Taylor Maritim Regulatory News (TMIP)

11 December 2023

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

Unaudited Interim Results for the period 1 April 2023 to 30 September 2023

Vessel sales completed leading to significant debt reduction at TMI and Grindrod Shipping ("Grindrod")

Refinancing of TMI debt with improved margin and extended term

Integration of management teams underway to unlock further commercial synergies and technical savings

Continued positive momentum in charter rates with BHSI and BSI hitting 13-month highs in December

Taylor Maritime Investments Limited, the specialist dry bulk shipping investment company, announces its interim results for the six month period ended 30 September 2023.

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

Commenting on the interim results, Henry Strutt, Chairman, said: 

"While challenging macroeconomic conditions persisted throughout the period, TMI continued to take great strides in strengthening its position to deliver long-term value to shareholders. Foremost was the continued reduction in debt with a total of US$91 million having been repaid at 30 September 2023 since the acquisition of Grindrod in December 2022 with the ambition to deliver on a strategy free of significant structural leverage. The Board remains cognisant of the ongoing uncertainty in the wider global economy but, overall, we maintain a favourable outlook for the Group and the segment in which it operates given our expectation of constrained supply going forward and gradually improving global demand. We are also acutely aware of the discount to NAV at which our shares trade at and view the discount as unwarranted, especially in context of the NAV validation we have delivered through vessel sales. As we progress our de-levering process, capital allocation will continue to be a significant focus area for the Board."

Edward Buttery, Chief Executive Officer, added:

"We have focused on delivering our strategic priorities to deleverage and strengthen the Group's balance sheet. We are also now in full swing of integrating commercial and technical management of the combined fleets which should translate into increased future operating profit for the Group. In terms of the market, the recovery of the last month supports our view that the world is short of inventory after a year of business confidence being damaged by rising interest rates and that with receding fears of rising rates we shall see increased activity. We are already seeing stronger levels discussed for longer periods."

Key Highlights (1 April 2023 to 30 September 2023)

Vessel Sales

· The Company agreed the sale of two ships to Grindrod on an arms-length basis during the period: a 2011 built 38k dwt Handysize vessel for gross proceeds of US$15.0 million (completed during the period) and a 40k dwt Handysize newbuild vessel due for delivery in Q1 of calendar year 2024 for gross proceeds of US$33.75 million

· TMI also completed the sale of a 2008 built 32k dwt Handysize vessel for gross proceeds of US$11.9 million, generating an IRR of c.63% and MOIC of c.2.0x

· At Grindrod, six vessel sales completed during the period; a 2010 built Handysize bulk carrier for gross proceeds of US$10.9 million, a 2011 built Handysize bulk carrier for gross proceeds of US$10.8 million, a 2014 built Handysize bulk carrier for gross proceeds of US$17.22 million, a 2015 built Ultramax bulk carrier for gross proceeds of US$23.25 million and, in an en-bloc deal ,a 2015 built Ultramax bulk carrier and a 2016 built Ultramax bulk carrier for aggregate gross proceeds of US$46.5 million

· At 30 September 2023, the combined fleet consisted of 44 vessels (including two vessels contracted to sell) (31 March 2023: 51 vessels) with a total market value of US$750 million (31 March 2023: US$997 million). Of the 44 vessels, 34 are Handysize vessels and 10 are Supramax/Ultramax vessels including 3 chartered-in vessels with purchase options

Refinancing and progress with debt reduction

· The Company replaced its existing Revolving Credit Facility ("RCF") and Acquisition Facility (in relation to the Grindrod transaction) with a new RCF with an improved margin and extended term

· During the period, the Company's outstanding debt decreased by US$54.6 million to US$167.6 million (31 March 2023: US$222.2 million). The Company's debt-to-gross assets ratio was 26.9% based on Fair Market Value at the end of September 2023 (31 March 2023: 27.8%)

· Including Grindrod debt, the Group's debt balance decreased by US$90.7 million over the period to US$338.1 million on a 'look-through' basis (31 March 2023: US$428.8 million)

Grindrod developments - integration of management teams underway and capital reduction

· Ship management of the TMI and Grindrod fleets was brought together under one entity with Grindrod's acquisition of TMI's commercial and technical managers and, as a result, benefits of scale will be more fully realisable

· Grindrod announced the effective date of the proposed capital reduction with a cash distribution taking place in two tranches (the first tranche was paid in October 2023 and the second payable in December 2023). Of the total US$32.4 million cash distribution, a total of US$26.7 million would be payable to TMI in line with its ownership

Chartering

· During the period, TMI agreed one long-term charter of 20 to 24 months at a net time charter rate of US$12,000 per day with a blue-chip charterer, significantly above the prevailing index rate

· The charter income for the combined fleet amounted to an average time charter equivalent ("TCE") rate of US$11,550 per day for the period. Whilst this is a decrease versus the equivalent six month period to 30 September 2022, the combined Handysize fleet and Supra/Ultramax fleet were c.US$2,510 per day and c.US$3,450 per day, respectively, above our benchmark indices[1] for the period

· The average time charter rate net of commissions for the combined fleet was US$12,122 per day at 30 September 2023 with an average duration of two months with a large portion of the fleet poised to capture improvements in market conditions as they roll off charters

Dividends

· The Company declared dividends of 4.00 US cents per Ordinary Shares in the period to 30 September 2023. In addition, the Company declared an interim dividend on 25 October 2023 of 2.00 US cents per Ordinary Share in respect of the quarter ended 30 September 2023, which was paid on 24 November 2023

Chair Appointment

· Henry Strutt was appointed non-Executive Chair of the Company with effect from 1 June 2023 bringing extensive financial services experience from his time spent in senior positions at several financial institutions. Frank Dunne, who acted as Interim Chair, remains on the Board as Senior Independent Director

Post-Period Trading Update (since 30 September 2023)

· The Company completed the sale of the two oldest vessels in the TMI fleet post period; a 2004 built 34k dwt Handysize vessel for gross proceeds of US$7.8 million, generating an IRR of 44.2% and MOIC of c.1.8x, and a 2007 built 33k dwt Handysize vessel for gross proceeds of US$9.0 million, generating an IRR of c.19% and MOIC of c.1.4x (as announced on 5 December 2023)

· In connection with the vessel sales, US$11.4 million of debt will be repaid by the end of the quarter to 31 December 2023, resulting in a reduction to the Company's outstanding debt to US$156.2 million (26.1% Debt to Gross Assets at TMI level based on 30 September 2023 Fair Market Values)

· Grindrod completed the sale of two 2013 Chinese built Handysize bulk carriers for aggregate gross proceeds of US$23.2 million

· Overall, there have been fifteen asset disposals agreed and completed across the Company and Grindrod in 2023 which have been achieved at an average discount to carrying value of -4.0%

· The combined fleet now comprises entirely of Japanese-built vessels (after the disposal of all four Chinese-built vessels) with an average age of 10.5 years and an average carrying capacity of c.40k dwt. This compares favourably to the pre-acquisition TMI fleet (average age of 13.0 years and average carrying capacity of c.33k dwt) and provides evidence of the increased attractiveness of the combined fleet

· Dry bulk rates accelerated from mid-November before surging at the end of the month with the adjusted BHSI TCA rising to US$12,967 per day and the adjusted BSI TCA rising to US$16,715 which is 121% and 124%, respectively, above their mid-August low points. The Company subsequently agreed medium-term charters for three TMI Handysize vessels; a US$16,000 per day gross time charter rate for 100 to 150 days, a US$19,000 per day gross time charter rate for about 75 days and a US$13,000 per day gross time charter rate for 100 to 150 days

· At the time of writing, the combined fleet has coverage for 44% of the remaining days in the current financial year at a TCE of US$11,634 per day

· Post period, the Company released its second annual Environmental, Social and Governance ("ESG") Report covering the financial year ended 31 March 2023 which highlights progress made on TMI's sustainability priorities including decarbonisation, social and community impact, and responsible business practices

· Post period, the Company appointed Deloitte LLP as Auditor following an audit tender process

Outlook

After strengthening considerably late in the interim period, dry bulk charter rates surged further in late November with the BHSI and BSI reaching 13-month highs by early December. The strengthening in rates has been driven by an increase in port congestion in Brazilian grain load ports and further tightening of drought-related transit restrictions on the Panama Canal which has seen an increase in queue times and an increase in tonne-miles with more owner-operators avoiding the route through the Canal. At the same time, US and South American grain trading activity has been robust, providing upside pressure on rates while delays and congestion in the Atlantic absorb significant volumes of tonnage.

Congestion outside Brazilian ports has eased from its peak albeit queues remain at levels more than double than they were a year ago. Meanwhile, Panama Canal restrictions appear to be tightening. In the Pacific, rates have shown signs of stabilising in recent weeks as cargo and tonnage become more balanced. Overall, charter rates are expected to remain stable allowing an opportunity to secure more charters to straddle the seasonally softer Christmas and Chinese New Year holiday period.

Asset values, while lagging charter rates, also improved from their mid-August low points with the Clarksons' benchmarks for a 10-year-old 37k dwt Handysize vessel and a 5-year-old Supra/Ultramax vessel rising by c.3% and c.9%, respectively.

Looking to 2024, restocking of global inventories of bulk commodities, which are believed to be at historically low levels after a prolonged period of uncertainty, would partially offset the dampening effects on demand if interest rates remain elevated. Charter rates and asset values should remain relatively firm as a result, with potential upside provided should interest rates peak, particularly for the geared dry bulk segment where improving industrial trends in China and firm forecasts for global grain production are expected to result in significant growth in minor bulk and grain tonne-miles, respectively. Reduction in effective supply as a result of lower operating speeds and the potential for increased demolition of older, less efficient tonnage with emissions regulations tightening, would provider further potential upside especially considering market fundamentals remain finely balanced as evidenced by the recent surge in dry bulk charter rates.

ENDS

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 Supra/Ultramax 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 19 vessels in the geared dry bulk segment. The ships are employed utilising a variety of employment/charter strategies.

On 20 December 2022, 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 has an owned fleet of 18 dry bulk vessels complementary to the Company's fleet. They are Japanese built, including 11 Handysize vessels and 7 Supra/Ultramax vessels. Grindrod has seven vessels in its chartered in fleet with purchase options on three.

The combined TMI and Grindrod fleet numbers 40 vessels (including chartered in vessels with 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 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) (listed in Oslo BWEK:NO). The commercial and technical management arms of Taylor Maritime were acquired by Grindrod in October 2023.

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.