Tufton Oceanic Assets : Interim Results for the period ended 31 December 2021

Tufton Oceanic Assets Limited

Interim Report and Condensed Interim Financial

Statements

For the period ended 31 December 2021

Contents

Highlights	2
Chairman's Statement	3
Board Members	7
Investment Manager's Report	9
Principal Risks and Uncertainties	26
Interim Report of the Directors	27
Condensed Financial Statements
Statement of Comprehensive Income	32
Statement of Financial Position	33
Statement of Changes in Equity	34
Statement of Cash Flows	35
Notes to the Financial Statements	36
Corporate Information	52

1

Highlights

• During the financial period, Tufton Oceanic Assets Limited (the "Company") had a profit of US$72.2m, or US$0.253 per share.
• The NAV per share increased from US$1.158 as at 30 June 2021 to US$1.376 as at 31 December 2021. The NAV total return for the financial period was 22.3%.
• Having raised the target dividend in January 2021, the Company raised its target dividend again from $0.075 to $0.08 per share commencing from 3Q21. The Company paid a dividend of US$0.02 per share for 3Q21 and 4Q21.
• At the end of the financial period, the Investment Manager's forecasted dividend cover through mid-2023 was c.1.7x despite the Company not being fully invested. When the Company is fully invested, the dividend cover is expected to be ≥ 1.8x.
• As at 28 February 2022, the Company's shares traded at US$1.28/share, a discount of 5.6% to the ex-dividend 31 December 2021 NAV.
• During the financial period, the Company raised gross proceeds of US$51.4m through two tap issues. The total number of outstanding shares and voting rights of the Company as at 31 December 2021 is 308,628,541.
• The significant investment and divestment activity discussed further below demonstrate the Investment Manager's commitment to capital re-allocation and ESG.
• As at 31 December 2021, the average expected charter length (EBITDA weighted) was c.1.9 years.
• The Company's fleet had no unplanned commercial idle time (voids) during the financial period.
• As at 31 December 2021, all delivered vessels except Candy, Orson and Golding were employed on fixed rate charters. Candy was on a floating rate time charter, subject to a floor and a ceiling. Golding and Orson are employed in a chemical tanker pool.
• During the financial period, the Company agreed to divest three vessels and to acquire five vessels. The overall return from the agreed divestments greatly exceeds the Company's targets. Of the five agreed acquisitions, three vessels were delivered during the financial period, one vessel was delivered in January 2022 and the other is expected to be delivered by the end of March.
• After the financial period, the Company agreed to divest four containerships at c.200% of depreciated replacement cost ("DRC") and agreed to acquire the bulker Auspicious.
• Following the announced transactions, the emissions intensity of the Company's fleet as measured by the Energy Efficiency Existing Ship Index ("EEXI") will improve by more than 30% compared to the beginning of the financial period.
• Energy Saving Devices ("ESDs") retrofits commenced on Laurel and Idaho at the end of 2021 and will be completed in 2022. The Investment Manager expects further improvement in the portfolio emissions intensity as more of the Company's vessels are retrofitted with ESDs.
• The Investment Manager took active measures to expedite crew relief on the Company's vessels. As a result, only c.2% of crew members were overdue for relief by more than 1 month at the end of 2021 compared to 7% for the top ten ship managers1.
• With recent events, the Investment Manager has increased focus on the safety and well- being of the Russian and Ukrainian crew members on board the Company's vessels.

1The top ten ship managers are signatories of the Neptune Declaration and are responsible for more than 90,000 seafarers across all the major segments

2

Chairman's Statement

Introduction

On behalf of the Board, I present the Interim Financial Statements of the Company for the period ended 31 December 2021.

It has been an active second half of 2021 and that activity has continued into 2022. During the financial period, the Company agreed to acquire five vessels of which three were delivered during the period and two were delivered after the period. The fleet as at the end of the financial period consisted of five handysize bulkers, an ultramax bulker, seven containerships and nine tankers, and one handysize bulker and one tanker pending delivery. There is a further breakdown of the portfolio on pages 13 to 14. After the financial period, the Company agreed to acquire a handysize bulker and to divest four containerships. Of the four containership transactions, three closed in February whilst the fourth closed in March.

The NAV per share increased from US$1.158 as at 30 June 2021 to US$1.376 as at 31 December 2021. The NAV total return for the financial period was 22.3%.

Covid

The global economy started recovering from the impacts of Covid from the end of 1H20. Over the financial period, containership asset values and time charter rates hit record highs while the Baltic Dry Index ("BDI"), the index of average prices paid for the transport of dry bulk materials across more than 20 routes, rose to its highest levels since 2009. In contrast, the tanker market remained weak due to the slow, ongoing recovery in oil demand growth. As noted previously, the Investment Manager has, where possible, mitigated the impact of the global humanitarian crisis of crew members extended stay on board commercial vessels due to Covid related travel restrictions. The Investment Manager took active measures to expedite crew relief on the Company's vessels. As a result, only c.2% of crew members were overdue for relief by more than 1 month at the end of 2021 compared to 7% for the top ten ship managers. The overdue crew member average for the global fleet (across all operators) is likely to be much higher.

Russian Invasion of Ukraine

On 24 February 2022, Russia launched a military invasion of Ukraine. The Investment Manager is monitoring the movements of all the Company's vessels. The Investment Manager will prohibit the entry of any vessel into conflict zones, a right established in all the Company's charters. The Board and the Investment Manager are also monitoring the new sanctions being put in place. The Company and its vessels will remain compliant with all international sanctions imposed by the US, UK, EU and the UN. The Board and the Investment Manager remain watchful in monitoring for any potential escalation of the conflict and consequences for shipping and the Company.

3

Chairman's Statement(continued)

Performance

As at 31 December 2021, the Company's NAV was US$424.8m being US$1.376 per share (US$312.6m as at 30 June 2021). The NAV total return over the period was 22.3%. The Company declared a profit of US$72.2m or US$0.253 per share for the period. The EBITDA-weighted average charter length is c.1.9 years.

During the financial period, following the continued strong performance and increased portfolio cash flow, we approved that the Company further raise its target annual dividend from US$0.075 to US$0.080 per share, commencing from 3Q21. At the end of the financial period, the Investment Manager's forecasted dividend cover2 through mid-2023 was c.1.7x despite the Company not being fully invested. When the Company is fully invested, the dividend cover is expected to be at least 1.8x.

Along with strong portfolio operating profit and cash flows, the Company benefited from non-cash fair value gains as asset values rose. Containership values rose strongly as the market benefited from pent-up demand and inventory re-stocking, as well as port congestion and supply chain constraints. Bulker values also rose with strong demand for seaborne bulk commodities including iron ore and grain.

During the financial period, the Company's share price increased from US$1.150 per share as at the close of business 30 June 2021 to US$1.370 per share as at the close of business 31 December 2021.

Tap Issues

On 6 August 2021, the Company announced the results of its tap issue of 10,533,763 Shares at US$1.18 per tap issue share, which raised gross proceeds of US$12.4m. On 12 November 2021, the Company announced the results of its tap issue of 28,057,140 shares at US$1.39 per tap issue share, which raised gross proceeds of US$39.0m. Over the financial period, 38,590,903 new ordinary shares were admitted to trading on the Specialist Funds Segment of the Main Market of the London Stock Exchange.

The total number of voting rights of the Company as at 31 December 2021 is 308,628,541.

Discount Management

The Company's Shares traded at a premium to NAV over most of the financial period. The average premium to NAV was c.4%. Over the financial period, no Shares were held in Treasury.

• Portfolio operating profit less capex less debt repayments, divided by dividends for the period
  4