Tufton Oceanic Assets : Interim Results for the period ended 31 December 2023

Tufton Oceanic Assets Limited

Interim Report and Condensed Interim Financial

Statements

For the period ended 31 December 2023

Contents

Highlights	2
Chairman's Statement	3
Board Members	6
Investment Manager's Report	7
Environmental, Social and Governance Report	17
Principal Risks and Uncertainties	18
Interim Report of the Directors	19
Condensed Financial Statements
Statement of Comprehensive Income	22
Statement of Financial Position	23
Statement of Changes in Equity	24
Statement of Cash Flows	25
Notes to the Financial Statements	26
Alternative Performance Measures	39
Corporate Information	42
Definitions	45

1

Highlights

Highlights of the financial period (vs. 6 months ending 31 December 2022):

• NAV was US$427.1m or US$1.452 per share (NAV: $431.6m or $1.402 per share).
• NAV Total Return Per Share 9.6% (-0.6%).
• Dividends paid during the period of US$12.6m (US$12.3m), reflect the increased target (from 4Q22) annual dividend of US$0.085 per share.
• The Company bought back 8,436,000 shares at the average price of US$0.98 per share.
• Consolidated Gearing Ratio of 12.7%* (13.7%).
• Average Charter Length of 1.7 years* (1.4 years).
• Tufton Group Stakeholders held 4.0% of the issued share capital in the Company* (vs. 3.2% as at 31 December 2022).

Diversified fleet*

• 10 product tankers
  o 6 Medium Range ("MR") product tankers o 4 handysize product tankers
• 9 bulkers
  o 8 handysize bulkers o 1 ultramax bulker
• 2 chemical tankers
• 1 gas tanker

Highlights since inception*

7.7%	US$112.2m	US$15.5m	39 (17)
Dividend			Vessels
Dividends	Buybacks	Acquired
Yield
		(Divested)

Strategy and capital allocation review

• SHIP's annual target dividend will be increased by c.17.6% from US$0.085 per share to US$0.10 per share. Based on this increased target the Company is forecast to have Dividend Cover of c.1.5x over the next 18 months.
• The Board is evaluating a proposed one-off return of capital in 2Q24 of between 5% and 10% of NAV at a price representing the prevailing NAV per share less attributable costs. Shareholders will be notified of the terms of the return of capital accordingly.
• Fleet renewal (based on age, technology, and sector outlook) is a priority. Returns from all new asset investments over a three-year holding period will be compared to the benefit from a return of capital given the prevailing share price at the time of the proposed investment and market outlook.
• The Board will evaluate a further return of capital annually using excess investible cash if no suitable investment opportunities are presented.
• The current buy-back policy is to remain in place (excess cash may be used, at the discretion of the directors, to repurchase the Company's shares should they trade at a >10% discount to
  NAV, as set out in the Company's listing documents).

• as at 31 December 2023.

Alternative Performance Measures ("APMs"), applied on a consolidated basis, are utilised in the Highlights and Investment Manager's Report to analyse performance. Please see the APMs on pages 39 to 41 for further information on APMs.

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 2023. The Company's portfolio as at 31 December 2023 consisted of 22 vessels, details of which are set out in the Investment Manager's Report.

Performance

As at 31 December 2023, the Company's NAV was US$427.1m, being US$1.452 per share (US$412.8m, US$1.365 per share as at 30 June 2023). NAV Total Return over the period was 9.6%. Performance was driven by strong Portfolio Operating Profit and asset value gains. Please see the Performance analysis in the Investment Managers Report for details.

Share Price and Discount Management

During the financial period, the Company's share price decreased from US$0.99 per share as at the close of business 30 June 2023 to US$0.98 per share as at the close of business 31 December 2023.

In common with most of the UK listed investment funds sector, the Company's shares traded at a significant discount, on average at 31% discount to NAV over the financial period. During the period, the Company (in accordance with the authority granted to it by shareholders) repurchased 8,436,000 shares at a cost of US$8,315,170. Refer to Note 5 for more details. At the end of the period, there were 14,596,000 shares held in treasury.

Since 1 January 2024, the Company has bought back an additional 2,400,000 shares with 16,996,000 Shares held in treasury and 291,632,541 shares outstanding as at 15 March 2024. As at 15 March 2024, the Company's shares traded at a 24.54% discount to the ex-dividend 31 December 2023 NAV.

War in Ukraine and attacks near the Gulf of Aden

All of the Company's vessels remain fully insured against war perils. None of the Company's vessels have been adversely affected by the war in Ukraine or the recent attacks on vessels transiting the Red Sea/Gulf of Aden by Iran-backed Houthi rebels based in Yemen.

The Investment Manager has formally requested all our charterers and vessel managers to desist from trade with Russia wherever legally possible except for humanitarian purposes. Additionally, the Investment Manager monitors compliance through regular inspection of vessel logs and satellite data. The Company and its vessels were compliant with all international sanctions imposed by the US, UK, EU and UN. We have had no issues to date with any vessels being damaged or blocked or otherwise affected by sanctions.

The Board and the Investment Manager remain watchful in monitoring the conflicts and their consequences for shipping in general and for the Company.

Dividends

During the period the Company declared and paid dividends to shareholders as follows:

Period end	Dividend per	Announce	Ex div	Record	Paid date
	share (US$)	date	date	date
Ordinary shareholders
30.06.23	0.02125	19.07.23	27.07.23	28.07.23	11.08.23
30.09.23	0.02125	18.10.23	26.10.23	27.10.23	10.11.23

3

Chairman's Statement(continued)

Dividends (continued)

A further dividend of US$0.02125 per share was declared on 17 January 2024 for the quarter ending 31 December 2023. The dividend was paid on 9 February 2024 to shareholders on 26 January 2024 with an ex-dividend date of 25 January 2024.

Corporate Governance

The Company is a member of the Association of Investment Companies ("AIC") and has therefore elected to comply with the provisions of the current AIC Code of Corporate Governance which sets out a framework of best practice in respect of governance of investment companies ("AIC Code"). The AIC Code has been endorsed by the Financial Reporting Council and the Guernsey Financial Services Commission (the "GFSC") as an alternative means for AIC members to meet their obligations in relation to the UK Corporate Governance Code.

Where the Company's stakeholders, including shareholders and their appointed agents, have matters they wish to raise with the Board in respect to the Company, I would encourage them to contact us at [e-mail].

Environmental, Social, Governance ("ESG")

Our Investment Manager continues to integrate ESG factors into its investment recommendations and asset ownership practices. The Board has reviewed and approved the Investment Manager's 2022 Sustainability Report for the Company which can be viewed on the Company's website (www.tuftonoceanicassets.com). The Investment Manager will publish the Company's 2023 Sustainability report later this year.

Annual General Meeting

The Annual General Meeting ("AGM") of the Company was held on 24 October 2023. I am pleased to report that all the resolutions were duly passed.

Outlook

Considering the ongoing share price discount to NAV and the Company's forthcoming continuation vote at the AGM in October 2024, the Board conducted a mid-term strategy and capital allocation policy review with the Investment Manager and our advisers towards the end of the financial period.

We have reviewed the opportunity set with the Investment Manager and believe the correct strategy for SHIP over the medium term, through to 2030, is to continue investing in fuel-efficient secondhand vessels to maximise shareholder returns, intending to realise the Company's portfolio of assets starting from 2028, well before the decarbonisation of shipping accelerates.

Cognisant of the persistent discount to NAV and the Investment Manager's priority of fleet renewal, we have worked with the Investment Manager to institute a capital allocation policy which takes into account this opportunity set but also sets a higher bar for new investments with the following ongoing priorities:

• Returns from all new asset investments over a three-year holding period will be compared to the benefit from a return of capital given the prevailing share price at the time of the proposed investment and medium-term market outlook.
• The Board will annually evaluate a further return of capital using excess investible cash if no suitable investment opportunities are presented.

4

Chairman's Statement(continued)

Outlook (continued)

Additionally, we have increased the Company's target annual dividend to $0.10 per share from 1Q24 and are evaluating a proposed one-off return of capital in 2Q24, representing between 5% and 10% of NAV at a price representing the prevailing NAV per share less attributable costs.

The Company has divested 17 vessels to date, in aggregate, at c.6% above communicated NAV and at a realised IRR of c.25%. After the end of the financial period, the Company agreed to divest two Handysize Product Tankers, Pollock and Dachshund at a 3.1% premium to the two vessels most recent holding NAV. The strong opportunity set, along with the focus on capital allocation and the demonstrated capability to divest assets at/above NAV should result in future IRRs being higher than the Company's published target.

Key drivers for the supply-side-led recovery in Tankers and Bulkers remain in place as the industry slowly transitions to zero carbon fuels to meet tightening regulations and decarbonisation targets. We expect that these drivers will continue to support high yields and secondhand vessel values over the next decade.

I would like to thank my fellow Directors for their commitment and support during these challenging times and, the Investment Manager and their team for their diligence in dealing with complex and challenging operational matters which were increased due to the war in Ukraine and the recent vessel attacks near the Gulf of Aden. I would also like to take this opportunity to thank our Shareholders for their support and continued belief in our strategy.

………………………

Rob King

Non-executive Chairman

5

Board Members

The Company's Board of Directors comprises five independent non-executive Directors. The Board's role is to manage and monitor the Company in accordance with its objectives. The Board monitors the Company's adherence to its investment policy, its operational and financial performance and its underlying assets, as well as the performance of the Investment Manager and other service providers. In addition, the Board has overall responsibility for the review and approval of the Company's NAV calculations and financial statements. It also maintains the Company's risk register, which it monitors and updates on a regular basis.

The Directors of the Company who served during the period are:

Robert King

Stephen Le Page

Paul Barnes

Christine Rødsæther

Katriona Le Noury ("Trina") - appointed 1 November 2023

Trina is a qualified chartered accountant with more than 20 years' experience working in the funds industry. Before becoming an independent non-executive director in 2023, she held senior management positions at two separate Private Equity firms, including holding directorships on the respective firms' fund General Partner boards. She currently serves on the board of JPEL Private Equity Limited, a London listed investment company, as well as three private companies for a leading global private equity firm. Trina is British and a resident in Guernsey.

All Directors, with the exception of Trina Le Noury, also served during the year ended 30 June 2023, and their brief biographies are available in the annual report as at that date.

6

Investment Manager's Report

Highlights of the Financial Period

Over the financial period NAV Total Return Per Share was 9.6% (-0.6% in 2H22), meaning the NAV Total Return since inception was 110.3%. The main drivers for the strong return over the period were:

• Portfolio Operating Profit US$27.7m: The Company benefited from the high, fixed-rate time charters on our MR product tankers during the entire period. The Company also benefited from the strong chemical tanker market with both our chemical tankers trading in a pool, with spot market exposure.
• Charter-freevalue gain of US$4.7m as rising product tanker values outweighed the effect of lower bulker values.
• Charter value gain of US$2.8m as negative charter value (mainly in product tankers) unwound with time.

500
		27.7	4.7	2.8
400					(12.6)	(8.3)
300
US$m							427.1
200	412.8
100
-
	NAV 30 June	Portfolio	Change in	Change in	Dividends	Share	NAV 31
	2023	Operating	charter-free	charter value		buybacks	December
		profit	value				2023

APMs, applied on a consolidated basis, are utilised in this section to analyse performance. Please see the APMs on pages 39 to 41 for further information on APMs.

At the end of the financial period, the portfolio had a total negative charter value of US$42.0m (US$43.3m at the end of 31 December 2022). Ceteris paribus, the negative charter value is expected to unwind (i.e. increase NAV) by c.US$22.0m over 2024.

The Company paid dividends of US$12.6m during the financial period (US$12.3m in 2H22). As per the Company's discount management policy, the Company repurchased 8,436,000 shares during that time and has therefore purchased a total of 14,596,000 of its own shares from 4Q22 until the end of the financial period.

Portfolio Operating Profit was US$27.7m (US$27m in 2H22). Gross Operating Profit, an indicator of the underlying profit from operating activity, increased YoY due to a combination of the full benefit of MR product tankers at high time charter rates and the strong chemical tanker market. Loan interest and fees were higher compared to the 2H22 due to the US$60m loan for the prior- period acquisitions of the two MR product tankers, Mindful and Courteous.

The new loan is secured on Mindful, Courteous, Marvelous and Exceptional.

7

Investment Manager's Report(continued)

Highlights of the Financial Period (continued)

Performance summary

	From 1 Jul 2023 to	From 1 Jul 2022 to
Figures below are in US$m unless otherwise stated	31 Dec 2023	31 Dec 2022
Ship-Days	4,048	3,908
Revenue	60.8	57.0
Operating Expense	(27.4)	(26.0)
Gross Operating Profit	33.4	31.0
Gross Operating profit / Time-weighted Capital Employed	14.3%	15.0%
Loan interest and fees	(3.6)	(1.6)
Gain / (loss) in capital values	7.5	(33.6)
Portfolio profit / (loss)	37.3	(4.2)
Interest income	0.2	0.0
Fund Level Fees and Expenses	(2.3)	(2.4)
Performance fee accrual	-	4.0
Profit / (Loss) for the period	35.2	(2.6)
Portfolio Operating Profit	27.7	27.0

The capital value gain of US$7.5m was mainly due to higher charter-free value and the unwinding of negative charter value in product tankers which outweighed the smaller fall in bulker charter- free values over the financial period. In late 4Q23, bulker charter-free values started recovering slowly as the market improved.

Segment performance summary

Segment Performance During	Product	Chemical	Gas	Containership*	Bulkers	Total
the Financial Period	Tankers	Tankers	Tanker
(unaudited)
US$m unless otherwise stated
Gross Operating Profit	18.2	5.2	2.1	1.0	7.0	33.5
Loan interest & fees	(3.6)	-	-	-	-	(3.6)
Gain / (loss) in charter-free	11.3	(0.1)	(0.7)	0.2	(6.0)	4.7
values
Gain / (loss) in charter values	4.0	-	-	-	(1.2)	2.8
Portfolio profit / (loss)	29.9	5.1	1.4	1.2	(0.2)	37.4

* The Company divested its last containership in 1Q23. Closing adjustments reflected here.

At the end of the financial period, the Company's diversified portfolio had high cash flow visibility from long-term charters on product tankers (43.5% of NAV). The product tanker segment yield remained c.10% even as asset values rose.

8

Investment Manager's Report(continued)

Highlights of the Financial Period (continued)

The Company's two chemical tankers, which represent 8.9% of NAV, benefit from exposure to the strong spot market as they operate in a pool. The Forecast Net Yield on our chemical tankers is based on our expectation of continued market strength. The yield on the Company's bulkers (36.6% of NAV) rose to 9.5%, from 8.4% at the end of June 2023, as the market improved towards the end of the financial period. Some of our bulkers were on index-linked charters at the end of the financial period and will benefit if, as we expect, the market continues to improve in the medium term.

Segment exposure and forecast net yields

Segment Exposure and Forecast	Product	Chemical	Gas	Bulkers	Total
Yields* (unaudited)	Tankers	Tankers	Tanker
% of NAV	43.5%	8.9%	5.7%	36.6%	94.7%
Forecast Net Yields*	9.9%	21.9%	16.9%	9.5%	11.3%

* Based on the market values at 31 December 2023

As at 31 December 2023, the Company's vessels had an average age of 11.9 years and were chartered to eleven different counterparties. Both tankers and bulkers benefit from good supply- side fundamentals which were further accentuated by the effect of transit disruptions in the Panama Canal and the Suez Canal. Please see the Shipping Market section of this report for details.

Mid-Term Strategy Review

Since inception, the Company has delivered on its original investment objectives including:

• Diversified portfolio.
• Provided investors a strong and growing dividend. Increased target dividend since the IPO from US$0.070 per share to US$0.085 per share. Please see the charts below.
• Total capital raised: US$316.5m gross through primary and secondary issues.
• Target annual dividend increased by c.21% from US$0.070 per share to US$0.085 per share.
• Acquired 39 vessels with low leverage and divested 17 vessels at c.6% above NAV in aggregate.
• Aggregate realised net IRR on all divestments is c.25%. Net Fund IRR is 13.9%1, ahead of its 12% IRR target published in its prospectus documents.
• Low NAV volatility due to diversification, limited use of leverage and high charter cover.
• Capital re-allocation based on rigorous fundamental analysis, industry knowledge and ESG: divested containerships and older bulkers to re-allocate capital into less emission- intensive bulkers and tankers.
• The operating emissions intensity of the portfolio2 was reduced by c.34% between 2019 and 2022.
• Further emissions reduction expected from Energy Saving Device retrofits, completed on eight vessels and planned for five other vessels in 2024 and 2025. Eight other vessels are already fuel-efficient relative to their peers.

1. Assumes pro-rata participation in all capital raises.
2. Operating emissions intensity as measured by the Energy Efficiency Operating Indicator ("EEOI").

9