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About Ocean Wilsons Holdings Limited
Ocean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) is a Bermuda
investment holding company which, through its subsidiaries, holds a portfolio of
international investments and operates a maritime services company in Brazil. The
Company is listed on both the London Stock Exchange and the Bermuda Stock
Exchange.
Principal Activities
The Company’s principal activities are the management of a diverse global
investment portfolio and the provision of maritime and logistics services in Brazil.
Ocean Wilsons has two operating subsidiaries: Ocean Wilsons (Investments)
Limited (“OWIL”) and Wilson Sons Holdings Brasil S.A. (“Wilson Sons”) (together
with the Company and their subsidiaries, the “Group”).
The Company owns 57% of Wilson Sons which is fully consolidated in the financial
statements with a 43% non-controlling interest. Wilson Sons is one of the largest
providers of maritime services in Brazil with activities including towage, container
terminals, offshore oil and gas support services, small vessel construction, logistics
and ship agency.
Objective
The Company’s objective is to focus on long-term value creation through both the
investment portfolio and the investment in Wilson Sons. This longer-term view
directs an OWIL investment strategy of a balanced thematic portfolio of funds
leveraging our long-standing investment market relationships and through detailed
insights and analysis. The Wilson Sons strategy focuses on providing best in class
or innovative solutions in a rapidly growing maritime logistics market.
Ocean Wilsons Holdings Limited - Annual Report 2022 Contents
02 DATA
HIGHLIGHTS
05 SECTION ONE
STRATEGIC REPORT
06
08
12
14
Chair’s Statement
Business Review
Financial Report
Risk Management
17 SECTION TWO
GOVERNANCE REPORT
18
24
26
28
31
33
Report of the Directors
Nomination Committee Report
Remuneration and Management Oversight Committee
Report
Audit and Risk Committee Report
Corporate and Social Responsibility
Directors’ Responsibility
35 SECTION THREE
TASK FORCE ON CLIMATE RELATED FINANCIAL
DISCLOSURES
41
SECTION FOUR
CONSOLIDATED FINANCIAL STATEMENTS
42
50
51
52
53
54
96
Independent Auditor’s Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flow
Notes to the Consolidated Financial Statements
Statistical Statement (Unaudited)
97 SECTION FIVE
SHAREHOLDER INFORMATION
98
99
100
Directory
Notice of Annual General Meeting
Form of Proxy
2022 Data Highlights
Key Data
AT 31 DECEMBER
IN US$ MILLIONS
Revenue
Operating Profit
Profit after tax
$11.5
2021: 82.5
Change: -86.1%
Net assets
$754.1
2021: 783.7
Change: -3.8%
$440.1
2021: 396.4
Change: +11.0%
$112.1
2021: 97.0
Change: +15.6%
Investment portfolio net
return
Investment portfolio
assets
$(51.0)
2021: 44.5
Change: ($95.5)
$293.8
2021: 351.8
Change: ($58.0)
Net debt
$442.3
2021: 440.9
Change: +0.3%
Net cash inflow from
operating activities
$97.1
2021: 106.1
Change: -8.5%
2
Ocean Wilsons Holdings Limited - Annual Report 2022
Share Data
AT 31 DECEMBER
Earnings per share
(USD)
(52.8) c
2021: 180.1 c
Change: (232.9) c
Implied net asset value
per share * (GBP)
18.78
2021: 15.95
Change: +17.7%
Proposed/Actual dividend
per share (USD)
Share price discount to net
asset value
50.5%
2021: 41.6%
Change: -8.9%
70 c
2021: 70 c
Change: -
Share price
(GBP)
9.30
2021: 9.32
Change: -0.2%
* net asset value per share of Ocean Wilsons based on the market value of each operating subsidiary
3
4
SECTION TWOOcean Wilsons Holdings Limited - Annual Report 2022 SECTION ONE
Strategic
Report
5
The Chair’s Statement
I am delighted to report that, in spite of a challenging 2022,
the business has navigated the year with confidence and
delivered both strong operational results and investment
returns that are respectable compared to benchmarks.
Elevated risks and uncertainties with respect to the supply
chain challenges and the impacts of the sanctions on
shipping markets, coupled with inflation and the effects of
the fears of recession on global financial markets all had
a dampening effect. Notwithstanding these headwinds,
the Group performed particularly well in our maritime
operations, and our defensive positions minimized losses in
the investment portfolio against index comparatives.
Our investment portfolio was, of course, not immune to the
global market volatility spurred by inflationary fears and
geopolitical instability. However, the portfolio loss of 13.8%
compared favourably to a notional balanced portfolio of
global equities and government bonds, which fell by 18.2%
for the year. In the most challenging investment year in a
decade, it is important to remember that the fundamental
tenet of our investment strategy is the long-term generation
of capital through the cycle. In addition to our equity and
diversifying fund investments, our longstanding relationships
with proven fund managers allows us to access compelling
investment opportunities not always available to others that
support our longer-term views. To reflect this, our portfolio
continues to include a substantial weighting in private equity
funds which are less correlated to equity market volatility and
have outperformed those indices by over 100% since 2014.
Wilson Sons grew revenues despite lower container volumes
as the business benefited from increases in volumes
at its towage and offshore support base divisions. This
rebalancing of product mix allowed Wilson Sons to pivot its
operations and to harden pricing in the towage sector, fill
empty capacity at the offshore support bases and improve
margins to maximize profitability in the container terminals.
Results Overview
At the close of markets on 31 December 2022, the Wilson
Sons’ share price was R$10.81 (US$2.05), resulting in a market
value for the Ocean Wilsons holding of 248,644,000 shares
(57% of Wilson Sons) of US$509.7 million which is equivalent
to US$14.41 (£11.91) per Ocean Wilsons share. This together
with the value of the investment portfolio at 31 December
2022 of US$8.29 results in an implied net asset value per
Ocean Wilsons Holdings Limited share of US$22.69 (£18.78).
The Ocean Wilsons Holdings Limited share price was £9.30
at 31 December 2022.
Earnings per share for the year was a loss of US 52.8 cents
compared with a profit of US 180.1 cents in 2021.
The Financial Report provides further details in relation to
the performance of the Group.
Our Environmental Social and Governance
(ESG) Practices
The Board is committed to driving and implementing
responsible investing policies and operating practices for the
Group. Ocean Wilsons’ ESG practices and related strategy
continued to receive close attention at our Board meetings
over the past year.
The investment portfolio is managed by the investment
manager, Hanseatic Asset Management LBG
(“Hansa
Capital”). During the year, Hansa Capital became a signatory
to the internationally recognised United Nations’ Principles
for Responsible Investment in line with the Board’s strategy
to further its ESG commitment within its subsidiaries. While
the Company does not have a specific ESG policy to exclude
investments in companies or sectors, new investments
which the Board believes will further the Company’s long-
term growth objectives are considered with an ESG lens in
addition to other factors. Our Investment Manager follows a
rigorous onboarding process for any new investments which
include a review of the funds’ ESG practices and philosophies.
On the Board’s recent visit to our operations in Brazil, we
were able to witness first-hand Wilson Sons’ continued
commitment to its corporate culture that drives innovation,
sustainability, social and diversity initiatives and strong
governance practices. Part of Wilson Sons’ criteria when
considering expansion and capital investments is the
improvement of the Company’s impact on the environment
and climate, opportunities to improve employee engagement
and to ensure its governance procedures are effective. For
6
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION ONE - Strategic Report example, Wilson Sons recently launched the first two of
six new tugs whose design reduces carbon emissions and
have recently moved into new office space which is smaller
and more energy efficient. Employees are encouraged
to participate in corporate innovation think tanks and
are rewarded when their ideas are implemented through
donations to charities of their choice. These are just a few
examples of the strong sense of commitment to being a
better corporate citizen to all its stakeholders that embodies
the corporate culture at Wilson Sons.
Further details of the Company’s ESG practices and our TCFD
disclosures are presented on page 35.
The Board
I would like to take the opportunity to recognise that after 23
years as the Chair of Ocean Wilsons, José Francisco Gouvêa
Vieira retired at the Annual General Meeting held in May 2022.
On behalf of the Board and the shareholders, I would like to
say thank you for his leadership and many contributions. We
continue to benefit from his knowledge of Brazilian markets
as he maintains his directorship on the Wilson Sons Board.
We wish him well in his future endeavours.
Outlook
The first quarter of 2023, in terms of uncertainty, is
reminiscent of the first quarter of 2022, which saw the
Russian invasion of Ukraine and a commensurate change
in the prevailing world order regarding supply chains, food
security and armed conflict; 2023 has already been jolted
by the effect on the US and global banking sectors from
the demise of Silicon Valley Bank and Signature Bank and
the current uncertainty around Credit Suisse and possible
others. There is much debate as to the mid-term impact
of this on financial markets, but what is clear is that
there continues to be little expectation of predictability.
Our outlook for 2023, in terms of our investment portfolio,
is that there are new opportunities with inflation beginning
to decline, interest rates likely nearing their peak, some
greens shoots of growth, albeit slow, lower valuations and
an expectation that geo-political risks will continue to
be a factor for the longer term. In anticipation of this, we
broadened the investment portfolio by adding more exposure
to value strategies to balance and complement our quality
and growth holdings. The key investment objective for the
portfolio remains unchanged; generate real returns through
long-term capital growth rather than overly responding to
short-term moves in equity markets.
We expect Wilson Sons to continue to leverage its strong
market position in Brazil and seek opportunities to expand its
maritime services and grow market share. Market consensus
is for an easing of the constraints on the global shipping
industry caused by the container shortages and supply chain
interruptions in recent years. The Wilson Sons’ management
team will continue to drive results from its towage and
offshore support bases to offset challenges in the container
terminals sector. Fundamental to the continued success of
Wilson Sons is their commitment to innovation which steers
investment towards new technologies that promote revenue
growth, sustainability and operating efficiency.
There are choppy waters ahead in the global economy,
however the experience of 2022 has demonstrated that
there are always navigation opportunities to be found and the
Board believes that both our divisions are well placed to seek
them out.
Caroline Foulger
Chair
23 March 2023
7
Business Review
Investment Manager’s Report
Market Backdrop
After a highly volatile year, the MSCI ACWI + FM, a key
benchmark index, finished down 18.4% with most equity
markets across the world declining. It was a similar story
in bond markets with the Bloomberg Global Treasury index
down 17.5%. The start of the year was fraught with concerns
about growing inflation and increasing interest rates before
Russia’s invasion of Ukraine dominated the news and
impacted global prices of energy and commodities. These
worries over inflation, interest rates and commodity prices
eased slowly through the year, leading to stronger market
performance in the last quarter.
Cumulative Portfolio Returns
OWIL
OWIL (Net)*
Performance
Benchmark**
2022
2021
3 Years
p.a.
5 Years
p.a.
-13.8%
16.1%
3.9%
4.3%
-14.7% 14.5%
2.7%
3.1%
9.5% 10.0%
7.9%
6.8%
MSCI ACWI + FM NR US$
-18.4% 18.5%
4.0%
5.2%
Bloomberg Global
Treasury TR US$
(Unhedged)
MSCI Emerging Markets
NR US$
-17.5% -6.6% -5.5% -2.4%
-20.1% -2.5% -2.7%
-1.4%
* Net of management and performance fees. No performance
fees were earned in 2022.
** The OWIL Performance Benchmark is an absolute benchmark
of US CPI Urban Consumers NSA +3% p.a.
Portfolio Commentary
The investment portfolio declined by 13.8% over the year in
contrast to a comparable portfolio represented by a 60:40
composite of the MSCI ACWI + FM index and the Bloomberg
Global Treasury which fell by 18.2%. The portfolio’s absolute
benchmark (US CPI Urban Consumers NSA + 3%), which is
inflation based, returned +9.5%, boosted by rising inflation.
Within the public market equity investments, the MSCI North
American Net Return USD Index declined by 19.5% and the
MSCI Europe Net Return USD Index declined by 15.1%. Long
duration sectors, such as technology, which dominates the
US market, were hit hard by concerns over rising interest
rates while more traditional industries, such as energy,
commodities and utilities, benefited. The market rotation
away from growth stocks towards value stocks drove the
decision to add Beutal Goodman US Value and Schroders
ISF Global Recovery to the portfolio with both performing
positively, returning 1.7% and 13.7%, respectively. Our largest
position, Findlay Park American, declined 21.5% leaving it
slightly behind the US index. Several thematic investments
were more resilient, in terms of the market environment, with
energy and commodities gaining 24.0% and declining 6.1%,
respectively. A new position initiated in Polar Capital Global
Insurance gained 12.9%. Our health care holdings were more
mixed with Worldwide Healthcare Trust down 18.9% while RA
Capital Healthcare fared relatively better, declining 10.5%.
The portfolio’s private market investments were more
resilient with many still seeing their value increasing and
returning significant capital to investors. While there is often
a time lag between public and private markets, several of
our private investments in Europe, healthcare and venture
continue to add value to their portfolios and be able to achieve
strong exits of their portfolio companies. Additionally, many
of our North American funds are now able to purchase assets
at far more attractive prices.
Those of our investments that are designed to be less
correlated to equity markets had a particularly strong
year. The non-directional hedge funds, MKP Opportunity
(+8.9%), Hudson Bay (+3.2%) and Keynes Dynamic Beta
(+10.2%) all finished the year with a positive return as
did the trend-following CTA funds, GAM Systematic Core
Macro and Schroder GAIA BlueTrend. Our investment in
BioPharma Credit, a healthcare secured lending specialist,
also performed well returning 9.9%, as did our long/short
government bond fund, Brevan Howard Absolute Return
Government Bond (+7.5%), with its ability to go short proving
crucial given the broad declines seen in world bond markets.
8
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION ONE - Strategic Report Looking Forward
Despite the rally of the past few months being underpinned
by expectations that inflation and interest rates may have
peaked and that some of the more pessimistic outlooks for
the economy are now looking to be overly cautious, we would
still advocate proceeding with some caution. We are yet to
see a weakening of the economy or corporate earnings,
many important economic indicators are still in expansionary
territory and employment figures remain very strong in many
key markets. With regards to inflation, whilst it is encouraging
that some of the more cyclical factors appear to be rolling
over, there is concern that some of the more structural
factors will be more persistent and challenging to eliminate.
This combination of stronger than expected growth together
with stickier inflation is likely to make it harder for central
banks to cut rates.
It seems likely that markets will face a period of continued
uncertainty. It is very possible that the rally seen at the end
of the year continues in the first part of 2023 with reports of
inflation coming off its highs and global growth bolstered by
China’s reopening process. In contrast, if there is a growing
realisation that inflation will be more permanent than many
believe, then markets may well experience a setback. Weaker
growth would suggest that central bank policy measures
are working, in contrast, stronger growth is likely to lead to
central banks being more aggressive, forcing rates higher,
and ultimately driving economies into a much deeper
recession. Hence, at this stage, while the building blocks are
being put in place for better market conditions, our approach
will be more circumspect with a longer-term view.
Hanseatic Asset Management LBG
March 2023
28.3%
7.1%
7.6%
3.0%
1.5%
3.0%
3.2%
3.3%
22.6%
0.6%
3.8%
7.1%
14.9%
12.2%
10.0%
45.7%
39.1%
11.5%
10.6%
10.6%
2.4%
3.1%
3.2%
4.7%
0.4%
7.1%
9.9%
10.6%
13.0%
ASSET CLASS ALLOCATION
SECTOR EXPOSURE
GEOGRAPHIC EXPOSURE
28.3% Equities
22.6% Information Technology
45.7% North America
39.1% Private Equity
12.2% Consumer Discretionary
13.0% Asia Pacific ex Japan
14.9% Hedge Funds (directional)
11.5% Health Care
10.6% Diversified
3.0%
Bonds
7.6%
Hedge Funds (non
directional)
7.1%
Cash/Liquidity Funds
10.6% Financials
10.6% Diversified
10.0% Industrials
9.9%
Developed Europe ex UK
7.1%
Cash/Liquidity Funds
4.7%
Latin America
7.1%
Cash/Liquidity Funds
3.2%
UK
3.8%
Materials
3.1%
Japan
3.3%
Communications Services
2.4%
Middle East & Africa
3.2%
Consumer Staples
0.4%
Emerging Europe
3.0%
Energy
1.5%
Real Estate
0.6%
Utilities
9
Investment Portfolio at 31 December 2022
Findlay Park American Fund
BlackRock Strategic Equity Hedge Fund
Select Equity Offshore, Ltd
NG Capital Partners II, LP
Pangaea II, LP
BA Beutel Goodman US Value Fund
Stepstone Global Partners VI, LP
Pershing Square Holdings Ltd
iShares Core MSCI Europe UCITS ETF
Schroder ISF Asian Total Return Fund
Top 10 Holdings
Polar Capital Global Insurance Fund
Silver Lake Partners IV, LP
Hudson Bay International Fund Ltd
Egerton Long - Short Fund Limited
NTAsian Discovery Fund
KKR Americas XII, LP
Navegar I, LP
Indus Japan Long Only Fund
iShares Core S&P 500 UCITS ETF
TA Associates XIII-A, LP
Top 20 Holdings
Baring Asia Private Equity Fund VII, LP
Schroder GAIA BlueTrend
Global Event Partners Ltd
Silver Lake Partners V, LP
Goodhart Partners: Hanjo Fund
GAM Star Fund PLC - Disruptive Growth
Schroder ISF Global Recovery
GAM Systematic Core Macro (Cayman) Fund
Worldwide Healthcare Trust PLC
Reverence Capital Partners Opportunities Fund II
Top 30 Holdings
Remaining Holdings
Cash and cash equivalents
TOTAL
Market Value
US$000
% of NAV
24,154
12,920
10,597
7,465
6,823
6,317
6,117
5,836
5,758
5,669
8.2
4.4
3.6
2.5
2.3
2.2
2.1
2.0
2.0
1.9
91,656
31.2
5,304
5,304
5,266
4,957
4,948
4,731
4,481
4,226
4,165
4,152
1.8
1.8
1.8
1.7
1.7
1.6
1.5
1.4
1.4
1.4
139,190
47.4
4,101
3,771
3,647
3,616
3,563
3,554
3,549
3,342
3,295
3,222
174,850
98,081
20,895
293,826
1.4
1.3
1.2
1.2
1.2
1.2
1.2
1.1
1.1
1.1
59.5
33.4
7.1
100.0
Primary Focus
US Equities - Long Only
Europe Equities - Hedge
US Equities - Long Only
Private Assets - Latin America
Private Assets - GEM
US Equities - Long Only
Private Assets - US Venture Capital
US Equities - Long Only
Europe Equities - Long Only
Asia ex-Japan Equities - Long Only
Financials Equities - Long Only
Private Assets - Global Technology
Market Neutral - Multi-Strategy
Europe/US Equities - Hedge
Asia ex-Japan Equities - Long Only
Private Assets - North America
Private Assets - Asia
Japan Equities - Long Only
US Equities - Long Only
Private Assets - Global Growth
Private Assets - Asia
Market Neutral - Multi-Strategy
Market Neutral - Event-Driven
Private Assets - Global Technology
Japan Equities - Long Only
Technology Equities - Long Only
Market Neutral - Multi-Strategy
Market Neutral - Multi-Strategy
Healthcare Equities - Long Only
Private Assets - Financials
10
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION ONE - Strategic Report Wilson Sons Management Report
The Wilson Sons 2022 Earnings Report was released on 23 March 2023 and is posted on www.wilsonsons.com.br.
In the report, Mr Fernando Salek, CEO of Wilson Sons, said:
“Wilson Sons’ 2022 revenues of US$440.1 million were 11.0% higher than the prior year (2021: US$396.4 million), and EBITDA
of US$181.8 million (R$939.0 million) was 14.1% above the comparative with resilient towage and logistics results. In R$ terms,
EBITDA increased 9.3% year-over-year.
Towage results rose 4.1% with an increase in average revenue per manoeuvre and special operations. During the year, our
shipyard delivered WS Centaurus and WS Orion, the first two of a six-tugboat series with over 90 tonnes of bollard pull. Both
vessels are in operation serving the largest bulk carriers currently calling at Brazilian ports, with capacities reaching 400,000
tonnes deadweight.
Container terminal results were impacted by the global limited availability of empty containers and logistics bottlenecks
causing vessel call cancellations. However, the situation has started to improve with aggregated volumes up 16.1% year-over-
year in January 2023.
Demand for our offshore energy-linked services improved markedly as vessel turnarounds in our offshore support base division
increased 30.6% over 2021 and operating days in our non-consolidated offshore support vessel joint venture rose 20.1% year-
over-year. In the last quarter of 2022, new support-base contracts were signed with Petronas and 3R Petroleum. Under the
Petrobras support-base contract, PSVs Torda, Biguá and Fulmar also began new four-year operating contracts.
Looking back over the past two years of turmoil to global supply chains created by the pandemic we are pleased to report that
Wilson Sons performed and managed these challenges while continuing growth, ensuring the safety of our employees, and the
continuity of excellent service to our customers and trade flow partners. We continue to advance the world-class performance
of our infrastructure, maintain the safety levels of our operations, and consistently seek opportunities to leverage our market
position, the resilience of our business model and the versatility of our services to challenge and transform maritime transport
for the benefit of all our stakeholders.”
KPIs
Towage
Number of harbour manoeuvres
Offshore support bases
Number of vessel turnarounds
Number of operating days
Container terminal – aggregated Volumes
Exports – full containers
Imports – full containers
Cabotage – full containers
Inland Navigation – full containers
Transhipment – full containers
Empty containers
Total Volume
2022
2021
Change
54,865
54,389
0.9%
785
6,488
254.5
129.3
122.7
21.3
142.2
245.8
915.8
601
5,400
306.2
150.4
121.1
22.2
160.2
282.2
1,042.3
30.6%
20.1%
-16.9%
-14.0%
1.3%
-4.1%
-11.2%
-12.9%
-12.1%
11
Financial Report
Operating Profit
Finance Costs
Operating profit of US$112.1 million (2021: US$97.0 million)
was US$15.1 million better than the prior year. Operating
margin improved year over year to 25.5% (2021: 24.5%)
principally due to an 11.0% increase in revenues and lower
foreign exchange losses on monetary items.
Operating expenses increased US$31.0 million driven by
higher costs for both raw materials and employee related
costs. Raw materials and consumables used were US$9.0
million higher at US$33.0 million (2021: US$24.0 million).
Employee charges and benefits expenses were US$14.3.
million higher at US$126.3 million (2021: US$112.0 million)
although remained relatively unchanged as a percentage of
revenue at 28.7% (2021: 28.3%). Other operating expenses
increased US$7.8 million to US$106.1 million (2021: US$98.3
million) driven by increases in freight charges and utilities
costs. Depreciation increased to US$62.0 million (2021:
US$58.7 million) due to the planned increases in capital
spending during the year.
Revenue from Maritime Services
Revenue for the year increased by 11.0% to US$440.1
million
(2021: US$396.4 million) attributed to higher
towage manoeuvres, growth in the offshore support bases
contracts, warehousing and ship agency services. Harbour
manoeuvre revenues increased 12.8% to US$201.4 million
(2021: US$178.6 million) and the offshore support bases
revenue increased 47.2% to US$10.6 million (2021: US$7.2
million) with the start of new contracts during the year.
Returns on the Investment Portfolio
Returns on the investment portfolio were a loss of US$47.9
million (2021: gain of US$49.5 million) and comprised realised
profits on the disposal of financial assets of US$24.3million
(2021: US$11.9 million), net
income from underlying
investments of US$11.8 million (2021: US$3.8 million) and
unrealised losses of US$80.0 million (2021: unrealised gains
of US$33.9 million). Additionally, the only Russia focused
investment was written off during the year for a loss of
US$4.1 million.
Other Investment Income
Other investment income for the year increased US$4.3
million to US$8.4 million (2021: US$4.1 million). Increased
interest on bank deposits and higher other interest income
were the contributing factors.
Finance costs for the year at US$34.5 million were US$4.3
million higher than the prior year (2021: US$30.2 million)
due to interest on lease liabilities and interest on bank loans
increasing.
Exchange Rates
The Group reports in USD and has revenues, costs, assets
and liabilities in both BRL and USD. Therefore, movements
in the USD/BRL exchange rate influence the Group’s results
either positively or negatively from year to year. During 2022
the BRL appreciated 6.5% against the USD from R$5.58 at
1 January 2022 to R$5.22 at the year end. In 2021 the BRL
depreciated 7.1% against the USD from R$5.20 at 1 January
2021 to R$5.57 at the year end. The foreign exchange gains
on monetary items were US$1.6 million in 2022, compared to
a loss of US$3.1 million in 2021.
Profit Before Tax
Profit before tax for the year decreased US$72.3 million to
US$38.1 million compared to US$110.4 million in 2021. The
decline in profit is primarily due to the unrealised losses in
valuation of the investment portfolio which contributed
negative returns of US$47.9 million compared to a positive
return of $49.5 million in the prior year in common with
macro trends globally.
The tax charge for the year at US$26.7 million was US$1.2
million lower than prior year (2021: US$27.9 million). The
Company is taxed on its maritime services operations. This
represents an effective tax rate for the year of 29% (2021:
40%) for maritime services. A more detailed breakdown of
taxation reconciling the effective tax rate is provided in note
9 to the consolidated financial statements.
Loss/Profit for the year
The loss for the year attributable to the equity holders of the
Company is US$18.6 million (2021: US$63.7 million profit)
and the profit attributable to the non-controlling interests
is US$30.2 million (2021: US$18.8 million profit). While the
US$25.1 million increase in Wilson Sons’ profit after tax was
attributed to both the equity holders of the Company and the
non-controlling interests based on ownership, the US$47.9
million loss on the investment portfolio (2021: US$49.5
million gain) was only attributed to the equity holders of the
Company since the Company has full ownership of it.
12
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION ONE - Strategic Report Cash Flows
Wilson Sons Limited
Net cash inflow from operating activities for the period at
US$97.1 million was US$9.0 million lower than prior year
(2021: US$106.1 million). Capital expenditure for the year at
US$63.3 million was US$15.9 million higher than the prior
year (2021: US$47.4 million).
The Group drew down new bank loans of US$59.8 million (2021:
US$19.4 million) to finance capital expenditure, while making
repayments of US$49.3 million (2021: US$57.9 million).
Dividends of US$24.8 million were paid to shareholders of
Ocean Wilsons (2021: US$24.8 million).
Viability Statement
In accordance with the UK Corporate Governance Code, the
Directors have assessed the viability of the Group over a
three-year period to 31 December 2025, taking into account
the current position and the potential impact of the principal
risks and uncertainties. Based on this assessment, the
Directors confirm that they have a reasonable expectation
that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period to 31
December 2025.
Whilst the Directors have no reason to believe the Company
will not be viable over a longer period, given the uncertainties
involved in longer term forecasting and the current global
dislocation, the Directors have determined that a three-
year period to 31 December 2025 is an appropriate period
over which to provide its viability statement. The three-year
period also aligns with the rolling three-year investment
portfolio performance benchmark.
In making the assessment, the Directors have considered
a number of factors that affect the Group, including the
principal risks and mitigating factors. The Directors also
took into account that the Group has two distinctly separate
operating segments and that there is no recourse between
them.
The assessment considered that the Wilson Sons business
model has proven to be strong in the long term with a range
of businesses that have consistently demonstrated their
ability to trade positively. Operational activities are funded by
cash generated from operations while borrowings are used
to finance capital expenditure. The Wilson Sons borrowings
are generally long-term with defined repayment schedules
over different periods up to 18 years. There is no recourse
from Wilson Sons to the rest of the Group in respect of these
borrowings. Wilson Sons is not reliant on one customer:
its largest customer constituted approximately 11% of its
revenue in 2022 (2021: 11%).
Ocean Wilsons (Investments) Limited
In making the assessment for the investment portfolio, the
Board has considered matters such as the potential for
significant stock market volatility, changes in exchange rate
and a significant reduction in the liquidity of the portfolio.
The investment portfolio and cash under management at
31 December 2022 was US$293.8 million with outstanding
capital commitments of US$50.4 million and no debt. At
31 December 2022 the investment portfolio had US$20.9
million in cash and cash equivalents and daily liquidity of
$94.8 million. This available liquidity covers 188% of the
capital commitments on the remote chance that there was a
need to fund all of the commitments at one time.
The Directors’ assessment is that if severe but plausible
downside scenarios were to crystallise, many of the individual
risks disclosed would be likely to be confined to one of either
Wilson Sons or Ocean Wilsons (Investments) Limited. The
risk is to the Group’s net asset valuation rather than to the
viability of the Group.
13
Risk Management
During the year, the Board reviewed the effectiveness of the systems of risk management and internal control. As part of this
assessment the Board updated its risk appetite and developed a risk appetite statement to set the level of risk that the Board
is willing to take, or tolerate, to achieve our strategic objectives.
The Company’s risk appetite approach considers three business objectives:
•
•
•
Long-term shareholder returns – open and flexible approach to risk, actively looking for accretive return opportunities that
are consistent with maintaining a long-term diversified portfolio;
Investment access to markets and opportunities – balanced approach to risk, seeking to optimise capacity and talent
focusing on value along with pursuing reliable, long standing and sustainable relationships; and
Safety in operating environments – adverse risk approach, safety is of paramount importance.
Risk appetite is not a single fixed concept. For example, it may be higher where we are prepared to tolerate more risk to achieve
a specific outcome or aim for an enhanced return or lower where we need to reduce risk exposure to protect an asset or the
Company’s reputation. There is zero-tolerance for risk as it relates to the safety of our workforce.
The Board will continue to review and update the risk appetite statement annually to ensure it remains consistent with the
Group’s strategy and the environment in which we operate.
Ocean Wilsons 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 reviewed annually by the Audit and Risk Committee. The Board is satisfied that these processes are operating
effectively.
The principal risks and uncertainties are described below and additionally note 30 to the consolidated financial statements
provides detailed explanations of the risks associated with the Company’s financial instruments. The Audit and Risk Committee
and the Board carried out a robust assessment of the Group’s emerging and principal risks.
14
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION ONE - Strategic Report Principal and Emerging Risks
Mitigation
Market Risk
Price risk
The Group’s
investments activities
expose it to movements in equity
valuations.
As a long-term investor, short-term changes in the value of investments are part
of the investment cycle. The Group does not have any significant borrowings
or shareholder commitments that may put pressure on the Group to sell an
investment solely due to its price movements.
The investment portfolio is invested in a diversified range of asset classes and
markets, as such the Group is not overly exposed to one particular market or asset
class.
Currency risk
The Group’s
investment activities
expose it to movements in foreign
currency exchange rates.
The functional currency of the Group
is US Dollars. Our investment in Wilson
Sons has a significant exposure to the
Brazilian Real.
We do not take speculative positions in non-US Dollar denominated assets.
The Group (outside of Wilson Sons) does not have material non-US dollar
denominated liabilities.
The majority of cash and liquid assets are maintained in US Dollars.
Ocean Wilsons does not hedge its exposure to overseas subsidiaries as the
functional currency of Wilson Sons is US dollars. There is a partial natural hedge
in the underlying Wilson Sons business as a significant portion of pricing and
cashflows are linked to the US Dollar.
International trade risk
Demand for Wilson Sons services is
substantially dependent on overall
volume of Brazilian domestic and
international trade.
Wilson Sons onshore and offshore
support bases are dependent on the
Brazilian offshore oil and gas industry.
Wilson Sons is a market leader in many of its business segments – providing
diversification in the service offerings.
Wilson Sons maintains levels of capital expenditure and investment in assets and
people to be competitive and seek opportunities to drive efficiencies.
The majority of the Wilson Sons business is not exposed to oil and gas and is
well diversified. However, Wilson Sons seeks to engage in long-term contracts
to reduce volatility and assesses the value in use of these entities to ascertain if
there are any impairments.
Operational risk
Risks arising from inadequate or failed
processes, people and systems or other
external factors.
Key operational risks include reliance
on third party managers and suppliers,
process failures, fraud, reliability of
core systems and IT security issues.
During the year, the Remuneration and Management Oversight Committee
reviewed the Investment Manager’s and third-party vendor performance. The
Audit and Risk Committee reviewed the independent internal control reports for
major providers and satisfied itself with their processes and internal controls.
The Audit and Risk Committee received a presentation from Wilson Sons which
provided an overview of IT access controls, backup and security and reported that
there were no breaches during the year.
15
Principal and Emerging Risks
Mitigation
Regulatory and legal risk
ESG Compliance Risk – compliance with
ESG regulations and reaching emission
targets set.
Climate related risks
Climate change and extreme weather
events may impact our business or the
businesses of our customers.
Agricultural exports account for a
significant portion of Brazilian trade
and are particularly vulnerable to
changes in weather patterns which may
result from climate change.
Emerging risks
Our Brazilian businesses operate in
a highly regulated environment and
are subject to complex tax laws and
regulations. The Brazilian Congress
is discussing a number of tax reforms
which
include proposals to create
a 15% ordinary withholding tax on
dividends, and a 25% withholding tax
when payments are made to what it
deems to be low-tax jurisdictions.
Changing geo-political environment
and regulatory policies.
Long-term impact of Russia-Ukraine
conflict on
international trade and
pricing.
Long-term impact on China’s supply
chain
international
trade and pricing.
interruption on
OWIL’s Investment Manager became a signatory to the UN Program for
Responsible Investing in 2022.
Wilson Sons monitors and trains its employees to reduce if not eliminate injury
and improve safety in the work environment.
We invest in the communities in which we operate through charitable giving and
community service.
The Company’s Board and management includes 2 female non-executive Directors
and 1 female executive. A female Chair was appointed in May 2022. Wilson Sons
continues to improve its gender balance with 30% females in management at 31
December 2022.
The Company continues to assess, monitor and evaluate the potential impacts
resulting from climate change and extreme weather events including regulatory
risk that may result in government actions prompted by climate change that could
impact our operations.
The Company seeks opportunities to invest in technology and implement
operational efficiencies to reduce greenhouse gas emissions. The Company’s
report on carbon emissions can be found on page 32.
The Company’s TCFD report found on page 35 describes further mitigation and
approach to climate risk.
Our businesses and markets are subject to complex laws and regulations which
significantly impact how we operate. It is possible that regulations, taxes or
laws may change in the future and may increase our costs or affect the manner
in which we operate which could have an adverse effect on us. We dedicate a
significant amount of time and resources to understanding laws and regulations
and analyse the potential impacts of changes in laws or regulations on our
business operations. This is so we can react in an efficient and timely manner and
ensure compliance with laws and regulations.
Our response to this risk is to diversify portfolio assets to avoid significant
exposure to specific political risks. Investment decisions take account of suitable
risk premia in economies and financial markets most susceptible to political
intervention.
OWIL wrote off the value of its one holding in a Russian investment fund in 2022
and has no other Russian assets. OWIL monitors its holdings in funds related to
US sanctioned Chinese companies through its fund managers.
Diversity in the product mix of Wilson Sons is offsetting lower container volumes.
Investment decisions to improve operating margins through more efficient use
and allocation of resources continues.
Wilson Sons has reviewed its customer and vendor list to ensure there are no
sanctioned contacts and continue to monitor to ensure compliance.
16
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION ONE - Strategic Report SECTION TWO
Governance
Report
17
Report of the Directors
Compliance with the UK Governance Code
Board Meetings
The agenda for each scheduled Board meeting is set by
the Chair with the assistance of the Chief Operating and
Financial Officer. Agendas are structured to allow sufficient
time for discussion and debate and to ensure that the Board
covers all items it needs to be able to discharge its duties.
Conflicts of Interest
The Board has in place a procedure for the consideration of
conflicts or possible conflicts of interest including a specific
annual consideration of those resulting from significant
shareholdings. If a Director has a conflict of interest, he/
she leaves the meeting prior to discussion unless requested
to remain and leaves determination of such matters to the
other Directors. The Board ensures independent judgement
by requiring disclosure of outside interests, encouraging a
culture of openness and debate amongst Board members
and promoting independence of thought.
Regarding the Directors proposed for re-election at the
Annual General Meeting there are no service contracts
between any of them and the Company.
Directors’ Time Commitment and Training
Non-executive Directors hold
letters of appointment.
The other substantive commitments of Directors are
disclosed on page 23 and the Board is satisfied that these
commitments do not conflict with their ability to effectively
carry out their duties as Directors of the Company. The Board
ensures that Directors have sufficient time to undertake their
duties through reviewing their other directorships and by
monitoring attendance and participation at Board meetings.
The Company has a procedure in place by which Directors
can seek independent professional advice at the Company’s
expense if the need arises. The Board has full and timely
access to all relevant information to enable it to perform its
duties. The Company has directors and officer’s insurance in
place.
The Board has put
in place corporate governance
arrangements that it believes are appropriate for the
operation of the Company. The Board has considered
the principles and recommendations of the 2018 UK
Corporate Governance Code (“the Code”) issued by the
Financial Reporting Council (available on the FRC website
www.frc.org.uk). The Company complies with all applicable
elements of the Code and has done so throughout the year
and up to the date of this report.
Matters Reserved for the Board
The Board has a formal schedule of matters specifically
reserved for its approval which includes:
•
•
•
•
•
•
•
•
Determining the Company’s purpose, values and
strategy and satisfying itself that these and its culture
are aligned;
Approving significant matters relating to capital
and
acquisitions
expenditure,
consideration of significant financial matters;
disposals
and
Reviewing the Company’s overall corporate governance
arrangements;
Approving the annual and interim reports;
Approving the dividend policy and proposing any
dividend recommendations to shareholders;
Reviewing any potential conflicts of interest and, where
appropriate, approving a specific conflict of interest;
Determining the respective terms of reference,
membership and Chair of Board committees; and
Undertaking an annual evaluation of
its own
performance, that of its committees and that of
individual Directors.
The full schedule of matters reserved can be found on the
Company’s website: www.oceanwilsons.bm.
18
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report All new Directors participate in an induction program upon
joining the Board. This covers such matters as strategy,
operations and activities of the subsidiaries and corporate
governance matters. Site visits and meetings with senior
management are also arranged. Directors additionally make
periodic operational site visits during their term and are
provided with industry and regulatory updates as part of their
ongoing training.
The Company Secretary and the Chief Operating and
Financial Officer are responsible for advising the Board
on all corporate matters. Each Director has access to the
advice and services of the Company Secretary and the Chief
Operating and Financial Officer.
The Board
The Board at 31 December 2022 was comprised of five
non-executive Directors. Two Directors are assessed to
be independent under the Code: Mr Andrey Berzins and Ms
Fiona Beck; and the Board considers the Chair, Ms Caroline
Foulger, also to be independent. Ms Beck and Ms Foulger
have links under the 2018 UK Corporate Governance Code as
they serve on two other boards together as non-executive
Directors. The Board still considers Ms Foulger and Ms Beck
as independent as the Group has no business relationship
with either of these companies and both Board members
exhibit
independent thought and behaviour. A formal
assessment of this matter was performed in 2022. The Board
has appointed Mr Berzins as the senior independent Director.
In accordance with the Company’s byelaws, all Directors
retire at each Annual General Meeting and being eligible,
offer themselves for re-election until the following Annual
General Meeting.
All Directors are subject to annual re-election by shareholders.
Newly appointed Directors are subject to election at the
first Annual General Meeting following their appointment
to the Board. A Director retiring upon the expiration of a
term of office at an annual general meeting shall be eligible
for reappointment for a further term. The Board, led by the
Nomination Committee develops succession plans and
assesses Board composition.
The division of responsibilities between the Chair and the
senior independent non-executive Director have been clearly
established, set out in writing, agreed by the Board and is
available on the Company’s website.
Board and Committee Meeting Attendance
BOARD
AUDIT AND RISK
COMMITTEE
NOMINATION
COMMITTEE
REMUNERATION
AND MANAGEMENT
OVERSIGHT
COMMITTEE
Number of Scheduled Meetings
Ms Caroline Foulger (1)
Mr William Salomon
Mr Andrey Berzins
Ms Fiona Beck
Mr Christopher Townsend
Mr José Francisco Gouvêa Vieira (2)
5
4 / 5
5 / 5
5 / 5
5 / 5
5 / 5
2 / 2
6
4 / 4
-
6 / 6
6 / 6
-
-
2
1 / 1
2 / 2
2 / 2
-
-
-
2
2 / 2
-
2 / 2
2 / 2
-
-
(1)
Ms Foulger became Chair on 27 May 2022 at which time she retired from the Company’s Audit and Risk Committee. Ms Foulger did not attend the Company’s
Nomination Committee meeting at which the recommendation to appoint her as Chair was an agenda item. Ms Foulger was unable to attend one Board meeting due to
another long-standing commitment, however, Ms Foulger reviewed all Board papers for this meeting and discussed her position on the agenda items in advance of the
meeting with the Deputy Chair so that her views were represented and considered.
(2)
Mr Gouvêa Vieira retired from the Board on 26 May 2022, he was present at all Board meetings up to that date.
19
Board of Directors’ Interests
The Directors who held office at 31 December 2022 had the
following interest in the Company’s shares:
Interest
2022
2021
Mr William Salomon* Beneficial
4,659,349
4,659,349
Mr Christopher
Townsend*
Ms Caroline Foulger
(Chair)
Beneficial
4,040,000
4,040,000
Beneficial
25,000
15,000
Ms Fiona Beck
Beneficial
Mr Andrey Berzins
Beneficial
15,000
13,000
8,000
5,000
* Additional indirect interests of Mr. Salomon and Mr. Townsend in the Company are set
out in substantial shareholdings below.
Mr Salomon is Chair of Hanseatic Asset Management LBG.
Mr Townsend is a Director of Hanseatic Asset Management
LBG and director of Hansa Capital GmbH, a wholly owned
subsidiary of Hanseatic Asset Management LBG. Fees paid
by the Company to Hanseatic Asset Management LBG during
the year amounted to US$3.0 million (2021: US$3.3 million)
for acting as Investment Manager of the Group’s investment
portfolio. There is no performance fee payable to the
Investment Manager in 2022 (2021: US$1.6 million). The terms
of, and the performance of the Manager under this contract
are annually reviewed by the independent Directors.
Substantial Shareholdings
At 31 December 2022 the Company was aware of the following
holdings of its shares, in excess of 3% of the issued ordinary
share capital:
Name of holder
Hansa Investment Company
Limited
Victualia Limited Partnership
Mr Christopher Townsend
City of London Investment
Management Company
ICM Limited
Number of
shares
% Held
9,352,770
4,435,064
4,040,000
1,745,361
1,167,762
26.45
12.54
11.42
4.94
3.30
The Company has been advised that Mr Salomon has an
interest in 4,435,064 shares registered in the name of
Victualia Limited Partnership. The Company has also been
advised that Mr Salomon has an interest in 27.9% and Mr
Townsend an interest in 25.9% of the voting shares of Hansa
Investment Company Limited.
Contracts and Agreements with Substantial
Shareholders
Mr Salomon and Mr Townsend are
in the
investment management agreement with Hanseatic Asset
Management LBG. Both Mr Salomon and Mr Townsend
receive remuneration from Hanseatic Asset Management
LBG.
interested
The Board of Ocean Wilsons (Investments)
Limited
The Board of Ocean Wilsons (Investments) Limited is
currently constituted by the same Directors as the Board of
Ocean Wilsons Holdings Limited. Ms Foulger was appointed
Chair from 1 January 2021. The Board delegates authority
to run the investment portfolio held by Ocean Wilsons
(Investments) Limited to the Investment Manager, Hanseatic
Asset Management LBG within Board-approved guidelines.
The Board of Ocean Wilsons (Investments) Limited has a
formal schedule of matters specifically reserved for its
attention which include:
•
•
•
•
•
•
•
•
•
The appointment, removal and terms of the Investment
Manager agreement;
The determination of the
investment guidelines
and restrictions in conjunction with the Investment
Manager;
The approval of
benchmark;
the
investment objective and
The approval and setting of limits on any use of derivative
instruments;
The review of the performance of the Investment
Manager;
The appointment, removal and terms of the custodian of
the investment assets;
The approval and setting of borrowing limits;
The approval of the annual accounts for Ocean Wilsons
(Investments) Limited; and
The approval of any dividends.
Internal Controls
The Board is responsible for the system of internal controls
and for reviewing its effectiveness. The Company’s Audit
and Risk Committee assists the Board in monitoring the
effectiveness of our internal controls and risk management
policies. The internal controls are designed to cover material
risks to achieving the Group’s objectives and include
business, operational, financial and compliance risks. These
20
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report controls have been in operation throughout the year. The
internal controls are designed to identify, evaluate, manage
and appropriately mitigate rather than completely eliminate
risk.
The Board reviews the need for an internal audit department
annually and currently considers no internal audit function
is required based on the following considerations: Wilson
Sons has an independent audit committee and an internal
audit function and both Hanseatic Asset Management LBG,
the Investment Manager of Ocean Wilsons (Investments)
Limited, and its portfolio custodian, Lombard Odier, provide
reports on their internal controls for the Board to consider
and review in its assessment for the need of an internal audit
department. The Board also noted there is segregation of
duties between the Investment Manager and the preparation
of accounts for our investment portfolio as this is performed
by an independent professional accounting firm. Additionally,
the Wilson Sons Audit Committee reports on key matters
such as internal controls, whistleblowing, legal matters,
internal audit and IT to the Company’s Audit and Risk
Committee. No material items were reported in 2022.
The Ocean Wilsons’ employee whistle-blowing policy is
designed to enable employees of the Company to raise
concerns internally and at a high level and to disclose
information which the
individual believes may show
malpractice or impropriety.
Auditor
KPMG Audit Limited (“KPMG”) were re-appointed as the
Company’s independent auditor at the 2022 annual general
meeting. KPMG have expressed their willingness to continue
in office as the independent auditor and a resolution to
reappoint KPMG Audit Limited under the provisions of
Section 89 of the Bermuda Companies Act 1981 will be
proposed at the forthcoming Annual General Meeting.
Communications with Shareholders
The Board regularly monitors the shareholder profile of
the Company. It aims to provide shareholders with a full
understanding of the Company’s activities and performance
and reports formally to shareholders twice a year by way of
the Annual Report and Consolidated Financial Statements
and Half Year Financial Report. The Annual General Meeting
of the Company is held in Bermuda. If a significant proportion
of the votes is cast against a resolution at an Annual General
Meeting the Board will speak with significant dissenting
shareholders to understand the reasons. The Company’s
website www.oceanwilsons.bm includes the annual and
interim reports and stock exchange announcements.
Dividends
Dividends are declared and paid in US Dollars and are
currently paid annually. The Ocean Wilsons current dividend
policy is to pay a percentage of the average capital employed
in the investment portfolio determined annually by the Board
together with the Company’s dividend received from Wilson
Sons after deducting funding for the parent company costs.
The Board may review and amend the dividend policy from
time to time in consideration of future plans and other
strategic factors.
The Board is recommending a dividend of US 70 cents per
share to be paid on 15 June 2023 to shareholders of record
of the Company as of the close of business on 19 May 2023.
Shareholders will receive dividends in Sterling by reference
to the exchange rate applicable to the USD on the dividend
record date (19 May 2023) except for those shareholders who
elect to receive dividends in USD. Based on the share price at
22 March 2023 and exchange rates a dividend of US 70 cents
per share represents a dividend yield of approximately 6.4%.
Strategy, Purpose and Values
The Board is responsible for setting the Company’s purpose,
strategy and values which are annually reviewed.
Company Purpose
The Company’s purpose is to deliver enhanced long-term
value by balancing portfolio risks and avoiding the distraction
of short-term cycles with a focus on growing the business
through sustainable profit growth.
Company Strategy
The Company’s strategy is currently twofold:
We invest in a balanced thematic portfolio of funds by
leveraging our long-term relationships and through our
detailed insights and analysis.
We invest in maritime logistic services providing best in class
or innovative solutions in a rapidly growing market.
The investment portfolio strategy is to generate real returns
through
long-term capital growth, whilst emphasising
preservation of capital without undue emphasis on short-
term movements in equity markets. The investment portfolio
is invested in both publicly quoted and private (unquoted)
assets in three components:
•
Core Regional & Thematic Component – this forms the
core of the portfolio and provides global exposure mostly
through single-country and regional equity funds. The
respective weights of these at any given time reflect
the Investment Manager’s current market outlook.
Thematic funds are included to provide exposure to
growth sectors such as technology and biotechnology.
21
•
•
Private Equity Component – in line with the portfolio’s
long-term investment horizon we invest in private equity
funds. This provides access to the higher potential
investment returns available by being able to commit
capital for multiple years and also to large areas of the
economy that are not generally or easily accessible
through public markets.
Diversifying Component – as business cycles mature,
we seek to shift dynamically to those asset classes that
are likely to add portfolio protection. This component
includes a wide variety of investment strategies, with
the common thread that they all display low correlations
to broad equity markets.
Commensurate with the long-term horizon, it is expected that
the majority of investments will be concentrated in equity,
across both ‘public’ and ‘private’ markets. In most cases,
investments will be made either through collective funds
or limited partnership vehicles, working alongside expert
managers in specialised sectors or markets to access what
we believe represent the most advantageous investment
opportunities.
The Wilson Sons strategy is to grow and strengthen their
businesses while looking for new opportunities in the
maritime and transport sector, focusing on Brazil and Latin
America. Wilson Sons looks to develop its businesses by
maximising economies of scale and efficiency and improving
the quality and range of services it provides to customers.
Wilson Sons principal services are towage, container
terminals, logistics, oil and gas support terminals, shipyard
and through our joint venture, offshore support vessels.
Company Values
The Company’s core values are:
•
•
•
•
Safety – provide a safe operating environment for our
employees;
Respect – for the environment and the communities in
which we operate and the people who work for us;
Commitment – have meaningful long-term relationships
with our stakeholders; and
Ethics – to act in a truthful, fair and honest way in all our
dealings.
22
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report
Directors
Ms Caroline Foulger (Chair)
Ms Foulger is aged 62 and is a Chartered Accountant with significant company director
experience on boards of both listed and unlisted companies. Ms Foulger was appointed to
the Board in 2020. She serves as a non-executive Director for Atlas Arteria International Ltd.
and Oakley Capital Investments Limited and is a retired partner of PwC Bermuda. Ms Foulger
is a member of the Company’s Remuneration and Management Oversight Committee and
is Chair of the Company’s Nomination Committee. Ms Foulger is also the Chair of Ocean
Wilsons (Investments) Limited.
Mr William Salomon (Deputy Chair)
Mr Salomon is aged 65 and joined the Board in 1995. He is senior partner of Hansa Capital
Partners LLP. He is also a non-executive Director of Hansa Investment Company Limited
and Wilson Sons and a member of the Company’s Nomination Committee.
Mr Andrey Berzins
Mr Berzins is aged 63 and joined the Board in 2014. He is a Chartered Accountant and sits on
the Boards of several Luxembourg investment funds. Mr Berzins is the senior independent
Director, Chair of the Company’s Audit and Risk Committee and member of the Company’s
Nomination and Remuneration and Management Oversight Committees.
Ms Fiona Beck
Ms Beck is aged 57 and joined the Board in 2020. She is a Chartered Accountant and an
experienced independent Director on several listed and unlisted companies. She is the
retired President and CEO of Southern Cross Cable Network. Ms Beck is a non-executive
Director on Oakley Capital Investments Limited and IBEX Ltd and is Chair of Atlas Arteria
International Ltd. Ms Beck is a member of the Company’s Audit and Risk Committee and is
Chair of the Company’s Remuneration and Management Oversight Committee.
Mr Christopher Townsend
Mr Townsend is aged 49 and joined the Board in 2011. He is a solicitor and has an MBA from
the London Business School. He is an investment director of Hansa Capital GmbH and a non-
executive Director of Wilson Sons.
23
Nomination Committe Report
Membership
•
•
•
Ms Caroline Foulger (Chair)
Mr William Salomon
Mr Andrey Berzins
Report from the Nomination Committee Chair on the actions
taken by the Committee to discharge its duties:
Meetings
The Committee met twice during the year.
Key Roles and Responsibilities
The Nomination Committee has formal terms of reference
approved by the Board which are reviewed on an annual
basis or more often if needed. The full terms of reference
are available on the Company’s website. The principal
responsibilities of the Nomination Committee are:
•
•
•
•
•
To lead the process for the appointment of Directors,
ensure plans are in place for orderly succession to
the Board, and oversee the development of a diverse
pipeline for succession, considering the Company’s
strategic priorities;
To identify and nominate, for the approval of the Board,
candidates to fill Board and Committee vacancies as
and when they arise;
To approve Directors’ external appointments;
To lead a regular review of the Board structure, size and
composition (including skills, knowledge, diversity and
experience); and
To manage and review the results of annual Board
effectiveness evaluations.
agencies to facilitate a search. The Committee will assess
candidates against objective criteria, giving regard to the
benefits of diversity on the Board, while ensuring that the
candidates recommended for appointment will bring the
necessary skills, insight and be able to allocate sufficient time
to the Company. During 2020 and 2021 there was significant
turnover on the Board which followed this process.
During the year, Ms Caroline Foulger was appointed as the
Chair of the Board upon the retirement of Mr José Francisco
Gouvêa Vieira. The senior independent Director and Deputy
Chair conducted an internal assessment of the Board and
made the recommendation that the Board appoint Ms
Foulger. There were no other new appointments to the Board.
The Committee discussed the tenure of each of the Directors
when considering recommendations for reappointment. It
was noted that Mr Berzins will have served as Director for 9
years in June of 2023. Mr Berzins’ contributions at the Board
level and additionally, as the senior independent Director and
Chair of the Company’s Audit and Risk Committee, continue
to be valuable and strategic to the success of the Company.
With the recent refresh of the Board Chair, the Committee
believes that the Board has the appropriate mix and skills
and that it is important to maintain continuity and corporate
knowledge. As such the Committee has recommended to
the Board that Mr Berzins be reappointed as a Director and
is considered to remain independent as he does not have any
other relationship with the Company and is not part of the
Company’s executive team or operations.
The Committee also acknowledges that Mr William Salomon
and Mr Christopher Townsend are substantial shareholders of
the Company and are both Directors. The Committee reviews
all conflicts of interest on an annual basis and ensures
that the Board and its Committees apply the necessary
independent thinking and recusals on those matters that
involve a conflict.
Succession Planning
New appointments to the Board are made as required
keeping in mind the balance of skills, knowledge, experience
and diversity that currently exists on the Board. When a
decision has been made to recruit an additional Director,
the Committee will consider engaging external recruitment
Directors’ and Board Performance
Evaluations
For 2022, the Committee assessed the composition of
the Board and its performance and effectiveness, both
collectively and for individual Directors. For 2022, the review
was conducted internally using an informal approach as a
24
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report more formal questionnaire approach was taken in the prior
year. The Chair met individually with each Director and
the appraisal of the Chair was led by Mr Berzins, the senior
independent Director.
The areas covered with the individual Directors and by the
Board were the investment strategy and performance of
OWIL, the operating results and strategy of Wilson Sons
and the longer-term view on the overall strategy of the
Company. A review of the performance of the Board as a
whole was included in the evaluation process together with
an assessment of the independence of each Director and
their performance and time commitment to their duties.
The Committee concluded that the Board’s range of skills
were effective and diverse and that each Director had a
clear understanding of the underlying businesses and the
opportunities and risks that the Company faces.
Diversity Policy
The Company’s diversity policy is that the Board should be
comprised of individuals who collectively have the range
of skills needed to implement the Company’s strategy. All
appointments and reappointments will be made on merit
judged against objective criteria within the context of the
balance of skills and backgrounds that the Board requires to
implement the Company’s strategy and to function optimally
as a collective.
The Board believes that the Company and its stakeholders
benefit from a Board with diversity of skills, knowledge,
experiences, backgrounds and perspectives. Diversity also
considers age, gender, ethnicity, nationality, educational or
professional background, culture and personal styles and
perspectives.
In 2022 there were no new appointments to the Board. There
was an appointment of a new Chair from the existing Director
pool at the time of the planned retirement of the former
Chair. As part of the Board succession planning, in 2020 two
new Directors were appointed which expanded the Board’s
skills and its gender, age, nationality and cultural diversity.
Caroline Foulger
Chair of the Nomination Committee
23 March 2023
Board Statistics
5 DIRECTORS
GENDER BALANCE
Female
Male
2
3
EXECUTIVE | NON-EXECUTIVE
Executive
Non-Executive
5
TENURE
0-5 years
6-10 years
10+ years
2
2
1
INDEPENDENT | NON-INDEPENDENT
Independent
Non-Independent
(excluding Chair)
2
2
25
Remuneration and Management
Oversight Committe Report
Membership
•
•
•
Ms Fiona Beck (Chair)
Ms Caroline Foulger
Mr Andrey Berzins
Report from the Remuneration and Management Oversight
Committee Chair on the actions taken by the Committee to
discharge its duties:
Meetings
The Committee met twice during the year.
Key Roles and Responsibilities
The Remuneration and Management Oversight Committee
has formal terms of reference approved by the Board which
are reviewed on an ongoing basis. The full terms of reference
are available on the Company’s website. The principal
responsibilities of the Committee are:
•
•
•
•
To determine the policy for Ocean Wilsons’ executive
management’s remuneration and the remuneration for
the Chair and non-executive Directors;
To determine bonuses payable to executive management
under the Company’s bonus scheme;
To conduct an annual review of the
Management agreement with Hansa Capital; and
Investment
To review the performance of material third-party
service providers and other management oversight as
required.
Remuneration Policy
The Company’s remuneration policy aims to align the interests
of the executive and the Board with those of shareholders.
The overriding objective is to ensure that the Company’s
executive remuneration policy encourages, reinforces and
rewards the delivery of sustainable shareholder value. The
Remuneration and Management Oversight Committee is
responsible for setting non-executive Directors’ fees. Fees
are structured as a basic fee for Board membership and an
additional fee for each Committee Chair. Non-executive
Director fees are reviewed usually every three years. The
Committee completed an extensive fee review in 2022: as
part of this review the remuneration policy was amended
to require that all Directors purchase and hold shares in the
Company’s stock equivalent to a minimum of their annual
Director’s fee.
The Committee does not determine the policy for
remuneration or set remuneration for the Chair, executive
Directors and senior management at Wilson Sons. It also does
not review workforce remuneration and related policies or
set remuneration policy at Wilson Sons. The Board regularly
reviews oversight of Wilson Sons workforce remuneration
and related policies to ensure that incentives and rewards
are aligned with culture and are considered when setting
Wilson Sons ‘policy for executive remuneration.
Remuneration
Non-executive Directors’ fees are set within limits set in
the Company’s Articles of Association. The present limit
is US$900,000 in aggregate per annum and the approval
of shareholders in a General Meeting is required to change
this amount. Levels of remuneration for the Chair and other
non-executive Directors reflect the time commitment
and responsibilities of the role and are benchmarked
against comparable companies and considering the Board
evaluation. There are no share options or other performance
related elements. The Committee’s 2022 review of Directors’
fees supports that the current limit of Directors’ fees is
appropriate and it is not recommending any changes to
these limits. During the year ended 31 December 2022, the
Company paid Directors’ fees of US$0.7 million (2021: US$0.6
million).
The board of Wilson Sons is responsible for all remuneration
matters relating to Wilson Sons and its subsidiaries. Mr
William Salomon and Mr Christopher Townsend are directors
of Wilson Sons. These Directors received directors’ fees of
US$66,000 (2021: US$66,000) from Wilson Sons during the
year 2022 in addition to their fees as Directors of Ocean
Wilsons. Additionally, both Mr Salomon’s and Mr Townsend’s
Directors’ fees for Ocean Wilsons are reduced by 30% from
the base Directors’ fee in consideration of this. There are no
additional fees payable to Directors for the services on the
Board of Ocean Wilsons (Investments) Limited.
26
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report The table below sets out fees paid to Directors during the year.
Director
Role
JF Gouvêa Vieira
Chair until 27 May 2022
C Foulger
C Foulger
A Berzins
F Beck
Chair from 27 May 2022
Independent non-executive Director
Independent non-executive Director
Independent non-executive Director
C Townsend
Non-executive Director
W Salomon
Non-executive Director
TOTAL
* Expressed in thousands of US Dollars
2022
Committee
Chair Fee*
2022
Director
Fee*
2022
Total Fees Paid
to Directors*
2021
Total Fees Paid
to Directors*
-
-
15
15
15
-
-
45
40
107
47
116
116
91
91
608
40
107
62
131
131
91
91
653
100
-
117
117
117
80
80
611
Directors’ Shareholding Guidelines
In 2022, the Committee recommended to the Board that each
Director should own the equivalent of at least their annual
Director’s fee in Company shares. This recommendation
was accepted and all Directors were compliant with this
requirement at the year end and at the issuance of this report.
Performance of Third-Party Service
Providers
The Committee, in conjunction with the Chief Operating
and Financial Officer, carries out an annual review of the
Investment Manager’s and significant third-party service
providers’ performance.
The Investment Manager evaluation considers whether the
contractual obligations are being met and if the remuneration
structure in place remains appropriate for the Company to
meet its investment objectives, is competitive and is in the
interests of shareholders. The evaluation also considers
the quality of the team and how the Investment Manager
prioritises the Company within its client base.
its review of the
Following
Investment Manager, the
Committee concluded that the Investment Manager was
meeting its obligations under the investment management
agreement and that its fee structure was competitive
compared to
industry bench marking. Based on the
performance of the portfolio in 2022, no performance fee
was payable to the Investment Manager and as such, no
review of this was required by the Committee.
Fiona Beck
Chair of the Remuneration and Management Oversight
Committee
23 March 2023
27
Audit and Risk Committee Report
Membership
•
•
Mr Andrey Berzins (Chair)
Ms Fiona Beck
As the Company meets the requirements of a smaller
company under the UK Corporate Governance Code, the
Audit and Risk Committee is comprised of two independent
non-executive Directors.
Report from the Audit and Risk Committee Chair on the
actions taken by the Committee to discharge its duties:
Meetings
The Committee met six times during the year. The Chief
Operating and Financial Officer of Ocean Wilsons attended
each of these meetings. The Committee meets with
the external auditor without the Chief Operating and
Financial Officer present to receive feedback on the team’s
performance.
Key Roles and Responsibilities
The Audit and Risk Committee has formal terms of reference
approved by the Board which are reviewed on an ongoing
basis. The full terms of reference are available on the
Company’s website. The principal responsibilities of the
Committee are:
•
External audit
‐
‐
To make recommendations to the Board, for it
to put to the shareholders for their approval at a
general meeting, in relation to the appointment,
reappointment and removal of the external auditor
and to approve the remuneration and terms of
engagement of the external auditor.
To review and monitor the external auditor’s
independence and objectivity and the effectiveness
of the audit process, taking into consideration
relevant professional and regulatory requirements.
The independence of the external audit process
has been assessed by reviewing reports from the
external auditors describing their arrangements to
identify, report and manage any conflicts of interest.
The Board also reviews the provision of any non-audit
services provided by the external auditors and ensure
that their independence is maintained.
•
Risk management and internal controls
‐
‐
To review the adequacy of the Company’s internal
control and risk management systems.
To review the Company’s risk register and assess
the Company’s emerging and principal risks to be
reviewed annually with the Board.
•
Financial and narrative reporting
‐
To consider the need for an internal audit function.
•
Compliance and fraud
‐
review
the adequacy of
To
whistleblowing procedures and
related to
the Company’s
the policies
fraud, bribery and anti-corruption.
‐
‐
To review the integrity of the interim and full year
consolidated financial statements of the Company,
including reviewing the significant accounting
policies and judgements included in them.
To provide advice to the Board as to whether the
annual report and accounts taken as a whole is
fair, balanced and understandable and provides
information necessary for shareholders to
the
the Company’s financial position and
assess
strategy.
performance, business model and
28
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report
Financial and Narrative Reporting
During the year, the Committee reviewed the December
2021 annual report and consolidated financial statements,
the June 2022 half yearly financial report and the quarterly
updates issued in May and November 2022. As part of the
review of the December 2021 Annual Report and Consolidated
Financial Statements, the Committee received a report from
the external auditor on their audit work performed on the
Annual Report and Consolidated Financial Statements.
The Committee also assessed the 2022 annual report
and accounts taken as a whole, to be fair, balanced and
understandable and that they provide the information
necessary for shareholders to assess the performance,
strategy and business model of the Company. The Committee
determined that the key risks of misstatement in the Group’s
2022 financial statements relate to:
•
•
Provisions for tax, labour and civil cases – In the normal
course of its operations in Brazil, Wilson Sons is
exposed to numerous local legal claims. The reporting
risk relates to the completeness of claims recorded
and the estimation of the provisions held against these
exposures. Provisions are measured at management’s
best estimate of the expenditure required to settle the
obligation based on prior experience, Wilson Sons’ best
knowledge of the relevant facts and circumstances
and legal advice received. The Committee questioned
Wilson Sons management on their assumptions
used in determining provisions and the procedure for
classification of legal liabilities as probable, possible or
remote loss, reviewed legal reports from Wilson Sons
management, asked questions on the background
and progress of material claims and evaluated the
current level of provisions in light of historical trends
and claim history to ensure provisions were adequate.
The Committee ensured that adequate resources are
allocated to recording, evaluating and monitoring legal
claims to ensure the completeness of claims recorded
and provisions made. The Committee was satisfied that
the significant assumptions used were appropriate and
was satisfied with the disclosures in the consolidated
financial statements. The Committee also discusses
potential risks surrounding legal claims with the external
auditor and reviewed their audit findings.
Revenue recognition – The reporting risk could arise from
inappropriate revenue recognition policies, incorrect
application of policies or cut-off errors surrounding
year end. The Committee considered the Wilson Sons’
revenue recognition policies and the level of transactions
compared to previous periods. The Committee received
quarterly Wilson Sons management reports on revenue
and financial performance with comparisons to
budget and prior year. The Committee reviewed and
questioned Wilson Sons management explanations for
•
•
variances and revenue performance. The Committee
also discussed potential risks surrounding revenue
recognition with the external auditor and reviewed
their audit findings. The Committee was satisfied
with management’s explanations of variances and
application of the presented policies relating to revenue
recognition.
Impairment test of Cash Generating Units (CGUs) – The
Group has significant non-financial assets within the
offshore support bases CGU. The reporting risk is that
the value of the CGU is overstated and that an impairment
charge should be recorded. Wilson Sons management
performed impairment testing for the offshore support
bases CGU by comparing its carrying value to its value in
use, calculated using the discounted cash flow model.
The Committee examined and challenged Wilson Sons
management’s key assumptions used in the impairment
testing and was satisfied that they are appropriate
and sufficiently robust. The Committee was further
satisfied with the impairment testing disclosures in
the consolidated financial statements. The Committee
also discusses potential risks surrounding impairment
risk with the external auditor and reviewed their audit
findings.
Valuation of unquoted investments – The investment
valuation risk arises from the valuation of the Level
3 investments which is determined using valuation
techniques and assumptions based on market
conditions existing at each reporting date. The
Committee received quarterly reports
from the
Investment Manager on
investment performance
which included historical performance analysis and
management outlook for
investment and market
performance. The Committee reviewed and questioned
the Investment Manager and obtained explanations for
investment performance and variations from market
performance, investment expectations and potential
risks to future performance. The Committee examined
and challenged management’s key assumptions used
in the valuation of investments. The Committee was
satisfied that the significant assumptions used were
appropriate and was satisfied with the disclosures in
the consolidated financial statements. The Committee
also discusses potential risks surrounding investment
valuation with the external auditor and reviewed their
audit findings.
The Committee is of the opinion that the annual report and
accounts articulate how the Company has performed during
the year and provides full disclosures at each of the segment
levels. The messages in the Chair’s Statement, Directors’
Report and Financial Reports are reflected in the annual
accounts and there is consistency between the narrative
sections and the consolidated financial statements.
29
External Audit
As part of the annual external audit process, the Committee:
•
•
•
Reviewed and approved the scope of audit work to be
undertaken by the auditor;
Agreed the fees to be paid to the external auditor for
the audit of the December 2022 consolidated financial
statements; and
Assessed the qualification, expertise and resources,
and independence of the external auditor:
‐
‐
‐
Reviewed the audit plan for the year, noting the role
of the audit partner who signs the audit report and
who, in accordance with professional rules, has not
held office for more than five years and any changes
in key audit staff;
Received a report from the external auditor
describing their arrangements to identify, report and
manage any conflicts of interest; and
Considered the overall extent of non-audit services
provided by the external auditor. There were no
non-audit services provided in 2022 by the external
auditor.
The Committee conducted its review of the performance of
the external auditors and the effectiveness of the external
audit process for the year ended 31 December 2021. The
review was based on a survey of key stakeholders across
the Group, the quality of the auditors’ reporting to and
interaction with the Audit and Risk Committee. Based on the
information currently available and this review, the Audit and
Risk Committee was satisfied with the performance of the
auditors and the effectiveness of the audit process.
Risk Management and Internal controls
The Committee works with the Company’s Chief Operating
and Financial Officer to review and assess the Company’s
risk matrix bi-annually and to assess the adequacy of the
Company’s internal controls. The Committee is satisfied that
the Company’s internal controls are effective and that the
risk matrix is representative of the risks facing the Company
and is used as a functional tool at the Board level to support
its decision making and risk mitigation planning.
Additionally, the Committee met quarterly in 2022 with the
Wilson Sons audit committee on the following matters:
•
To receive reports from the Wilson Sons audit committee
on relevant accounting matters and its report from the
Wilson Sons internal audit team;
•
•
•
•
•
To review and challenge the assumptions used in the
Wilson Sons impairment test of the offshore support
bases cash-generating unit
long-term
revenue; costs and expenses; investments; projection
period; growth rate and discount rates based on the
weighted average cost of capital;
including
To receive a report on cybersecurity at Wilson Sons. The
report highlighted the principal risks as ransomware,
data loss, customer data breaches, mission critical
systems failure, reputational damage, financial losses
and operational accidents. The Committee was satisfied
with the actions being taken to mitigate cyber risks;
To receive a report on the Wilson Sons enterprise risk
management process. The report detailed the most
critical risks of Wilson Sons, identifying the respective
risk owners, and the mitigation plans in place or under
development, see principal and emerging risks on page
15;
To receive litigation reports from the Wilson Sons
legal department outlining the legal provisions in the
accounts and work performed to manage possible
claims; and
To have a briefing on the Wilson Sons whistle-blowing
channel outlining the structure of the whistle-blowing
channel and procedures for following up on complaints
received.
Compliance and Fraud
The Committee reviewed and revised the Company’s policies
on Whistleblowing and Bribery in 2022 to align them with best
practice and current legislation. There were no instances of
fraud reported in 2022 and the Committee is satisfied that
the procedures and policies in place are being monitored and
complied with.
Andrey Berzins
Chair of the Audit and Risk Committee
23 March 2023
30
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report Corporate and Social
Responsibility
The Board recognises that, in addition to managing the
Company’s assets, it has an obligation to ensure that it
undertakes efforts to ensure that its corporate and social
responsibilities to all its stakeholders are addressed at both
the parent level and its operating subsidiaries.
Social Responsibility
Workforce and Safety
With Wilson Sons being the largest employer in the Group,
Board attention is directed to encouraging and monitoring
their initiatives to create opportunities within its workforce
for gender equality and to develop programs that will prepare
the younger generation to grow within the organisation.
Wilson Sons management team is comprised of 30% women
and 20% of the overall workforce are female. Wilson Sons has
multiple initiatives to train both women and young people,
such as intern and apprentice programs, involvement with
local universities to provide lectures on maritime services
and a program specifically geared to young girls to give them
tools to address and challenge obstacles related to gender
equality in Brazil.
On average the Group employed 3,296 employees during the
year (2021: 3,208). The nature of operations in the maritime
division means that the health and safety of our workforce
is fundamentally important to the Board and is engrained
in our corporate values and daily routines. Through a safety
programme in partnership with DuPont, health and safety
targets are measured using lost-time injury frequency rate
(“LTIFR”). In 2022 the LTIFR rate was 0.45 compared to 2021 of
0.63. The international benchmark is 0.5 which Wilson Sons
has set as its target to remain below.
Communities
Ocean Wilsons and Wilson Sons both have corporate giving
programs within the communities in which they operate.
Ocean Wilsons corporate giving is geared to supporting
charities that develop life skills for young people. Wilson
interaction through both
Sons has varied community
corporate volunteering and charitable donations. For over
20 years, Wilson Sons has engaged its employees to partake
in volunteering programs that also focus on life skills and
development of the youth.
Environment and Responsible Investing
The Board believes that responsible investing and sustainable
operating practices are integral to the longer-term delivery
of the Company’s success. The Board works closely with
both the Investment Manager and Wilson Sons Management
to regularly review the Company’s performance, investment
strategy, capital investment and expansion opportunities.
The Board reviews and assesses underlying policies to ensure
that the Company is complying with and evolving its ESG
strategy to drive a culture that ensures effective, ethical and
viable investment for our shareholders and future investors.
The Investment Manager became a signatory to the United
Nations Principles for Responsible Investment in 2022.
The Board encouraged this in 2021 and also has driven
the development of policies to gather information from
the underlying investments of the portfolio on their own
environmental and social policies. Currently, Hansa Capital’s
investment policies include reviewing its investment portfolio
and identifying if a portfolio manager or company are not
engaged in practicing ESG. If they are not, our Investment
Manager will seek to engage with them to encourage
improvement with the ultimate sanction being exiting, or
not investing in, a fund or company if their concerns are not
sufficiently addressed.
When the Investment Manager is selecting funds, they do
not currently specifically exclude sectors and countries,
but instead, for those companies that make significant
use of energy, resources and materials they endeavour to
understand and report to the Board how those investees
issues and their responsibilities. The
manage these
is
Investment Manager’s Responsible
Investing Policy
available on the Ocean Wilsons
(www.oceanwilsons.bm)
and Hanseatic Asset Management’s group websites
(www.hansagrp.com).
The Board is committed to reducing the environmental
impact of our operations. As a component of both
environmental stewardship and strategic business practice
we are taking action on this commitment in both Wilson
Sons’ operations and our investment portfolio strategy.
31
During 2022, Wilson Sons furthered
its sustainability
ambitions by hiring a dedicated Sustainability Director,
continued its data collection and analysis on greenhouse
gas emissions, waste generation and water usage to aid in
setting targets and identified more opportunities to reduce
its impact on the environment. Two of six new tugs were
launched designed to produce lower emissions and drive
efficient use of carbon fuels. There is a committed focus
to analyse operational activities and processes to discover
opportunities to add the most value and make positive
change on the environment. Innovation is key to leveraging
these opportunities as such Wilson Sons has created an
Innovation Hub that realises these opportunities through both
internal research and external investments. For example,
in 2022 Wilson Sons made an investment in Argonautica,
an engineering firm that optimises operations through
port engineering, such as hydrodynamic interaction, tug
manoeuvre and breakwater analysis. The team is passionate
about driving ESG activity and engaged in developing the
tools and driving the culture needed to achieve our ambitions.
Greenhouse Gas Emissions
Wilson Sons has been
identifying opportunities for
decarbonization of its energy matrix to reduce the impact
of its activities on the environment. Since 2014, Wilson
Sons has maintained its commitment to proactively publish
its Greenhouse Gas Emissions (GHG) Inventory in the public
register of the Brazilian GHG Protocol Program, the tool most
used by companies and government to assess, quantify
and mange GHG. Wilson Sons earned the Gold Seal in this
program for a third consecutive year covering scope 1 and
scope 2 emissions.
Wilson Sons proactively seeks opportunities for the adoption
of new technologies and in creating efficiencies in operations
as a means of contributing to the reduction of emissions. For
example, in 2022 Wilson Sons achieved a 20% reduction in
operational carbon intensity (kgCO2/ TEU) at the container
terminals by optimizing yard design at Tecon Salvador and
the prioritization of equipment using cleaner energy.
GHG Emissions - Scope 1
Container Terminals
Towage
Others
Total
GHG Emissions - Scope 2
Container Terminals
Towage
Others
Total
Unit
tCO2e
tCO2e
tCO2e
tCO2e
Unit
tCO2e
tCO2e
tCO2e
tCO2e
2022
Preliminary*
8,637
52,488
1,274
62,399
2022
Preliminary*
1,221
96
198
1,515
2021
Final
7,681
53,257
1,434
62,372
2021
Final
4,104
137
526
4,768
2021
Preliminary*
7,209
53,364
1,882
62,455
2021
Preliminary*
2,679
91
398
3,168
2020
Final
7,848
47,650
1,010
56,508
2020
Final
1,573
86
253
1,912
*The final report is released in April of the following year, subsequently to the issue of the annual report.
Wilson Sons achieved a 5% reduction in total emissions
in 2022. This reduction is mainly due to the decrease
in scope 2 emissions, more specifically electricity
consumption. Compared to 2021, the average emission
factor of electricity from the National Interconnected
System reduced 66%. In addition, in 2022 Wilson Sons
consumed 4% less electricity due mainly to the reduction
of 5% in container handling and 10% in the stay of reefer
containers at Tecon Rio Grande. 2021 was an atypical year
for comparison, as there were longer stays, delays and
cancellations at the terminals due to supply chain disruption
and shipping bottlenecks resulting from the Covid-19
pandemic which increased energy consumption in the year.
The tugboat division is responsible for about 80% of the
direct emissions at Wilson Sons. This division achieved
a 2% reduction in emissions by leveraging systems that
optimize navigation routes which manages the efficient use
of maritime fuels across its fleet.
As part of the ongoing commitment to reduce and report on
GHG emissions, a materiality analysis was conducted in 2022
on scope 3 emissions. The most representative categories
identified were goods and services purchased, capital goods
and use of goods and services sold. In addition, Wilson Sons
began studies to establish its trajectory to reduce the carbon
footprint of the company itself and of its value chain. Wilson
Sons will set emissions reduction targets in 2025 after
evaluating its analysis and various scenarios for adaptation
to the low carbon economy.
32
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report Directors’ Responsibility
Going Concern
Wilson Sons Limited
The Group has considerable financial resources including
US$75.7 million in cash and cash equivalents at 31 December
2022 and the Group’s borrowings have a long maturity profile.
The Group’s business activities together with the factors
likely to affect its future development and performance
are set out in the Chair’s Statement, Financial Report and
Investment Manager’s Report. The financial position, cash
flows and borrowings of the Group are set out in the Financial
Report. In addition, note 30 to the consolidated financial
statements includes details of its financial instruments and
its exposure to credit risk and liquidity risk. Details of the
Group’s borrowings are set out in note 20.
The Group closely monitors and manages its liquidity risk and
does so in a manner that reflects its structure of two distinct
businesses being Ocean Wilsons (Investments) Limited
and Wilson Sons Limited. In performing its going concern
assessment, the Board considered the 15-month period to 31
March 2024.
Ocean Wilsons Holdings Limited and Ocean Wilsons
(Investments) Limited
in respect of
Ocean Wilsons and Ocean Wilsons (Investments) Limited
have combined cash and cash equivalents of US$27.8 million
and further highly liquid investments of US$94.8 million at
31 December 2022. They have no debt and they have made
investment subscriptions
commitments
amounting to US$50.4 million, details are provided in note
10. The timing of the investment commitments may be
accelerated or delayed in comparison with those indicated
in note 10, but highly liquid investments held are significantly
in excess of the commitments. Neither Ocean Wilsons
nor Ocean Wilsons (Investments) Limited have made any
commitments or have obligations towards Wilson Sons and
its subsidiaries and their creditors or lenders. In the unlikely
circumstance that Wilson Sons was to encounter financial
difficulty, the parent company and its other subsidiary have
no obligations to provide support and have sufficient cash
and other liquid resources to continue as a going concern on
a standalone basis.
Wilson Sons has cash and cash equivalents of US$47.9
million. All of the debt, as set out in note 20, and all of the
lease liabilities, as set out in note 15, relate to Wilson Sons,
and have a long maturity profile. The debt held by Wilson
Sons is subject to covenant compliance tests as summarised
in note 20, which were in compliance at 31 December 2022
and are forecast to be complied with throughout the forecast
period.
The covenants are most sensitive to changes in EBITDA, debt
service costs and asset values. The Ocean Wilsons Board
reviewed Wilson Sons’ 15-month forecasts for the financial
year 2023 and the first quarter of 2024 which included
analysis of cash flows and loan covenant compliance for the
forecasting period. Budgets are compared with prior period
actual results and previous forecasts to identify variances
and understand the drivers of the changes and their future
impact to allow management to take action as appropriate.
Additional market analysis is performed to corroborate
other key assumptions underpinning the forecasts. In
preparing the forecasts, consideration has been given to
the commitments Wilson Sons has to its joint ventures and
associates in respect of their loan agreements as set out in
note 13 and possible cash outflows these may give rise to,
should the joint ventures and associates breach their loan
covenants.
Cash flow and loan covenant compliance forecasts were
then subjected to reverse stress tests to understand the
headroom available before a covenant breach occurs or
liquidity is exhausted. Consideration was then given as
to whether the principal risks attributable to Wilson Sons
would give rise to severe downside scenarios that could
cause loan covenant breaches or exhausting of liquidity,
such as significant reductions in revenues. The possibility
of these scenarios happening are considered remote when
contemplating Wilson Sons’ financial performance during
Brazil’s economic crisis in 2015 and 2016 and in the Covid-19
pandemic. Whilst the going concern assessment does not
indicate it will be necessary, should it be required, Wilson
Sons can delay or cancel forecast capital expenditure in
order to manage liquidity and or loan covenant compliance.
33
This assessment confirmed that Wilson Sons has adequate
cash, other liquid resources and undrawn credit facilities to
enable it to meet its obligations as they fall due in order to
continue its operations during the going concern forecast
period. Based on the Board’s review of Wilson Sons’ going
concern assessment and the
liquidity and cash flow
reviews of the Company and its subsidiary Ocean Wilsons
Investments, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, the Directors continue to adopt the going
concern basis in preparing the annual report and accounts.
•
•
•
state that applicable accounting standards have been
followed, subject to any material departures disclosed
and explained in the accounts;
provide additional disclosure when compliance with
the specific requirements of IFRS is insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the
Company and Group financial position and financial
performance; and
present information, including accounting policies in a
manner that provides relevant, reliable, comparable and
understandable information.
Directors’ Responsibility Statement
The Directors are responsible for preparing the annual report
in accordance with applicable laws and regulations.
The Directors are required by Bermuda company law to
lay financial statements before the Company in a general
meeting. In doing this the Directors prepare accounts on a
going concern basis for each financial year which give a true
and fair view of the state of affairs of the Company and the
Group and of the profit or loss of the Group for that period.
In preparing those accounts, the Directors are required to:
•
ensure suitable accounting policies have been adopted
and applied consistently;
• make judgements and estimates that are reasonable
and prudent;
The Board considers the annual report and accounts, taken
as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
On behalf of the Board
Caroline Foulger
Chair
23 March 2023
34
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION TWO - Governance Report SECTION THREE
Task Force for
Climate Related
Financial Disclosures
(“TCFD”)
35
The Ocean Wilsons (“OWHL”) Board is responsible for ensuring strong corporate governance. The Audit and Risk Committee
assists the Board in monitoring the effectiveness of internal controls and risk management policies. Committee meetings are
used to assess the Group’s risk exposure, opportunities, and mitigation, including that of subsidiaries. The Committee met six
times in 2022, with the Chief Operating and Financial Officer attending each meeting.
OWHL is a holding company, as such, climate-related risks and opportunities arise at the level of its subsidiary companies.
The actions taken to address these risks and opportunities are also undertaken at this subsidiary investment level. OWHL
has reflected this in the structure of its TCFD statement, which first outlines OWHL’s governance of Wilson Sons and OWIL,
followed by granular TCFD disclosures for the subsidiaries themselves.
The section below describes Wilson Sons’ TCFD disclosures:
Governance
1
2
Board Oversight
Management Oversight
OWHL shares two common Board members with Wilson
Sons; the remaining OWHL Directors attend parts of the
quarterly Wilson Sons board (“WSB”) meetings as observers
for updates on operational activities and management
issues.
The WSB has ultimate oversight and accountability for its
ESG strategy, including the approach and actions taken
in relation to climate-related risks and opportunities. The
WSB is updated on climate-related issues via a report from
the Sustainability Director on an annual basis and they
are discussed as part of quarterly board meetings. This
ensures oversight and accountability across all programmes
and policies. Climate-related issues are considered when
reviewing budgets and capital allocation, particularly with
regard to innovation opportunities and capital investments.
As such, climate-related risks and opportunities influence
strategic decisions at the Board level.
The Wilson Sons CEO oversees Wilson Sons’ climate agenda.
Since July 2022, Wilson Sons’ climate strategy has been
integrated within the Sustainability Department and led by
the Sustainability Director. Additionally, Wilson Sons’ has
an ESG Committee formed of employees from across the
business.
OWHL’s management and Audit and Risk Committee assist
in risk oversight as part of Wilson Sons’ risk management
process. This ensures that policies and practices are aligned
with OWHL ambitions and disclosure requirements on
climate-related issues.
Risk Management
3
4
5
Identifying and assessing climate related risks
Managing climate related risks
Integration into the Group’s risk management processes
Wilson Sons’ risk governance and management processes
are detailed within Wilson Sons’ Sustainability Report (see
the report at www.wilsonsons.com.br). During the year,
Wilson Sons assesses and evaluates risks relating to climate
change as part of the review cycle.
To assess the severity of climate-related risks, and the
potential impacts arising from them, risks are classified
according to the impact matrix provided in the Wilson Sons
Policy for Integrated Risk Management. This categorises
risks based on a combination of probability and likely impact.
To advance this approach, in 2022 Wilson Sons also
undertook a qualitative scenario analysis. This analysis was
able to validate the risk identification processes undertaken
to date.
After evaluation and prioritisation steps, each risk is assigned
to a risk owner at the functional level, responsible for
responding to, monitoring, and reporting company risk based
36
on the degree of impact and probability. Each risk is also
assigned a risk champion, responsible for implementing and
managing the execution of the risk management processes,
including action plans or controls that were defined as
suitable responses. For potential extreme impact risks, the
risk owner is the Executive Board, composed of Wilson Sons’
highest C-level executives (CEO, COO and CFO).
Climate-related risks identified as risks for Wilson Sons
are embedded into a central Integrated Risk Management
framework within Wilson Sons’ Sustainability Report.
Climate-related risks are classified as emerging risks and
are managed as such according to the Integrated Risk
Management Framework. If any of these risks’ timeline
probabilities were to change, the framework has a continuous
process of classification elevation.
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION THREE - Task Force for Climate Related Financial Disclosures (“TCFD”)
Strategy
6
7
8
Identifying of climate related risks
Impact of climate risks and opportunities
Scenario analysis
In 2021, Wilson Sons identified climate-related risks to the
business over the following time horizons: short term (< 3
years), medium term (3-10 years), and long term (> 10 years).
In addition to risks, Wilson Sons has identified several
climate-related opportunities relevant to the business.
These include:
a)
Increased demand
from cargo owners seeking
alternatives to road haulage, rail and airfreight as part of
lower-carbon supply chains;
b) Potential
for
increased
volume of
decarbonisation-related cargoes, such as solar panels
and wind turbines; and
transport
c) Potential to position itself as the partner of choice
for customers through best practice disclosure and a
decarbonisation strategy.
In 2022, these risks and opportunities were validated and
assessed with respect to warming scenarios via a qualitative
scenario analysis to validate earlier risk mapping. Additionally,
the validation considered the business’ resilience to climate
change across warming scenarios.
The analysis considered two timeframes: 2030 and 2050
aligned with international climate-related milestones and
commitments, such as the Sustainable Development Goals
and the Paris Agreement. The table below sets out the
Metrics and Targets
9
10
11
Metrics used to assess
Emissions reporting
Assessment Targets
scenarios. Shared Socioeconomic Pathways (SSPs) describe
the expected societal changes associated with warming
scenarios, and Representative Concentration Pathways
(RCPs) align to physical degrees (Celsius) of warming.
Completion of the qualitative scenario analysis allowed the
financial materiality of the identified risks to be estimated.
Scenario
Baseline
SSP1 - RCP 2.6
SSP1 - RCP 2.6
SSP3 – RCP 7.0
SSP3-RCP 7.0
Model
n/a
Time Horizon
Historical period
of reference
Optimistic
Optimistic
Pessimistic
Pessimistic
2030
2050
2030
2050
Mitigation actions to reduce exposure to risks have been
identified. For example, building on extensive monitoring
of its direct emissions from 2013 onwards. Wilson Sons has
dedicated itself to qualitative goals, such as the elaboration
of the MACC curve (marginal abatement cost curve) to
evaluate opportunities for decarbonisation initiatives in the
towage and Rio Grande container terminal businesses from
2023.
Qualitative goals relevant to the MACC curve were confirmed
in January 2023 and cover 80% of Wilson Sons’ carbon
emissions. Use of this tool will allow objective and cost-
effective prioritisation of decarbonisation efforts.
Commitment to continuous monitoring of climate-relevant
metrics facilitates effective management of agenda-related
risks and opportunities.
Key metrics currently
include: energy consumption
(renewable electricity) with business unit intensity metrics.
Metrics related to net income are also used (GHG emissions
per US$1 million), and specific operational metrics according
to the nature of the business (e.g. GHG emissions per
container handled; GHG emissions per towage manoeuvre).
Metrics related to water consumption and solid waste
disposal are also monitored.
Wilson Sons’ Scope 1 and 2 emissions are summarised within
the table found on page 32.
Wilson Sons is currently undertaking a Scope 3 screening
analysis. The ambition is to continually advance this process,
such that Wilson Sons can build a comprehensive Scope 3
inventory in the coming years.
Building on this work, Wilson Sons will disclose a quantitative
Scope 1 and 2 emissions reduction targets in 2025.
37
OWHL also has oversight over OWIL which share the same Directors. Quarterly meetings are held with the portfolio investment
manager where updates on fund performance, asset allocation, ESG status, and, during 2022, the progress to becoming a
signatory to the UN PRI, are shared.
The section below describes OWIL’s TCFD disclosures:
Governance
1
2
Board Oversight
Management Oversight
The Board of OWHL, through its 100% subsidiary OWIL, holds
ultimate accountability for responsible investing, and within
that, climate-related issues for this subsidiary.
The Board discusses ESG-related issues, including climate
change, as a standing agenda item at all meetings and
is notified of updates on any serious ESG issues. OWIL
appointed Hanseatic Asset Management LBG (“HAML”) as
its Investment Manager in November 2000. Importantly, the
portfolio is a portfolio of funds and therefore engagement
with the managers of selected underlying fund investments
is required to appropriately influence climate-related issues.
In this regard, HAML, has discussed its ESG views with the
fund managers as part of its ongoing due diligence and
monitoring processes.
As part of its wider commitment to ESG and climate
throughout the organisation, OWHL worked with HAML as
it developed its responsible investment policy. In particular,
OWHL requested that HAML join the UN-supported Principles
of Responsible Investment (PRI) to which HAML became a
signatory in 2022.
Risk Management
3
4
5
Identifying and assessing climate related risks
Managing climate related risks
Integration into the Group’s risk management processes
Climate-related risks were identified with support from
a specialist ESG consultancy. Risks were
identified
on a qualitative basis of impact and likelihood of risk
materialisation. Risks evaluated include those related to
existing and emerging regulatory requirements, as well as
other transition and physical risks.
More broadly, HAML’s responsible investing policy aims to
support a long-term and responsible approach to investment
to reduce and manage long-term risk.
HAML and OWHL Directors are continually upskilling in
ESG to better assess and manage climate-related risks and
opportunities in the future. Investment team members have
exposure to ESG-related matters through training courses,
investment due diligence and relevant forums and bodies to
ensure they remain up to date on best practice.
Strategy
6
7
8
Identifying of climate related risks
Impact of climate risks and opportunities
Scenario analysis
In 2021, supported by an external consultancy, climate-
related risks and opportunities were identified and assessed
(see page 39 of OWHL’s 2021 annual report). Risks have been
categorised in alignment with the TCFD recommendations.
Climate-related risks were considered across the categories
of policy and legal, technology, market, and reputation,
alongside acute and chronic physical risks. Time horizons
have been defined by OWIL as short term (< 3 years), medium
term (3-10 years), and long term (> 10 years).
38
OWIL continues to develop its understanding of the effect of
identified risks and opportunities. Given this focus, alongside
considered relatively low exposure in the medium term to
climate-related risk, scenario analysis is not considered a
priority for the OWIL portfolio.
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION THREE - Task Force for Climate Related Financial Disclosures (“TCFD”)
Metrics and Targets
9
10
11
Metrics used to assess
Emissions reporting
Assessment Targets
Given its position as a fund investor, collection of the relevant
data and use of this data as the basis of decarbonisation
targets presents ongoing transitional challenges. HAML,
with the encouragement of the Company, continues to
explore the feasibility of collecting climate-related data with
fund managers as part of its ongoing engagement. This will
provide the organisation with a stronger understanding of
data availability, and therefore a timeline to the disclosure of
this information.
39
40
SECTION TWOOcean Wilsons Holdings Limited - Annual Report 2022 SECTION FOUR
Consolidated
Financial Statements
41
42
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial Statements 43
INDEPENDENT AUDITOR’S REPORT 44
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial Statements 45
INDEPENDENT AUDITOR’S REPORT 46
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial Statements 47
INDEPENDENT AUDITOR’S REPORT 48
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial Statements 49
INDEPENDENT AUDITOR’S REPORT Sales of services
Raw materials and consumables used
Employee charges and benefits expenses
Other operating expenses
Depreciation of owned assets
Depreciation of right-of-use assets
Amortisation of intangible assets
Gain/(loss) on disposal of property, plant and equipment and intangible assets
Foreign exchange gains/(losses) on monetary items
Operating profit
Share of results of joint ventures and associates
Returns on investment portfolio at fair value through profit or loss
Investment portfolio performance and management fees
Other investment income
Finance costs
Profit before tax
Tax expense
Profit for the year
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Post-employment benefits remeasurement
Purchase price adjustment of associate
Items that will be or may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations
Effective portion of changes in fair value of derivatives
Other comprehensive income/(loss) for the year
Total comprehensive income for the year
(Loss)/profit for the year attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive (loss)/income for the year attributable to:
Equity holders of the Company
Non-controlling interests
Earnings per share:
Basic and diluted
Note
5
6
7
14
15
16
13
5
5
8
9
21
13
26
26
28
2022
440,107
(32,956)
(126,330)
(106,055)
(48,473)
(13,573)
(2,389)
100
1,620
112,051
3,165
(47,947)
(3,047)
8,421
(34,509)
38,134
(26,656)
11,478
93
159
7,128
9
7,389
18,867
(18,675)
30,153
11,478
(14,484)
33,351
18,867
(52.8)c
2021
396,376
(24,036)
(112,026)
(98,289)
(46,631)
(12,063)
(2,718)
(499)
(3,100)
97,014
(5,029)
49,474
(4,954)
4,113
(30,227)
110,391
(27,925)
82,466
108
-
(7,459)
158
(7,193)
75,273
63,687
18,779
82,466
59,604
15,669
75,273
180.1c
The accompanying notes are an integral part of these consolidated financial statements.
50
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsCONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2022 - (Expressed in thousands of US Dollars)
Current assets
Cash and cash equivalents
Financial assets at fair value through profit and loss
Recoverable taxes
Trade and other receivables
Inventories
Non-current assets
Other trade receivables
Related party loans receivable
Other non-current assets
Recoverable taxes
Investment in joint ventures and associates
Deferred tax assets
Property, plant and equipment
Right-of-use assets
Other intangible assets
Goodwill
Total assets
Current liabilities
Trade and other payables
Tax liabilities
Lease liabilities
Bank loans
Net current assets
Non-current liabilities
Bank loans
Post-employment benefits
Deferred tax liabilities
Provisions for legal claims
Lease liabilities
Total liabilities
Capital and reserves
Share capital
Retained earnings
Translation and hedging reserve
Equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Signed on behalf of the Board
F. Beck
Director
A. Berzins
Director
The accompanying notes are an integral part of these consolidated financial statements.
Note
2022
10
9
11
12
11
23
22
9
13
9
14
15
16
17
19
9
15
20
20
21
9
22
15
24
26
75,724
275,080
34,515
67,136
17,579
470,034
1,456
11,176
3,506
15,143
81,863
21,969
589,629
178,699
14,392
13,420
931,253
1,401,287
(58,337)
(10,290)
(24,728)
(59,881)
(153,236)
316,798
(262,010)
(1,737)
(49,733)
(8,997)
(171,448)
(493,925)
(647,161)
11,390
634,910
(91,692)
554,608
199,518
754,126
2021
28,565
392,931
25,380
59,350
12,297
518,523
1,580
10,784
3,582
12,816
61,553
22,332
563,055
157,869
14,981
13,272
861,824
1,380,347
(58,513)
(8,057)
(19,449)
(45,287)
(131,306)
387,217
(256,312)
(1,562)
(50,194)
(8,907)
(148,394)
(465,369)
(596,675)
11,390
678,006
(95,739)
593,657
190,015
783,672
51
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022 - (Expressed in thousands of US Dollars)
Balance at 1 January 2021
11,390
635,987
Share capital
Retained
earnings
Currency translation adjustment
Effective portion of changes in fair
value of derivatives
Post-employment benefits (note 21)
Profit for the year
Total comprehensive income/(loss)
for the year
Dividends (notes 26, 27)
Equity transactions in subsidiaries
(note 25)
–
–
–
–
–
–
–
Balance at 31 December 2021
11,390
–
–
61
63,687
63,748
(24,754)
3,025
678,006
Hedging and
Translation
reserve
Attributable
to equity
holders of the
Company
(91,595)
(4,234)
555,782
(4,234)
Non-
controlling
interests
187,925
(3,225)
Total equity
743,707
(7,459)
90
–
–
(4,144)
–
–
(95,739)
90
61
68
47
158
108
63,687
18,779
82,466
59,604
(24,754)
3,025
593,657
15,669
(17,808)
4,229
190,015
75,273
(42,562)
7,254
783,672
Balance at 1 January 2022
11,390
678,006
(95,739)
593,657
190,015
783,672
Currency translation adjustment
Effective portion of changes in fair
value of derivatives
Post-employment benefits (note 21)
Purchase price adjustment of
associate (note 13)
(Loss)/profit for the year
Total comprehensive (loss)/income
for the year
Dividends (notes 26, 27)
Equity transactions in subsidiaries
(note 25)
–
–
–
–
–
–
–
–
– 4,042
4,042
3,086
7,128
–
54
90
(18,675)
5
–
–
–
5
54
90
4
39
69
(18,675)
30,153
9
93
159
11,478
(18,531)
4,047 (14,484)
33,351
18,867
(24,754)
(24,754)
(25,173)
(49,927)
Balance at 31 December 2022
11,390
634,910
(91,692)
554,608
189
–
189
1,325
199,518
1,514
754,126
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 designated hedging relationships.
Amounts in the statement of changes of equity are stated net of tax where applicable.
The accompanying notes are an integral part of these consolidated financial statements.
52
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022 - (Expressed in thousands of US Dollars)
Operating activities
Profit for the year
Adjustment for:
Depreciation & amortisation
(Gain)/loss on disposal of property, plant and equipment and intangible assets
Share of results of joint ventures and associates
Returns on investment portfolio at fair value through profit or loss
Other investment income
Finance costs
Foreign exchange (gains)/losses on monetary items
Share based payment expense
Post-employment benefits
Tax expense
Changes in:
Inventories
Trade and other receivables
Other current and non-current assets
Trade and other payables
Provisions for legal claims
Taxes paid
Interest paid
Net cash inflow from operating activities
Investing activities
Income received from trading investments
Purchase of trading investments
Proceeds on disposal of trading investments
Purchase of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Purchase of intangible assets
Proceeds on disposal of intangible assets
Investment in joint ventures and associates
Net cash used in investing activities
Financing activities
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests in subsidiary
Repayments of borrowings
Payments of lease liabilities
New bank loans drawn down
Shares repurchased in subsidiary
Issue of new shares in subsidiary under employee share option plan
Net cash used in financing activities
Notes
2022
2021
11,478
82,466
14,15,16
13
5
5
8
25
21
9
12
11, 23
9,22
9,19
22
14
16
13
27
26
20
15
20
25
25
64,435
(100)
(3,165)
47,947
(8,421)
34,509
(1,620)
334
(170)
26,656
(5,282)
(8,054)
(11,386)
2,057
90
(22,070)
(30,143)
97,095
16,348
(70,864)
128,959
(63,268)
726
(1,386)
-
(17,016)
(6,501)
(24,754)
(25,173)
(49,349)
(8,591)
59,793
(2,549)
3,729
(46,894)
61,412
499
5,029
(49,474)
(4,113)
30,227
3,100
369
136
27,925
(533)
(13,629)
(3,388)
19,158
(653)
(27,256)
(25,161)
106,114
5,700
(72,811)
73,064
(47,352)
304
(1,375)
517
(20,016)
(61,969)
(24,754)
(17,808)
(57,926)
(8,473)
19,438
-
6,885
(82,638)
Net increase/(decrease) in cash and cash equivalents
43,700
(38,493)
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these consolidated financial statements.
28,565
3,459
75,724
63,255
3,803
28,565
53
Ocean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) is a Bermuda investment holding company which, through
its subsidiaries, operates a maritime services company in Brazil and holds a portfolio of international investments. The Company
is incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991. The Company’s
registered office is Clarendon House, 2 Church Street, Hamilton, Bermuda. These consolidated financial statements comprise
the Company and its subsidiaries (the “Group”).
These consolidated financial statements were approved by the Board on 23 March 2023.
2
Significant accounting policies and critical accounting judgments
Basis of accounting
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRSs”) and are presented in US Dollars, which is the Company’s functional currency. All amounts have been rounded to the
nearest thousand, unless otherwise indicated.
These consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of financial
instruments, share-based payments liabilities and defined health benefit plan liabilities that are measured at fair value.
Basis of consolidation
These consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company. The Group controls an 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 financial statements of subsidiaries are
included in the consolidated financial statements from the date on which control commences until the date on which control
ceases. The financial statements of subsidiaries are prepared in accordance with the accounting policies set out in note 2. All
intra-group transactions and balances are eliminated on consolidation.
Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-
controlling interests’ 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 directly to equity. When the
Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling
interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the
former subsidiary is measured at fair value when control is lost.
Joint ventures and associates
A joint venture is a contractual agreement where the Group has joint control and has rights to the net assets of the contractual
arrangement, rather than being entitled to specific assets and liabilities arising from the agreement. An associate is an entity
in which the Group has significant influence, but not control or joint control, over the financial and operating policies.
Investments in joint ventures and associates are accounted for using the equity method and are initially recognised at cost.
The Group’s share in the profit or loss and other comprehensive income of the joint ventures and associates is included in these
consolidated financial statements, until the date that significant influence or joint control ceases.
Foreign currency
The functional currency of each entity of the Group is established as the currency of the primary economic environment in
which it operates. 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 translated into the functional currency at the exchange
rate at the reporting date. Non-monetary items that are measured based on historical cost in a foreign currency are translated
at the exchange rate at the date of the transaction. Exchange differences arising on the settlement and on the translation of
monetary items are included in profit or loss for the period.
54
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars)1 General Information On consolidation, the statement of profit or loss and comprehensive income of entities with a functional currency other than
US Dollars are translated into US Dollars, at the average exchange rates for the period. Statement of financial position items
are translated into US Dollars at the exchange rate at the reporting date. Exchange differences arising on consolidation of
entities with functional currencies other than US Dollars are recognised in other comprehensive income and accumulated in
the translation reserve, less the translation difference allocated to non-controlling interest.
Revenue
Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal
course of business net of trade discounts and sales related taxes.
Ship agency and logistics revenues
Revenue from providing agency and logistics services is recognised when the agreed services have been performed.
Towage and port terminals revenues
Revenue from providing towage services, vessel turnarounds, container movement and associated services is recognised on
the date that the services have been performed.
Shipyard revenue
Revenue related to services and construction contracts is recognised throughout the period of the project when the work in
proportion to the stage of completion of the transaction contracted has been performed.
Employee Benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A 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.
Share option plan
For equity settled share-based payment transactions, the Group measures the options granted, and the corresponding increase
in equity, directly at the fair value of the option grant. Subsequent to initial recognition and measurement, the estimate of the
number of equity instruments for which the service and non-market performance conditions are expected to be satisfied is
revised during the vesting period. The cumulative amount recognised is based on the number of equity instruments for which
the service and non-market related vesting conditions are expected to be satisfied. No adjustments are made in respect of
market related vesting conditions.
Defined contribution plan
Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Defined health benefit plans
The Group’s net obligation regarding defined health benefit plans is calculated separately for each plan by estimating the amount
of future benefit that employees receive in return for their service in the current period and prior periods. That health benefit
is discounted to determine its present value. The calculation of the liability of the defined health benefit plan is performed
annually by a qualified actuary using the projected unit credit method. Remeasurements of the net defined health benefit
obligation, which include actuarial gains and losses, are immediately recognised in other comprehensive income.
The Group determines the net interest expense on the net defined benefit liabilities for the period by multiplying them by the
discount rate used to measure the defined health benefit obligations. Defined health benefit liabilities for the period take into
account any changes during the period due to the payment of contributions and benefits. Net interest and other expenses
related to defined health benefit plans are recognised in profit or loss. When the benefits of a health plan are changed, the
portion of the change in benefits relating to past services rendered by employees is recognised immediately in profit or loss.
The Group recognised gains and losses on the settlement of a defined health benefit plan when settlement occurs.
Termination benefits
Termination benefits are recognised as an expense when the Group can no longer withdraw the offer of such benefits. If
payments are settled after 12 months from the reporting date, then they are discounted to their present values.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 2
Significant accounting policies and critical accounting judgments (continued)
Finance income and finance costs
The Group’s finance income and finance costs include interest income, interest expense and the net gain or loss on the disposal
on financial assets at fair value through profit or loss. Interest income or expense is recognised in profit or loss using the
effective interest method.
Taxation
Tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to items
recognised directly in equity or in other comprehensive income, in which case the tax is also recognised directly in equity or in
other comprehensive income.
Current tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement
of profit or loss and other comprehensive income because it excludes or includes 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 current tax expense
is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is generally recognised for all taxable
temporary differences except for when the Group is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future. Deferred tax is not recognised if the temporary
difference arises from goodwill or from the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the
extent that it is probable that future taxable profits will be available against which they can be used. The carrying amount of
deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that
the related tax benefit will be realised. Prior reductions are reversed when the probability of future taxable profits improves.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset is recognised, based on tax rates and tax laws that have been enacted or substantively enacted by the end
of the reporting period. The measurement of deferred tax reflects the tax consequences that would follow from the manner in
which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
The Company offsets current tax assets against current tax liabilities when these items are in the same entity and relate to
taxes levied by the same taxation authority and the taxation authority permits the Company to make or receive a single net
payment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and other short-term highly liquid cash equivalents.
Financial instruments
Recognition and initial measurement
Trade and other receivables are initially recognised when they are originated. All other financial assets and financial liabilities
are initially recognised when the Group becomes a party to the contractual provisions of the instruments. Trade and other
receivables are initially measured at the transaction price which reflects fair value. All other financial assets and financial
liabilities are initially measured at fair value plus transaction costs that are directly attributable to their acquisition or issue.
Classification and subsequent measurement
Management determines the classification of its financial instruments at the time of initial recognition. The classification
depends on the purpose for which the financial instruments were acquired or issued, their characteristics and the Group’s
designation of such instruments.
56
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) Financial assets
A financial asset is classified as measured at amortised cost if it is not designated as at fair value through profit and loss and
if it is held within a business model whose objective is to hold assets to collect contractual cash flows and if its contractual
terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding. These assets are subsequently measured at amortised cost using the effective interest method, reduced by any
impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any
gain or loss on derecognition is recognised in profit or loss.
A financial asset is classified as measured at fair value through other comprehensive income if it is not designated as at fair
value through profit and loss and if it is held within a business model whose objective is to both hold assets to collect contractual
cash flows and to sell financial assets, and if its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding. These assets are subsequently measured at fair value.
Interest income calculated using the effective interest method, dividends, foreign exchange gains and losses and impairment
are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition,
gains and losses accumulated in other comprehensive income are reclassified to profit or loss.
A financial asset is classified as measured at fair value through profit and loss if it is not classified as measured at amortised
cost or at fair value through other comprehensive income, or if it is designated as such by management on initial recognition.
Financial assets held for trading are classified as measured at fair value through profit and loss. These assets are subsequently
measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level
because this best reflects the way the business is managed and information is provided to management. The information
considered includes the stated policies and objectives for the portfolio, how the performance of the portfolio is evaluated and
reported to the Group’s management and the risks that affect the performance of the business model and how those risks are
managed. In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers
the contractual terms of the instrument, including assessing whether the financial asset contains a contractual term that could
change the timing or amount of contractual cash flows such that it would not meet this condition.
Financial liabilities
Financial liabilities are classified as at fair value through profit and loss when the financial liability is either held for trading or
it is designated as such by management on initial recognition. These liabilities are measured at fair value and net gains and
losses, including any interest expense, are recognised in profit or loss.
Financial liabilities that are not classified as at fair value through profit and loss are classified as other financial liabilities and
are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
The following summarises the classification the Group applies to each of its significant categories of financial instruments:
Category
Trade and other receivables
Classification
Amortised cost
Financial assets at fair value through profit and loss
At fair value through profit and loss
Cash and cash equivalents
Trade and other payables
Bank loans
Amortised cost
Other financial liabilities
Other financial liabilities
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 2
Significant accounting policies and critical accounting judgments (continued)
Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire or when it
transfers the rights to receive the contractual cash flows in a transaction in which the Group either substantially transfers all of
the risks and rewards of ownership of the financial asset or in which the Group neither transfers nor retains substantially all of
the risks and rewards of ownership and it does not retain control of the financial asset.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. The Group
also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially
different, in which case a new financial liability based on the modified terms is recognised at fair value.
Hedge Accounting
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.
When the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability,
the gains and losses previously deferred in other comprehensive income are transferred from equity and included in the
measurement of the initial carrying amount of the asset or liability. Any ineffective portion of changes in the fair value of the
derivative is recognised immediately in profit or loss.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For financial assets measured at amortised cost, the Group applies a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting
date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-
looking factors specific to the receivables and the economic environment.
The Group considers a financial asset in default when contractual payments are 180 days past due. However, in certain cases,
the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is
unlikely to receive the outstanding contractual amounts in full before. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
Impairment losses are recognised in profit and loss and reflected in an allowance account against trade and other receivables.
If, in a subsequent period, an event causes the amount of impairment loss to decrease, the decrease in impairment loss is
reversed through profit and loss.
Inventories
Inventories are measured 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.
58
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) Property, plant and equipment
Property, plant and equipment is measured at cost, which includes capitalised borrowing costs, less accumulated depreciation
and any accumulated impairment losses. Subsequent expenditure is recognised only when it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
Depreciation is calculated to write off the cost less the estimated residual value of items of property, plant and equipment,
other than freehold land or assets under construction, over their estimated useful lives, using the straight-line method. Land
is not depreciated, and assets under construction are not depreciated until they are transferred to the appropriate category of
property, plant and equipment when the assets are ready for intended use. Depreciation is recognised in profit or loss.
The estimated useful life of the different categories of property, plant and equipment are as follows:
Freehold Buildings:
Leasehold Improvements:
Floating Craft:
Vehicles:
Plant and Equipment:
25 to 35 years
5 to 52 years, shorter of the rental period or the useful life of the underlying asset
25 years
5 to 10 years
10 to 20 years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period with the
effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. The gain or loss arising on disposal or retirement 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 profit
or loss.
Leased assets
At inception of a contract, the Group assesses whether it is a lease or contains a lease component, which it is if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
At the lease commencement date, the Group recognises a right-of-use asset and a lease liability. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying
asset, less any incentives received.
The lease liability is initially measured at the present value of the lease payments unpaid at the commencement date using the
interest rate implicit in the lease, or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally,
the Group applies the incremental borrowing rate. For a portfolio of leases with similar characteristics, lease liabilities are
discounted using a single discount rate.
Lease payments included in the measurement of the lease liability comprises fixed payments, variable payments based on an
index or rate, amounts expected to be payable under a residual value guarantee, and payments arising from options reasonably
certain to be exercised. Variable lease payments not related to an index or rate are recognised in profit or loss as incurred.
Right-of-use assets are depreciated using the straight-line method, from the lease commencement date to the earlier of the
end of their useful life or the end of the lease term, over their expected useful lives, on the same basis as owned assets except
when there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, in which case the right-
of-use asset shall be fully depreciated over the shorter of the lease term and its useful life. Right-of-use assets are reduced by
impairment losses, if any, and adjusted for remeasurements of the lease liability.
Subsequent to the initial measurement, the carrying amount of the liability is reduced to reflect the lease payments made and
increased to reflect the interest payable. If there is a change in the expected cash flows arising from and index or rate, the lease
liability is recalculated. If the modification is related to a change in the amounts to be paid, the discount rate is not revised.
Otherwise, if a modification is made to a lease, the Group revises the discount rate as if a new lease arrangement had been
made.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases and leases of low-value
assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the
lease term.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 2
Significant accounting policies and critical accounting judgments (continued)
Intangible assets
Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation
and any accumulated impairment losses. Subsequent expenditure is recognised only when it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
Amortisation is calculated to write off the cost less the estimated residual values of intangible assets, using the straight-line
method. Amortisation is recognised in profit or loss.
The estimated useful life of the different category of intangible assets are as follows:
Concession rights:
Computer software:
30 to 33 years
5 years
The estimated useful life, residual values and amortisation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective basis.
An intangible asset is derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset. The gain or loss arising on disposal or retirement of an intangible asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Goodwill
Goodwill arising on an acquisition of a business is measured at cost as established at the date of acquisition of the business less
accumulated impairment losses. Goodwill is not amortised.
Impairment of non-financial assets
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 is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing
use that are largely independent of the cash inflows of other assets or cash-generating units (CGUs). Goodwill acquired in a
business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
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.
An impairment loss is recognised if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment
losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the
carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU
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.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that an outflow of
economic benefits will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the
end of the reporting period taking into account the risks and uncertainties surrounding the obligation.
60
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) Use of judgements, estimates and assumptions
The preparation of these consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future periods affected.
In the process of applying the Group’s accounting policies, the following judgements, estimates and assumptions made by
management have the most significant effect on the amounts recognised in these consolidated financial statements:
a. Provisions for tax, labour and civil risks – Judgement
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 management’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.
b.
Impairment loss on non-financial assets – Judgement, estimates and assumptions
Impairment losses occur when book value of an asset or cash generating unit exceeds its recoverable value, which is the
higher of fair value less selling costs and value in use. Calculation of fair value less selling costs is based on information
available on similar assets’ selling transactions or market prices less additional costs to dispose of the asset. The value-in-
use calculation is based on the discounted cash flow model. The recoverable value of the cash-generating unit is defined
as the higher of the fair value less sales costs and value in use.
c. Valuation of unquoted investments – Judgements, estimates and assumptions
The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation
techniques. The Group 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.
Changes in significant accounting policies
A number of new or amended standards are effective for annual periods beginning after 31 December 2021, but do not have a
significant impact on the preparation of the consolidated financial statements of the Group.
Standards issued but not yet effective
Several new or amended standards are effective for annual periods beginning after 31 December 2022 with early adoption
permitted. The Group has elected to not adopt early the following new or amended standards and is assessing their impact on
the preparation of its consolidated financial statements.
•
•
•
•
Amendments to IAS 1: Classification of Liabilities as Current or Non-current, effective for periods beginning after 31
December 2022
Amendments to IAS 8: Definition of Accounting Estimates, effective for periods beginning after 31 December 2022
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies, effective for periods beginning
after 31 December 2022
Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction, effective for
periods beginning after 31 December 2022
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 3
Group composition
Ocean Wilsons has direct ownership in the following subsidiaries:
Subsidiaries
Investments
Place of
incorporation and
operation
Segment
Ocean Wilsons (Investments) Limited
Bermuda
Investment
Holdings
Ownership interest
2022
100%
2021
100%
Ocean Wilsons Overseas Limited
Bermuda
Unallocated
100%
100%
Ocean Wilsons Overseas Limited has direct ownership in the following subsidiary:
Subsidiaries
Holdings
Place of
incorporation and
operation
Segment
OW Overseas (Investments) Limited
United Kingdom
Unallocated
OW Overseas (Investments) Limited has direct ownership in the following subsidiary:
Ownership interest
2022
100%
2021
100%
Subsidiaries
Holdings
Place of
incorporation and
operation
Ownership interest
Segment
2022
2021
Wilson Sons Holdings Brasil S.A.
Brazil
Maritime service
56.58%
56.88%
The change in ownership interest in Wilson Sons Holdings Brasil S.A. from the year ended 31 December 2021 to 31 December
2022 is due to the exercise of share options and the repurchase of shares in subsidiaries, for which the details are presented in
note 25. The information on non-controlling interests is presented in note 26.
Wilson Sons Holdings Brasil S.A. has direct ownership in the following subsidiaries:
Subsidiaries
Shipyard
Place of
incorporation and
operation
Segment
Wilson Sons Estaleiros Ltda.
Brazil
Maritime service
Ownership interest
2022
100%
90%
100%
100%
50%
100%
100%
2021
100%
90%
100%
100%
50%
100%
100%
Brazil
Brazil
Maritime service
Maritime service
Brazil
Brazil
Maritime service
Maritime service
Brazil
Brazil
Maritime service
Maritime service
Brazil
Maritime service
100%
100%
Ship agency
Dock Market Soluções Ltda.
Wilson Sons Shipping Services Ltda.
Logistics
Wilson Sons Terminais e Logística Ltda.
Allink Transportes Internacionais Ltda.
Container terminal
Tecon Rio Grande S.A.
Tecon Salvador S.A.
Offshore support bases and towage
Wilson Sons Serviços Marítimos Ltda.
62
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 4
Business and geographical segments
The Group has two reportable segments: maritime services and investments. These segments report their financial and
operational data separately to the Board. The Board considers these segments separately when making business and
investment decisions. The maritime services segment provides towage and ship agency, port terminals, offshore, logistics
and shipyard services in Brazil. The investment segment holds a portfolio of international investments and is a Bermuda based
company.
For the year ended 31 December 2022
Result
Sale of services
Net return on investment portfolio at fair value through
profit or loss
Operating expenses
Depreciation and amortisation
Share of results of joint ventures and associates
Other investment income
Finance costs
Brazil -
Maritime Services
Bermuda -
Investment
Unallocated
Consolidated
440,107
-
-
440,107
-
(50,994)
-
(50,994)
(261,461)
(202)
(3,578)
(265,241)
(64,435)
3,165
8,421
(34,509)
-
-
-
-
-
(64,435)
-
3,165
-
8,421
-
(34,509)
Foreign exchange gains/(losses) on monetary items
1,837
(159)
(58)
1,620
Profit/(loss) before tax
Tax
Profit/(loss) after tax
Financial position
Current assets
Investment in joint ventures and associates
Property, plant and equipment
Right-of-use assets
Other intangible assets
Goodwill
Other non-current assets
Segment assets
Segment liabilities
Other information
Capital additions
Right-of-use assets additions
93,125
(51,355)
(3,636)
38,134
(26,656)
-
-
(26,656)
66,469
(51,355)
(3,636)
11,478
167,140
293,717
9,177
470,034
81,863
589,629
178,699
14,392
13,420
53,250
-
-
-
-
-
-
-
81,863
-
589,629
-
178,699
-
14,392
-
13,420
-
53,250
1,098,393
293,717
9,177
1,401,287
(646,339)
(509)
(313)
(647,161)
64,654
5,222
-
-
-
64,654
-
5,222
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 4
Business and geographical segments (continued)
For the year ended 31 December 2021
Result
Sale of services
Net return on investment portfolio at fair value through
profit or loss
Operating expenses
Depreciation and amortisation
Share of results of joint ventures and associates
Other investment income
Finance costs
Foreign exchange losses on monetary items
Profit/(loss) before tax
Tax
Profit/(loss) after tax
Financial position
Current assets
Investment in joint ventures and associates
Property, plant and equipment
Right-of-use assets
Other intangible assets
Goodwill
Other non-current assets
Segment assets
Segment liabilities
Other information
Capital additions
Right-of-use assets additions
Brazil -
Maritime Services
Bermuda -
Investment
Unallocated
Consolidated
396,376
-
(231,476)
(61,412)
(5,029)
4,113
(30,227)
(2,990)
69,355
(27,925)
41,430
163,967
61,553
563,055
157,869
14,981
13,272
51,094
1,025,791
(594,218)
48,727
7,718
-
44,520
(212)
-
-
-
-
(6)
44,302
-
44,302
-
-
(3,162)
-
-
-
-
(104)
(3,266)
-
(3,266)
351,774
2,782
-
-
-
-
-
-
351,774
(2,211)
-
-
-
-
-
-
-
-
2,782
(246)
-
-
396,376
44,520
(234,850)
(61,412)
(5,029)
4,113
(30,227)
(3,100)
110,391
(27,925)
82,466
518,523
61,553
563,055
157,869
14,981
13,272
51,094
1,380,347
(596,675)
48,727
7,718
64
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 5
Revenue
An analysis of the Group’s revenue is as follows:
Sale of services
Net income from underlying investment vehicles
Profit on disposal of financial assets at fair value through profit or loss
Unrealised (losses)/gains on financial assets at fair value through profit or loss
Write down of Russia-focused investments (note 10)
Returns on investment portfolio at fair value through profit or loss
Interest on bank deposits
Other interest
Other investment income
Total Revenue
2022
440,107
11,809
24,316
(79,995)
(4,077)
(47,947)
4,146
4,275
8,421
400,581
2021
396,376
3,754
11,870
33,850
-
49,474
2,254
1,859
4,113
449,963
The Group derives its revenue from contracts with customers from the sale of services in its Brazil – Maritime services segment.
The revenue from contracts with customers can be disaggregated as follows:
Harbour manoeuvres
Special operations
Ship agency
Towage and ship agency services
Container handling
Warehousing
Ancillary services
Offshore support bases
Other services
Port terminals
Logistics
Shipyard
Total Revenue from contracts with customers
2022
201,429
17,633
9,910
228,972
73,166
40,946
20,932
10,617
13,360
159,021
47,591
4,523
440,107
2021
178,552
20,558
8,774
207,884
72,402
35,036
21,283
7,234
13,040
148,995
35,142
4,355
396,376
Contract balance
Trade receivables are generally received within 30 days. The carrying amount of operational trade receivables at the end of the
reporting period was US$54.5 million (2021: US$49.1 million). These amounts include US$12.0 million (2021: US$13.5 million) of
contract assets (unbilled accounts receivables). There were no contract liabilities as of 31 December 2022 (2021: none).
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 5
Revenue (continued)
Performance obligations
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when
it transfers control over a good or service to a customer, and the payment is generally due within 30 days. Information about the
Group’s performance obligations timing is as follows:
Performance obligation
Towage and ship agency services
Harbour manoeuvres
Special operations
Ship agency
Port Terminals
Container handling
Warehousing
Ancillary services
Offshore support bases
Other services
Logistics
Shipyard
When performance obligation is typically satisfied
At a point in time
At a point in time
At a point in time
At a point in time
At a point in time
At a point in time
At a point in time
At a point in time
At a point in time
Over time
The disaggregation of revenue from contracts with customers based on the timing of performance obligations is as follows:
At a point of time
Over time
Total Revenue from contracts with customers
2022
435,584
4,523
440,107
2021
392,021
4,355
396,376
The performance obligation of shipyard is satisfied over time and the revenue related to these contracts is recognised when
the work in proportion to the stage of completion of the transaction contracted has been performed. At 31 December 2022 and
2021, there were no warranties or refund obligations associated with ship construction contracts.
There are no significant judgements in the determination of when performance obligations are typically satisfied.
All revenue is derived from continuing operations.
66
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 6
Employee charges and benefits expenses
Employee charges and benefits expenses are classified as follows:
Wages, salaries and benefits
Social security costs
Other pension costs
Share based payments
Total employee charges and benefits expenses
2022
(102,397)
(22,701)
(904)
(328)
(126,330)
2021
(90,868)
(20,062)
(772)
(324)
(112,026)
Defined contribution retirement benefit schemes
The Group operates defined contribution retirement benefit schemes for all qualifying employees in its Brazilian operations.
The assets of the scheme are held separately from those of the Group in funds under the control of independent managers. An
expense of US$0.9 million (2021: US$0.7 million) recognised under other pension costs represents contributions payable to the
scheme by the Group at rates specified in the rules of the plan.
Information regarding the defined health benefit plans is detailed in note 21.
7
Other operating expenses
Other operating expenses are classified as follows:
Utilities and communications
Insurance
Corporate, governance and compliance costs
Short-term or low-value asset leases
Service costs
Freight
Port expenses
Other operating expenses
Total other operating expenses
8
Finance costs
Finance costs are classified as follows:
Interest on lease liabilities
Interest on bank loans
Exchange loss on foreign currency borrowings
Other interest costs
Total finance costs
2022
(13,616)
(3,483)
(3,292)
(33,432)
(24,925)
(17,320)
(7,168)
(2,819)
(106,055)
2021
(12,309)
(4,076)
(2,359)
(32,881)
(24,401)
(10,717)
(6,629)
(4,917)
(98,289)
2022
(15,798)
(17,160)
(248)
(1,303)
2021
(13,882)
(16,219)
(32)
(94)
(34,509)
(30,227)
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 9
Taxation
At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and accordingly, no expenses or
provisions for such taxes has been recorded by the Group for its Bermuda operations. The Company has received an undertaking
from the Bermuda Government exempting it from all such taxes until 31 March 2035.
Tax expense
The reconciliation of the amounts recognised in profit or loss is as follows:
Current tax expense
Brazilian corporation tax
Brazilian social contribution
Total current tax expense
Deferred tax – origination and reversal of timing differences
Charge for the year in respect of deferred tax liabilities
Credit for the year in respect of deferred tax assets
Total deferred tax expense
Total tax expense
2022
2021
(17,018)
(8,340)
(25,358)
(14,123)
12,825
(1,298)
(26,656)
(17,239)
(7,114)
(24,353)
(6,737)
3,165
(3,572)
(27,925)
Brazilian corporation tax is calculated at 25% (2021: 25%) of the taxable profit for the year. Brazilian social contribution tax is
calculated at 9% (2021: 9%) of the taxable profit for the year.
The reconciliation of the effective tax rate is as follows:
Profit before tax
Less: Loss/(profit) before tax of Bermuda and unallocated segments
Profit before tax – Maritime services
Tax at the aggregate Brazilian tax rate of 34% (2021: 34%)
Net operating losses in the period
Non-deductible expenses
Foreign exchange variance on loans
Tax effect of share of results of joint ventures and associates
Tax effect of foreign exchange gains or losses on monetary items
Retranslation of non-monetary items
Share option scheme
Leasing
Other
Tax expense for the year
Effective rate for the year – Maritime services
Effective rate for the year – Group
2022
38,134
54,991
93,125
(31,663)
(788)
(863)
(3,008)
1,076
625
11,592
-
64
(3,691)
(26,656)
29%
70%
2021
110,391
(41,036)
69,355
(23,581)
(816)
(554)
1,142
(1,710)
(881)
228
(110)
158
(1,801)
(27,925)
40%
25%
68
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars)
The tax expense related to amounts recognised in other comprehensive income is as follows:
For the year ended 31 December 2022
Items that will not be reclassified subsequently to profit or loss
Post-employment benefits
Purchase price adjustment of associate
Items that will be or may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations
Effective portion of changes in fair value of derivatives
Total amounts recognised in other comprehensive income
For the year ended 31 December 2021
Items that will not be reclassified subsequently to profit or loss
Post-employment benefits
Items that will be or may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations
Effective portion of changes in fair value of derivatives
Total amounts recognised in other comprehensive income
Before tax
Tax
(expense)/credit
124
213
9,551
12
9,900
(31)
(54)
(2,423)
(3)
(2,511)
Net of tax
93
159
7,128
9
7,389
Before tax
Tax
(expense)/credit
Net of tax
164
(11,302)
239
(10,899)
(56)
3,843
(81)
3,706
108
(7,459)
158
(7,193)
Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group and their movements during the current
and prior reporting period:
Foreign
exchange
variance on
loans
Tax
depreciation
Profit on
construction
contracts
Other timing
differences
Tax losses
At 1 January 2021
(Charge)/credit to income
Other adjustments
Exchange differences
At 31 December 2021
(Charge)/credit to income
Other adjustments
Exchange differences
(29,483)
(2,497)
-
2,130
(29,850)
(1,711)
(1,510)
(2,168)
At 31 December 2022
(35,239)
36,457
1,251
-
(2,436)
35,272
(8,433)
(68)
2,200
28,971
14,705
(4,159)
-
(868)
9,678
(4,112)
151
703
15,523
(632)
(83)
-
14,808
(534)
82
-
6,184
2,237
(1,456)
(429)
6,536
1,900
1,438
678
Retranslation
of non-
monetary
items
(64,657)
228
-
123
(64,306)
11,592
1
(111)
Total
(21,271)
(3,572)
(1,539)
(1,480)
(27,862)
(1,298)
94
1,302
6,420
14,356
10,552
(52,824)
(27,764)
Certain tax assets and liabilities have been offset on an entity-by-entity basis. After offset, deferred tax balances are disclosed
in the statement of financial position as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
2022
21,969
(49,733)
(27,764)
2021
22,332
(50,194)
(27,862)
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars)
9
Taxation (continued)
At 31 December 2022, the Group had unused tax losses of US$31.2 million (2021: US$39.0 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$4.0 million (2021: US$7.6 million) due to the unpredictability of
future profit streams, as a tax asset of one entity of the Group cannot be offset against a tax liability of another entity of the
Group as there is no legally enforceable right to do so. The Group expects to recover the deferred tax assets between three and
five years.
Deferred tax on foreign exchange variance on loans arises from exchange gains or losses on the Group’s US Dollar and Brazilian
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.
Retranslation of non-monetary items deferred tax arises on Brazilian property, plant and equipment held in subsidiaries with
US Dollar as their functional currency. Deferred tax is calculated on the difference between the historical US Dollar balances
recorded in the Group’s accounts and the Brazilian Real balances used in the Group’s Brazilian tax calculations.
Recoverable and payable taxes
The Group reviews taxes and levies impacting its business to ensure that payments are accurately made. In the event that tax
credits arise, the Group intends to use them in future years within their legal term. If the Group does not utilise the tax credit
within their legal term, a reimbursement of such amounts will be requested from the Brazilian Internal Revenue Service.
The recoverable taxes relate to Brazilian federal taxes, Brazilian sales and rendering of services taxes, Brazilian payroll taxes,
Brazilian income tax, Brazilian social contributions, and judicial bonds related to these items. The recoverable taxes are
classified as current if they are expected to be used or reimbursed within 12 months of the end of the period, otherwise they are
classified as non-current, and are as follows:
Recoverable taxes – current
Recoverable taxes – non-current
Total recoverable taxes
2022
34,515
15,143
49,658
2021
25,380
12,816
38,196
The payable taxes relate to Brazilian federal taxes, Brazilian rendering of services taxes, Brazilian payroll taxes and Brazilian
income tax. The payable taxes are classified as current if they are payable within 12 months of the end of the period, otherwise
they are classified as non-current, and are as follows:
Taxes payable – current
Taxes payable – non-current
Total taxes payable
2022
(10,290)
-
(10,290)
2021
(8,057)
-
(8,057)
70
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 10
Financial assets at fair value through profit or loss
The movement in financial assets at fair value through profit or loss is as follows:
Opening balance – 1 January
Additions, at cost
Disposals, at market value
(Decrease)/increase in fair value of financial assets at fair value through profit or loss
Write down of Russia-focused investments1
Profit on disposal of financial assets at fair value through profit or loss
Closing balance – 31 December
Bermuda – Investment segment
Brazil – Maritime services segment
2022
392,931
70,864
(128,959)
(79,995)
(4,077)
24,316
275,080
272,931
2,149
2021
347,464
72,811
(73,064)
33,850
-
11,870
392,931
349,613
43,318
1 During the year ended 31 December 2022, the Company wrote down the full value of its investment in Prosperity Quest Fund, a
Russia-focused equity fund held within the investments segment portfolio, following the issue of an investor notice announcing
the suspension of its net asset valuation, subscriptions and redemptions.
Bermuda – Investment segment
The financial assets at fair value through profit or loss held in this segment 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 financial assets at fair value through profit or loss are open ended funds whose shares may not be listed on a stock
exchange but are redeemable for cash at the current net asset value at the option of the Group. 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 by third parties using various valuation techniques that include inputs for the
asset or liability that are not based on observable market data.
The Investment Manager receives an investment management fee of 1% of the valuation of funds under management and an
annual performance fee of 10% of the net investment return which exceeds the benchmark, provided that the high-water mark
has been exceeded. The portfolio performance is measured against a benchmark calculated by reference to the US CPI Urban
Consumers index not seasonally adjusted plus 3% per annum over rolling three-year periods. Payment of performance fees are
subject to a high-water mark and are capped at a maximum of 2% of the portfolio net asset value. The Board considers a three-
year measurement period appropriate due to the investment mandate’s long-term horizon and an absolute return inflation-
linked benchmark appropriately reflects the Group’s investment objectives while having a linkage to economic factors.
At the end of the reporting period, the Group had entered into commitment agreements with respect to the investment portfolio
for capital subscriptions. The classification of those commitments based on their expiry date is as follows:
Within one year
In the second to fifth year inclusive
After five years
Total commitment for capital subscriptions
2022
5,951
2,346
42,129
50,426
2021
5,219
2,946
35,056
43,221
The exact timing of capital calls made in respect of the above commitments are at the discretion of the manager of the
underlying structure. If required, amounts expected to be settled within one year will be met from the realisation of liquid
investment holdings. 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 condition of each individual structure.
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 10
Financial assets at fair value through profit or loss (continued)
Brazil – Maritime Services segment
The financial assets at fair value through profit or loss held in this segment are held and managed separately from the Bermuda
– Investment segment portfolio and consist of US Dollar denominated depository notes, an investment fund and an exchange
traded fund both privately managed. Those funds’ financial obligations are limited to service fees to the asset management
company employed to execute investment transactions, audit fees and other similar expenses. The funds’ underlying
investments are highly liquid and readily convertible.
Information about the Group’s exposure to financial risks and fair value information related to financial assets at fair value
through profit or loss is included in note 30.
11
Trade and other receivables
Trade and other receivables are classified as follows:
Non-current
Other trade receivables
Total other trade receivables
Current
Trade receivable for the sale of services
Unbilled trade receivables
Total gross current trade receivables
Allowance for expected credit loss
Total current trade receivables
Prepayments
Insurance claim receivable
Employee advances
Disposal proceeds of financial assets at fair value through profit or loss receivable
Other receivables
Total other current receivables
Total trade and other receivables
The aging of the trade receivables is as follows:
Current
From 0 – 30 days
From 31 – 90 days
From 91 – 180 days
More than 180 days
Total gross trade receivables
72
2022
1,456
1,456
43,293
12,036
55,329
(792)
54,537
4,887
981
1,449
2,181
3,101
12,599
67,136
2022
44,699
5,997
2,461
1,236
936
55,329
2021
1,580
1,580
35,915
13,517
49,432
(338)
49,094
6,646
632
1,236
-
1,742
10,256
59,350
2021
43,160
4,098
858
988
328
49,432
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) The movement in allowance for expected credit loss is as follows:
Opening balance – 1 January
(Increase)/decrease in allowance recognised in profit or loss
Exchange differences
Closing balance – 31 December
2022
(338)
(419)
(35)
(792)
2021
(554)
188
28
(338)
Information about the Group’s exposure to credit risks related to trade receivables is included in note 30.
12
Inventories
Inventories are classified as follows:
Operating materials
Raw materials for third party vessel construction
Total inventories
2022
13,727
3,852
17,579
2021
10,829
1,468
12,297
Inventories are presented net of provision for obsolescence, amounting to US$0.3 million (2021: US$0.4 million).
13
Joint ventures and associates
The Group holds the following significant interests in joint ventures and associates at the end of the reporting period:
Place of incorporation and
operation
Proportion of ownership
2022
2021
JOINT VENTURES
Logistics
Porto Campinas Logística e Intermodal Ltda
Offshore
Wilson Sons Ultratug Participações S.A.
Atlantic Offshore S.A.
ASSOCIATES
Brazil
Brazil
Panamá
50%
50%
50%
Argonáutica Engenharia e Pesquisas S.A.
Brazil
32.32%
50%
50%
50%
-
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 13
Joint ventures and associates (continued)
The aggregated Group’s interests in joint ventures and associates are equity accounted. The financial information of the joint
ventures and associates and reconciliations to the share of result of joint ventures and associates and the investment in joint
ventures and associates recognised for the period are as follows:
2022
182,882
(116,046)
(53,212)
5,057
18,681
2,656
(14,756)
6,581
(253)
6,328
6,334
50%
3,167
(6)
32.32%
(2)
2021
118,049
(70,364)
(50,962)
(3,904)
(7,181)
302
(15,789)
(22,668)
12,610
(10,058)
(10,058)
50%
(5,029)
-
N/A
-
3,165
(5,029)
2022
5,747
51,260
551,921
608,928
(46,506)
(56,833)
(324,012)
(427,351)
181,577
180,079
50%
90,040
1,498
32.32%
484
1,711
(10,372)
81,863
2021
7,541
46,548
584,886
638,975
(66,567)
(49,173)
(375,988)
(491,728)
147,247
147,247
50%
73,624
-
N/A
-
-
(12,071)
61,553
Sales of services
Operating expenses
Depreciation and amortisation
Foreign exchange gains/(losses) on monetary items
Results from operating activities
Finance income
Finance costs
Profit/(loss) before tax
Tax (expense)/credit
Profit/(loss) for the year
Total profit/(loss) for the year – joint ventures
Participation
Share of profit/(loss) for the year for joint ventures
Total profit/(loss) for the year – associates
Participation
Share of profit/(loss) for the year for associates
Share of result of joint ventures and associates
Cash and cash equivalents
Other current assets
Non-current assets
Total assets
Trade and other payables
Other current liabilities
Non-current liabilities
Total liabilities
Total net assets
Total net assets – joint ventures
Participation
Group’s share of net assets – joint ventures
Total net assets – associates
Participation
Group’s share of net assets – associates
Goodwill and surplus generated on associate purchase
Cumulative elimination of profit on construction contracts
Investment in joint ventures and associates
74
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) The movement in investment in joint ventures and associates is as follows:
Opening balance – 1 January
Share of result of joint ventures and associates
Capital increase
Elimination of profit on construction contracts
Purchase price adjustment of associate
Post-employment benefits
Translation reserve
Closing balance – 31 December
2022
61,553
3,165
17,016
(158)
159
-
128
2021
26,185
(5,029)
40,207
17
-
10
163
81,863
61,553
During the year ended 31 December 2022, the Group increased its invested capital in Wilson Sons Ultratug Participações S.A.
with a cash contribution of US$14.9 million and in Porto Campinas Logística e Intermodal Ltda with a cash contribution of
US$0.1 million and acquired a 32.32% participation in Argonáutica Engenharia e Pesquisas S.A. with a cash contribution of
US$2.0 million.
During the year ended 31 December 2021, the Group increased its invested capital in Wilson Sons Ultratug Participações S.A.
with a cash contribution of US$20.0 million, and in Atlantic Offshore S.A. with the conversion in capital of a US$20.2 million
related party loan.
Guarantees
Wilson Sons Ultratug Participações S.A. has loans with the Brazilian Development Bank guaranteed by a lien on the financed
supply vessels and by a corporate guarantee from its participants, proportionate to their ownership. The Group’s subsidiary
Wilson Sons Holdings Brasil Ltda. is guaranteeing US$163.7 million (2021: US$160.4 million).
Wilson Sons Ultratug Participações S.A. has a loan with Banco do Brasil guaranteed by a pledge on the financed offshore
support vessels, a letter of credit issued by Banco de Crédito e Inversiones and its long-term contracts with Petrobras. The
joint venture has to maintain a cash reserve account until full repayment of the loan agreement amounting to US$1.7 million
(2021: US$2.1 million) presented as long-term investment.
Covenants
On 31 December 2022 and 2021, Wilson Sons Ultratug Participações S.A. was not in compliance with one of its covenants’ ratios
with Banco do Brasil, resulting in a required increase in capital within a year of US$1.8 million (2021: US$ 5.5 million). As the
capital will be increased to that amount within a year, management will not negotiate a waiver letter with Banco do Brasil. There
are no other capital commitments for the joint ventures and associates as of 31 December 2022 (2021: none).
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 14
Property, plant and equipment
Land and
buildings
Floating
Craft
Vehicles, plant
and equipment
Assets under
construction
Cost
At 1 January 2021
Additions
Transfers from joint operations
Transfers
Disposals
Exchange differences
At 1 January 2022
Additions
Transfers
Transfers to intangible assets
Disposals
Exchange differences
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charge for the year
Elimination on construction contracts
Disposals
Exchange differences
At 1 January 2022
Charge for the year
Elimination on construction contracts
Disposals
Exchange differences
At 31 December 2022
Carrying Amount
At 31 December 2021
At 31 December 2022
279,313
8,992
-
(16)
(1,998)
(11,608)
274,683
10,835
(112)
-
(1,955)
11,084
525,484
22,152
1,350
1,462
(9,196)
-
541,252
15,493
24,623
-
(4,477)
-
294,535
576,891
79,628
7,989
-
(1,193)
(3,773)
82,651
8,518
-
(1,645)
3,644
93,168
245,583
26,070
25
(6,842)
-
264,836
27,831
87
(4,426)
-
288,328
192,032
201,367
276,416
288,563
209,034
6,919
32
(1,446)
(4,607)
(11,468)
198,464
9,936
(2,317)
(60)
(4,892)
10,854
211,985
109,774
12,572
-
(3,053)
(5,855)
113,438
12,124
-
(4,609)
5,724
126,677
85,026
85,308
Total
1,014,123
47,352
1,382
-
(15,801)
(23,076)
1,023,980
63,268
-
(60)
(11,324)
21,938
292
9,289
-
-
-
-
9,581
27,004
(22,194)
-
-
-
14,391
1,097,802
-
-
-
-
-
-
-
-
-
-
-
434,985
46,631
25
(11,088)
(9,628)
460,925
48,473
87
(10,680)
9,368
508,173
9,581
14,391
563,055
589,629
Land and buildings with a net book value of US$0.2 million (2021: US$0.2 million) and plant and equipment with a carrying
amount of US$0.1 million (2021: US$0.1 million) have been given in guarantee for various legal processes.
The Group has pledged assets with a carrying amount of US$230.2 million (2021: US$251.6 million) to secure loans granted to
the Group.
The amount of borrowing costs capitalised in 2022 was US$0.1 million at an average interest rate of 5.6% (2021: none).
The Group has contractual commitments to suppliers for the acquisition and construction of property, plant and equipment
amounting to US$19.9 million (2021: US$14.2 million).
76
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 15
Lease arrangements
Right-of-use assets
Right-of-use assets are classified as follows:
Operational
facilities
Floating
Craft
Buildings
Vehicles, plant
and equipment
Total
Cost
At 1 January 2021
Additions
154,710
7,278
-
7,353
Contractual amendments
33,466
(838)
(15,662)
-
5,697
176
119
(177)
9,749
177,434
189
7,718
40
32,787
(806)
(16,645)
Terminated contracts
Exchange differences
At 1 January 2022
Additions
Contractual amendments
Terminated contracts
Exchange differences
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charge for the year
Terminated contracts
Exchange differences
At 1 January 2022
Charge for the year
Terminated contracts
Exchange differences
(5,396)
(716)
(427)
(326)
(6,865)
167,118
13,077
-
3,018
17,901
5,793
5,388
1,305
63
8,846
194,429
899
5,222
117
23,874
-
(2,796)
(3,771)
(58)
(6,625)
10,313
510
96
328
11,247
195,332
19,602
3,081
10,132
228,147
13,739
7,410
(3,264)
4,750
4,187
-
2,421
980
(504)
7,246
748
(598)
413
(743)
63
(288)
18,298
8,194
2,960
7,108
28,156
13,325
(4,366)
(555)
36,560
8,244
4,825
912
916
14,897
-
(1,226)
(2,424)
(44)
(3,694)
1,104
242
63
276
1,685
At 31 December 2022
27,646
12,035
1,511
8,256
49,448
Carrying Amount
At 31 December 2021
At 31 December 2022
148,820
4,883
2,428
1,738
157,869
167,686
7,567
1,570
1,876
178,699
Operational facilities
Tecon Rio Grande
Lease commitments to operate the container terminal and heavy cargo terminal in the Port of Rio Grande, expiring in 2047. The
commitments include a monthly payment for facilities and leased areas, a contractual payment per container moved based on
minimum forecast volumes and a payment per tonne in respect of general cargo handling and unloading.
Tecon Salvador
Lease commitments to operate the container terminal and heavy cargo terminal in the Port of Salvador, expiring in 2050. The
commitments require the Group to make a minimum specified investment to expand the leased terminal area and include
a monthly payment for facilities and leased areas, a contractual payment per container moved based on minimum forecast
volumes and a fee per tonne of non-containerised cargo moved based on minimum forecast volumes.
Shipyard
Lease commitments to operate an area used to expand and develop a Group’s shipyard, expiring in 2038 and renewable for a
further period of 30 years at the option of the Group. Management’s intention is to exercise the renewal option.
Offshore support base
Lease commitments to operate a port area with convenient access to service oil producing basins, expiring in 2043.
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 15
Lease arrangements (continued)
Logistics
Lease commitments for a distribution centre, expiring in 2026.
Floating craft
Lease commitments for the chartering of vessels for maritime transport between port terminals.
Buildings
Lease commitments for the Brazilian headquarters, branches and commercial offices in several Brazilian cities.
Vehicles, plant and equipment
Lease commitments mainly for forklifts, vehicles for operational, commercial and administrative activities and other operating
equipment.
Lease liabilities
Lease liabilities are classified as follows:
Operational facilities
Floating craft
Buildings
Vehicles, plant and equipment
Total
Total current
Total non-current
Average discount rate
2022
8.55%
9.61%
9.75%
12.12%
(184,591)
(7,605)
(2,121)
(1,859)
(196,176)
(24,728)
(171,448)
2022
(25,958)
(23,101)
(56,682)
(355,360)
(461,101)
264,925
(196,176)
2021
(159,444)
(4,823)
(2,139)
(1,437)
(167,843)
(19,449)
(148,394)
2021
(20,323)
(37,535)
(32,767)
(313,102)
(403,727)
235,884
(167,843)
The contractual undiscounted cash flows related to leases liabilities are as follows:
Within one year
In the second year
In the third to fifth years inclusive
After five years
Total cash flows
Adjustment to present value
Total lease liabilities
The lease liabilities balance considering the projected future inflation rate in the discounted payment flows is as follows:
Actual outflow
Embedded interest
Lease liabilities
Inflated flow
Inflated embedded interest
Inflated lease liabilities
78
2022
(461,101)
264,925
(196,176)
(284,773)
204,117
(80,656)
2021
(403,727)
235,884
(167,843)
(426,694)
252,974
(173,720)
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) Amounts recognised in profit and loss
Depreciation of right-of-use assets
PIS and COFINS taxes
Net depreciation of right-of-use assets
Interest on lease liabilities
PIS and COFINS taxes
Interest on lease liabilities
Variable lease payments not included in the measurement of lease liabilities1
Expenses relating to short-term leases
Expenses relating to low-value assets
Total
2022
(14,897)
1,324
(13,573)
(16,810)
1,012
(15,798)
(2,376)
(29,778)
(1,281)
(62,806)
2021
(13,325)
1,262
(12,063)
(14,771)
889
(13,882)
(2,332)
(29,641)
(897)
(58,815)
1.
The amounts refer to payments which exceeded the minimum forecast volumes of Tecon Rio Grande and Tecon Salvador and payments related to the
number of vessel trips which were not included in the measurement of lease liabilities.
Amounts recognised in the cash flow statement
Payment of lease liability
Interest paid – lease liability
Short-term leases paid
Variable lease payments
Low-value leases paid
Total cash outflow
2022
(8,591)
(16,810)
(29,778)
(2,376)
(1,281)
(58,836)
2021
(8,473)
(14,771)
(29,641)
(2,332)
(897)
(56,114)
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 16
Other intangible assets
Other intangible assets cost and related accumulated amortisation are classified as follows:
Cost
At 1 January 2021
Additions
Disposals
Exchange differences
At 1 January 2022
Additions
Transfers from right-of-use
Disposals
Exchange differences
At 31 December 2022
Accumulated amortisation
At 1 January 2021
Charge for the year
Disposals
Exchange differences
At 1 January 2022
Charge for the year
Disposals
Exchange differences
At 31 December 2022
Carrying Amount
31 December 2021
31 December 2022
17
Goodwill
Goodwill is classified as follows:
Carrying Value
At 1 January 2021
Exchange differences
At 1 January 2022
Exchange differences
At 31 December 2022
Computer
Software
Concession
rights
Other
Total
41,107
1,375
(925)
(634)
40,923
1,386
60
(1,105)
558
41,822
34,348
2,298
(695)
(411)
35,540
1,965
(1,105)
381
36,781
16,013
-
-
(512)
15,501
-
-
-
277
15,778
5,852
420
-
(324)
5,948
424
-
102
6,474
47
-
-
(2)
45
57,167
1,375
(925)
(1,148)
56,469
-
-
-
2
47
1,386
60
(1,105)
837
57,647
-
-
-
-
-
40,200
2,718
(695)
(735)
41,488
-
-
-
-
2,389
(1,105)
483
43,255
5,383
9,553
45
14,981
5,041
9,304
47
14,392
Tecon Rio Grande
Tecon Salvador
Total
10,949
(157)
10,792
148
10,940
2,480
-
2,480
-
2,480
13,429
(157)
13,272
148
13,420
The goodwill associated with each cash-generating unit “CGU” (Tecon Salvador and Tecon Rio Grande) is attributed to the Brazil
- Maritime Services segment.
Each CGU is assessed for impairment annually and whenever there is an indication of impairment. The carrying value of
goodwill has been assessed with reference to its value in use reflecting the projected discounted cash flows of each CGU to
which goodwill has been allocated.
Details of the impairment test are disclosed in note 18.
80
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 18
Impairment Test of Cash Generating Units
Tecon Rio Grande and Tecon Salvador
The Tecon Rio Grande and Tecon Salvador CGUs contains goodwill and as such are tested annually for impairment. The cash
flows of these CGUs are derived from operating budgets, historical and prospective data, and include forecast assumptions on
revenue, costs and expenses, investments, and projection period. The key assumptions used in determining value in use are
as follows:
Discount rate
Growth rate
Inflation rate
Tecon Rio Grande
Tecon Salvador
2022
8.5%
5.8%
3.3%
2021
9.2%
4.3%
3.7%
2022
8.5%
3.4%
3.3%
2021
9.5%
3.4%
3.7%
Further assumptions include sales and operating margins, which are based on past experience considering the effect potential
changes in market or operating conditions. Projected volumes for both CGUs were based on the expected performance of the
Brazilian economy until reaching operating capacity for each. The discount rate was based on weighted average cost of capital
(“WACC”), whereas the growth rate for projection is based on the inflation rate only after reaching operating capacity.
At 31 December 2022 and 2021, the estimated recoverable amount of these CGUs significantly exceeded their carrying value
and as such no impairment loss was recognised. An increase in the discount rate of up to 32.7% (2021: 33.7%) for Tecon Rio
Grande and 6.6% (2021: 6.4%) for Tecon Salvador would not result in an impairment loss.
Offshore support bases
For the year ended 31 December 2022 and 2021, the offshore support bases CGU, which is part of the Brazil – Maritime Services
segment, reported negative earnings before taxes, and as such was tested for impairment. The cash flows of this CGU are
derived from operating budgets, historical and prospective data, and include the following forecast assumptions: (i) revenue,
(ii) costs and expenses, (iii) investments, (iv) projection period and (v) discount rate.
i.
Revenue: The assumption considers the estimated pace of growth in oil & gas offshore exploration and production. Data
from the Brazilian Petroleum National Agency, the Energy Research Agency, oil companies’ releases and specialised
industry reports all support a significant increase in oil exploration and production activities in Brazil in the next 10 years.
The Group assesses it will successfully capture part of that increase in demand and expects from 2028 onwards to reach
operating levels attained prior to the economic and oil and gas market crises. Based on current and expected future tender
activity and competitive advantage, the average growth rate is estimated at 15.2% each year until 2028. For 2032 onward,
the growth rate is estimated at 1.0%, based on the expected growth in the Brazilian oil and gas sector and in the region
in which the CGU operates. Projections for 2023 include a 4.6% increase in average contract prices in relation to current
pricing and a 7.5% increase in public prices for Spot berthing compared to 2022. From 2024 onwards, prices are adjusted
for inflation.
ii. Costs and expenses: Projections for 2023 are in line with the budget and include an increase in fixed costs of 26% over
2022. From 2024 onwards, costs are forecasted to increase in line with the increase in activity.
iii.
Investments: The Group did not include any expansion investment within its projections.
iv. Projection period: The Group has prepared the projections using a 10-year period plus a perpetuity, as the oil and gas
industry life cycle is at least 10 years, due to the life cycle of investment in an oil field from exploration to sustainable
production.
v. Discount rate: The discount rate calculation is based on the specific circumstances of the CGU, taking into consideration
the time value of money and individual risks of the CGU that have not been incorporated in the cash flow estimates, and is a
weighted average cost of capital (WACC). The Group has determined the discount rate using reputable sources to capture
macroeconomic assumptions and information from comparable companies in the oil field and the maritime services
sector in which the CGU operates. For the year ended 31 December 2022, the discount rate was estimated at 10.2% (2021:
10.1%).
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 18
Impairment Test of Cash Generating Units (continued)
At 31 December 2022, the estimated recoverable amount of the CGU of US$91.9 million (2021: US$72.1 million) exceeded its
carrying value of US$47.6 million (2021: US$42.9 million) and as such no impairment loss was recognised. While maintaining all
other assumptions constant, either an increase in the discount rate of up to 3.6% (2021: 2.5%), a decrease in revenue over the
projected period of up to 11.1% (2021: 7.8%), or a decrease in revenue over the first 3 years of the projected period of up to 99.2%
(2021: 80.0%) would not result in an impairment loss.
19
Trade and other payables
Trade and other payables are classified as follows:
Trade payables
Accruals
Other payables
Provisions for employee benefits
Deferred income
Total trade and other payables
2022
(25,583)
(8,550)
(479)
(21,365)
(2,360)
(58,337)
2021
(29,242)
(7,424)
(441)
(19,547)
(1,859)
(58,513)
Trade creditors and accruals principally comprise amounts outstanding for trade purposes and ongoing costs. 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 agreed with each vendor.
20 Bank loans
The movement in bank loans is as follows:
Opening – 1 January
Additions
Principal amortisation
Interest amortisation
Accrued interest
Exchange difference
Closing – 31 December
2022
(301,599)
(59,793)
49,349
13,333
(17,437)
(5,744)
2021
(342,661)
(19,438)
57,926
10,390
(16,246)
8,430
(321,891)
(301,599)
82
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) The terms and conditions of outstanding bank loans are as follows:
2035
2028
2022
2034
2029
2027
2035
2024
2023
2023
2025
Lender
BNDES
BNDES
BNDES
BNDES
BNDES
BNDES
Currency
Annual
interest
rate %
linked to US Dollar
2.30% – 3.71%
linked to US Dollar
2.07% – 4.08%
linked to US Dollar
Real
Real
Real
5.00%
15.91%
14.65%
9.79%
Banco do Brasil
linked to US Dollar
2.00% – 4.00%
Bradesco
Bradesco
Banco Santander
Banco Santander
Total bank loans
Real
10.08% - 10.45%
Real
US Dollar
Real
10.75%
2.63%
15.59%
The breakdown of bank loans by maturity is as follows:
Within one year
In the second year
In the third to fifth years (inclusive)
After five years
Total bank loans
2022
2021
Year of
maturity
Carrying
value
Fair value
(129,231)
(129,231)
(21,477)
(21,477)
-
-
Carrying
value
(110,514)
(25,161)
(177)
Fair value
(110,514)
(25,161)
(177)
(50,148)
(50,148)
(45,264)
(45,264)
(5,816)
(564)
(66,110)
(19,571)
(2,406)
(20,288)
(6,280)
(5,816)
(564)
(66,110)
(19,718)
(2,411)
(20,304)
(6,279)
(6,241)
(638)
(71,854)
(27,248)
(4,494)
(10,008)
-
(6,241)
(638)
(71,854)
(27,417)
(4,489)
(10,008)
-
(321,891)
(322,058)
(301,599)
(301,763)
2022
(59,881)
(56,022)
(91,037)
(114,951)
(321,891)
2021
(45,287)
(47,961)
(86,671)
(121,680)
(301,599)
Guarantees
The loan agreements with BNDES and Banco do Brasil rely on corporate guarantees from the Group’s subsidiary party to the
agreement. For some contracts, the corporate guarantee is in addition to a pledge of the respective financed tugboat or a lien
over the logistics and port operations equipment financed.
The loan agreements with Bradesco and Banco Santander rely on corporate guarantees from the Group’s subsidiary party to
the agreement.
Undrawn credit facilities
At 31 December 2022, the Group had US$37.1 million (2021: US$78.8 million) of undrawn borrowing facilities available in relation
to the Salvador Terminal expansion and the dry-docking, maintenance and repair of tugs.
Covenants
Some of the loan agreements include obligations related to financial indicators, including EBITDA/Net operating revenue,
EBITDA/Debt service, Equity/Total assets and Net debt/EBITDA. At 31 December 2022 and 2021, the Group was in compliance
with all covenants related to its loan agreements.
Information about the Group’s exposure to financial risks is included in note 30.
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 21
Post-employment benefits
The Group operates a private medical insurance scheme for its employees in its Brazilian operations, which requires the eligible
employees to pay fixed monthly contributions. In accordance with Brazilian law, eligible employees with greater than ten years’
service acquire the right to remain in the plan following retirement or termination of employment. 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 membership of the scheme.
The movement in the present value of the actuarial liability for the year is as follows:
Opening balance – 1 January
Current service cost
Interest expense
Contributions to the plan
Changes in economic and financial assumptions
Changes in biometric and demographic assumptions
Exchange differences
Closing balance – 31 December
2022
(1,562)
(7)
(146)
(14)
228
(126)
(110)
(1,737)
2021
(1,641)
(3)
(133)
(30)
522
(391)
114
(1,562)
The calculation of the liability generated by the defined health benefits plan involves actuarial assumptions that are based on
market conditions. The principal actuarial assumptions, and the impact of a change (keeping the other assumptions constant)
on the defined benefit obligation valuation are as follows:
Annual interest rate
Estimated inflation rate in the long-term
Impact of 0.5% increase
Impact of 0.5% decrease
Medical cost trend rate
Impact of 0.5% increase
Impact of 0.5% decrease
2022
9.18%
3.00%
(214)
247
5.58%
255
(222)
2021
8.67%
3.00%
(195)
223
5.58%
229
(199)
84
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 22
Legal claims
In the normal course of its operations in Brazil, the Group is exposed to numerous local legal claims. The Group’s policy is to
vigorously contest those claims, many of which appear to have little substance or merit, and manage such claims through its
legal counsel.
Labour claims – Claims involving payment of health risks, additional overtime and other allowances.
Tax cases – Claims involving government tax assessments when the Group considers it has a chance of successfully defending
its position.
Civil and environmental cases – Claims involving indemnification for material damage, environmental and shipping claims and
other contractual disputes.
Claims deemed probable and subject to reasonable estimation by management and its legal counsel are recorded as provisions,
whereas claims deemed only reasonably possible are disclosed as contingent liabilities. Both provisions and contingent
liabilities are subject to uncertainties around the timing and amount of possible cash outflows as the outcome is heavily
dependent on court proceedings.
The movement in the carrying amount of each class of provision for legal claims for the period is as follows:
At 1 January 2022
Additional provisions
Unused amounts reversed
Utilisation of provisions
Exchange difference
At 31 December 2022
Labour claims
Tax cases
Civil and
environmental
cases
(6,190)
(1,295)
(1,422)
Total
(8,907)
(288)
(1,536)
(263)
(2,087)
1,385
165
463
2,013
524
5
30
559
(409)
(71)
(95)
(575)
(4,978)
(2,732)
(1,287)
(8,997)
The contingent liabilities at the end of each period are as follows:
At 31 December 2021
At 31 December 2022
Labour claims
Tax cases
Civil and
environmental
cases
(4,968)
(52,793)
(14,881)
Total
(72,642)
(6,002)
(66,071)
(11,158)
(83,231)
Other non-current assets of US$3.5 million (2021: US$3.6 million) represent legal deposits required by the Brazilian legal
authorities as security to contest legal actions.
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 23
Related party transactions
Transactions between the Group and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
Transactions and outstanding balances between the Group and its related parties are as follows:
Revenues/(Expenses)
Receivable/(Payable)
2022
2021
2022
2021
Joint ventures
Wilson, Sons Ultratug Participações S.A.1
2,778
524
11,176
10,784
Others
Hanseatic Asset Management LBG2
Hansa Capital Partners3
Gouvêa Vieira Advogados4
(3,047)
(32)
(28)
(4,876)
(484)
(2,133)
-
(21)
-
-
-
-
1.
2.
3.
4.
Related party loans with Wilson, Sons Ultratug Participações S.A. (interest – 3.6% per year with no maturity date).
Mr. W Salomon is chairman and Mr. C Townsend is a director of Hanseatic Asset Management LBG. Fees were paid to Hanseatic Asset Management LBG
for acting as Investment Manager of the Group’s investment portfolio.
Mr. W Salomon is a partner of Hansa Capital Partners. Office facilities charges were paid to Hansa Capital Partners.
Mr. J F Gouvêa Vieira is a partner in the law firm Gouvêa Vieira Advogados. Fees were paid to Gouvêa Vieira Advogados for legal services.
Mr. J F Gouvêa Vieira is a Director of Jofran Services. During the year ended 31 December 2022, directors’ fees of US$0.04
million were paid to Mr. J F Gouvêa Vieira through Jofran Services (2021: US$0.10 million).
Mr. C Townsend is a Director of Hansa Capital GmbH. During the year ended 31 December 2022, directors’ fees of US$0.09
million were paid to Mr. C Townsend through Hansa Capital GmbH (2021: US$0.09 million).
Remuneration of key management personnel
The remuneration of the executive directors and other key management of the Group is as follows:
Short-term employee benefits
Post-employment benefits
Share based payment expense
Total remuneration of key management personnel
24
Share capital
Authorised
50,060,000 ordinary shares of 20p each (2021: 50,060,000 ordinary shares of 20p each)
Issued and fully paid
35,363,040 ordinary shares of 20p each (2021: 35,363,040 ordinary shares of 20p each)
The Company has one class of ordinary share which carries no right to fixed income.
2022
(4,914)
(70)
(306)
(5,290)
2022
16,119
11,390
2021
(6,131)
(67)
(236)
(6,434)
2021
16,119
11,390
Share capital is converted at the exchange rate prevailing at 31 December 2002, the date at which the Group’s presentation
currency changed from Sterling to US Dollars, being US$1.61 to £1.
86
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 25
Equity transactions in subsidiaries
On 13 May 2022, the Group’s subsidiary Wilson Sons Holdings Brasil S.A. (WSSA) executed a 1:6 stock split, previously approved
by the shareholders of WSSA on 26 April 2022. Comparative data presented within this note has been updated to reflect the
stock split.
Share options in subsidiary
On 8 January 2014, the shareholders of the subsidiary WSSA approved a share option plan which allowed for the grant of options
to eligible participants, including an increase in the authorised capital of WSSA through the creation of up to 26,465,562 new
shares.
The options provide participants with the right to acquire shares in WSSA at a predetermined fixed price, following a vesting
period of 3 to 5 years, and expire 10 years from the grant date, or immediately on the resignation of the employee, whichever is
earlier. Options lapse if not exercised within 6 months of the date that the participant ceases to be employed within the Group
by reason of injury, disability or retirement.
The movement in share options and related weighted average exercise prices in Brazilian Real (R$) is as follows:
Opening balance – 1 January
Granted during the period
Exercised during the period
Expired during the period
Outstanding at 31 December
Exercisable at 31 December
2022
Number of
shares
WAEP (R$)
9,153,840
6.34
-
(3,726,240)
-
5,427,600
2,654,160
-
5.21
-
7.12
5.56
2021
Number of
shares
13,280,940
2,700,000
(6,743,100)
(84,000)
9,153,840
6,284,520
WAEP (R$)
5.33
8.66
5.28
6.33
6.34
5.34
The options outstanding at 31 December 2022 had an exercise price in the range of R$5.21 to R$8.66 (2021: R$5.21 to R$8.66)
and a weighted-average contractual life of 5.4 years (2021: 4.7 years). The weighted average share price at the date of exercise
for the year ended 31 December 2022 was R$9.11 (2021: R$5.58).
During the year ended 31 December 2022, 3,726,240 share options of the subsidiary WSSA were exercised (2021: 6,743,100),
resulting in an increase in non-controlling interest of 0.48% (2021: 0.89%).
Share buyback in subsidiary
On 13 May 2022, the Board of Directors of the subsidiary WSSA approved a share buyback program, which allows for the
repurchase of the subsidiary’s own common shares. The program is to be executed within 18 months of its approval and is
limited to 8,181,000 common shares to be acquired at market price.
The weighted average share price at the date of repurchase for the year ended 31 December 2022 was R$9.28 (2021: n/a).
During the year ended 31 December 2022, 1,427,200 shares of the subsidiary WSSA were repurchased (2021: n/a), resulting in a
decrease in non-controlling interest of 0.19% (2021: n/a).
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 26 Non-controlling interest
The following table summarises the information related to non-controlling interests. The non-controlling interests immaterial
to the Group originate from the Brazil – Maritime services segment and are presented together as Other. The information on the
Group’s composition is presented in note 3.
For the year ended 31 December 2022
Net assets attributable to non-controlling interest
Profit allocated to non-controlling interest
Other comprehensive income allocated to non-controlling interest
Dividends to non-controlling interest
For the year ended 31 December 2021
Net assets attributable to non-controlling interest
Profit allocated to non-controlling interest
Other comprehensive income allocated to non-controlling interest
Dividends to non-controlling interest
Wilson Sons Holdings
Brasil S.A.
199,004
27,858
3,213
22,728
Wilson Sons Holdings
Brasil S.A.
189,336
17,170
(3,095)
16,533
Other
514
2,295
(15)
2,445
Other
679
1,609
(15)
1,275
Total
199,518
30,153
3,198
25,173
Total
190,015
18,779
(3,110)
17,808
27 Dividends
The following dividends were declared and paid by the Company to its shareholders:
70c per share (2021: 70c per share)
2022
24,754
2021
24,754
After the reporting date, the following dividends were proposed by the Board, but have not been recognised as liabilities:
70c per share (2021: 70c per share)
28
Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
(Loss)/profit for the year attributable to equity holders of the Company
Weighted average number of ordinary shares
Earnings per share – basic and diluted
The Company has no dilutive or potentially dilutive ordinary shares.
2022
24,754
2021
24,754
2022
(18,675)
35,363,040
(52.8)c
2021
63,687
35,363,040
180.1c
88
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 29
Risk management
Capital risk management
The Group manages its capital to ensure that entities within the Group are viable and will be able to continue as a going concern.
The capital structure of the Group consists of debt, long term in nature, which includes the borrowings disclosed in note 20
and the lease liabilities included in note 15, cash and cash equivalents, investments, and equity attributable to equity holders
of the Company comprising issued capital, reserves and retained earnings disclosed in 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 activities. There were no significant changes during the year relative to the Group
policy relating to capital management.
Climate change risk
The Group is exposed to both climate-related risks and opportunities. The two major categories of risk being transition and
physical risk. Transition risks are those relating to the transition to a lower carbon economy and include risks such as policy and
legal risk, technology risk, market risk and reputation risk. Physical risks are those relating to the physical impacts of climate
change which can be acute (those from increased frequency and severity of climate related events) or chronic (due to longer-
term shifts in climate patterns). The Group is more significantly affected by physical risk through its exposure to acute and
chronic climate change. However, consideration must be, and is, given to transition and climate-related litigation risks.
During the year ended 31 December 2022, the Group continued to assess and evaluate risks relating to climate change,
including those related to existing and emerging regulatory requirements. The Group’s process for managing climate related
risks is grounded in its emissions monitoring work, which includes greenhouse gas (GHG) emissions, water consumption and
solid waste disposal within its operating entity. This intelligence enables the Group to mitigate potential risks and identify
opportunities, particularly in the reduction of its direct emissions, and as a result to continue to adopt advancing technologies
to reduce its GHG emissions. The approach to evaluating climate related risks in the investment portfolio includes gaining
insight on the approach funds take to climate change across categories such as decarbonisation policy, technology, legal and
reputational.
30
Financial instruments
Accounting classification and fair value
The classification, carrying value and fair value of financial instruments is as follows:
Classification
Carrying
value
Fair
value
Carrying
value
Fair
value
2022
2021
Amortised cost
At fair value through profit and
loss
Amortised cost
75,724
75,724
28,565
28,565
275,080
67,136
275,080
67,136
392,931
59,350
392,931
59,350
Financial assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Trade and other receivables
Financial liabilities
Trade and other payables
Other financial liabilities
Bank loans
Other financial liabilities
(58,337)
(321,891)
(58,337)
(322,058)
(58,513)
(301,599)
(58,513)
(301,763)
The carrying value of cash and cash equivalents, trade and other receivables and trade and other payable is a reasonable
approximation of fair value.
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 30
Financial instruments (continued)
The fair value of bank loans was established as their present value determined by future cash flows and interest rates applicable
to instruments of similar nature, terms and risks or at market quotations of these securities.
The fair value of financial assets at fair value through profit and loss are based on quoted market prices at the close of trading
at the end of the period if traded in active markets and based on valuation techniques if not traded in active markets. These
valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity
specific estimates.
Fair value measurements recognised in the consolidated financial statements are grouped into levels based on the degree to
which the fair value is observable.
Financial instruments whose values are based on quoted market prices in active markets are classified as Level 1. These
include active listed equities.
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 as Level 2. These include certain
private investments that are traded over the counter and debt instruments.
Financial instruments that have significant unobservable inputs as they trade infrequently and are not quoted in an active
market are classified as Level 3. These include investments in limited partnerships and other private equity funds which may
be subject to restrictions on redemptions such as lock up periods, redemption gates and side pockets.
Valuations are the responsibility of the Board of Directors of the Company. The Group’s Investment Manager considers the
valuation techniques and inputs used in valuing these funds as part of its due diligence prior to investing to ensure they are
reasonable and appropriate. Therefore, the net asset value (“NAV”) of these funds may be used as an input into measuring their
fair value. In measuring this fair value, the NAV of the funds is adjusted, if necessary, for other relevant factors known of the
fund. In measuring fair value, consideration is also paid to any clearly identifiable transactions in the shares of the fund.
Depending on the nature and level of adjustments needed to the NAV and the level of trading in the fund, the Group classifies
these funds as either Level 2 or Level 3. As observable prices are not available for these securities, the Group values these
based on an estimate of their fair value. The Group obtains the fair value of their holdings from valuation statements provided
by the managers of the invested funds. Where the valuation statement is not stated at the reporting date, the Group adjusts
the most recently available valuation for any capital transactions made up to the reporting date. When considering whether the
NAV of the underlying managed funds represent fair value, the Investment Manager considers the valuation techniques and
inputs used by the managed funds in determining their NAV.
The underlying funds use a blend of methods to determine the value of their own NAV by valuing underlying investments
using methodology consistent with the International Private Equity and Venture Capital Valuation Guidelines (‘IPEV’). IPEV
guidelines generally provides five ways to determine the fair market value of an investment: (i) binding offer on the company,
(ii) transaction multiples, (iii) market multiples, (iv) net assets and (v) discounted cash flows. Such valuations are necessarily
dependent upon the reasonableness of the valuations by the fund managers of the underlying investments. In the absence of
contrary information, these values are relied upon.
The following table provides an analysis of financial instruments recognised in the statement of financial position by the level of
hierarchy, excluding financial instruments for which the carrying amount is a reasonable approximation of fair value:
31 December 2022
Financial assets at fair value through profit and loss
Bank loans
31 December 2021
Financial assets at fair value through profit and loss
Bank loans
Level 1
Level 2
Level 3
Total
31,925
-
67,177
-
122,789
(321,891)
120,366
-
275,080
(321,891)
196,069
(301,599)
129,685
-
392,931
(301,599)
90
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) During the year ended 31 December 2022, no financial instruments were transferred between Level 1 and Level 2 (2021: none).
The movement in Level 3 financial instruments for the year is as follows:
Balance at 1 January
Transfers from Level 2 to Level 3
Purchases of investments and drawdowns of financial commitments
Sales of investments and repayments of capital
Realised gains
Unrealised (losses)/gains
Balance at 31 December
Cost
Cumulative unrealised (losses)/gains
2022
129,685
-
12,830
(9,231)
4,526
(17,444)
120,366
130,183
(9,816)
2021
99,137
77
15,379
(12,992)
6,873
21,211
129,685
125,983
3,702
Investment in private equity funds require a long-term commitment with no certainty of return. The Group’s intention is to hold
Level 3 investments to maturity. In the unlikely event that the Group is required to liquidate these investments, the proceeds
received may be less than the carrying value due to their illiquid nature. The following table summarises the sensitivity of the
Company’s Level 3 investments to changes in fair value due to illiquidity, based on the assumptions that the proceeds realised
will be decreased by 5%, 10% or 20%, with all other variables held constant.
31 December 2022
31 December 2021
5% scenario
10% scenario
20% scenario
(6,018)
(6,484)
(12,037)
(12,968)
(24,073)
(25,936)
Credit risk
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’s credit risk is primarily attributable to its bank balances, trade receivables, related party loans and investments. The
amounts presented as receivables in the consolidated statement of financial position are shown net of allowances for credit
loss.
The Bermuda – Investment segment primarily transacts with regulated institutions on normal market terms which are trade
date plus one to three days. The levels of amounts outstanding from brokers are regularly reviewed by the Investment Manager.
The duration of credit risk associated with the investment transaction is the period between the date the transaction took
place, the trade date and the date the stock and cash are transferred, and the settlement date. The level of risk during the
period is the difference between the value of the original transaction and its replacement with a new transaction.
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 Group’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 Bermuda – Investment segment 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 vehicles. The Board reviews all investments at its regular meetings from reports prepared by the Company’s
Investment Manager.
The Brazil – Maritime Services segment invests temporary cash surpluses in government and private bonds, according to
regulations approved by management, which follow the Group policy on credit risk concentration. Credit risk on investments
in non-government backed bonds is mitigated by investing only in assets issued by leading financial institutions. The Group
stipulates a cash allocation limit per bank, in addition to investment rules according to rating classification. The Group invests
in banks with rating classification BBB (limited to a maximum of 15%), from A to AA (limited to a maximum of 40%) or AAA
(limited to a minimum of 40% and maximum of 100%).
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 30
Financial instruments (continued)
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 WSSA management which seek to
mitigate any loss from customers’ delinquency. The Group has no significant concentration of credit risk for trade receivables
as they consist of a large number of customers. Regular credit evaluation is performed on the financial condition of accounts
receivable.
Allowance for expected credit losses
Generally, an interest penalty is charged on overdue balances for trade receivables. The Group recognises an allowance for
expected credit losses based on an expected credit loss model and a provision matrix that involves historical evaluation of
effective losses over billing cycles. The provision matrix is initially based on the Group’s historical observed default rates
and is reassessed every 180 days. The period of review is 3.5 years, and the measurement of the default rate considers the
recoverability of receivables and will be applied according to the payment profile of debtors. The Group will recalibrate, when
appropriate, the matrix to adjust the historical credit losses experience with forward-looking information. Additionally, the
Group created a credit committee to monitor and, if necessary, propose payment terms to those customers with credit risk.
The allowance for expected credit losses determined using a provision matrix is as follows:
31 December 2022
Expected credit loss rate
Receivables for services
Allowance for expected credit losses
31 December 2021
Expected credit loss rate
Receivables for services
Current
1-30 days
31-90 days
91-180 days
0.05%
44,699
(24)
0.05%
5,997
(3)
2.56%
2,461
(63)
7.48%
1,236
(92)
More than
180 days
63.70%
Total
936
55,329
(610)
(792)
0.05%
0.05%
1.67%
8.65%
60.08%
43,160
4,098
858
989
327
49,432
Allowance for expected credit losses
(22)
(2)
(14)
(86)
(214)
(338)
Foreign currency risk
The Brazil – Maritime services segment operates principally in Brazil with a substantial proportion of its revenue, expenses,
assets and liabilities denominated in Real, exposing the Group to exchange rate fluctuations. Due to the high cost of hedging
transactions denominated in Real, the Group does not normally hedge its net exposure to the Real, as the Board does not
consider it economically viable.
Purchases and sales of goods and services are denominated in Real and US Dollars. These transactions are subject to currency
fluctuations between the time that the price of goods or services are settled and the actual payment date. For investing and
financing cash flows, the resources and their application are monitored with the objective of matching the currency cash flows
and due dates. For operating cash flows, the Group seeks to neutralise the currency risk by matching assets (receivables) and
liabilities (payments).
Furthermore, the Group has contracted US Dollar denominated and Real denominated debt, and the cash and cash equivalents
balances are also US Dollar denominated and Real denominated. The Group seeks to generate an operating cash surplus in the
same currency in which the debt service of each business is denominated.
The Bermuda – Investment segment operates internationally and holds monetary assets denominated in currencies other than
the US Dollar, the functional currency. Foreign currency risk arises as the value of future transactions, recognised monetary
assets and monetary liabilities denominated in other currencies fluctuate due to changes in foreign exchange rates.
The Company’s policy is not to manage its exposure to foreign exchange movements by entering into any foreign exchange
hedging transactions. Instead, when the Investment Manager formulates a view on the future direction of foreign exchange
rates and the potential impact on the Company, the Investment Manager factors that into its portfolio allocation decisions.
92
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting
date are as follows (presented in US Dollar):
Real
Sterling
Swiss Franc
Euro
Yen
Assets
Liabilities
2022
157,063
12,241
2,341
15,083
4,226
2021
173,297
11,603
3,305
31,549
5,394
2022
(395,616)
(19)
-
-
-
2021
(367,528)
(22)
-
-
-
Total foreign currency denominated monetary items
190,954
225,148
(395,635)
(367,550)
The Group is primarily exposed to unfavourable movements in the Real on its Brazilian monetary assets and liabilities held by
US Dollar functional currency entities. The sensitivity analysis below refers to the position at the end of the reporting period
and estimates the impacts of a Real devaluation against the US Dollar, considering three scenarios: a likely scenario (probable),
a 25% devaluation scenario (possible) and a 50% devaluation scenario (remote). The Group uses the Brazilian Central Bank’s
“Focus” report to determine the probable scenario.
31 December 2022
Projected exchange rate
Total assets
Total liabilities
Net impact
31 December 2021
Projected exchange rate
Total assets
Total liabilities
Net impact
Currency
Amount ($US)
Probable
scenario
BRL
BRL
BRL
BRL
157,063
(395,616)
173,297
(367,528)
5.25
(934)
2,434
1,500
5.59
(294)
625
331
Possible
scenario
(25%)
6.56
(32,160)
81,070
48,910
6.99
(34,895)
74,005
39,110
Remote
scenario
(50%)
7.88
(52,977)
133,495
80,518
8.39
(57,963)
122,926
64,963
Market price risk
By the nature of its activities, the Bermuda – Investment segment’s investments are exposed to market price fluctuations.
However, the portfolio as a whole does not correlate directly 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 5, 10 or 20 percent 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 5, 10 or 20 percent, assuming all
other variables are kept constant. A fall in market prices of 5, 10 or 20 percent would give rise to an equal fall in profit or loss
and total equity.
31 December 2022
31 December 2021
5% scenario
10% scenario
20% scenario
13,647
27,293
17,481
34,961
54,586
69,922
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) 30
Financial instruments (continued)
Interest rate risk
The Group is exposed to interest rate risk as entities within the Group borrow funds at both fixed and floating interest rates.
The Group holds most of its debts linked to fixed rates. The Group’s 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 partly in time deposits, with short-term maturities. The Group has floating rate financial
assets consisting of bank balances principally denominated in US Dollars and Real that bear interest at rates based on the
banks’ floating interest rate.
The Group is primarily exposed to unfavourable movements in the interest rate impacting its floating interest rate borrowings,
which are partially being offset by the impact on its floating interest rates investments. The sensitivity analysis below refers
to the position at the end of the reporting period and estimates the impacts of unfavourable movement in the interest rates,
considering three scenarios: a likely scenario (probable), a 25% devaluation scenario (possible) and a 50% devaluation scenario
(remote). The net impact was obtained by assuming a 12-month period starting at the beginning of the period in which interest
rates vary and all other variables are held constant. The Group uses the Brazilian Central Bank’s “Focus” report to determine the
probable scenario.
Risk
Amount
($US)
Probable
scenario
Possible
scenario
(25%)
Remote
scenario
(50%)
31 December 2022
Borrowing
Borrowing
Borrowing
Borrowing
Investments
Net impact
31 December 2021
Borrowing
Borrowing
Borrowing
Borrowing
Investments
Net impact
Brazilian Interbank Interest Rate
Brazilian Long-Term Interest Rate
Brazilian National Consumer Prices
N/A (fixed interest rates)
Brazilian Interbank Interest Rate
Brazilian Interbank Interest Rate
Brazilian Long-Term Interest Rate
Brazilian National Consumer Prices
N/A (fixed interest rates)
Brazilian Interbank Interest Rate
(28,257)
(564)
(55,964)
(237,106)
22,014
(31,743)
(638)
(51,506)
(217,712)
18,626
(10)
-
-
-
177
167
(615)
-
-
-
2,207
1,592
(719)
(6)
(788)
-
1,156
(357)
(1,342)
(6)
(1,114)
-
4,111
1,649
(1,408)
(12)
(1,566)
-
2,136
(850)
(2,053)
(12)
(2,204)
-
4,089
(180)
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 risk management committee. Generally, the Group seeks to apply hedge accounting
in order to manage volatility.
94
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) Concentration risk
By the nature of its activities, the Bermuda – Investment segment’s investments are exposed to concentration of credit risk and
market risk based on geographic exposure and sector exposure. The Investment Manager and the Board monitor the portfolio
composition on a regular basis to ensure it remains invested in a diversified range of markets to limit the concentration of
exposure by geography and by sector.
At 31 December 2022, the Group has identified concentration risk for its financial assets at fair value through profit and loss
within the Bermuda – Investment segment due to their geographic exposure of US$134.3 million in North America (2021:
US$174.8 million) and their sector exposure of US$66.4 million in information technology (2021: US$94.6 million). These
exposures are based on the immediate investment into investment vehicles and may be further affected by specific allocation
of assets within those vehicles.
Liquidity risk
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 assets. The Group’s approach in managing liquidity is to ensure that the Group
always has sufficient liquidity to fulfil its obligations that expire and to meet the expected operational expenses, under normal
and stressed conditions, to avoid damage to the reputation of the Group. 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 expects to meet its other obligations from
operating cash flows and proceeds of maturing financial assets.
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities, showing the
undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay, including
both interest and principal payments.
Weighted average
effective interest rate %
Less than 12
months
1-5 years
5+ years
Total
31 December 2022
Variable interest rate instruments
Fixed interest rate instruments
Lease liability
Total contractual cash outflows
31 December 2021
Variable interest rate instruments
Fixed interest rate instruments
Lease liability
12.29%
2.89%
8.06%
4.26%
2.73%
(24,954)
(47,537)
(25,958)
(48,690)
(125,319)
(79,783)
(98,449)
(253,792)
(33,479)
(94,714)
(355,360)
(483,553)
(107,123)
(267,570)
(461,101)
(835,794)
(22,445)
(48,787)
(35,792)
(107,024)
(34,651)
(112,903)
(98,390)
(245,944)
10.49%
(20,323)
(70,302)
(313,102)
(403,727)
Total contractual cash outflows
(77,419)
(231,992)
(447,284)
(756,695)
Limitations of sensitivity analysis
The sensitivity information included in note 30 demonstrates the estimated impact of a change in a major input assumption
while other assumptions remain unchanged. There are normally significant levels of correlation between the assumptions and
other factors.
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 - (Expressed in thousands of US Dollars) STATISTICAL STATEMENT (UNAUDITED)
For the year ended 31 December 2022 - (Expressed in thousands of US Dollars)
Income Statement
Sales of services
Raw materials and consumables used
Employee charges and benefits expenses
Other operating expenses
Depreciation & amortisation expense
Impairment charge
Gain/(loss) on disposal of property, plant and
equipment and intangible assets
Foreign exchange gain/(loss) on monetary items
Operating profit
Share of results of joint ventures and associates
Returns on investment portfolio at fair value through
2022
2021
2020
2019
2018
440,107
(32,956)
(126,330)
(106,055)
(64,435)
–
100
1,620
112,051
3,165
396,376
(24,036)
(112,026)
(98,289)
(61,412)
–
(499)
(3,100)
97,014
(5,029)
352,792
(19,266)
(110,016)
(84,666)
(61,323)
–
65
(7,551)
70,035
(4,142)
406,128
(25,290)
(140,348)
(89,207)
(66,122)
(13,025)
294
(79)
72,351
564
460,196
(38,128)
(146,327)
(117,025)
(56,178)
–
(296)
(8,459)
93,783
(4,062)
profit or loss
(47,947)
49,474
33,383
34,716
(7,942)
Investment portfolio performance and management
fees
Other investment income
Finance costs
Profit before tax
Tax expense
Profit for the year
Profit for the year attributable to:
Equity holders of the Company
Non-controlling interests
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Key Statistics
(3,047)
8,421
(34,509)
38,134
(26,656)
11,478
(18,675)
30,153
11,478
(4,954)
4,113
(30,227)
110,391
(27,925)
82,466
63,687
18,779
82,466
(3,130)
1,644
(23,210)
74,580
(26,577)
48,003
38,712
9,291
48,003
470,034
931,253
518,523
861,824
492,769
861,093
1,401,287
1,380,347
1,353,862
(153,236)
(493,925)
(647,161)
754,126
(131,306)
(465,369)
(596,675)
783,672
(124,276)
(485,879)
(610,155)
743,707
Earnings per share (US$)
Cash dividends per share paid (US$)
Book value per share (US$)
Mid-market quotation at end of period
Mid-market quotation at end of period in (US$)
(52.8)c
70.0c
$22.69
£9.30
$11.24
180.1c
70.0c
$22.16
£9.32
$12.62
109.5c
70.0c
$21.03
£8.45
$11.55
(3,417)
6,052
(27,736)
82,530
(21,481)
61,049
46,852
14,197
61,049
460,616
981,011
1,441,627
(115,678)
(540,089)
(655,767)
785,860
132.5c
70.0c
$22.22
£9.90
$13.13
(2,742)
4,152
(22,951)
60,238
(26,433)
33,805
13,308
20,497
33,805
438,928
773,521
1,212,449
(119,036)
(315,704)
(434,740)
777,709
37.6c
70.0c
$21.99
£11.70
$14.92
96
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FOUR - Consolidated Financial Statements SECTION FIVE
Shareholder
Information
97
DIRECTORY
Bermuda Office
Mailing Address:
PO Box HM 2250
Hamilton HM JX
Bermuda
Registered Office
Mailing Address:
PO Box HM 2250
Hamilton HM JX
Bermuda
Office Address:
Richmond House - 5th Floor
12 Par-la-Ville Road
Hamilton HM 12
Bermuda
Office Address:
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Registrars
UK Transfer Agent and Ocean
Auditor
Wilsons Dividend Access
KPMG Audit Limited
Crown House
4 Par-la-Ville Road
Hamilton HM 12
Bermuda
Conyers Corporate Services (Bermuda)
Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Investment Manager
Hanseatic Asset Management LBG
Le Truchot,
Guernsey GY1 1WD
Channel Islands
Bankers
HSBC Bank Bermuda Limited
37 Front Street
Hamilton HM 11
Bermuda
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Brokers
Peel Hunt
100 Liverpool Street
London
EC2M 2AT
UK
Lombard Odier & Cie SA
Rue de la Corraterie 11
1204 Geneva
Switzerland
98
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FIVE - Shareholder Information NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 2023 Annual General Meeting of the Company will be held at the Company’s registered office,
Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda on 30 May 2023 at 9:00am for the following purposes:
1
2
3
4
5
6
7
8
9
10
11
12
To appoint a Chair of the meeting.
To confirm notice and quorum.
To receive and, if approved, adopt the Directors’ Report and Accounts for the year ended 31 December 2022.
To declare a dividend of 70 cents per share.
To determine the maximum number of Directors for the ensuing year as nine and to authorise the Board of Directors
to fill any vacancy in their number left unfilled for any reason to serve until the conclusion of the next Annual General
Meeting.
To re-elect Ms Caroline Foulger as a Director until the next Annual General Meeting.
To re-elect Mr William Salomon as a Director until the next Annual General Meeting.
To re-elect Mr Andrey Berzins as a Director until the next Annual General Meeting.
To re-elect Mr Christopher Townsend as a Director until the next Annual General Meeting.
To re-elect Ms Fiona Beck as a Director until the next Annual General Meeting.
To re-appoint KPMG Bermuda as the Auditor and to authorise the Directors to determine the remuneration of the
Auditor.
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 2022.
On Behalf of the Board
Conyers Corporate Services (Bermuda) Limited
Company Secretary
Clarendon House, Church Street, Hamilton HM 11, Bermuda
23 March 2023
Any member of the Company entitled to attend and vote at the meeting may appoint one or more proxies to attend and vote
instead on their behalf. A proxy need not be a member of the Company.
99
FORM OF PROXY
* I / We
* of
being a Member of Ocean Wilsons Holdings Limited, hereby appoint Ms Caroline Foulger, or failing her any Director of the Company as my/
our proxy to vote for me/us and on my/our behalf at the 2023 Annual General Meeting of the Company to be held on 30 May 2023 and at any
adjournment thereof. The proxy will vote on the Resolutions as indicated opposite.
Or
as my/our proxy to vote for me/us and on my/our behalf at the 2023 Annual General Meeting of the Company to be held on 30 May 2023
and at any adjournment thereof. The proxy will vote on the Resolutions as indicated opposite.
FOR
AGAINST WITHHELD
1
2
3
4
5
6
7
8
9
To receive and, if approved, adopt the Directors’ Report and Accounts for the year ended
31 December 2022.
To declare a dividend of 70 cents per share.
To determine the maximum number of Directors for the ensuing year as nine 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 Ms Caroline Foulger as a Director until the next Annual General Meeting.
To re-elect Mr William Salomon as a Director until the next Annual General Meeting.
To re-elect Mr Andrey Berzins as a Director until the next Annual General Meeting.
To re-elect Mr Christopher Townsend as a Director until the next Annual General Meeting.
To re-elect Ms Fiona Beck as a Director until the next Annual General Meeting.
To re-appoint KPMG Bermuda as the Auditor and authorise the Directors to fix the
remuneration of the Auditor.
10
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 2022.
Signature
Dated 2023
Notes
(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, Link Group, PXS 1, Central Square, 29 Wellington Street,
LEEDS, LS 14DL, United Kingdom no later than 9:00 am (Bermuda time) on 25 May 2023.
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.
100
Ocean Wilsons Holdings Limited - Annual Report 2022SECTION FIVE - Shareholder Information
101
OCEAN WILSONS HOLDINGS LIMITED
AN NUAL REPORT 2022