25 October 2023

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

Quarterly NAV Announcement, Trading Update and Publication of Factsheet

Reduction in fleet market value impacting NAV - benchmark values back to end of June levels since quarter end

Significant progress with $42 million decrease in TMI debt during the quarter

Positive momentum in charter rates since mid-August

Interim dividend of 2 cents per share declared

Taylor Maritime Investments Limited, the specialist dry bulk shipping company, today announces that as at 30 September 2023 its unaudited NAV was $1.31 per Ordinary Share compared to $1.56 per Ordinary Share as at 30 June 2023.  The Company is pleased to declare an interim dividend in respect of the period to 30 September 2023 of 2 cents per Ordinary Share.  The NAV total return for the quarter was -13.5%.

The second quarterly factsheet of the current financial year is also now available on the Company's website, www.taylormaritimeinvestments.com.

Key Highlights (to 30 September 2023)

NAV development

·      The main driver of NAV performance, accounting for approximately 87% of the decrease in NAV, was a decrease in Fair Value of $72.7 million, resulting from softer asset values given a weaker charter market.  The Market Value of the fleet decreased by approximately 8%, on a like for like basis, to $726.7 million (TMI $288.4 million and Grindrod $438.3 million which excludes chartered-in ships without purchase options and two vessels held for sale during the period)

·      Clarksons' benchmark values for secondhand Handysize and Supra/UItramax vessels have returned to their end of June levels since quarter end

Taking opportunity to lock in higher charter rates against a sharply rising index

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

·      The average net time charter rate for the TMI fleet was $10,299 per day at quarter end, slightly above the adjusted BHSI (Baltic Handysize Index) Time Charter Average (net)[1] which increased c.74% from its recent low point in early August to finish the period at $10,214 per day

·      The average charter duration for the TMI fleet stood at three months, with a large portion of the fleet poised to capture recent improvements in market conditions as they roll off current charters.  The average annualised unlevered gross cash yield was 7.8% at quarter end

·      The blended time charter equivalent (TCE) across the TMI and Grindrod fleet was $10,695 per day at quarter end (including Handysize and Supra/Ultramax vessels)

Vessel sales

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

·      Grindrod completed three ship sales: a 2011 built Handysize bulk carrier for gross proceeds of $10.8 million, a 2015 built Ultramax bulk carrier and a 2016 built Ultramax bulk carrier for aggregate gross proceeds of $46.5 million (as previously announced) 

·      Grindrod further agreed the sale of two 2013 Chinese built Handysize bulk carriers expected to complete in Q3 of the current financial year for aggregate gross proceeds of $23.2 million

·    In total, across the Company and Grindrod, seven ship sales were agreed or completed, of which two sales were from TMI to Grindrod.  As a result, the combined owned fleet comprised 42 vessels at quarter end (TMI 21[2] and Grindrod 21[3]).  These transactions achieve a balance of supporting the Company's de-gearing plans together with strategic fleet management resulting in an improved overall fleet profile.   Once agreed vessel sales complete, the combined fleet will comprise 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

·    Overall, there have been fourteen asset disposals (agreed and completed) across the Company and Grindrod since the acquisition in December 2022 which have been achieved at an average discount to carrying value of -3.9%

Progress with debt reduction

·      During the quarter, the Company's outstanding debt decreased by $42.4 million to $167.6 million (versus $210.1 million at the end of June).  The Company's debt-to-gross assets ratio was 26.9% based on Fair Market Value at the end of September (versus 28.5% as at 30 June 2023) and was impacted by a decrease in asset values

·      Grindrod's debt including lease liabilities reduced by $7.7 million to $168.9 million at quarter end (versus $176.6 million at the end of June.  As a result, the estimated debt to gross assets ratio on a 'look through'[4] basis at 30 September 2023 was 38.5% (versus 38.7% as at 30 June 2023[5])

Grindrod developments - acquisition of TMI commercial and technical managers and capital reduction

·      The acquisition of the commercial and technical managers by Grindrod (previously announced), brings the ship management of the TMI and Grindrod fleets together under one entity and, as a result, benefits of scale should be more fully realisable.  The fleet management strategies will be aligned and fleet resources pooled with a view to creating potential synergies across three key areas:  technical management, commercial management and accounting 

·      Grindrod announced the effective date of the proposed capital reduction which will result in a cash distribution in two tranches, both payable in the third quarter of the current financial year.  Of the total $32.4 million cash distribution, US$26.7 million would be payable to TMI in line with its 82.3% ownership and is expected to be used to further reduce debt and for general corporate purposes

Post-Period Trading Update (since 30 September 2023)

·      TMI has agreed a further asset sale:  a 2007 built 33k dwt Handysize vessel expected to complete this quarter for gross proceeds of $9.0 million, generating an IRR of c.19% and MOIC of c.1.4x, with part of the proceeds expected to be used to reduce debt

·      The combined TMI and Grindrod fleet has covered 29% of remaining fleet days for the Financial Year ending 31 March 2024 at a blended time charter equivalent rate of c.$12,100 per day

Commenting on the trading update Edward Buttery, Chief Executive Officer, said:

"Despite weaker-than-expected market conditions impacting asset values, we have had a successful year to date in terms of strengthening our balance sheet through debt reduction and implementing operational efficiencies.  Reducing debt remains a top priority for TMI and our shareholders.  We've repaid just over $90 million of debt at TMI alone this calendar year - and we've reduced consolidated debt (including lease liabilities) by just under $150 million including Grindrod.  We've sold 12 ships across the companies (excluding two ships sold to Grindrod by TMI).  This has had the dual benefit of refocusing the fleet on an attractive core of modern Japanese geared bulk carriers poised to capture the upside of improving charter rates; now managed under one roof to deliver synergies across the larger fleet.  We are encouraged by the recent market strengthening and favourable outlook, and we continue to improve our position to deliver long term value to shareholders."

Dry bulk market outlook

With China's economic recovery taking longer than initially expected, charter market conditions remained soft at the start of the period before firming significantly from early August with the BHSI rising by c.74% and the BSI increasing by c.82%.  Rates have been driven by strong corn and soybean exports from Brazil meeting firm seasonal demand from key importing regions.  Congestion caused by Panama Canal drought related transit restrictions also tied up ships for longer durations, increasing fleet utilisation.

Strong grain exports from East Coast South America and improving sentiment in China driven by encouraging consumption and industrial output figures and new policy measures targeting construction and infrastructure investment, should see charter rates remain stable before the onset of the seasonally softer market over the holiday period, including Chinese New Year. 

The Clarksons' benchmarks for a 10-year-old 37k dwt Handysize vessel and a 5-year-old Supra/Ultramax vessel each decreased by c.3% quarter-on-quarter with values of Supra/Ultramax geared bulk vessels recovering slightly in September as rates rose.  Although lagging the sharp recovery in rates since mid-August, secondhand Handysize and Supra/UItramax values have improved and at the time of writing Clarksons had increased its benchmark to end of June levels. 

Looking to 2024, deliveries of new Handysize and Supra/Ultramax are scheduled to peak, with Clarksons forecasting the combined fleet growing by 3.3% net, before fleet growth slows in 2025 and 2026, when 4.5% of the geared fleet will be 28 years or older[6], following several years of limited ordering and construction activity.  High newbuilding costs, constrained shipyard capacity, regulatory and technological uncertainty and higher costs of capital will continue to discourage new orders of dry bulk vessels.  Meanwhile, pressure to comply with emissions regulations will encourage slower operating speeds and increased demolition of older, less efficient tonnage, particularly in the Handysize and Supra/Ultramax segments where 9.5% and 4.8% of the respective fleets are over 25 years old.

Given the above supply side pressures and forecasts of 3.2% combined minor bulk and grain tonne-mile growth in 2024, according to Clarksons, we maintain a positive outlook for valuations and charter rates for the geared dry bulk segment.

Financing

TMI refinanced its debt during the quarter with the existing Revolving Credit Facility ("RCF") and Acquisition Facility (in connection with the Grindrod transaction) replaced by a new RCF that bears a lower margin. 

TMI will continue to reduce its debt from agreed and planned vessel sales to achieve, and go beyond, 25% debt to gross assets as well as continuing to reduce 'look through' leverage.  This is supported by a similar strategy at Grindrod.

ESG

The Company has just released its second annual ESG report covering the financial year 1 April 2022 to 31 March 2023. TMI's disclosure is in line with the Task Force on Climate-related Disclosure, the Global Reporting Initiative, and the Sustainability Accounting Standards Board. The report also includes key metrics on Grindrod Shipping, representing a sizeable portion of TMI's overall portfolio. The report can be viewed on TMI's website.

During the reporting period, measurable progress was made towards the Group's decarbonisation targets - fleet carbon intensity improved, as measured by EEOI ("Energy Efficiency Operational Index") and AER ("Average Efficiency Ratio"), by 18% and 1.4% respectively, remaining on track with the IMO's decarbonisation trajectory.

TMI continues to work closely with Grindrod Shipping on ESG strategy and alignment.

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 20 vessels, excluding one vessel held for sale post period, 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 excluding vessels held for sale.  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 42 vessels (including chartered in vessels with purchase options and excluding vessels held for sale during the period).

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.