Company Announcements

Notes to the Consolidated Financial Statements

For the year ended 31 December 2021

(Expressed in thousands of US Dollars)

 

1       General Information

Ocean Wilsons Holdings Limited ("Ocean Wilsons" or the "Company") is a Bermuda investment holding company which, through its subsidiaries, operates a maritime services company in Brazil and holds a portfolio of international investments. The Company is incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991. The Company's registered office is Clarendon House, 2 Church Street, Hamilton, Bermuda. These consolidated financial statements comprise the Company and its subsidiaries (the "Group").

These consolidated financial statements were approved by the Board 23 March 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.

 

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.

Defined contribution plan

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

Defined health benefit plans

The Group's net obligation regarding defined health benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees receive in return for their service in the current period and prior periods. That health benefit is discounted to determine its present value.

The calculation of the liability of the defined health benefit plan is performed annually by a qualified actuary using the projected unit credit method. Remeasurements of the net defined health benefit obligation, which include actuarial gains and losses, are immediately recognised in other comprehensive income.

The Group determines the net interest expense on the net defined benefit liabilities for the period by multiplying them by the discount rate used to measure the defined health benefit obligations. Defined health benefit liabilities for the period take into account any changes during the period due to the payment of contributions and benefits. Net interest and other expenses related to defined health benefit plans are recognised in profit or loss.

When the benefits of a health plan are changed, the portion of the change in benefits relating to past services rendered by employees is recognised immediately in profit or loss. The Group recognised gains and losses on the settlement of a defined health benefit plan when settlement occurs.

Termination benefits

Termination benefits are recognised as an expense when the Group can no longer withdraw the offer of such benefits. If payments are settled after 12 months from the reporting date, then they are discounted to their present values.

Finance income and finance costs

The Group's finance income and finance costs include interest income, interest expense and the net gain or loss on the disposal on financial assets at fair value through profit or loss. Interest income or expense is recognised in profit or loss using the effective interest method.

Taxation

Tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income, in which case the tax is also recognised directly in equity or in other comprehensive income.

Current tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of profit or loss and other comprehensive income because it excludes or includes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's current tax expense is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is generally recognised for all taxable temporary differences except for when the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefit will be realised. Prior reductions are reversed when the probability of future taxable profits improves.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is recognised, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities

The Company offsets current tax assets against current tax liabilities when these items are in the same entity and relate to taxes levied by the same taxation authority and the taxation authority permits the Company to make or receive a single net payment.

Financial instruments

Recognition and initial measurement

Trade and other receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instruments. Trade and other receivables are initially measured at the transaction price which reflects fair value. All other financial assets and financial liabilities are initially measured at fair value plus transaction costs that are directly attributable to their acquisition or issue.

Classification and subsequent measurement

Management determines the classification of its financial instruments at the time of initial recognition. The classification depends on the purpose for which the financial instruments were acquired or issued, their characteristics and the Group's designation of such instruments.

Financial assets

A financial asset is classified as measured at amortised cost if it is not designated as at fair value through profit and loss and if it is held within a business model whose objective is to hold assets to collect contractual cash flows and if its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. These assets are subsequently measured at amortised cost using the effective interest method, reduced by any impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

A financial asset is classified as measured at fair value through other comprehensive income if it is not designated as at fair value through profit and loss and if it is held within a business model whose objective is to both hold assets to collect contractual cash flows and to sell financial assets, and if its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, dividends, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

A financial asset is classified as measured at fair value through profit and loss if it is not classified as measured at amortised cost or at fair value through other comprehensive income, or if it is designated as such by management on initial recognition. Financial assets held for trading are classified as measured at fair value through profit and loss. These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes the stated policies and objectives for the portfolio, how the performance of the portfolio is evaluated and reported to the Group's management and the risks that affect the performance of the business model and how those risks are managed. In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument, including assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

 

Financial liabilities

Financial liabilities are classified as at fair value through profit and loss when the financial liability is either held for trading or it is designated as such by management on initial recognition. These liabilities are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.

Financial liabilities that are not classified as at fair value through profit and loss are classified as other financial liabilities and are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

The following summarises the classification the Group applies to each of its significant categories of financial instruments:

Category	Classification
Trade and other receivables	Amortised cost
Financial assets at fair value through profit and loss	At fair value through profit and loss
Cash and cash equivalents	Amortised cost
Trade and other payables	Other financial liabilities
Bank 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 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 the commencement date using the interest rate implicit in the lease, or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group applies the incremental borrowing rate. For a portfolio of leases with similar characteristics, lease liabilities are discounted using a single discount rate.

Lease payments included in the measurement of the lease liability comprises fixed payments, variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee, and payments arising from options reasonably certain to be exercised. Variable lease payments not related to an index or rate are recognised in profit or loss as incurred.

Right-of-use assets are depreciated using the straight-line method, from the lease commencement date to the earlier of the end of their useful life or the end of the lease term, over their expected useful lives, on the same basis as owned assets except when there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, in which case the right-of-use asset shall be fully depreciated over the shorter of the lease term and its useful life. Right-of-use assets are reduced by impairment losses, if any, and adjusted for remeasurements of the lease liability.

Subsequent to the initial measurement, the carrying amount of the liability is reduced to reflect the lease payments made and increased to reflect the interest payable. If there is a change in the expected cash flows arising from and index or rate, the lease liability is recalculated. If the modification is related to a change in the amounts to be paid, the discount rate is not revised. Otherwise, if a modification is made to a lease, the Group revises the discount rate as if a new lease arrangement had been made.

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 

Intangible assets

Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Subsequent expenditure is recognised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group.

Amortisation is calculated to write off the cost less the estimated residual values of intangible assets, using the straight-line method. Amortisation is recognised in profit or loss.

The estimated useful life of the different category of intangible assets are as follows:

Concession rights:	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 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.

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

 

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:

	Place of incorporation		Ownership interest
Subsidiaries	and operation	Segment	2021	2020
Investments
Ocean Wilsons (Investments) Limited	Bermuda	Investment	100%	100%
Holding company
Wilson Sons Limited1	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.A2	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.

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)

 

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)

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).

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.

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)

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%

 

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)

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)

 

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

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

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	Proportion of ownership
	and operation	2021	2020
Towage
Consórcio de Rebocadores Baia de São Marcos1	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

 

	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	Proportion of ownership
	and operation	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)

 

	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).

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).

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.

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

 

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 liabilities1	(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.

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

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. 

(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.

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:

				2021		2020
Lender	Currency	Annual interest rate %	Year of maturity	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

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.

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)

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.

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 LBG3	(4,876)	(3,130)	(2,133)	(599)
Gouvêa Vieira Advogados4	(21)	(51)	-	-
CMMR Intermediacão Comercial Limitada5	-	(6)	-	-
Jofran Services6	-	(156)	-	-
Hansa Capital GMBH7	-	(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
Total	6,434	4,119

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 grated 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

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

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. 

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:

		2021		2020
	Classification	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.

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)

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.

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)

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.

	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			Probable	Possible	Remote
	Risk	Amount ($US)	scenario	scenario (25%)	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)

 

31 December 2020			Probable	Possible	Remote
	Risk	Amount ($US)	scenario	scenario (25%)	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.

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.

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.

 

Enquiries:

 

Company Contact:
Leslie Rans, CPA	1 (441) 295 1309
Media:
David Haggie Haggie Partners LLP	020 7562 4444
Brokers:
Peel Hunt Edward Allsopp/Charles Batten Investment Banking	020 7418 8900