Tufton Oceanic Assets : 1Q21 Factsheet

Tufton Oceanic Assets Limited (SHIP)

1Q21 Factsheet

KEY STATISTICS

as at 31 Mar 2021

(unless otherwise stated)

No. of Shares outstanding	270.04m
Share Price	$0.97
NAV	$284.44m
NAV per share	$1.053
Premium/Discount to NAV	-7.9%
Target IRR (long-term)	12% p.a.
Target Dividend per Share	$0.075

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)

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 per share total return for the quarter was 9.1%. In particular, containership values rose strongly. Because market charter rates have increased greatly, the portfolio has a negative charter value of $44.6m. This will trend to zero (i.e. increase NAV) in the medium term ceteris paribus. If market rates stay flat, the NAV impact in 2Q21 will be +c.$8m (c.3% of NAV). The yield (please see next page for details) on the portfolio increased to 13.3%, primarily due to new containership charters. The portfolio of twenty-one vessels has an average charter cover of c.2.5 years. After the end of the quarter, the Company agreed to acquire a handysize bulker for $14.3m with a fixed rate, eleven- to thirteen-month time charter.

Performance Fee: 20% of excess return over

12% net hurdle, partially paid after 7 years

INVESTMENT MANAGER

Tufton Investment Management Ltd

Albemarle House, 1 Albemarle Street

London, W1S 4HA, UK

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 has been a signatory to the UN Principles for Responsible Investment since December 2018.

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 to

Tufton continues to prioritize crew welfare as part of its commitment to responsible investment. As at the end of 1Q21, c.3% of the crew members on board the Company's vessels were overdue for rotation (down from c.6% at the end of 4Q20). This is significantly better than the industry average of c.15%.

DIVIDEND

The Company declared a 1Q21 dividend of $0.01875 per share, payable on 14 May 2021. The Company continues to target a total annual dividend of $0.075 per share and is forecast to have a dividend cover of c.1.7x over the next 18 months.

INVESTMENT OUTLOOK

The containership market surprised even seasoned market participants as the effects of strong demand were accentuated by regional port congestion. Asset values rose strongly, with the benchmark 10-year old 2500-TEU ship up by c.54% or $7m during 1Q21. According to research from Harper Petersen shipbrokers, there is negligible containership vessel capacity becoming available in the coming 12 months.

The tanker market remains weak, but the Company's six product tankers are on long term charters fixed before current weak market conditions prevailed. Earlier this month, OPEC and its allies announced a production increase of c.2 mbpd between May and July which will aid the gradual recovery in the tanker market. The bulker market strengthened over 1Q21. The market for smaller bulkers was led by demand for grain and minor bulk commodities. US corn exports rose in 1Q21 along with wheat and barley exports from Australia. Port congestion in Asia as a result of Covid-19 restrictions also contributed to the market strength.

Overall, the supply side recovery in shipping continues with the orderbook close to thirty-year lows which will result in slowing fleet growth. The Clarksons newbuilding price index rose c.3.5% in 1Q21 as the trickle of new orders was channeled to a decreasing number of active yards. The ongoing supply side adjustment, tightening environmental regulations and recovery in world economic growth suggest a strong upcycle ahead in shipping.

All Rights Reserved. Published 22 Apr 2021

Tufton Oceanic Assets Limited (SHIP)

1Q21 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]

N+1 Singer

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)

Wikus Van Schalkwyk: [phone]

CORPORATE CALENDAR
AGM		20 Oct 2021
Reporting period		30 Jun 2021 (FY)
end
Dividend Calendar
	1Q	2Q	3Q	4Q
	21	21	21	21
Release	22	22	21	TBC
date	Apr	Jul	Oct
Ex-dividend	29	29	28	TBC
date	Apr	Jul	Oct
Record date	30	30	29	TBC
	Apr	Jul	Oct
Payment	14	13	12	TBC
date	May	Aug	Nov

PORTFOLIO PERFORMANCE

NAV per share total return for the quarter was 9.1%. There was a fair value gain of $0.069 per share as containership values rose strongly in a strong market. Because market charter rates have increased greatly, the portfolio has a negative charter value of $44.6m. This will trend to zero (i.e. increase NAV) in the medium term ceteris paribus. If market rates stay flat, the NAV impact in 2Q21 will be +c.$8m (c.3% of NAV).

							$1.20
			($0.175)
		$0.239		($0.019)		$1.10
	$0.026
						$1.00
			$1.072	$1.072
				$1.053
		$1.008
$0.982	$0.982
								$0.90
NAV	Operating	Change in	Change in	Dividend	NAV
31 Dec 2020	profit	charter-free	charter value				31 Mar 2021
		values

FLEET NET YIELDS

The run rate yield+ on the fleet is 13.3%. Average expected charter length (EBITDA weighted) is c.2.5 years.

					20%
	13.0%	15.6%		13.3%
11.0%		11.2%	15%
					10%
					5%
					0%
Product &	Gas	Containerships	Bulkers	Fleet Avg
Chemical	Tanker
Tankers

+On market value and after capex accrual and fees, as at 31 March 2021

PORTFOLIO OVERVIEW+

Vessel Type

Charter Length

Vessel Age

Vessel Charterers

Containerships	< 1 year	1-3 years	5-10 years	Across eleven
Product & Chem Tankers		charterers
		10-15 years
Gas Tanker	3-5 years
Bulkers			15-20 years
Cash and other net assets				+As at 31 March 2021

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: 1 Albemarle Street, London W1S 4HA

All Rights Reserved. Published 22 Apr 2021