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

Taylor MaritimeAnnouncement

25/10/2024 07:00

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RNS Number : 5457J  Taylor Maritime Investments Limited  25 October 2024

25 October 2024

 

Taylor Maritime Investments Limited (the "Company" or "TMI")

 

Quarterly NAV Announcement, Trading Update and Publication of Factsheet

 

Grindrod Shipping Holdings Limited ("Grindrod") delisted following completion
of acquisition

Debt reduced by $55.6 million during the period

Four asset sales agreed in firm S&P market for gross proceeds of $65.5
million

Interim dividend of 2 cents per share declared with 1.1x dividend cover

 

Taylor Maritime Investments Limited, the specialist dry bulk shipping
investment company, today announces that, as at 30 September 2024, its
unaudited NAV was $1.48 per Ordinary Share compared to $1.52 per Ordinary
Share as at 30 June 2024.  The Company is pleased to declare an interim
dividend in respect of the period to 30 September 2024 of 2 cents per Ordinary
Share.  The NAV total return for the quarter was -1.7%.

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

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

"We're pleased to have completed the Grindrod acquisition.  As a standalone
investment, it has generated an overall profit of $49 million, a 15% return.
Now that Grindrod has been delisted, we're simplifying our structure and
reducing costs at the corporate level.  We've continued to be highly active
in the sale and purchase market, completing 4 vessel sales this quarter and
agreeing the sale of 3 more at historically high values.  As a result, we've
reduced debt by $55.6 million and we expect to make a further $20 million in
debt repayments when agreed sales complete this quarter, taking total debt
repayments to $198 million since our initial investment in Grindrod in
December 2022."

Key Highlights (to 30 September 2024)

Grindrod becomes wholly owned subsidiary of TMI

·      On 16 August 2024, TMI successfully completed the acquisition of
Grindrod following a Selective Capital Reduction ("SCR") after which it became
a wholly owned subsidiary of the Company through its subsidiary Good Falkirk
(MI) Limited

·      The SCR was accretive to TMI NAV per share with a positive impact
of 7 cents

·      The Company's investment in Grindrod has generated an overall
profit of $49 million, representing a 15% return

·      Completed and in-process cost rationalization activities will
reduce the consolidated Group's (the "Group") net overhead by c.$16 million on
an annualized basis once fully implemented.  This reflects initiatives post
the December 2022 acquisition as well as significant corporate synergies
enabled by the recent completion of the acquisition of Grindrod and its
subsequent de-listing.  The Group will continue to pursue further cost
efficiencies whilst maintaining safe operation of its assets

Strong chartering performance

·      The fleet generated average time charter equivalent ("TCE")
earnings of $14,211 per day for the quarter (versus $13,264 per day for the
quarter ended 30 June 2024)

·      Charter market conditions were firm relative to the same time
last year resulting in strong chartering performance for the period with
earnings up c.37% year on year.  Relative to benchmark indices 1  (#_ftn1) ,
the combined Handysize fleet outperformed by $1,303 per day (c.11%) and the
Supra/Ultramax fleet outperformed by $2,630 per day (c.18%)

 

 

Fleet development and market value

·      Three previously announced vessel sales completed during the
period at an average 0.5% discount to Fair Market Value; a 2012 built 28k
Handysize vessel for gross proceeds of $11.95 million, a 2009 built 32k dwt
Handysize vessel for gross proceeds of $13.0 million, and a 2024 built 40k dwt
Handysize vessel for gross proceeds of $35.35 million

·      The Company agreed to sell four further vessels at an average
3.2% discount to Fair Market Value (the discount was due to a softening in
asset values over the period which resulted in a 3.9% decrease for the
fleet 2  (#_ftn2) ): a 2020 built 38k dwt Handysize vessel for gross proceeds
of $28.55 million (which completed during the quarter), a 2009 built 32k dwt
Handysize vessel, a 2012 built 28k dwt Handysize vessel, and a 2008 built 33k
dwt Handysize vessel for combined gross proceeds of $37.0 million

·      During the period, an in-the-money purchase option was exercised
at $23.2 million on a 2020 built 63k dwt Ultramax vessel. The vessel was
subsequently sold for gross proceeds of $31.4 million and delivered into a JV
arrangement, of which the Company owns 50%, and time chartered back into the
fleet

·      The Market Value of the fleet 3  (#_ftn3) decreased by
approximately 3.9%, on a like-for-like basis, to $646.5 million.  Despite
softening slightly over the period, asset values remain near their highest
levels since 2010, supporting the Company's strategy of disposals to protect
against downside asset valuation risk.  Elevated vessel prices are
underpinned by expectations of firm trading conditions given a favourable
supply outlook and historically high newbuild pricing

·    The fleet comprised 34 4  (#_ftn4) Japanese-built vessels at quarter
end.  After agreed sales complete, the fleet will reduce to 31 vessels with
an average age of 10.6 years and an average carrying capacity of c.42.8k dwt.
 This compares favourably to the pre-Grindrod acquisition fleet average age
of 14.0 years and average carrying capacity of c.33.5k dwt

·    Overall, there have been 26 vessel divestments, including 8 during
this financial year, since the Grindrod acquisition in late 2022, averaging a
3.1% discount to Fair Market Value 5  (#_ftn5) which will have resulted in
$198 million overall reduction in debt when agreed sales complete this quarter

Progress with debt reduction

·      As a result of debt repayments, look-through debt-to-gross assets
(including Grindrod-level debt) reduced to 35.1% 6  (#_ftn6) at 30 September
2024 (versus 35.4% at 30 June 2024) despite softer asset values. Outstanding
debt was $282.7 million on a look-through basis(3) (versus $338.3 million at
30 June 2024)

·      The Company's debt-to-gross assets (excluding Grindrod-level
debt) improved to 18.1% at 30 September 2024 (versus 21.7% at 30 June 2024).
The Company's outstanding debt was $108.95 million at the quarter end (versus
$140.3 million at 30 June 2024)

·      The Group continues to focus on strengthening its balance sheet
consistent with a long-term commitment to be free of significant structural
leverage, targeting medium-term look-through leverage of 25% of gross assets,
and periodically assesses opportunities to refinance existing debt to lower
overall cost of capital and improve cash breakeven levels

Board changes

·      As previously announced, Ms. Rebecca Brosnan and Mr. Gordon
French were appointed as non-executive Directors of the Company.  Prior to
their appointment, Ms. Brosnan and Mr. French were serving as Directors of
Grindrod before their retirement from the Board on 30 September 2024

·      Also as previously announced, Mr. Chris Buttery and Mr. Frank
Dunne retired from the TMI Board with each having agreed not to stand for
re-election by Shareholders at the 2024 AGM

Post-Period Trading Update (since 30 September 2024)

·      Mrs. Trudi Clark, Non-Executive Director, was chosen as Mr.
Dunne's successor and appointed as the Company's Senior Independent Director
with effect from 24 October 2024

·      The Company entered an agreement to exercise an in-the-money
purchase option on a 2020 built 63k dwt Ultramax vessel.  Delivery is
expected to take place in December 2024

·      The Company released its third annual Environmental, Social and
Governance ("ESG") Report covering the financial year ended 31 March 2024.
The Report highlights progress made on TMI's sustainability priorities
including decarbonisation, social and community impact, and responsible
business practices

·      The number of covered fleet ship days remaining for the 2024
financial year stands at 31% at an average TCE rate of $13,876 per day with a
portion of the fleet maintained on short charters to capitalise on an
anticipated seasonal strengthening in rates towards the end of the current
quarter

Dry bulk market review and outlook

The usual summer lull was offset by ongoing disruptions in the Panama Canal
and in the Red Sea.  Charter rates remained elevated and steady with the BSI
TCA 7  (#_ftn7) and BHSI TCA 8  (#_ftn8) c.45% and c.50% higher, on average,
when compared to the same period last year.  Rerouting of vessels away from
the Red Sea continued to impact positively, driving an estimated c.1.2%
increase in dry bulk tonne-mile demand according to Clarksons, with Suez Canal
bulk carrier transits c.40% lower when compared to the same period last
year.  Panama Canal transit disruptions also continued to tie up tonnage,
providing support for rates, although transit volumes gradually increased
through the period, and are now approaching pre-drought levels.

With the escalation of tensions in the Middle East, bulk carrier transits
through the Suez Canal are expected to remain at lower levels, continuing to
support tonne-mile demand and contributing to a firm outlook for calendar Q4
which typically sees seasonal commodity demand strength.  Dry bulk trade
volumes could be further bolstered by increased economic activity in China
following the introduction of both monetary and fiscal stimulus measures. The
US Federal Reserve's September interest rate cut decision has also provided
grounds for optimism, although clear risks remain.

Newbuild prices and second-hand asset values remain well above historical
levels, buoyed by favourable supply side dynamics.  Supply growth forecasts
remain modest, with the geared dry bulk fleet to grow by 4.3% and 4.2% in dwt
terms in 2024 and 2025, respectively, which follows several years of limited
ordering and newbuilding activity.  Growth beyond those levels will be
limited, with shipyards operating near capacity resulting in a heavily
backdated orderbook.  New orders from top tier shipyards are not available
for delivery until end of 2027 and early 2028.  Recent expansion of
shipbuilding capacity is not expected to disrupt supply forecasts for geared
dry bulk tonnage as shipyards continue to prioritise orders from other, higher
margin, segments.  Tightening environmental regulations will further impact
effective supply through recycling of older, less efficient tonnage and speed
reductions, while also enhancing the value of efficient and eco-friendly
vessels.

ESG

The Company has released its third annual ESG report covering the financial
year 1 April 2023 to 31 March 2024.  The report can be viewed on TMI's
website (www.taylormaritimeinvestments.com
(http://www.taylormaritimeinvestments.com/) ). The report highlights progress
made on the Group's sustainability priorities including decarbonisation,
social and community impact, and responsible business practices.

The Company's disclosure follows guidance from the Task Force on
Climate-related Disclosure, the Global Reporting Initiative and the
Sustainability Accounting Standards Board.

Measurable progress was made towards the Group's decarbonisation targets
during the financial year; fleet carbon intensity as measured by AER ("Average
Efficiency Ratio"), improved by 7% year on year , remaining on track with the
IMO's decarbonisation trajectory.

The Company obtained independent assurance of both Grindrod and TMI's
greenhouse gas emissions to ISO 14064-3 standards.

 

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

 Apex Group                               +44 1481 737600

 Matt Falla

Notes to Editors

 

About the Company

Taylor Maritime Investments Limited is an internally managed investment
company listed under the closed-ended investment funds category of the FCA's
UK Listing Rules sourcebook (previously the Premium Segment of the Official
List), with 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 Supra/Ultramax bulk carrier segments of the
global shipping sector.  The Company invests in a diversified portfolio of
vessels which are primarily second-hand and Japanese built.

The Company acquired a controlling stake in Grindrod Shipping Holdings Limited
("Grindrod") in December 2022 and, following a Selective Capital Reduction
which took effect on 16 August 2024, Grindrod became a wholly owned subsidiary
of the Company and was delisted from each of Nasdaq and the JSE.  As a
result, the Company, through its subsidiaries, currently has an owned fleet of
32 dry bulk vessels, including vessels held for sale, consisting of 24
Handysize vessels and eight Supra/Ultramax vessels.  The Company also has six
vessels in its chartered in fleet with purchase options on two. The ships are
employed utilising a variety of employment/charter strategies.

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 Taylor Maritime.
Taylor Maritime was established in 2014 as a privately owned ship-owning and
management business with a seasoned team including 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).  The commercial and
technical management arms of Taylor Maritime were acquired by Grindrod in
October 2023.

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

About Geared Vessels

Geared vessels are characterised by their own cargo loading and discharging
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) The Company uses adjusted Baltic Handysize Index 38k dwt and
Baltic Supramax Index 58k dwt Time Charter Average (TCA) figures net of
commissions and weighted according to average dwt of the Group's combined
Handysize and Supra/Ultramax fleets, respectively

 2  (#_ftnref2) Excluding one vessel under JV arrangement

 3  (#_ftnref3) Excluding one vessel under JV arrangement

 4  (#_ftnref4) Including two chartered-in vessels with purchase options,
three vessels held for sale and one vessel under JV arrangement

 5  (#_ftnref5) Includes completed and agreed sales but excludes two vessel
sales within the Group

 6  (#_ftnref6) Excluding lease liabilities

 7  (#_ftnref7) Average of the 10 T/C Routes for BSI-58 dwt vessel (gross)

 8  (#_ftnref8) Average of the 7 T/C Routes for BHSI-38 dwt vessel (gross)

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