Tufton Oceanic Assets : 2Q23 Factsheet

Tufton Oceanic Assets Limited (SHIP)

2Q23 Factsheet

KEY STATISTICS

as at 30 June 2023

(unless otherwise stated)

No. of Shares in issue	302.469m
Share Price	$0.99 / £0.78
NAV*	$412.8m / £324.7m
NAV per share*	$1.365 / £1.074
Premium/(Discount) to NAV	(27.5%)
Target IRR (long-term)	12% p.a.
Target Dividend per Share	$0.085 p.a.

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

• 30 June 2023 closing mid-rate of USD/GBP 0.7866 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

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 2Q23 was -0.7%. Strong operating profit was outweighed by falls in capital value as the Bulker and Tanker markets were negatively impacted by factors we believe are transient (e.g., seasonal). Our Product Tankers are on long-term charters while we continue to focus on shorter-term charters for Bulkers in expectation of longer charters at higher rates later this year. Though our dividend cover forecast has been revised slightly lower to reflect the recent Bulker market weakness, Tufton retains a positive view on the Product Tanker and Chemical Tanker markets in the medium term and expects the Bulker market to improve with demand growth in 2H23. Please see Investment Outlook for details.

DIVIDEND

The Company declared a 2Q23 dividend of $0.02125 per share, payable on 11 August. The Company targets a total annual dividend of $0.085 per share and is forecast to have a dividend cover of c.1.6x over the next 18 months.

SHARE BUYBACKS AND PRINCIPAL PURCHASES

In 2Q23, SHIP purchased 3,400,000 ordinary shares at an average price of $1.11 per share in line with its published discount management policy. SHIP has purchased a total of 6,160,000 ordinary shares since 4Q22. The Company announced on 26 June 2023 that Tufton principals acquired a further 593,136 ordinary shares. Tufton-related shareholders owned 3.7% of the issued share capital of the Company as at 30 June 2023.

INVESTMENT OUTLOOK

The limited orderbooks in the Bulker, Product Tanker and Chemical Tanker segments will result in very low fleet growth over the next two years. Further, new environmental regulations are expected to result in an effective supply reduction of 2-4% over the next 18 months.

Product Tanker demand weakened seasonally. The easing Product Tanker market also impacted the Chemical Tanker market. The structural factors of long-haul demand from the addition of new refining capacity in Asia and the Middle East as well as the reconfiguration of Russian trade flows remain in place for the Product Tanker market in addition to strong supply-side fundamentals. We expect rates and asset values to rise in 2H23. Chemical Tankers should also benefit from the improving Product Tanker market.

The expected improvement in the Bulker market is delayed after port congestion eased in South America and Australia, increasing supply. Minor bulk demand growth was weaker than expected as PMIs in the Eurozone and the US fell. The Bulker market is strongly underpinned by its supply-side fundamentals, with orderbook at only c.7% of fleet expected to result in very low fleet growth over the next two years. We expect the market will improve with demand growth in 2H23. Our Handysize Bulkers, which are fuel- efficient compared to their global peer group, will especially benefit from the new environmental regulations.

All Rights Reserved. Published 19 July 2023

Tufton Oceanic Assets Limited (SHIP)

2Q23 Factsheet

COMPANY INFORMATION

	1 Royal Plaza
Registered	Royal Avenue
Address	St Peter Port
	Guernsey, GY1 2HL
Listing	Specialist Fund Segment of the
London Stock Exchange
IPO Date	20 December 2017

PORTFOLIO PERFORMANCE

NAV total return for the quarter was -0.7%. Operating profit was $0.047/share. The charter-free value of the portfolio fell by $0.062/share due to the transitory weakness in the Product Tanker and Bulker markets. Portfolio charter value increased only by $0.002/share as the Tanker market became more backwardated and the negative charter value unwound less than expected, leading to revised forecasts of higher unwinding over the next few quarters, as SHIP has experienced before. If market rates stay flat,

ISIN	GG00BDFC1649
SEDOL	BDFC164 / BMB3NJ1

the total negative charter value (c.12% of NAV) will unwind by c.2.8% of NAV in 2H23.

							$1.50
Ticker	SHIP / SHPP	$0.047		$0.002
					$0.003
Dividend	Quarterly
	($0.062)		($0.021)
Frequency
ISA / SIPP	Yes						$1.25
eligible?	$1.396	$1.396	$1.381	$1.381	$1.362	$1.362	$1.365
Website	www.tuftonoceanicassets.com
Email	[e-mail]						$1.00

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]

NAV	Operating	Change in	Change in	Dividend	Accretion from	NAV
31 Mar 2023	profit	charter-free	charter values		share buybacks	30 Jun 2023
		values

FLEET NET YIELDS

The run rate yield+ on the fleet is 11.0%. Average expected charter length (EBITDA-weighted) is 1.3 years for the portfolio.

	23.8%	30%
	25%
	16.3%	20%
8.9%	11.0%	15%
8.4%	10%

ADMINISTRATOR & SECRETARY						5%
Maitland Administration (Guernsey) Limited							0%
(per registered address above)			Product Tankers	Chemical Tankers	Gas	Bulkers	Fleet Avg
[e-mail]
				Tanker
CORPORATE CALENDAR			PORTFOLIO OVERVIEW	+On market value and after capex accrual and fees, pro forma
AGM		26 Oct 2023
Reporting period end	30 Jun 2023 (FY)	Vessel Type	Charter Length	Vessel Age	Vessel Charterers
Dividend Calendar
	2Q	3Q	4Q	1Q
	23	23	23	24
Release	19	18	17	16
date	Jul	Oct	Jan	April
Ex-dividend	27	26	TBC	TBC
date	Jul	Oct	Bulkers
		< 1 year		5-10 years	Ten charterers
	28	27			Product Tankers
Record date	TBC	TBC			10-15 years
Jul	Oct	Chem Tankers	1-3 years
Payment	11	10	TBC	TBC	Gas Tanker			15-20 years
date	Aug	Nov	Net current assets

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 19 July 2023