Interim Statement
Highlights
· |
Solid first half performance for both Ocean Wilsons Investments Limited (“OWIL” or “investment portfolio”) and Wilson Sons Limited. OWIL's net return for the six months ended 30 June 2021 was 9.0%, outperforming the benchmark by 3.3%. Operational indicators from Wilson Sons are on a positive trajectory as the Brazilian market starts its rebound from the impact of Covid-19 on imports and exports. |
· |
Operating profit for the period was 83.0% higher than the comparable period at US$50.7 million (2020: US$27.7 million). |
· |
OWIL returned US$29.5 million for the period (2020: US$13.8 million loss); assets and cash under management was US$25.0 million higher at US$335.9 million compared to 31 December 2020 (US$310.9 million). |
· |
Net profit after tax for the period was US$51.8 million (2020: US$18.4 million loss). |
· |
Net cash inflow from operating activities for the period of US$41.6 million (2020: US$68.5 million). |
· |
Dividends paid to shareholders in the period of US$24.8 million (2020: US$10.6 million). |
About Ocean Wilsons Holdings Limited
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 listed on both the London Stock Exchange and the Bermuda Stock Exchange. It has two principal subsidiaries: Wilson Sons Limited (“Wilson Sons”) and Ocean Wilsons (Investments) Limited (together with the Company and their subsidiaries, the “Group”).
At 30 June 2021 Ocean Wilsons holds a 57% interest in Wilson Sons which is fully consolidated in the Group accounts with a 43% non-controlling interest. Wilson Sons is one of the largest providers of maritime services in Brazil with over three thousand employees and activities including towage, container terminals, offshore oil and gas support services, small vessel construction, logistics and ship agency.
Objective
Ocean Wilsons focuses on long-term performance and value creation. This approach applies to both OWIL and our investment in Wilson Sons. The long-term strategy, managed by the Board, enables Wilson Sons' investments to grow and develop sustainable results with less pressure to produce short-term performance at the expense of longer-term value creation. This same view allows the Investment Manager of OWIL to make investment decisions to achieve long-term capital growth.
Chairman's Statement
The Group has delivered a strong financial performance with its returns on the investment portfolio and has demonstrated both operational and financial resilience with its direct investment in Wilson Sons. Against the backdrop of continuing challenges and the recovery from the impacts of Covid-19 on our investments, the Board is pleased with the Investment Manager's performance and with the Management team of Wilson Sons continued focus on growth and innovation and their commitment to ensuring the welfare of our employees and on continuity of services to our customers
We continue to drive strategies that we consider will improve the current trading discount of our stock and improve market valuations of our investment in Wilson Sons to match its industry peers in Brazil. As such, in May of this year, we announced that Wilson Sons would undertake a corporate restructuring that includes the reverse merger of the Bermuda-registered Wilson Sons , into its Brazilian subsidiary, Wilson Sons Holdings Brasil (WS S/A), and the listing of its shares on the Novo Mercado, with former shareholders and holders of Wilson Sons BDRs receiving shares of WS S/A on a 1:1 basis . Since Wilson Sons' announcement of this restructuring, Wilson Sons' share price has increased 25% as at 31 July 2021
COVID-19
Wilson Sons provides port and maritime logistics services which is classified as essential activities by the Brazilian government limiting the negative effects of COVID-19 on the company's results up to this time. The company does not predict any material impact on its long-term performance as the global economy is expected to gradually recover in the coming years.
Regarding the progress of vaccination, government authorities prioritized the vaccination of port workers throughout the country. As such, we expect to have more than 90% of employees vaccinated by September 2021.
Environmental, Social and Governance Practices (“ESG”)
The Group continues to evolve and seek improvements in its ESG practices. In 2021 Wilson Sons is participating in the S&P ESG Corporate Sustainability Assessment with results to be disclosed at year end.
In response to the Covid-19 pandemic, Wilson Sons has developed a detailed set of working practices and protocols to ensure (i) the health, safety and well-being of our employees, clients and other stakeholders and (ii) the continuity of all our operations safely, in line with best practice, as well as health authority rules and guidance.
Workplace safety improvement reflects our relentless commitment to safety, with a reduction of 83% in lost-time injuries per one million man-hours worked between 2011 and the first half of 2021.
Wilson Sons continues to monitor its performance through various environmental and other social responsibility indicators with a number of actions and results disclosed in the Integrated Annual Report and the Bloomberg ESG Survey published on the company's investor relations website ( wilsonsons.com.br/ir ).
OWIL Report
Market backdrop
The past six months proved to be another positive one for stock markets. Risk assets generally continued their upward march with world equities rising by 12.3% in US dollar terms. Confounding many commentators who had expected 2021 to be less good for US equities given the market's bias towards technology and growth stocks, the US market continued to outperform and returned just under 15% for the first half of the year. Elsewhere, Europe returned 11.8% year-to-date and emerging markets a more modest 7.4% albeit with significant variation at the country level with China barely positive for the year (+1.8%) compared to +10% and +19.7% for Brazil and Russia respectively.
Bonds had a more difficult period with global treasuries down 4.6%, investment grade bonds down 1.7% while high yield bonds were up 2.1%. Similarly, US treasuries declined by 2.6% and emerging market bonds were down 1% in USD terms. Rounding-off the picture commodities delivered mixed returns with energy continuing its strong run (up 28.7% year-to-date) and industrial metals lagged although was positive while gold declined 6.8% in the first half of the year.
Portfolio commentary
While most economies started the period in lockdown, equity markets chose to look through this predicting a wave of activity as economies reopened and vaccination rates crept up. This was initially expressed by a swing towards more cyclical names further boosted by higher oil prices. However, towards the end of the period the uncertainty, and delay in some cases, of the reopening process gave markets the jitters leading to a move back to higher quality, growth stocks which led to strong performance for our active managers later in the period. The investment portfolio was up 9.5% in the first half of the year, whilst its benchmark, the US CPI Urban Consumers NSA + 3%, returned 5.7% over the same period. The MSCI ACWI gained 12.3% while the Bloomberg Barclays Global Treasury index fell by 4.5%.
Cumulative Portfolio Returns
|
|
|
|
|
|
3 Years |
5 Years |
Performance (Time-weighted) |
YTD |
p.a. |
p.a. |
OWIL (net) |
9.0% |
8.8% |
9.1% |
Performance Benchmark* |
5.7% |
5.5% |
5.4% |
MSCI ACWI + FM |
12.3% |
14.5% |
14.6% |
MSCI Emerging Markets |
7.4% |
11.3% |
13.9% |
*Notes:
The OWIL Performance Benchmark which came into effect on 1 January 2015 is US CPI Urban Consumers NSA +3% p.a. This has been combined with the old benchmark (USD 12 Month LIBOR +2%) for periods prior to the adoption of the new benchmark.
Investment Portfolio at 30 June 2021
|
Market Value |
|
|
|
US$000 |
% |
Primary Focus |
Findlay Park American Fund |
35,390 |
10.5 |
US Equities – Long Only |
Adelphi European Select Equity Fund |
18,216 |
5.4 |
Europe Equities – Long Only |
BlackRock European Hedge Fund |
15,887 |
4.7 |
Europe Equities – Hedge |
GAM Star Fund PLC – Disruptive Growth |
15,843 |
4.7 |
Technology Equities – Long Only |
Egerton Long – Short Fund Limited |
15,522 |
4.6 |
Europe/US Equities – Hedge |
Select Equity Offshore, Ltd |
13,251 |
3.9 |
US Equities – Long Only |
Vulcan Value Equity Fund |
13,197 |
3.9 |
US Equities – Long Only |
Schroder ISF Asian Total Return Fund |
10,202 |
3.0 |
Asia ex-Japan Equities – Long Only |
Greenspring Global Partners VI, LP |
7,987 |
2.4 |
Private Assets – US Venture Capital |
Goodhart Partners: Hanjo Fund |
7,924 |
2.4 |
Japan Equities – Long Only |
Top 10 Holdings |
153,419 |
45.7 |
|
NG Capital Partners II, LP |
7,027 |
2.1 |
Private Assets – Latin America |
NTAsian Discovery Fund |
6,923 |
2.1 |
Asia ex-Japan Equities – Long Only |
Pangaea II, LP |
6,405 |
1.9 |
Private Assets – GEM |
Hudson Bay International Fund Ltd |
6,159 |
1.8 |
Market Neutral – Multi-Strategy |
Pershing Square Holdings Ltd |
6,055 |
1.8 |
US Equities – Long Only |
Silver Lake Partners IV, LP |
5,479 |
1.6 |
Private Assets – Global Technology |
Impax Environmental Markets Fund |
5,448 |
1.6 |
Environmental Equities – Long Only |
Prince Street Opportunities Fund |
5,357 |
1.6 |
Emerging Markets Equities – Long Only |
Indus Japan Long Only Fund |
5,345 |
1.6 |
Japan Equities – Long Only |
KKR Americas XII, LP |
5,326 |
1.6 |
Private Assets – North America |
Top 20 Holdings |
212,943 |
63.4 |
|
Remaining Holdings |
121,300 |
36.1 |
|
Cash |
1,670 |
0.5 |
|
TOTAL |
335,913 |
100.0 |