REG - Taylor Maritime Taylor Maritime -TMI - Interim Results to 30 September 2022

Taylor MaritimeAnnouncement

09/12/2022 07:00

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RNS Number : 1373J  Taylor Maritime Investments Limited  09 December 2022

9 December 2022

 

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

 

Unaudited Interim Results for the period 1 April 2022 to 30 September 2022

 

Healthy earnings through the period despite mixed market conditions

Offer to acquire up to 100% of Grindrod Shipping

Vessel sales completed leading to $20m repayment of RCF

First biofuel trial onboard a TMI vessel

 

Taylor Maritime Investments Limited, the specialist dry bulk shipping
investment company, announces its interim results for the six month period
ended 30 September 2022.

 

The Interim Report of the current financial year 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) .

 

Key Highlights (1 April 2022 to 30 September 2022)

·      The Company's Total Net Asset Value ("NAV") return per Ordinary
Share was +1.41% for the six month period ended 30 September 2022

·     During the period, the Company completed a total of three
previously announced vessel sales and agreed and completed the sale of a 2009
built Handysize vessel for net proceeds of US$17.2 million which delivered to
its buyer in August. The vessel was an IPO seed asset and the sale generated
an IRR of 80% and MOIC of 1.9x, crystallising the rise in asset values early
in the period

·      The Company's fleet consisted of 27 vessels at the end of the
period (including one vessel sold in November) with a total market value of
US$445 million, a decrease of c.6% or c.US$30m versus the 31 March 2022 Market
Value of c.US$476m for the same portfolio of vessels. Of the 27 vessels, 26
are Handysize and 1 is a Supramax. The average age of the fleet is 11.10 years

·     At 30 September 2022, the Company's c.26% stake in Grindrod
Shipping was valued at a share price of US$23.93 per share amounting to US$118
million in total

·     The Company received total dividends of US$1.31 per share during
the period from its stake in Grindrod Shipping representing a total of
c.US$6.4 million. Since the initial investment, the Company has received an
annualized yield of c.16% with c.US$10 million in dividends received to date
through to the end of September

·     During the period, the Company announced a possible cash offer to
acquire all of the issued ordinary shares of Grindrod Shipping not already
owned by the Company for an aggregate value of US$26.00 per share (US$21 in
cash plus a special dividend of US$5 per share payable by Grindrod Shipping)

·    The Company's fleet's average net time charter rate for the period was
US$18,858 per day ending the period at US$17,418 per day, a decrease of c.6.5%
from 31 March 2022, with an average duration of six months (31 March 2022: six
months) and an average annualised unlevered gross yield of c.24% (31 March
2022: 24%)

·     The Company declared total dividends of 6.97 US cents per Ordinary
Share in the period to 30 September 2022.  Dividend cover for the financial
period to 30 September 2022 was 3.6x (inclusive of last financial year final
quarter dividend of 1.75 cents paid in May 2022 but excluding the special
dividend of 3.22 US cents paid in June 2022)

·     During the period, the Company announced a new annualised dividend
target for financial year 2023 of 8% on the IPO price and increased the
interim dividend from 1.75 US cents per Ordinary Share to 2 US cents per
Ordinary Share

·     In accordance with this, the Company declared an interim dividend
on 27 October 2022 of 2 US cents per Ordinary Share in respect of the quarter
ended 30 September 2022, which was paid on 25 November 2022

·     The first biofuel trial onboard a TMI vessel took place generating a
lifecycle CO2 emissions saving of over 25% and a further five vessels were
fitted with energy saving devices including boss-cap fins, high performance
paints, pre-swirl ducts and fuel efficiency monitoring systems

Post-Period Trading Update (since 30 September 2022)

·    Post period, on 11 October 2022, the Company entered into a
Transaction Implementation Agreement with Grindrod Shipping and on 12 October
2022 announced an offer, structured as a voluntary conditional cash offer to
acquire all of the issued ordinary shares of Grindrod Shipping not already
owned by the Company, for an aggregate transaction value of US$26.00 per share
including US$5 per share special dividend payable by Grindrod Shipping.
 Documentation relating to the offer was published on 28 October 2022,
commencing the initial offer period

·   A resolution to amend the Company's investment policy to facilitate the
proposed acquisition notably for an exceptional increase in debt for a maximum
of 18 months was passed at an EGM held on 28 October 2022

·      On 29 November 2022, the Company announced that the offer had
become unconditional in all respects.  At expiry of the initial offer period,
47.20% of Grindrod Shipping shareholders had tendered their shares bringing
the Company's ownership to 73.78% after accounting for outstanding awards of
forfeitable shares which became issuable.  Following the expiry of the
initial offer, a subsequent offer period commenced which is due to expire on
19 December 2022

·      The Company completed the sale of a 2012 built Supramax vessel for
net proceeds of $20.1 million. The vessel was an IPO seed asset and the sale
generated an IRR of 25% and MOIC of 1.3x.  The proceeds were used to repay
$20m of the RCF, reducing the drawn amount to $140m

·     The Company has covered 59% of remaining fleet days for the
financial year ending 31 March 2023 at an average net time charter rate of
$18,135 per day

Commenting on the interim results, Nicholas Lykiardopulo, Independent Chair,
said:

"After a successful first year since listing during which we were able to
capitalise on the post-lockdown rebound in seaborne trade, TMI continues to
deliver attractive yields despite the emergence of considerable economic
headwinds. We increased the annualised dividend target at the beginning of the
period, reflecting our confidence in market fundamentals and defensive
attributes of the geared dry bulk segment. The offer for Grindrod  Shipping
 results in an enlarged group enabling the Company to take further advantage
of the strong earnings environment we anticipate in the medium term."

Edward Buttery, Chief Executive Officer, added:

"We generated healthy earnings and completed several vessel sales,
crystallising solid returns on investments which allowed us to repay $20m of
our RCF.  This strengthened our balance sheet as we launched our bid to
acquire the remaining shares of Grindrod Shipping.  This acquisition will
allow us to take further advantage of favourable market dynamics, while
supporting TMI's strategy to own a larger, younger, more carbon efficient
fleet. Despite macro uncertainties, we remain confident in the fundamentals of
the geared dry bulk sector and are cautiously optimistic that slower operating
speeds will have the effect of removing supply from the fleet as regulations
come into force next year. Overall, therefore, the Group anticipates charter
rates and dry bulk earnings should remain above historical averages into
2024 when supply growth is forecast to be at a historic low and with the
potential for healthy demand as economic headwinds ease."

Outlook

October saw an improvement in the market post the typical summer holiday lull,
but this was stalled by drought conditions in the Mississippi River Basin and
zero-Covid policies in China.  The non-seasonal softness in the Atlantic has
begun to subside and we anticipate some strength to emerge before the end of
the calendar year.  In the Pacific, rates have shown signs of stabilising in
recent weeks as cargo and tonnage become slightly more balanced.  In the
medium term, recently announced stimulus measures in China are expected to
have a positive impact on dry bulk demand, targeting the property and
construction sector and are expected to coincide with the supportive gradual
easing of zero-Covid policies as the country reopens next year.  In the
meantime, the fleet is well positioned, with 73% of our vessels currently
trading in the Atlantic and, of those trading in the Pacific, only three are
exposed between now and the end of the calendar year. Our charters are also
well positioned to straddle the usual Christmas and Chinese New Year
softening.

From January 2023, gradual lowering of operating speeds to reduce fuel
consumption and meet International Maritime Organisation emissions targets is
expected to reduce effective supply. Over time, these new regulations and the
IMO's fuel efficiency rules should accelerate scrapping of older, less
efficient tonnage - particularly pronounced in the older trading Handysize
fleet. This slow down, combined with limited new vessel additions given a
historically low orderbook and lack of yard availability should keep earnings
above historical averages over the medium term and in turn support firm asset
values.

 

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

 (formerly Praxis Fund Services Limited)

 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 and which, historically, have demonstrated average yields in
excess of the Company's target dividend yield of 8% p.a. (on the Initial Issue
Price).  The current portfolio numbers 26 vessels in the geared dry bulk
segment.  The ships are employed utilising a variety of employment/charter
strategies.

 

On 29 November, the Company announced it had acquired a controlling interest
in Grindrod Shipping Holdings Ltd ("Grindrod") (NASDAQ:GRIN, JSE:GSH).
Grindrod is Singapore incorporated and dual listed on NASDAQ and
the Johannesburg Stock Exchange.  Grindrod owns 25 smaller, geared vessel
categories complementary to those of the Company's fleet.  They are mostly
Japanese built, including 15 Handysize vessels and 10 Supramax and Ultramax
vessels.  Grindrod also has six vessels in its chartered in fleet with
purchase options on four.

 

The Company announced an increased interim dividend of 2 cents per Ordinary
Share paid on a quarterly basis on 28 July 2022, 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
market segment is 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.

 

Important Information

This communication is for informational purposes only, is not a recommendation
and is neither an offer to purchase nor a solicitation of an offer to sell any
shares of Grindrod or any other securities, nor is it a substitute for the
Tender Offer Statement on Schedule TO and other necessary filings that the
Company and Good Falkirk (MI) Limited (the "Offeror") filed, and the
Solicitation/Recommendation Statement on Schedule 14D-9 and other necessary
filings that Grindrod filed, with the SEC on 28 October 2022. Any solicitation
and offer to buy shares of Grindrod is only being made pursuant to the Offer
to Purchase and related tender offer materials. The Tender Offer Statement,
including the offer to purchase, the related letter of transmittal and certain
other offer documents (as they may be updated and amended from time to time),
and the Solicitation/Recommendation Statement on Schedule 14d-9 contain
important information. Any holders of shares of Grindrod are urged to read
these documents carefully because they contain important information that
holders of shares should consider before making any decision with respect to
the tender offer. The offer to purchase, the related letter of transmittal and
the solicitation/recommendation statement and other filings related to the
offer are available for free at the SEC's website at www.sec.gov
(https://protect.mimecast-offshore.com/s/tCuDC594n9Cx5OokhOZYhN?domain=sec.gov)
. Copies of all documents filed with the SEC by the Company and/or the Offeror
with regards to the tender offer are available free of charge on the Company's
website at
www.taylormaritimeinvestments.com/investor-centre/shareholder-information/
(https://protect.mimecast-offshore.com/s/aKZvC7L08LCQ49vGCNDVm2?domain=taylormaritimeinvestments.com/)
. Copies of the Offer to Purchase and the documents filed with the SEC by
Grindrod are available free of charge on Grindrod's website at
www.grinshipping.com/investorrelations
(https://protect.mimecast-offshore.com/s/RubmC9QN6QiMLPv4t1XsRB?domain=grinshipping.com)
. In addition, holders of shares of Grindrod may obtain free copies of the
offer materials by contacting the information agent for the offer, Georgeson
LLC, at 1290 Avenue of the Americas, 9(th) Floor New York, NY 10104 and by
telephone at (866) 695-6078 (toll-free).

 

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