Ocean Wilsons Holdings Limited
Preliminary results for the year ended 31 December 2021
Ocean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) today announces its preliminary results for the year ended 31 December 2021.
COMPANY HIGHLIGHTS
About Ocean Wilsons Holdings Limited
Ocean Wilsons Holdings Limited (“Ocean Wilsons” or the “Company”) is a Bermuda holding company which, through its subsidiaries, holds a portfolio of international investments and operates a maritime services company in Brazil. The Company is a premium listed entity on the London Stock Exchange and is also listed on the Bermuda Stock Exchange.
It has two principal subsidiaries: Ocean Wilsons (Investments) Limited (“OWIL”) and Wilson Sons Holdings Brasil S.A. (“Wilson Sons”) (together with the Company and their subsidiaries, the “Group”). OWIL is a wholly owned Bermuda investment company. The Company owns 57% of Wilson Sons which is fully consolidated in the accounts with a 43% non-controlling interest. Wilson Sons is one of the largest providers of maritime services in Brazil with activities including towage, container terminals, offshore oil and gas support services, small vessel construction, logistics and ship agency.
Objective
Ocean Wilsons focuses on long-term performance and value creation. This approach applies to both the investment portfolio and our investment in Wilson Sons. This longer-term view of the Board directs an OWIL investment strategy whereby investments are made in a balanced thematic portfolio of funds leveraging our long-standing investment market relationships and through detailed insights and analysis. The Wilson Sons maritime logistic services investment strategy focuses on providing best in class innovative solutions in a rapidly growing market.
2021 Data Highlights
|
Key Data as at 31 December (In US$ millions) |
2021 |
2020 |
Change |
|
Profit after tax |
$82.5 |
$48.0 |
71.9% |
|
Operating Profit |
$97.0 |
$70.0 |
38.6% |
|
Revenue |
$396.4 |
$352.8 |
12.4% |
|
Net cash inflow from operating activities |
$106.1 |
$105.7 |
0.4% |
|
Investment portfolio assets including cash and cash equivalents |
$351.8 |
$310.9 |
13.2% |
|
Net assets |
$783.7 |
$743.7 |
5.4% |
|
Debt net of cash and cash equivalents |
$440.9 |
$437.3 |
0.8% |
|
Share Data as at 31 December |
2021 |
2020 |
Change |
|
Earnings per share |
US 180.1 cents |
US 109.5 cents |
64.5% |
|
Proposed dividend/Actual dividend per share |
US 70 cents |
US 70 cents |
– |
|
Share discount |
41.6% |
39.2% |
2.4% |
|
Implied net asset value per share |
GBP 15.95 |
GBP 13.89 |
14.8% |
|
Share price |
GBP 9.32 |
GBP 8.45 |
10.3% |
|
Profit Analysis as at 31 December (In US$ millions) |
2021 |
2020 |
Change |
|
Investment Portfolio Net Return |
$44.5 |
$30.3 |
46.9% |
|
Maritime Services Net Profit |
$41.4 |
$20.6 |
101.0% |
|
Investment Portfolio as a % of Net Profit |
53.9% |
63.1% |
(9.2%) |
|
Maritime Services as a % of Net Profit |
50.2% |
42.9% |
7.3% |
STRATEGIC REPORT
Chairman's Statement
As we continue to find a balance between getting back to pre-pandemic business operations, minimizing the challenges that “living with Covid” pose, and now considering the potential impacts of the Russia/Ukraine war on both our operations and investments; we find ourselves challenging how we operate, rationalizing our investment strategies and ensuring that we address any issues related to Russian sanctions. When navigating our day-to-day operations, we seek opportunities to grow and protect our investments, drive innovation, address sustainability and minimize risks in the face of geo-political conflict.
A significant part of the Board's focus during the year was given to supporting Wilson Sons' new listing on the Novo Mercado on the Sao Paulo Stock Exchange and analysing OWIL's legacy private equity holdings to rationalize the current investment portfolio while seeking to maximize the potential returns on these holdings. At the same time, we have been reducing risk exposure and driving ESG initiatives with Wilson Sons to have more measurable outcomes and to begin to establish climate related emissions targets for the Group. This is the first year that the Company will report on its TCFD disclosures (Taskforce for Climate-related Financial Disclosures) which has driven a more focused approach to the Group's risk management framework for monitoring and managing climate related risks. It is our ambition to ensure that these risks and related opportunities are examined in depth and across time horizons with clear discussion of strategic implications and mitigating actions.
The Group's financial results are moving back to pre-pandemic performance levels. Driven by the success of the investment portfolio in rising equity markets, the portfolio assets (including cash and cash equivalents) increased 13.2% to US$351.8 million (2020: US$310.9 million) and outperformed the benchmark.
Wilson Sons reported better than expected revenues of US$396.4 million, close to comparable 2019 revenues of US$406.1 million, against a global shipping industry backdrop of container shortages, supply chain challenges, clogged shipping ports and changing demands in the mix of consumer goods generated.
Key performance indicators of the Wilson Sons' main revenue generating activities, the container terminals, towage and offshore vessels businesses improved year over year:
|
Operating volumes |
2021 |
2020 |
% Change |
|
Container Terminals (container movements in TEU '000s) * |
1,042.3 |
1,017.6 |
2.4% |
|
Towage (number of harbour manoeuvres performed) |
54,839 |
52,873 |
3.7% |
|
Offshore Vessels (days in operation) |
5,400 |
5,356 |
0.8% |
* TEUs stands for “twenty-foot equivalent units”.
Results
Encouragingly, profit for the year at US$82.5 million was US$34.5 million better than the prior year (2020: US$48.0 million) primarily due to the returns on the investment portfolio and significant improvement in Wilson Sons' revenues with increased activity over the prior year.
Operating profit at US$97.0 million (2020: US$70.0 million) improved by US$27.0 million, and total comprehensive income was US$75.3 million, US$78.8 million better than prior year (2020: loss US$3.5 million) driven in part by reduced foreign exchange losses. Operating expenses generally increased in correlation with increased operating revenues at Wilson Sons as business activities return to normalized levels.
The investment portfolio delivered a net return basis 14.5% and outperformed the benchmark (10.0%) by 4.5%. The portfolio including cash increased US$43.0 million to US$351.8 million (2020: US$308.8 million). OWIL paid dividends of US$5.0 million to Ocean Wilsons Holdings Limited and paid the Investment Manager management fees of US$3.3 million (2020: US$2.8 million) and performance fees of US$1.6 million (2020: US$0.3 million).
Over the three-year period ended 31 December 2021, the portfolio produced a time-weighted net return of 12.5% per annum compared with the three-year period performance benchmark of 6.5% per annum.
At the close of markets on 31 December 2021, the Wilson Sons' share price was R$55.68 (US$9.99), resulting in a market value for the Ocean Wilsons holding of 41,444,000 shares (56.88% of Wilson Sons) of US$414.2 million, the equivalent of US$11.71 (£8.65) per Ocean Wilsons share.
The market value per share at 31 December 2021 was US$11.71 for Wilsons Sons and US$9.88 (£7.30) for the investment portfolio. The net asset value per Ocean Wilsons Holdings Limited share was US$22.16 (£16.37). The Ocean Wilsons Holdings Limited share price was £9.32 at 31 December 2021.
Earnings per share for the year were US 180.1 cents compared with US 109.5 cents in 2020.
The Financial Report provides further details in relation to the performance of the Group.
Environmental Social and Governance Practices (ESG)
Ocean Wilsons is committed to a responsible investing policy and operating practices within its subsidiaries. Ocean Wilsons is in a unique position, relating to ESG, as a holding company of two varied investments
Although our investments are managed by an external investment manager, we do expect the investments in our portfolio to take ESG issues seriously, to clearly report on them and to aspire to do the right thing. As part of the Company's continued evolution of its ESG practices, the Board is working with the Investment Manager Hanseatic Asset Management LBG (“HAML”) and its Sub-advisor Hansa Capital Partners LLP (“HCP”), collectively the HAML Group, such that they are working towards becoming a signatory in 2022 for the internationally recognized United Nations' Principles for Responsible Investment (“UN PRI”) to demonstrate their and our commitment to responsible investment.
At Wilson Sons, it is recognized that continued evolution of the maritime port sector is necessary for the coming years. The combination of the exponential advances in the application of technologies in ports and vessels with the growing demand for the sector to become increasingly sustainable will significantly affect the business dynamics in the industry. Wilson Sons monitors these industry trends to seek opportunities to participate in this transformation and take value from it. We believe that innovation and ESG are intrinsically connected, so that many of the solutions we apply to our current or potential businesses must involve aspects of emissions reduction, inclusion, and positive social impact. ESG is an intrinsic part of our innovative business analysis and selection criteria.
Corporate Governance
The Board has established corporate governance arrangements which are appropriate for the operation of the Company. The Board has considered the principles and recommendations of the 2018 UK Corporate Governance Code (“the Code”) issued by the Financial Reporting Council applying those aspects which are appropriate to the business. The limited areas where the Company does not comply with the Code, and an explanation of why, are contained in the section on Corporate Governance in the Annual Report. The position is regularly reviewed and monitored by the Board.
Outlook
Our outlook in the earlier part of 2022 would have discussed the ongoing supply-chain challenges triggered by Covid-19, global container shortages and inflationary concerns. These are still factors; however, we now must consider the geo-political uncertainties and global economic impacts stemming from the Russian invasion of Ukraine. We initially expected global economic growth to be more moderate in 2022 following the very strong recovery in 2021 and this is still our general view, albeit with a more cautious lens.
As a result of the Ukrainian conflict and the ensuing economic sanctions on Russia, significant pressure has been put on markets especially commodity markets, further impacting inflation and interest rates, the full extent and market reach of these impacts is still to be fully realized. The portfolio's exposure to Russian linked investments is less than 1.4% at the time of writing and reduced to zero at the end of Q1. Further, we are ensuring that the funds we invest in are, and remain, compliant with sanctions being imposed on Russia. We continue to be alert and cautious in our approach to minimize overreaction and maintain our disciplined approach to focus on the portfolio's objective of long-term sustainable capital growth.
The outlook in Brazil for 2022 remains cautious when considering the impacts of the war in Ukraine on world trade and the upcoming presidential elections which creates a scenario of economic uncertainty. While it is expected that pressures on our container terminal business will continue, we are expecting stronger results in the towage and a move towards recovery of maritime services to the oil and gas industry.
I am pleased to report that Wilson Sons' strategy to maximise its economies of scale to improve operating efficiencies has placed its ports in Salvador and Rio Grande as the most efficient in Brazil according to the rankings of the Global Container Port Performance Index released by the World Bank. Wilson Sons' ports were the only Brazilian ports to appear among the top 50 ports in the world. Additionally, Ocean Wilsons' stock became part of the FTSE All-Share Index on 21 March 2022, which is expected to improve the liquidity of our stock.
Passing the Torch
23 years have passed since I took office as the Chairman of Ocean Wilsons Board of Directors. At the forthcoming Annual General Meeting, I will be retiring from the Board. I would like to take this opportunity to express my sincere thanks to our valued shareholders, for the ongoing support and confidence you have given to me over the years. It was a great honour for me to serve and I am proud of what our Company has become today.
My designated successor, Ms. Caroline Foulger, with her extensive experience and strong leadership, will prove to be an excellent Chair to continue the Company's growth and evolve its investment strategy. I wish Ocean Wilsons, all its shareholders, employees, and business partners and last, but not least, my colleagues on the Board of Directors and the entire management team all the best and continuing success for the future.
J F Gouvêa Vieira
Chairman
Ocean Wilsons Holdings Limited