Tufton Oceanic Assets : 3Q21 Factsheet

Tufton Oceanic Assets Limited (SHIP)

3Q21 Factsheet

KEY STATISTICS

as at 30 Sep 2021

(unless otherwise stated)

No. of Shares outstanding	280.57m
Share Price	$1.35
NAV	$383.71m
NAV per share	$1.368
Premium/(Discount) to NAV	(1.3%)
Target IRR (long-term)	12% p.a.
Target Dividend per Share	$0.08

Management Fee: 0.85% of NAV below $250m 0.75% of NAV between $250m and $500m 0.65% of NAV above $500m (no fees on cash)

Performance Fee: 20% of excess return over

12% net hurdle, partially paid after 7 years

INVESTMENT OBJECTIVES AND STRATEGY

To provide investors with an attractive level of regular and growing income and capital returns through investing in a diversified portfolio of secondhand commercial sea-going vessels.

PORTFOLIO HIGHLIGHTS

NAV total return for the quarter was 19.7% as containership and bulker values rose strongly. During the quarter, the Company agreed to divest the containership Citra with a realised net IRR of 47% and agreed to acquire a fuel efficient ultramax bulker with a fixed-rate time charter producing an annual net yield of c.21%. On 6 August 2021, the Company announced the successful raise of $12.4m in gross proceeds via the issue of 10.53m shares at a price of $1.18 per share. By the end of the quarter, the proceeds from the capital raise and the divestment of Citra were promptly invested in two fuel efficient handysize bulkers with fixed-rate charters producing an annual net yield of 25%. After these transactions, the Company will have an average expected charter cover of c.1.9 years. After the end of the quarter, the Company agreed to divest the handysize bulker Dragon. Tufton expects to invest the proceeds from the divestment promptly.

INVESTMENT MANAGER

Tufton Investment Management Ltd

70 Pall Mall, 1st Floor London SW1Y 5ES

The Investment Manager is Tufton Investment Management Ltd ("Tufton") The Tufton group was founded in 1985 to provide financial services to the maritime and energy industries and since 2000 has concentrated predominately on investment and asset management. The Investment Manager is authorised and regulated by the Financial Conduct Authority and has offices in London, Isle of Man, and Cyprus. Tufton is fully dedicated to the maritime industry with an in- house research team and Asset Manager providing operational and accounting services to each vessel within the portfolio. The Investment Manager is committed to Responsible Investment by integrating ESG principles into its investment process and since December 2018, has been a signatory of the UN Principles for Responsible Investment

Fund Managers:

• Andrew Hampson: 43 years of experience in banking and shipping finance. Joined Tufton in 2001.
• Paulo Almeida: 26 years of experience in fund management, investment banking and the shipping industry. Joined Tufton in 2009.

Signatory of

DIVIDEND

The Company declared a 3Q21 dividend of $0.02 per share, payable on 12 November 2021. The Company targets a total annual dividend of $0.08 per share and is forecast to have dividend cover of c.1.6x over the next 18 months despite being not fully invested from December following the divestment of Dragon. Tufton expects the forward cover will be at least 1.7x once SHIP is again fully invested.

INVESTMENT OUTLOOK

Tufton believes the shipping market is in a multi-year upcycle and offers investors inflation protection. The Clarksons newbuilding price index has risen c.19% YTD, largely driven by input cost pressures. Ceteris paribus, higher newbuilding prices drive secondhand vessel values higher.

The containership and bulker markets continued to strengthen in 3Q21, with strong underlying demand and port congestion. Benchmark 10-year-old containership prices rose c.29% while benchmark 10-year-old handysize bulker prices rose c.24% over the quarter. Despite the increase in bulker values, they are not above mid-cycle levels while annual net yields of c.20% are significantly above mid-cycle.

Earlier this year, SHIP acquired two chemical tankers. Tufton sees multiple catalysts on the horizon for improvement in the tanker market over the medium term. Oil demand continues to recover and will likely attain pre-pandemic levels in 2022. The rising cost of environmental compliance and high scrap prices suggest that the rise in tanker recycling seen earlier this year will continue. New orders remain subdued with the tanker orderbook at only c.8% of fleet which will result in very low fleet growth. While the strong yields in bulkers significantly de-risk new investments, the tanker market is likely to offer value opportunities in the coming quarters with strong capital appreciation potential. Tufton believes the shipping market continues to offer an excellent range of opportunities across the segments to provide investors with an attractive level of regular and growing income and capital returns.

All Rights Reserved. Published 21 Oct 2021

$1.80

Tufton Oceanic Assets Limited (SHIP)

3Q21 Factsheet

COMPANY INFORMATION

	3rd Floor
Registered	1 Le Truchot
Address	St Peter Port
	Guernsey, GY1 1WD
Listing	Specialist Fund Segment of the
London Stock Exchange
IPO Date	20th December 2017
ISIN / SEDOL	GG00BDFC1649 / BDFC164
Ticker	SHIP
Dividend	Quarterly
Frequency
ISA / SIPP	Yes
eligible?
Website	www.tuftonoceanicassets.com

[e-mail]

BOARD OF DIRECTORS

Robert King (Chairman)

Paul Barnes

Stephen Le Page

Christine Rødsæther

CORPORATE ADVISERS

Hudnall Capital LLP

Adam House, 7-10 Adam Street

London, WC2N 6AA

Andrew Cade: [phone]

Singer Capital Markets

1 Bartholomew Lane, London, EC2N 2AX Alan Geeves: [phone] James Waterlow: [phone] Sam Greatrex: [phone]

PORTFOLIO PERFORMANCE

NAV total return for the quarter was 19.7%. Operating profit was $0.027/share. The rise in charter-free values from the strong containership and bulker markets was partially offset by a drop in charter value as benchmark time charter rates rose i.e. an increase in "under-renting". The rate of increase in negative charter value slowed over the quarter as the benchmark rates in containerships and bulkers increased only moderately in September. The total negative charter value in the portfolio of $126.7m will trend to zero (i.e. increase NAV) in the medium-termceteris paribus. If market rates stay flat, the NAV impact in 4Q21 will be +c.$19.6m (c.5.1% of NAV).

				$0.431								$1.60
					($0.219)							$1.40
	$0.027			($0.018)	($0.011)
										$1.20
					$1.397	$1.379	$1.368		$1.368
$1.158	$1.158		$1.185								$1.00
													$0.80
NAV	Operating	Change in	Change in	Dividend	Performance	NAV
30 Jun 2021	profit	charter-free	charter				fee accrual	30 Sep 2021
				values	value

FLEET NET YIELDS

The run rate yield+ on the fleet is 14.1%. Average expected charter length

(EBITDA weighted) is c.1.9 years.	19.4%	20%
	15.9%
		14.1%
11.3%	12.7%		15%
			10%
			5%

ADMINISTRATOR & SECRETARY						0%
Maitland Administration (Guernsey) Limited	Product &	Gas	Containerships	Bulkers	Fleet Avg
(per registered address above)	Chemical	Tanker
Wikus Van Schalkwyk: [phone]	Tankers
CORPORATE CALENDAR		+On market value and after capex accrual and fees, pro forma for all transactions announced

AGM		20 Oct 2021		PORTFOLIO OVERVIEW+
Reporting period end	30 Jun 2022 (FY)	Vessel Type	Charter Length	Vessel Age	Vessel Charterers
Dividend Calendar
	1Q	2Q	3Q	4Q
	21	21	21	21
Release	22	22	21	20
date	Apr	Jul	Oct	Jan
Ex-dividend	29	29	28	TBC
date	Apr	Jul	Oct		Containerships	< 1 year 1-3 years	5-10 years	Ten charterers
Record date	30	30	29	TBC	Product & Chem Tankers
	10-15 years
	Apr	Jul	Oct		Gas Tanker	3-5 years
Payment	14	13	12	TBC	Bulkers		15-20 years
date	May	Aug	Nov		Net current assets		+ pro forma for all transactions announced

Disclaimer: The information in this document has been prepared for information purposes only and does not constitute an offer or solicitation for the purchase or sale of any investment or financial instrument in Tufton Oceanic Assets Limited (the "Company") and should not be relied on by any person for the purpose of accounting, legal or tax advice or for making an investment decision. The payment of dividends and the repayment of capital are not guaranteed by the Company. Any forecast, projection or target is indicative only and not guaranteed in any way, and any opinions or views expressed in this document are those of Tufton Investment Management Ltd (the "Investment Manager"), and do not constitute investment advice and are subject to change without notice, and neither the Company nor the Investment Manager is under any obligation to update such opinions. Any potential investments identified by the Investment Manager are prospective only and there is no guarantee that the Company will proceed with any of them. Past performance is not a reliable indicator of future performance, and investors may not get back the original amount invested. Unless otherwise stated, the sources for all information contained in this document are the Investment Manager. Information contained in this document is believed to be accurate at the date of publication, but neither the Company nor the Investment Manager gives any representation or warranty as to the accuracy or completeness of the information in this document. This document does not contain and is not to be taken as containing any financial product advice or financial product recommendation. Neither the Company nor the Investment Manager accepts any liability whatsoever for any loss (whether direct or indirect) arising from any use of this document or its contents. Tufton Investment Management Ltd. is authorised and regulated by the FCA, registered in England & Wales (Registered Number: 01835984). Registered Office: 70 Pall Mall, 1st Floor, London SW1Y 5ES

All Rights Reserved. Published 21 Oct 2021