Tufton Oceanic Assets : 4Q22 Factsheet

Tufton Oceanic Assets Limited (SHIP)

4Q22 Factsheet

KEY STATISTICS

as at 31 December 2022 (unless otherwise stated)

No. of Shares in issue	307.778m
Share Price	$1.15 / £0.95
NAV*	$431.6m / £358.8m
NAV per share*	$1.402 / £1.165
Premium/(Discount) to NAV	(18.0%)
Target IRR (long-term)	12% p.a.
Target Dividend per Share	$0.085 p.a.
(to commence from 4Q22)

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 4Q22 was minus 3.8% as values fell over all. Total return would have been positive had our Product Tankers' negative charter value not increased substantially. As the negative charter value unwinds going forward (further details below and over) ceteris paribus NAV will increase by 10%. In the Bulker segment, the relatively low charter cover resulted in limited charter value gains as asset values fell in a weakening market. The Company agreed to divest its last Containership, the Riposte, taking the portfolio to twenty-two vessels. The aggregate realised net IRR on the Company's Containerships is c.27%. NAV total return for 2022 was 7.7% and since inception is 91.1%.

DIVIDEND

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

• 31 Dec 2022 closing mid-rate of USD/GBP 0.8313. Source: Morningstar

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: 45 years of experience in banking and shipping finance. Joined Tufton in 2001.
• Paulo Almeida: 28 years of experience in fund management, investment banking and the shipping industry. Joined Tufton in 2009.

Signatory of

The Company declared a 4Q22 dividend of $0.02125 per share, payable on 10 February. The Company targets a total annual dividend of $0.085 per share and is forecast to have a dividend cover of 1.8x over the next 18 months after reinvesting the Riposte sale proceeds.

SHARE PURCHASES

Tufton principals acquired an additional 613,000 ordinary shares in 2H22 such that Tufton-related shareholders owned 3.2% of the issued share capital as at 31 December 2022. During 4Q22, SHIP bought back 945,000 ordinary shares at an average price of $1.14 per share.

INVESTMENT OUTLOOK

The Product Tanker market continued to strengthen. Benchmark time charter rates rose to their highest level since 2005. The easing of Covid-related lockdowns in China, refinery expansions in the Middle East and Asia as well as slowing fleet growth (orderbook at only c.5% of fleet) suggest the Product Tanker market will remain strong in 2023. Asset values should rise as confidence builds in the duration of the market strength - or, if rates moderate, negative charter value should unwind more than charter-free values drop. The tightening Product Tanker market also benefits Chemical Tankers as 25-30% of MR Product Tankers are engaged in the chemical/vegoil trade. More Product/ Chemical Tankers have shifted away from chemicals to meet the rising Product Tanker demand. The Chemical Tanker market is also expected to benefit from slowing fleet growth and improving demand growth, primarily in China, in 2023. Vessels corresponding to c.52% of NAV benefit from these trends.

The Containership market continued to weaken as port congestion unwound and demand was negatively impacted by high inflation and tightening monetary policy. With fleet growth of c.7% forecast in 2023, the Containership market is likely to remain weak. SHIP agreed to divest its last Containership. Tufton will seek new opportunities as they arise.

The Bulker market weakened during the quarter as demand growth was impacted by the slowdown in Chinese economic activity following the Covid- related lockdowns, coincident with the easing of port congestion. Beyond seasonal weakness in 1Q23, Tufton expects the market, supported by strong supply-side fundamentals, to improve as demand growth recovers.

The Company's acquisitions since 4Q21 are in the top quartile of fuel efficiency compared to their respective peer groups. Through capital re-allocation, we have improved the portfolio emissions intensity by c.50% since 3Q21. Energy Saving Devices ("ESDs") retrofits are substantially completed on seven vessels, in progress on one, and planned for three other vessels later in 2023. The ESDs have expected IRRs of >20% and will further reduce emissions.

All Rights Reserved. Published 17 January 2023

Tufton Oceanic Assets Limited (SHIP)

4Q22 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	GG00BDFC1649
SEDOL	BDFC164 / BMB3NJ1
Ticker	SHIP / SHPP
Dividend	Quarterly
Frequency
ISA / SIPP	Yes
eligible?
Website	www.tuftonoceanicassets.com
Email	[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]

ADMINISTRATOR & SECRETARY

Maitland Administration (Guernsey) Limited

(per registered address above) [e-mail]

PORTFOLIO PERFORMANCE

NAV total return for the quarter was minus 3.8%. Operating profit was $0.048/share. The capital value of the portfolio fell by $0.119/share. Charter-free values fell due to the weaker Containership and Bulker markets while charter values also fell as benchmark Product Tanker time charter rates rose strongly. The total negative charter value in the portfolio of $43.3m will trend to zero (i.e. increase NAV) in the medium term, ceteris paribus. If market rates stay flat, the NAV impact will be +c.$4m (c.1% of NAV) in 1Q23 and c.$18.0m (c.4.2% of

NAV) in 2023.											$1.75
				$0.048											$1.50
														$0.013
					($0.052)
								($0.066)	($0.020)
		$1.479		$1.479	$1.475		$1.409		$1.389		$1.389		$1.402	$1.25
																		$1.00
		NAV	Operating	Change in	Change in	Dividend	Performance		NAV
	30 Sep 2022	profit	charter-free	charter values				fee accrual	31 Dec 2022
						values

FLEET NET YIELDS

The run rate yield+ on the fleet is 12%. Average expected charter length (EBITDA-weighted) was 1.4 years for the portfolio and 0.3 years for Bulkers. The low expected charter length on Bulkers means the segment will benefit if the

market improves from 2Q23 as expected.			30%
23.8%				25%
	15.8%	15.7%		20%
			12.0%	15%
9.0%				10%
				5%
				0%
Product Tankers Chemical Tankers	Gas	Bulkers	Fleet Avg
	Tanker

+On market value and after capex accrual and fees, pro forma

CORPORATE CALENDAR			PORTFOLIO OVERVIEW+
AGM		26 Oct 2023
		Vessel Type	Charter Length	Vessel Age	Vessel Charterers
Reporting period end	30 Jun 2023 (FY)
Dividend Calendar
	4Q	1Q	2Q	3Q
	22	23	23	23
Release	18	19	19	18
date	Jan	Apr	Jul	Oct
Ex-dividend	26	27	27	26
date	Jan	Apr	Jul	Oct	Bulkers	< 1 year	5-10 years	Ten charterers
					Product Tankers
	27	28	28	27		10-15 years
Record date		1-3 years
Jan	Apr	Jul	Oct	Chem Tankers
		15-20 years
Payment	10	11	10	10	Gas Tanker
date	Feb	May	Aug	Nov	Net current assets			+ Pro forma

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 17 January 2023