ANNUAL REPORT
ABOUT OCEAN WILSONS HOLDINGS LIMITED
Ocean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) is a Bermuda holding
company which, through its subsidiaries, holds a portfolio of international investments and operates
a maritime services company in Brazil. The Company is a premium listed entity on the London Stock
Exchange and is also listed on the Bermuda Stock Exchange.
It has two principal subsidiaries: Ocean Wilsons (Investments) Limited (“OWIL”) and Wilson Sons
Holdings Brasil S.A. (“Wilson Sons”) (together with the Company and their subsidiaries, the “Group”).
OWIL is a wholly owned Bermuda investment company. The Company owns 57% of Wilson Sons
which is fully consolidated in the accounts 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
Ocean Wilsons focuses on long-term performance and value creation. This approach applies to
both the investment portfolio and our investment in Wilson Sons. This longer-term view of the Board
directs an OWIL investment strategy whereby investments are made in a balanced thematic portfolio
of funds leveraging our long-standing investment market relationships and through detailed insights
and analysis. The Wilson Sons maritime logistic services investment strategy focuses on providing
best in class innovative solutions in a rapidly growing market.
OCEAN WILSONS HOLDINGS LIMITED
Contents
12
SECTION THREE
Financial Report
14
SECTION FOUR
Governance -
Report Of The Directors
43
SECTION FIVE
Consolidated Financial
Statements
44 Independent Auditor’s Report
52 Consolidated Statement of
Profit or Loss and Other
Comprehensive Income
53 Consolidated Statement
of Financial Position
54 Consolidated Statement
of Changes in Equity
55 Consolidated Statement
of Cash Flow
56 Notes to the Consolidated
Financial Statements
103 Statistical Statement
(Unaudited)
104
SECTION SIX
Directory
Notice of Annual
General Meeting
Form of Proxy
02
2021 DATA HIGHLIGHTS
04
CHAIRMAN’S STATEMENT
07
SECTION ONE
Business Review –
Investment Manager’s Report
11
SECTION TWO
Business Review -
Wilson Sons’
Management Report
11 CONTENTS
KEY DATA AS AT 31 DECEMBER
(In US$ millions)
2021 2020 CHANGE
Profit after tax $82.5 $48.0 71.9%
Operating Profit $ 97.0 $70.0 38.6%
Revenue $396.4 $352.8 12.4%
Net cash inflow from
operating activities $106.1 $105.7 0.4%
Investment porfolio assets
including cash and cash
equivalents $351.8 $310.9 13.2%
Net assets $783.7 $743.7 5.4%
Debt net of cash and cash
equivalents $440.9 $ 4 37. 3 0.8%
2021 Data Highlights
2 Ocean Wilsons Holdings Limited 2021 Annual Report
SHARE DATA AS AT 31 DECEMBER
2021 2020 CHANGE
Earnings per share
US 180.1 cents
US 109.5 cents
64.5%
Proposed dividend/Actual dividend per
share
US 70 cents
US 70 cents
--
Share discount
41.6%
39.2%
2.4%
Implied net asset value per share
GBP 15.95
GBP 13.89
14.8%
Share price
GBP 9.32
GBP 8.45
10.3%
PROFIT ANALYSIS AS AT 31 DECEMBER
(In US$ millions)
2021 2020 CHANGE
Investment Portfolio Net Return
$44.5
$30.3
46.9%
Maritime Services Net Profit
$41.4
$20.6
101.0%
Investment Portfolio as a % of Net Profit
53.9%
63.1%
(9.2%)
Maritime Services as a % of Net Profit
50.2%
42.9%
7.3 %
3 2021 DATA HIGHLIGHTS
A significant part of the Board’s focus during the year was given to supporting
Wilson Sons’ new listing on the Novo Mercado on the Sao Paulo Stock Exchange
and analysing OWIL’s legacy private equity holdings to rationalize the current
investment portfolio while seeking to maximize the potential returns on these
holdings. At the same time, we have been reducing risk exposure and driving ESG
initiatives with Wilson Sons to have more measurable outcomes and to begin to
establish climate related emissions targets for the Group. This is the first year that
the Company will report on its TCFD disclosures (Taskforce for Climate-related
Financial Disclosures) which has driven a more focused approach to the Group’s
risk management framework for monitoring and managing climate related risks. It
is our ambition to ensure that these risks and related opportunities are examined
in depth and across time horizons with clear discussion of strategic implications
and mitigating actions.
The Group’s financial results are moving back to pre-pandemic performance
levels. Driven by the success of the investment portfolio in rising equity markets,
the portfolio assets (including cash and cash equivalents) increased 13.2% to
US$351.8 million (2020: US$310.9 million) and outperformed the benchmark.
Wilson Sons reported better than expected revenues of US$396.4 million, close
to comparable of 2019 revenues of US$406.1 million, against a global shipping
industry backdrop of container shortages, supply chain challenges, clogged
shipping ports and changing demands on the mix of consumer goods generated.
Key performance indicators of the Wilson Sons’ main revenue generating activities,
the container terminals, towage and offshore vessels businesses improved year
over year:
Operating Volumes 2021 2020 % Change
Container Terminals (container
movements in TEU ‘000s) * 1,042.3 1,017.6 2.4%
Towage (number of harbour manoeuvres
performed) 54,839 52,873 3.7%
Offshore Vessels (days in operation) 5,400 5,356 0.8%
* TEUs stands for “twenty-foot equivalent units”.
Results
Encouragingly, profit for the year at US$82.5 million was US$34.5 million better
than the prior year (2020: US$48.0 million) primarily due to the returns on the
investment portfolio and significant improvement in Wilson Sons’ revenues with
increased activity over the prior year.
Operating profit at US$97.0 million (2020: US$70.0 million) improved by US$27.0
million, and total comprehensive income was US$75.3 million, US$78.8 million
better than prior year (2020: loss US$3.5 million) driven in part by reduced
foreign exchange losses. Operating expenses generally increased in correlation
with increased operating revenues at Wilson Sons as business activities return
to normalized levels.
CHAIRMAN’S STATEMENT
Strategic Report
As we continue to find a
balance between getting
back to pre-pandemic
business operations,
minimizing the challenges
that “living with Covid”
pose, and now considering
the potential impacts of
the Russia/Ukraine war
on both our operations
and investments; we find
ourselves challenging how
we operate, rationalizing
our investment strategies
and ensuring that we
address any issues related
to Russian sanctions.
When navigating our day-
to-day operations, we seek
opportunities to grow and
protect our investments,
drive innovation, address
sustainability and minimize
risks in the face of geo-
political conflict.
Ocean Wilsons Holdings Limited 2021 Annual Report4
The investment portfolio delivered a net return basis 14.5%
and outperformed the benchmark (10.0%) by 4.5%. The
portfolio including cash increased US$43.0 million to
US$351.8 million (2020: US$308.8 million). OWIL paid
dividends of US$5.0 million to Ocean Wilsons Holdings
Limited and paid the Investment Manager management fees
of US$3.3 million (2020: US$2.8 million) and performance
fees of US$1.6 million (2020: US$0.3 million).
Over the three-year period ended 31 December 2021, the
portfolio produced a time-weighted net return of 12.5% per
annum compared with the three-year period performance
benchmark of 6.5% per annum.
At the close of markets on 31 December 2021, the Wilson
Sons’ share price was R$55.68 (US$9.99), resulting in a
market value for the Ocean Wilsons holding of 41,444,000
shares (56.88% of Wilson Sons) of US$414.2 million, the
equivalent of US$11.71 (£8.65) per Ocean Wilsons share.
The market value per share at 31 December 2021 was
US$11.71 for Wilsons Sons and US$9.88 (£7.30) for the
investment portfolio. The net asset value per Ocean Wilsons
Holdings Limited share was US$22.16 (£16.37). The Ocean
Wilsons Holdings Limited share price was £9.32 at 31
December 2021.
Earnings per share for the year were US 180.1 cents compared
with US 109.5 cents in 2020.
The Financial Report provides further details in relation to
the performance of the Group.
Environmental Social and Governance Practices (ESG)
Ocean Wilsons is committed to a responsible investing policy
and operating practices within its subsidiaries. Ocean Wilsons
is in a unique position, relating to ESG, as a holding company
of two varied investments.
Although our investments are managed by an external
investment manager, we do expect the investments in our
portfolio to take ESG issues seriously, to clearly report on them
and to aspire to do the right thing. As part of the Company’s
continued evolution of its ESG practices, the Board is working
with the Investment Manager Hanseatic Asset Management
LBG (“HAML”) and its Sub-advisor Hansa Capital Partners
LLP (“HCP”), collectively the HAML Group, such that they
are working towards becoming a signatory in 2022 for the
internationally recognized United Nations’ Principles for
Responsible Investment (“UN PRI”) to demonstrate their
and our commitment to responsible investment.
At Wilson Sons, it is recognized that continued evolution
of the maritime port sector is necessary for the coming
years. The combination of the exponential advances in
the application of technologies in ports and vessels with
the growing demand for the sector to become increasingly
sustainable will significantly affect the business dynamics in
the industry. Wilson Sons monitors these industry trends to
seek opportunities to participate in this transformation and
take value from it. We believe that innovation and ESG are
intrinsically connected, so that many of the solutions we apply
to our current or potential businesses must involve aspects
of emissions reduction, inclusion, and positive social impact.
ESG is an intrinsic part of our innovative business analysis
and selection criteria.
Corporate Governance
The Board has established corporate governance
arrangements which are appropriate for the operation of
the Company. The Board has considered the principles and
recommendations of the 2018 UK Corporate Governance
Code (“the Code”) issued by the Financial Reporting Council
applying those aspects which are appropriate to the business.
The limited areas where the Company does not comply with
the Code, and an explanation of why, are contained in the
section on Corporate Governance in the Annual Report. The
position is regularly reviewed and monitored by the Board.
Outlook
Our outlook in the earlier part of 2022 would have discussed
the ongoing supply-chain challenges triggered by Covid-19,
global container shortages and inflationary concerns. These
are still factors; however, we now must consider the geo-
political uncertainties and global economic impacts stemming
from the Russian invasion of Ukraine. We initially expected
global economic growth to be more moderate in 2022
following the very strong recovery in 2021 and this is still
our general view, albeit with a more cautious lens.
As a result of the Ukrainian conflict and the ensuing economic
sanctions on Russia, significant pressure has been put on
markets especially commodity markets, further impacting
inflation and interest rates, the full extent and market reach
of these impacts is still to be fully realized. The portfolio’s
CHAIRMAN’S STATEMENT 5
CHAIRMAN’S STATEMENT - c o n t i n u e d
exposure to Russian linked investments is less than 1.4%
at the time of writing and reduced to zero at the end of Q1.
Further, we are ensuring that the funds we invest in are, and
remain, compliant with sanctions being imposed on Russia.
We continue to be alert and cautious in our approach to
minimize overreaction and maintain our disciplined approach
to focus on the portfolio’s objective of long-term sustainable
capital growth.
The outlook in Brazil for 2022 remains cautious when
considering the impacts of the war in Ukraine on world
trade and the upcoming presidential elections which creates
a scenario of economic uncertainty. While it is expected that
pressures on our container terminal business will continue,
we are expecting stronger results in the towage and a move
towards recovery of maritime services to the oil and gas
industry.
I am pleased to report that Wilson Sons’ strategy to maximise
its economies of scale to improve operating efficiencies has
placed its ports in Salvador and Rio Grande as the most efficient
in Brazil according to the rankings of the Global Container
Port Performance Index released by the World Bank. Wilson
Sons’ ports were the only Brazilian ports to appear among
the top 50 ports in the world. Additionally, Ocean Wilsons’
stock became part of the FTSE All-Share Index on 21 March
2022, which is expected to improve the liquidity of our stock.
Passing the Torch
23 years have passed since I took office as the Chairman
of Ocean Wilsons Board of Directors. At the forthcoming
Annual General Meeting, I will be retiring from the Board.
I would like to take this opportunity to express my sincere
thanks to our valued shareholders, for the ongoing support
and confidence you have given to me over the years. It was
a great honour for me to serve and I am proud of what our
Company has become today.
My designated successor, Ms. Caroline Foulger, with her
extensive experience and strong leadership, will prove to be
an excellent Chair to continue the Company’s growth and
evolve its investment strategy. I wish Ocean Wilsons, all its
shareholders, employees, and business partners and last,
but not least, my colleagues on the Board of Directors and
the entire management team all the best and continuing
success for the future.
J F Gouvêa Vieira
Chairman
Ocean Wilsons Holdings Limited
23 March 2022
Ocean Wilsons Holdings Limited 2021 Annual Report6
Market Backdrop
2021 ended in a similar vein to how it started with concerns over new variant of COVID, Omicron. Despite this, 2021 can be
best described as a year of normalisation albeit one beset by challenges and setbacks. Risk assets produced another year of
double-digit returns, rising by 18.5%. Driving this performance yet again was the US market which rose by 26.4%. Europe and
the UK produced positive returns rising by 15.7% and 18.5% for the year, respectively. Japan was up 1.7% whereas China
fell by 21.7%. In contrast India and Russia rose by 26.2% and 15.0% albeit coming off very weak performances in 2020.
At the sector level, in contrast to recent years where performance has largely been driven by the technology and growth sectors,
this year saw a broadening in returns with financials, real estate and IT returning 24.3%, 22.8% and 27.4% respectively.
Highlighting contrasting fortunes, commodities rose by 27.1%, with energy the standout performer rising by 36.0%, whereas
bonds were typically weaker for the year with US Treasuries falling by 2.3%.
Cumulative Portfolio Returns
SECTION ONE
Business Review -
Investment Manager’s Report
2021 2020
3 years
p.a.
5 years
p.a.
OWIL 16.1% 12.2% 13.9% 11.0%
OWIL (Net)* 14.5% 10.9% 12.5% 9.7%
Performance Benchmark** 10.0% 4.4% 6.5% 5.9%
MSCI ACWI + FM NR US$ 18.5% 16.2% 20.4% 14.4%
Bloomberg Global Treasury TR US$ (Unhedged) -6.6% 9.5% 2.6% 2.9%
MSCI Emerging Markets NR US$ -2.5% 18.3% 10.9% 9.9%
* The OWIL net performance is after charging investment management and performance fees.
** The OWIL performance benchmark which came into effect on 1 January 2015 is US CPI Urban Consumers NSA +3% p.a.
7 SECTION ONE
SECTION ONE
Portfolio Commentary
Global markets were more volatile during 2021 with periods
of strong performance counterbalanced by declines when
concerns about new Covid variants shook confidence. Rising
rates became an increasing focus as inflation continued to
tick higher as energy prices increased and supply constraints
remained unresolved. Towards the end of the year markets
initially worried about the new Omicron COVID variant but
ultimately this variant turned out to be far less virulent than
previous waves and investors quickly looked past it. The
investment portfolio was up 16.1% over the year whilst its
benchmark returned 10.0% over the same period. The MSCI
ACWI gained 18.5% while the Bloomberg Barclays Global
Treasury index fell by 6.6%.
Looking Forward
We entered 2022 with ongoing inflationary concerns albeit
with an expectation that we would see an easing as we moved
through the year. Interest rates had started to rise in the West
having previously been held at historically low levels due to
central bank efforts to combat the pandemic.
In late February however, the decision by Russia to invade
Ukraine stunned world markets. Whilst there were some
fears that President Putin might launch an invasion it was
not widely expected to occur in face of the limited strategic
advantage and Ukraine’s clear commitment to retaining
its independence, not to mention the devastating effects
on human life. The subsequent global sanctions that have
been imposed on Russia have been both swift and severe,
placing Russia under significant financial duress as well
as being excluded from the global financial system for the
foreseeable future.
At this stage, it is too early to assess the full financial impact
of recent events. Commodity markets, which had already been
under considerable pressure, are being squeezed with Russian
commodities excluded from the global system. This will
place yet further pressure on inflation in the short-term. The
knock-on effects to global growth will need to be monitored
carefully, albeit Russia itself is a small component of the
global economy; however, the effects on Europe will be more
severe. Commodities are of particular importance with their
many different touch points on Western economies including
fuel costs, global supply chains, where Russian metals are
important, and food supply. These factors, combined with
the impact on economic confidence with a war in Europe,
will certainly weigh on growth. Outside of Europe economies
will be more immune with the US being a relatively closed
economy and largely energy self-sufficient and with many
emerging markets far less affected. Our weightings in the
US and emerging markets are 50% and 23% respectively
compared to 11% in Europe for our core regional, thematic
and private equity silos (as at 10 March 2022).
We had a modest exposure to Russia through our holding
in Prosperity Quest (1.2%) and some de minimis exposures
mainly through index funds. The portfolio is highly diverse
by country exposure, asset class and number of holdings
managed by highly experienced asset managers who have
operated through many different economic cycles with
underlying holdings that are well positioned to weather more
difficult trading conditions.
Our defensive holdings have, to-date, held up extremely well.
This part of the portfolio was designed to provide a more
defensive and diversified exposure at a time when bond
markets, the conventional defensive asset class, were looking
extremely expensive. So far this year, interestingly, bonds do
not appear to be generating the positive performance that
would have typically been expected during periods such as
this with the ongoing inflationary pressures and prospect of
higher rates weighing on them.
We will continue to actively monitor the situation over the
coming weeks and months and will adjust the portfolio
accordingly as matters develop, albeit always with a view to
our long-term mandate.
Hanseatic Asset Management LBG
10 March 2022
80
100
120
140
160
180
200
31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21
5 Year Cumulative Indexed Returns
OWIL Gross TW Performance Benchmark
Bloomberg Global Treasury TR US$ (Unhedged) MSCI ACWI FM NR US$
MSCI Emerging Markets NR USD
Ocean Wilsons Holdings Limited 2021 Annual Report8
Geographic Exposure
0.2% Cash/Liquidity Funds
2.0% Emerging Europe
2.9% Middle East & Africa
4.2% Japan
4.2% Latin America
4.6% UK
6.3% Diversified
10.4% Developed Europe ex UK
15.3% Asia Pacific ex Japan
49.9% North America
49.9%
15.3%
10.4%
6.3%
4.6%
4.2%
4.2%
27.0 %
15.4%
12.5%
11.4%
10.0%
6.3%
6.3%
4.3%
Sector Exposure
0.2% Cash/Liquidity Funds
0.6% Utilities
1.1% Real Estate
2.2% Consumer Staples
2.7% Energy
4.3% Materials
6.3% Communications Services
6.3% Diversified
10.0% Financials
11.4% Health Care
12.5% Industrials
15.4% Consumer Discretionary
27.0 % Information Technology
0.2%
0.6%
1.1%
2.2%
2.7%
0.2%
2.0%
2.9%
9 SECTION ONE
Market Value
US$000 % of NAV Primary Focus
Findlay Park American Fund 39,264 11.2 US Equities - Long Only
BlackRock Strategic Equity Hedge Fund 16,200 4.6 Europe Equities - Hedge
Adelphi European Select Equity Fund 15,590 4.4 Europe Equities - Long Only
Egerton Long - Short Fund Limited 15,474 4.4 Europe/US Equities - Hedge
Select Equity Offshore, Ltd 14,508 4.1 US Equities - Long Only
GAM Star Fund PLC - Disruptive Growth 14,454 4.1 Technology Equities - Long Only
Vulcan Value Equity Fund 13,324 3.8 US Equities - Long Only
Schroder ISF Asian Total Return Fund 8,988 2.5 Asia ex-Japan Equities - Long Only
Stepstone Global Partners VI, LP 8,364 2.4 Private Assets - US Venture Capital
NG Capital Partners II, LP 7,973 2.3 Private Assets - Latin America
Top 10 Holdings 154,139 43.8
Goodhart Partners: Hanjo Fund 7,767 2.2 Japan Equities - Long Only
Pangaea II, LP 7,670 2.2 Private Assets - GEM
NTAsian Discovery Fund 7,247 2.1 Asia ex-Japan Equities - Long Only
KKR Americas XII, LP 6,879 2.1 Private Assets - North America
Pershing Square Holdings Ltd 6,817 1.9 US Equities - Long Only
Silver Lake Partners IV, LP 6,095 1.7 Private Assets - Global Technology
Primary Capital IV, LLP 5,609 1.6 Private Assets - Europe
Indus Japan Long Only Fund 5,394 1.5 Japan Equities - Long Only
Impax Environmental Markets Fund 5,310 1.5 Environmental Equities - Long Only
Hudson Bay International Fund Ltd 5,101 1.4 Market Neutral - Multi-Strategy
Top 20 Holdings 218,028 62.0
Stepstone Global Partners IV, LP 4,980 1.4 Private Assets - US Venture Capital
Helios Investors II, LP 4,807 1.4 Private Assets - Africa
Prince Street Opportunities Fund 4,733 1.3 Emerging Markets Equities - Long Only
Baring Asia Private Equity Fund VII, LP 4,317 1.2 Private Assets - Asia
Silver Lake Partners V, LP 4,311 1.2 Private Assets - Global Technology
EQT Mid Market Europe, LP 4,092 1.2 Private Assets - Europe
Prosperity Quest Fund 4,077 1.2 Russia Equities - Long Only
Worldwide Healthcare Trust PLC 4,069 1.1 Healthcare Equities - Long Only
SPDR MSCI World Financials UCITS ETF 3,832 1.1 Financials Equities - Long Only
Global Event Partners Ltd 3,772 1.1 Market Neutral - Event-Driven
Top 30 Holdings 261,018 74.2
58 Remaining Holdings 88,595 25.2
Cash 2,186 0.6
TOTAL 351,799 100.0
SECTION ONE
Investment Portfolio as at 31 December 2021
Ocean Wilsons Holdings Limited 2021 Annual Report10
The Wilson Sons 2021 Earnings Report released on 23 March
2022 is posted on
www.wilsonsons.com.br
.
In the report, Mr. Fernando Salek, CEO of Wilson Sons, said:
Wilson Sons’ 2021 EBITDA of US$159.4 million increased
16.3% compared to 2020 (2020: US$137.1 million) with
solid growth in towage operating revenues.
Container terminal operating results and exports in particular
were impacted by the limited availability of empty containers
and worldwide logistic bottlenecks causing vessel call
cancellations. Despite these challenges Salvador container
terminal reached an all-time cargo handling record of 376,400
TEUs in 2021 with new berth infrastructure supporting
increased efficiency. Due to robust first half results in 2021
and an improved revenue mix, net revenues from the container
terminals were U$141.8 million, 7.3% better than prior year
(2020: US$132.2 million).
Towage results rebounded with operating volumes driven
by strong commodity exports and LNG imports. Towage net
revenues were US$199.1 million in 2021 (2020: US$173.6
million).
Our outlook for 2022 remains cautious with the effects on
worldwide trade from the war in Ukraine, Brazilian elections
and political scenario creating some uncertainty. In addition,
our container terminal business will continue to be challenged
in the first half of the year with logistical bottlenecks, lack of
empty containers and cancellation of vessel calls. Trade flow
in particular is expected to support strong towage results and
maritime services to the oil and gas industry are expected
to recover.
In terms of sustainability, we are pleased to report our carbon
emissions audit has achieved the CDP Gold Seal. Health and
safety continue to be fundamental for our business and the
highlight for 2021 is exceptional vaccination rates among our
employees which together with other precautionary actions
like testing and mask wearing have protected our employees
and allowed our operations to continue throughout the year.
We accomplished more than just solid financial results in
2021. Significant achievements during the year include our
listing on B3’s Novo Mercado, we were awarded with the
internationally recognized standard of excellence for workplace
environments Great Place to Work, publication of the Standard
& Poor’s (S&P) ESG Corporate Sustainability Assessment
with the company ranked in the second quartile and we
ranked in the 100 Open Start-ups Award. These initiatives
and successes coupled with our strong financial position and
culture of innovation, position us well for continued growth
and success as we strive to be the best in class of Brazil’s
maritime logistics companies.
SECTION TWO
Business Review -
Wilson Sons’ Management Report
11 SECTION TWO
Operating Profit
Operating profit of US$97.0 million was US$27.0 million
better than prior year (2020: US$70.0 million). Operating
margin improved year over year at 24.5% (2020: 19.9%)
principally due to increased revenues and an improvement
in foreign exchange losses on monetary items.
Operating expenses increased as expected with increased
volumes in the ports nearing pre-pandemic levels. Raw
materials and consumables used were US$4.7 million higher
at US$24.0 million (2020: US$19.3 million). Employee
expenses were US$2.0 million higher at US$112.0 million
(2020: US$110.0 million). Employee expenses as a
percentage of revenue declined from 31.2% in 2020 to
28.3% in the current year.
Other Operating expenses increase US$13.6 million to
US$98.3 million (2020: US$84.7 million). Depreciation
at $61.4 million was US$0.1 million higher than
the comparative period (2020: US$61.3 million).
Revenue from Maritime Services
Revenue for the year increased by 12.4% to US$396.4 million
(2020: US$352.8 million). The increase in revenue can be
attributed to higher towage manoeuvres, increases in special
operations and improved operational activity in logistics, the
shipyards and shipping agency over the prior year. Container
Terminal revenue increased 7.3% year over year to US$141.8
million (2020: US$132.2 million), in spite of a challenging
global container bottlenecks in the second half of the year.
Towage revenue at US$199.1 million was US$25.5 million
higher than the prior year (2020: US$173.6 million) with
increased volumes in ports that operate larger ships and
success in our ongoing focus to improve our revenue mix.
Returns on the Investment Portfolio
at Fair Value Through Profit or Loss
Returns on the investment portfolio of US$49.5 million (2020:
US$33.4 million) comprise realised profits on the disposal of
financial assets at fair value through profit or loss of US$11.9
million (2020: US$1.0 million), net income from underlying
investment vehicles of US$3.8 million (2020: US$3.3 million)
and unrealised gains on financial assets at fair value through
profit or loss of US$33.9 million (2020: US$29.1 million).
Finance Costs
Finance costs for the year at US$30.2 million were US$7.0
million higher than the prior year (2020: US$23.2 million)
as interest on lease liabilities increased US$1.1 million to
US$13.9 million (2020: US$12.8 million). Interest on bank
loans and overdrafts increased US$5.9 million to US$16.2
million (2020: US$10.3 million) due to normalization of debt
repayments in during the current year after “stand still” debt
repayment agreements that were given during Covid expired.
SECTION THREE
Financial Report
Ocean Wilsons Holdings Limited 2021 Annual Report12
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 2021 the BRL depreciated 7.1% against the USD
from R$5.20 at 1 January 2020 to R$5.57 at the year
end. In 2020 the BRL depreciated 29.0% against the USD
from R$4.03 at 1 January 2019 to R$5.20 at the year end.
Profit Before Tax
Profit before tax for the year increased US$35.8 million
to US$110.4 million compared to US$74.6 million in
2020. The increase in profit is primarily due to the
US$16.1 million in higher returns from the investment
portfolio, and the $43.6 million increase in revenues
offsetting increased operating expenses and finance costs.
Taxation
The tax charge for the year at US$27.9 million was US$1.3
million higher than prior year (2020: US$26.6 million).
This represents an effective tax rate for the year of 25.3%
(2020: 35.6%) for the Group. A more detailed breakdown
of Taxation is provided in note 9 to the consolidated
financial statements reconciling the effective tax rate.
Cash Flow
Net cash inflow from operating activities for the period at
US$106.1 million was consistent with the prior year (2020:
US$105.7 million). Capital expenditure in the year at US$48.7
million was US$10.7 million lower than the prior year (2020:
US$59.4 million).
The Group drew down new loans of US$19.4 million (2020:
US$51.5 million) to finance capital expenditure, while making
loan repayments of US$57.9 million in the year (2020:
US$25.7 million). Dividends of US$24.8 million were paid to
shareholders (2020: US$24.8 million) with a further US$17.8
million paid by Wilson Sons to non-controlling interests (2020:
US$17.5 million).
Cash and cash equivalents at 31 December 2021 decreased
US$34.7 million from the prior year end to US$28.6 million
(2020: US$63.3 million). Wilson Sons held a further
US$43.3 million in USD denominated investments which
are classified as financial assets at fair value through profit or
loss (2020: US$39.6 million) which are not part of the Group’s
investment portfolio and are intended to fund Wilson Sons.
Statement of Financial Position
Equity attributable to shareholders of the parent company at
the reporting date was US$37.9 million higher at US$593.7
million compared with US$555.8 million at 31 December
2020. The main movements for the year were profits for the
period of US$63.7 million, less dividends paid of US$24.8
million and a negative currency translation adjustment of
US$4.2 million. The currency translation adjustment arises
from exchange differences on the translation of Wilson Sons
operations which use a functional currency other than USD.
Net Debt and Financing
All debt at the year-end was held in the Wilson Sons subsidiary
with no recourse to Ocean Wilsons, or the investment portfolio
held by Ocean Wilsons (Investments) Limited. Wilson Sons’
borrowings are used principally to finance vessel construction
and the development of its container terminal business.
Debt net of cash and cash equivalents at 31 December 2021
was US$440.9 million (2020: US$437.3 million).
Leslie J. Rans, CPA
Chief Operating and Financial Officer
Ocean Wilsons Holdings Limited
23 March 2022
13 SECTION THREE
The Directors present herewith their Report and Accounts
for the year ended 31 December 2021.
The Group accounts, presented under International
Financial Reporting Standards (IFRS), comprise the
Consolidated Statement of Profit or Loss and Other
Comprehensive Income, Consolidated Statement of Financial
Position, Consolidated Statement of Changes in Equity,
Consolidated Cash Flow Statement and the related notes.
Profits and Dividends
The Group’s profit after tax on ordinary activities attributable
to equity shareholders amounted to US$63.7 million (2020:
US$38.7 million).
Dividends are set in US Dollars and are normally paid annually.
The Ocean Wilsons dividend policy is to pay a percentage
of the average capital employed in the investment portfolio
and the Company’s full dividend received from Wilson Sons
in the period after deducting funding for the parent company
costs. The Board may review and amend the dividend policy
from time to time in light of our future plans and other factors.
The Board is recommending a dividend of US 70 cents
per share to be paid on 15 June 2022 to shareholders
of the Company as of the close of business on 20 May
2022. Shareholders will receive dividends in Sterling by
reference to the exchange rate applicable to the USD on
the dividend record date (20 May 2022) except for those
shareholders who elect to receive dividends in USD.
Principal Activities
The Group’s principal activities during the year were the
management of a diverse investment portfolio and the
provision of maritime and logistics services in Brazil.
The investment strategy is to maximise total return by investing
in a portfolio of diversified assets including global equities,
fixed income and alternative assets. Investments are designed
to add value over the medium to longer-term through a non-
market correlated, conviction-based investment style.
Our subsidiary, Wilson Sons, has provided maritime
services in Brazil for over 180 years. Wilson Son’s
strategy is to provide maritime and logistics services to
the domestic economy, international trade and the oil
and gas market. Details of these activities are set out in
the Financial Report and Investment Manager’s Report.
Company Purpose
The Company’s purpose is to deliver enhanced
long-term value by balancing portfolio risk and avoiding
the distraction of short-term cycles with a focus on
growing the business through sustainable profit growth.
Company Strategy
The Company’s strategy is currently twofold:
We invest in a balanced thematic portfolio of funds by
leveraging our long-term relationships and through our detailed
insights and analysis. We invest in maritime logistic services
providing best in class innovative solutions in a rapidly growing
market.
The investment portfolio strategy is to generate real returns
through long-term capital growth, whilst emphasising
preservation of capital rather than short-term movements
in equity markets. The investment portfolio is invested in
both publicly quoted and private (unquoted) assets in three
components:
(i)
Core Regional & Thematic Component
(ii)
Private Equity Component
(iii)
Diversifying Component
SECTION FOUR
Governance -
Report of the Directors
Ocean Wilsons Holdings Limited 2021 Annual Report14
Commensurate with the long-term horizon, it is expected that
the majority of investments will be concentrated in equity,
across both ‘public’ and ‘private’ markets. In most cases,
investments will be made either through collective funds
or limited partnership vehicles, working alongside expert
managers in specialised sectors or markets to access what
we believe represent the most advantageous investment
opportunities.
The Wilson Sons strategy is to grow and strengthen their
businesses while looking for new opportunities in the
maritime and transport sector, focusing on Brazil and Latin
America. Wilson Sons looks to develop its businesses by
maximising economies of scale and efficiency and improving
the quality and range of services it provides to customers.
Wilson Sons principal services are container terminals,
logistics, oil and gas support terminals, towage, shipyard
and through our joint venture, offshore support vessels.
Values
The Company’s core values are to:
• Invest and develop our business for the long-term in a
sustainable manner without pressure to produce short-
term results at the expense of long-term value creation;
• Provide a safe operating environment for our employees;
• Respect the environment and the communities in which
we operate and the people who work for us;
• Have meaningful long-term relationships with our
stakeholders; and
• To act ethically in all our dealings.
15 SECTION FOUR
Directors & Directors’ Interests
SECTION FOUR
Mr. Jose Francisco Gouvêa Vieira
(Chairman)
Mr. Gouvêa Vieira is aged 72 and joined
the Board in 1991. He is a partner of
the Brazilian law firm of Gouvêa Vieira
Advogados. Mr. Gouvêa Vieira is also a
member of the Corporate Governance
Committee for the American Chamber
of Commerce in São Paulo and a non-
executive director of Wilson Sons.
Mr. William Salomon
(Deputy Chairman)
Mr. Salomon is aged 64 and joined the
Board in 1995. He is senior partner
of Hansa Capital Partners LLP. He
is also a non-executive director of
Hansa Investment Company Limited
and Wilson Sons and a member of the
Company’s Nomination Committee.
Ms. Caroline Foulger
Ms. Foulger is aged 61 and joined the
board in 2020. She is a Chartered
Accountant with significant company
director experience on boards of both
listed and unlisted companies. She is
a non-executive director on Hiscox
Ltd, Atlas Arteria International Ltd, and
Oakley Capital Investments Limited.
Ms. Foulger is a retired partner of PWC
Bermuda. Ms. Foulger is a member
of the Company’s Audit and Risk,
and Remuneration and Management
Oversight Committees, and is Chair
of the Nominations Committee.
Ocean Wilsons Holdings Limited 2021 Annual Report16
Mr. Andrey Berzins
Mr. Berzins is aged 62 and joined
the Board in 2014. He is a Chartered
Accountant and sits on the Boards
of several Luxemburg investment
funds. Mr. Berzins is the Senior
Independent Director, Chair of the
Company’s Audit and Risk Committee
and member of the Company’s
Nomination and Remuneration and
Management Oversight Committees.
Mr. Christopher Townsend
Mr. Townsend is aged 48 and joined
the Board in 2011. He is a solicitor
and has an MBA from the London
Business School. He is an investment
director of Hansa Capital GmbH and a
non-executive director of Wilson Sons.
Ms. Fiona Beck
Ms. Beck is aged 56 and joined the
Board in 2020. She is a Chartered
Accountant and an experienced
independent director on several listed
and unlisted companies. She was
President and CEO of Southern Cross
Cable Network. Ms. Beck is a non-
executive Director of Oakley Capital
Investments Limited, Atlas Arteria
International Ltd. and IBEX Ltd. Ms.
Beck is a member of the Company’s
Audit and Risk Committee and is Chair
of the Remuneration and Management
Oversight Committee.
17 SECTION FOUR
The Directors who held office at 31 December 2021 had the
following interest in the Company’s shares:
Interest 2021
2020
Mr. J F Gouvêa Vieira
(Chairman)
Beneficial
179,100
179,100
Mr. W Salomon* Beneficial
4,659,349
4,659,349
Mr. C Townsend* Beneficial
4,040,000
4,040,000
Ms. C Foulger Beneficial
15,000
10,000
Ms. F Beck Beneficial
8,000
3,000
Mr. A Berzins Beneficial
5,000
5,000
* Additional indirect interests of Mr. W Salomon and Mr. C Townsend in the
Company are set out in substantial shareholdings below.
Mr. W Salomon is Chair of Hanseatic Asset Management
LBG. Mr. C Townsend is a director of Hansa Capital GmbH,
a wholly owned subsidiary of Hanseatic Asset Management
LBG. Fees paid to Hanseatic Asset Management LBG
amounted to US$3.3 million (2020: US$2.8 million) for
acting as Investment Manager of the Group’s investment
portfolio. A performance fee of US$1.6 million is payable to
the Investment Manager in 2021 (2020: US$0.3 million).
The Board
The Board at 31 December 2021 comprised six non-executive
directors. Three of the six directors are considered by the
Board to be independent under the Code: Mr. A Berzins, Ms.
C Foulger and Ms. F Beck. Ms. Beck and Ms. Foulger have
links under the 2018 UK Corporate Governance Code as they
serve on two other boards together as non-executive directors.
Ms. C Foulger is Chair of one of those Boards. The Board
still consider Ms. Foulger and Ms. Beck as independent as
the Group has no business relationship with either of these
companies and both Board members exhibit independent
thought. The Board has appointed Mr. A Berzins as the
senior independent director. Mr. K. Middleton, an Executive
Director retired on 26 March 2021.
In accordance with the Company’s byelaws, all Directors are
subject to annual re-election by shareholders and if eligible,
offer themselves for re-election until the following Annual
General Meeting. Mr. J F Gouvêa Viera will be retiring as both
Chairman and a director at the conclusion of the next Annual
General Meeting and not offering himself for re-election as
previously disclosed.
Newly appointed directors are subject to election at the
first Annual General Meeting following their appointment to
the Board. A Director retiring upon the expiration of a term
of office at an annual general meeting shall be eligible for
reappointment for a further term. The Board, led by the
Nomination Committee, considers on a regular basis how
to refresh itself.
Non-executive directors hold letters of appointment. The
other commitments of directors are disclosed on page 16
and the Board is satisfied that these commitments do not
conflict with their ability to carry out effectively their duties
as directors of the Company. The Board ensures that non-
executive directors have sufficient time to undertake their
duties through reviewing their other directorships, monitoring
attendance and participation at Board meetings.
Non-executive Directors’ fees are set within limits set in
the Company’s Articles of Association. The present limit is
US$900,000 in aggregate per annum and the approval of
shareholders in a General Meeting is required to change
this amount. The remuneration of non-executive directors is
reviewed every three years. Levels of remuneration for the chair
and all non-executive directors reflect the time commitment
and responsibilities of the role and are benchmarked against
comparable companies and considering the Board evaluation.
During the year ended 31 December 2021, the Company
paid US$0.6 million (2020: US$0.9 million) in directors fees.
The division of responsibilities between the Chair and the
senior independent non-executive director have been clearly
established, set out in writing and agreed by the Board. These
are available on the Company’s website. Ocean Wilsons does
not have a chief executive. The Board appointed Ms. L Rans
as Chief Operating and Financial Officer on 1 January 2021.
Our subsidiary, Wilson Sons, is managed by the Board
of Wilson Sons who have appointed Mr. F Salek as chief
executive of Wilson Sons. Ocean Wilsons manages its interest
in Wilson Sons through the appointment of non-executive
directors of Wilson Sons (presently Mr. J F Gouvêa Vieira, Mr.
W Salomon and Mr. C Townsend) voting on matters requiring
Wilson Sons’ shareholders’ approval.
The Ocean Wilsons Holdings Limited Board has a formal
schedule of matters specifically reserved for its attention
which includes:
• Determining the Company’s purpose, values and strategy
and satisfying itself that these and its culture are aligned;
• Determining the responsibilities of the Chair and Directors;
• Recommending changes to the capital structure of the
Company or other matters relevant to its status as a listed
Company for shareholder approval;
SECTION FOUR
Ocean Wilsons Holdings Limited 2021 Annual Report18
• Approving significant matters relating to acquisitions
and disposals and consideration of significant financial
matters;
• Selecting the Chair of the Board;
• Appointing or removing the company executives and
company secretary;
• Reviewing any potential conflicts of interest and, where
considered appropriate, to approve any conflict of interest;
• Approving annual and interim reports;
• Proposing any dividends and dividend policy;
• Appointing the external auditor and any financial advisor
or corporate broker;
• Determining the Terms of Reference, membership and
chair of Board committees, including the Audit and Risk
Committee, Remuneration and Management Committee
and Nomination Committee;
• Approving any agreements or amendments to agreements
between Ocean Wilsons and Wilson Sons including the
relationship agreement;
• Voting the shares in Wilson Sons on matters presented
to shareholders of Wilson Sons for shareholder approval;
• Undertaking a formal and rigorous annual evaluation
of its own performance and that of its committees and
individual directors; and
• Reviewing the Company’s overall corporate governance
arrangements.
The Company has a procedure in place by which directors
can seek independent professional advice at the Company’s
expense if the need arises. The Board has full and timely
access to all relevant information to enable it to perform its
duties. The Company has directors and officer’s insurance
in place.
The Chief Operating and Financial Officer is responsible for
advising the Board on all corporate matters. Each director
has access to the advice and services of the Company
Secretary, Mr. F McAleavey, and the Chief Operating and
Financial Officer.
During 2021, seven scheduled meetings of the Ocean Wilsons
Board were held in Bermuda with those Directors unable
to travel due to the Covid-19 pandemic joining by video
conference. Details of attendance at Board meetings are
set out below.
Directors’ attendance at Board meetings:
Director
Board
meetings
attended
Mr. J F Gouvêa Vieira (Chairman) 7
Mr. W Salomon 7
Ms. C Foulger 7
Mr. C Townsend 7
Mr. A Berzins 7
Ms. F Beck 7
Mr. K Middleton (retired March 26, 2021) 2
The agenda for each scheduled Board meeting is set by the
Chair in consultation with the Chief Operating and Financial
Officer. The Board of Ocean Wilsons is invited to the Wilson
Sons Board meetings where appropriate to receive operational
updates.
All new Directors participate in an induction program on joining
the Company. This covers such matters as strategy, operation
and activities of the subsidiaries and corporate governance
matters. Site visits and meetings with senior management
are also arranged when possible. Directors make periodic
operational site visits. Directors are also provided with industry
and regulatory updates as part of their ongoing training.
No site visits were performed in 2021 due to travel and
operational restrictions resulting from the Covid-19 pandemic.
Conflicts of Interest
The Board has in place a procedure for the consideration and
authorisation of conflicts or possible conflicts of interest with
the Company’s interests annually including those resulting
from significant shareholdings. If a director has a conflict
of interest, he/she leaves the meeting prior to discussion
unless requested to remain and leaves determination of such
matters to the other directors. The Board ensures that the
influence of third parties does not compromise or override
independent judgement by requiring disclosure of outside
interests, encouraging a culture of openness and debate
amongst Board members and promoting independent thought.
19 SECTION FOUR
SECTION FOUR
Board of Ocean Wilsons
(Investments) Limited
The Board of Ocean Wilsons (Investments) Limited is currently
constituted by the same directors as the Board of Ocean
Wilsons Holdings Limited. Ms. C Foulger was appointed
Chair from 1 January 2021. The Board delegates authority
to run the investment portfolio held by Ocean Wilsons
(Investments) Limited to the Investment Manager, Hanseatic
Asset Management LBG within certain guidelines. The Board
of Ocean Wilsons (Investments) Limited has a formal schedule
of matters specifically reserved for its attention which include:
• Appointment, removal and terms of the Investment
Manager;
• Determination of investment guidelines and restrictions
in conjunction with the Investment Manager;
• Approval of the investment objective and benchmark;
• Approval of and limits on the use of derivative instruments;
• Review of the performance of the Investment Manager;
• Appointment, removal and terms of the custodian of
Ocean Wilsons (Investments) Limited;
• Approval of and limits on borrowing;
• Approval of the annual accounts for Ocean Wilsons
(Investments) Limited; and
• Approval of any dividends.
OWIL Investment Policy
The Investment Manager will seek to achieve the investment
objective through investments in publicly quoted and private
(unquoted) assets across three ‘silos’:
(i)
Core Regional & Thematic Component
– this forms the
core of the portfolio and provides global exposure mostly
through single-country and regional equity funds with
the balance reflecting the Investment Manager’s current
market outlook. Thematic funds are included to provide
exposure to growth sectors such as technology and
biotechnology.
(ii)
Private Equity Component
– In line with the Company’s
long-term investment horizon we invest in private equity
funds. This provides access to the improved potential
investment returns available by being able to commit
capital for multiple years and also to large areas of the
economy that are not accessible through public markets.
.
(iii)
Diversifying Component
– as business cycles mature,
we seek to shift dynamically to those asset classes that
are likely to add portfolio protection. This component
includes a wide variety of investment strategies, with the
common thread that they all display low correlations to
broad equity markets.
The Investment Manager maintains a global network to find
the best opportunities across the three silos worldwide. The
portfolio contains a high level of investments which would
not normally be readily accessible to investors without similar
resources. Furthermore, many holdings are closed to new
investors. There is currently no gearing although the Board
would, under the appropriate circumstances, be open-minded
to modest levels of gearing. Likewise, the Board may, from
time to time, permit the Investment Manager opportunistically
to use derivative instruments (such as index hedges using
call and put options) to actively protect the portfolio.
Contracts and Agreements with
Substantial Shareholders
Mr. W Salomon and Mr. C Townsend have interests in
the investment management agreement with Hanseatic
Asset Management LBG. Both Mr. W Salomon and Mr.
C Townsend receive remuneration from Hanseatic
Asset Management LBG. The independent directors of
the Board conduct a regular review of this agreement.
Service Contracts
Regarding the Directors proposed for re-election at
the Annual General Meeting there are no service
contracts between any of them and the Company.
Nomination Committee
Ms. C Foulger, an independent director, was the Chair of the
Nomination Committee throughout 2021. In addition to Ms.
Foulger, the Committee comprised of two additional directors,
Mr. A Berzins, an independent director, and Mr. W Salomon.
There were two scheduled meetings in 2021. Director’s
attendance at these meetings is set out below:
Director
Committee meetings
attended
Ms. C Foulger (Chair) 2
Mr. W Salomon 2
Mr. A Berzins 2
Ocean Wilsons Holdings Limited 2021 Annual Report20
The Nomination Committee has formal terms of reference
approved by the Board which are reviewed on an ongoing
basis and are available on the Company’s website. The
principal responsibilities of the Nomination Committee are:
• to lead the process for the appointment of Directors,
ensure plans are in place for orderly succession, and
oversee the development of a diverse pipeline for
succession, considering the Company’s strategic priorities;
• to be responsible for identifying and nominating, for the
approval of the Board, candidates to fill Board vacancies
as and when they arise;
• to lead the regular review of the Board structure, size and
composition (including its skills, knowledge, diversity and
experience);
• before any appointment is made to the Board, prepare
for consideration by the Board an updated evaluation
of the balance of skills, knowledge and experience on
the Board, and in the light of this evaluation prepare a
description of the role and capabilities required for a
particular appointment. In identifying suitable candidates,
the Committee shall:
— use the services of external advisers to facilitate the
search;
— consider candidates from a wide range of backgrounds;
and
— consider candidates on merit and against objective
criteria and with due regard for the benefits of diversity
on the Board, including gender, taking care that
appointees have enough time available to devote to
the position;
• ensure that, prior to the appointment of a director, the
proposed appointee should be required to disclose any
business interests that may result in a conflict of interest
and be required to report any future business interests
that could result in a conflict of interest; and
• arrange, that on appointment to the Board, Directors
receive a formal letter of appointment confirming clearly
what is expected of them in terms of time commitment,
committee service and involvement outside Board
meetings.
Annual General Meeting 26 May 2022
At the upcoming Annual General Meeting, Mr. J F Gouvêa
Vieira will not stand for re-election after having served as
Chairman of the company for the past 23 years. The Board
places great importance on a long-term solution for the
succession and has decided unanimously that Ms. Caroline
Foulger, a current Director, with her extensive experience
and strong leadership qualities is the ideal candidate to
become the Chair of Ocean Wilsons. Therefore, the Board
of Directors proposes to the Annual General Meeting
to re-elect her as a member of the Board of Directors
after which the Board will appoint Ms. Foulger as Chair.
Remuneration and Management
Oversight Committee
The Remuneration and Management Oversight Committee
comprises three independent non-executive directors: Ms.
F Beck (Chair), Mr. A Berzins and Ms. C Foulger.
There were two scheduled meetings held in 2021. Director’s
attendance at these meetings is set out below:
Director
Committee meetings
attended
Ms. F Beck (Chair) 2
Mr. A Berzins 2
Ms. C Foulger 2
The Committee’s terms of reference are reviewed annually
and are available on the Company’s website. The principal
responsibilities are:
• to determine the policy for Ocean Wilsons’ executive
management’s remuneration and the remuneration for
the chair and non-executive Directors;
• to determine bonuses payable to executive management
under the Company’s bonus scheme; and
• to review significant vendor agreements and other
management oversight as required.
Remuneration Policy
The Company’s remuneration policy aims to align the
interests of the executive with those of shareholders. The
overriding objective is to ensure that the Company’s executive
remuneration policy encourages, reinforces and rewards the
21 SECTION FOUR
SECTION FOUR
delivery of sustainable shareholder value. The Remuneration
Committee is responsible for setting non-executive Directors’
fees. Fees are structured as a basic fee for Board membership
and an additional fee for any committee chair. Non-executive
Director fees are reviewed at least every three years, the last
review was in 2019. The Committee believes that an effective
remuneration strategy plays an essential part in the future
success of the Company.
The Committee does not determine the policy for
remuneration or set remuneration for the Chair, executive
Directors and senior management at Wilson Sons. It also
does not review workforce remuneration and related
policies or set remuneration policy at Wilson Sons. The
Board regularly reviews oversight of Wilson Sons workforce
remuneration and related policies to ensure that incentives
and rewards are aligned with culture and are considered
when setting Wilson Sons’ policy for executive remuneration.
Remuneration
Non-executive Directors’ fees are set within limits set in
the Company’s Articles of Association. The present limit is
US$900,000 in aggregate per annum and the approval of
shareholders in a General Meeting is required to change
this amount. Levels of remuneration for the chair and all
non-executive directors reflect the time commitment and
responsibilities of the role and are benchmarked against
comparable companies and considering the Board evaluation.
The board of Wilson Sons is responsible for all remuneration
matters relating to Wilson Sons and its subsidiaries.
Mr. J F Gouvêa Vieira, Mr. W Salomon and Mr. C
Townsend are directors of Wilson Sons. These directors
received directors’ fees from Wilson Sons in addition
to their fees as directors of Ocean Wilsons in 2021.
Audit and Risk Committee
The Audit and Risk Committee comprises three independent
directors, Mr. A Berzins (Chair), Ms. F Beck and Ms. C Foulger.
The Board is satisfied that during 2021 the three members
have recent and relevant financial experience as all have
served on the audit committees of other listed companies
and hold accounting qualifications.
The Committee met six times in 2021. The Chief Operating
and Financial Officer of Ocean Wilsons attended each of these
meetings. The external auditors attended three meetings. The
Committee meets with the external auditor without the Chief
Operating and Financial Officer present to receive feedback
on their performance.
Director
Committee meetings
attended
Mr. A Berzins (Chair) 6
Ms. F Beck 6
Ms. C Foulger 6
The Audit and Risk Committee has defined terms of reference
which are available on the Company’s website. The principal
responsibilities of the Audit and Risk Committee are to:
• review the integrity of the interim and full year financial
statements of the Company, including reviewing significant
financial reporting judgements included in them;
• provide advice to the Board as to whether the annual
report and accounts taken as a whole is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s financial position
and performance, business model and strategy;
• review the Company’s internal control and risk
management systems;
• make recommendations to the Board, for it to put to the
shareholders for their approval in general meeting, in
relation to the appointment, reappointment and removal
of the external auditor and to approve the remuneration
and terms of engagement of the external auditor;
• review and monitor the external auditor’s independence
and objectivity and the effectiveness of the audit process,
taking into consideration relevant professional and
regulatory requirements. The independence of the external
audit process has been assessed by reviewing reports
from the external auditors describing their arrangements
to identify, report and manage any conflicts of interest.
The Board also reviews the provision of non-audit
services provided by the external auditors. Any non-audit
services provided by the auditor must be an arms-length
transaction;
• consult with the Group’s auditor and, where necessary
the auditor of the subsidiary companies, regarding any
matters arising in the course of the annual audit which
should be brought to the attention of the Board;
Ocean Wilsons Holdings Limited 2021 Annual Report22
• monitor the Group’s risk exposure, opportunities and
mitigation;
• consider the need for an Ocean Wilsons internal audit
function and review the work performed by the Wilson
Sons internal audit function; and
• review arrangements by which employees of the Company
may, in confidence, raise concerns about possible
improprieties in matters of financial reporting or other
matters.
Report from the Audit and Risk Committee Chair on the
actions taken by the Audit and Risk Committee to discharge
its duties:
Since the beginning of 2021, the Audit and Risk
Committee has:
• reviewed the December 2020 annual report and financial
statements, the June 2021 half yearly financial report
and the quarterly updates issued in May and November
2021. As part of the review of the December 2020 Annual
Report and Financial Statements, the committee received
a report from the external auditor on their audit work
performed on the annual report and financial statements;
• provided advice to the Board on whether the annual
report and financial statements taken as a whole is
fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy;
• reviewed and challenged the assumptions used in the
Wilson Sons impairment test on the Brasco offshore
support base cash-generating unit “CGU” including
long-term revenue; costs and expenses; investments;
projection period; growth rate and discount rates based
on the weighted average cost of capital (“WACC”);
• reviewed and approved the scope of audit work to be
undertaken by the auditor;
• agreed the fees to be paid to the external auditor for the
audit of the December 2021 financial statements;
• undertook a robust request for proposal (“RFP”) and
tender process to assess applicants and appoint a new
auditor;
• assessed the qualification, expertise and resources, and
independence of the external auditor;
• received reports from the Wilson Sons Audit Committee
and the Wilson Sons internal audit team;
• received a report on cybersecurity at Wilson Sons. The
report highlighted the principal risks as ransomware,
data loss, customer data breaches, mission critical
systems failure, reputational damage, financial losses
and operational accidents. The Committee was satisfied
with the actions being taken to mitigate cyber risks;
• received a report on the Wilson Sons enterprise risk
management process (see principal and emerging risks
on page 26);
• received litigation reports from the Wilson Sons legal
department outlining the legal provisions in the accounts
and work performed to manage possible claims;
• received a briefing on the Wilson Sons whistle-blowing
channel outlining the structure of the whistle-blowing
channel and procedures for following up on complaints
received;
• reviewed the 2021 annual report to assess if the annual
report and accounts, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the performance,
strategy and business model of the Company. The
Committee is of the opinion that the annual report and
accounts articulate how the Company has performed
during the year and provides full disclosures at each of the
segment levels. The messages in the Chair’s Statement,
Directors’ Report and Financial Reports are reflected in
the annual accounts and there is consistency between
the narrative sections and the financial statements. As
part of the review of the December 2021 annual report
and financial statements, the committee received a report
from the external auditor on their audit work performed
on the annual report and financial statements; and
• reviewed the performance of the external auditors and the
effectiveness of the external audit process for the year
ended 31 December 2020. The review was based on a
survey of key stakeholders across the Group, the quality
of the auditors’ reporting to and interaction with the Audit
Committee. Based on the information currently available
and this review, the Audit Committee was satisfied with the
performance of the previous auditors and the effectiveness
of the audit process.
23 SECTION FOUR
SECTION FOUR
To fulfil its responsibility regarding the independence of the
external auditor, the Audit and Risk Committee reviewed:
• EY’s determination that they would not be independent for
the 2021 audit. As such, the Audit Committee accepted
EY’s resignation and recommended to the Board that
the successful audit firm from the RFP process for the
2022 audit appointment, KPMG Bermuda, be appointed
to perform the 2021 audit;
• the overall extent of non-audit services provided by the
external auditor. Non-audit services were provided in
2021, before EY resigned as the Company’s auditor and
before the RFP process to appoint a new auditor, by
KPMG Bermuda. As part of the RFP process and due
diligence performed by KPMG, any potential impairments
to independence and the management of those were
discussed and it was concluded by both parties that these
non-audit services did not impact KPMG’s independence;
• the external auditor plan for 2021, noting the role of the
audit partner who signs the audit report and who, in
accordance with professional rules, has not held office
for more than five years and any changes in key audit
staff; and
• a report from the external auditor describing their
arrangements to identify, report and manage any conflicts
of interest.
After discussion with the external auditor and
Ocean Wilsons (OWHL) management, it was determined
that the key risks of misstatement in the Group’s 2021
financial statements relate to:
•
Provisions
– Legal claims against the Brazilian operations
comprise civil and environmental cases, tax cases
and labour claims. The reporting risk relates to the
completeness of claims recorded and the estimation of
the provisions held against these exposures. There remain
a significant number of contingent liabilities, particularly
concerning labour and taxation claims. Provisions are
based on prior experience, Wilson Sons’ management’s
best knowledge of the relevant facts and circumstances
and expert legal advice relative to each case. The
Committee questioned Wilson Sons’ management on
their assumptions used in determining provisions and the
procedure for classification of legal liabilities as probable,
possible or remote loss by the external lawyers. The
Committee reviewed legal reports from Wilson Sons’
management on contingencies and asked questions on
the background and progress of material claims. The
Committee evaluated the current level of provisions in light
of historical trends and claim history to ensure provisions
were adequate. The committee further ensured that
adequate resources are allocated to recording, evaluating
and monitoring legal claims to ensure the completeness
of claims recorded and provisions made. The Committee
also discusses potential risks surrounding legal claims
with the external auditor and reviewed their audit findings.
•
Impairment Risk to Wilsons Sons Brasco cash
generating unit
– The Group has significant property
plant and equipment and intangibles balances within
the Brasco cash generating unit. The reporting risk is
that these balances may be overstated. Wilson Sons’
management perform impairment reviews for property,
plant and equipment and intangibles as required by
IAS 36,
Impairment of Assets
. The impairment test is
performed by comparing the carrying value of property,
plant and equipment and intangibles to its value in use,
calculated using the discounted cash flow forecasts under
the principles of IAS 36. The committee examined and
challenged Wilson Sons’ management’s key assumptions
used in the impairment tests to understand their impact
on the recoverable amounts. The Committee was satisfied
that the significant assumptions used were appropriate
and sufficiently robust. The Committee was further
satisfied with the impairment disclosures in the financial
statements. The Committee also discusses potential risks
surrounding impairment risk with the external auditor and
reviewed their audit findings.
•
Revenue recognition
– The revenue recognition risk
could arise from inappropriate revenue recognition
policies, incorrect application of policies or cut-off
errors surrounding year end or management override/
manipulation of revenue. The Committee considered
the Group’s revenue recognition policies and the level
of transactions compared to previous periods. The
Committee received quarterly Wilson Sons’ management
reports on revenue and financial performance with
comparisons to budget and prior year. The Committee
reviewed and questioned Wilson Sons’ management
explanations for variances and revenue performance.
The Committee also discussed potential risks surrounding
revenue recognition with the external auditor and reviewed
their audit findings. The Committee was satisfied with
management’s explanations of variances and application
of the presented policies relating to revenue recognition.
•
Investment valuation
– The investment valuation risk
arises from the valuation of the Level 3 investments
which requires significant judgements and estimates by
Ocean Wilsons Holdings Limited 2021 Annual Report24
management and external inputs, principally investment
valuations made by the managers of the funds we invest
in. The Committee received quarterly reports from the
Investment Manager on investment performance which
included historical performance analysis and management
outlook for investment and market performance. The
Committee reviewed and questioned the Investment
Manager and obtained explanations for investment
performance and variations from market performance,
investment expectations and potential risks to future
performance. This information is considered in the
valuation of Level 3 investments. The Committee examined
and challenged management’s key assumptions used in
the valuation of investments. The Committee was satisfied
that the significant assumptions used were appropriate.
The Committee was further satisfied with the disclosures
in the financial statements. The Committee also discusses
potential risks surrounding investment valuation with the
external auditor and reviewed their audit findings.
During the year, the audit of the Company’s 2020 financial
statements undertaken by Ernst & Young LLP was chosen
for inspection by the United Kingdom Financial Reporting
Council (“FRC”). The FRC’s review identified limited areas
for improvement. As the company changed auditors during
2021 to KPMG, the Committee discussed the areas identified
for improvement by the FRC with the Company’s new auditor
and understood how the new auditor proposed to ensure
their audit of the 2021 financial statements would address
the FRC’s findings.
Andrey Berzins
Audit and Risk Committee Chair
Ocean Wilsons Holdings Limited
23 March 2022
Employees
The average number of persons, including Directors, employed
by the Group in 2021 was 3,207 (2020: 3,807), almost all of
whom are employed by our operating subsidiary, Wilson Sons.
Share Option Plan
On 24 June 2021, the shareholders of Wilson Sons, in a
special general meeting, approved the migration of the
share options plan (“Migration Plan”) from Wilson Sons
Limited (“WSL”) to Wilson Sons Holdings Brasil S.A. as part
of Wilson Sons listing on the Novo Mercado. The Migration
Plan replaced the share options granted by WSL under
the 2014 Share Options Scheme which allowed for the
grant of options to eligible participants to be selected by
the Wilson Sons Board. Details of the share option plan are
disclosed in note 26 to the consolidated financial statements.
Substantial Shareholdings
As at 31 December 2021 the Company was aware of the
following holdings of its shares, in excess of 3% of the issued
ordinary share capital:
Name of holder
Number
of shares % Held
Hansa Investment
Company Limited 9,352,770 26.45
Victualia Limited Partnership 4,435,064 12.54
Mr. C Townsend 4,040,000 11.42
Dynamo Administração
de Recurso 2,338,369 6.61
Utilico Emerging Markets
Utilities Limited 1,623,000 4.59
The Company has been advised that Mr. W Salomon has
an interest in 4,435,064 shares registered in the name of
Victualia Limited Partnership and that Mr. W Salomon has an
interest in 27.2% and Mr. C Townsend an interest in 25.9%
of the voting shares of Hansa Investment Company Limited.
Auditor
During the year, Ernst & Young LLP (“EY”) resigned as auditors
as EY determined they would not be independent for the
Company’s 2021 audit. The Company appointed KPMG Audit
Limited (“KPMG”) as the Company’s independent auditor,
after a competitive tender process, with effect from 21 October
2021 until the conclusion of the Company’s annual general
meeting in 2022. KPMG have expressed their willingness to
continue in office as auditor and a resolution to reappoint
KPMG Audit Limited under the provisions of Section 89 of
the Bermuda Companies Act 1981 will be proposed at the
forthcoming Annual General Meeting. During the year ended
31 December 2021, the Company paid US$0.7 million (2020:
US$0.7 million) in audit fees for the audit of its consolidated
financial statements.
25 SECTION FOUR
SECTION FOUR
Internal Controls
The Board is responsible for the system of internal control and
reviewing its effectiveness. The Audit and Risk Committee
assists the Board in monitoring the effectiveness of our
internal control and risk management policies. The internal
controls are designed to cover material risks to achieving the
Group’s objectives and include business, operational, financial
and compliance risks. The internal controls are designed to
identify, evaluate and manage rather than eliminate risk of
failure to meet business objectives. These controls have been
in place throughout the year and no significant deficiencies
have been identified.
The Board reviews the need for an internal audit department
annually and currently considers no internal audit function is
required. Wilson Sons has an independent Audit committee
in addition to an internal audit function. Hanseatic Asset
Management LBG, the Investment Manager of Ocean Wilsons
(Investments) Limited and its portfolio custodian Lombard
Odier also provide reports on their internal controls for the
Board to consider and review in its assessment for the need
of an internal audit department. The Board also noted there
was segregation of duties between the Investment Manager
and the recording and preparing of accounts as this is done
by an independent professional accounting firm. Additionally,
Wilson Sons presents the results of the Wilson Sons’ internal
audit function to the Wilson Sons’ and Ocean Wilsons’ Audit
and Risk Committees on an annual basis and reports any
material findings on a quarterly basis. No material items
were reported in 2021. In reviewing Wilson Sons, the Board
receives reports from the Wilson Sons’ legal department, and
on cybersecurity from Wilson Sons’ IT department.
The Ocean Wilsons’ employee whistle-blowing policy is
designed to enable employees of the Company to raise
concerns internally and at a high level and to disclose
information which the individual believes may show
malpractice or impropriety. Wilson Sons’ whistle-blowing
policy and procedures enable employees who have concerns
about the application of Wilson Sons’ Code of Ethics to raise
them with the Wilson Sons’ Ethics Committee. During the year,
the Board of Ocean Wilsons received reports on the Ocean
Wilsons’ and Wilson Sons’ corporate governance environment
as well as the work of the Wilson Sons’ Ethics Committee.
Risk Management
Ocean Wilsons has an ongoing process for identifying,
evaluating and managing key risks including financial,
operational and compliance controls. A risk register is
maintained detailing business risks, together with controls
and responsibilities. The risk register is regularly reviewed
by the Audit and Risk Committee. The Board is satisfied that
these systems are operating effectively.
The principal risks and uncertainties are described below and
additionally note 31 to the consolidated financial statements
provides detailed explanations of the risks associated with
the Company’s financial instruments. The Audit and Risk
Committee and the Board carried out a robust assessment
of the Group’s emerging and principal risks.
Ocean Wilsons Holdings Limited 2021 Annual Report26
Principal Risks
Nature of Risk Description Potential Impact Risk mitigation
Financial Risk – equity
market exposure
The Group’s investment
activities expose it to
movements in equity
values.
Losses arising
from large adverse
movements in equity
prices.
As a long-term investor, short-term changes
in the value of investments are part of the
investment cycle. The Group does not have
any significant borrowings or shareholder
withdrawals that may put pressure on the
Group to sell an investment solely due to its
price movements.
The Board of OWIL determines investment
guidelines and restrictions in conjunction with
the Investment Manager, these together, with
the Investment Managers reports are reviewed
at the OWIL board meetings to monitor
performance and ensure compliance with
the investment guidelines.
The investment portfolio is invested in a
diversified range of asset classes and markets,
so the Group is not concentrated in one
particular market or asset class.
Financial Risk – foreign
currency exposure
The Group’s investment
activities expose it to
movements in foreign
currency exchange
rates.
Losses arising
from large adverse
movements in foreign
currency exchange
rates.
OWHL and OWIL do not take speculative
positions in non-US Dollar denominated
assets.
The majority of cash and liquid assets are
maintained in US Dollars.
The Group (outside of Wilson Sons) does not
have material non-US Dollar denominated
liabilities. Non-US Dollar denominated
liabilities are trade creditors from UK based
suppliers, non-US Dollar denominated
investment trades waiting to settle and non-US
Dollar capital subscription commitments.
Financial Risk – USD/
BRL currency volatility
The functional currency
of the Group is US
Dollars. OWHL has a
significant investment
in Wilson Sons that in
turn has a significant
exposure to the
Brazilian Real.
The Group is exposed
to losses due to
movements in the
Brazilian Real /US
Dollar exchange rate.
The Board of Wilson Sons is responsible for
managing currency risk in their operations.
OWHL does not hedge its exposure as the
functional currency of Wilson Sons is US
Dollars and the Board does not deem it
practicable to hedge this exposure. There
is a partial natural hedge in the underlying
Wilson Sons business as a significant portion
of pricing and cashflows are linked to the
US Dollar.
The Board of OWHL monitors the performance
and risks of Wilson Sons through reviews of the
OWHL interim and annual financial statements
and the presence of three OWHL appointed
Board members on the Board of Wilson Sons.
27 SECTION FOUR
SECTION FOUR
Principal Risks - c o n t i n u e d
Nature of Risk Description Potential Impact Risk mitigation
Financial Risk – domestic
and international trade
volumes
Demand for Wilson
Sons’ services is
substantially dependent
on overall volume of
Brazilian domestic and
international trade.
Wilson Sons’ onshore
and offshore support
bases are dependent
on the Brazilian
offshore oil and gas
industry.
Adverse movements
in international trade
or offshore oil and gas
industry can lead to
financial losses.
Wilson Sons is a market leader in many of the
business segments providing diversification
in the service offerings.
Wilson Sons maintains levels of capital
expenditure and investment in assets and
people to be able to remain competitive and
seek opportunities to drive efficiencies.
The majority of Wilson Sons’ business is not
exposed to oil and gas and is well diversified.
However, Wilson Sons seeks to engage in
long-term contracts to reduce volatility and
assesses the value-in-use of these entities to
ascertain if there are any impairments.
IT Security Risk
– Technology and
cybersecurity
A successful malicious
cyber-attack could
cause damage to
our business and
operations.
Risk that data could be
compromised, denial
of service, business
continuity issues, or
confidential information
may be accessed by
unauthorised users.
Access to systems and information is password
protected and is limited to authorised users.
Regular back up on network to cloud and
separate disks are performed.
Wilson Sons actively manages technology risks
and reports to the Wilson Sons’ Board which
provides the report to OWHL on measures to
protect and, the impact of any breach.
ESG Risk – compliance
with ESG regulations
and reaching emission
targets set
Environmental -
emissions reduction
targets for WS
operations are not met.
ESG Governance -
OWIL investment
holdings do not align
with responsible
investing practices
ESG Governance -
OWHL Board is not
compliant and its ESG
strategy is not being
effectively managed or
communicated
ESG Social - Health
and Safety targets
for WS operations
and corporate giving
program are not met
or implemented
ESG Social - OWIL
responsible investing
practices are not met
or implemented
ESG Social - OWHL
corporate giving and
diversity policies are
not met or implemented
The Group may not
be performing at best
practice ESG levels
which could impact
both compliance and
regulation, potential
fines, investment
performance and
investor relations.
The Group continues to monitor opportunities
to invest in technology and implement
operational efficiencies that could reduce
our greenhouse gas emissions.
In 2021 Wilson Sons completed the S&P rating
for ESG to assist in grading current state and
setting goals for improvement.
OWIL has requested that Hansa takes the
necessary steps to become a signatory to
the UN Program for Responsible Investing
in 2022.
Wilson Sons monitors and trains its employees
to reduce injury and improve safety in the
work environment. Additionally, they invest in
the communities in which they operate with
charitable giving.
OWHL approved a corporate giving policy in
2021 which will be implemented in 2022.
The OWHL Board and management has
improved diversity with the addition of 2 female
directors and 1 female executive. A female
Chair will be appointed for OWHL in May 2022.
Ocean Wilsons Holdings Limited 2021 Annual Report28
Emerging Risks
Nature of Risk Description Potential Impact Risk mitigation
Emerging Risk –
Longer-term impacts
of COVID-19 on
financial markets and
the container shipping
industry
Group revenues
and returns on the
investment portfolio
could be negatively
impacted as well
as workforce and
operational disruption.
Group revenues
and returns on the
investment portfolio
could be negatively
impacted from
continued volatility in
markets as economies
seek to recover and
avert from pandemic
related costs and
production delays.
Further work disruption
in the event of
increased severity and
spread of new variants.
The Group has a diversified portfolio of assets.
Since January 2020 Wilson Sons has
implemented a number of measures and
protocols to ensure:
(i) the health, safety and well-being of our
employees, clients and partners;
(ii) the continuity of operations; and
(iii) the financial strength and resilience of
the business.
We continue to monitor developments in the
Covid-19 pandemic and will take actions in
managing our businesses where appropriate.
Emerging Risk –
Changing political
environment and
regulatory policies
Regulation is becoming
geographically diverse
with increases in
protectionist behaviours
and fragmented
regulation. Additionally,
governments could
seek to recover the
costs of the COVID-19
pandemic through tax
increases.
Adverse political and
regulatory measures
impacting our
strategy could result
in increased costs,
create a competitive
disadvantage or have
negative impact on
our return on capital
employed.
The Group holds a diversified portfolio of
assets to avoid excessive exposure to specific
political risks.
Investment decisions take account of suitable
risk premia in economies and financial markets
most susceptible to political intervention.
29 SECTION FOUR
SECTION FOUR
Emerging Risks - c o n t i n u e d
Nature of Risk Description Potential Impact Risk mitigation
Emerging Risk - Climate
change and extreme
weather events may
impact our business or
the businesses of our
customers
Much of the Group’s
revenue is derived
from services linked to
Brazilian trade volumes
and are sensitive to
the rate of growth in
Brazilian GDP and
trade flows. Brazilian
GDP or trade flows may
be adversely impacted
by climate change
or a change in the
frequency or intensity
of extreme weather
events. Agricultural
exports account for a
significant portion of
Brazilian trade and are
particularly vulnerable
to changes in weather
patterns which may
result from climate
change.
Decreases in Brazilian
growth or trade volumes
could adversely affect
demand for Group
services and its
financial condition.
The Group’s operational
efficiency may also be
adversely impacted
by climate change
or extreme weather
events.
Decreases in Brazilian
growth or trade volumes
could adversely
affect the demand
for services and the
financial condition
of the Group. The
operational efficiency
may also be adversely
impacted by climate
change or extreme
weather events.
There is a regulatory
risk that government
may act prompted by
climate change that
impacts our business
or the businesses of
our customers. The
International Maritime
Organisation initial
Greenhouse Gas
Emissions (GHG)
strategy envisages a
reduction in carbon
intensity of international
shipping (to reduce
CO2 emissions per
transport work, as
an average across
international shipping,
by at least 40% by
2030, pursuing efforts
towards 70% by 2050,
compared to 2008);
and that total annual
GHG emissions from
international shipping
should be reduced by
at least 50% by 2050
compared to 2008.
The Board continues to monitor and evaluate
the potential impacts resulting from climate
change and extreme weather events including
the regulation risk that may cause government
action.
The Company engaged a consultant to develop
its framework for TCFD reporting requirements
for 2021 and 2022 which will evolve the
Company’s risk management approach as
it relates to climate risk and set targets for
carbon emission reductions and the path to
meet those targets.
The Board continues to monitor opportunities
to invest in technology and implement
operational efficiencies that could reduce
our greenhouse gas emissions.
Ocean Wilsons Holdings Limited 2021 Annual Report30
Communications with Shareholders
The Board regularly monitors the shareholder profile of
the Company. It aims to provide shareholders with a full
understanding of the Company’s activities and performance
and reports formally to shareholders twice a year by way of
the Annual Report and Financial Statements and Half Year
Financial Report. When a significant proportion of the votes
have been cast against a resolution at an Annual General
Meeting the Board will contact significant shareholders to
understand the reasons behind their vote. The Company’s
website www.oceanwilsons.bm contains copies of the annual
and interim reports and stock exchange announcements.
Environment, Social and Governance
Practices (“ESG”)
The Board believes that responsible investing and sustainable
operating practices are integral to the longer-term delivery
of the Company’s long term success. The Board works
closely with both the Investment Manager and Wilson Sons’
management to regularly review the Company’s performance,
investment strategy, capital investment and expansion
opportunities. The Board reviews and assesses underlying
policies to ensure that the Company is evolving its ESG
strategy to drive a culture that ensures effective, ethical and
viable investment for our shareholders and future investors.
The Board has agreed a responsible investing policy with
OWIL’s Investment Manager, Hanseatic Asset Management
LBG. As long-term investors, the Company has a natural
commitment to be responsible investors and good corporate
citizens. This is reflected in the belief that such businesses
and investors are likely to generate superior long-term
returns and, furthermore, consideration of such issues
is an important element to manage potential risks. The
Responsible Investment Policy agreed with the Investment
Manager incorporates ESG factors into their fund management
business. When assessing the attractiveness of a fund or
company they consider their environmental impact, social
factors and good governance.
Currently, Hansa Capital Partners’ investment policies include
reviewing its investment portfolio and identifying if a portfolio
manager or company are not engaged in practicing ESG. Our
Investment Manager will then seek to engage with them to
encourage improvement with the ultimate sanction being
exiting, or not investing in, a fund or company if their concerns
are not sufficiently addressed.
As part of the Investment Manager’s fund selection process,
ESG is included as part of due diligence. It considers the
following factors:
•
Does the manager take their ESG responsibilities
seriously?
•
Do they have a formal ESG policy?
•
How does the manager engage with those companies
that are failing in their responsibilities?
•
What is their voting policy?
•
How do they consider their carbon footprint?
When the Investment Manager is selecting funds, they do not
seek to exclude specific sectors and countries, but instead,
for those companies that make significant use of energy,
resources and materials they want to understand how they
manage these issues and their responsibilities.
The Investment Manager’s Responsible Investing Policy is
available on the Hanseatic Group website www.hansagrp.com.
Environment
The Board closely engages with Wilson Sons Board and
Management to ensure that there is alignment on the strategic
direction, focus, targets and reporting on ESG matters and on
the newly introduced TCFD reporting requirements for 2022.
Wilson Sons continues to manage, implement and develop
robust ESG practices. Of particular note, the Board received a
report from Wilson Sons on their innovation strategies aimed
at transforming how Wilson Sons operates and leverages
technology to accelerate a digital culture, leverage internal
expertise to reduce impacts of interactions with ecosystems
and to drive overall ESG initiative success. During 2021
Wilson Sons completed the Standard and Poor’s ESG Rating
and ranked in the second quartile. As part of this exercise,
Wilson Sons has prioritized the following aspects in driving
and measuring environmental sustainability:
•
Emissions and Climate Change
•
Energy Usage
•
Waste and Water Resources Usage
•
Impact on marine eco-systems
As a way to reduce the impact of operating activities on the
environment, Wilson Sons has been identifying opportunities
for decarbonisation of its energy matrix. Since 2014, Wilson
Sons has maintained a commitment to proactively publish
its Greenhouse Gas Emissions Inventory (GHG) in the public
31 SECTION FOUR
SECTION FOUR
emissions registry, a platform managed by the Brazilian GHG
Protocol Programme. In 2021, Wilson Sons was awarded the
Gold Seal of the GHG Protocol inventory. Wilson Sons has
replaced diesel operated cranes with electric cranes and
estimate a reduction of about 35% in operational carbon
intensity (kgCO2 / TEU) with the electrification of ten cranes.
Additionally, the towage operations centre for Wilson Sons
reduced the use of maritime fuel with the optimisation of
navigation routes.
Greenhouse gas emissions
GHG Emissions - Scope 1 Unit 2021 2020 2019
Container Terminals tCO2e 7,208.94 7,8 47.9 0 9,751.34
Towage tCO2e 53,364.03 47,6 5 0.2 2 39,554.55
Others tCO2e 1,882.27 1,010.48 1,453.55
Total tCO2e 62,455.24 56,508.60 50,759.44
GHG Emissions - Scope 2 Unit 2021 2020 2019
Container Terminals tCO2e 2,678.96 1,573.30 1,826.64
Towage tCO2e 90.98 86.21 94.18
Others tCO2e 398.24 252.68 419.76
Total tCO2e 3,168.18 1,912.19 2,340.58
The towage division represents, on average, about 80% of
Wilson Sons’ emissions. Currently, the fleet uses Diesel Marine
Oil (DMA) in its propulsion systems. In 2021, there was an
increase of 10.5% in Scope 1 emissions due to the significant
growth in the total of special operations (29%), the greater
need for vessel displacement between the operational units
and the number of maneuvers performed. Although accounted
for, fuel consumption during vessel transfers between units
is not part of the maneuver operational activity.
There was an increase of around 25% in electricity
consumption at the container terminals, due to the longer
stay of customers’ reefer containers at the terminals. In Rio
Grande, this length was around 12 days, longer than the
historical average of 7 to 8 days. This pattern of change
was observed during the COVID-19 pandemic when there
was a backlog of vessels in all ports worldwide, as well as a
shortage of empty containers and an increase in the value of
international freight. The operational carbon intensity in TEU
movement also increased by about 22%. This metric does not
include the length of container dwell time, a parameter that
became relevant in the pandemic and should be considered
to improve future performance analysis.
In addition to container terminal and towage activities,
shipyards produced increases in carbon emissions year over
year, with an increase of 594 tCO2e. This is due to 22 dockings
in 2021, a 29% increase over 2020 which was artificially
low due to Covid. The construction of two tugboats was also
initiated in 2021 compared to 2020 when the pandemic halted
construction and only docking operations were maintained.
Wilson Sons full disclosure of environmental metrics can be
found in their 2021 Sustainability Report at www.wilsonsons.
com.br.
The Group reports on its environmental initiatives, emissions
and TCFD compliance in its TCFD report on page 34.
Ocean Wilsons Holdings Limited 2021 Annual Report32
Social
Safety
When considering the “Social” aspect of ESG, the Board is
focused on the Health and Safety of its workforce in Brazil as
it is of fundamental importance to incorporate our employees’
safety in our corporate values. We measure our Health and
Safety using lost-time injury frequency rate (“LTIFR”). In
2021 the LTIFR rate was 0.63 compared to 2020 of 0.42.
The international benchmark is 0.5. Safety performance is
continuously monitored to further improve safe work practices,
develop annual safety training plans and to prevent future
accidents in order to improve the LTIFR rate to meet or exceed
the international benchmark.
Corporate Giving and Sponsorship
Ocean Wilsons and Wilson Sons both have corporate giving
programs within the communities they operate. Ocean Wilsons’
Charitable Giving Policy was approved in 2021 with several
Bermuda charities being considered to receive a donation
in 2022. Wilson Sons continues to support several local
charities and causes in Brazil. Donations for the year totalled
US$0.7 million, in addition to a corporate volunteer program.
Corporate Governance
The Board has put in place corporate governance
arrangements that it believes are appropriate for the operation
of the Company. The Board has considered the principles
and recommendations of the 2018 UK Corporate Governance
Code (“the Code”) issued by the Financial Reporting Council
(available on the FRC website www.frc.org.uk) and applies
those aspects which they believe are appropriate to the
business. This reflects the fact that Ocean Wilsons Holdings
Limited is an investment holding company incorporated by
an act of parliament in Bermuda with significant operations
in Brazil. The Company complies with the Code where it
is appropriate for its business to do so and has done so
throughout the year and up to the date of this report except,
as noted within this report, where it does not fully comply
with the Code. These arrangements are regularly reviewed
and monitored by the Board. The areas where Ocean Wilsons
Holdings Limited does not comply with the 2018 UK Corporate
Governance Code and the rationale for not complying are
as follows:
• The Code states that the chair should not remain in
their post beyond nine years from the date of their first
appointment to the Board.
The current Chairman, Mr. J F Gouvêa Vieira, was first
appointed to the Board in 1991 and made Chairman of
the Board in 1999. Due to the Company’s significant
investment in Wilson Sons, the Board considered it
important that Mr. Gouvêa Vieira continued as Chairman
in 2021. His insights and knowledge in relation to Wilson
Sons and Brazil through his long association with the
Group has been a valuable resource in managing and
understanding our Brazilian business.
At the conclusion of the May 2022 AGM, Mr. J F Gouvêa
Vieira will retire as Chairman and Director of the Company.
The Board, led by the Nomination Committee, proposes
to appoint Ms. C Foulger as the successor for Chair.
The Board assesses and monitors the corporate culture of
the Group by receiving periodic reports from Wilson Sons,
management on the Brazilian business including corporate
governance, health, safety, ethics and legal updates and
ensure results are consistent with the Group’s values. Further
details are provided in each section of this report. The Board
has not undertaken a formal cultural assessment and is
considering performing one in the near future.
Conflicts of Interest
The Board has in place a procedure for the consideration
and authorisation of conflicts or possible conflicts of
interest with the Company’s interests annually including
those resulting from significant shareholdings. If a director
has a conflict of interest, he/she leaves the meeting prior
to discussion unless requested to remain and leaves
determination of such matters to the other directors. The
Board ensures that the influence of third parties does
not compromise or override independent judgement by
requiring disclosure of outside interests, encouraging a
culture of openness and debate amongst Board members
and promoting independent thought.
Board and Committee Evaluations
The Board undertakes an annual formal performance
evaluation of the Board, its committees and individual
directors. The process involves completion of internally
prepared questionnaires. The Chair discusses their
responses with each Director and then reports verbally the
results of the process to the Board. The Board discusses
the results highlighting any areas for improvement. The
conclusion of the 2021 performance evaluation was that
the Board and its committees are operating effectively. The
evaluation identified additional site visits to Brazil for the
newest Directors and the Chief Operating and Financial
Officer in 2022 when Covid-19 travel restrictions have
33 SECTION FOUR
SECTION FOUR
eased to ensure that they receive training on the various
operations of Wilson Sons. In the place of in-person
training, the new Directors and management received
training utilizing video conferencing.
The Board regularly assesses Board performance
evaluation procedures and modified the 2021 evaluation
survey to include more assessment on longer-term
strategy, governance and independent thinking.
Board Diversity Policy
The Board considers diversity, including the balance
of skills, ethnicity, diversity of background and gender,
amongst many other factors, when reviewing the
appointment of new directors. The Board has not set
specific targets for gender diversity but considers this in
making new Board appointments. The current composition
of the Board is two women and four men. During 2021
the Board appointed a new female management member
to the position of Chief Operating and Financial Officer.
Taskforce on Climate Related Financial
Disclosures (“TCFD”)
Below is detailed OWHL first TCFD aligned disclosures in
accordance with FCA requirements of Premium Listed UK
corporates. The Company has provided responses across
the TCFD’s pillars and aims to advance the maturity of its
climate-related actions and disclosures on an annual basis.
The Board is responsible for the system of internal control to
ensure strong corporate governance. In addition, the Audit
and Risk Committee assists the Board in monitoring the
effectiveness of these internal controls and risk management
policies. Committee meetings are used to assess the Group’s
risk exposure, opportunities, and mitigation, including that of
subsidiaries. The Committee met six times in 2021, with the
Chief Operating and Financial Officer attending each meeting.
OWHL is structured as a holding company. As such,
climate-related risks and opportunities arise at the level
of its subsidiary companies. The actions taken to address
these risks and opportunities, are also undertaken at this
subsidiary investment level. OWHL has reflected this in the
structure of its TCFD statement, which first outlines OWHL’s
governance of Wilson Sons and OWIL, followed by granular
TCFD disclosures for the subsidiaries themselves.
OWHL shares three common Board members with Wilson
Sons. OWHL Directors attend quarterly Wilson Sons’
board meetings for updates on operational activities and
management issues, which includes climate-related risks.
OWHL also has oversight over OWIL. They share the same
directors and quarterly meetings are held with the portfolio
Investment Manager. Here, updates on fund performance,
asset allocation, ESG status, and progress in becoming a
signatory to the UN PRI, are shared.
The below table describes Wilson Sons’ climate-related risks,
opportunities, and risk mitigation actions.
Governance Disclosure
The Board’s oversight of
climate-related risks and
opportunities
Wilson Sons’ board has ultimate oversight and accountability for ESG strategy and performance
for the company, which includes the approach and actions taken in relation to climate-related
issues. The Board is updated on climate-related issues via a report from the climate change
Executive Risk Owner on an annual basis and they are discussed as part of quarterly Board
meetings where appropriate. This ensures oversight and accountability across all programmes
and policies. Climate-related issues are considered when reviewing budgets and capital
expenditures, particularly with regard to innovation opportunities and the purchase of capital
goods.
While ultimate accountability for risk governance sits with the Board, the OWHL’s management
and Audit and Risk Committee assist in risk oversight as part of Wilson Sons’ risk management
process. This ensures that policies and practices are aligned with OWHL ambitions and
disclosure requirements on climate-related issues.
Management’s role in
assessing and managing
climate-related risks and
opportunities
Primary responsibility for oversight of climate-related strategy implementation sits with the
climate Executive Risk Owner, the Head of Health, Safety, Environment and Sustainability.
Implementation and risk management is then delivered at the functional level, with mitigation
actions assigned to relevant functions. For example, physical risks to offices are overseen
by real estate and facilities management teams and reported back through Integrated Risk
Management and Environmental and Health & Safety areas. If climate-related risks reach a
certain threshold of risk and likelihood, then they are also escalated to Wilson Sons’ executives
or board by the relevant function.
Ocean Wilsons Holdings Limited 2021 Annual Report34
Strategy and Risk
Management
Disclosure
The Group’s processes
for identifying and
assessing climate-related
risks
Wilson Sons’ risk governance and management processes are detailed within Wilson Sons’
Sustainability Report. During the year, Wilson Sons assessed and evaluated risks relating
to climate change as part of the review cycle, and they were discussed by the Wilson Sons
Executive and the Wilson Sons Audit Committee. Risks evaluated include those related to
existing and emerging regulatory requirements, as well as other transition and physical risks.
In addition, a sustainability focused materiality assessment assessed climate change as a risk
for Wilsons Sons and its stakeholders. This materiality assessment utilised the methodology
employed by Fundação Dom Cabral (FDC) to identify and prioritise climate-related risk. It is
based on internal and external interviews, in addition to analysis of stakeholder statements to
determine the relative internal and external importance of sustainability issues.
How processes for
identifying, assessing and
managing climate-related
risks are integrated into
the organisation’s overall
risk management
Climate-related risks have been identified as a risk for Wilson Sons and are therefore embedded
into a central Integrated Risk Management framework (see Wilson Sons’ Sustainability Report).
Within that framework, risks will be monitored by the Wilson Sons Executive and Audit Committee
to ensure they are embedded in strategic decision-making. On a more granular level, climate-
related risks are then communicated and actioned either as standalone risks or assessed and
mitigated as part of existing or emerging adjacent risks within the framework.
The Group’s processes
for managing climate-
related risks
Wilson Sons’ process for managing climate related risk is grounded in its emissions monitoring
work, which includes GHG emissions, tide and ocean data, as well as market movements and
impacts suffered by clients. This intelligence enables Wilson Sons to mitigate potential risks
and identify opportunities, particularly in the reduction of its direct emissions. Wilson Sons
continues to adopt advancing technologies to reduce its GHG emissions as a result. Examples
include updating conventional platform supply vessels to more efficient diesel-electric systems,
using rubber-tyred gantry electric yard cranes with lower environmental impact in container
terminals, and expanding Towage Operations Centre, enabling the reduction of fuel consumption
by optimising vessel operations.
The climate-related
risks and opportunities
the Group has identified
over the short, medium
and long term
The impact of climate-
related risks and
opportunities on the
Group’s business(es),
strategy and financial
planning
The below table details Wilson Sons’ key climate-related risks. Risks have been categorised
in alignment with the TCFD recommendations. Climate-related risks were considered across
the categories of policy and legal, technology, market, and reputation, alongside acute and
chronic physical risks. Time horizons have been defined by Wilson Sons as short term (< 3
years), medium term (3-10 years), and long term (> 10 years). The Group notes that while
climate-related risks are considered as part of Wilson Sons’ financial planning, particularly in
consideration of the useful lifetime of assets and infrastructure, this is Wilsons Sons’ first TCFD
disclosure. This means that in future years Wilson Sons aims to explore the financial materiality
of identified risks in greater detail.
In addition to risk, Wilson Sons has identified several linked climate-related opportunities
relevant to the business. These include:
a. Increased demand from cargo owners seeking alternatives to road haulage and
airfreight as part of lower-carbon supply chains.
b. Potential for increased transport volume of decarbonisation-related cargoes, such as
solar panels and wind turbines.
c. Finally, Wilson Sons could position itself as the partner of choice for customers through
best practice disclosure and action a decarbonisation strategy.
35 SECTION FOUR
SECTION FOUR
Risk Title Risk Category Risk Description Impact
Changes in
precipitation
patterns
Physical:
Chronic
Rising and increasing
variability of mean
temperatures resulting
in altered precipitation
patterns.
Timeframe:
Short- term
Likelihood: High
Impact: Moderate
Climate-related alterations in precipitation patterns are expected
to negatively impact Brazilian agricultural production over the
medium to long-term.
Wilson Sons’ customers transport significant volumes of
agricultural cargo from Brazil, and as such, adverse climate
effects on agricultural output could result in decreased demand
for Wilson Sons‘ services over this time horizon.
In addition, Brazil’s energy matrix relies on a high proportion
of hydroelectric power. Reduced precipitation could negatively
affect the industrial production of our clients or our operations.
Increase
in extreme
weather
events
Physical:
Acute
Increased incidence
and magnitude of
extreme weather
events.
Timeframe:
Medium-term
Likelihood: High
Impact: Moderate
The impact of extreme weather events could impact Wilson
Sons in two ways.
First, as identified above, Wilson Sons‘ revenues are sensitive
to Brazilian trade volumes. Increasing incidence of extreme
weather events has the potential to negatively impact Brazilian
economic activity over the long-term, and as such demand for
Wilson Sons’ services could decrease.
Second, Wilson Sons’ operations could be directly impacted
by storms and flooding, for instance through loss of equipment
and load, as well as damages to infrastructure.
Rising sea
levels
Physical:
Acute /
Chronic
Rising sea levels
result in significant
damage, disruption,
and mitigation costs
to Brazilian port
infrastructure.
Timeframe:
Long-term
Likelihood: Moderate
Impact: Moderate
Ports and connecting coastal transport infrastructure are
exposed to rising mean sea levels as well as potential increases
in the frequency/intensity of extreme sea levels (ESLs) due to
storm surges.
The potential impacts of such events include damage to port
infrastructure and increase operational halts. This has potential
financial implications for Wilson Sons and its customers.
Changes in
energy mix
Transition:
Market and
Technology
Declining oil trade
volumes as a result
of policy action and/
or changing consumer
demand.
Timeframe:
Long-term
Likelihood: Moderate
Impact: Moderate
Over the long-term world crude oil demand could plateau and
then reduce due to the progress of low-carbon forms of energy
production in response to policy and/or consumer demand.
Transport volume of carbon-related cargo is likely to decrease
in step with a reduced demand for Brazilian crude oil exports
and extraction with potential reductions in demand for Wilson
Sons’ services during this period.
Reinforcement
of regulation
Transition:
Policy and
Compliance
Governments legislate
for stronger climate
action from shipping
and logistics industries.
Timeframe:
Medium-term
Likelihood: Moderate
Impact: Moderate
Environmental regulation on shipping and logistics may become
more stringent with associated impacts for Wilson Sons.
First, the Group notes that the International Maritime
Organisation’s initial GHG strategy envisages a reduction in
carbon intensity of international shipping by at least 40% by
2030, pursuing efforts towards 70% by 2050, compared to
2008.
This is likely to impact Wilson Sons and its customers via costs
associated with reducing the carbon-intensity of operations.
That said, Wilson Sons also expects some of these costs to
be offset by operational efficiency savings. In addition, Wilson
Sons recognises the risks associated with the introduction of
a carbon tax over the medium to long-term. This would also
increase costs associated with Wilson Sons and its customers’
operations.
Ocean Wilsons Holdings Limited 2021 Annual Report36
Risk Title Risk Category Risk Description Impact
External
pressure for
decarbonisation
Transition:
Reputational
External pressure for
decarbonization from
business customers.
Timeframe:
Long-term
Likelihood: Moderate
Impact: Moderate
Wilson Sons customers may increasingly value working with
logistics providers with lower absolute GHG emissions as a
result of their own Scope 3 decarbonisation targets.
For Wilson Sons, increasing requirements to decarbonise
operations could result in costs, for example via the introduction
of alternative-fuel powered vessels.
Metrics and Targets Disclosure
Metrics used by the Group to
assess climate-related risks and
opportunities
Commitment to the ongoing tracking and monitoring of climate-relevant metrics facilitates
the effective management of climate-related risks and opportunities. The key metrics
include those related to emissions, energy and water consumption, and solid waste
disposal. All metrics are disclosed in Wilson Sons’ Sustainability Report at www.wilsonsons.
com.br.
Scope 1, Scope 2 and Scope 3
greenhouse (‘GHG’) emissions,
and the related risks
The Company’s Scope 1 and 2 emissions are summarised within the table on page 32,
detailing comparative years where available. Wilson Sons’ good practice in this area was
recognised with the Gold Seal from the GHG Protocol Program in 2021.
Targets used by the Group
to manage climate-related
risks and opportunities and
performance against targets
As part of the Wilson Sons’ roadmap development, a timeline to the disclosure of
decarbonisation targets will also be published in the Ocean Wilsons 2022 Annual Report.
The below table describes OWIL’s climate-related risks, opportunities, and risk mitigation actions.
Governance Disclosure
The Board’s oversight of
climate-related risks and
opportunities
The Board of OWHL, through its 100% subsidiary OWIL, holds ultimate accountability
for responsible investing, and within that, climate-related issues for this subsidiary. In
this instance the OWIL Board shares the same directors as OWHL. The OWIL Board are
updated on the performance of the portfolio in quarterly meetings, where information
on climate-related risks and opportunities is also reviewed.
OWIL appointed HAML as its Investment Manager in November 2000. Importantly, the
portfolio is structured as a fund-of-funds and therefore engagement with the managers
of selected underlying fund investments is required to appropriately influence climate-
related issues. In this regard, the HAML Group has discussed its ESG views with the
managers of the underlying investments of the Company as part of its ongoing due
diligence process.
Management’s role in assessing
and managing climate-related
risks and opportunities
As part of their regular due diligence processes, which are applied to both new and
existing investments of the Company, the HAML Group discusses ESG related issues
with the managers of the Company’s underlying investments. The Directors of OWIL
regularly meet with representatives of the HAML Group and, as part of those meetings,
ESG issues and points of interest are discussed including feedback relating to the
underlying portfolio of investments.
37 SECTION FOUR
SECTION FOUR
Strategy and Risk
Management
Disclosure
The Group’s processes for
identifying and assessing
climate-related risks
This year, climate-related risks were identified with support from a specialist ESG
consultancy. Risks were identified on a qualitative basis of impact and likelihood of
risk materialisation. Risks evaluated include those related to existing and emerging
regulatory requirements, as well as other transition and physical risks. More broadly, the
HAML Group’s responsible investing policy aims to support a long-term and responsible
approach to investment to reduce and manage long-term risk.
The Group’s processes for
managing climate-related risks
ESG due diligence requirements and considerations reduce the initial climate-related
risk of the portfolio. Subsequent to this, engagement processes and divestment options
provide mechanisms for reducing the climate-related risks present in the existing portfolio.
HAML Group continue engaging with the underlying fund managers to understand the
ESG related risks within their funds. A full review has been completed of all current
investments to ensure they are consistent with the HAML Group’s responsible investing
policy, and this review will also be ongoing as policies develop. In addition, the HAML
Group will become a signatory for the internationally recognized UN PRI to demonstrate
their and our commitment to responsible investment. This will ensure that climate risk has
been identified and actively managed in order to reduce the exposure of the portfolio.
Finally, the HAML Group are continually upskilling in ESG, to better assess and manage
climate-related risks and opportunities in the future. Investment team members have
exposure to ESG related matters through training courses, investment due diligence and
relevant forums and bodies to ensure they remain up to date on best practice.
Resilience of the Group’s
strategy, taking into
consideration different climate-
related scenarios
This is the first year of TCFD aligned disclosures related to OWIL, as such the focus has
been identifying risks and opportunities, in the context of Hansa’s broader responsible
investing policy. Given this focus, alongside considered relatively low exposure in the
medium-term to climate-related risk scenario analysis is not considered a priority for
the OWIL portfolio.
The climate-related risks
and opportunities the Group
has identified over the short,
medium and long term
The impact of climate-related
risks and opportunities on the
Group’s business(es), strategy
and financial planning
The below table details OWIL’s key climate-related risks. Risks have been categorised
in alignment with the TCFD recommendations. Climate-related risks were considered
across the categories of policy and legal, technology, market, and reputation, alongside
acute and chronic physical risks. Time horizons have been defined by the Company as
short term (< 3 years), medium term (3-10 years), and long term (> 10 years). This is
the Company’s first TCFD disclosure, and in future years the Company aims to explore
the financial materiality of identified risks in greater detail.
Ocean Wilsons Holdings Limited 2021 Annual Report38
Risk Title Risk Category Risk Description Impact
Physical
impacts of
extreme
climate
phenomena
Physical:
Acute /
Chronic
Impacts of increased
incidence and
magnitude of extreme
weather events across
sectors.
Timeframe:
Medium-term
Likelihood: High
Impact: Low
As the consequences of extreme weather events become
more severe over the long-term, economic disruption is likely
to accelerate, with impacts across geographic locations, supply
chains, and sectors.
However, we recognise the risk to OWIL is likely to be limited
due to the diversification of the portfolio and ability to divest
from underperforming funds.
Policy Risk
Transition:
Policy and
Regulation
Climate policy and
regulation increases
costs and reduces
business profitability.
Timeframe:
Medium-term
Likelihood: Moderate
Impact: Low
Legal and regulatory change is likely to affect social licence to
operate, supply chains, or management practices, particularly
in exposed sectors and regions.
Investment managers could be impacted in several ways:
Companies may face higher costs in proving compliance with
more stringent regulations, reducing their profitability and
valuations.
Investment managers might then face higher costs in order
to prove compliance with regulation, including ESG reporting,
metrics, and due diligence.
Increased risk of obsolescence and stranded assets due to
regulatory changes, again particularly in exposed sectors, for
instance energy and extractives.
Climate-
related
technological
Disruption
Transition:
Technology
Potential for
technological disruption
within exposed sectors.
Timeframe: Medium /
long-term
Likelihood: Moderate
Impact: Low
Emerging technology and innovative business models are
expected to provide widespread disruption across a range of
sectors as they transition towards more sustainable models,
for instance as currently observed in the automotive sector.
This has negative implications for legacy companies and
increases risk of stranded assets within the portfolio.
Changing
market
dynamics
Transition:
Market
Impacts associated
with consumer
demand-based market
transformation.
Timeframe: Medium /
long-term
Likelihood: High
Impact: Low
In some, particularly exposed markets, this may result in
obsolescence and stranded assets across a range of assets,
products, and geographies.
Again, this has implications for the performance of the portfolio
over the medium to long-term, with expected risk reduction as
a result of investment diversification.
Metrics and Targets Disclosure
Metrics and targets pillar
disclosures
Given its position as a fund-of-funds, collection of the relevant data and using this data
as the basis of decarbonisation targets presents transitional challenges. However, this
year the HAML Group aims to explore the feasibility of collecting climate-related data
with fund managers. This will provide the organisation with a stronger understanding of
data availability, and therefore a timeline to the disclosure of this information.
39 SECTION FOUR
SECTION FOUR
Going Concern
The Group has considerable financial resources including
US$28.6 million in cash and cash equivalents at year end
and the Group’s borrowings have a long maturity profile. The
Group’s business activities together with the factors likely to
affect its future development and performance are set out
in the Chairman’s Statement, Financial Report, Investment
Manager’s Report and Wilson Sons’ Management Report.
The financial position, cash flows and borrowings of the
Group are set out in the Financial Report. In addition, note
31 to the consolidated financial statements includes details
of its financial instruments and its exposure to credit risk and
liquidity risk. Details of the Group’s borrowings are set out in
note 21 to the consolidated financial statements.
The Group closely monitors and manages its liquidity risk
and does so in a manner that reflects its structure, of two
distinct businesses, being the parent company along with
Ocean Wilsons (Investments) Limited, and Wilson Sons
Limited. In performing its going concern assessment, the
Board considered the 15-month period to 31 March 2023.
Ocean Wilsons Holdings Limited and Ocean Wilsons
(Investments) Limited
Ocean Wilsons and Ocean Wilson (Investments) Limited
have combined cash and cash equivalents of US$4.9 million
and further highly liquid investments of US$113.9 million
as at 31 December 2021. They have no debts but have
made commitments in respect of investment subscriptions
amounting to US$43.2 million, for which details are provided
in note 11 to the consolidated financial statements. The
timing of the investment commitments may be accelerated
or delayed, however, the highly liquid investments held are
significantly in excess of the commitments. Neither Ocean
Wilsons, nor Ocean Wilsons (Investments) Limited have
made any commitments or have obligations towards Wilsons
Sons and its subsidiaries and their creditors or lenders.
Therefore, in the unlikely circumstance that Wilsons Sons was
to encounter financial difficulty, the parent company and its
subsidiary have no obligations to provide support and have
sufficient cash and other liquid resources to continue as a
going concern on a standalone basis.
Wilson Sons Limited
Wilson Sons has cash and cash equivalents of US$23.6 million
and further highly liquid investments of US$43.3 million. All
of the debt, as set out in note 21 to the consolidated financial
statements, and all of the lease liabilities, as set out in note
16 to the consolidated financial statements, relate to Wilson
Sons and have a long maturity profile. The debt held by Wilson
Sons is subject to covenant compliance tests as summarised
in note 21 to the consolidated financial statements, which
were in compliance at 31 December 2021 and are forecast
to be complied with throughout the forecast period.
The covenants are most sensitive to changes in EBITDA,
debt service costs and asset values. Management and the
Audit and Risk Committee reviewed Wilson Sons’ 15-month
forecasts for the financial year 2022 and the first quarter of
2023 which included analysis of cash flows and loan covenant
compliance for the forecasting period. Budgets are compared
with prior period actual results and previous forecasts to
identify variances and understand the drivers of the changes
and their future impact so as to allow management to take
action as appropriate. Additional market analysis is performed
to corroborate other key assumptions underpinning the
forecasts. In preparing the forecasts consideration has been
given to the commitments Wilson Sons has to its joint ventures
in respect of their loan agreements as set out in note 14 to
the consolidated financial statements and possible cash
outflows these may give rise to, should the joint ventures
breach their loan covenants.
Cash flow and loan covenant compliance forecasts were then
reverse stress tested to understand the headroom available
before a covenant breach occurs or liquidity is exhausted.
Consideration was then given as to whether the principal
risks attributable to Wilsons Sons would give rise to severe
downside scenarios that could cause loan covenant breaches
or exhausting of liquidity, such as significant reductions
in revenues. The possibility of these scenarios happening
are considered remote when contemplating Wilson Sons’
financial performance during Brazil’s economic crisis in
2015 and 2016 and in the Covid-19 pandemic in 2020 and
given the outlook for the global and Brazilian economies in
2021 and beyond. The potential impact of both the Russia/
Ukraine conflict and Covid-19 have been considered as part
of the going concern assessment. Whilst the going concern
assessment does not indicate it will be necessary, should it
Ocean Wilsons Holdings Limited 2021 Annual Report40
be required, Wilson Sons has the ability to delay or cancel
forecast capital expenditure in order to manage liquidity and
or loan covenant compliance.
This assessment confirmed that Wilson Sons has adequate
cash, other liquid resources and undrawn credit facilities
to enable it to meet its obligations as they fall due in
order to continue its operations during the going concern
forecast period. Based on the Board’s review of Wilson
Sons’ going concern assessment and the liquidity and
cash flow reviews of the Company and its subsidiary
OWIL, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, the Directors continue to adopt the going
concern basis in preparing the annual report and accounts.
Viability Statement
In accordance with the UK Corporate Governance Code,
the Directors have assessed the viability of the Group over a
three-year period to 31 December 2024, taking into account
the Group’s current position and potential impact of the
principal risks and uncertainties. Based on this assessment,
the Directors confirm that they have a reasonable expectation
that the Company will be able to continue in operation and
meet its liabilities as they fall due over the period to 31
December 2024.
Whilst the Directors have no reason to believe the Company
will not be viable over a longer period, given the uncertainties
involved in longer term forecasting the Directors have
determined that a three-year period to 31 December 2024
is an appropriate period over which to provide its viability
statement. The three-year period also aligns with the rolling
three-year investment portfolio performance benchmark.
In making the assessment, the Directors have considered
a number of factors that affect the Group, including the
principal risks and mitigating factors. The Directors also took
into account that the Group has two distinct and separate
investments and there is no recourse between them.
Wilson Sons Limited
The assessment considered that the Wilson Sons business
model has proven to be strong in the long term with a range
of businesses that have consistently demonstrated their ability
to trade. Operational activities are funded by cash generated
from operations while the Wilson Sons borrowings are used
to finance capital expenditure. The Wilson Sons borrowings
are generally long-term with defined repayment schedules
repayable over different periods up to 18 years. There is
no recourse from Wilson Sons to the Company or Ocean
Wilsons (Investments) Limited in respect of Wilson Sons’
borrowings. Wilson Sons is not reliant on one customer: its
largest customer constituted approximately 11.4% of their
IFRS revenue in 2021. The largest customer is served by
seven different businesses in the Group. In addition, Wilson
Sons has opportunities to mitigate any adverse impacts given
the flexible cost base of some of their businesses.
Ocean Wilsons (Investments) Limited
In making the assessment for the investment portfolio, the
Board has considered matters such as significant stock
market volatility, changes in exchange rate and a significant
reduction in the liquidity of the portfolio. The investment
portfolio and cash under management at 31 December 2021
was US$351.8 million with outstanding capital commitments
of US$43.2 million and no external debt. At 31 December
2021 the investment portfolio had US$2.2 million in cash
and cash equivalents and daily liquidity of $113.9 million.
This available liquidity covers more than 250% of the capital
commitment in a reasonable time frame on the remote chance
that there was a need to fund all of commitments at one time.
The Directors’ assessment is that if severe but
plausible downside scenarios were to crystallize, many
of the individual risks disclosed would be likely to
be confined to either Wilson Sons or Ocean Wilsons
(Investments) Limited. The risk is to the Group’s net
asset valuation rather than to the viability of the Group.
Directors’ Responsibility Statement
The Directors are responsible for preparing the annual report
in accordance with applicable laws and regulations.
Each of the Directors, whose names and functions are listed
in the Board of Directors section of this report, confirms that,
to the best of his/her knowledge:
• the Annual Report includes a fair review of the development
and performance of the business and the position of the
Company, together with a description of the principal
risks and uncertainties that the Company faces;
41 SECTION FOUR
SECTION FOUR
• the consolidated financial statements, prepared in
accordance with IFRS, present fairly, in all material
respects, the assets, liabilities, financial position and
profit or loss of the Company and, taken as a whole,
are in compliance with the requirements set out in the
Bermuda Companies Act 1981 (as amended);
• the Chair’s statement, Director’s report, Investment
Manager’s report and Wilson Sons’ Management Report,
include a fair review of the information as required; and
• the Annual Report and consolidated financial statements,
taken as a whole, provide the information necessary
to assess the Company’s position and performance,
business model and strategy, and is fair, balanced and
understandable.
By Order of the Board
Fergus McAleavey
Company Secretary
23 March 2022
Ocean Wilsons Holdings Limited 2021 Annual Report42
Consolidated
Financial Statements
SECTION FIVE 43
SECTION FIVE - FINANCIALS
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Telephone
Fax
Internet
+1 441 295 5063
+1 441 295 9132
www.kpmg.bm
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private English company limited by guarantee. All rights reserved.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders and Board of Directors of Ocean Wilsons Holdings Limited
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of Ocean Wilsons Holdings Limited (the “Company”) and its
subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2021, the
consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year
then ended, and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at 31 December 2021, and its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section
of our report. We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants International Code of Ethics for Professional Accountants (including International Independence Standards)
(IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements
in Bermuda and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
KPMG Audit Limited
Crown House
4 Par-la-Ville Road
Hamilton
HM 08
Bermuda
Telephone
Fax
Internet
+1 441 295 5063
+1 441 295 9132
www.kpmg.bm
© 2022 KPMG Audit Limited, a Bermuda limited liability company and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders and Board of Directors of Ocean Wilsons Holdings Limited
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of Ocean Wilsons Holdings Limited (the “Company”) and its
subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2021, the
consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year
then ended, and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at 31 December 2021, and its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with International Ethics Standards Board for
Accountants International Code of Ethics for Professional Accountants (including International Independence Standards)
(IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements
in Bermuda and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Ocean Wilsons Holdings Limited 2021 Annual Report44
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The key audit matter
How the matter was addressed in our audit
Unbilled revenue
(2021: US$13.5m; 2020: US$10.7m)
Revenue recognition is presumed by auditing standards to
be a fraud risk area, therefore we determined that this is a
key audit matter. For the risk of fictitious revenues
recognition we have focused specifically on unbilled
revenue recognised for services rendered but not yet
invoiced at year end, due to its significance and the manual
nature of the process.
§ We walked through and understood the controls
designed and implemented by the Group related to
unbilled revenue recognition, but we did not test the
operating effectiveness of the controls;
§ We evaluated the accounting policies applied in the
recognition of unbilled revenue in accordance with the
principles of IFRS 15;
§ We tested on a sample basis unbilled revenue to
address the identified fraud risk by obtaining supporting
documentation to evidence: the provision of the service,
the value of the transaction and where applicable the
subsequent invoicing and recovery of the unbilled
revenue;
§ We performed analytical procedures to identify and
investigate unusual trading patterns which could
indicate inappropriate revenue recognition; and
§ We assessed the adequacy of the disclosures in the
consolidated financial statements with regard to the
requirements of IFRS 15.
The key audit matter
How the matter was addressed in our audit
Risk of impairment of Brasco cash generating unit’s
(CGU) assets
(2021: US$39.8m tangible assets, US$7.2m intangible assets
and US$5.2m lease rights; 2020: US$39.2m tangible assets,
US$7.4m intangible assets and US$5.8m lease rights
respectively)
Due to losses incurred by the CGU and the inherent
uncertainty involved in forecasting and discounting future
cash flows there is a risk that an impairment has not been
recognised.
The recoverability of the CGU is dependent on
management’s estimates of the future cash flows that the
CGU is expected to produce. The carrying value of the
assets are particularly sensitive to changes in
management's revenue growth and discount rates applied.
Due to the level of judgement required in determining the
value in use there are inherent risks and uncertainties
involved in forecasting and discounting future cash flows in
this industry.
§ We walked through and understood the controls
designed and implemented by the Group over the
impairment review, but we did not test the operating
effectiveness of the controls;
§ We considered past cash flow projections and actual
results subsequently achieved to assess
management’s forecasting track record to ascertain if
there may be indicators of management bias or
excessive optimism in forecasting cash flows;
§ We obtained the Group’s impairment model and tested
its mathematical accuracy;
§ We challenged the Group’s determination of the
projection period used;
§ We performed independent research on forecasts for
the oil and gas sector, globally and also for Brazil. We
considered multiple sources of information including
those published by oil and gas companies, industry
organisations, and industry analysts. We challenged
and evaluated management’s forecasts in the context
of this information;
45 SECTION FIVE
SECTION FIVE - FINANCIALS
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§ With regard to near team forecast cashflows which
were based on specifically identified projects, tenders
submitted and expected outcomes from such tenders,
we inspected tender submissions, examined
correspondence with potential customers, reviewed
management’s internal reporting with regard tender and
sales pipeline reporting and reviewed press releases
and other media published by prospective customers
with regard their specific projects. We challenged and
evaluated management’s forecasts in the context of this
information;
§ We used our own valuation specialists to assist us in
our impairment testing, including assessing the
valuation methodology used by management, and
challenging specific inputs into the determination of the
discount rate with reference to independently sourced
external data and benchmarks and in developing
independently an appropriate discount rate;
§ We identified those assumptions which are most
sensitive to change and performed sensitivity analysis
to ascertain what changes in assumptions could
produce significantly different outcomes. In doing so we
noted the future forecasted revenues, and the discount
rate are the most sensitive assumptions. In doing so,
we ascertained the extent of changes that individually,
or in combination, would be required for Brasco’s
assets to be impaired; and
§ We assessed the fairness, accuracy and completeness
of disclosures required by IAS 36.
Ocean Wilsons Holdings Limited 2021 Annual Report46
© 2022 KPMG Audit Limited, a Bermuda limited liability company and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
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The key audit matter
How the matter was addressed in our audit
Provisions and contingencies
(2021: US$8.9m, 2020: US$9.6m) The unprovided amounts for
possible losses are US$72.6m (2020: US$77.4m).
The Group is party to a high volume of legal claims arising
from civil proceedings, labor claims and tax legislation.
These resultant contingent liabilities are potentially
significant and the application of accounting standards to
determine the amount, if any, to be recognised as a liability
or disclosed, is inherently subjective and requires
judgement.
Inappropriate evaluations of the possible outcome on
material claims may materially impact the Group’s
consolidated financial statements for the year.
§ We walked through and understood the controls
designed and implemented by the Group over claims
and litigation. However, we did not test the operating
effectiveness of the controls;
§ We obtained a listing of all current open claims and
litigation, including details of quantum, appointed
advisors, provided and disclosed amounts;
§ We obtained an understanding from Group’s in-house
legal counsel of the basis for their judgements of
financial amounts. We challenged the basis of those
judgements with reference to the latest available
corroborative information such as correspondence with
the Group’s external counsel on all significant legal
cases and held discussions with them when further
clarity was deemed necessary;
§ We reviewed legal expenses and Board of Directors
minutes to identify possible litigation and claims that
had not been identified by the Group and disclosed to
us;
§ We obtained direct confirmations from the Group’s
external counsel for all litigation cases and assessed
the Group’s judgements in the context of these
confirmations;
§ We considered cases settled or litigation concluded in
the year and also changes in assessments for ongoing
cases year on year. We considered whether the
Group’s previous judgements were proven to be
reasonable and materially correct; and
§ We assessed the fairness, accuracy and
completeness of disclosures in the consolidated
financial statements as required by IAS 37.
47 SECTION FIVE
SECTION FIVE - FINANCIALS
© 2022 KPMG Audit Limited, a Bermuda limited liability company and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
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The key audit matter
How the matter was addressed in our audit
Fair value estimates – Level 3 investments
(2021: US$129.7m, 2020: US$99.1m)
Valuation of the level 3 investments requires significant
judgements and estimates by management. Inappropriate
selection of valuation methods, significant assumptions and
significant data inputs used in determining these fair values
could result in a material misstatement to the consolidated
financial statements.
§ We walked through and understood the controls
designed and implemented by the Group over
valuation of level 3 investments. However, we did not
test the operating effectiveness of the controls;
§ We read the accounting policy for investment valuation
and assessed its compliance with accounting
standards;
§ We have tested the appropriateness of the valuation
methodologies and techniques applied to all the level
3 investments including comparing them with the
International Private Equity and Venture Capital
Valuation Guidelines (‘IPEV’);
§ We obtained independent support to corroborate the
stated values for all the level 3 investments. We also
considered whether any changes had been made in
valuation;
§ We considered the date of valuations, where these
were not as of 31 December 2021. We performed
procedures to ascertain if any significant changes in
value might be expected where investments were
valued at an interim date. We used our own valuation
specialists to challenge management’s assumptions
used in determining the fair value of these investments,
in the context of the IPEV valuation guidelines.
§ We obtained independent confirmations of the
existence and accuracy of the level 3 investments from
counterparties;
§ We also considered valuations received after the year
end until the date of our opinion for such investments;
and
§ We assessed the fairness, accuracy and
completeness of disclosures in the consolidated
financial statements required by IFRS 7 and IFRS 9.
.
.
Ocean Wilsons Holdings Limited 2021 Annual Report48
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Other Matter
The consolidated financial statements of the Group for the year ended December 31, 2020, were audited by another
auditor who expressed an unmodified opinion on those consolidated financial statements on March 12, 2021.
Other information
Management is responsible for the other information. The other information comprises the Annual Report, but does not
include the consolidated financial statements and our auditor’s report thereon.
Except as described in the Report on Other Legal and Regulatory Requirements section of our report, our opinion on the
consolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,
in doing so, we consider whether the other information is materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
— Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
49 SECTION FIVE
SECTION FIVE - FINANCIALS
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— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
— Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
— Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
— Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on Other Legal and Regulatory Requirements
Corporate Governance Statement
We are required to review the part of the Corporate Governance Statement
relating to the Group’s compliance with the
provisions of the UK Corporate Governance Code specified by the Listing Rules of the UK Listing Authority for our review.
We have nothing to report in this respect.
Disclosures of emerging and principal risks and longer term viability
We are required to review the Going Concern and Viability Statements, set out on pages 40 and 41 under the Listing Rules.
Based on the knowledge we acquired during our audit of the consolidated financial statements, we have nothing material
to add or draw attention to in relation to:
Ocean Wilsons Holdings Limited 2021 Annual Report50
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— the directors’ confirmation within the longer-term viability statement on page 41 that they have carried out a robust
assessment of the emerging and principal risks facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity;
— the Emerging and Principal Risks disclosures describing these risks and how emerging risks are identified, and
explaining how they are being managed and mitigated; and
— the directors’ explanation in the Going Concern and Viability Statements of how they have assessed the prospects
of the Group, over what period they have done so and why they considered that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and
meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our consolidated
financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of anything
to report on these statements is not a guarantee as to the Group’s longer-term viability. In addition, the above conclusions
are not a guarantee that the Group will continue in operation.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s shareholders and Board of Directors, as a body. Our audit work has been
undertaken so that we might state to the Company’s shareholders and Board of Directors those matters we are required
to state to them in an auditor’s report and the further matters we are required to state to them in accordance with the terms
agreed with the Company and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company’s shareholders and Board of Directors, as a body, for our audit work, for
this report, or for the opinion we have formed.
The Engagement Partner on the audit resulting in this independent auditor’s report is James Berry.
Chartered Professional Accountants
Hamilton, Bermuda
March 23, 2022
51 SECTION FIVE
Note 2021 2020
Sales of services 5 396,376 352,792
Raw materials and consumables used (24,036 ) (19,266 )
Employee charges and benefits expense 6 (112,026 ) (110,016 )
Other operating expenses 7 (98,289 ) (84,666 )
Depreciation of owned assets 15 (46,631 ) (47,793 )
Depreciation of right-of-use assets 16 (12,063 ) (10,706 )
Amortisation of intangible assets 17 (2,718 ) (2,824 )
(Loss)/gain on disposal of property, plant and equipment and intangible assets (499 ) 65
Foreign exchange losses on monetary items (3,100 ) (7,551 )
Operating profit 97,014 70,035
Share of results of joint ventures 14 (5,029 ) (4,142 )
Returns on investment portfolio at fair value through profit or loss 5 49,474 33,383
Investment portfolio performance and management fees (4,954 ) (3,130 )
Other investment income 5 4,113 1,644
Finance costs 8 (30,227 ) (23,210 )
Profit before tax 110,391 74,580
Tax expense 9 (27,925 ) (26,577 )
Profit for the year 82,466 48,003
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Post-employment benefits remeasurement 22 108 351
Items that will be or may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations (7,459 ) (51,824 )
Effective portion of changes in fair value of derivatives 158 (35 )
Other comprehensive loss for the year (7,193 ) (51,508 )
Total comprehensive income/(loss) for the year 75,273 (3,505 )
Profit for the year attributable to:
Equity holders of the Company 63,687 38,712
Non-controlling interests 27 18,779 9,291
Total comprehensive income/(loss) for the year attributable to:
Equity holders of the Company 59,604 9,064
Non-controlling interests 27 15,669 (12,569 )
Earnings per share:
Basic and diluted 29 180.1 c 109.5 c
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
The accompanying notes are an integral part of these consolidated financial statements.
Ocean Wilsons Holdings Limited 2021 Annual Report52
Note 2021 2020
Current assets
Cash and cash equivalents 10 28,565 63,255
Financial assets at fair value through profit and loss 11 392,931 347,464
Recoverable taxes 9 25,380 22,479
Trade and other receivables 12 59,350 47,807
Inventories 13 12,297 11,764
Non-current assets
Other trade receivables 12 1,580 9
Related party loans receivable 24 10,784 30,460
Other non-current assets 23 3,582 4,905
Recoverable taxes 9 12,816 11,006
Investment in joint ventures 14 61,553 26,185
Deferred tax assets 9 22,332 29,716
Property, plant and equipment 15 563,055 579,138
Right-of-use assets 16 157,869 149,278
Other intangible assets 17 14,981 16,967
Goodwill 18 13,272 13,429
Total assets 1,380,347 1,353,862
Current liabilities
Trade and other payables 20 (58,513 ) (41,066 )
Tax liabilities 9 (8,057 ) (6,346 )
Lease liabilities 16 (19,449 ) (18,192 )
Bank overdrafts and loans 21 (45,287 ) (58,672 )
(131,306 ) (124,276 )
Net current assets 387,217 368,493
Non-current liabilities
Bank loans
21 (256,3 12 ) (28 3,9 8 9 )
Post-employment benefits 22 (1,562 ) (1,641 )
Deferred tax liabilities 9 (50,194 ) (50,987 )
Provisions for legal claims 23 (8,907 ) (9,560 )
Lease liabilities 16 (148,394 ) (139,702 )
(465,369 ) (485,879 )
Total liabilities (596,675 ) (610,155 )
Capital and reserves
Share capital 25 11,390 11,390
Retained earnings 678,006 635,987
Translation and hedging reserve (95,739 ) (91,595 )
Equity attributable to equity holders of the Company 593,657 555,782
Non-controlling interests 27 190,015 187,925
Total equity 783,672 743,707
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021 (Expressed in thousands of US Dollars)
Signed on behalf of the Board
F. Beck A. Berzins
Director Director
The accompanying notes are an integral part of these consolidated financial statements.
53 SECTION FIVE
Share
capital
Retained
earnings
Hedging and
Translation
reserve
Attributable
to equity
holders
of the
Company
Non-
controlling
interests
Total
equity
Balance at 1 January 2020 11,390 620,151 (61,748 ) 569,793 216,067 785,860
Currency translation adjustment - - (29,827 ) (29,827 ) (21,997 ) (51,824 )
Post-employment benefits (note 22) - 199 - 199 152 351
Effective portion of changes in fair
value of derivatives
Profit for the year - 38,712 - 38,712 9,291 48,003
Total comprehensive income/(loss) for
the year
Dividends (notes 27, 28) - (24,754 ) - (24,754 ) (17,455 ) (42,209 )
Tax incentives - - - - 19 19
Share options exercised in subsidiary
(note 26)
Share based payment expense
(note 26)
Balance at 31 December 2020 11,390 635,987 (91,595 ) 555,782 187,925 743,707
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 )
Post-employment benefits (note 22) - 61 - 61 47 108
Effective portion of changes in fair
value of derivatives
Profit for the year - 63,687 - 63,687 18,779 82,466
Total comprehensive income/(loss) for
the year
Dividends (notes 27, 28) - (24,754 ) - (24,754 ) (17,808 ) (42,562 )
Share options exercised in subsidiary
(note 26)
Share based payment expense
(note 26)
Balance at 31 December 2021 11,390 678,006 (95,739 ) 593,657 190,015 783,672
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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.
Ocean Wilsons Holdings Limited 2021 Annual Report54
Notes 2021 2020
Operating activities
Profit for the year 82,466 48,003
Adjustment for:
Depreciation & amortisation 15,16,17 61,412 61,323
Loss/(gain) on disposal of property, plant and equipment and
intangible assets
Share of results of joint ventures 14 5,029 4,142
Returns on investment portfolio at fair value through profit or loss 5 (49,474 ) (33,383 )
Other investment income 5 (4,113 ) (1,644 )
Finance costs 8 30,227 23,210
Foreign exchange losses on monetary items 3,100 7,551
Share based payment expense 26 369 127
Post-employment benefits 22 136 134
Tax expense 9 27,925 26,577
Changes in:
Inventories 13 (533 ) (1,257 )
Trade and other receivables 12, 24 (13,629 ) 8,141
Other current and non-current assets 9,23 (3,388 ) 22,565
Trade and other payables 20 19,158 (8,914 )
Provisions for legal claims 23 (653 ) 1,030
Taxes paid (27,256 ) (29,137 )
Interest paid (25,161 ) (22,703 )
Net cash inflow from operating activities 106,114 105,700
Investing activities
Income received from trading investments 5,700 5,076
Purchase of trading investments (72,811 ) (63,723 )
Proceeds on disposal of trading investments 73,064 45,154
Purchase of property, plant and equipment 15 (47,352 ) (58,360 )
Proceeds on disposal of property, plant and equipment 304 1,259
Purchase of intangible assets 17 (1,375 ) (1,085 )
Proceeds on disposal of intangible assets 517 -
Investment in joint ventures 14 (20,016 ) (23 )
Net cash used in investing activities (61, 9 6 9 ) (71,7 0 2 )
Financing activities
Dividends paid to equity holders of the Company 28 (24,754 ) (24,754 )
Dividends paid to non-controlling interests in subsidiary 27 (17,808 ) (17,455 )
Repayments of borrowings 21 (57,926 ) (25,725 )
Payments of lease liabilities 16 (8,473 ) (6,345 )
New bank loans drawn down 21 19,438 51,455
Issue of new shares in subsidiary under employee share option plan 26 6,885 3,336
Net cash used in financing activities (82,638 ) (19,488 )
Net (decrease)/increase in cash and cash equivalents (38,493 ) 14,510
Cash and cash equivalents at beginning of year 63,255 68,979
Effect of foreign exchange rate changes 3,803 (20,234 )
Cash and cash equivalents at end of year 28,565 63,255
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
The accompanying notes are an integral part of these consolidated financial statements.
55 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
1 General Information
The Company is incorporated in Bermuda
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 2022.
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.
Although the outbreak of the COVID-19 pandemic and the measures adopted by governments to mitigate its spread have
impacted the Group, management continues to have a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future and that the going concern basis of accounting remains appropriate.
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 arrangements
Joint ventures
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. Joint venture entities
are accounted for using the equity method. After initial recognition at cost, these consolidated financial statements include
the Group’s share in the profit or loss and other comprehensive income of the joint venture until the date that significant
influence or joint control ceases.
Joint operations
A joint operation is a contractual agreement where the Group and other parties undertake an economic activity that is subject
to joint control, where the strategic financial and operating policy decisions relating to the activities require the unanimous
consent of the parties sharing control. The joint operations’ assets and any liabilities incurred jointly with other ventures
are recognised in the financial statements of the relevant entity and classified according to their nature. The Group’s share
of the assets, liabilities, income and expenses of joint operation entities are combined with the equivalent items in these
consolidated financial statements on a line-by-line basis.
Ocean Wilsons Holdings Limited 2021 Annual Report56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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 other sales related taxes.
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.
Port terminals revenue
Revenue from providing container movement and associated services is recognised on the date that the services have been
performed.
Offshore support base revenue
Revenue from providing vessel turnarounds is recognised on the date that the services have been performed.
Towage revenue
Revenue from towage services is recognised on the date that the services have been performed.
Ship agency and logistics revenues
Revenue from providing agency and logistics services is recognised when the agreed services have 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.
57 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
2 Significant accounting policies and critical accounting judgements (
c o n t i n u e d
)
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.
Ocean Wilsons Holdings Limited 2021 Annual Report58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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.
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.
59 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
2 Significant accounting policies and critical accounting judgements (c o n t i n u e d )
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 overdraft and 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 or 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 (Cash flow hedge)
The Company seeks to apply hedge accounting (cash flow hedge) to manage volatility in profit or loss. When a derivative is
designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with
a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of
changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve
in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
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
Ocean Wilsons Holdings Limited 2021 Annual Report60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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 60 years
Leasehold Improvements: Lower of the rental period and useful life
Floating Craft: 25 years
Vehicles: 5 years
Plant and Equipment: 5 to 30 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.
61 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
2 Significant accounting policies and critical accounting judgements (
c o n t i n u e d
)
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 an 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: 10 to 33 years
Computer software: 3 to 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
Ocean Wilsons Holdings Limited 2021 Annual Report62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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 and estimates
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 managements’ 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
highest 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 – Judgement and estimates
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
Amendments to IFRS 16 COVID-19 Related Rent Concessions
On 28 May 2020, the IASB issued COVID-19-Related Rent Concessions - amendment to IFRS 16 Leases. The amendments
provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as
a direct consequence of the COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a
COVID-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any
change in lease payments resulting from the COVID-19 related rent concession the same way it would account for the change
under IFRS 16, if the change were not a lease modification.
63 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
2 Significant accounting policies and critical accounting judgements (c o n t i n u e d )
The amendment applies to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted and
the Group adopted the amendment for the year ending 31 December 2020, with an impact of US$0.02 million in discounts
obtained and US$0.2 million in payment deferrals from 2020 to 2021.
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs,
which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship
is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the
hedged item or the hedging instrument. These amendments had no impact on the consolidated financial statements of the
Group as it does not have any interest rate hedge relationships.
Standards issued but not yet effective
A number of new or amended standards are effective for annual periods beginning after 31 December 2021 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.
- Reference to Conceptual Framework – Amendments to IFRS 3, effective for periods beginning on or after 1 January
2022
- Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16, effective for periods beginning
on or after 1 January 2022
- Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37, effective for periods beginning on or after
1 January 2022
- Amendments to IAS 1: Classification of Liabilities as Current or Non-current, effective for periods beginning on or after
1 January 2023
- Amendments to IAS 8: Definition of Accounting Estimates, effective for periods beginning on or after 1 January 2023
- Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies, effective for periods beginning
on or after 1 January 2023
Ocean Wilsons Holdings Limited 2021 Annual Report64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
3 Group composition
Ocean Wilsons has direct ownership in Ocean Wilsons (Investments) Limited and Wilson Sons Holdings Brasil S.A, which
in turn has direct ownership in the towage, shipyard, ship agency, logistics, container terminal and offshore support bases
subsidiaries. The effective ownership interest of Ocean Wilsons at the end of each reporting period is as follows:
Subsidiaries
Place of
incorporation
and operation Segment
Ownership interest
2021 2020
Investments
Ocean Wilsons (Investments) Limited Bermuda Investment 100% 100%
Holding company
Wilson Sons Limited
1
Bermuda Maritime service NA 57.77%
Wilson Sons Holdings Brasil S.A.
1
Brazil Maritime service 56.88% 57.77%
Towage
Saveiros, Camuyrano Serviços Marítimos S.A.
2
Brazil Maritime service – 57.77%
Shipyard
Wilson Sons Shipping Services Ltda. Brazil Maritime service 56.88% 57.77%
Wilson Sons Estaleiros Ltda. Brazil Maritime service 56.88% 57.77%
Ship agency
Wilson Sons Agência Marítima Ltda. Brazil Maritime service 56.88% 57.77%
Dock Market Soluções Ltda. Brazil Maritime service 56.88% 57.77%
Logistics
Wilson Sons Terminais e Logística Ltda. Brazil Maritime service 56.88% 57.77%
EADI Santo André Terminais de Cargas Ltda. Brazil Maritime service 56.88% 57.77%
Allink Transportes Internacionais Ltda. Brazil Maritime service 56.88% 57.77%
Container terminal
Wilport Operadores Portuários Ltda. Brazil Maritime service 56.88% 57.77%
Tecon Rio Grande S.A. Brazil Maritime service 56.88% 57.77%
Tecon Salvador S.A. Brazil Maritime service 56.88% 57.77%
Offshore support bases and towage
Wilson Sons Serviços Marítimos Ltda Brazil Maritime service 56.88% 57.77%
(1) During the year ended 31 December 2021, Wilson Sons Limited (WSL) merged into Wilson Sons Holdings Brasil S.A. (WSSA),
its controlled subsidiary. As all WSL shareholders received WSSA shares at the ratio of 1:1, the transaction had no impact on
the Group composition or ownership interests.
(2) During the year ended 31 December 2021, Saveiros, Camuyrano Serviços Marítimos S.A. was merged into Wilson Sons
Serviços Marítimos Ltda.
The decrease in ownership interest from the year ended 31 December 2020 to 31 December 2021 is due to the exercise
of share options in subsidiaries, for which the details are presented in note 26. The information on non-controlling interests
is presented in note 27.
65 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
4 Business and geographical segments
The Group has two reportable segments: maritime services and investments. These segments report their financial and
operational data separately to the Board. The Board considers these segments separately when making business and investment
decisions. The maritime services segment provides towage and ship agency, port terminals, offshore, logistics and shipyard
services in Brazil. The investment segment holds a portfolio of international investments and is a Bermuda based company.
For the year ended 31 December 2021
Brazil -
Maritime
Services
Bermuda -
Investment Unallocated Consolidated
Sale of services 396,376 – – 396,376
Result
Segment result 103,488 (212) (3,162) 100,114
Share of results of joint ventures (5,029) – – (5,029)
Return on investment portfolio at fair value
through profit or loss
– 49,474 – 49,474
Investment portfolio performance and
management fees
– (4,954) – (4,954)
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
Other information
Capital additions 48,727 – – 48,727
Right-of-use asset additions 7,718 – – 7,718
Depreciation and amortisation (61,412) – – (61,412)
Statement of financial position
Goodwill 13,272 – – 13,272
Other intangible assets 14,981 – – 14,981
Right-of-use assets 157,869 – – 157,869
Property, plant and equipment 563,055 – – 563,055
Investment in joint ventures 61,553 – – 61,553
Related party loans 10,784 – – 10,784
Other non-current assets 3,582 – – 3,582
Other trade receivables 1,580 – – 1,580
Total current assets 163,967 351,774 2,782 518,523
Segment assets 1,025,791 351,774 2,782 1,380,347
Segment liabilities (594,218) (2,211) (246) (596,675)
Ocean Wilsons Holdings Limited 2021 Annual Report66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
For the year ended 31 December 2020
Brazil -
Maritime
Services
Bermuda -
Investment Unallocated Consolidated
Sale of services 352,792 – – 352,792
Result
Segment result 80,279 (185) (2,508) 77,586
Share of results of joint ventures (4,142) – – (4,142)
Return on investment portfolio at fair value
through profit or loss – 33,383 – 33,383
Investment portfolio performance and
management fees – (3,130) – (3,130)
Other investment income 1,644 – – 1,644
Finance costs (23,210) – – (23,210)
Foreign exchange losses on monetary items (7,444) (12) (95) (7,551)
Profit/(loss) before tax 47,127 30,056 (2,603) 74,580
Tax (26,577) – – (26,577)
Profit/(loss) after tax 20,550 30,056 (2,603) 48,003
Other information
Capital additions 62,486 – – 62,486
Right-of-use asset additions 5,200 – – 5,200
Depreciation and amortisation (61,323) – – (61,323)
Statement of financial position
Goodwill 13,429 – – 13,429
Other intangible assets 16,967 – – 16,967
Right-of-use assets 149,278 – – 149,278
Property, plant and equipment 579,138 – – 579,138
Investment in joint ventures 26,185 – – 26,185
Related party loans 30,460 – – 30,460
Other non-current assets 4,905 – – 4,905
Other trade receivables 9 – – 9
Total current assets 178,281 310,882 3,606 492,769
Segment assets 1,039,374 310,882 3,606 1,353,862
Segment liabilities (609,104) (621) (430) (610,155)
67 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
5 Revenue
An analysis of the Group’s revenue is as follows:
2021 2020
Sale of services 396,376 352,792
Net income from underlying investment vehicles 3,754 3,327
Profit on disposal of financial assets at fair value through profit or loss 11,870 1,001
Unrealised gains on financial assets at fair value through profit or loss 33,850 29,055
Returns on investment portfolio at fair value through profit or loss 49,474 33,383
Interest on bank deposits 2,254 1,078
Other interest 1,859 566
Other investment income 4,113 1,644
Total Revenue 449,963 387,819
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:
2021 2020
Harbour manoeuvres 178,552 159,134
Special operations 20,558 14,462
Ship agency 8,774 8,122
Towage and ship agency services 207,884 181,718
Container handling 72,402 71,401
Warehousing 35,036 28,727
Ancillary services 21,283 18,534
Offshore support bases 7,234 8,045
Other services 13,040 13,514
Port terminals 148,995 140,221
Logistics 35,142 28,616
Logistics 35,142 28,616
Repairs/dry-docking 4,355 2,237
Shipyard 4,355 2,237
Total Revenue from contracts with customers 396,376 352,792
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$49.1 million (2020: US$40.6 million). These amounts include US$13.5 million (2020:
US$10.7 million) of contract assets (unbilled accounts receivables). There were no contract liabilities as of 31 December
2021 (2020: none).
Ocean Wilsons Holdings Limited 2021 Annual Report68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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 agency services
Harbour Maneuvers 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
Logistics At a point in time
Shipyard
Ship construction contracts Over time
Technical assistance/dry-docking Over time
The disaggregation of revenue from contracts with customers based on the timing of performance obligations is as follows:
2021 2020
At a point of time 392,021 350,555
Over time 4,355 2,237
Total Revenue from contracts with customers 396,376 352,792
The performance obligation of ship construction contracts, technical assistance and drydocking 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. As at 31 December 2021 and 2020, 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.
69 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
6 Employee charges and benefits expense
Employee charges and benefits expense are classified as follows:
2021 2020
Wages, salaries and benefits (90,868) (87,852)
Social security costs (20,062) (21,271)
Other pension costs (772) (687)
Share based payments (324) (206)
Employee charges and benefits expense (112,026) (110,016)
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$0.7 million (2020: US$0.6 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 are detailed in note 22.
7 Other operating expenses
Other operating expenses are classified as follows:
2021 2020
Utilities and communications (12,309) (10,352)
Insurance (4,076) (2,632)
Corporate, governance and compliance costs (2,359) (2,459)
Short-term or low-value asset leases (32,881) (26,522)
Service costs (24,401) (21,953)
Freight (10,717) (7,031)
Port expenses (6,629) (6,172)
Other operating expenses (4,917) (7,545)
(98,289) (84,666)
8 Finance costs
Finance costs are classified as follows:
2021 2020
Interest on lease liabilities (13,882) (12,836)
Interest on bank overdrafts and loans (16,219) (10,262)
Exchange loss on foreign currency borrowings (32) -
Other interest costs (94) (112)
(30,227) (23,210)
Ocean Wilsons Holdings Limited 2021 Annual Report70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
9 Taxation
At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and accordingly, no expenses
or provisions for such taxes has been recorded by the Group for its Bermuda operations. The Company has received an
undertaking from the Bermuda Government exempting it from all such taxes until 31 March 2035.
Tax expense
The reconciliation of the amounts recognised in profit or loss is as follows:
2021 2020
Current tax expense
Brazilian corporation tax (17,239) (20,912)
Brazilian social contribution (7,114) (8,276)
Total current tax expense (24,353) (29,188)
Deferred tax – origination and reversal of timing differences
Charge for the year in respect of deferred tax liabilities (6,737) (17,601)
Credit for the year in respect of deferred tax assets 3,165 20,212
Total deferred tax (expense)/credit
(3,572) 2,611
Total tax expense (27,925) (26,577)
Brazilian corporation tax is calculated at 25% (2020: 25%) of the taxable profit for the year. Brazilian social contribution tax
is calculated at 9% (2020: 9%) of the taxable profit for the year.
The reconciliation of the effective tax rate is as follows:
2021 2020
Profit before tax 110,391 74,580
Less: Profit before tax of Bermuda and unallocated segments (41,036) (27,453)
Profit before tax – Maritime services 69,355 47,127
Tax at the aggregate Brazilian tax rate of 34% (2020: 34%) (23,581) (16,023)
Net operating losses in the period (816) (2,869)
Non-deductible expenses (554) (2,018)
Foreign exchange variance on loans 1,142 14,631
Tax effect of share of results of joint ventures (1,710) (1,408)
Tax effect of foreign exchange gains or losses on monetary items (881) (4,248)
Retranslation of non-monetary items 228 (13,972)
Share option scheme (110) (43)
Leasing 158 108
Other (1,801) (735)
Tax expense for the year (27,925) (26,577)
Effective rate for the year – Maritime services
40% 56%
Effective rate for the year – Group 25% 36%
71 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
9 Taxation (c o n t i n u e d )
The tax expense related to amounts recognised in other comprehensive income is as follows:
For the year ended 31 December 2021 Before tax
Tax
(expense)/
credit Net of tax
Post-employment benefits 164 (56) 108
Items that will not be reclassified subsequently to profit or loss 164 (56) 108
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
Items that will be or may be reclassified subsequently to profit or loss (11,063) 3,762 (7,301)
Total amounts recognised in other comprehensive income (10,899) 3,706 (7,193)
For the year ended 31 December 2020 Before tax
Tax
(expense)/
credit Net of tax
Post-employment benefits 532 (181) 351
Items that will not be reclassified subsequently to profit or loss 532 (181) 351
Exchange differences arising on translation of foreign operations (78,521) 26,697 (51,824)
Effective portion of changes in fair value of derivatives (53) 18 (35)
Items that will be or may be reclassified subsequently to profit or loss (78,574) 26,715 (51,859)
Total amounts recognised in other comprehensive income (78,042) 26,534 (51,508)
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:
Tax
depreciation
Foreign
exchange
variance on
loans Tax losses
Profit on
construction
contracts
Other timing
differences
Retranslation
of non-
monetary
items Total
At 1 January 2020 (37,274) 29,379 14,933 16,962 7,152 (51,314) (20,162)
(Charge)/credit to
income
(638) 15,135 3,235 (1,439) 290 (13,972) 2,611
Other adjustments - - (63) - 121 - 58
Exchange differences 8,429 (8,057) (3,400) - (1,379) 629 (3,778)
At 31 December 2020 (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)
Ocean Wilsons Holdings Limited 2021 Annual Report72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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:
2021 2020
Deferred tax liabilities (50,194) (50,987)
Deferred tax assets 22,332 29,716
(27,862) (21,271)
As at 31 December 2021, the Group had unused tax losses of US$39.0 million (2020: US$64.4 million) available for offset
against future profits in the company in which they arose.
No deferred tax asset has been recognised in respect of US$7.6 million (2020: US$6.9 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 bond related those previous 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:
2021 2020
Recoverable taxes – current 25,380 22,479
Recoverable taxes – non-current 12,816 11,006
Total recoverable taxes 38,196 33,485
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:
2021 2020
Taxes payable – current (8,057) (6,346)
Total taxes payable (8,057) (6,346)
73 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
10 Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three
months or less. The carrying amount of these assets approximates their fair value.
11 Financial assets at fair value through profit or loss
The movement in financial assets at fair value through profit or loss is as follows:
2021 2020
Opening balance – 1 January 347,464 298,839
Additions, at cost 72,811 63,723
Disposals, at market value (73,064) (45,154)
Increase in fair value of financial assets at fair value through profit or loss 33,850 29,055
Profit on disposal of financial assets at fair value through profit or loss 11,870 1,001
Closing balance – 31 December 392,931 347,464
Bermuda – Investment segment 349,613 307,874
Brazil – Maritime services segment
43,318 39,590
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:
2021 2020
Within one year 5,219 4,670
In the second to fifth year inclusive 2,946 5,153
After five years 35,056 35,495
Total 43,221 45,318
Ocean Wilsons Holdings Limited 2021 Annual Report74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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
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 31.
12 Trade and other receivables
Trade and other receivables are classified as follows:
2021 2020
Non-current
Other trade receivables 1,580 9
Total other trade receivables 1,580 9
Current
Trade receivable for the sale of services 35,915 30,436
Unbilled trade receivables 13,517 10,716
Total gross current trade receivables 49,432 41,152
Allowance for expected credit loss (338) (554)
Total current trade receivables 49,094 40,598
Prepayments 6,646 4,252
Insurance claim receivable 632 995
Employee advances 1,236 1,099
Other receivables 1,742 863
Total other current receivables 10,256 7,209
Total trade and other receivables 59,350 47,807
The aging of the trade receivables is as follows:
2021 2020
Current 43,160 34,561
From 0 – 30 days 4,098 4,800
From 31 – 90 days 858 852
From 91 – 180 days 988 197
More than 180 days 328 742
Total 49,432 41,152
75 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
12 Trade and other receivables (c o n t i n u e d )
The movement in allowance for expected credit loss is as follows:
2021 2020
Opening balance – 1 January 554 837
Decrease in allowance recognised in profit or loss (188) (99)
Exchange differences (28) (184)
Closing balance – 31 December 338 554
Information about the Group’s exposure to credit risks related to trade receivables is included in note 31.
13 Inventories
Inventories are classified as follows:
2021 2020
Operating materials 10,829 9,404
Raw materials for third party vessel construction 1,468 2,360
Total 12,297 11,764
Inventories are presented net of provision for obsolescence, amounting to US$0.4 million (2020: US$0.3 million).
14 Joint arrangements
Joint operations
The Group holds the following significant interests in joint operations at the end of the reporting period:
Place of
incorporation
and operation
Proportion of ownership
2021 2020
Towage
Consórcio de Rebocadores Baia de São Marcos
1
Brazil - 50%
(1) The joint operation was terminated in December 2021
The following amounts are included in the Group’s financial information as a result of proportional consolidation of joint
operations listed above:
2021 2020
Sales of services - 4,067
Other operating expenses (1,059) (2,449)
Profit for the year (1,059) 1,618
Ocean Wilsons Holdings Limited 2021 Annual Report76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
2021 2020
Property, plant and equipment - 1,842
Other intangible assets - 2
Inventories - 186
Trade and other receivables - 990
Cash and cash equivalents - 1,408
Total assets - 4,428
Trade and other payables - (4,237)
Deferred tax liabilities - (191)
Total liabilities - (4,428)
Joint ventures
The Group holds the following significant interests in joint ventures at the end of the reporting period:
Place of
incorporation
and operation
Proportion of ownership
2021 2020
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%
The aggregated Group’s interests in joint ventures are equity accounted. The Group has not given separate disclosure of
each material joint ventures because they belong to the same economic group. The financial information of the joint ventures
and reconciliations to the share of result of joint ventures and the investment in joint ventures recognised for the period are
as follows:
2021 2020
Sales of services 118,049 121,616
Operating expenses (70,364) (59,344)
Depreciation and amortisation (50,962) (51,199)
Foreign exchange losses on monetary items (3,904) (16,998)
Results from operating activities (7,181) (5,925)
Finance income
302 65
Finance costs (15,789) (17,415)
Loss before tax (22,668) (23,275)
Tax credit 12,610 14,991
Loss for the year (10,058) (8,284)
Participation 50% 50%
Share of result of joint ventures (5,029) (4,142)
77 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
14 Joint arrangements ( c o n t i n u e d )
2021 2020
Non-current assets 584,886 590,734
Other current assets 46,548 37,942
Cash and cash equivalents 7,541 15,219
Total assets 638,975 643,895
Non-current liabilities 375,988 387,478
Other current liabilities 49,173 78,011
Trade and other payables 66,567 98,145
Total liabilities 491,728 563,634
Total net assets 147,247 80,261
Participation 50% 50%
Group’s share of net assets 73,624 40,131
Cumulative elimination of profit on construction contracts (12,071) (13,946)
Investment in joint ventures 61,553 26,185
Investment in joint ventures movement 2021 2020
Opening balance – 1 January 26,185 30,334
Share of result of joint ventures (5,029) (4,142)
Capital increase 40,207 23
Elimination of profit on construction contracts 17 45
Post-employment benefits 10 24
Translation reserve 163 (99)
Closing balance – 31 December 61,553 26,185
During the year ended 31 December 2021, the Group increased its invested capital in the joint venture Wilson Sons Ultratug
Participações S.A. with a cash contribution of US$20.0 million (2020: nil), and in the joint venture Atlantic Offshore S.A.
with the conversion in capital of a US$20.2 million (2020: nil) related party loan.
Guarantees
The joint venture Wilson Sons Ultratug Participações S.A. has loans with the Brazilian Development Bank which are guaranteed
by a lien on the financed supply vessel and by a corporate guarantee from its participants, proportionate to their ownership.
The Group’s subsidiary Wilson Sons Holdings Brasil Ltda. is guaranteeing US$160.4 million (2020: US$170.7 million).
The joint venture 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
Petrobas. The joint venture has to maintain a cash reserve account, presented as long-term investment, until full repayment
of the loan agreement, amounting to US$2.1 million (2020: US$2.1 million).
Covenants
On 31 December 2021 the joint venture Wilson Sons Ultratug Participações S.A. was not in compliance with one of the
covenants’ ratios with Banco do Brasil. In the event of non-compliance, the joint venture has to increase its capital within a
year to reach 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 as of 31 December 2021
(2020: none).
Ocean Wilsons Holdings Limited 2021 Annual Report78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
15 Property, plant and equipment
Land and
buildings Floating craft
Vehicles,
plant and
equipment
Assets under
construction Total
Cost
At 1 January 2020
313,432 516,361 231,226 292 1,061,311
Additions 25,901 10,216 25,284 - 61,401
Transfers to right-of-use assets - - (495) - (495)
Transfers to intangible assets - - (99) - (99)
Transfers 148 (124) (24) - -
Disposals (3,725) (969) (4,039) - (8,733)
Exchange differences (56,443) - (42,819) - (99,262)
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 31 December 2021 274,683 541,252 198,464 9,581 1,023,980
Accumulated depreciation
At 1 January 2020
91,945 217,369 124,948 - 434,262
Charge for the year 6,774 29,030 11,989 - 47,793
Transfers to right-of-use assets - - (471) - (471)
Elimination on construction contracts - 13 - - 13
Disposals (2,400) (829) (3,928) - (7,157)
Exchange differences (16,691) - (22,764) - (39,455)
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 31 December 2021 82,651 264,836 113,438 - 460,925
Carrying Amount
At 31 December 2020 199,685 279,901 99,260 292 579,138
At 31 December 2021 192,032 276,416 85,026 9,581 563,055
Land and buildings with a net book value of US$0.2 million (2020: US$0.2 million) and plant and equipment with a carrying
amount of US$0.1 million (2020: US$0.1 million) have been given in guarantee for various legal processes.
The Group has pledged assets with a carrying amount of US$251.6 million (2020: US$253.6 million) to secure loans granted
to the Group.
No borrowing costs were capitalised in 2021. The amount of borrowing costs capitalised in 2020 was US$3.0 million at an
average interest rate of 2.76%.
The Group has contractual commitments to suppliers for the acquisition and construction of property, plant and equipment
amounting to US$14.2 million (2020: US$1.6 million).
79 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
16 Lease arrangements
Right-of-use assets
Right-of-use assets are classified as follows:
Operational
facilities Floating craft Buildings
Vehicles,
plant and
equipment Total
Cost
At 1 January 2020
186,026 4,481 6,449 12,703 209,659
Additions 1,553 3,504 19 124 5,200
Contractual amendments 9,376 52 201 83 9,712
Transfers from property, plant and
equipment
- - - 495 495
Terminated contracts - - (200) (1,911) (2,111)
Exchange differences (42,245) (759) (772) (1,745) (45,521)
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 31 December 2021 167,118 13,077 5,388 8,846 194,429
Accumulated depreciation
At 1 January 2020
8,269 2,276 1,469 8,634 20,648
Charge for the year 7,280 2,995 1,099 1,062 12,436
Transfers from property, plant and
equipment
- - - 471 471
Terminated contracts - - (70) (1,861) (1,931)
Exchange differences (1,810) (521) (77) (1,060) (3,468)
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 31 December 2021 18,298 8,194 2,960 7,108 36,560
Carrying Amount
At 31 December 2020 140,971 2,528 3,276 2,503 149,278
At 31 December 2021 148,820 4,883 2,428 1,738 157,869
Operational facilities
The main lease commitments included as operational facilities are described below:
Tecon Rio Grande
The Tecon Rio Grande lease was signed on 3 February 1997 for a period of 25 years renewable for a further 25 years.
Tecon Rio Grande was then granted the right to renew the lease as set out in the contract amendment signed on 7 March
2006. The commitments set forth in the lease agreement and its addendum 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.
Ocean Wilsons Holdings Limited 2021 Annual Report80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
Tecon Salvador
Tecon Salvador S.A. has the right to lease and operate the container terminal and heavy cargo terminal in the Port of Salvador
for 25 years renewed in 2016 for a further 25 years. The total lease term of 50 years, until March 2050, is provided in the
second addendum to the rental agreement. This addendum requires the Group to make a minimum specified investment
in expanding the leased terminal area. The commitments set forth in the lease agreement and its addendums include a
monthly payment for facilities and leased areas and a contractual payment per container moved based on minimum forecast
volumes and a fee per ton of non-containerised cargo moved based on minimum forecast volumes.
Shipyard
Lease commitments mainly refer to a 60-year right to lease from June 2008 and operate an area located adjacent to a
Group’s shipyard in Guarujá, São Paulo state. The initial lease of 30 years is renewable for a further period of 30 years at
the option of the Group. The area has been used to expand and develop the shipyard. Management’s intention is to exercise
the renewal option.
Brasco
The Brasco lease commitments mainly refers to a 30-year lease expiring in 2043 to operate a port area in Caju, Rio de
Janeiro, Brazil with convenient access to service the Campos and Santos oil producing basins.
Logistics
Lease commitments mainly refer to the bonded terminals and distribution centres located in Santo André, São Paulo state
and Suape, Pernambuco state with terms ranging between 18 and 24 years.
Floating craft
Variable chartering of vessels for maritime transport between port terminals.
Buildings
The Group has lease commitments for its Brazilian business headquarters, branches and commercial offices in several
Brazilian cities.
Vehicles, plant and equipment
Rental contracts mainly for forklifts, vehicles for operational, commercial and administrative activities and other operating
equipment.
Lease liabilities
Lease liabilities by class of asset Discount rate 2021 2020
Operational facilities 5.17% - 9.33% 159,444 150,513
Floating craft 7.75% - 10.52% 4,823 2,759
Buildings 4.41% - 17.19% 2,139 2,932
Vehicles, plant and equipment 4.87% - 12.9% 1,437 1,690
Total 167,843 157,894
Total current 19,449 18,192
Total non-current 148,394 139,702
81 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
16 Lease arrangements (c o n t i n u e d )
Maturity analysis - contractual undiscounted cash flows 2021 2020
Within one year 20,323 19,153
In the second year 37,535 17,365
In the third to fifth years inclusive 32,767 49,353
After five years 313,102 292,766
Total cash flows 403,727 378,637
Adjustment to present value (235,884) (220,743)
Total lease liabilities 167,843 157,894
The table below presents the lease liabilities balance considering the projected future inflation rate in the discounted payment
flows. For the purposes of this calculation, all other assumptions were maintained.
2021 2020
Actual outflow 403,727 378,637
Embedded interest (235,884) (220,743)
Lease liabilities 167,843 157,894
Inflated flow 426,694 400,017
Inflated embedded interest (252,974) (236,886)
Inflated lease liabilities 173,720 163,131
Amounts recognised in profit and loss
2021 2020
Depreciation of right-of-use assets (13,325) (12,436)
PIS and COFINS taxes 1,262 1,730
Net depreciation of right-of-use assets (12,063) (10,706)
Interest on lease liabilities (14,771) (14,096)
PIS and COFINS taxes 889 1,260
Interest on lease liabilities (13,882) (12,836)
Variable lease payments not included in the measurement of lease liabilities
1
(2,332) (2,037)
Expenses relating to short-term leases (29,641) (23,392)
Expenses relating to low-value assets (897) (1,093)
Total (58,815) (50,064)
(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.
Ocean Wilsons Holdings Limited 2021 Annual Report82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
Amounts recognised in the cash flow statement
2021 2020
Payment of lease liability (8,473) (6,345)
Interest paid – lease liability (14,771) (14,111)
Short-term leases paid (29,641) (23,392)
Variable lease payments (2,332) (2,037)
Low-value leases paid (897) (1,093)
Total cash outflow (56,114) (46,978)
17 Other intangible assets
Other intangible assets cost and related accumulated amortisation are classified as follows:
Computer
software
Concession
rights Other Total
Cost
At 1 January 2020
42,420 20,461 61 62,942
Additions 1,085 - - 1,085
Transfers to property, plant and equipment 99 - - 99
Disposals (43) - - (43)
Exchange differences (2,454) (4,448) (14) (6,916)
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 31 December 2021 40,923 15,501 45 56,469
Accumulated amortisation
At 1 January 2020
33,326 7,304 - 40,630
Charge for the year 2,394 430 - 2,824
Disposals (42) (382) - (424)
Exchange differences (1,330) (1,500) - (2,830)
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 31 December 2021 35,540 5,948 - 41,488
Carrying Amount
31 December 2020 6,759 10,161 47 16,967
31 December 2021 5,383 9,553 45 14,981
83 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
18 Goodwill
Goodwill is classified as follows:
Tecon Rio Grande Tecon Salvador Total
Carrying Value:
At 1 January 2020
11,610 2,480 14,090
Exchange differences (661) - (661)
At 1 January 2021 11,949 2,480 13,429
Exchange differences (157) - (157)
At 31 December 2021 10,792 2,480 13,272
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 19.
19 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
2021 2020 2021 2020
Discount rate 9.4% 8.4% 9.5% 8.4%
Growth rate 4.3% 7.4% 3.4% 3.9%
Inflation rate 3.7% 4.0% 3.7% 4.0%
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
and does not exceed its historical average.
As at 31 December 2021 and 2020, 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 33.7% (2020: 36.6%) for
Tecon Rio Grande and 6.4% (2020: 12.6%) for Tecon Salvador would not result in an impairment loss.
Offshore support bases
For the year ended 31 December 2021 and 2020, 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.
Ocean Wilsons Holdings Limited 2021 Annual Report84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
(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 to reach from 2026 onwards
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 20% each year until 2025. For 2026
onward, the growth rate is estimated at 21%, based on the expected growth in the Brazilian oil and gas sector and in the
region in which the CGU operates. Projections for 2022 include a 9% increase from the pricing currently in place and a
29% decrease in public prices for Spot berthing compared to 2021. From 2023 onwards, prices are adjusted for inflation.
(ii) Costs and expenses: Projections for 2022 are in line with the budget and include an increase in fixed costs of 23%
over 2021. From 2023 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 comparator companies in the oilfield and the maritime
services sector in which the CGU operates. For the year ended 31 December 2021, the discount rate was estimated at
10.1% (2020: 11.3%), the reduction being principally driven by a reduction of cost of equity due to a reduction in the
unlevered beta and in the country risk premium.
As at 31 December 2021, the estimated recoverable amount of the CGU of US$72.1 million (2020: US$57.2 million)
exceeded its carrying value of US$42.9 million (2020: US$46.3 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 2.5% (2020: 0.9%), a
decrease in revenue over the projected period of up to 7.8% (2020: 5.3%), or a decrease in revenue over the first 3 years
of the projected period of up to 80.0% (2020: 12.0%) would not result in an impairment loss.
20 Trade and other payables
Trade and other payables are classified as follows:
2021 2020
Trade payables 29,242 17,090
Accruals 7,424 5,757
Other payables 441 912
Provisions for employee benefits 19,547 16,516
Deferred income 1,859 791
Total 58,513 41,066
Trade creditors and accruals principally comprise amounts outstanding for trade purposes and ongoing costs. The average
credit period for trade purchases is 29 days (2020: 29 days). For most suppliers, interest is charged on outstanding trade
payable balances at various interest rates. The Group has financial risk management policies in place to ensure that payables
are paid within the credit timeframe agreed with each vendor.
85 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
21 Bank loans and overdrafts
The movement in bank loans is as follows:
2021 2020
Opening – 1 January 342,661 334,978
Additions 19,438 51,455
Principal amortisation (57,926) (25,725)
Interest amortisation (10,390) (8,569)
Accrued interest 16,246 13,840
Exchange difference (8,430) (23,318)
Closing – 31 December 301,599 342,661
The terms and conditions of outstanding secured borrowings are as follows:
Lender Currency
Annual
interest
rate %
Year of
maturity
2021 2020
Carrying
value Fair value
Carrying
value Fair value
BNDES linked to US Dollar 2.30% – 3.71% 2035 110,514 110,514 117,781 117,781
BNDES linked to US Dollar 2.07% – 4.08% 2028 25,161 25,161 27,060 27,060
BNDES linked to US Dollar 5% 2022 177 177 1,605 1,605
BNDES Real 15.91% 2034 45,264 45,264 47,632 47,632
BNDES Real 14.65% 2029 6,241 6,241 7,545 7,545
BNDES Real 9.79% 2027 638 638 805 805
Banco do Brasil linked to US Dollar 2.00% – 4.00% 2035 71,854 71,854 75,795 75,795
Bradesco Real 10.08% – 10.45% 2024 27,248 27,417 38,660 40,577
Bradesco Real 10.75% 2023 4,494 4,489 - -
Itaú Real 3.38% 2021 - - 4,056 4,060
Banco
Santander
US Dollar 2.63% 2023 10,008 10,008 - -
Banco
Santander
Real 6.44% 2021 - - 6,153 6,144
Banco
Santander
Real 6.44% 2021 - - 1,903 1,900
China
Construction
Bank
Real 5.65% 2021 - - 13,666 13,657
Total 301,599 301,763 342,661 344,561
Ocean Wilsons Holdings Limited 2021 Annual Report86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
The breakdown of bank overdrafts and loans by maturity is as follows:
2021 2020
Within one year 45,287 58,672
In the second year 47,961 44,707
In the third to fifth years (inclusive) 86,671 96,250
After five years 121,680 143,032
Total 301,599 342,661
Amounts due for settlement within 12 months 45,287 58,672
Amounts due for settlement after 12 months 256,312 283,989
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
As at 31 December 2021, the Group had US$78.8 million (2020: US$19.1 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 Net Debt/EBITDA, Profit/Total Debt,
current liquidity ratio and debt service coverage ratio.
As at 31 December 2021 and 2020, 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 31.
22 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.
87 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
22 Post-employment benefits (c o n t i n u e d )
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:
2021 2020
Opening balance – 1 January (1,641) (2,369)
Current service cost (3) (7)
Interest expense (133) (127)
Contributions to the plan (30) (23)
Changes in economic and financial assumptions 522 566
Changes in biometric and demographic assumptions (391) (215)
Exchange differences 114 534
Closing balance – 31 December (1,562) (1,641)
The calculation of the liability generated by the defined health benefits plan involves actuarial assumptions. The principal
actuarial assumptions are as follows:
2021 2020
Economic and Financial assumptions
Annual interest rate 8.67% 7.90%
Estimated inflation rate in the long-term 3.00% 3.50%
Medical cost trend rate 5.58% 6.09%
Biometric and Demographic assumptions
Employee turnover 14.10% 21.27%
Mortality table AT-2000 AT-2000
Disability table Álvaro Vindas Álvaro Vindas
Retirement Age 100% at 62 100% at 62
Employees electing to remain in the plan after
retirement or termination
23% 23%
Probability of marriage 80% of the participants 80% of the participants
Age difference for active participants Men 3 years older than women Men 3 years older than women
The present value of future liabilities may change depending on market conditions and actuarial assumptions. Changes on
a relevant actuarial assumption, keeping the other assumptions constant, would have affected the defined benefit obligation
as follows:
Change in assumptions 2021 2020
Discount rate + 0.5% (195) (225)
Discount rate - 0.5% 223 260
Medical Cost Trend Rate + 0.5% 229 264
Medical Cost Trend Rate - 0.5% (199) (229)
Aging factor + 0.5% 145 151
Aging factor - 0.5% (145) (151)
Ocean Wilsons Holdings Limited 2021 Annual Report88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
23 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:
Labour claims Tax cases
Civil and
environmental
cases Total
At 1 January 2021 7,985 1,202 373 9,560
Additional provisions 667 280 1,132 2,079
Unused amounts reversed (1,542) (102) (3) (1,647)
Utilisation of provisions (368) (2) - (370)
Exchange difference (552) (83) (80) (715)
At 31 December 2021 6,190 1,295 1,422 8,907
The contingent liabilities at the end of each period are as follows:
Labour claims Tax cases
Civil and
environmental
cases Total
At 31 December 2020 13,318 58,809 5,264 77,391
At 31 December 2021 14,881 52,793 4,968 72,642
Other non-current assets of US$3.6 million (2020: US$4.9 million) represent legal deposits required by the Brazilian legal
authorities as security to contest legal actions.
89 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
24 Related party transactions
Transactions between the Group and its subsidiaries which are related parties 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)
2021 2020 2021 2020
Joint arrangements
Consórcio de Rebocadores Baía de São Marcos - (4) - 1,535
Wilson, Sons Ultratug Participações S.A.
1
524 506 10,784 10,346
Atlantic offshore S.A.
2
- - -
20,617
Others
Hanseatic Asset Management LBG
3
(4,876) (3,130) (2,133) (599)
Gouvêa Vieira Advogados
4
(21) (51) - -
CMMR Intermediacão Comercial Limitada
5
- (6) - -
Jofran Services
6
- (156) - -
Hansa Capital GMBH
7
- (93) - -
(1) Related party loans with Wilson, Sons Ultratug Participações S.A. (interest – 0.3% per month with no maturity date).
(2) Related party loans with Atlantic Offshore S.A. (with no interest and with no maturity date).
(3) Mr. W H Salomon is chairman of Hanseatic Asset Management LBG. Fees were paid to Hanseatic Asset Management LBG for acting as Investment Manager
of the Group’s investment portfolio.
(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.
(5) Mr. C M Marote, a former Director of Wilson Sons Limited is a shareholder and Director of CMMR. Intermediacão Comercial Limitada. Fees were paid to
CMMR. Intermediacão Comercial Limitada for consultancy services.
(6) Mr. J F Gouvêa Vieira is a Director of Jofran Services. Directors’ fees were paid to Jofran Services.
(7) Mr. C Townsend is a Director of Hansa Capital GmbH. Directors’ fees were paid to Hansa Capital GmbH.
Remuneration of key management personnel
The remuneration of the executive directors and other key management of the Group is as follows:
2021 2020
Short-term employee benefits 6,131 3,877
Post-employment benefits 67 82
Share based payment expense 236 160
6,434 4,119
Ocean Wilsons Holdings Limited 2021 Annual Report90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
25 Share capital
2021 2020
Authorised
50,060,000 ordinary shares of 20p each (2020: 50,060,000 ordinary shares of 20p each) 16,119 16,119
Issued and fully paid
35,363,040 ordinary shares of 20p each (2020: 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$1.61 to £1.
26 Share options in subsidiary
On 8 January 2014, the shareholders of the subsidiary WSL approved a share option plan which allowed for the grant of
options to eligible participants, including an increase in the authorised capital of WSL through the creation of up to 4,410,927
new shares. Following the merger of WSL into WSSA (note 3), the shareholders of the subsidiary WSL approved on 24 June
2021 the migration of the share option plan to WSSA, where the rights and the granted share options were maintained in
accordance with the conditions stipulated in the prior WSL share option plan.
The options provide participants with the right to acquire shares in WSL at a predetermined fixed price, following a vesting
period of 3 to 5 years, and expire 10 years from the grant date, or immediately on the resignation of the employee, whichever
is earlier. Options lapse if not exercised within 6 months of the date that the participant ceases to be employed within the
Group by reason of injury, disability or retirement.
The movement in share options and related weighted average exercise prices in Brazilian Real (R$) is as follows:
2021 2020
Number
of shares
(not rounded) WAEP (R$)
Number
of shares
(not rounded) WAEP (R$)
Opening balance – 1 January 2,213,490 31.96 2,702,540 31.85
Granted during the period 450,000 51.95 - -
Exercised during the period (1,123,850) 31.65 (475,050) 31.23
Expired during the period (14,000) 38.00 (14,000) 33.98
Outstanding at 31 December 1,525,640 38.03 2,213,490 31.96
Exercisable at 31 December 1,047,420 32.02 2,063,500 31.66
91 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
26 Share options in subsidiary (c o n t i n u e d )
The options outstanding as at 31 December 2021 had an exercise price in the range of R$31.23 to R$51.95 (2020: R$31.23
to R$40.33) and a weighted-average contractual life of 4.7 years (2020: 3.5 years). The weighted average share price at
the date of exercise for the year ended 31 December 2021 was R$33.5 (2020: R$45.76).
The fair value of the share options at the grant date was determined using the Binomial model based on the following
assumptions:
Grant date 10 January 2014 13 November 2014 11 August 2016 16 May 2017 9 November 2017
Closing share price (in Real) R$30.05 R$33.50 R$32.15 R$38.00 R$38.01
Expected volatility 28.00% 29.75% 31.56% 31.82% 31.82%
Expected life
10 years 10 years 10 years
10 years 10 years
Risk free rate 10.8% 12.74% 12.03% 10.17% 10.17%
Expected dividend yield 1.7% 4.8% 4.8% 4.8% 4.8%
Expected volatility was determined by calculating the historical volatility of the subsidiary share price. The expected life used in
the model has been adjusted based on management’s best estimate for exercise restrictions and behavioural considerations.
During the year ended 31 December 2021, 1,123,850 share options were exercised (2020: 475,050), resulting in an increase
in non-controlling interest of 0.89% (2020: 0.39%).
27 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 2021 WSSA 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
For the year ended 31 december 2020 WSL Other Total
Net assets attributable to non-controlling interest 187,595 330 187,925
Profit allocated to non-controlling interest 8,230 1,061 9,291
Other comprehensive income allocated to non-controlling interest (21,674) (186) (21,860)
Dividends to non-controlling interest 16,275 1,180 17,455
Ocean Wilsons Holdings Limited 2021 Annual Report92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
28 Dividends
The following dividends were declared and paid by the Company:
2021 2020
70c per share (2020: 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:
2021 2020
70c per share (2020: 70c per share) 24,754 24,754
29 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
2021 2020
Profit for the year attributable to equity holders of the Company 63,687 38,712
Weighted average number of ordinary shares (not rounded) 35,363,040 35,363,040
Earnings per share – basic and diluted 180.1c 109.5c
The Company has no dilutive or potentially dilutive ordinary shares.
30 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 21 and the lease liabilities included in note 16, 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.
93 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
30 Risk management ( c o n t i n u e d )
During the year ended 31 December 2021, the Group assessed and evaluated risks relating to climate change, including
those related to existing and emerging regulatory requirements, as well as other transition and physical risks. The Group’s
process for managing climate related risks is grounded in its emissions monitoring work, which includes greenhouse gas
(GHG) emissions, tide and ocean data, as well as market movements and impacts suffered by clients. 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.
A significant part of the Board’s focus during the year ended 31 December 2021 has been reducing risk exposure and
driving ESG (Environmental Social and Governance Practices) initiatives to have more measurable outcomes and to begin
establishing climate related emissions targets for the Group. This is the first year that the Company will report on its TCFD
disclosures (Taskforce for Climate-related Financial Disclosures) which has driven a more focused approach to the Group’s
risk management framework for monitoring and managing climate related risks. It is the Board’s ambition to ensure that
these risks and related opportunities are examined in depth and across time horizons with clear discussion of strategic
implications and mitigating actions.
31 Financial instruments
Accounting classification and fair value
The classification, carrying value and fair value of financial instruments is as follows:
Classification
2021 2020
Carrying
value
Fair
value
Carrying
value
Fair
value
Financial assets
Trade and other receivables Amortised cost 59,350 59,350 47,807 47,807
Financial assets at fair value through
profit and loss
At fair value through profit and
loss
392,931 392,931 347,464 347,464
Cash and cash equivalents Amortised cost 28,565 28,565 63,255 63,255
Financial liabilities
Trade and other payables Other financial liabilities (58,513) (58,513) (41,066) (41,066)
Bank overdraft and loans Other financial liabilities (301,599) (301,763) (342,661) (344,561)
The carrying value of trade and other receivables, cash and cash equivalents and trade and other payable is a reasonable
approximation of fair value.
The fair value of bank overdraft and 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.
Ocean Wilsons Holdings Limited 2021 Annual Report94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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 as 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 2021
Financial assets at fair value through profit and loss 67,177 196,069 129,685 392,931
Bank overdraft and loans - (301,599) - (301,599)
31 December 2020
Financial assets at fair value through profit and loss 59,224 189,103 99,137 347,464
Bank overdraft and loans - (342,661) - (342,661)
95 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
31 Financial instruments (c o n t i n u e d )
During the year ended 31 December 2021, no financial instruments were transferred between Level 1 and Level 2 (2020:
none). The movement in Level 3 financial instruments for the year is as follows:
2021 2020
Balance at 1 January 99,137 101,263
Transfers from Level 2 to Level 3 77 -
Purchases of investments and drawdowns of financial commitments 15,379 9,485
Sales of investments and repayments of capital (12,992) (9,661)
Realised gains/losses 6,873 (1,196)
Unrealised gains/losses 21,211 (754)
Balance at 31 December 129,685 99,137
Cost 125,983 117,649
Cumulative unrealised gains/losses 3,702 (18,512)
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 at 31 December 2021. The analysis is based on
the assumptions that the proceeds realised will be decreased by 5%, 10% or 20%, with all other variables held constant.
This represents the Directors’ best estimate of a reasonable possible impact that could arise from a disposal due to illiquidity.
Level 3 financial instruments sensitivity 5% scenario 10% scenario 20% scenario
31 December 2021 (6,484) (12,968) (25,936)
31 December 2020 (4,957) (9,914) (19,827)
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.
Ocean Wilsons Holdings Limited 2021 Annual Report96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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, interest of 1% per month plus a 2% 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 calibrate, when appropriate, the matrix to adjust the historical credit losses experience with forward-looking
information. Due to the COVID-19 pandemic, the Group has reviewed the variables that make up the methodology of
measurement of estimated losses. There has been no increase in customer default rate due to the outbreak. 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:
Current 1-30 days 31-90 days 91-180 days
More than
180 days Total
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)
31 December 2020
Expected credit loss rate 0.09% 0.09% 3.30% 12.77% 62.48%
Receivables for services 34,561 4,800 852 197 742 41,152
Allowance for expected credit losses (35) (4) (28) (25) (462) (554)
97 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
31 Financial instruments (c o n t i n u e d )
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 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 sells 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 both monetary and non-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
2021 2020 2021 2020
Real 173,297 160,021 (367,528) (354,244)
Sterling 11,603 11,492 (22) (22)
Swiss Franc 3,305 3,273 - -
Euro
31,549 31,147 -
-
Yen 5,394 5,125 - -
225,148 211,058 (367,550) (354,266)
The Group is primarily exposed to unfavorable movements in the Real on its Brazilian 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.
Ocean Wilsons Holdings Limited 2021 Annual Report98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
Currency
Amount in
US Dollars
Probable
scenario
Possible
scenario
(25%)
Remote
scenario
(50%)
31 December 2021 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
31 December 2020
Exchange rate 5.20 6.50 7.80
Total assets BRL 160,021 (101) (32,085) (53,408)
Total liabilities BRL (354,244) 225 71,029 118,231
Net impact 124 38,944 64,823
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 unfavorable 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 unfavorable movement in the interest rates,
considering three scenarios: a likely scenario (probable), a 25% devaluation scenario (possible) and a 50% devaluation
scenario (remote). The Group uses the Brazilian Central Bank’s “Focus” report to determine the probable scenario.
31 December 2021
Risk Amount
($US)
Probable
scenario
Possible
scenario
(25%)
Remote
scenario
(50%)
Borrowing Brazilian Interbank Interest Rate (31,743) (615) (1,342) (2,053)
Borrowing Brazilian Long-Term Interest Rate (638) - (6) (12)
Borrowing Brazilian National Consumer Prices (51,506) - (1,114) (2,204)
Borrowing N/A (217,712) - - -
Investments Brazilian Interbank Interest Rate 18,626 2,207 4,111 4,089
Net impact 1,592 1,649 (180)
99 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
31 Financial instruments (c o n t i n u e d )
31 December 2020
Risk Amount
($US)
Probable
scenario
Possible
scenario
(25%)
Remote
scenario
(50%)
Borrowing Brazilian Interbank Interest Rate (64,439) (440) (746) (1,050)
Borrowing Brazilian Long-Term Interest Rate (841) - (6) (12)
Borrowing Brazilian National Consumer Prices (55,141) - (415) (825)
Borrowing N/A (222,240) - - -
Investments LIBOR 39,997 - 15 31
Investments Brazilian Interbank Interest Rate 52,995 218 619 1,020
Net impact (222) (533) (836)
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 scenarios represent the difference between the weighted scenario rate
and actual rate.
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.
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 exactly to any Stock Exchange Index as it is invested in a diversified
range of markets. The Investment Manager and the Board monitor the portfolio valuation on a regular basis and consideration
is given to hedging the portfolio against large market movements.
The sensitivity analysis below has been determined based on the exposure to market price risks at the year end and shows
what the impact would be if market prices had been 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 2021 17,481 34,961 69,922
31 December 2020 15,394 30,787 61,574
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.
As at 31 December 2021, 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$174.8 million in North America
(2020: US$132.0 million) and their sector exposure of US$94.6 million in information technology (2020: US$72.2 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.
Ocean Wilsons Holdings Limited 2021 Annual Report100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
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, 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 ensures it has sufficient cash reserves to meet the expected operational expenses, including financial obligations.
This practice excludes the potential impact of extreme circumstances that cannot be reasonably foreseen except for those
taken this year and in prior year in response to COVID-19 liquidity management.
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 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
77,419 231,992 447,284 756,695
31 December 2020
Variable interest rate instruments 2.78% 35,923 61,088 42,972 139,983
Fixed interest rate instruments 2.75% 31,136 100,087 131,858 263,081
Lease liability 8.77% 19,153 66,718 292,766 378,637
86,212 227,893 467,596 781,701
The Group expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
During the year ended 31 December 2020, the Brazilian National Economic and Social Development Bank (BNDES) granted
Wilson Sons eligibility for the COVID-19 “Standstill Agreement”. This allowed for the postponement of principal and interest
payments that occurred between May and October 2020, a payment deferment of approximately US$10.3 million for the
Group and US$9.9 million for the Company’s 50% share in the offshore support vessel joint venture. Loan repayments are
to be made according to the remaining terms of the contracts included in the scheme.
During the year ended 31 December 2021, the Company signed a second five-month standstill to defer approximately US$7.5
million for the Group and US$8.9 million for the Company’s 50% share in the offshore support vessel joint venture between
January 2021 and May 2021. Principal and interest payments resumed as scheduled in June 2021.
Additionally, during the last quarter of the year ended 31 December 2020, the Company signed a COVID-19 related “Standstill
Agreement” with the Banco do Brazil delaying repayment of approximately US$3.7 million for the Group and US$1.9 million
for the Company’s 50% share in the offshore support vessel joint venture. Principal and interest payments resumed as
scheduled in the year ended 31 December 2021.
Limitations of sensitivity analysis
The sensitivity information included in note 31 demonstrates the estimated impact of a change in a major input assumption
while other assumptions remain unchanged. In reality, there are normally significant levels of correlation between the
assumptions and other factors.
101 SECTION FIVE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
32 Subsequent events
On 24 February 2022, Russia invaded Ukraine, and the ongoing military attack has led multiple states including the UK, the EU
and the United States to impose economic sanctions on Russia. The conflict continues to evolve as military activity proceeds
and additional sanctions are imposed. The Company is still assessing the full impact on its operations and investments,
but it is clear that this conflict is increasingly affecting the global economy and financial markets and exacerbating ongoing
economic challenges, including issues such as rising inflation, rising commodity prices and global supply-chain disruption.
The Company considers this event as a non-adjusting post year end event which has no impact on the carrying value of its
assets and liabilities as at 31 December 2021.
In March 2022, the Company wrote down the full value of its investment in Prosperity Quest Fund, a Russia-focused
equity fund, following the issue of an investor notice announcing the suspension of its net asset valuation, subscriptions
and redemptions. As at 31 December 2021, Prosperity Quest Fund was a Level 3 investment valued at US$4.1 million and
included within financial assets at fair value through profit and loss on the consolidated statement of financial position.
Ocean Wilsons Holdings Limited 2021 Annual Report102
STATISTICAL STATEMENT (UNAUDITED)
For the year ended 31 December 2021 (Expressed in thousands of US Dollars)
2021 2020 2019 2018 2017
INCOME STATEMENT
Sales of services 396,376 352,792 406,128 460,196 496,340
Raw materials and consumables used (24,036) (19,266) (25,290) (38,128) (37,679)
Employee charges and benefits expense (112,026) (110,016) (140,348) (146,327) (166,395)
Other operating expenses (98,289) (84,666) (89,207) (117,025) (119,600)
Depreciation & amortisation expense (61,412) (61,323) (66,122) (56,178) (57,481)
Impairment charge - - (13,025) - -
(Loss)/gain on disposal of property, plant and
equipment and intangible assets (499) 65 294 (296) (2,930)
Foreign exchange (loss)/gain on monetary items (3,100) (7,551) (79) (8,459) 2,750
Operating profit
97,014 70,035 72,351 93,783 115,005
Share of results of joint ventures (5,029) (4,142) 564 (4,062) 3,366
Returns on investment portfolio at fair value
through profit or loss
49,474 33,383 34,716 (7,942) 42,064
Investment portfolio performance and
management fees
(4,954) (3,130) (3,417) (2,742) (2,710)
Other investment income 4,113 1,644 6,052 4,152 9,715
Finance costs (30,227) (23,210) (27,736) (22,951) (21,976)
Profit before tax
110,391 74,580 82,530 60,238 145,464
Tax expense (27,925) (26,577) (21,481) (26,433) (36,056)
Profit for the year 82,466 48,003 61,049 33,805 109,408
Profit for the year attributable to:
Equity holders of the Company 63,687 38,712 46,852 13,308 78,315
Non-controlling interests 18,779 9,291 14,197 20,497 31,093
82,466 48,003 61,049 33,805 109,408
Statement of financial position
Non-current assets 861,824 861,093 981,011 773,521 818,714
Current assets 518,523 492,769 460,616 438,928 501,240
Total assets 1,380,347 1,353,862 1,441,627 1,212,449 1,319,954
Current liabilities (131,306) (124,276) (115,678) (119,036) (123,908)
Non-current liabilities (465,369) (485,879) (540,089) (315,704) (371,986)
Total liabilities (596,675) (610,155) (655,767) (434,740) (495,894)
Net assets 783,672 743,707 785,860 777,709 824,060
Key Statistics
Earnings per share (US$) 180.1c 109.5c 132.5c 37.6c 221.5c
Cash dividends per share paid (US$) 70.0c 70.0c 70c 70c 63c
Book value per share (US$) 22.16 21.03 22.22 21.99 23.30
Mid-market quotation at end of period £9.32 £8.45 £9.90 £11.70 £10.95
Mid-market quotation at end of period in (US$) $12.62 $11.55 $13.13 $14.92 $14.79
103 SECTION FIVE
Bermuda Office
mailing address: office address:
PO Box HM 2250 Richmond House – 5th Floor
Hamilton HM JX 12 Par-la-Ville Road
Bermuda Hamilton HM 12
Bermuda
Registered Office
mailing address: office address:
PO Box HM 2250 Clarendon House
Hamilton HM JX 2 Church Street
Bermuda Hamilton HM 11
Bermuda
Registrars
Conyers Corporate Services (Bermuda) Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
UK Transfer Agent and Ocean Wilsons Dividend Address
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Auditor
KPMG Audit Limited
Crown House
4 Par-la-ville Road
Hamilton HM 12
Bermuda
Investment Manager
Hanseatic Asset Management LBG
Le Truchot,
Guernsey GY1 1WD
Channel Islands
Switzerland
Brokers
Peel Hunt
100 Liverpool Street
London
EC2M 2AT
UK
DIRECTORY
Ocean Wilsons Holdings Limited 2021 Annual Report104
Notice is hereby given that the 29th Annual General Meeting of the Company will be held at the offices of Conyers Dill
& Pearman Limited, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda on 26 May 2022 at 8:30 am for the
following purposes.
1 To appoint a chairperson of the meeting.
2 To confirm notice.
3 To receive and, if approved, adopt the Directors’ Report and Accounts for the year ended 31 December 2021.
4 To declare a dividend of 70 cents per share.
5 To determine the maximum number of Directors for the ensuing year as nine and to authorise the Board of Directors
to fill any vacancy in their number left unfilled for any reason to serve until the conclusion of the next Annual
General Meeting.
6 To re-elect Mr. William Salomon as a Director until the next Annual General Meeting.
7 To re-elect Mr. Andrey Berzins as a Director until the next Annual General Meeting.
8 To re-elect Mr. Christopher Townsend as a Director until the next Annual General Meeting.
9 To re-elect Ms. Fiona Beck as a Director until the next Annual General Meeting.
10 To re-elect Ms. Caroline Foulger as a Director until the next Annual General Meeting.
11 To re-appoint KPMG Audit Limited as the Auditor and to authorise the Directors to determine the remuneration of
the Auditor.
12 Ratification and confirmation of all and any actions taken by the Board of Directors and the persons entrusted with
Company’s management in the year ended 31 December 2021.
By Order of the Board
Fergus McAleavey
Company Secretary
Clarendon House, Church Street, Hamilton HM 11, Bermuda
23 March 2022
Any member of the Company entitled to attend and vote at the meeting may appoint one or more proxies to attend and
vote instead of him. A proxy need not be a member of the Company.
NOTICE OF ANNUAL GENERAL MEETING
105
FORM OF PROXY
* I / We
* of
being a Member of Ocean Wilsons Holdings Limited, hereby appoint Mr. J. F. Gouvêa Vieira, or failing him any Director of the Com-
pany as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the company to be held on 26 May
2022 and at any adjournment thereof. The proxy will vote on the Resolutions as indicated opposite.
Or
as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on
26 May 2022 and at any adjournment thereof. The proxy will vote on the Resolutions as indicated opposite.
FOR AGAINST WITHHELD
1
To receive and, if approved, adopt the Directors’ Report and Accounts for the year
ended 31 December 2021.
2
To declare a dividend of 70 cents per share.
3
To determine the maximum number of Directors for the ensuing year as nine and
authorise the Board of Directors to elect or appoint on the Members’ behalf a person
or persons to act as additional Directors up to such maximum number to serve until
the conclusion of the next Annual General Meeting.
4
To re-elect Mr. W. Salomon as a Director until the next Annual General Meeting.
5
To re-elect Mr. A. Berzins as a Director until the next Annual General Meeting.
6
To re-elect Mr. C. Townsend as a Director until the next Annual General Meeting.
7
To re-elect Ms. F Beck as a Director until the next Annual General Meeting.
8
To re-elect Ms. C. Foulger as a Director until the next Annual General Meeting.
9
To re-appoint KPMG Audit Limited as the Auditor and authorise the Directors to fix
the remuneration of the Auditor.
10
Ratification and confirmation of all and any actions taken by the Board of Directors
and the persons entrusted with Company’s management in the year ended 31
December 2021.
Signature Dated 2022
Notes
(1) If any other proxy is preferred, delete the names inserted above and add the name of the proxy whom you wish to appoint, and initial the alteration.
(2) Please indicate by a cross in the appropriate box how you wish your proxy to vote. If no indication is given your proxy will abstain or vote as he/she
thinks fit.
(3) To be valid, the proxy should be deposited at the Transfer Agents of the Company, Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1
4DL, no less than 48 hours before the time for the Meeting.
(4) In the case of a corporation, this proxy must be under its Common Seal or under that of an Officer or Attorney duly authorised in writing.
(5) In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the
other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members, in respect of the
joint holding.
* Please insert your full name and address in BLOCK CAPITALS.
Ocean Wilsons Holdings Limited 2021 Annual Report106
107
