–
15,612
1 January
2012
US$’000
13,132
2,480
–
15,612
For the purposes of testing goodwill for impairment losses, the Group makes use its updated valuation model, for the relevant cash-generating units (Tecon Rio
Grande and Tecon Salvador) derived from the most recent financial budget for the following year, extrapolates cash flows for the remaining life of the concession
based on an estimated average growth rate of 6% annually and a discount rate of 10.07% (31 December 2012: 10.07% and 1 January 2012: 12%) for both
business units. This rate does not exceed the average long-term historical growth rate for the relevant market. After testing goodwill as mentioned above, no
impairment losses were recognised for the periods presented.
Briclog’s goodwill arose from the acquisition of Briclog and is composed partly of expectation for future profitability and partially for deferred tax on intangibles.
This goodwill´s historical value is equivalent to US$23.3 million, with negative foreign exchange impact of US$1.3 million due to the translation effect, on
31 December 2013. The goodwill will be tested for impairment annually; details of the Briclog acquisition are shown in note 29.
The directors consider that no reasonable change in their assumptions regarding their goodwill impairment testing would result in impairment
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
51
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 52
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
14 Other intangible fixed assets
Cost
At 1 January 2012 – (Restated)
Additions
Write off
Exchange differences
At 1 January 2013 – (Restated)
Additions
Acquired with acquisition of Briclog
Write off
Exchange differences
At 31 December 2013
Amortisation
At 1 January 2012 – (Restated)
Charge for the year
Write off
Exchange differences
At 1 January 2013 – (Restated)
Acquired with acquisition of Briclog
Charge for the year
Write off
Exchange differences
At 31 December 2013
Carrying amount
31 December 2013
31 December 2012 – (Restated)
1 January 2012 – (Restated)
US$’000
39,041
7,209
(684)
(1,510)
44,056
26,028
266
(30)
(3,469)
66,851
10,578
5,258
(627)
(498)
14,711
206
6,302
(23)
(995)
20,201
46,650
29,345
28,463
Intangible fixed assets arose from (i) the acquisition of concession rights for the container and heavy cargo terminal in Salvador in 2000, and the Ponta Norte
expansion at Tecon Salvador in 2010 (ii) and the implementation of integrated management software (SAP) (iii) the Briclog acquisition in 2013.
The breakdown of intangibles by type is as follows:
Briclog
Tecon Salvador
Computer software
Other
Total
31 December
2013
US$’000
21,454
9,263
7,613
8,320
46,650
31 December
2012
(Restated)
US$’000
–
11,509
9,724
8,112
29,345
1 January
2012
(Restated)
US$’000
–
13,509
6,774
8,180
28,463
The additions to Intangible assets in the period are attributable mainly to the 30-year lease right acquired through the Briclog acquisition as detailed in Note 29.
Lease concessions are amortised over the remaining terms of the concessions at the time of acquisition, which for Tecon Salvador is 25 years and Ponta Norte is
15 years. The computer software is amortised over 5 years following completion of the installation.
52
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 53
Ocean Wilsons Holdings Limited/Annual Report 2013
15 Property, plant and equipment
Cost or valuation
At 1 January 2012 – (Restated)
Additions
Transfers
Exchange differences
Disposals
Land and
buildings
US$’000
Vehicles, plant
Floating Craft
and equipment
US$’000
US$’000
Assets under
construction
US$’000
213,951
68,049
15
(8,482)
(1,174)
296,644
3,474
13,743
–
–
At 1 January 2013 – (Restated)
272,359
313,861
Additions
Additions – Briclog
Transfers
Exchange differences
Disposals
At 31 December 2013
Accumulated depreciation and impairment
At 1 January 2012 – (Restated)
Charge for the year
Elimination on construction contracts
Exchange differences
Disposals
At 1 January 2013 – (Restated)
Charge for the year
Additions – Briclog
Elimination on construction contracts
Exchange differences
Disposals
At 31 December 2013
Carrying Amount
At 31 December 2013
At 31 December 2012 – (Restated)
At 1 January 2012 – (Restated)
38,153
12,687
(5,033)
(16,663)
(2,006)
299,497
34,972
12,759
–
(1,254)
(545)
45,932
17,584
530
–
(3,188)
(649)
60,209
239,288
226,427
178,979
7,197
–
11,913
–
(11,809)
321,162
98,783
14,350
2,628
–
(3)
115,758
11,523
–
3,744
–
(11,355)
119,670
201,492
198,103
197,861
Total
US$’000
745,883
121,715
–
(15,522)
(6,489)
845,587
94,675
15,978
–
(30,771)
(30,097)
2,667
26,952
(13,743)
–
–
15,876
19,091
–
(11,913)
–
–
23,054
895,372
–
–
–
–
–
–
–
–
–
–
–
–
207,201
50,639
2,628
(5,405)
(4,353))
250,710
52,372
2,019
3,744
(9,203)
(21,194)
278,448
232,621
23,240
(15)
(7,040)
(5,315)
243,491
30.234
3,291
5,033
(14,108)
(16,282)
251,659
73,446
23,530
–
(4,151)
(3,805)
89,020
23,265
1,489
–
(6,015)
(9,190)
98,569
153,090
154,471
159,175
23,054
15,876
2,667
616,924
594,877
538,682
The carrying amount of the Group’s vehicles, plant and equipment includes an amount of US$22.3 million (2012: US$20.5 million) in respect of assets held
under finance leases.
Land and buildings with a net book value of US$0.2 million (2012: US$0.2 million) and tugs with a value of US$2.0 million (2012: US$2.2 million) have been
given in guarantee of various legal processes.
The Group has pledged assets having a carrying amount of approximately US$234.1 million (2012: US$588.6 million) to secure loans granted to the Group.
At 31 December 2013, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to US$5.5 million
(2012: US$15.8 million).
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
53
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 54
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
16 Subsidiaries
OCEAN WILSONS (INVESTMENTS) LIMITED
Investment holding and dealing company
ASCENSION UNDERWRITING LIMITED
Corporate underwriting member of Lloyds
WILSON SONS LIMITED
Holding company
Place of
incorporation
and operation
Bermuda
Method used
Effective
to account
interest*
for investment
100%**
Consolidation
UK
100%
Consolidation
Bermuda
58.25%**
Consolidation
WILSON SONS DE ADMINISTRAÇÃO E COMÉRCIO LTDA
Brazil
58.25%
Consolidation
Holding company
SAVEIROS CAMUYRANO SERVIÇOS MARÍTIMOS LTDA
Brazil
58.25%
Consolidation
Tug operators
WILSON, SONS S.A., COMÉRCIO, INDÚSTRIA, E AGÉNCIA DE NAVEGAÇÃO LTDA
Brazil
58.25%
Consolidation
Shipbuilders
WILSON, SONS ESTALEIRO LTDA
Shipbuilders
WILSON SONS AGENCIA MARÍTIMA LTDA
Ship Agents
WILSON, SONS NAVEGAÇÃO LTDA
Ship Agents
SOBRARE-SERVEMAR LTDA
Tug operator
Brazil
58.25%
Consolidation
Brazil
58.25%
Consolidation
Brazil
58.25%
Consolidation
Brazil
58.25%
Consolidation
WILPORT OPERADORES PORTUÁRIOS LTDA
Brazil
58.25%
Consolidation
Stevedoring
WILSON, SONS LOGÍSTICA LTDA
Logistics
WILSON, SONS TERMINAIS DE CARGAS LTDA
Transport services
EADI SANTO ANDRÉ TERMINAL DE CARGA LTDA
Bonded warehousing
VIS LIMITED
Holding company
TECON RIO GRANDE S.A.
Port operator
WILSON, SONS APOIO MARITIMO LTDA
Tug operator
Brazil
58.25%
Consolidation
Brazil
58.25%
Consolidation
Brazil
58.25%
Consolidation
Guernsey
58.25%
Consolidation
Brazil
58.25%
Consolidation
Brazil
58.25%
Consolidation
WILSON SONS OPERACOES MARÍTIMAS ESPECIAS LTDA
Brazil
58.25%
Consolidation
Tug operator
BRASCO LOGÍSTICA OFFSHORE LTDA
Port operator
TECON SALVADOR S.A.
Port operator
Brazil
58.25%
Consolidation
Brazil
53.88%
Consolidation
* Effective interest is the net interest of Ocean Wilsons Holdings Limited after non-controlling interests.
** Ocean Wilsons Holdings Limited holds direct interests in Ocean Wilsons Investments Limited and Wilsons Sons Limited.
The Group also has a 58.25% effective interest in a private investment fund Hydrus Fixed Income Private Credit Investment Fund. This private fund is
administrated by Itau bank and the investment policy and objectives are determined by the Group’s treasury department in line with Group policy.
54
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 55
Ocean Wilsons Holdings Limited/Annual Report 2013
17 Joint ventures
The Group holds the following significant interests in joint operations and joint ventures at the end of the reporting period:
Towage
Consórcio de Rebocadores Barra de Coqueiros
Consórcio de Rebocadores Baia de São Marcos
Logistics
Porto Campinas, Logística e Intermodal Ltda
Offshore
Wilson, Sons Ultratug Participações S.A.*
Atlantic Offshore S.A.**
Place of
31 December
31 December
Proportion of ownership interest
incorporation
and operation
Brazil
Brazil
Brazil
Brazil
Panamá
2013
50%
50%
50%
50%
50%
2012
(Restated)
50%
50%
50%
50%
50%
1 January
2012
(Restated)
50%
50%
50%
50%
50%
* Wilson, Sons Ultratug Participações S.A. controls Wilson, Sons Offshore S.A. and Magallanes Navegação Brasileira S.A. These latter two companies are indirect joint ventures of the Company.
** Atlantic Offshore S.A. controls South Patagonia S.A. This company is indirect joint venture of the company.
The Group´s interests on joint ventures are equity accounted.
Revenue
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expenses
Other operating expenses
Loss on disposals of property, plant & equipment
Results from operating activities
Finance income
Finance costs
Foreign exchange gains/(losses) on monetary items
Profit/(loss) before tax
Income tax expense
Profit for the period
Participation
Equity result
Year ended
Year ended
31 December
31 December
2013
US$’000
108,837
(5,190)
(42,192)
(26,249)
(15,240)
(72)
19,894
1,292
(15,391)
1,890
7,685
2012
(Restated)
US$’000
93,900
(3,983)
(41,180)
(21,540)
(16,682)
–
10,515
1,243
(11,609)
(12,874)
(12,725)
(2,900)
14,104
4,785
1,379
50%
2,392
50%
689
55
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 56
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
17 Joint ventures (continued)
Other non-current Assets
Property, plant and equipment
Long-term investment
Other current assets
Trade and other receivables
Derivatives
Cash and cash equivalents
Total assets
Bank overdrafts and loans
Other non-current liabilities
Trade and other payables
Equity
Total liabilities
Guarantees
31 December
31 December
2013
US$’000
465
2012
(Restated)
US$’000
876
1 January
2012
(Restated)
US$’000
554
603,137
510,316
410,986
2,131
864
33,607
–
23,401
2,144
380
24,906
985
10,488
663,605
550,095
2,145
21
22,464
–
12,641
448,811
501,713
8,878
102,782
50,232
416,905
308,562
5,537
89,774
37,879
19,629
84,561
36,059
663,605
550,095
448,811
Loans from the BNDES are guaranteed by a pledge over the financed supply vessels and corporate guarantee from Wilson Sons Adminisração e Comércio and/or
Remolcadores Ultratug Ltda.
Loans with Banco do Brasil are guaranteed by a pledge over the financed supply vessels, “Standby Letter of Credit”, fiduciary assignment of Petrobras long-term
contracts and corporate guarantee from Remolcadores Ultratug Ltda. The Magallanes Navegação Brasileira S.A. subsidiary, in accordance to this Financing
Agreement with Banco do Brasil, constituted a restricted cash account, accounted for under Long-term investments, in the amount of US$2.1 million. This reserve
will be retained until financing settlement, with minimum remuneration as savings account or by other financial instrument with similar risk, at the financial
institution’s discretion, and operated exclusively by the financial institution.
Covenants
The joint venture Magallanes Navegação Brasileira S.A. has to comply with specific financial covenants.
Provisions for tax, labour and civil risks
The provisions below are included in other non-current liabilities above. The breakdown of the provision by type of risk is as follows:
31 December
31 December
2013
US$’000
9
639
1,231
1,879
2012
(Restated)
US$’000
10
712
1,223
1,945
1 January
2012
(Restated)
US$’000
–
739
17
756
Civil cases
Tax cases
Labour claims
Total
56
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 57
Ocean Wilsons Holdings Limited/Annual Report 2013
2013
US$’000
2012
US$’000
241,582
77,879
(55,176)
14,594
(910)
277,969
244,969
33,000
277,969
251,297
114,458
(140,567)
3,005
13,389
241,582
221,582
20,000
241,582
18 Investments
Trading investments
At 1 January
Additions, at cost
Disposals, at market value
Increase in fair value of trading investments held at year end
(Loss)/profit on disposal of trading investments
At 31 December
Ocean Wilsons Investment Limited Portfolio
Wilson Sons Limited
Trading investments held at fair value at 31 December
Wilson Sons Limited
During 2013 Wilson Sons Limited invested in Real denominated and US Dollar denominated fixed rate certificates. The Wilson Sons Limited investments are held
and managed separately from the Ocean Wilsons Investment Portfolio.
Ocean Wilsons Investment Portfolio
The Group has not designated any financial assets that are not classified as trading investments as financial assets at fair value through profit or loss.
Trading investments above represent investments in listed equity securities, funds and unquoted equities that present the Group with opportunity for return
through dividend income and capital appreciation.
Included in trading investments are open ended funds whose shares may not be listed on a recognised stock exchange but are redeemable for cash at the
current net asset value at the option of the company. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market
prices where available. Where quoted market prices are not available, fair values are determined using various valuation techniques that include inputs for the
asset or liability that are not based in observable market data (unobservable inputs).
19 Inventories
Operating materials
Raw materials and spare parts
Total
Inventories are expected to be recovered in less than one year and there were no obsolete items.
31 December
31 December
2013
US$’000
13,433
15,657
29,090
2012
(Restated)
US$’000
12,902
24,551
37,453
1 January
2012
(Restated)
US$’000
11,533
13,838
25,371
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
57
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 58
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
20 Construction contracts
Contract costs incurred plus recognised profits less recognised losses to date
Less progress billings
Amounts due to contract customers included in trade and other payables
21 Trade and other receivables
Trade and other receivables
Amount receivable for the sale of services
Allowance for doubtful debts
Income taxation recoverable
Other recoverable taxes and levies
Prepayments
Other
Total current
Total non-current
31 December
31 December
2013
US$’000
81,995
2012
(Restated)
US$’000
77,029
(110,540)
(152,366)
(28,545)
(75,337)
31 December
31 December
2013
US$’000
65,542
(1,718)
63,824
15,082
32,760
7,089
56,062
174,817
150,819
23,998
174,817
2012
(Restated)
US$’000
66,026
(2,506)
63,520
11,239
44,819
43,211
53,620
216,409
199,486
16,923
216,409
1 January
2012
(Restated)
US$’000
63,425
(87,232)
(23,807)
1 January
2012
(Restated)
US$’000
67,858
(927)
66,931
9,262
41,283
16,319
54,723
188,518
160,553
27,965
188,518
Non-current trade receivables relate to: recoverable taxes with maturity dates in excess of one year, which comprise mainly PIS, COFINS, ISS and INSS, customers
with maturities over one year, and receivables from Intermarítima relating to the sale of the non-controlling interest in Tecon Salvador. There are no indicators of
impairment related to these receivables.
Included in the Group’s trade receivable balances are debtors with a carrying amount of US$12.8 million (2012: US$16.3 million) which are past due but not
impaired at the reporting date for which the Group has not provided as there has not been a change in credit quality and the Group believes the amounts are still
recoverable. The Group does not hold any collateral over these balances.
Included in other debtors is US$15.4 million relating to insurance receivables for the damage to the warehouse and materials inventory used in the shipbuilding
process by the fire at the Guarujá II shipyard warehouse during the year (property, plant and equipment US$1.5 million and inventories US$13.9 million).
58
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 59
Ocean Wilsons Holdings Limited/Annual Report 2013
31 December
31 December
2013
US$’000
9,046
3,015
771
–
2012
(Restated)
US$’000
8,670
4,043
3,549
–
1 January
2012
(Restated)
US$’000
13,720
996
622
–
12,832
16,262
15,338
21 Trade and other receivables (continued)
Ageing of past due but not impaired trade receivables
From 0 – 30 days
From 31 – 90 days
From 91 – 180 days
more than 180 days
Total
The average credit period taken on services ranges from zero to 30 days. Interest is charged at up to 1% per month on the outstanding balances with an
additional fine of up to 2% per month. The Group has provided in full for all receivables over 180 days because historical experience is such that receivables that
are past due 180 days are generally not recoverable.
Included in the Group’s allowance for doubtful debts are individually impaired trade receivables with a balance of US$2.5 million, which are aged, greater than
180 days. The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected
settlement proceeds.
The Group does not hold any collateral over these balances.
Ageing of impaired trade receivables
From 0 – 30 days
From 31 – 90 days
From 91 – 180 days
more than 180 days
Total
Movement in the allowance for doubtful debts
Balance at the beginning of the year (Restated)
Amounts written off as uncollectable
Increase in allowance recognised in profit or loss
Exchange differences
Balance at the end of the year
31 December
31 December
2013
US$’000
–
–
–
1,718
1,718
2012
(Restated)
US$’000
–
–
–
2,506
2,506
2013
US$’000
2,506
(10,332)
9,682
(138)
1,718
1 January
2012
(Restated)
US$’000
–
–
–
927
927
2012
US$’000
927
(5,643)
7,348
(126)
2,506
In determining recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially
granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. The directors believe that there is
no further credit provision required in excess of the allowance for doubtful debts.
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
59
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 60
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
22 Bank loans and overdrafts
Unsecured borrowings
Bank overdrafts – Real
Total unsecured borrowings
Secured borrowings
BNDES – FINAME Real ¹
BNDES – FMM linked to US Dollar ²
BNDES – FMM Real ²
BNDES – FINEM Real ³
BNDES – linked to US Dollar ³
Total BNDES
BB – FMM linked to US Dollar 4
IFC – US Dollar 5IFC – linked to Real 5
BB – FMM linked to US Dollar 4
China Eximbank – US Dollar 6
Itaú – Finimp – US Dollar 7
Caterpillar – Supplier´s Credit Real
Total others
Total secured borrowings
Total
31 December
31 December
Annual
Interest rate
2013
%
US$’000
12.4%
–
–
3.0% to 12.00%
2.07% to 6%
9.71%
6.76% – 6.89%
5.07% to 5.36%
2.00% to 3.00%
3.14%
14.09%
2.19%
2.02% to 4.30%
4.41% to 7.44%
10,366
214,826
3,247
9,849
11,591
249,879
24,387
75,296
1,738
11,563
9,528
–
2012
(Restated)
US$’000
–
–
19,401
213,999
3,994
3,604
13,821
254,819
–
77,606
2,655
13,686
10,605
264
1 January
2012
(Restated)
US$’000
132
132
30,591
198,827
4,540
–
15,447
249,405
–
57,208
3,618
15,769
3,152
487
122,512
104,816
80,234
372,391
359,635
329,639
372,391
359,635
329,771
1.
2.
3.
FINAME credit line, through a variety of financial agents, finances Logistics and Port Operation equipment.
As an agent of Fundo da Marinha Mercante’s (FMM), Banco Nacional De Desenvolvimento Economico e Social (BNDES) finances the construction of tugboats and shipyard facilities.
Through FINEM credit line, BNDES is also financing improvements in Tecon Rio Grande, modernisation of support bases of Brasco in Niterói and Guaxindiba, Logistics equipment, implementation of
Wilport’s yard and enlargement of the container storehouse in Salvador Depot. The debt amount is repayable over different periods up to 18 years.
4.
Banco do Brasil (“BB”) as a Fundo da Marinha Mercante’s (FMM) agent, finances the construction of tugboats. The contract shall be repaid in 18 years starting in March 2015, with monthly amortisation
and interest payment.
5.
6.
International Finance Corporation (IFC) finances projects in container terminal -Tecon Salvador. The amortisation and interest payment are semi-annual.
The Export-Import Bank of China (Eximbank) finances Tecon Rio Grande’s equipment acquisition. As per loan agreement principal shall be repaid in 9 years (5.1 years on 31 December 2013), with
semi-annual amortisation and interest payment. There is a 2.0% p.a. guarantee fee paid to Banco Itaú BBA.
7.
Banco Itaú BBA S.A finances Tecon Rio Grande’s equipment acquisition through an Import Finance Facility (“FINIMP”). As per the loan agreement the principal will be repaid in 5.5 years (1.1 years on
31 December 2013) with semi-annual amortisation and interest payments. The second loan was signed on 6 January 2012. As per the loan agreement the principal will be repaid in 5 years (3.0 years
on 31 December 2013) with semi-annual amortisation and interest payments.
60
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 61
Ocean Wilsons Holdings Limited/Annual Report 2013
22 Bank loans and overdrafts (continued)
The breakdown of bank overdrafts and loans by maturity is as follows:
31 December
31 December
Within one year
In the second year
In the third to fifth years (including)
After five years
Total
Amounts due for settlement within 12 months
Amounts due for settlement after 12 months
The analysis of borrowings by currency is as follows:
31 December 2013
Bank overdrafts
Bank loans
Total
31 December 2012 (Restated)
Bank overdrafts
Bank loans
Total
1 January 2012 (Restated)
Bank overdrafts
Bank loans
Total
Guarantees
2013
US$’000
37,997
37,370
110,115
186,909
372,391
37,997
334,394
$Real
linked to
US Dollars
US$’000
–
250,804
250,804
–
227,820
227,820
–
214,274
214,274
$Real
US$’000
–
25,200
25,200
–
29,919
29,919
132
39,236
39,368
2012
(Restated)
US$’000
35,497
38,358
102,608
183,172
359,635
35,497
324,138
1 January
2012
(Restated)
US$’000
25,185
33,927
98,092
172,567
329,771
25,185
304,586
US Dollars
US$’000
Total
US$’000
–
96,387
96,387
–
101,896
101,896
–
76,129
76,129
–
372,391
372,391
–
359,635
359,635
132
329,639
329,771
Loans with BNDES rely on a corporate guarantee from Wilson Sons de Administração e Comércio Ltda. For some contracts, the corporate guarantee is additional
to: (i) pledge of the respective financed tugboat or platform supply vessel, (ii) lien of logistics and port operations equipment financed.
Loans with BB rely on a corporate guarantee from Wilson, Sons de Administração e Comércio Ltda. and pledge of the respective financed tugboat.
The loans that Tecon Salvador holds with IFC are guaranteed by shares of Tecon Salvador, projects’ cash flows, equipment and buildings.
The loan with “The Export-Import Bank of China” is guaranteed by a “Standby Letter of Credit” issued for Tecon Rio Grande by Banco Itaú BBA S.A., with the
financing bank as beneficiary, as counter-guarantee, Tecon Rio Grande pledged the equipment funded by “The Export-Import Bank of China” to Banco Itaú BBA S.A.
Loan with Itaú BBA S.A. is guaranteed by the corporate guarantee from Wilson Sons de Administração e Comércio Ltda and the pledge of the respective financed
equipment. One contract is additionally guaranteed by a promissory note.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
61
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 62
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
22 Bank loans and overdrafts (continued)
Undrawn credit facilities
At 31 December 2013 the Group had available US$218.5 million (R$512.0 million) of undrawn borrowing facilities. For each disbursement there is a set of
precedent conditions that must be satisfied.
Fair value
Management estimates the fair value of the Group's borrowings as follows:
Bank overdrafts
Bank loans
BNDES
BB
IFC
Eximbank
Finimp
Caterpillar
Total bank loans
Total
The weighted average interest rates paid were as follows:
Bank loans in US$ and linked to the US$
Bank loans in $Real
31 December
31 December
2013
US$’000
–
2012
(Restated)
US$’000
–
1 January
2012
(Restated)
US$’000
132
249,879
254,819
249,405
24,387
77,034
11,563
9,528
–
–
80,352
13,686
10,605
264
–
60,934
15,769
3,152
487
372,391
359,726
329,747
372,391
359,726
329,879
Year ended
Year ended
2013
3.2%
7.9%
2012
3.2%
8.5%
At 31 December 2013, the Group had available US$218.5 million of undrawn committed borrowings facilities available. For each disbursement, there is a set of
conditions precedent that must be met (2012: US$500.5 million).
23 Derivative financial instruments
The Group may enter into derivatives contracts to manage risks arising from exchange rate fluctuations. The derivatives are entered into with bank and financial
institution counterparties, which are rated AAA, based on rating agency Standard & Poor’s ratings.
The Group buys and sells derivatives, in order to manage market risks. All such transactions are carried out within the guidelines set by the Wilson Sons Limited
Risk Management Committee. Generally the Group seeks to apply hedge accounting in order to manage volatility in profit or loss.
The Group entered into currency put-options contracts during the years ended 31 December 2013 (31 December 2012: nil). Options are derivative financial
instruments that give the buyer, in exchange for a premium payment, the right, but not the obligation, to either purchase from (call option) or sell to (put option)
the writer a specified underlying instrument at a specific price on or before a specified date.
The premium paid on acquired put options are recorded initially as an asset and adjusted to their respective fair values using valuation techniques as Black and
Scholes option model. The model used to price option contracts includes observables inputs available on market.
At 31 December 2013 the notional value of outstanding derivative put contracts was US$• million. The fair value was US$1.2 million.
62
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 63
Ocean Wilsons Holdings Limited/Annual Report 2013
23 Derivative financial instruments (continued)
Cash flow hedge
The Group seeks to apply hedge accounting in order to manage volatility in profit or loss.
The put option contracts described are designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated
with a highly probable forecast transaction that could affect profit or loss. The effective portion of changes in the fair value of the derivative is recognised in other
comprehensive income and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised
immediately in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge
accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur then the balance in equity is reclassified to profit or loss.
On initial designation of the derivative as a hedging instrument, the Group formally documents the relationship between the hedging instrument and hedged
item, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be
used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an
ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows of the respective
hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80 – 125%.
Derivatives are recognised initially at fair value; any attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition,
derivatives are measured at fair value, and changes therein are accounted for as described below.
The hedged item and the risk associated is the foreign currency exposure in BRL of payments to the shipyard.
The Group uses cash flow hedges to limit its exposure that may result from the variability of floating interest rates. On 16 September 2013, its subsidiary, Tecon
Salvador, entered into an interest rate swap agreement with a notional amount of $74.4 million to hedge a portion of its outstanding floating-rate debt with IFC.
This swap converts floating interest rate based on the London Interbank Offered Rate, or LIBOR, into fixed-rate interest and expires in March 2020.The derivatives
were entered into with Santander Brasil as counterparty, whose credit rating was AAA, as of 31 December 2013, according to Standard& Poor’s Brazilian local
rating scale.
Tecon Salvador is required to pay the counterparty a stream of fixed interest payments at rates fixed from 0.553% to 4.250%, according to the schedule
agreement, and in turn, receives variable interest payments based on 6-month LIBOR. The net receipts or payments from the swap are recorded as financial
expense.
Within one year
In the second year
In the third to fifth years (including)
After five years
Fair Value
Outflows
(110)
(58)
(1,118)
(46)
(1,332)
US$’000
Inflows
–
58
34
–
92
Net effect
(110)
–
(1,084)
(46)
(1,240)
(1,240)
The fair value of the swap was estimated based on the yield curve as of 31 December 2013, and represents its carrying value. As of 31 December 2013, the
interest rate swap balance in current liabilities and other non-current liabilities was US$1.2 million; and the balance in accumulated other comprehensive income
on the consolidated balance sheets was US$1.2 million. The net change in fair value of the interest rate swap recorded as other comprehensive income for the
year ended 31 December 2013 was an after-tax loss of US$1.2 million.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
63
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Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
23 Derivative financial instruments (continued)
31 December 2013
Financial Assets
Interest Rates Swap
Total
Derivative Sensitivity Analysis
Notional
Amount
US$000’s
Maturity
74,400
Mar/2020
Fair Value
US$000’s
(1,240)
(1,240)
This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The
analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. Three scenarios
were simulated: the likely scenario (Probable) and two possible scenarios of deterioration of 25% (Possible) and 50% (Remote) in the exchange rate, the risk in
buying an options contracts is that the Group pays a premium whether or not the option is exercised. In this case in both scenarios the risk associated on 31
December 2013 is US$1.2 million.
Cash Flow Hedge
The Group applies hedge accounting for transactions in order to manage the volatility in earnings. The swap is designated and qualifies as a cash flow hedge. As
such, the swap is accounted for as an asset or a liability in the accompanying consolidated balance sheets at fair value. The effective portion of changes in fair
value of the derivative is recognized in other comprehensive income and presented as an asset revaluation reserve in equity. Any ineffective portion of changes
in fair value of the derivative is recognised immediately in the profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting operations, expires or is sold, terminated or exercised, or the designation is revoked,
the model accounting hedges (hedge accounting) is discontinued prospectively when there is no more expectation for the forecasted transaction, and then the
amount stated in the equity is reclassified to the profit or loss.
On the initial designation of the derivative as a hedging instrument, the Group formally documents the relationship between the hedging instrument and the
hedged transaction, including the risk management objective and strategy on the implementation of the hedge and the hedged risk, together with the methods
that will be used to evaluate the effectiveness of the hedging relationship. The Group is utilizing the dollar offset method to assess the effectiveness of the swap,
analysing whether the hedging instruments are highly effective in offsetting changes in fair values or cash flows of the respective hedged items attributable to the
hedged risk, and if the actual results for each coverage are within the range from 80 – 125%.
Under this methodology, the swap was deemed to be highly effective for the period ended 31 December 2013. There was no hedge ineffectiveness recognized
in profit or loss for the year ended 31 December 2013.
24 Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period.
Accelerated tax
variance on
Other
non-current asset
Exchange
Retranslation of
depreciation
US$’000
(16,203)
(1,670)
–
(17,873)
(1,320)
–
–
loans
US$’000
508
4,958
(61)
5,405
11,768
–
(166)
(19,193)
17,007
differences
US$’000
24,790
9,913
(558)
34,145
(416)
(7,793)
(1,599)
24,337
valuation
US$’000
3,152
(10,225)
–
(7,073)
(18,740)
–
–
(25,813)
Total
US$’000
12,247
2,976
(619)
14,604
(8,708)
(7,793)
(1,765)
(3,662)
At 1 January 2012 – (Restated)
(Charge)/credit to income
Exchange differences
At 1 January 2013 – (Restated)
(Charge)/credit to income
Deferred tax from acquisitions
Exchange differences
At 31 December 2013
64
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 65
Ocean Wilsons Holdings Limited/Annual Report 2013
24 Deferred tax (continued)
Certain tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes.
Deferred tax liabilities
Deferred tax assets
31 December
31 December
2013
US$’000
(33,761)
30,099
(3,662)
2012
(Restated)
US$’000
(15,043)
29,647
14,604
1 January
2012
(Restated)
US$’000
(17,260)
29,507
12,247
At the balance sheet date the Group had unused tax losses of US$42.0 million (2012: US$66.5 million) available for offset against future profits in the company in
which they arose. No deferred tax asset has been recognised in respect of US$7.2 million (2012: US$6.9 million) due to the unpredictability of future profit streams.
Retranslation of non-current asset valuation deferred tax arises on Brazilian property, plant and equipment held in US dollar functional currency businesses.
Deferred tax is calculated on the difference between the historical US Dollar balances recorded in the Groups accounts and the $Real balances used in the
Group’s Brazilian tax calculations.
Deferred tax on exchange variance on loans arises from exchange gains or losses on the Group’s US Dollar and $Real denominated loans linked to the US Dollar that
are not deductible or payable for tax in the period they arise. Exchange gains on these loans are taxable when settled and not in the period in which gains arise.
25 Obligations under finance leases
Amounts payable under finance leases
Within one year
In the second to fifth years inclusive
After five years
Less future finance charges
Present value of lease obligations
Less: Amounts due for settlement within 12 months (shown under current liabilities)
Amount due for settlement after 12 months
Amounts payable under finance leases
Within one year
In the second to fifth years inclusive
After five years
Less future finance charges
Present value of lease obligations
Less: Amounts due for settlement within 12 months (shown under current liabilities)
Amount due for settlement after 12 months
Minimum lease payments
31 December
31 December
2013
US$’000
2,042
6,546
–
8,588
(2,229)
6,359
1,547
4,812
2012
(Restated)
US$’000
1,666
3,564
–
5,230
(1,187)
4,043
1,234
2,809
1 January
2012
(Restated)
US$’000
4,568
4,305
–
8,873
(1,776)
7,097
3,804
3,293
Present value of Minimum lease payments
31 December
31 December
2013
US$’000
1,547
4,812
–
6,359
–
–
1,547
4,812
2012
(Restated)
US$’000
1,234
2,809
–
4,043
–
–
1,234
2,809
1 January
2012
(Restated)
US$’000
3,804
3,293
–
7,097
–
–
3,804
3,293
65
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 66
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
25 Obligations under finance leases (continued)
It is the Group’s policy to lease certain of its fixtures and equipment under finance leases. The average lease term is 4.5 years.
For the year ended 31 December 2013, the average effective borrowing rate was 13.61% (2012: 14.94%). Interest rates are fixed at contract date. All leases are
denominated in Brazilian Real and include a fixed repayment and a variable finance charge linked to the Brazilian interest rate. Interest rates range from 12.11%
to 17.32%.
The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assets.
26 Trade and other payables
Trade creditors
Amounts due to construction contract customers (note 20)
Other taxes
Accruals and deferred income
Share based payment liability
Total current
Total non-current
31 December
31 December
2013
US$’000
73,908
28,545
12,437
10,132
10,898
135,920
135,920
–
2012
(Restated)
US$’000
58,671
75,337
15,199
12,818
12,328
174,353
173,219
1,134
1 January
2012
(Restated)
US$’000
55,977
23,807
16,709
13,397
18,035
127,925
125,454
2,471
Trade creditors and accruals principally comprise amounts outstanding for trade purposes and ongoing costs.
The average credit period for trade purchases is 76 days (2012: 104 days). For most suppliers interest is charged on outstanding trade payable balances at
various interest rates. The Group has financial risk management policies in place to ensure that payables are paid within the credit timeframe.
The directors consider that the carrying amount of trade payables approximates their fair value.
27 Provisions
At 1 January 2012 – (Restated)
Increase in provisions in the year
Utilisation of provisions
Exchange difference
At 31 December 2012 – (Restated)
Increase in provisions in the year
Utilisation of provisions
Exchange difference
At 31 December 2013
Provisions comprise legal claims relating to civil cases, tax cases and legal claims by former employees.
Analysis of provisions by type:
Civil and environmental cases
Tax cases
Labour claims
66
US$’000
13,378
1,658
(3,452)
(618)
10,966
4,252
(1,239)
(3,717)
10,262
1 January
2012
(Restated)
US$’000
1,910
169
11,299
13,378
31 December
31 December
2013
US$’000
2,078
1,822
6,362
10,262
2012
(Restated)
US$’000
1,747
1,764
7,455
10,966
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 67
Ocean Wilsons Holdings Limited/Annual Report 2013
27 Provisions (continued)
Civil and environment cases: these comprise indemnification for environmental damages caused by floating craft accidents and contract disputes.
Labour claims: These claims relate to additional payments for health risks, overtime and other allowances.
Tax cases: Brazilian taxes that the Group and its advisors consider have been incorrectly applied against the Group and are contesting in legal actions.
Other non-current assets of US$10.2 million (2012: US$9.2 million) represent legal deposits required by the Brazilian legal authorities as security to contest legal
actions.
In addition to the cases for which the Group booked the provision there are other tax, civil and labour disputes amounting to US$131.6 million (2012: US$91.6
million) included in note 31, contingent liabilities, whose probability of loss was estimated by the legal counsel as possible.
The analysis of possible losses by type:
Civil and environmental cases
Tax cases
Labour claims
31 December
31 December
2013
US$’000
10,174
56,799
66,416
133,389
2012
(Restated)
US$’000
7,140
40,479
43,961
91,580
1 January
2012
(Restated)
US$’000
6,261
25,036
37,365
68,662
Procedure for classification of legal liabilities as probable, possible or remote loss by the external lawyers:
Upon receipt of the notification of a new judicial lawsuit, the external lawyers, in general, classify it as a possible claim, recording the total amount involved, not
the amount at risk which is not known at this stage. Exceptionally, if there is sufficient knowledge from the beginning that there are very high or very low risk of
loss, the lawyer may classify the claim as probable loss or remote loss.
During the course of the lawsuit and considering, for instance, its first judicial decision, legal precedents, arguments of the claimant, thesis under discussion,
applicable laws, documentation for the defense and other variables, the lawyer may re-classify the claim as probable loss or remote loss.
When classifying the claim as probable loss, the lawyer estimates the Amount at Risk for such claim.
28 Share capital
Authorised
50,060,000 ordinary shares of 20p each
Issued and fully paid
35,363,040 ordinary shares of 20p each
2013
US$’000
2012
(Restated)
US$’000
16,119
16,119
11,390
11,390
The company has one class of ordinary shares which carry no right to fixed income.
Share capital is converted at the exchange rate prevailing at 31 December 2002, the date at which the Group’s presentational currency changed from Sterling to
US$, being US$1.61 to £1.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
67
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Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
29 Acquisition of subsidiary
Business combinations
Brasco Logística Offshore Ltda ("Brasco"), completed the acquisition of all the shares representing the capital of Brazilian Intermodal Complex S/A (“Briclog”),
concluding the acquisition on 1 July 2013. The closing price of the acquisition of shares was R$89.8 million (equivalent to US$40.5 million at the transaction
date) with debt of R$32.1 million (equivalent to US$14.5 million at transaction date) assumed on acquisition these values were subsequently adjusted to
R$89.2 million regarding the acquisition of shares (equivalent to US$40.2 million at the transaction date) with debt of R$32.7 million (equivalent to
US$14.8 million at transaction date) due to an update on the commercial agreement.
The acquisition of shares is payable in three amounts, including R$10 million (equivalent to US$4.5 million at transaction date) paid in June 2011, R$22.5 million
(US$10.2 million at transaction date) paid on the closing and R$57.3 million (equivalent to US$25.9 million at transaction date) that will be paid 300 days from
the closing adjusted for movement in the Brazilian index of consumer prices (IPCA) from the date of closing.
The major asset of the acquisition is a 30-year lease to operate in an area of Guanabara Bay, Rio de Janeiro, Brazil with excellent access to the Campos and
Santos oil producing basins.
In the 6 month-period ended 31 December 2013, Briclog accrued revenues of US$3.9 million and profit of US$790,000. If the acquisition had occurred on
1 January 2013, management estimates that revenue contribution would amount to US$11.0 million and the loss for the year would have been US$3.0 million.
In determining these amounts, management considered that the provisional fair value adjustments, which arose on the acquisition date, would have been the
same if the acquisition had occurred on 1 January 2013.
Included in the Group’s accounts payable at 31 December 2013 is US$25.5 million for amounts outstanding in relation to the purchase of Briclog.
Contingent consideration
There is no contingent consideration involved in the purchase agreement.
Identifiable assets acquired and liabilities assumed
Assets
Cash and cash equivalents
Trade and other receivables
Recoverable taxes
Other assets
Property, plant and equipment
Identifiable intangible assets
Total identifiable assets
Liabilities
Trade and other payables
Advances
Tax payable
Provisions for tax, labour and civil risks
Deferred tax on intangible assets
Other payables
Total identifiable liabilities
Total net identifiable assets
Goodwill for expected future profitability
Total consideration
US$’000
19
434
357
274
13,990
23,413
38,487
6,156
1,785
3,580
1,036
8,131
844
21,532
16,955
23,272
40,227
Lease operations were recognised at fair value on the acquisition date
If any new information is obtained within one year from the date of purchase regarding facts and circumstances that existed at the acquisition date which
indicate adjustments to the amounts described above or any additional provision that existed at the acquisition date, the accounting for the acquisition will be
reviewed.
68
Job No.: 17319
Customer: Ocean Wilsons
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Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 69
Ocean Wilsons Holdings Limited/Annual Report 2013
29 Acquisition of subsidiary (continued)
Goodwill and other intangible assets
Goodwill and other intangible assets recognised as a result of the acquisition are as follows:
Lease concession intangible asset
Goodwill for expected future profitability
US$’000
23,353*
23,272**
46,625
* The intangible asset is attributable mainly to the 30-year lease to operate in a sheltered area of Guanabara Bay, Rio de Janeiro, Brazil with privileged access to attend the Campos and Santos oil producing
basins and the fair value of the customer portfolio. The intangible asset calculation is supported by an independent expert valuation.
** Goodwill is attributable to Briclog’s expected future profitability and deferred tax on the lease concession intangible asset and is disclosed in the consolidated balance sheet and assessed for impairment
(see note 13).
Acquisition costs
There are no material acquisition costs incurred by the Group including legal fees and due diligence costs.
30 Notes to the cash flow statement
Reconciliation from profit before tax to net cash from operating activities
Profit before tax
Share of results of joint venture
Investment revenues
Other gains and losses
Finance costs
Foreign exchange losses on monetary items
Operating profit
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share based payment (credit)/expense
Gain on disposal of property, plant and equipment
Decrease in provisions
Operating cash flows before movements in working capital
Increase in inventories
Decrease/(increase) in receivables
(Decrease)/increase in payables
Increase in other non-current assets
Cash generated by operations
Income taxes paid
Interest paid
Net cash from operating activities
Cash and cash equivalents
Year ended
Year ended
31 December
31 December
2013
US$’000
100,502
(2,392)
(17,838)
(13,684)
21,863
30,589
119,040
2012
(Restated)
US$’000
98,552
(689)
(18,255)
(16,394)
9,948
11,572
84,734
52,372
50,639
6,302
(1,430)
(9,966)
(2,528)
163,790
(3,085)
62,154
(73,194)
(999)
148,666
(27,306)
(12,944)
108,416
5,258
2,262
534
(2,412)
141,015
(12,082)
(27,891)
54,650
(781)
154,911
(31,921)
(12,899)
110,091
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount
of these assets approximates their fair value.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
69
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Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
30 Notes to the cash flow statement (continued)
Private investment funds
Wilson Sons Limited has investments in private investment funds that are consolidated in the financial statements as cash equivalents.
The Group has investments in a private investment fund called Hydrus Fixed Income Private Credit Investment Fund that are consolidated in these financial
statements. This private investment fund comprises deposit certificates, financial notes and debentures, with final maturities ranging from January 2014 to
January 2019. About 67.62% of the securities included in the portfolio of the Private Investment Fund have daily liquidity and are marked to fair value on a daily
basis against current earnings. This private investment fund does not have significant financial obligations. Any financial obligations are limited to service fees to
the asset management company employed to execute investment transactions, audit fees and other similar expenses.
Cash and cash equivalents held in Brazil amount to US$84.3 million (2012: US$110.5 million and 2011: US$106.1 million).
Cash equivalents are held for the purpose of meeting short-term cash commitments and not for cash investment purposes.
Additions to plant and equipment during the year amounting to US$4.2 million (2012: US$0.7 million) were financed by new finance leases.
31 Contingent liabilities
In the normal course of business in Brazil, the Group continues to be exposed to numerous local legal claims. It is the Group’s policy to contest such claims
vigorously, many of which appear to have little substance in merit, and to manage such claims through its legal advisers. The total estimated contingent claims at
31 December 2013 are US$131.6 million (2012: US$91.6 million). These have not been provided for as the Directors and the Group’s legal advisors do not
consider that there is any probable loss. Contingent liabilities relate to labour, civil and environmental, and tax claims.
32 Cash-settled share-based payments
The Group issues to certain employees share appreciation rights in respect of the Group’s long-term incentive plan “LTIP” that require the Group to pay the
intrinsic value to the employee at the date of exercise.
The Group operates two long-term incentive plans, the Ocean Wilsons Holdings scheme and the Wilson Sons Limited scheme.
Ocean Wilsons Holdings Limited LTIP
The Company implemented a cash-settled phantom option scheme that was approved by shareholders at a Special General Meeting held on 19 April 2007. The
scheme was for selected senior management and the options provide for the option holder to receive on exercise the difference between the option price of
US$5.66 and the lower of US$19.98, being the market capitalisation of the Wilson Sons at the date of the IPO per OWHL share and the market value of Wilson
Sons per OWHL share at the time of exercise. The awards vested in four tranches from April 2009 to April 2012 and expire in April 2016.
As at 31 December 2013 the scheme was closed and there were no outstanding options.
Details of the share options outstanding during the year as follows:
Outstanding at the beginning of the period
Exercised during the period
Outstanding at the end of the period
2013
2012
Number of
Number of
share options
share options
–
–
–
296,038
(296,038)
–
70
Job No.: 17319
Customer: Ocean Wilsons
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Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 71
Ocean Wilsons Holdings Limited/Annual Report 2013
32 Cash-settled share-based payments (continued)
The movement of the accrual relating to the plan is as follows:
Liability at 1 January
Charge for the year
Exercise of options
Liability at 31 December
2013
US$’000
–
–
–
–
2012
(Restated)
US$’000
3,664
572
(4,236)
–
The group has recorded no liability (2012: zero) in respect of this scheme. There were no exercisable options at period end.
Wilson Sons Limited LTIP
On 9 April 2007, the boards of Ocean Wilsons Holding Limited and Wilson Sons Limited approved a stock option plan which allows for the grant of phantom
options to eligible employees selected by the Wilson Sons Limited Board. The options will provide cash payments, on exercise, based on the number of options
multiplied by the growth in the price of a Wilson Sons Limited Brazilian Depositary Receipt “BDR” between the date of grant (the Base Price) and the date of
exercise (the “Exercise Price”). The plan is a Brazilian Real denominated scheme and options were issued at R$23.74 during 2007. A further 135,000 options were
issued under the plan at R$18.70 in 2008 and 2009 and a further 148,000 at R$24.58 in 2011. The awards vest in four tranches from two to six years from
date of issue.
Details of the share options outstanding during the year as follows:
Outstanding at the beginning of the period
Granted during the period
Exercised during the period
Forfeited during the period
Outstanding at the end of the period
The movement of the accrual relating to the plan is as follows:
Liability at 1 January
(Credit)/charge for the year
Exercise of options
Liability at 31 December
2013
2012
Number of
Number of
share options
share options
2,541,260
3,826,260
–
–
–
–
(1,232,000)
(53,000)
2,541,260
2,541,260
2013
US$’000
12,328
(1,430)
–
10,898
2012
(Restated)
US$’000
14,371
1,690
(3,733)
12,328
The group has recorded liabilities of US$10.9 million (2012: US$12.3million). Fair value is determined by using the Binomial model using the assumptions noted
in the table below.
Weighted average option price for awards made in 2007
Weighted average option price for awards made in 2008 and 2009
Weighted average option price for awards made in 2011
Expected volatility
Expected life
Risk free rate
Expected dividend yield
2013
R$23.74
R$18.70
R$24.58
2012
R$23.74
R$18.70
R$24.58
2011
R$23.74
R$18.70
R$24.58
26% – 29%
26% – 30%
30% – 33%
10 years
10.40%
1.60%
10 years
10 years
3.90%
1.50%
7.10%
1.47%
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
71
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 72
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
32 Cash-settled share-based payments (continued)
Expected volatility was determined with reference to the historical volatility of the OWHL Group share price. The expected life used in the model has been
adjusted, based on management’s best estimate for exercise restrictions and behavioural considerations. The options terminate on the expiry date or immediately
on resignation of the Director or senior employee, whichever is earlier.
Share options outstanding at the end of the period had a weighted average exercise price of R$23.56 (2012: R$23.56) and a weighted average remaining
contractual life of 2,031 days (2012: 1,667 days).
At period end there were 2,453,510 exercisable options (2012: 2,390,510).
On the 10 January 2014 eligible participants exercised a total of 2,338,750 options at a price of R$30.23 generating a payment liability of R$15.7 million
(US$6.6 million).
Stock option scheme
On 13 November 2013, the board of Wilson Sons Limited approved a Stock Option Plan, which allowed for the grant of options to eligible participants to be
selected by the board. The shareholders in special general meeting approved the plan on the 8 January 2014 including an increase in the authorized capital of
the company through the creation of up to 4,410,927 new shares. The options provide participants with the right to acquire shares via Brazilian Depositary
Receipts (“BDR”) in Wilson Sons Limited at a predetermined fixed price not less than the three-day average mid-price for the days preceding the date of option
issuance.
On 10 January 2014 options for the acquisition 2,914,100 were granted under the Stock Option Plan with an exercise price of R$31.23 as detailed below:
Options series
07 ESO – 3 Year
07 ESO – 4 Year
07 ESO – 5 Year
Number
Grant date
Vesting date
Expiry date
Exercise price
961,653
961,653
10/1/2014
10/1/2017
10/1/2022
10/1/2014
10/1/2018
10/1/2023
990,794
10/1/2014
10/1/2019
10/1/2024
(R$)
31.23
31.23
31.23
The options terminate on the expiry date or immediately on the resignation of the director or senior employee, whichever is earlier.
The following Fair Value expense of the grant to be recorded as a liability in future accounting periods was determined using the Binomial model based on the
assumptions detailed below:
Period
2014
2015
2016
2017
2018
Total
* Amounts in Dollars converted at R$2.3426/US$1.00.
Projected IFRS2
Projected IFRS2
Fair Value expense
Fair Value expense
R$’000
7,507
7,506
7,506
4,408
2,011
US$’000*
3,205
3,204
3,204
1,882
858
28,938
12,353
72
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 73
Ocean Wilsons Holdings Limited/Annual Report 2013
10 January
2014
R$30.05
28%
10 years
10.8%
1.7%
32 Cash-settled share-based payments (continued)
Closing share price (in Real)
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Expected volatility was determined by calculating the historical volatility of the Group’s share price. The expected life used in the model has been adjusted based
on management´s best estimate for exercise restrictions and behavioural considerations.
The Group has recorded no liability in respect of this scheme at the balance sheet date.
33 Operating lease arrangements
The Group as lessee
2013
US$’000
2012
(Restated)
US$’000
Minimum lease payments under operating leases recognised in income for the year
13,966
14,128
At the balance sheet date, the minimum amount due in 2013 by the Group for future minimum lease payments under cancellable operating leases was US$12.5
million (2012: $13.4 million).
Lease commitments for land and buildings over 5 years comprise the minimum contractual lease obligations between Tecon Rio Grande and the Rio Grande port
authority the Group and the Salvador port authority. The Tecon Rio Grande concession expires in 2022 and Tecon Salvador in 2025.
Tecon Rio Grande guaranteed payments consist of two elements; a fixed rental, plus a fee per 1000 containers moved based on forecast volumes. The amount
shown in the accounts is based on the minimum volume forecast. Volumes are forecast to rise in future years. If container volumes moved through the terminal
exceed forecast volumes in any given year, additional payments will be required.
Tecon Salvador guaranteed payments consists of three elements; a fixed rental, a fee per container moved based on minimum forecast volumes and a fee per
ton of non-containerised cargo moved based on minimum forecast volumes.
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable/operating leases, which fall due
as follows:
Within one year
In the second to fifth year inclusive
After five years
2013
US$'000
25,223
90,634
108,516
224,373
2012
(Restated)
US$'000
26,698
95,380
98,055
220,133
Non-cancellable lease payments represent rental payments by the Group for the bonded warehouse used by EADI Santo Andre.
The unexpired lease term at 31 December 2013 is 4 years and 11 months and rental payments are corrected by a Brazilian general inflation index.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
73
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 74
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
34 Commitments
At 31 December 2013 the Group had entered into fifteen commitment agreements with respect to fifteen separate trading investments. These commitments
relate to capital subscription agreements entered into by Ocean Wilsons Investments Limited.
The details of these commitments are as follows:
31 March 2014
15 May 2014
03 August 2014
22 November 2014
08 December 2013
23 February 2015
31 December 2016
17 February 2017 (a)
21 May 2013
28 March 2017
30 April 2017
05 December 2017
30 March 2018
21 December 2018
31 December 2018
21 June 2019
01 January 2020
18 December 2021
01 February 2023
01 April 2023
05 June 2023
22 August 2023
Total
Year ended
Outstanding
Year ended
Outstanding
At 31 December
At 31 December
Commitment
$’000
5,000
3,000
3,000
5,000
5,000
5,000
3,000
3,000
4,994
5,000
7,500
5,000
5,000
5,000
4,650
5,000
4,500
5,000
5,000
5,000
3,200
5,000
2013
US$’000
1,700
68
810
1,175
1,356
949
271
1,652
267
4,884
5,226
394
914
623
739
3,000
4,500
3,544
1,000
3,824
3,048
4,607
2012
US$’000
2,100
68
1,410
1,550
2,274
1,823
271
2,253
411
–
6,304
473
641
1,013
1,766
4,392
–
4,228
1,250
–
–
–
101,844
44,551
32,227
(a) Commitment made in Euro. Total commitment €3,350,000 with amounts outstanding at 31 December 2013 €193,987 (2012: €311,086).
There may be situations when commitments may be extended by the manager of the underlying structure beyond the initial expiry date dependent upon the
terms and conditions of each individual structure.
35 Retirement benefit schemes
Defined contribution schemes
The Group operates defined contribution retirement benefit schemes for all qualifying employees of its Brazilian business. The assets of the scheme are held
separately from those of the Group in funds under the control of independent managers.
The total cost charged to income of US$1.5 million (2012: US$1.2 million) represents contributions payable to the scheme by the Group at rates specified in the
rules of the plan.
74
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 75
Ocean Wilsons Holdings Limited/Annual Report 2013
36 Related party transactions
Transactions between this company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Transactions between the group and its associates, joint ventures and others investments are disclosed below:
Joint ventures
1. Allink Transportes Internacionais Limitada
2. Consórcio de Rebocadores Barra de Coqueiros
3. Consórcio de Rebocadores Baía de São Marcos
4. Wilson Sons Ultratug and subsidiaries
Others
5. Hanseatic Asset Management
6. Gouvêa Vieira Advogados
7. CMMR Intermediacao Comercial Limitada
8. Jofran Services
Joint ventures
1. Allink Transportes Internacionais Limitada
2. Consórcio de Rebocadores Barra de Coqueiros
3. Consórcio de Rebocadores Baía de São Marcos
4. Wilson Sons Ultratug
Others
5. Hanseatic Asset Management
6. Gouvêa Vieira Advogados
7. CMMR Intermediacao Comercial Limitada
8. Jofran Services
Dividends received/
Revenue of services
Amounts paid/
Cost of services
31 December
31 December
31 December
31 December
2013
US$’000
2012
US$’000
2013
US$’000
2012
US$’000
31
313
12
36
351
108
55,687
127,411
–
–
(1,124)
–
–
–
(573)
–
–
–
–
–
–
–
–
–
(2,420)
(2,478)
(245)
(244)
(165)
(199)
(279)
(165)
Amounts owed
by related parties
Amounts owed
to related parties
31 December
31 December
31 December
31 December
2013
US$’000
–
134
2,165
20,350
–
–
–
–
2012
US$’000
1
64
2,497
–
–
–
–
–
2013
US$’000
2012
US$’000
(2)
–
–
–
–
–
–
(12,909)
(211)
(204)
–
–
–
–
–
–
1. Mr A C Baião is a shareholder and Director of Allink Transportes Internacionais Limitada. Allink Transportes Internacionais Limitada is 50% owned by the
Group and rents office space from the Group.
5. Mr W H Salomon is chairman of Hanseatic Asset Management. Fees were paid to Hanseatic Asset Management for acting as investment managers of the
Group’s investment portfolio and administration services.
6. Dr J F Gouvêa Vieira is a partner in the law firm Gouvêa Vieira Advogados. Fees were paid to Gouvêa Vieira Advogados for legal services.
7. Mr C M Marote is a shareholder and Director of CMMR Intermediacao Comercial Limitada. Fees were paid to CMMR Intermediacao Comercial Limitada for
consultancy services.
8. Mr J F Gouvêa Vieira is a Director of Jofran Services. Directors’ fees were paid to Jofran Services.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
75
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 76
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
36 Related party transactions (continued)
Remuneration of key management personnel
The remuneration of the executive directors and other key management of the Group, is set out below in aggregate for the categories specified in IAS 24 Related
Party Disclosures.
Short-term employee benefits
Other long-term employee benefits
Post-employment benefits
Share-based payment
37 Financial instruments
Capital risk management
Year ended
Year ended
2013
US$'000
9,265
1,807
1,541
(1,430)
11,183
2012
(Restated)
US$'000
9,013
2,316
1,450
2,262
15,041
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital structure of the Group consists of debt,
which includes the borrowings disclosed in note 22, cash and cash equivalents and equity attributable to equity holders of the parent comprising issued capital,
reserves and retained earnings and the consolidated statement of changes in equity.
The Group borrows to fund capital projects and looks to cash flow from these projects to meet repayments. Working capital is funded through cash generated by
operating revenues.
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.
Significant accounting policies
Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income
and expense are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.
Categories of financial instruments
Financial assets
Designated as fair value through profit or loss
Receivables (including cash and cash equivalents and other non-current assets)
Financial liabilities
Financial instruments classified as amortised cost
Financial instruments classified as cash flow hedge (Derivatives)
Financial risk management objectives
Year ended
Year ended
Year ended
2013
US$’000
244,969
312,033
2012
(Restated)
US$’000
221,582
371,060
2011
(Restated)
US$’000
226,797
325,828
(502,233)
(521,698)
(445,613)
(1,240)
–
–
The Group’s Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets and manages the
financial risks relating to the operations of the Group through internal reports. The primary objective is to keep a minimum exposure to those risks by using
financial instruments and by assessing and controlling the credit and liquidity risks according to the rules and procedures established by management. These
risks include market risk, (including currency risk, interest rate risk and price risk) credit risk and liquidity risk.
The Group may use derivative financial instruments to hedge these risk exposures, with Board approval. The Group does not enter into trading financial
instruments, including derivative financial instruments for speculative purposes.
76
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 77
Ocean Wilsons Holdings Limited/Annual Report 2013
37 Financial instruments (continued)
Credit risk
The Group’s principal financial assets are cash, trade and other receivables and trading investments. The Group’s credit risk is primarily attributable to its bank
balances, trade receivables and investments. The amounts presented as receivables in the balance sheet are net of allowances for doubtful receivables as outlined
above.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The credit
risk on investments held for trading is limited because the counterparties with whom the Group transacts are regulated institutions or banks with high credit
ratings. The company’s appointed investment manager, Hanseatic Asset Management LBG, evaluates the credit risk on trading investments prior to and during
the investment period.
In addition, the Company invests in Limited Partnerships and other similar investment vehicles. The level of credit risk associated with such investments is
dependent upon the terms and conditions and the management of the investment structures. The board reviews all investments at its regular meetings from
reports prepared by the company's investment managers
The Group has no significant concentration of credit risk. Ongoing credit evaluation is performed on the financial condition of accounts receivable.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
Foreign currency risk management
The Group undertakes certain transactions denominated or linked to foreign currencies and therefore exposures to exchange rate fluctuations arise. The Group
operates principally in Brazil with a substantial proportion of the Group’s revenue, expenses, assets and liabilities denominated in the Real. Due to the cost of
hedging the Real, the Group does not normally hedge its net exposure to the Brazilian Real, as the Board does not consider it economically viable.
Cash flows from investments in fixed assets are denominated in Brazilian Real and US Dollars. These investments are subject to currency fluctuations between the
time that price of goods or services are settled and the actual payment date. The resources and their application are monitored with purpose of matching the
currency cash flows and due dates.
The Group has contracted US Dollar-denominated and Brazilian Real-denominated debt, and the cash and cash equivalents balances are also US Dollar-
denominated and Brazilian Real-denominated.
In general terms, for operating cash flows, the Group seeks to neutralize the currency risk by matching assets (receivables) and liabilities (payments). Furthermore,
the Group seeks to generate an operating cash surplus in the same currency in which the debt service of each business is denominated.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
Real
Sterling
Euro
Yen
Singapore dollar
Liabilities
(Restated)
2012
US$’000
2013
US$’000
(Restated)
2111
US$’000
2013
US$’000
Assets
(Restated)
2012
US$’000
168,913
236,867
168,323
262,387
368,524
39
–
–
–
108
446
–
–
–
–
––
–
168,952
236,975
168,769
18,573
5,854
4,995
291,809
16,108
4,509
–
11,232
400,373
(Restated)
2011
US$’000
303,828
27,279
3,355
3,887
2,183
340,532
77
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 78
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
37 Financial instruments (continued)
Foreign currency sensitivity analysis
The Group is primarily exposed to unfavourable movements in the Brazilian Real on its Brazilian liabilities held by US$ functional currency entities.
The sensitivity analysis presented in the following table simulates how movements in the exchange rate may impact the Group. The analysis uses a baseline
scenario, represented by the carrying value of the operations, considering the exchange rate prevailing at 31 December 2013. The following table details the
Group’s sensitivity to three possible scenarios: the likely scenario (Probable) and two possible scenarios of deterioration of 25% (Possible) and 50% (Remote) in
the exchange rate. The Group uses the focus reports published by the Brazilian Central Bank (BACEN) to determine the exchange rate used in the probable
scenario which is also used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the
reasonable possible change in foreign exchange rates.
Amount
US Dollars
Result
259,404
Exchange Effects
168,913
Exchange Effects
Net Effect
Amount
US Dollars
Result
365,269
Exchange effects
236,867
Exchange effects
Net effect
Probable
scenario
31 December 2013
Exchange rates
Possible
scenario
25%
Remote
scenario
50%
R$2.500/US$1.00
R$3.125/US$1.00
R$3.750/US$1.00
Probable
scenario
(16,332)
10,635
(5,697)
Probable
scenario
Possible
scenario
(25%)
(64,946)
42,290
(22,656)
31 December 2012 – Restated
Exchange rates
Possible
scenario
25%
Remote
scenario
(50%)
(97,356)
63,394
(33,962)
Remote
scenario
50%
R$2.070/US$1.00
R$2.588/US$1.00
R$3.105/US$1.00
Probable
scenario
(4,676)
3,032
(1,644)
Probable
scenario
Possible
scenario
(25%)
(76,795)
49,799
(26,996)
1 January 2012 – Restated
Exchange rates (i)
Possible
scenario
25%
Remote
scenario
(50%)
(124,874)
80,977
(43,897)
Remote
scenario
50%
R$1.800/US$1.00
R$2.250/US$1.00
R$2.700/US$1.00
Amount
US Dollars
Result
303,828
Exchange effects
168,323
Exchange effects
Net effect
Probable
scenario
12,795
(7,088)
5,707
Possible
scenario
(25%)
(50,530)
27,994
(22,536)
Remote
scenario
(50%)
(92,746)
51,382
(41,364)
Risk
BRL
BRL
Risk
BRL
BRL
Risk
BRL
BRL
Operation
Total assets
Total liabilities
Operation
Total assets
Total liabilities
Operation
Total assets
Total liabilities
The Brazilian Real foreign currency impact is mainly attributable to the exposure of outstanding Brazilian Real receivables and payables at year end in the Group.
The Sterling currency impact is mainly attributable to the exposure of sterling denominated investments.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk, as the yearend exposure does not reflect the exposure
during the year.
78
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 79
Ocean Wilsons Holdings Limited/Annual Report 2013
37 Financial instruments (continued)
Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.
The Group holds most of its debts linked to fixed rates. Most of the Group's fixed rates loans are with the FMM (Fundo da Marinha Mercante).
Other loans exposed to floating rates are as follows:
TJLP (Brazilian Long-Term Interest Rate) for Brazilian Real-denominated funding through FINAME credit line to Port Operations and Logistics operations.
DI (Brazilian Interbank Interest Rate) for Brazilian Real-denominated funding in Logistics operations.
6-month Libor (London Interbank Offered Rate) for US Dollar-denominated funding for Port Operations.
The Brazilian Real-denominated investments yield interest rates corresponding to the DI daily fluctuation for privately-issued securities and/or “Selic-Over”
government-issued bonds. The US Dollar-denominated investments are part in time deposits, with short-term maturities.
The Group’s strategy for managing interest rate risk is to maintain a balanced portfolio of fixed and floating interest rates in order to balance both cost and
volatility. The Group may use derivative instruments to reduce cash flow interest rate attributable to interest rate volatility.
The Group has floating rate financial assets consisting of bank balances principally denominated in US Dollars and Brazilian Real that bear interest at rates based
on the banks floating interest rate.
Interest rate sensitivity analysis
The Group uses two important information sources to estimate the probable scenarios in determining interest rate scenarios, BM&F (Bolsa de Mercadorias e
Futuros) and Bloomberg. The following analysis concerns a possible fluctuation of revenue or expenses linked to the transactions and scenarios shown, without
considering their fair value. For floating rate liabilities and investments, the analysis is prepared assuming the amount of the liability outstanding or cash invested
at balance sheet date was outstanding or invested for the whole year.
Transaction
Loans
Investments
Transaction
IFC loan
Eximbank loan
Finimp loan
Investments
31 December 2013
Libor
Possible
scenario
25%
0.72%
0.42%
Possible
scenario
(25%)
107
6
18
(45)
86
Probable
scenario
0.57%
0.33%
Probable
scenario
146
13
23
(105)
77
Risk
Libor
Libor
Libor
Libor
Amount
US Dollars
73,658
11,663
9,799
46,944
Result
Interest
Interest
Interest
Income
Net Income
Remote
scenario
50%
0.86%
0.50%
Remote
scenario
(50%)
69
(1)
13
14
95
79
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 80
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
37 Financial instruments (continued)
Transaction
Investments
Transaction
Investments CDI
Risk
BRL
Probable
scenario
10.95%
Probable
scenario
Principle
US Dollars
Result
79,125
Income
2,590
31 December 2013
CDI
Possible
scenario
25%
13.69%
Possible
scenario
(25%)
5,178
Remote
scenario
50%
16.43%
Remote
scenario
(50%)
7,766
The net effect was obtained by assuming a 12 month period starting 31 December 2013 in which interest rates vary and all other variables are held constant.
Other loans have fixed interest rates and represent a total of 81.50%.
The investment rate risk mix in Brazil is 37.24% Libor, 62.76% CDI.
Transaction
Loans
Investments
Transaction
IFC loan
Eximbank loan
Finimp loan
Investments
Transaction
Investments
Risk
BRL
BRL
BRL
BRL
Amount
US Dollars
75,750
13,686
10,588
23,000
Probable
scenario
0.81%
0.48%
Result
Probable
scenario
Interest
Interest
Interest
Income
Net effect
(75)
(9)
(4)
246
158
Probable
scenario
7.09%
Probable
scenario
31 December 2012 – Restated
Libor
Possible
scenario
25%
1.01%
0.60%
Possible
scenario
(25%)
(191)
(33)
(14)
214
(24)
31 December 2012 – Restated
CDI (ii)
Possible
scenario
25%
8.86%
Possible
scenario
(25%)
1,832
Remote
scenario
50%
1.21%
0.72%
Remote
scenario
(50%)
(308)
(56)
(23)
188
(199)
Remote
scenario
50%
10.64%
Remote
scenario
(50%)
3,633
Transaction
Risk
Principle
US Dollars
Result
Investments
BRL
108,428
Income
30
The net effect was obtained by assuming a 12 month period starting 31 December 2012 in which interest rates vary and all other variables are held constant.
The investment rate mix in Brazil is 18% Libor, 82% CDI.
80
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17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 81
Ocean Wilsons Holdings Limited/Annual Report 2013
1 January 2012 – Restated
Libor (i)
Possible
scenario
25%
1.39%
0.99%
Possible
scenario
(25%)
(301)
(106)
(17)
148
(276)
1 January 2012 – Restated
CDI (ii)
Possible
scenario
25%
12.08%
Possible
scenario
(25%)
2,060
Remote
scenario
50%
1.66%
1.19%
Remote
scenario
(50%)
(410)
(137)
(22)
98
(471)
Remote
scenario
50%
14.49%
Remote
scenario
(50%)
4,911
37 Financial instruments (continued)
Transaction
Loans
Investments
Transaction
IFC loan
Eximbank loan
Finimp loan
Investments
Transaction
Investments
Risk
BRL
BRL
BRL
BRL
Amount
US Dollars
54,323
15,769
3,134
24,500
Result
Interest
Interest
Interest
Income
Net effect
Transaction
Risk
Principal
US Dollars
Result
Probable
scenario
1.11%
0.79%
Probable
scenario
(193)
(76)
(12)
199
(82)
Probable
scenario
9.66%
Probable
scenario
Investments
BRL
103,447
Income
(791)
The net effect was obtained by assuming a 12 month period starting 1 January 2012 in which interest rates vary and all other variables are held constant.
The investment rate risk mix in Brazil is 18.2% Libor, 81.8% CDI.
Investment portfolio
Interest rate changes will always impact equity prices. The level and direction of change in equity prices is subject to prevailing local and world economics as well
as market sentiment all of which are very difficult to predict with any certainty.
Derivative financial instruments
The Group may enter into derivatives contracts to manage risks arising from interest rate fluctuations. All such transactions are carried out within the guidelines
set by the Wilson Sons Limited Risk Management Committee. Generally the Group seeks to apply hedge accounting in order to manage volatility in profit or loss.
On 16 September 2013, Tecon Salvador, entered into an interest rate swap agreement with a notional amount of $74.4 million to hedge a portion of its
outstanding floating-rate debt with the IFC. This swap converts the floating interest rate liability based on the London Interbank Offered Rate, or LIBOR, into a
fixed interest rate liability and expires in March 2020.The derivatives were entered into with Santander Brasil as counterparty, whose credit rating was AAA, as of
31 December 2013, according to Standard& Poor’s Brazilian local rating scale.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
81
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 82
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
37 Financial instruments (continued)
Tecon Salvador is required to pay the counterparty a stream of fixed interest payments at rates fixed from 0.553% to 4.250%, according to the schedule
agreement, and in turn, receives variable interest payments based on 6-month LIBOR. The net receipts or payments from the swap are recorded as financial
expense.
Within one year
In the second year
In the third to fifth years (including)
After five years
Fair Value
Outflows
Inflows
Net effect
(110)
(58)
(1.118)
(46)
1.332)
–
58
34
–
92
(110)
–
(1.084)
(46)
(1.240)
(1.240)
The fair value of the swap was estimated based on the yield curve as of 31 December 2013, and represents its carrying value. As of 31 December 2013, the
interest rate swap balance in other non-current liabilities was $1.2 million; and the balance in accumulated other comprehensive income on the consolidated
balance sheets was $1.2 million. The net change in fair value of the interest rate swap recorded as other comprehensive income for the year ended 31 December
2013 was an after-tax loss of $1.2 million.
31 December 2013
Financial Assets
Interest Rates Swap
Total
Derivative Sensitivity Analysis
Notional
Amount US$
Maturity
Fair Value
US$
74,400
Mar/2020
(1,240)
(1,240)
This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The
analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. Three scenarios
were simulated: the likely scenario (Probable) and two possible scenarios of deterioration of 25% (Possible) and 50% (Remote) in the exchange rate, the risk in
buying an options contracts is that the Group pays a premium whether or not the option is exercised. In this case, in both scenarios the risk associated on
31 December 2013 is US$1.2 million.
Cash Flow Hedge
The Group applies hedge accounting for transactions in order to manage the volatility in earnings. The swap is designated and qualifies as a cash flow hedge. As
such, the swap is accounted for as an asset or a liability in the accompanying consolidated balance sheets at fair value. The effective portion of changes in fair
value of the derivative is recognised in other comprehensive income and presented as an asset revaluation reserve in equity. Any ineffective portion of changes in
fair value of the derivative is recognised immediately in the profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting operations, expires or is sold, terminated or exercised, or the designation is revoked,
the model accounting hedges (hedge accounting) is discontinued prospectively when there is no more expectation for the forecasted transaction, and then the
amount stated in the equity is reclassified to the profit or loss.
On the initial designation of the derivative as a hedging instrument, the Group formally documents the relationship between the hedging instrument and the
hedged transaction, including the risk management objective and strategy on the implementation of the hedge and the hedged risk, together with the methods
that will be used to evaluate the effectiveness of the hedging relationship. The Group is utilizing the dollar offset method to assess the effectiveness of the swap,
analysing whether the hedging instruments are highly effective in offsetting changes in fair values or cash flows of the respective hedged items attributable to the
hedged risk, and if the actual results for each coverage are within the range from 80 – 125%.
Under this methodology, the swap was deemed to be highly effective for the period ended 31 December 2013. There was no hedge ineffectiveness recognised
in profit or loss for the year ended 31 December 2013.
82
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Customer: Ocean Wilsons
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17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 83
Ocean Wilsons Holdings Limited/Annual Report 2013
37 Financial instruments (continued)
Market price sensitivity
By the nature of its activities, the Company's investments are exposed to market price fluctuations. However the portfolio as a whole does not correlate exactly to
any Stock Exchange Index as it is invested in a diversified range of markets. The investment manager and the board monitor the portfolio valuation on a regular
basis and consideration is given to hedging the portfolio against large market movements.
The sensitivity analysis below has been determined based on the exposure to market price risks at the year end and shows what the impact would be if market
prices had been 10 per cent higher or lower at the end of the financial year. The amounts below indicate an increase in profit or loss and total equity where
market prices increase by 10 per cent, assuming all other variables are constant. A fall in market prices of 10 per cent would give rise to an equal fall in profit or
loss and total equity.
Profit or loss
Total equity
Credit risk management
2013
US$’000
24,497
24,497
2012
(Restated)
US$’000
22,158
22,158
2011
(Restated)
US$’000
22,680
22,680
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group has adopted a policy
of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.
The Group’s sales policy is subordinated to the credit sales rules set by management, which seeks to mitigate any loss from customers’ delinquency.
Trade receivables consist of a large number of customers except for one large customer, which makes up 12% of revenue. Ongoing credit evaluation is
performed on the financial condition accounts receivable.
Liquidity risk management
Liquidity risk is the risk that the Group will encounter difficulty in fulfilling obligations associated with its financial liabilities that are settled with cash payments or
other financial asset. The Group's approach in managing liquidity is to ensure that the Group always has sufficient liquidity to fulfil the obligations that expire,
under normal and stress conditions, without causing unacceptable losses or risk damage to the reputation of the Group.
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets
and liabilities.
The Group uses costing based on activities to price the products and services, which assist in monitoring cash flow requirements and optimizing the return on
cash investments.
Normally, the Group ensures it has sufficient cash reserves to meet the expected operational expenses, including financial obligations. This practice excludes the
potential impact of extreme circumstances that cannot be reasonably foreseen, such as natural disasters.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
83
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 84
Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
37 Financial instruments (continued)
The following tables detail the Group's remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and
principal cash flows.
31 December 2013
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
31 December 2012 (Restated)
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
1 January 2012 (Restated)
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Fixed interest rate instruments
Weighted
average
effective
interest rate
%
–
13.61%
3.02%
3.06%
Less than
12 months
US$’000
136,130
1,547
16,354
21,646
1-5 years
US$’000
–
4,812
68,708
78,775
175,677
152,295
–
173,219
14.9%
3.18%
3.16%
1,654
13,511
21,986
1,134
3,555
64,102
76,864
210,370
145,655
–
128,999
14.9%
3.18%
3.16%
4,607
6,268
18,917
2,471
4,365
52,184
76,835
158,791
135,855
5+ years
US$’000
Total
US$’000
–
–
25,518
161,391
186,909
–
–
35,408
147,764
183,172
–
–
27,723
144,844
172,567
136,130
6,359
110,580
261,812
514,881
174,353
5,209
113,021
246,614
539,197
131,470
8,972
86,175
240,596
467,213
The Group expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
Fair value of financial instruments
The fair value of non-derivative financial assets traded on active liquid markets are determined with reference to quoted market prices. The carrying amounts of
financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair value.
The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on 31 December. Prior to 1
January 2013, the quoted market price used for financial assets held by the Company was the current bid price. From 1 January 2013 and changed its fair
valuation inputs to utilise the last traded market price financial assets.
Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into levels 1 to 3
based on the degree to which fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 Inputs for the asset that are not based on observable market data. Fair value measurements are those derived from valuation techniques that include
inputs for the assets or liability that are not based on observable data (unobservable inputs).
84
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Customer: Ocean Wilsons
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Project Title: Annual Report 2013
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17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 85
Ocean Wilsons Holdings Limited/Annual Report 2013
37 Financial instruments (continued)
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise
the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level 2.
If one of more of the significant inputs is not based on observable market data, the instrument is included in level 3.
31 December 2013
Financial assets at FVTPL
Level 1
US$’000
Level 2
US$’000
Level 3
US$’000
Total
US$’000
Non-derivative financial assets for trading
65,831
121,965
57,173
244,969
31 December 2012 (Restated)
Financial assets at FVTPL
Level 1
US$’000
Level 2
US$’000
Level 3
US$’000
Total
US$’000
Non-derivative financial assets for trading
61,445
113,185
46,952
221,582
1 January 2012 (Restated)
Financial assets at FVTPL
Level 1
US$’000
Level 2
US$’000
Level 3
US$’000
Total
US$’000
Non-derivative financial assets for trading
80,567
110,373
35,857
226,797
Valuation Process
Investments whose values are based on quoted market prices in active markets and are classified within Level I include active listed equities. The Company does
not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not considered active but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain private investments that are traded over the counter. As Level 2
investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity
and/or non-transferability, which are generally based on available market information.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently. Level 3 instruments include holdings in Limited Partnerships
and other funds. As observable prices are not available for these securities, the Company values these based on an estimate of their fair value, which is
determined as follows:
(i)
For entities that have recently begun trading, and for which detailed financial information is not available, the valuation will be determined with reference to
the original cost plus any further drawdowns Jess any distributions received. This will be adjusted by reference to more recent benchmark subscriptions and
investments which give a guide to fair value, or where there are other factors that indicate there has been a significant change in fair value.
(ii)
For more established investments, the valuation will be determined by reference to recent financial information received from the underlying entity. This
underlying information is determined in accordance with International Private Equity and Venture Capital Guidelines and is determined using methodologies
that include applying an average sector earnings multiple to operating profits, reference to the valuation of the underlying net asset base and discounted
cash flows.
Level 3 valuations are reviewed on a quarterly basis by the Company's investment manager who reports to the Board of Directors quarterly. The investment
manager considers the appropriateness of the valuation model inputs used and the basis of the techniques used to ensure they are in line with industry
standards. In selecting the most appropriate valuation model the investment manager considers historical alignment to actual market transactions.
Job No.: 17319
Customer: Ocean Wilsons
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Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
85
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Ocean Wilsons Holdings Limited/Annual Report 2013
Notes to the Accounts
37 Financial instruments (continued)
None of the Company’s investments have moved between classification levels in the year and therefore no reconciliation is necessary. Sensitivity analysis in
relation to Level 3 investments has been included in the market price risk management analysis where the Company has shown impacts to the value of
investments if markets prices had been 10 per cent higher or lower at the end of the financial year.
Reconciliation of Level 3 fair value measurements of financial assets:
Balance at 1 January
Transfer into Level 3
Total profit/(losses) in statement of comprehensive income
Purchases and drawdowns of financial commitments
Sales and repayments of capital
Balance at 31 December
2013
US$’000
46,952
–
1,643
14,256
(5,678)
57,173
2012
(Restated)
US$’000
35,857
91
(1,660)
14,042
(1,378)
46,952
38 Post-employment benefits
The Brazilian Group operates a private medical insurance scheme for its employees that requires eligible employees to pay fixed monthly contributions. Under
Brazilian law, eligible employees acquire the right to remain in the plan following retirement or termination of employment, in accordance with articles 30 and 31
of law 9.656/98, generating a post-employment commitment for the Group. Ex-employees remaining in the plan will be liable for paying the full cost of their
continued scheme membership. The future actuarial liability for the Group relates to the potential increase in plan costs resulting from additional claims due to
the expanded scheme membership.
Present value of actuarial liabilities
Actuarial assumptions
31 December
31 December
2013
US$’000
2,251
2012
US$’000
–
1 January
2012
US$’000
–
The calculation of the liability generated by the post-employment commitment involves actuarial assumptions. The following are the principal actuarial
assumptions at the reporting date:
Economic and Financial Assumptions
Annual interest rate
Estimated inflation rate in the long-term
Aging Factor
Medical cost trend rate
31 December
2013
12.38%
5.50%
2.50% a.a
2.50% a.a
86
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Customer: Ocean Wilsons
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Project Title: Annual Report 2013
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17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 87
Ocean Wilsons Holdings Limited/Annual Report 2013
31 December
2013
22%
AT-2000
IAPB-1957
Álvaro Vindas
100% at 62
23%
90% of the participants
Man 4 years older than the woman
Composition of the family group
38 Post-employment benefits (continued)
Biometric and Demographic Assumptions
Employee turnover
Mortality table
Mortality table for disabled
Disability table
Retirement Age
Employees who opt to keep the health plan after retirement and termination
Family composition before retirement
Probability of marriage
Age difference for active participants
Family composition after retirement
Sensitivity analysis
The present value of future liabilities may change materially depending on market conditions. Fair values are calculated based on rates that are linked to
government bonds available in the Brazilian bond market (government bonds in the long-term – NTN-B). Brazil is an emerging market with greater interest rate
volatility, which may cause volatility in the fair value of the liability recorded in the balance sheet.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
87
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 88
Ocean Wilsons Holdings Limited/Annual Report 2013
Statistical Statement
2009 – 2013 (in US$’000)
Closing rates of exchange – R$ to US$
Income Statement
Group revenue
Raw materials and consumables used
Employee benefits expense
Depreciation & amortisation expense
Other operating expenses
Profit/(loss) on disposal of property, plant and equipment
Group operating profit
Profit realised on formation of joint venture
Share of results of joint venture
Investment revenue
Other gains and losses
Finance costs
Foreign exchange losses on monetary items
Profit before tax
Income tax expense
Profit for the year
Profit for the period attributable to:
Equity holders of parent
Non-controlling interests
Group operating profit
Less share based payment (credit)/expense
Adjusted group operating profit
Balance Sheet
Net assets
Brazilian interests
Investments held for trading
Other net assets
Attributable net assets – per share
Brazilian interests – book amount
Other assets – book and market amount
Key Statistics
Earnings per share
Cash dividends per share paid
Mid-market quotation at end of period
Mid-market quotation at end of period in US Dollars
Year to
Year to
31 December
Year to
Year to
Year to
31 December
2012
31 December
31 December
31 December
2013
US$’000
2.34
(Restated)
US$’000
2.04
2011
US$’000
1.88
2010
US$’000
1.67
2009
US$’000
1.74
660,106
(94,330)
610,354
(72,207)
698,044
(82,889)
575,551
(67,222)
477,888
(49,570)
(209,459)
(223,031)
(239,543)
(205,486)
(162,367)
(58,674)
(188,569)
9,966
119,040
–
2,392
17,838
13,684
(21,863)
(30,589)
100,502
(42,216)
58,286
37,873
20,413
58,286
119,040
(1,430)
117,610
(55,897)
(173,951)
(534)
84,734
–
689
18,255
16,394
(9,948)
(11,572)
98,552
(33,671)
64,881
41,264
23,617
64,881
84,734
2,262
86,996
(59,479)
(221,159)
1,959
96,933
–
–
10,203
(27,818)
(20,741)
–
58,577
(51,615)
6,962
(8,639)
15,601
6,962
96,933
(7,880)
89,053
(42,923)
(32,066)
(192,090)
(155,042)
90
67,920
20,407
–
17,982
22,460
(11,611)
–
117,158
(30,564)
86,594
56,879
29,715
86,594
67,920
16,545
84,465
470
79,313
–
–
35,613
34,305
(9,411)
–
139,820
(31,228)
108,592
70,200
38,392
108,592
79,313
17,174
96,487
US$’000
US$’000
US$’000
US$’000
US$’000
476,626
244,969
48,480
770,075
1,348c
830c
2,178c
107.1
42c
1042p
1,725c
461,479
221,582
60,507
743,568
1305c
798c
2103c
116.7c
33.0c
970p
1512c
426,760
226,797
54,650
708,207
1207c
796c
2003c
(24.4c)
42.0c
1065p
1650c
389,744
260,544
78,932
729,220
960c
1102c
2062c
160.8c
42.0c
1382p
2155c
297,835
238,662
136,748
673,245
842c
1062c
1904c
198.5c
30.0c
865p
1378c
1.
Share based payment expenses are included in employee benefits expense and arise from the Ocean Wilsons Holdings Limited and Wilson Sons Limited cash settled phantom accounting date. Movements
in the Wilsons Sons Limited can result in significant movements in the fair value of the two schemes significantly impacting operating profit in the period and causing significant fluctuations in earnings.
2.
The year to 31 December 2009, 31 December 2010 and 31 December 2011 have not been restated as a result of adopting new accounting standards in 2013.
88
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Customer: Ocean Wilsons
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17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 89
Notice of Annual General Meeting
Ocean Wilsons Holdings Limited/Annual Report 2013
Notice is hereby given that the 21st Annual General Meeting of the Company will be held at the offices of Conyers Dill & Pearman Limited, Clarendon House,
2 Church Street, Hamilton HM 11, Bermuda on 3 June 2014 at 10:00 am for the following purposes.
1
2
3
4
5
To receive and, if approved, adopt the Directors’ Report and Accounts for the year ended 31 December 2013.
To determine the maximum number of Directors for the ensuing year as eight and authorise the Board of Directors to elect or appoint on the Members’
behalf a person or persons to act as additional Directors up to such maximum number to serve until the conclusion of the next Annual General Meeting.
To re-elect Mr K Middleton as a Director.
To reappoint KPMG LLP as the Auditor and authorise the Directors to fix the remuneration of the Auditor.
To amend Bye-law 23 of the Bye-laws of the Company to increase the maximum aggregate fees to be paid yearly to Directors (other than Directors
appointed to an executive office) from US$600,000 to US$700,000.
6
Ratification and confirmation of all and any actions taken by the Board of Directors and the persons entrusted with Company’s management in the year
ended 31 December 2013.
By Order of the Board
Malcolm Mitchell
Secretary
Clarendon House, Church Street, Hamilton HM 11, Bermuda
28 March 2014
Any member of the Company entitled to attend and vote at the meeting may appoint one or more proxies to attend and vote instead of him.
A proxy need not be a member of the Company.
Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
89
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Ocean Wilsons Holdings Limited/Annual Report 2013
90
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17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 10:44 Page 91
Ocean Wilsons Holdings Limited/Annual Report 2013
Form of Proxy
*I/We
*of
*of
being a Member of Ocean Wilsons Holdings Limited, hereby appoint Mr J F Gouvêa Vieira, or failing him Mr W H Salomon both Directors of the Company.
Or
as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the company to be held on 3 June 2014 and at any adjournment
thereof. The proxy will vote on the Resolutions as indicated opposite.
For
Against
Withheld
1 To receive and, if approved, adopt the Directors’ Report and Accounts for the year ended
31 December 2013.
2 To determine the maximum number of Directors for the ensuing year as eight and authorise the
Board of Directors to elect or appoint on the Members’ behalf a person or persons to act as
additional Directors up to such maximum number to serve until the conclusion of the next
Annual General Meeting.
3 To re-elect Mr K Middleton as a Director.
4 To reappoint KPMG LLP as the Auditor and authorise the Directors to fix the remuneration
of the Auditor.
5 To amend Bye-law 23 of the Bye-laws of the Company to increase the maximum aggregate
fees to be paid yearly to Directors (other than Directors appointed to an executive office)
from US$600,000 to US$700,000.
6 Ratification and confirmation of all and any actions taken by the Board of Directors and the
persons entrusted with Company’s management in the year ended 31 December 2013.
Signature
Notes
Dated
2014
1
2
3
4
5
If any other proxy is preferred, delete the names inserted above and add the name of the proxy whom you wish to appoint, and initial the alteration.
Please indicate by a cross in the appropriate box how you wish your proxy to vote. If no indication is given your proxy will abstain or vote as he/she thinks fit.
To be valid, the proxy should be deposited at the Transfer Agents of the Company, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, no less than 48 hours before the
time for the Meeting.
In the case of a corporation, this proxy must be under its Common Seal or under that of an Officer or Attorney duly authorised in writing.
In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose
seniority shall be determined by the order in which the names stand in the Register of Members, in respect of the joint holding.
*
Please insert your full name and address in BLOCK CAPITALS.
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Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 pp31-92_17319 Ocean Wilsons R&A 2013 pp31-92 16/04/2014 19:34 Page 92
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34 Beckenham Road
BECKENHAM
BR3 4ZF
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Job No.: 17319
Customer: Ocean Wilsons
Proof Event: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600
17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE_17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE 16/04/2014 10:40 Page 2
Contents
1 Ocean Wilsons Holdings Limited
2 Chairman’s Statement
6 Financial Review
12 Investment Portfolio
13 Investment Managers Report
20 Directors and Advisers
21 Report of the Directors
28 Independent Auditors’ Report
29 Consolidated Statement of Comprehensive Income
30 Consolidated Balance Sheet
31 Consolidated Statement of Changes in Equity
32 Consolidated Cash Flow Statement
33 Notes to the Accounts
86 Statistical Statement 2008 – 2012
87 Notice of Annual General Meeting
89 Form of Proxy
Printed by Park Communications on FSC certified paper.
Park is a CarbonNeutral® company and its Environmental Management System is certified to ISO 14001.
This document is printed on Chorus Silk, which can be disposed of by recycling, incineration for energy recovery or is biodegradable.
The mill which makes chorus, sources 90% of its pulp fibre from within a 200km radius of the mill, reducing the carbon footprint for production.
Job No.: 17319
Customer Ocean Wilsons
Proof: 5
Project Title Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T 020 7055 6500 F 020 7055 6600
17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE_17319 Ocean Wilsons R&A 2013 Cover + 7mm SPINE 16/04/2014 10:39 Page 1
Ocean Wilsons Holdings Limited
Annual Report 2013
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Job No.: 17319
Customer: Ocean Wilsons
Proof: 8
Project Title: Annual Report 2013
Park Communications Ltd Alpine Way London E6 6LA
T: 020 7055 6500 F: 020 7055 6600