REG - Taylor Maritime Taylor Maritime -TMI - Half-year Report

Taylor MaritimeAnnouncement

18/12/2024 07:00

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RNS Number : 4863Q  Taylor Maritime Investments Limited  18 December 2024

18 December 2024

 

 

Taylor Maritime Investments Limited

 

Unaudited Interim Results for the period 1 April 2024 to 30 September 2024

 

Grindrod becomes a wholly-owned subsidiary of TMI

Vessel sales completed at or close to NAV and contributing to further debt
reduction

Firm market conditions contributing to strong chartering performance

 

Taylor Maritime Investments Limited (the "Company" or "TMI" and together
with its subsidiary undertakings, the "Group" or "TMI Group"), the specialist
dry bulk shipping investment company, announces its interim results for the
six month period ended 30 September 2024.

The Interim Report of the current financial period is also now available on
the Company's website, www.taylormaritimeinvestments.com
(http://www.taylormaritimeinvestments.com/) , and on the National Storage
Mechanism, https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

Commenting on the interim results, Edward Buttery, Chief Executive Officer,
said:

"A highly active interim period for the Group, with the realisation of one
major strategic priority achieved, the completion of the acquisition of
Grindrod, and strong progress made toward the other with vessel divestments
allowing for significant reductions in Group debt. With the balance sheet
suitably strengthened, the Board was pleased to announce our intention to
declare a special dividend as a show of appreciation to shareholders. The hard
work continues as we seek to transfer listing categories and embark on the
next phase of the Company's journey while remaining true to our philosophy and
core strategy."

Edward Buttery, Chief Executive Officer, added:

"Firm market conditions saw us deliver strong operating performance for the
period and allowed us to opportunistically sell vessels at prices at, or close
to NAV, as asset values reached their highest levels since 2010. At the same
time, we were pleased to conclude our investment in Grindrod, giving way to a
simpler corporate structure for the Group, through which a further set of
synergies has been unlocked. I believe the Company is well-positioned to
benefit from positive medium-term outlook for our segment and is more
resilient in the face of short-term macro uncertainty."

Key Highlights (1 April 2024 to 30 September 2024)

·      The Company's NAV was US$1.48 per Ordinary Share as at 30
September 2024 (31 March 2024 US$1.48)

·      The Company's NAV return per Ordinary Share was 2.6% for the
period ended 30 September 2024 (31 March 2024 -9.0%) with a total share price
return of 4.5% (31 March 2024 -16.1%)

·      The Company declared dividends of 4.00 US cents per Ordinary
Share in the six-month period ended 30 September 2024 (30 September 2023: 4.00
US cents). In addition, the Company declared an interim dividend on 24 October
2024 of 2.00 US cents per Ordinary Share in respect of the quarter ended 30
September 2024, which was paid on 29 November 2024

Grindrod becomes a 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 US cents

·      The Company's investment in Grindrod had generated an overall
profit of US$49 million by the end of the interim period, representing a 15%
return

·      Completed and in-process cost rationalization activities will
reduce the consolidated net overhead by c.US$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
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

Vessel sales and fleet development

·      The Group completed six vessel sales during the period for
combined gross proceeds of US$123.7 million, representing an average discount
to Fair Market Value of 1.5%.  These comprised:

o  a 2008 built 33k dwt Handysize vessel for gross proceeds of US$12.3
million

o  a 2014-built 60k dwt Ultramax vessel for gross proceeds of US$22.4 million

o  a 2012 built 28k Handysize vessel for gross proceeds of US$11.95 million

o  a 2009 built 32k dwt Handysize vessel for gross proceeds of US$13.0
million

o  a 2024 built 40k dwt Handysize vessel for gross proceeds of US$35.4
million and

o  a 2020 built 38k dwt Handysize vessel for gross proceeds of US$28.6
million

·      Three additional vessel sales were agreed during the period and
have since completed; 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 US$37.0 million, representing an average discount to Fair
Market Value of 3.3%

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

Progress with debt reduction

·      Look-through debt-to-gross assets (including Grindrod-level debt)
reduced to 35.1% 1  (#_ftn1)  at 30 September 2024 (versus 35.8% at 31 March
2024) despite softer asset values.  Outstanding debt was US$282.7 million on
a look-through basis(2) (versus US$330.8 million at 31 March 2024)

·      The Company remains focused on strengthening its balance sheet,
and intends to repay debt from agreed and future vessel sales and operating
earnings, targeting medium-term look-through leverage of 25-30% of gross
assets

Chartering performance

·      The fleet's time charter equivalent ("TCE") was US$13,731 per day
for the six months ending 30 September 2024, compared to US$11,550 per day for
equivalent period last year, with the Handysize fleet and the
Supramax/Ultramax fleet outperforming their respective indices by US$478 per
day (4%) and US$1,822 per day (12%), respectively

Board Developments

·      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

·      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

Post-Period Trading Update (since 30 September 2024)

·      Post period, the Company published a circular proposing to
transfer the Company's equity shares listing from the closed-ended investment
funds category to the equity shares (commercial companies) category of the
Official List.  The Circular sets out, among other things, a notice of a
general meeting to be held on 13 January 2025 at which special resolutions to
approve the proposed transfer will be considered.  The Proposed Transfer is,
subject to shareholder approval, expected to become effective on 10 February
2025

·      The Company also announced post period its intention to declare a
special dividend of 4 cents per ordinary share in respect of the period to 31
December 2024, to be paid in the first quarter of calendar year 2025, in
addition to the regular quarterly dividend of 2 cents per ordinary share

·      The Company entered into a single senior secured 4-year revolving
credit facility (the "RCF") maturing in December 2028 to replace the TMI
Group's two main debt facilities.  The new RCF bears a lower margin compared
with both existing debt facilities that it replaces.  The refinancing lowers
TMI Group's cash breakeven by c.US$1,700 per ship per day due to there being
no scheduled loan repayments for two years.  The Company plans initially to
draw down c.US$167.5 million of the RCF commitment and there is further
liquidity available under the RCF if required, providing future financial
flexibility

·      The Company has agreed the sale of a 2011 built 33k dwt Handysize
vessel for gross proceeds of US$13.9 million, representing a 0.5% discount to
fair market value, which is expected to complete in the first quarter of
calendar year 2025

·      Overall, there have now been 27 vessel divestments since the
Grindrod acquisition in late 2022, averaging a 3.0% discount to fair market
value 2  (#_ftn2) and resulting in a US$198 million reduction in debt

·      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 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

·      At the time of writing, the fleet has coverage for 55% of the
remaining days in the current financial year at a TCE of US$13,284 per day

Dry bulk market review and outlook

Firm demand for dry bulk commodities, particularly minor bulk and grain,
combined with ongoing fleet inefficiencies from disruptions in the Red Sea and
Panama Canal supported charter rates throughout the period, partially
offsetting the usual summer lull.  As a result, the BSI TCA 3  (#_ftn3) and
the BHSI TCA 4  (#_ftn4) were c.42% and c.37% higher, on average, when
compared to the same period last year.

The steady conditions in freight markets supported an active market for
second‑hand vessels, underpinned by positive sentiment, where benchmark
prices reached their highest levels since 2010 for a Handysize vessel 5 
(#_ftn5) and since 2008 for a Supra/Ultramax 6  (#_ftn6) vessel midway through
the period before softening slightly in September.

As global macroeconomic headwinds started showing signs of easing, central
banks in major economies began to gradually reduce interest rates providing
grounds for optimism for increased dry bulk demand.  Meanwhile, fiscal and
monetary stimulus measures introduced in China designed to address issues in
the country's real estate sector and spur economic activity have the potential
to bolster dry bulk trade volumes although the near-term impact remains
uncertain and could be offset if protectionist trade policies are introduced
by the incoming US administration. Whilst transits through the Panama Canal
are approaching pre-drought levels, tensions in the Middle East remain
elevated and disruptions in the Red Sea are expected to continue to encourage
the diversion of significant amounts of tonnage to longer routes, amplifying
tonne-mile demand.

The medium-term outlook remains positive underpinned by modest supply growth
forecasts, by historical standards, following several years of limited
ordering and newbuilding activity. With shipyards operating near capacity and
a heavily backdated orderbook, a recent uptick in orders is unlikely to
disrupt this trend over the medium term even with a recent expansion of
shipbuilding capacity as shipyards continue to prioritise orders from other,
higher margin, shipping sectors such as gas carriers, tankers and containers.
Tightening environmental regulations will further impact effective supply
through slow steaming and recycling of older, less efficient tonnage,
particularly for the aged geared dry bulk fleet, while also enhancing the
value of efficient and less carbon intensive vessels.

 

Click or paste the following link into your web browser to view the Interim
Report: http://www.rns-pdf.londonstockexchange.com/rns/4863Q_1-2024-12-17.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/4863Q_1-2024-12-17.pdf)

 

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

 Sanne Fund Services (Guernsey) Limited   +44 20 3530 3107

 Matt Falla

 

The person responsible for arranging for the release of this announcement on
behalf of the Company is Matt Falla of Sanne Fund Services (Guernsey) Limited.

 

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. As announced previously, the Company is proposing to transfer
the Company's equity shares listing from the closed-ended investment funds
category to the equity shares (commercial companies) category of the Official
List.  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
31 dry bulk vessels consisting of 21 Handysize vessels (including one vessel
held for sale) and ten Supra/Ultramax vessels (including one vessel under a JV
agreement and one long-term chartered in vessel with purchase option).  The
Company also has six vessels in its short-term chartered in fleet. 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.

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.

 

LEI: 213800FELXGYTYJBBG50

 

 1  (#_ftnref1) Excluding lease liabilities

 2  (#_ftnref2) Includes completed and agreed sales but excludes the two
vessel sales within the Group

 3  (#_ftnref3) Baltic Supramax Index Time Charter Average

 4  (#_ftnref4) Baltic Handysize Index Time Charter Average

 5  (#_ftnref5) Clarksons benchmark 37k dwt 10 year old Handysize vessel

 6  (#_ftnref6) Clarksons benchmark 61k dwt 10 year old Supra/Ultramax vessel

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