Factsheet, Trading Update & Quarterly NAV
27 April 2023
Taylor Maritime Investments Limited (the "Company")
Quarterly NAV Announcement, Trading Update and Publication of Factsheet
Grindrod Shipping investment delivering benefits of scale and synergies with TMI CEO Edward Buttery appointed CEO
On track to reach debt reduction target by end of June with total of c.$64 million of debt repaid across TMI and Grindrod in the quarter
Balanced chartering strategy outperforming index and should benefit from market upside with continued positive outlook
Interim dividend of 2 cents per share declared
Taylor Maritime Investments Limited, the specialist dry bulk shipping company, today announces that as at 31 March 2023 its estimated unaudited NAV was $1.72 per ordinary share compared to $1.67 per ordinary share as at 31 December 2022. The Company is also pleased to declare an interim dividend in respect of the period to 31 March 2023 of 2 cents per Ordinary Share. The NAV total return for the quarter was 3.8%.
The fourth quarterly factsheet of the current financial year is also now available on the Company's website, www.taylormaritimeinvestments.com.
Key Highlights (to 31 March 2023)
· Continuing to successfully execute on deleveraging strategy with total of $37 million of TMI debt repaid from vessel sale proceeds, resulting in debt to gross assets ratio of 27.7% at quarter end and on track to reduce this to below 25% by the end of June in line with its commitment in the Company's investment policy. When combined with Grindrod's debt repayments during the period, a total of c.$64 million of debt was repaid across TMI and Grindrod
· Overall improvement in asset values resulting in 2.7% increase in the Market Value of TMI's vessel portfolio on a like-for-like basis. Grindrod's NAV increased by an estimated 3.4%. Excluding three chartered-in vessels without purchase options, the combined fleet comprised 51 vessels with a Market Value of $999 million
· Dividend cover for the financial year to 31 March 2023 was 2.6x (excluding the special dividend)
· TMI's strategy of ship sales in order to reduce leverage was supported by a strong sale and purchase market. TMI completed two vessel sales for aggregate net proceeds of $24.4 million generating IRRs of 35% and 68% and MOIC of 1.56x and 1.54x. As already announced, a third vessel was declared a constructive total loss due to the war in Ukraine with insurance proceeds used to prepay debt. TMI's fleet therefore comprised 23 vessels at the quarter end
· The earnings environment improved from the second half of the quarter, as expected. The net time charter rate for the TMI fleet was $14,500 per day at quarter end. The Company outperformed the adjusted BHSI (Baltic Handysize Index) Time Charter Average (net)[1] which stood at $10,331 at quarter end. TMI's chartering strategy mitigated the impact of a typically weaker first quarter, given Chinese New Year. The average charter duration stands at four months, with a large portion of the fleet positioned to capture improving market conditions expected in the lead up to summer, and the average annualized unlevered gross cash yield was c.17.5% at quarter end
· Edward Buttery was appointed Chief Executive Officer of Grindrod with effect from 1 April 2023, securing alignment of strategy as TMI seeks to crystallise value from its investment in Grindrod
· At Grindrod, one previously announced vessel sale completed during the period. A further three vessels were contracted for sale (completion expected by 30 June 2023). The contracted vessel sales will fund a further $16.1 million of debt repayments once completed
Post-Period Trading Update (since 31 March 2023)
· TMI agreed a further sale of a 2008 built 32k dwt Handysize vessel due to complete this quarter for net proceeds of $11.7 million to be applied to reduce debt, generating an IRR of c.63% and MOIC of c.2.0x
· The Company has covered 24% of fleet days for the Financial Year ending 31 March 2024 at an average net time charter rate of c.$16,250 per day
· Synergies from TMI's investment in Grindrod have started to crystallise with the relocation of respective staff in London and Singapore into the same office space and with Edward Buttery's leadership as dual CEO reducing overheads. Fleet marketing is now coordinated which will strengthen the overall commercial position. An integration plan is in progress to formally combine commercial and technical management of the fleets in due course which will deliver economies of scale
· The process of recruiting a new Chairman for TMI is now at an advanced stage
Commenting on the trading update, Edward Buttery, Chief Executive Officer, said:
"We've made solid progress to deleverage TMI's balance sheet, benefiting from a healthy secondary market as long-term fundamentals remain favourable for geared dry bulk. It's exciting to see synergies already crystallising from the Grindrod transaction - my role as CEO of both companies will enable the execution of a clear commercial strategy. Further plans are expected to come to fruition over the next couple of quarters and should bring cost benefits across the fleet. We're in a strong position to capitalise on what we expect to be a firming market for the benefit of all shareholders."
Dry bulk market outlook
The charter market made a swift recovery from mid-February with the BHSI rising c.60% to the end of March following an earlier-than-usual Chinese New Year. Dry bulk earnings are expected to improve through 2023 partly boosted by China, accounting for c.50% of the dry bulk market, which is showing early signs of an economic recovery and global macroeconomic headwinds potentially easing through the year.
Further support for charter rates is anticipated from increased seaborne grain trade with Clarksons projecting tonne-mile growth of 4.7% year-on-year in 2023, driven by robust export volumes from Brazil, Ukraine and the US. Clarksons has revised its forecast upwards for combined minor bulk and grain demand growth (key drivers for the geared dry bulk segment) to 2.1% in 2023 and 3.2% in 2024 while the Handysize fleet grows modestly by 0.4% in 2023 and is expected to contract by -1.0% in 2024. The Supramax and Ultramax fleet is forecast to grow by 2.2% in 2023 and 1.8% in 2024.
Asset values held firm, buoyed by supply-side pressure emanating from a historically low orderbook and recently-introduced environmental regulations which have fuelled expectations of greater levels of recycling and lower operating speeds. Asset values also improved with Clarksons' 10 year old 37k dwt Handysize values increasing from $16.5 million to $18.5 million at quarter end (the more moderate increase in TMI's fleet value is a result of vessels becoming one year older). We continue to anticipate support for earnings and in turn second-hand asset values given ongoing supply side constraints. We maintain a positive outlook through to the end of 2024, and possibly into 2025 with the orderbook remaining near a historical low.
Financing
TMI repaid a total of $37 million of debt with a balance outstanding of $222 million at the quarter end resulting in debt to gross assets ratio of 27.7%. TMI expects to reduce this to below 25% by the end of June through agreed and planned vessel sales in line with its commitment in the Company's investment policy.
Grindrod repaid $18.6 million of debt with a balance outstanding of $205 million at the quarter end. On a 'look through' basis, debt to gross assets ratio was 38.9% (including TMI and Grindrod debt). TMI expects to reduce this to c.35% by the end of June[2].
TMI continues to be focused on ensuring a strong balance sheet consistent with its long-term commitment to a prudent capital structure.
ESG
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. During the period, 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. TMI aims to achieve a long-term target of running a zero-emission fleet by 2050 and is a signatory to the Getting to Zero Coalition's "Call to Action for Shipping Decarbonisation".
ENDS
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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 numbers 23 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 owns 24 geared dry bulk vessels complementary to the Company's fleet. They are mostly Japanese built, including 15 Handysize vessels and 9 Supramax and Ultramax vessels. Grindrod has seven vessels in its chartered in fleet with purchase options on four.
The combined TMI and Grindrod fleet numbers 54 vessels (including chartered in vessels).
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.
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.
LEI: 213800FELXGYTYJBBG50
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