REG - Taylor Maritime Taylor Maritime -TMI - Factsheet, Trading Update & Quarterly NAV

Taylor MaritimeAnnouncement

28/07/2023 07:00

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RNS Number : 4868H  Taylor Maritime Investments Limited  28 July 2023

28 July 2023

 

Taylor Maritime Investments Limited (the "Company")

 

Quarterly NAV Announcement, Trading Update and Publication of Factsheet

 

Continued focus on debt reduction

Asset values firm relative to charter rates indicating positive market outlook

Interim dividend of 2 cents per share declared

 

Taylor Maritime Investments Limited, the specialist dry bulk shipping company,
today announces that as at 30 June 2023 its unaudited NAV was $1.56 per
Ordinary Share compared to $1.71 per Ordinary Share as at 31 March 2023.  The
Company is also pleased to declare an interim dividend in respect of the
period to 30 June 2023 of 2 cents per Ordinary Share.  The NAV total return
for the quarter was -7.6%.

The first quarterly factsheet of the current financial year is also now
available on the Company's website, www.taylormaritimeinvestments.com
(http://www.taylormaritimeinvestments.com) .

Key Highlights (to 30 June 2023)

·      TMI made further progress reducing its debt by $12 million from
net proceeds generated from the sale of a 2008 built 32k dwt Handysize vessel,
which generated an IRR of c.63% and MOIC of c.2.0x.  This resulted in a debt
to gross assets ratio of 28.5% for TMI at quarter end (27.7% as at 31 March
2023)

·      Grindrod repaid approximately $28 million of debt from operations
and proceeds from vessel sales completed during the quarter, resulting in an
estimated debt to gross assets ratio on a 'look through' 1  (#_ftn1) basis at
30 June 2023 of 37.8% (38.9% as at 31 March 2023)

·      During the period, Grindrod agreed the sale of a 2011 Chinese
built 33k dwt Handysize vessel for gross proceeds of $10.8 million, with
expected delivery by the end of August

·      The combined owned fleet comprised 47 vessels at quarter end (TMI
22 2  (#_ftn2) and Grindrod 25 3  (#_ftn3) ).  The Market Value of the fleet
was $880 million 4  (#_ftn4) (TMI $331 million and Grindrod $549 million which
excludes chartered-in ships without purchase options), a decrease of
approximately 5.7% on a like for like basis over the quarter

·      The net time charter rate for the TMI fleet was $10,600 per day
at quarter end, outperforming the adjusted BHSI (Baltic Handysize Index) Time
Charter Average (net) 5  (#_ftn5) which stood at $6,712.  TMI's balanced
chartering strategy continued to mitigate the impact of softening dry bulk
markets emanating from a slower-than-expected economic recovery in China and
macroeconomic headwinds impacting demand

·      The average charter duration for the TMI fleet stands at three
months, with a large portion of the fleet positioned to capture improvements
in the charter market expected in the latter part of 2023, and the average
annualized unlevered gross cash yield was 7.9% at quarter end

·      The blended net time charter equivalent (TCE) across the TMI and
Grindrod fleet was $12,735 per day for the quarter (including Handysize and
Supra/Ultramax vessels)

·      On 1 June 2023, Henry Strutt was appointed Non-Executive Chair of
the Company with the Interim Chair Frank Dunne remaining as Senior Independent
Director

Post-Period Trading Update (since 30 June 2023)

·      Since quarter end, TMI agreed the sale of two vessels to Grindrod
on an arm's-length basis.  The transactions include a 2011 built 38.5k dwt
Handysize vessel due to complete in July for $15 million net proceeds and a
40k dwt Handysize newbuild due for delivery in Q1 of calendar year 2024 for
net proceeds of $33.75 million

·      Together, these transactions achieve a balance of strategic fleet
management, improving the overall attractiveness of the fleet profile of TMI
and Grindrod and keeping an optimal number of ships operational ahead of the
expected improvement in rates to come in the latter part of 2023, whilst also
supporting TMI's de-gearing plans

·      Since quarter end, TMI agreed one long-term charter of 20 to 24
months at a net time charter rate of $12,000 per day with a blue-chip
charterer, a rate significantly above the current index reflecting positive
forward market sentiment and the benefits of broader chartering opportunities
arising as a result of the Grindrod investment

·      On 13 July, Grindrod announced an EGM to be held on 10 August
2023 to propose a capital reduction which would result in a total cash
distribution of up to a maximum of $45 million, of which up to a maximum of
$37 million would be payable to TMI in line with its 83.23% ownership.  The
surplus cash available to fund the proposed capital reduction has been
generated from recent vessel sales after accounting for related debt
repayments.  Should the capital reduction go ahead, with any initial
distribution expected to be made within financial year Q3, TMI would use
proceeds to further reduce debt

·      TMI has covered 26% of fleet days for the Financial Year ending
31 March 2024 at a time charter equivalent rate of c.$12,100 per day

Commenting on the trading update Edward Buttery, Chief Executive Officer,
said:

"Despite current pressure on rates we continue to outperform our benchmark
index thanks to our balanced chartering strategy.  Asset values remain above
historical averages and the building blocks of an improved earnings
environment for the next two years are evident. We continue to prioritise debt
reduction and delivering synergies by integrating management of the TMI and
Grindrod fleets and making the most of opportunities given our enhanced scale
so we're in a strong position to capitalise on market improvements when they
come."

Dry bulk market outlook

After showing signs of improvement at the end of Q1 of the calendar year,
demand disappointed in Q2 as China's expected recovery failed to materialize
with the BHSI decreasing by 35% from 31 March to 30 June.  Asset values,
however, held up relative to charter rates through the quarter, decreasing by
8% (Clarksons 10 year old 37k dwt Handysize vessel benchmark) reflective of
more positive forward sentiment with improving industrial trends and
re-stocking in China expected, and ample seaborne grain supply from record
harvests to meet firm demand across key importing regions.  As a result,
charter rates may improve towards the latter part of the year before the onset
of the typically softer holiday period from Christmas through to the Chinese
New Year.

Overall, the combined minor bulk and grain trade is forecast to grow by 3.0%
in 2023 in tonne-mile terms according to Clarksons and by 3.9% in 2024 when
market analysts anticipate a structural recovery in the Chinese economy driven
by further policy support in line with the Chinese Government's stated
ambitions of delivering long-term, sustainable growth.

Meanwhile, several years of limited newbuilding activity will see Handysize
fleet supply growth of 3.0% in 2023 followed by modest 1.3% growth in 2024 as
environmental regulations are expected to lead to increased demolition of
older, less efficient tonnage.  The Supra/Ultramax fleet is forecast to grow
by 3.0% in 2023 and 2024.  Newbuilding activity is expected to remain
constrained given shipyards are generally full until the second half of 2026
with orders from other segments dominating and uncertainty over future fuel
choices deterring newbuild ordering.  Given this tightening supply picture
and forecasts of positive demand growth, we maintain a favourable view for
2024 and 2025 for both charter rates and asset values.

Financing

TMI's debt balance stands at $210 million, down from $222 million at the end
of March, which represents a debt to gross assets ratio of 28.5% based on Fair
Market Values as at end of June (27.7% as at 31 March 2023).

Grindrod's estimated debt balance was $178 million with a 'look through' debt
to gross assets ratio of 37.8% based on end of June Fair Market Values (38.9%
as at 31 March 2023) (including TMI and Grindrod debt).

After applying $15 million proceeds to repay debt from the additional TMI
vessel sale, due to complete within July 2023, TMI debt to gross assets will
reduce to 26.8% based on June Fair Market Values.

TMI's priority is strengthening its balance sheet consistent with its
long-term commitment to a prudent capital structure.  TMI will continue to
reduce its debt from agreed and planned vessel sales as well as from proceeds
from the proposed capital reduction by Grindrod.  TMI remains focused on
achieving the 25% target for TMI of debt to gross assets and this is supported
by a similar strategy at Grindrod.

ESG

During the period, a further two TMI vessels were fitted with energy saving
devices including boss-cap fins, high performance paints, pre-swirl ducts and
fuel efficiency monitoring systems.  The carbon intensity of TMI's fleet, as
measured by the EEOI ("Energy Efficiency Operational Index"), improved by 18%
y-o-y over the FY22 period, primarily driven by the divestment of
less-efficient vessels, installation of energy saving devices and other
efficiency initiatives onboard.

TMI continues to work closely with its commercial and technical managers to
ensure the fleet is compliant with the new industry decarbonisation
regulations that came into force in January 2023, designed to meet the IMO's
2030 GHG reduction targets.

 

ENDS

 

 For further information, please contact:

Taylor Maritime Investments Limited      IR@tminvestments.com (mailto:IR@tminvestments.com)

 Edward Buttery

 Camilla Pierrepont

 Jefferies International Limited          +44 20 7029 8000

 Stuart Klein

 Gaudi Le Roux

 Montfort Communications                  TMI@montfort.london (mailto:TMI@montfort.london)

 Alison Allfrey

 George Morris Seers

 Sanne Fund Services (Guernsey) Limited   +44 1481 737600

 Matt Falla

Notes to Editors

 

About the Company

Taylor Maritime Investments Limited is an internally managed investment
company listed on the Premium Segment of the Official List, its shares trading
on the Main Market of the London Stock Exchange since May 2021.  The
Company specializes in the acquisition and chartering of vessels in the
Handysize and Supramax bulk carrier segments of the global shipping sector.
The Company invests in a diversified portfolio of vessels which are primarily
second-hand.  TMI's fleet portfolio currently numbers 22 vessels in the
geared dry bulk segment.  The ships are employed utilising a variety of
employment/charter strategies.

 

On 20 December, the Company announced it acquired a controlling majority
interest in Grindrod Shipping Holdings Ltd ("Grindrod") (NASDAQ:GRIN,
JSE:GSH), a Singapore incorporated, dual listed company on NASDAQ and the
Johannesburg Stock Exchange.  Grindrod currently owns 21 geared dry bulk
vessels complementary to the Company's fleet.  They are mostly Japanese
built, including 13 Handysize vessels and 8 Supra/Ultramax vessels.  Grindrod
has seven vessels in its chartered in fleet with purchase options on four.

 

The combined TMI and Grindrod fleet numbers 47 vessels (excluding three long
term chartered in vessels without purchase options).

 

The Company's target dividend policy is 8 cents p.a. paid on a quarterly
basis, with a targeted total NAV return of 10-12% per annum over the medium to
long-term.

 

The Company has the benefit of an experienced Executive Team led by Edward
Buttery and who previously worked closely together at the Commercial Manager,
Taylor Maritime.  Established in 2014, Taylor Maritime is a privately owned
ship-owning and management business with a seasoned team that includes the
founders of dry bulk shipping company Pacific Basin Shipping (listed in Hong
Kong 2343.HK) and gas shipping company BW Epic Kosan (formerly Epic
Shipping) (listed in Oslo BWEK:NO).  Taylor Maritime's team of industry
professionals are based in Hong Kong, Singapore and London.

 

For more information, please visit www.taylormaritimeinvestments.com
(http://www.taylormaritimeinvestments.com/) .

 

About Geared Vessels

Geared vessels are characterised by their own loading equipment. The Handysize
and Supra/Ultramax market segments are particularly attractive, given the
flexibility, versatility and port accessibility of these vessels which carry
necessity goods - principally food and products related to infrastructure
building - ensuring broad diversification of fleet activity and stability of
earnings through the cycle.

 

IMPORTANT NOTICE

The information in this announcement may include forward-looking statements,
which are based on the current expectations and projections about future
events and in certain cases can be identified by the use of terms such as
"may", "will", "should", "expect", "anticipate", "project", "estimate",
"intend", "continue", "target", "believe" (or the negatives thereon) or other
variations thereon or comparable terminology. These forward-looking statements
are subject to risks, uncertainties and assumptions about the Company,
including, among other things, the development of its business, trends in its
operating industry, and future capital expenditures and acquisitions. In light
of these risks, uncertainties and assumptions, the events in the
forward-looking statements may not occur.

 

References to target dividend yields and returns are targets only and not
profit forecasts and there can be no assurance that these will be achieved.

 

 1  (#_ftnref1) Including Grindrod debt

 2  (#_ftnref2) Excluding the newbuild vessel due to be delivered in the first
quarter of calendar year 2024

 3  (#_ftnref3) Including one vessel held for sale, 4 chartered in ships with
purchase options including one which has been exercised, but excluding 3
chartered in ships without purchase options

 4  (#_ftnref4) Including one Grindrod asset held for sale

 5  (#_ftnref5) BHSI index is basis a 38k dwt type (since Jan 2020), therefore
the Company uses adjusted BHSI figures weighted according to average dwt of
the Company's fleet

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