TIDMOCN
RNS Number : 0687U
Ocean Wilsons Holdings Ltd
24 March 2023
Ocean Wilsons Holdings Limited
Preliminary results for the year ended 31 December 2022
STRATEGIC REPORT
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.
Data Highlights
Key Data at 31 December
(In US$ millions) 2022 2021 Change
------- ------
Revenue $440.1 $396.4 +11.0%
Operating Profit $112.1 $97.0 +15.6%
Profit after tax $11.5 $82.5 -86.1%
Investment portfolio net
return ($51.0) $44.5 ($95.5)
Investment portfolio assets $293.8 $351.8 ($58.0)
Net assets $754.1 $783.7 -3.8%
Net debt $442.3 $440.9 +0.3%
Net cash inflow from operating
activities $97.1 $106.1 -8.5%
------- ------ --------
Share Data at 31 December 2022 2021 Change
------------ ----------------
Earnings per share USD (52.8) USD 180.1 cents USD (232.9)
cents cents
Proposed/Actual dividend US 70 cents US 70 cents -
per share
Share price discount to net
asset value 50.5% 41.6% -8.9%
Implied net asset value per
share* GBP 18.78 GBP 15.95 +17.7%
Share price GBP 9.30 GBP 9.32 -0.2%
------------ ---------------- ------------
*net asset value per share of Ocean Wilsons based on the market
value of each operating subsidiary
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
(GBP11.91) 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 (GBP18.78). The Ocean Wilsons Holdings Limited share
price was GBP9.30 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 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 in the annual report.
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
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
3 years 5 years
2022 2021 p.a. p.a.
------------------------------ ------- ------ -------- --------
OWIL -13.8% 16.1% 3.9% 4.3%
------------------------------ ------- ------ -------- --------
OWIL (Net)* -14.7% 14.5% 2.7% 3.1%
------------------------------ ------- ------ -------- --------
Performance Benchmark** 9.5% 10.0% 7.9% 6.8%
------------------------------ ------- ------ -------- --------
MSCI ACWI + FM NR US$ -18.2% 18.5% 0.3% 2.3%
------------------------------ ------- ------ -------- --------
Bloomberg Global Treasury TR
US$ (Unhedged) -18.4% -6.6% 4.0% 5.2%
------------------------------ ------- ------ -------- --------
MSCI Emerging Markets NR US$ -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.
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
Investment Portfolio at 31 December 2022
Market
Value % of
US$000 NAV Primary Focus
------------------------------------------ -------- ------ -----------------------------------
Findlay Park American Fund 24,154 8.2 US Equities - Long Only
BlackRock Strategic Equity Hedge
Fund 12,920 4.4 Europe Equities - Hedge
Select Equity Offshore, Ltd 10,597 3.6 US Equities - Long Only
NG Capital Partners II, LP 7,465 2.5 Private Assets - Latin America
Pangaea II, LP 6,823 2.3 Private Assets - GEM
BA Beutel Goodman US Value Fund 6,317 2.2 US Equities - Long Only
Stepstone Global Partners VI, Private Assets - US Venture
LP 6,117 2.1 Capital
Pershing Square Holdings Ltd 5,836 2.0 US Equities - Long Only
iShares Core MSCI Europe UCITS
ETF 5,758 2.0 Europe Equities - Long Only
Schroder ISF Asian Total Return Asia ex-Japan Equities - Long
Fund 5,669 1.9 Only
Top 10 Holdings 91,656 31.2
------------------------------------------ -------- ------ -----------------------------------
Polar Capital Global Insurance Financials Equities - Long
Fund 5,304 1.8 Only
Silver Lake Partners IV, LP 5,304 1.8 Private Assets - Global Technology
Hudson Bay International Fund
Ltd 5,266 1.8 Market Neutral - Multi-Strategy
Egerton Long - Short Fund Limited 4,957 1.7 Europe/US Equities - Hedge
Asia ex-Japan Equities - Long
NTAsian Discovery Fund 4,948 1.7 Only
KKR Americas XII, LP 4,731 1.6 Private Assets - North America
Navegar I, LP 4,481 1.5 Private Assets - Asia
Indus Japan Long Only Fund 4,226 1.4 Japan Equities - Long Only
iShares Core S&P 500 UCITS ETF 4,165 1.4 US Equities - Long Only
TA Associates XIII-A, LP 4,152 1.4 Private Assets - Global Growth
Top 20 Holdings 139,190 47.4
------------------------------------------ -------- ------ -----------------------------------
Baring Asia Private Equity Fund
VII, LP 4,101 1.4 Private Assets - Asia
Schroder GAIA BlueTrend 3,771 1.3 Market Neutral - Multi-Strategy
Global Event Partners Ltd 3,647 1.2 Market Neutral - Event-Driven
Silver Lake Partners V, LP 3,616 1.2 Private Assets - Global Technology
Goodhart Partners: Hanjo Fund 3,563 1.2 Japan Equities - Long Only
GAM Star Fund PLC - Disruptive Technology Equities - Long
Growth 3,554 1.2 Only
Schroder ISF Global Recovery 3,549 1.2 Market Neutral - Multi-Strategy
GAM Systematic Core Macro (Cayman)
Fund 3,342 1.1 Market Neutral - Multi-Strategy
Healthcare Equities - Long
Worldwide Healthcare Trust PLC 3,295 1.1 Only
Reverence Capital Partners Opportunities
Fund II 3,222 1.1 Private Assets - Financials
Top 30 Holdings 174,850 59.5
------------------------------------------ -------- ------ -----------------------------------
Remaining Holdings 98,081 33.4
------------------------------------------ -------- ------ -----------------------------------
Cash and cash equivalents 20,895 7.1
------------------------------------------ -------- ------ -----------------------------------
TOTAL 293,826 100.0
------------------------------------------ -------- ------ -----------------------------------
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 2022 2021 Change
Towage
Number of harbour manoeuvres 54,865 54,389 0.9%
----------------------------------------- ------- -------- -------
Offshore support bases
Number of vessel turnarounds 785 601 30.6%
Number of operating days 6,488 5,400 20.1%
----------------------------------------- ------- -------- -------
Container terminal - aggregated Volumes
Exports - full containers 254.5 306.2 -16.9%
Imports - full containers 129.3 150.4 -14.0%
Cabotage - full containers 122.7 121.1 1.3%
Inland Navigation - full containers 21.3 22.2 -4.1%
Transhipment - full containers 142.2 160.2 -11.2%
Empty containers 245.8 282.2 -12.9%
Total Volume 915.8 1,042.3 -12.1%
----------------------------------------- ------- -------- -------
Financial Report
Operating Profit
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
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.
Cash Flows
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).
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 31 December 2022
(Expressed in thousands of US Dollars)
Note 2022 2021
------------------------------------------------------------------------------- ---- ----------------- ---------
Sales of services 5 440,107 396,376
Raw materials and consumables used (32,956) (24,036)
Employee charges and benefits expenses 6 (126,330) (112,026)
Other operating expenses 7 (106,055) (98,289)
Depreciation of owned assets 14 (48,473) (46,631)
Depreciation of right-of-use assets 15 (13,573) (12,063)
Amortisation of intangible assets 16 (2,389) (2,718)
Gain/(loss) on disposal of property, plant and equipment and intangible assets 100 (499)
Foreign exchange gains/(losses) on monetary items 1,620 (3,100)
------------------------------------------------------------------------------- ---- ----------------- ---------
Operating profit 112,051 97,014
Share of results of joint ventures and associates 13 3,165 (5,029)
Returns on investment portfolio at fair value through profit or loss 5 (47,947) 49,474
Investment portfolio performance and management fees (3,047) (4,954)
Other investment income 5 8,421 4,113
Finance costs 8 (34,509) (30,227)
------------------------------------------------------------------------------- ---- ----------------- ---------
Profit before tax 38,134 110,391
Tax expense 9 (26,656) (27,925)
------------------------------------------------------------------------------- ---- ----------------- ---------
Profit for the year 11,478 82,466
------------------------------------------------------------------------------- ---- ----------------- ---------
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Post-employment benefits remeasurement 21 93 108
Purchase price adjustment of associate 13 159 -
Items that will be or may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations 7,128 (7,459)
Effective portion of changes in fair value of derivatives 9 158
------------------------------------------------------------------------------- ---- ----------------- ---------
Other comprehensive income/(loss) for the year 7,389 (7,193)
------------------------------------------------------------------------------- ---- ----------------- ---------
Total comprehensive income for the year 18,867 75,273
------------------------------------------------------------------------------- ---- ----------------- ---------
(Loss)/profit for the year attributable to:
Equity holders of the Company (18,675) 63,687
Non-controlling interests 26 30,153 18,779
------------------------------------------------------------------------------- ---- ----------------- ---------
11,478 82,466
------------------------------------------------------------------------------- ---- ----------------- ---------
Total comprehensive (loss)/income for the year attributable to:
Equity holders of the Company (14,484) 59,604
Non-controlling interests 26 33,351 15,669
------------------------------------------------------------------------------- ---- ----------------- ---------
18,867 75,273
------------------------------------------------------------------------------- ---- ----------------- ---------
Earnings per share:
Basic and diluted 28 (52.8)c 180.1c
------------------------------------------------------------------------------- ---- ----------------- ---------
The accompanying notes are an integral part of these
consolidated financial statements.
Consolidated Statement of Financial Position
At 31 December 2022
(Expressed in thousands of US Dollars)
Note 2022 2021
------------------------------------------------------- ---- ----------------- ---------
Current assets
Cash and cash equivalents 75,724 28,565
Financial assets at fair value through profit and loss 10 275,080 392,931
Recoverable taxes 9 34,515 25,380
Trade and other receivables 11 67,136 59,350
Inventories 12 17,579 12,297
------------------------------------------------------- ---- ----------------- ---------
470,034 518,523
------------------------------------------------------- ---- ----------------- ---------
Non-current assets
Other trade receivables 11 1,456 1,580
Related party loans receivable 23 11,176 10,784
Other non-current assets 22 3,506 3,582
Recoverable taxes 9 15,143 12,816
Investment in joint ventures and associates 13 81,863 61,553
Deferred tax assets 9 21,969 22,332
Property, plant and equipment 14 589,629 563,055
Right-of-use assets 15 178,699 157,869
Other intangible assets 16 14,392 14,981
Goodwill 17 13,420 13,272
------------------------------------------------------- ---- ----------------- ---------
931,253 861,824
------------------------------------------------------- ---- ----------------- ---------
Total assets 1,401,287 1,380,347
------------------------------------------------------- ---- ----------------- ---------
Current liabilities
Trade and other payables 19 (58,337) (58,513)
Tax liabilities 9 (10,290) (8,057)
Lease liabilities 15 (24,728) (19,449)
Bank loans 20 (59,881) (45,287)
------------------------------------------------------- ---- ----------------- ---------
(153,236) (131,306)
------------------------------------------------------- ---- ----------------- ---------
Net current assets 316,798 387,217
------------------------------------------------------- ---- ----------------- ---------
Non-current liabilities
Bank loans 20 (262,010) (256,312)
Post-employment benefits 21 (1,737) (1,562)
Deferred tax liabilities 9 (49,733) (50,194)
Provisions for legal claims 22 (8,997) (8,907)
Lease liabilities 15 (171,448) (148,394)
------------------------------------------------------- ---- ----------------- ---------
(493,925) (465,369)
------------------------------------------------------- ---- ----------------- ---------
Total liabilities (647,161) (596,675)
------------------------------------------------------- ---- ----------------- ---------
Capital and reserves
Share capital 24 11,390 11,390
Retained earnings 634,910 678,006
Translation and hedging reserve (91,692) (95,739)
------------------------------------------------------- ---- ----------------- ---------
Equity attributable to equity holders of the Company 554,608 593,657
------------------------------------------------------- ---- ----------------- ---------
Non-controlling interests 26 199,518 190,015
------------------------------------------------------- ---- ----------------- ---------
Total equity 754,126 783,672
------------------------------------------------------- ---- ----------------- ---------
Signed on behalf of the Board
F. Beck A. Berzins
Director Director
The accompanying notes are an integral part of these
consolidated financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
(Expressed in thousands of US Dollars)
Attributable to
Share Hedging and equity holders of Non-controlling
capital Retained earnings Translation reserve the Company interests Total equity
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Balance at 1
January 2021 11,390 635,987 (91,595) 555,782 187,925 743,707
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Currency
translation
adjustment - - (4,234) (4,234) (3,225) (7,459)
Effective
portion of
changes in fair
value of
derivatives - - 90 90 68 158
Post-employment
benefits (note
21) - 61 - 61 47 108
Profit for the
year - 63,687 - 63,687 18,779 82,466
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Total
comprehensive
income/(loss)
for the year - 63,748 (4,144) 59,604 15,669 75,273
Dividends (notes
26, 27) - (24,754) - (24,754) (17,808) (42,562)
Equity
transactions in
subsidiaries
(note 25) - 3,025 - 3,025 4,229 7,254
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Balance at 31
December 2021 11,390 678,006 (95,739) 593,657 190,015 783,672
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Balance at 1
January 2022 11,390 678,006 (95,739) 593,657 190,015 783,672
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Currency
translation
adjustment - - 4,042 4,042 3,086 7,128
Effective
portion of
changes in fair
value of
derivatives - - 5 5 4 9
Post-employment
benefits (note
21) - 54 - 54 39 93
Purchase price
adjustment of
associate (note
13) - 90 - 90 69 159
(Loss)/profit
for the year - (18,675) - (18,675) 30,153 11,478
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Total
comprehensive
(loss)/income
for the year - (18,531) 4,047 (14,484) 33,351 18,867
Dividends (notes
26, 27) - (24,754) (24,754) (25,173) (49,927)
Equity
transactions in
subsidiaries
(note 25) - 189 - 189 1,325 1,514
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
Balance at 31
December 2022 11,390 634,910 (91,692) 554,608 199,518 754,126
---------------- ------- ------------------- -------------------- -------------------- -------------------- --------------------
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 in equity are stated net of
tax where applicable.
The accompanying notes are an integral part of these
consolidated financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
(Expressed in thousands of US Dollars)
Notes 2022 2021
------------------------------------------------------------------------------- -------- --------- --------
Operating activities
Profit for the year 11,478 82,466
Adjustment for:
Depreciation & amortisation 14,15,16 64,435 61,412
(Gain)/loss on disposal of property, plant and equipment and intangible assets (100) 499
Share of results of joint ventures and associates 13 (3,165) 5,029
Returns on investment portfolio at fair value through profit or loss 5 47,947 (49,474)
Other investment income 5 (8,421) (4,113)
Finance costs 8 34,509 30,227
Foreign exchange (gains)/losses on monetary items (1,620) 3,100
Share based payment expense 25 334 369
Post-employment benefits 21 (170) 136
Tax expense 9 26,656 27,925
Changes in:
Inventories 12 (5,282) (533)
Trade and other receivables 11, 23 (8,054) (13,629)
Other current and non-current assets 9,22 (11,386) (3,388)
Trade and other payables 9,19 2,057 19,158
Provisions for legal claims 22 90 (653)
Taxes paid (22,070) (27,256)
Interest paid (30,143) (25,161)
Net cash inflow from operating activities 97,095 106,114
------------------------------------------------------------------------------- -------- --------- --------
Investing activities
Income received from trading investments 16,348 5,700
Purchase of trading investments (70,864) (72,811)
Proceeds on disposal of trading investments 128,959 73,064
Purchase of property, plant and equipment 14 (63,268) (47,352)
Proceeds on disposal of property, plant and equipment 726 304
Purchase of intangible assets 16 (1,386) (1,375)
Proceeds on disposal of intangible assets - 517
Investment in joint ventures and associates 13 (17,016) (20,016)
Net cash used in investing activities (6,501) (61,969)
------------------------------------------------------------------------------- -------- --------- --------
Financing activities
Dividends paid to equity holders of the Company 27 (24,754) (24,754)
Dividends paid to non-controlling interests in subsidiary 26 (25,173) (17,808)
Repayments of borrowings 20 (49,349) (57,926)
Payments of lease liabilities 15 (8,591) (8,473)
New bank loans drawn down 20 59,793 19,438
Shares repurchased in subsidiary 25 (2,549) -
Issue of new shares in subsidiary under employee share option plan 25 3,729 6,885
------------------------------------------------------------------------------- -------- --------- --------
Net cash used in financing activities (46,894) (82,638)
------------------------------------------------------------------------------- -------- --------- --------
Net increase/(decrease) in cash and cash equivalents 43,700 (38,493)
------------------------------------------------------------------------------- -------- --------- --------
Cash and cash equivalents at beginning of year 28,565 63,255
------------------------------------------------------------------------------- -------- --------- --------
Effect of foreign exchange rate changes 3,459 3,803
------------------------------------------------------------------------------- -------- --------- --------
Cash and cash equivalents at end of year 75,724 28,565
------------------------------------------------------------------------------- -------- --------- --------
The accompanying notes are an integral part of these
consolidated financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
(Expressed in thousands of US Dollars)
1 General Information
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 23 March 2023.
2 Significant accounting policies and critical accounting judgements
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.
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.
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.
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 Classification
Trade and other receivables Amortised cost
Financial assets at fair value through profit and loss At fair value through profit and loss
Cash and cash equivalents Amortised cost
Trade and other payables Other financial liabilities
Bank loans Other financial liabilities
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.
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: 25 to 35 years
Leasehold Improvements: 5 to 52 years, shorter of the rental period or the useful life of the underlying asset
Floating Craft: 25 years
Vehicles: 5 to 10 years
Plant and Equipment: 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.
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: 30 to 33 years
Computer software: 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.
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
3 Group composition
Ocean Wilsons has direct ownership in the following
subsidiaries:
Place of incorporation Ownership interest
--------------------
Subsidiaries and operation Segment 2022 2021
------------------------------------ ----------------------- ------------ --------- ---------
Investments
Ocean Wilsons (Investments) Limited Bermuda Investment 100% 100%
Holdings
Ocean Wilsons Overseas Limited Bermuda Unallocated 100% 100%
------------------------------------ ----------------------- ------------ --------- ---------
Ocean Wilsons Overseas Limited has direct ownership in the
following subsidiary:
Place of incorporation Ownership interest
--------------------
Subsidiaries and operation Segment 2022 2021
---------------------------------- ----------------------- ------------ --------- ---------
Holdings
OW Overseas (Investments) Limited United Kingdom Unallocated 100% 100%
---------------------------------- ----------------------- ------------ --------- ---------
OW Overseas (Investments) Limited has direct ownership in the
following subsidiary:
Place of incorporation Ownership interest
--------------------
Subsidiaries and operation Segment 2022 2021
--------------------------------- ----------------------- ----------------- --------- ---------
Holdings
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:
Place of incorporation Ownership interest
--------------------
Subsidiaries and operation Segment 2022 2021
----------------------------------------------- ----------------------- ----------------- --------- ---------
Shipyard
Wilson Sons Estaleiros Ltda. Brazil Maritime service 100% 100%
Ship agency
Dock Market Soluções Ltda. Brazil Maritime service 90% 90%
Wilson Sons Shipping Services Ltda. Brazil Maritime service 100% 100%
Logistics
Wilson Sons Terminais e Logística Ltda. Brazil Maritime service 100% 100%
Allink Transportes Internacionais Ltda. Brazil Maritime service 50% 50%
Container terminal
Tecon Rio Grande S.A. Brazil Maritime service 100% 100%
Tecon Salvador S.A. Brazil Maritime service 100% 100%
Offshore support bases and towage
Wilson Sons Serviços Marítimos Ltda. Brazil Maritime service 100% 100%
----------------------------------------------- ----------------------- ----------------- --------- ---------
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 Brazil - Maritime
December 2022 Services Bermuda - Investment Unallocated Consolidated
------------------------- ------------------------- -------------------- --------------------- -------------------
Result
Sale of services 440,107 - - 440,107
Net return on investment
portfolio at fair value
through profit or loss - (50,994) - (50,994)
Operating expenses (261,461) (202) (3,578) (265,241)
Depreciation and
amortisation (64,435) - - (64,435)
Share of results of joint
ventures and associates 3,165 - - 3,165
Other investment income 8,421 - - 8,421
Finance costs (34,509) - - (34,509)
Foreign exchange
gains/(losses) on
monetary items 1,837 (159) (58) 1,620
------------------------- ------------------------- -------------------- --------------------- -------------------
Profit/(loss) before tax 93,125 (51,355) (3,636) 38,134
Tax (26,656) - - (26,656)
------------------------- ------------------------- -------------------- --------------------- -------------------
Profit/(loss) after tax 66,469 (51,355) (3,636) 11,478
------------------------- ------------------------- -------------------- --------------------- -------------------
Financial position
Current assets 167,140 293,717 9,177 470,034
Investment in joint
ventures and associates 81,863 - - 81,863
Property, plant and
equipment 589,629 - - 589,629
Right-of-use assets 178,699 - - 178,699
Other intangible assets 14,392 - - 14,392
Goodwill 13,420 - - 13,420
Other non-current assets 53,250 - - 53,250
------------------------- ------------------------- -------------------- --------------------- -------------------
Segment assets 1,098,393 293,717 9,177 1,401,287
Segment liabilities (646,339) (509) (313) (647,161)
Other information
Capital additions 64,654 - - 64,654
Right-of-use assets
additions 5,222 - - 5,222
------------------------- ------------------------- -------------------- --------------------- -------------------
For the year ended 31 December 2021 Brazil - Maritime Services Bermuda - Investment Unallocated Consolidated
----------------------------------------- -------------------------- -------------------- ----------- ------------
Result
Sale of services 396,376 - - 396,376
Net return on investment portfolio at
fair value through profit or loss - 44,520 - 44,520
Operating expenses (231,476) (212) (3,162) (234,850)
Depreciation and amortisation (61,412) - - (61,412)
Share of results of joint ventures and
associates (5,029) - - (5,029)
Other investment income 4,113 - - 4,113
Finance costs (30,227) - - (30,227)
Foreign exchange losses on monetary items (2,990) (6) (104) (3,100)
----------------------------------------- -------------------------- -------------------- ----------- ------------
Profit/(loss) before tax 69,355 44,302 (3,266) 110,391
Tax (27,925) - - (27,925)
----------------------------------------- -------------------------- -------------------- ----------- ------------
Profit/(loss) after tax 41,430 44,302 (3,266) 82,466
----------------------------------------- -------------------------- -------------------- ----------- ------------
Financial position
Current assets 163,967 351,774 2,782 518,523
Investment in joint ventures and
associates 61,553 - - 61,553
Property, plant and equipment 563,055 - - 563,055
Right-of-use assets 157,869 - - 157,869
Other intangible assets 14,981 - - 14,981
Goodwill 13,272 - - 13,272
Other non-current assets 51,094 - - 51,094
Segment assets 1,025,791 351,774 2,782 1,380,347
Segment liabilities (594,218) (2,211) (246) (596,675)
Other information
Capital additions 48,727 - - 48,727
Right-of-use assets additions 7,718 - - 7,718
----------------------------------------- -------------------------- -------------------- ----------- ------------
5 Revenue
An analysis of the Group's revenue is as follows:
2022 2021
----------------------------------------------------------------------------------- --------------- -------
Sale of services 440,107 396,376
----------------------------------------------------------------------------------- --------------- -------
Net income from underlying investment vehicles 11,809 3,754
Profit on disposal of financial assets at fair value through profit or loss 24,316 11,870
Unrealised (losses)/gains on financial assets at fair value through profit or loss (79,995) 33,850
Write down of Russia-focused investments (note 10) (4,077) -
----------------------------------------------------------------------------------- --------------- -------
Returns on investment portfolio at fair value through profit or loss (47,947) 49,474
----------------------------------------------------------------------------------- --------------- -------
Interest on bank deposits 4,146 2,254
Other interest 4,275 1,859
----------------------------------------------------------------------------------- --------------- -------
Other investment income 8,421 4,113
----------------------------------------------------------------------------------- --------------- -------
Total Revenue 400,581 449,963
----------------------------------------------------------------------------------- --------------- -------
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:
2022 2021
-------------------------------------------- ----------------- -------
Harbour manoeuvres 201,429 178,552
Special operations 17,633 20,558
Ship agency 9,910 8,774
-------------------------------------------- ----------------- -------
Towage and ship agency services 228,972 207,884
-------------------------------------------- ----------------- -------
Container handling 73,166 72,402
Warehousing 40,946 35,036
Ancillary services 20,932 21,283
Offshore support bases 10,617 7,234
Other services 13,360 13,040
-------------------------------------------- ----------------- -------
Port terminals 159,021 148,995
-------------------------------------------- ----------------- -------
Logistics 47,591 35,142
-------------------------------------------- ----------------- -------
Shipyard 4,523 4,355
-------------------------------------------- ----------------- -------
Total Revenue from contracts with customers 440,107 396,376
-------------------------------------------- ----------------- -------
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).
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 When performance obligation is typically satisfied
------------------------------- --------------------------------------------------
Towage and ship agency services
Harbour manoeuvres At a point in time
Special operations At a point in time
Ship agency At a point in time
Port Terminals
Container handling At a point in time
Warehousing At a point in time
Ancillary services At a point in time
Offshore support bases At a point in time
Other services At a point in time
Logistics At a point in time
Shipyard Over time
------------------------------- --------------------------------------------------
The disaggregation of revenue from contracts with customers
based on the timing of performance obligations is as follows:
2022 2021
-------------------------------------------- ----------------- -------
At a point of time 435,584 392,021
Over time 4,523 4,355
-------------------------------------------- ----------------- -------
Total Revenue from contracts with customers 440,107 396,376
-------------------------------------------- ----------------- -------
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.
6 Employee charges and benefits expenses
Employee charges and benefits expenses are classified as
follows:
2022 2021
--------------------------------------------- ------------------- ---------
Wages, salaries and benefits (102,397) (90,868)
Social security costs (22,701) (20,062)
Other pension costs (904) (772)
Share based payments (328) (324)
--------------------------------------------- ------------------- ---------
Total employee charges and benefits expenses (126,330) (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:
2022 2021
------------------------------------------- ---------- -------------------
Utilities and communications (13,616) (12,309)
Insurance (3,483) (4,076)
Corporate, governance and compliance costs (3,292) (2,359)
Short-term or low-value asset leases (33,432) (32,881)
Service costs (24,925) (24,401)
Freight (17,320) (10,717)
Port expenses (7,168) (6,629)
Other operating expenses (2,819) (4,917)
------------------------------------------- ---------- -------------------
Total other operating expenses (106,055) (98,289)
------------------------------------------- ---------- -------------------
8 Finance costs
Finance costs are classified as follows:
2022 2021
--------------------------------------------- ------------ --------
Interest on lease liabilities (15,798) (13,882)
Interest on bank loans (17,160) (16,219)
Exchange loss on foreign currency borrowings (248) (32)
Other interest costs (1,303) (94)
--------------------------------------------- ------------ --------
Total finance costs (34,509) (30,227)
--------------------------------------------- ------------ --------
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:
2022 2021
-------------------------------------------------------------- ------------ --------
Current tax expense
Brazilian corporation tax (17,018) (17,239)
Brazilian social contribution (8,340) (7,114)
-------------------------------------------------------------- ------------ --------
Total current tax expense (25,358) (24,353)
-------------------------------------------------------------- ------------ --------
Deferred tax - origination and reversal of timing differences
Charge for the year in respect of deferred tax liabilities (14,123) (6,737)
Credit for the year in respect of deferred tax assets 12,825 3,165
-------------------------------------------------------------- ------------ --------
Total deferred tax expense (1,298) (3,572)
-------------------------------------------------------------- ------------ --------
Total tax expense (26,656) (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:
2022 2021
------------------------------------------------------------------- ------------- --------
Profit before tax 38,134 110,391
Less: Loss/(profit) before tax of Bermuda and unallocated segments 54,991 (41,036)
Profit before tax - Maritime services 93,125 69,355
------------------------------------------------------------------- ------------- --------
Tax at the aggregate Brazilian tax rate of 34% (2021: 34%) (31,663) (23,581)
Net operating losses in the period (788) (816)
Non-deductible expenses (863) (554)
Foreign exchange variance on loans (3,008) 1,142
Tax effect of share of results of joint ventures and associates 1,076 (1,710)
Tax effect of foreign exchange gains or losses on monetary items 625 (881)
Retranslation of non-monetary items 11,592 228
Share option scheme - (110)
Leasing 64 158
Other (3,691) (1,801)
------------------------------------------------------------------- ------------- --------
Tax expense for the year (26,656) (27,925)
------------------------------------------------------------------- ------------- --------
Effective rate for the year - Maritime services 29% 40%
Effective rate for the year - Group 70% 25%
------------------------------------------------------------------- ------------- --------
The tax expense related to amounts recognised in other
comprehensive income is as follows:
Tax (expense)/
For the year ended 31 December 2022 Before tax credit Net of tax
------------------------------------------------------------------ ------------- ------------------- --------------
Items that will not be reclassified subsequently to profit or loss
Post-employment benefits 124 (31) 93
Purchase price adjustment of associate 213 (54) 159
Items that will be or may be reclassified subsequently to profit
or loss
Exchange differences arising on translation of foreign
operations 9,551 (2,423) 7,128
Effective portion of changes in fair value of derivatives 12 (3) 9
Total amounts recognised in other comprehensive income 9,900 (2,511) 7,389
------------------------------------------------------------------ ------------- ------------------- --------------
Tax (expense)/
For the year ended 31 December 2021 Before tax credit Net of tax
-------------------------------------------------------------------------- ---------- -------------- ----------
Items that will not be reclassified subsequently to profit or loss
Post-employment benefits 164 (56) 108
Items that will be or may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations (11,302) 3,843 (7,459)
Effective portion of changes in fair value of derivatives 239 (81) 158
Total amounts recognised in other comprehensive income (10,899) 3,706 (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 Retranslation
exchange Profit on of
Tax variance on construction Other timing non-monetary
depreciation loans Tax losses contracts differences items Total
---------------- -------------- -------------- ---------- -------------- -------------- ------------- ---------
At 1 January
2021 (29,483) 36,457 14,705 15,523 6,184 (64,657) (21,271)
(Charge)/credit
to income (2,497) 1,251 (4,159) (632) 2,237 228 (3,572)
Other
adjustments - - - (83) (1,456) - (1,539)
Exchange
differences 2,130 (2,436) (868) - (429) 123 (1,480)
---------------- -------------- -------------- ---------- -------------- -------------- ------------- ---------
At 31 December
2021 (29,850) 35,272 9,678 14,808 6,536 (64,306) (27,862)
---------------- -------------- -------------- ---------- -------------- -------------- ------------- ---------
(Charge)/credit
to income (1,711) (8,433) (4,112) (534) 1,900 11,592 (1,298)
Other
adjustments (1,510) (68) 151 82 1,438 1 94
Exchange
differences (2,168) 2,200 703 - 678 (111) 1,302
---------------- -------------- -------------- ---------- -------------- -------------- ------------- ---------
At 31 December
2022 (35,239) 28,971 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:
2022 2021
------------------------- ----------- --------
Deferred tax assets 21,969 22,332
Deferred tax liabilities (49,733) (50,194)
Net deferred tax balance (27,764) (27,862)
------------------------- ----------- --------
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:
2022 2021
-------------------------------- ----------- ------
Recoverable taxes - current 34,515 25,380
Recoverable taxes - non-current 15,143 12,816
-------------------------------- ----------- ------
Total recoverable taxes 49,658 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:
2022 2021
---------------------------- ------------- -------
Taxes payable - current (10,290) (8,057)
Taxes payable - non-current - -
---------------------------- ------------- -------
Total taxes payable (10,290) (8,057)
---------------------------- ------------- -------
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:
2022 2021
------------------------------------------------------------------------------------------- -------------- --------
Opening balance - 1 January 392,931 347,464
Additions, at cost 70,864 72,811
Disposals, at market value (128,959) (73,064)
(Decrease)/increase in fair value of financial assets at fair value through profit or loss (79,995) 33,850
Write down of Russia-focused investments(1) (4,077) -
Profit on disposal of financial assets at fair value through profit or loss 24,316 11,870
------------------------------------------------------------------------------------------- -------------- --------
Closing balance - 31 December 275,080 392,931
------------------------------------------------------------------------------------------- -------------- --------
Bermuda - Investment segment 272,931 349,613
Brazil - Maritime services segment 2,149 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:
2022 2021
------------------------------------------- -------------- ------
Within one year 5,951 5,219
In the second to fifth year inclusive 2,346 2,946
After five years 42,129 35,056
------------------------------------------- -------------- ------
Total commitment for capital subscriptions 50,426 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.
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:
2022 2021
-------------------------------------------------------------------------------------- ------------- ------
Non-current
Other trade receivables 1,456 1,580
-------------------------------------------------------------------------------------- ------------- ------
Total other trade receivables 1,456 1,580
-------------------------------------------------------------------------------------- ------------- ------
Current
Trade receivable for the sale of services 43,293 35,915
Unbilled trade receivables 12,036 13,517
-------------------------------------------------------------------------------------- ------------- ------
Total gross current trade receivables 55,329 49,432
Allowance for expected credit loss (792) (338)
-------------------------------------------------------------------------------------- ------------- ------
Total current trade receivables 54,537 49,094
-------------------------------------------------------------------------------------- ------------- ------
Prepayments 4,887 6,646
Insurance claim receivable 981 632
Employee advances 1,449 1,236
Disposal proceeds of financial assets at fair value through profit or loss receivable 2,181 -
Other receivables 3,101 1,742
-------------------------------------------------------------------------------------- ------------- ------
Total other current receivables 12,599 10,256
-------------------------------------------------------------------------------------- ------------- ------
Total trade and other receivables 67,136 59,350
-------------------------------------------------------------------------------------- ------------- ------
The aging of the trade receivables is as follows:
2022 2021
------------------------------ ----------------- ------
Current 44,699 43,160
From 0 - 30 days 5,997 4,098
From 31 - 90 days 2,461 858
From 91 - 180 days 1,236 988
More than 180 days 936 328
------------------------------ ----------------- ------
Total gross trade receivables 55,329 49,432
------------------------------ ----------------- ------
The movement in allowance for expected credit loss is as
follows:
2022 2021
-------------------------------------------------------------- ------------------ -----
Opening balance - 1 January (338) (554)
(Increase)/decrease in allowance recognised in profit or loss (419) 188
Exchange differences (35) 28
-------------------------------------------------------------- ------------------ -----
Closing balance - 31 December (792) (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:
2022 2021
-------------------------------------------------- --------- ------
Operating materials 13,727 10,829
Raw materials for third party vessel construction 3,852 1,468
-------------------------------------------------- --------- ------
Total inventories 17,579 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 Proportion of ownership
-------------------------
and operation 2022 2021
---------------------------------------------------- ----------------------- -------------- ---------
Joint ventures
Logistics
Porto Campinas Logística e Intermodal Ltda Brazil 50% 50%
Offshore
Wilson Sons Ultratug Participações S.A. Brazil 50% 50%
Atlantic Offshore S.A. Panamá 50% 50%
Associates
Argonáutica Engenharia e Pesquisas S.A. Brazil 32.32% -
---------------------------------------------------- ----------------------- -------------- ---------
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 2021
------------------------------------------------------- ------------------ --------
Sales of services 182,882 118,049
Operating expenses (116,046) (70,364)
Depreciation and amortisation (53,212) (50,962)
Foreign exchange gains/(losses) on monetary items 5,057 (3,904)
------------------------------------------------------- ------------------ --------
Results from operating activities 18,681 (7,181)
------------------------------------------------------- ------------------ --------
Finance income 2,656 302
Finance costs (14,756) (15,789)
Profit/(loss) before tax 6,581 (22,668)
------------------------------------------------------- ------------------ --------
Tax (expense)/credit (253) 12,610
------------------------------------------------------- ------------------ --------
Profit/(loss) for the year 6,328 (10,058)
------------------------------------------------------- ------------------ --------
Total profit/(loss) for the year - joint ventures 6,334 (10,058)
Participation 50% 50%
Share of profit/(loss) for the year for joint ventures 3,167 (5,029)
------------------------------------------------------- ------------------ --------
Total profit/(loss) for the year - associates (6) -
Participation 32.32% N/A
Share of profit/(loss) for the year for associates (2) -
Share of result of joint ventures and associates 3,165 (5,029)
------------------------------------------------------- ------------------ --------
2022 2021
----------------------------------------------------------- ---------------- ---------
Cash and cash equivalents 5,747 7,541
Other current assets 51,260 46,548
Non-current assets 551,921 584,886
Total assets 608,928 638,975
----------------------------------------------------------- ---------------- ---------
Trade and other payables (46,506) (66,567)
Other current liabilities (56,833) (49,173)
Non-current liabilities (324,012) (375,988)
Total liabilities (427,351) (491,728)
----------------------------------------------------------- ---------------- ---------
Total net assets 181,577 147,247
----------------------------------------------------------- ---------------- ---------
Total net assets - joint ventures 180,079 147,247
Participation 50% 50%
Group's share of net assets - joint ventures 90,040 73,624
----------------------------------------------------------- ---------------- ---------
Total net assets - associates 1,498 -
Participation 32.32% N/A
Group's share of net assets - associates 484 -
----------------------------------------------------------- ---------------- ---------
Goodwill and surplus generated on associate purchase 1,711 -
Cumulative elimination of profit on construction contracts (10,372) (12,071)
----------------------------------------------------------- ---------------- ---------
Investment in joint ventures and associates 81,863 61,553
----------------------------------------------------------- ---------------- ---------
The movement in investment in joint ventures and associates is
as follows:
2022 2021
------------------------------------------------- ------ -------
Opening balance - 1 January 61,553 26,185
Share of result of joint ventures and associates 3,165 (5,029)
Capital increase 17,016 40,207
Elimination of profit on construction contracts (158) 17
Purchase price adjustment of associate 159 -
Post-employment benefits - 10
Translation reserve 128 163
------------------------------------------------- ------ -------
Closing balance - 31 December 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).
14 Property, plant and equipment
Land and Vehicles, plant Assets under
buildings Floating Craft and equipment construction Total
---------------------------------------- ---------- -------------- --------------- ------------- ----------
Cost
At 1 January 2021 279,313 525,484 209,034 292 1,014,123
Additions 8,992 22,152 6,919 9,289 47,352
Transfers from joint operations - 1,350 32 - 1,382
Transfers (16) 1,462 (1,446) - -
Disposals (1,998) (9,196) (4,607) - (15,801)
Exchange differences (11,608) - (11,468) - (23,076)
At 1 January 2022 274,683 541,252 198,464 9,581 1,023,980
Additions 10,835 15,493 9,936 27,004 63,268
Transfers (112) 24,623 (2,317) (22,194) -
Transfers to intangible assets - - (60) - (60)
Disposals (1,955) (4,477) (4,892) - (11,324)
Exchange differences 11,084 - 10,854 - 21,938
---------------------------------------- ---------- -------------- --------------- ------------- ----------
At 31 December 2022 294,535 576,891 211,985 14,391 1,097,802
---------------------------------------- ---------- -------------- --------------- ------------- ----------
Accumulated depreciation
At 1 January 2021 79,628 245,583 109,774 - 434,985
Charge for the year 7,989 26,070 12,572 - 46,631
Elimination on construction contracts - 25 - - 25
Disposals (1,193) (6,842) (3,053) - (11,088)
Exchange differences (3,773) - (5,855) - (9,628)
---------------------------------------- ---------- -------------- --------------- ------------- ----------
At 1 January 2022 82,651 264,836 113,438 - 460,925
Charge for the year 8,518 27,831 12,124 - 48,473
Elimination on construction contracts - 87 - - 87
Disposals (1,645) (4,426) (4,609) - (10,680)
Exchange differences 3,644 - 5,724 - 9,368
---------------------------------------- ---------- -------------- --------------- ------------- ----------
At 31 December 2022 93,168 288,328 126,677 - 508,173
---------------------------------------- ---------- -------------- --------------- ------------- ----------
Carrying Amount
At 31 December 2021 192,032 276,416 85,026 9,581 563,055
---------------------------------------- ---------- -------------- --------------- ------------- ----------
At 31 December 2022 201,367 288,563 85,308 14,391 589,629
---------------------------------------- ---------- -------------- --------------- ------------- ----------
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).
15 Lease arrangements
Right-of-use assets
Right-of-use assets are classified as follows:
Operational Floating Vehicles, plant
facilities craft Buildings and equipment Total
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Cost
At 1 January 2021 154,710 7,278 5,697 9,749 177,434
Additions - 7,353 176 189 7,718
Contractual
amendments 33,466 (838) 119 40 32,787
Terminated
contracts (15,662) - (177) (806) (16,645)
Exchange
differences (5,396) (716) (427) (326) (6,865)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 1 January 2022 167,118 13,077 5,388 8,846 194,429
Additions - 3,018 1,305 899 5,222
Contractual
amendments 17,901 5,793 63 117 23,874
Terminated
contracts - (2,796) (3,771) (58) (6,625)
Exchange
differences 10,313 510 96 328 11,247
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 31 December
2022 195,332 19,602 3,081 10,132 228,147
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Accumulated
depreciation
At 1 January 2021 13,739 4,750 2,421 7,246 28,156
Charge for the
year 7,410 4,187 980 748 13,325
Terminated
contracts (3,264) - (504) (598) (4,366)
Exchange
differences 413 (743) 63 (288) (555)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 1 January 2022 18,298 8,194 2,960 7,108 36,560
Charge for the
year 8,244 4,825 912 916 14,897
Terminated
contracts - (1,226) (2,424) (44) (3,694)
Exchange
differences 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 148,820 4,883 2,428 1,738 157,869
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 31 December
2022 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.
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:
Average discount rate 2022 2021
------------------------------ --------------------- ----------------- ---------
Operational facilities 8.55% (184,591) (159,444)
Floating craft 9.61% (7,605) (4,823)
Buildings 9.75% (2,121) (2,139)
Vehicles, plant and equipment 12.12% (1,859) (1,437)
------------------------------ --------------------- ----------------- ---------
Total (196,176) (167,843)
------------------------------ --------------------- ----------------- ---------
Total current (24,728) (19,449)
Total non-current (171,448) (148,394)
------------------------------ --------------------- ----------------- ---------
The contractual undiscounted cash flows related to leases
liabilities are as follows:
2022 2021
-------------------------------------- ---------------- ---------
Within one year (25,958) (20,323)
In the second year (23,101) (37,535)
In the third to fifth years inclusive (56,682) (32,767)
After five years (355,360) (313,102)
-------------------------------------- ---------------- ---------
Total cash flows (461,101) (403,727)
-------------------------------------- ---------------- ---------
Adjustment to present value 264,925 235,884
-------------------------------------- ---------------- ---------
Total lease liabilities (196,176) (167,843)
-------------------------------------- ---------------- ---------
The lease liabilities balance considering the projected future
inflation rate in the discounted payment flows is as follows:
2022 2021
--------------------------- ---------------- ---------
Actual outflow (461,101) (403,727)
Embedded interest 264,925 235,884
--------------------------- ---------------- ---------
Lease liabilities (196,176) (167,843)
--------------------------- ---------------- ---------
Inflated flow (284,773) (426,694)
Inflated embedded interest 204,117 252,974
--------------------------- ---------------- ---------
Inflated lease liabilities (80,656) (173,720)
--------------------------- ---------------- ---------
Amounts recognised in profit and loss
2022 2021
-------------------------------------------------------------------------------- ----------------- --------
Depreciation of right-of-use assets (14,897) (13,325)
PIS and COFINS taxes 1,324 1,262
-------------------------------------------------------------------------------- ----------------- --------
Net depreciation of right-of-use assets (13,573) (12,063)
-------------------------------------------------------------------------------- ----------------- --------
Interest on lease liabilities (16,810) (14,771)
PIS and COFINS taxes 1,012 889
-------------------------------------------------------------------------------- ----------------- --------
Interest on lease liabilities (15,798) (13,882)
-------------------------------------------------------------------------------- ----------------- --------
Variable lease payments not included in the measurement of lease liabilities(1) (2,376) (2,332)
Expenses relating to short-term leases (29,778) (29,641)
Expenses relating to low-value assets (1,281) (897)
-------------------------------------------------------------------------------- ----------------- --------
Total (62,806) (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
2022 2021
-------------------------------- ----------------- --------
Payment of lease liability (8,591) (8,473)
Interest paid - lease liability (16,810) (14,771)
Short-term leases paid (29,778) (29,641)
Variable lease payments (2,376) (2,332)
Low-value leases paid (1,281) (897)
-------------------------------- ----------------- --------
Total cash outflow (58,836) (56,114)
-------------------------------- ----------------- --------
16 Other intangible assets
Other intangible assets cost and related accumulated
amortisation are classified as follows:
Concession-
Computer software rights Other Total
------------------------------ ----------------- --------------- ----------- --------------------
Cost
At 1 January 2021 41,107 16,013 47 57,167
Additions 1,375 - - 1,375
Disposals (925) - - (925)
Exchange differences (634) (512) (2) (1,148)
------------------------------ ----------------- --------------- ----------- --------------------
At 1 January 2022 40,923 15,501 45 56,469
Additions 1,386 - - 1,386
Transfers from right-of-use 60 - - 60
Disposals (1,105) - - (1,105)
Exchange differences 558 277 2 837
At 31 December 2022 41,822 15,778 47 57,647
------------------------------ ----------------- --------------- ----------- --------------------
Accumulated amortisation
At 1 January 2021 34,348 5,852 - 40,200
Charge for the year 2,298 420 - 2,718
Disposals (695) - - (695)
Exchange differences (411) (324) - (735)
------------------------------ ----------------- --------------- ----------- --------------------
At 1 January 2022 35,540 5,948 - 41,488
Charge for the year 1,965 424 - 2,389
Disposals (1,105) - - (1,105)
Exchange differences 381 102 - 483
------------------------------ ----------------- --------------- ----------- --------------------
At 31 December 2022 36,781 6,474 - 43,255
------------------------------ ----------------- --------------- ----------- --------------------
Carrying amount
31 December 2021 5,383 9,553 45 14,981
------------------------------ ----------------- --------------- ----------- --------------------
31 December 2022 5,041 9,304 47 14,392
------------------------------ ----------------- --------------- ----------- --------------------
17 Goodwill
Goodwill is classified as follows:
Tecon Tecon
Rio Grande Salvador Total
----------------------- ----------- ---------- ----------
Carrying Value
At 1 January 2021 10,949 2,480 13,429
Exchange differences (157) - (157)
----------------------- ----------- ---------- ----------
At 1 January 2022 10,792 2,480 13,272
Exchange differences 148 - 148
----------------------- ----------- ---------- ----------
At 31 December 2022 10,940 2,480 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.
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:
Tecon Rio Grande Tecon Salvador
------------------ ----------------
2022 2021 2022 2021
--------------- -------- -------- ------- -------
Discount rate 8.5% 9.2% 8.5% 9.5%
Growth rate 5.8% 4.3% 3.4% 3.4%
Inflation rate 3.3% 3.7% 3.3% 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%).
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:
2022 2021
--------------------------------- -------------- --------
Trade payables (25,583) (29,242)
Accruals (8,550) (7,424)
Other payables (479) (441)
Provisions for employee benefits (21,365) (19,547)
Deferred income (2,360) (1,859)
--------------------------------- -------------- --------
Total trade and other payables (58,337) (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:
2022 2021
----------------------- ---------- ---------
Opening - 1 January (301,599) (342,661)
Additions (59,793) (19,438)
Principal amortisation 49,349 57,926
Interest amortisation 13,333 10,390
Accrued interest (17,437) (16,246)
Exchange difference (5,744) 8,430
----------------------- ---------- ---------
Closing - 31 December (321,891) (301,599)
----------------------- ---------- ---------
The terms and conditions of outstanding bank loans are as
follows:
2022 2021
-------------------------- -------------------------
Annual
interest rate Year of Fair Fair
Lender Currency % maturity Carrying value value Carrying value value
--------------- --------------- ------------- -------------- -------------- ---------- -------------- ---------
linked to US
BNDES Dollar 2.30% - 3.71% 2035 (129,231) (129,231) (110,514) (110,514)
linked to US
BNDES Dollar 2.07% - 4.08% 2028 (21,477) (21,477) (25,161) (25,161)
linked to US
BNDES Dollar 5.00% 2022 - - (177) (177)
BNDES Real 15.91% 2034 (50,148) (50,148) (45,264) (45,264)
BNDES Real 14.65% 2029 (5,816) (5,816) (6,241) (6,241)
BNDES Real 9.79% 2027 (564) (564) (638) (638)
linked to US
Banco do Brasil Dollar 2.00% - 4.00% 2035 (66,110) (66,110) (71,854) (71,854)
10.08% -
Bradesco Real 10.45% 2024 (19,571) (19,718) (27,248) (27,417)
Bradesco Real 10.75% 2023 (2,406) (2,411) (4,494) (4,489)
Banco Santander US Dollar 2.63% 2023 (20,288) (20,304) (10,008) (10,008)
Banco Santander Real 15.59% 2025 (6,280) (6,279) - -
--------------- --------------- ------------- -------------- -------------- ---------- -------------- ---------
Total bank loans (321,891) (322,058) (301,599) (301,763)
-------------------------------- ------------- -------------- -------------- ---------- -------------- ---------
The breakdown of bank loans by maturity is as follows:
2022 2021
---------------------------------------- ----------------------- ---------
Within one year (59,881) (45,287)
In the second year (56,022) (47,961)
In the third to fifth years (inclusive) (91,037) (86,671)
After five years (114,951) (121,680)
---------------------------------------- ----------------------- ---------
Total bank loans (321,891) (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.
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:
2022 2021
------------------------------------------------- ----------------------- -------
Opening balance - 1 January (1,562) (1,641)
Current service cost (7) (3)
Interest expense (146) (133)
Contributions to the plan (14) (30)
Changes in economic and financial assumptions 228 522
Changes in biometric and demographic assumptions (126) (391)
Exchange differences (110) 114
------------------------------------------------- ----------------------- -------
Closing balance - 31 December (1,737) (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:
2022 2021
------------------------------------------ --------------------- -------
Annual interest rate 9.18% 8.67%
------------------------------------------ --------------------- -------
Estimated inflation rate in the long-term 3.00% 3.00%
Impact of 0.5% increase (214) (195)
Impact of 0.5% decrease 247 223
------------------------------------------ --------------------- -------
Medical cost trend rate 5.58% 5.58%
Impact of 0.5% increase 255 229
Impact of 0.5% decrease (222) (199)
------------------------------------------ --------------------- -------
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:
Civil and environmental
Labour claims Tax cases cases Total
--------------------------- ------------------- -------------------- ------------------------- -------------------
At 1 January 2022 (6,190) (1,295) (1,422) (8,907)
Additional provisions (288) (1,536) (263) (2,087)
Unused amounts reversed 1,385 165 463 2,013
Utilisation of provisions 524 5 30 559
Exchange difference (409) (71) (95) (575)
--------------------------- ------------------- -------------------- ------------------------- -------------------
At 31 December 2022 (4,978) (2,732) (1,287) (8,997)
--------------------------- ------------------- -------------------- ------------------------- -------------------
The contingent liabilities at the end of each period are as
follows:
Labour claims Tax cases Civil and environmental cases Total
-------------------- ----------------- ------------------ ----------------------------- ------------------
At 31 December 2021 (4,968) (52,793) (14,881) (72,642)
-------------------- ----------------- ------------------ ----------------------------- ------------------
At 31 December 2022 (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.
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 LBG(2) (3,047) (4,876) (484) (2,133)
Hansa Capital Partners(3) (32) - - -
Gouvêa Vieira Advogados(4) (28) (21) - -
----------------------------------------------------- ---------------- ----------------- ---------------- --------
(1) Related party loans with Wilson, Sons Ultratug Participações
S.A. (interest - 3.6% per year with no maturity date).
(2) 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.
(3) Mr. W Salomon is a partner of Hansa Capital Partners. Office
facilities charges were paid to Hansa Capital Partners.
(4) 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:
2022 2021
----------------------------------------------- ---------------- -------
Short-term employee benefits (4,914) (6,131)
Post-employment benefits (70) (67)
Share based payment expense (306) (236)
----------------------------------------------- ---------------- -------
Total remuneration of key management personnel (5,290) (6,434)
----------------------------------------------- ---------------- -------
24 Share capital
2022 2021
------------------------------------------------ ------ ------
Authorised
50,060,000 ordinary shares of 20p each
(2021: 50,060,000 ordinary shares of 20p each) 16,119 16,119
------------------------------------------------ ------ ------
Issued and fully paid
35,363,040 ordinary shares of 20p each
(2021: 35,363,040 ordinary shares of 20p each) 11,390 11,390
------------------------------------------------ ------ ------
The Company has one class of ordinary share which carries no
right to fixed income.
Share capital is converted at the exchange rate prevailing at 31
December 2002, the date at which the Group's presentation currency
changed from Sterling to US Dollars, being US$1.61 to GBP1.
25 Equity transactions in subsidiaries
On 13 May 2022, the Group's subsidiary Wilson Sons Holdings
Brasil S.A. (WSSA) executed a 1:6 stock split, previously approved
by the shareholders of WSSA on 26 April 2022. Comparative data
presented within this note has been updated to reflect the stock
split.
Share options in subsidiary
On 8 January 2014, the shareholders of the subsidiary WSSA
approved a share option plan which allowed for the grant of options
to eligible participants, including an increase in the authorised
capital of WSSA through the creation of up to 26,465,562 new
shares.
The options provide participants with the right to acquire
shares in WSSA at a predetermined fixed price, following a vesting
period of 3 to 5 years, and expire 10 years from the grant date, or
immediately on the resignation of the employee, whichever is
earlier. Options lapse if not exercised within 6 months of the date
that the participant ceases to be employed within the Group by
reason of injury, disability or retirement.
The movement in share options and related weighted average
exercise prices in Brazilian Real (R$) is as follows:
2022 2021
---------------------------------- ---------------------------
Number of
shares WAEP (R$) Number of shares WAEP (R$)
------------------------------ --------------- ----------------- ---------------- ---------
Opening balance - 1 January 9,153,840 6.34 13,280,940 5.33
Granted during the period - - 2,700,000 8.66
Exercised during the period (3,726,240) 5.21 (6,743,100) 5.28
Expired during the period - - (84,000) 6.33
------------------------------ --------------- ----------------- ---------------- ---------
Outstanding at 31 December 5,427,600 7.12 9,153,840 6.34
------------------------------ --------------- ----------------- ---------------- ---------
Exercisable at 31 December 2,654,160 5.56 6,284,520 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).
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 Wilson Sons Holdings Brasil S.A. Other Total
------------------------------------------------------------ -------------------------------- ----------- ---------
Net assets attributable to non-controlling interest 199,004 514 199,518
------------------------------------------------------------ -------------------------------- ----------- ---------
Profit allocated to non-controlling interest 27,858 2,295 30,153
------------------------------------------------------------ -------------------------------- ----------- ---------
Other comprehensive income allocated to non-controlling
interest 3,213 (15) 3,198
------------------------------------------------------------ -------------------------------- ----------- ---------
Dividends to non-controlling interest 22,728 2,445 25,173
------------------------------------------------------------ -------------------------------- ----------- ---------
For the year ended 31 December 2021 Wilson Sons Holdings Brasil S.A. Other Total
----------------------------------------------------------------- -------------------------------- ------- -------
Net assets attributable to non-controlling interest 189,336 679 190,015
----------------------------------------------------------------- -------------------------------- ------- -------
Profit allocated to non-controlling interest 17,170 1,609 18,779
----------------------------------------------------------------- -------------------------------- ------- -------
Other comprehensive income allocated to non-controlling interest (3,095) (15) (3,110)
----------------------------------------------------------------- -------------------------------- ------- -------
Dividends to non-controlling interest 16,533 1,275 17,808
----------------------------------------------------------------- -------------------------------- ------- -------
27 Dividends
The following dividends were declared and paid by the Company to
its shareholders:
2022 2021
------------------------------------ ------ ------
70c per share (2021: 70c per share) 24,754 24,754
------------------------------------ ------ ------
After the reporting date, the following dividends were proposed
by the Board, but have not been recognised as liabilities:
2022 2021
------------------------------------ ------ ------
70c per share (2021: 70c per share) 24,754 24,754
------------------------------------ ------ ------
28 Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2022 2021
------------------------------------------------------------------------- -------------- ----------
(Loss)/profit for the year attributable to equity holders of the Company (18,675) 63,687
Weighted average number of ordinary shares 35,363,040 35,363,040
------------------------------------------------------------------------- -------------- ----------
Earnings per share - basic and diluted (52.8)c 180.1c
------------------------------------------------------------------------- -------------- ----------
The Company has no dilutive or potentially dilutive ordinary
shares.
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:
2022 2021
--------------------------- --------------------
Classification Carrying Fair Carrying Fair
value value value value
-------------------------------- --------------------------------- --------------- ---------- --------- ---------
Financial assets
Cash and cash equivalents Amortised cost 75,724 75,724 28,565 28,565
Financial assets at fair value At fair value through profit and
through profit and loss loss 275,080 275,080 392,931 392,931
Trade and other receivables Amortised cost 67,136 67,136 59,350 59,350
Financial liabilities
Trade and other payables Other financial liabilities (58,337) (58,337) (58,513) (58,513)
Bank loans Other financial liabilities (321,891) (322,058) (301,599) (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.
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:
Level 1 Level 2 Level 3 Total
------------------------------------------------------- ------- ---------- -------- ----------
31 December 2022
Financial assets at fair value through profit and loss 31,925 122,789 120,366 275,080
Bank loans - (321,891) - (321,891)
31 December 2021
Financial assets at fair value through profit and loss 67,177 196,069 129,685 392,931
Bank loans - (301,599) - (301,599)
------------------------------------------------------- ------- ---------- -------- ----------
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:
2022 2021
---------------------------------------------------------------- --------- --------
Balance at 1 January 129,685 99,137
Transfers from Level 2 to Level 3 - 77
Purchases of investments and drawdowns of financial commitments 12,830 15,379
Sales of investments and repayments of capital (9,231) (12,992)
Realised gains 4,526 6,873
Unrealised (losses)/gains (17,444) 21,211
---------------------------------------------------------------- --------- --------
Balance at 31 December 120,366 129,685
---------------------------------------------------------------- --------- --------
Cost 130,183 125,983
Cumulative unrealised (losses)/gains (9,816) 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.
5% scenario 10% scenario 20% scenario
----------------- ----------- ------------ ------------
31 December 2022 (6,018) (12,037) (24,073)
----------------- ----------- ------------ ------------
31 December 2021 (6,484) (12,968) (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%).
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:
More than 180
Current 1-30 days 31-90 days 91-180 days days Total
--------------- --------------- ---------------- --------------- ---------------- --------------- --------------
31 December
2022
Expected credit
loss rate 0.05% 0.05% 2.56% 7.48% 63.70%
Receivables for
services 44,699 5,997 2,461 1,236 936 55,329
--------------- --------------- ---------------- --------------- ---------------- --------------- --------------
Allowance for
expected
credit losses (24) (3) (63) (92) (610) (792)
--------------- --------------- ---------------- --------------- ---------------- --------------- --------------
31 December
2021
Expected credit
loss rate 0.05% 0.05% 1.67% 8.65% 60.08%
Receivables for
services 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.
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):
Assets Liabilities
----------------- ---------------------
2022 2021 2022 2021
-------------------------------------------------- -------- ------- ---------- ---------
Real 157,063 173,297 (395,616) (367,528)
Sterling 12,241 11,603 (19) (22)
Swiss Franc 2,341 3,305 - -
Euro 15,083 31,549 - -
Yen 4,226 5,394 - -
-------------------------------------------------- -------- ------- ---------- ---------
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.
Currency Amount ($US) Probable scenario Possible scenario (25%) Remote scenario (50%)
------------------------ --------- ------------ ----------------- ----------------------- ---------------------
31 December 2022
Projected exchange rate 5.25 6.56 7.88
Total assets BRL 157,063 (934) (32,160) (52,977)
Total liabilities BRL (395,616) 2,434 81,070 133,495
------------------------ --------- ------------ ----------------- ----------------------- ---------------------
Net impact 1,500 48,910 80,518
----------------------------------- ------------ ----------------- ----------------------- ---------------------
31 December 2021
Projected exchange rate 5.59 6.99 8.39
Total assets BRL 173,297 (294) (34,895) (57,963)
Total liabilities BRL (367,528) 625 74,005 122,926
------------------------ --------- ------------ ----------------- ----------------------- ---------------------
Net impact 331 39,110 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.
5% scenario 10% scenario 20% scenario
----------------- ------------ ------------ ------------
31 December 2022 13,647 27,293 54,586
----------------- ------------ ------------ ------------
31 December 2021 17,481 34,961 69,922
----------------- ------------ ------------ ------------
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
Brazilian Interbank
Borrowing Interest Rate (28,257) (10) (719) (1,408)
Brazilian Long-Term
Borrowing Interest Rate (564) - (6) (12)
Brazilian National
Borrowing Consumer Prices (55,964) - (788) (1,566)
N/A (fixed interest (237,106) - - -
Borrowing rates)
------------ ----------------------- ------------ ----------------- ----------------------- ---------------------
Brazilian Interbank
Investments Interest Rate 22,014 177 1,156 2,136
------------ ----------------------- ------------ ----------------- ----------------------- ---------------------
Net impact 167 (357) (850)
------------------------------------- ------------ ----------------- ----------------------- ---------------------
31 December 2021
Brazilian Interbank
Borrowing Interest Rate (31,743) (615) (1,342) (2,053)
Brazilian Long-Term
Borrowing Interest Rate (638) - (6) (12)
Brazilian National
Borrowing Consumer Prices (51,506) - (1,114) (2,204)
N/A (fixed interest
Borrowing rates) (217,712) - - -
------------ ----------------------- ------------ ----------------- ----------------------- ---------------------
Brazilian Interbank
Investments Interest Rate 18,626 2,207 4,111 4,089
------------ ----------------------- ------------ ----------------- ----------------------- ---------------------
Net impact 1,592 1,649 (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.
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 12.29% (24,954) (48,690) (33,479) (107,123)
Fixed interest rate
instruments 2.89% (47,537) (125,319) (94,714) (267,570)
Lease liability 8.06% (25,958) (79,783) (355,360) (461,101)
----------------------- ---------------------- ------------------- --------------- --------------- --------------
Total contractual cash
outflows (98,449) (253,792) (483,553) (835,794)
----------------------- ---------------------- ------------------- --------------- --------------- --------------
31 December 2021
Variable interest rate
instruments 4.26% (22,445) (48,787) (35,792) (107,024)
Fixed interest rate
instruments 2.73% (34,651) (112,903) (98,390) (245,944)
Lease liability 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.
ENQUIRIES
Company Contact
Leslie Rans, CPA
1 (441) 295 1309
Media
David Haggie
Haggie Partners LLP
020 7562 4444
Brokers
Peel Hunt
Edward Allsopp/Charles Batten
020 7418 8900
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