TIDMSHIP TIDMSHPP
RNS Number : 2797T
Tufton Oceanic Assets Ltd.
17 March 2023
Tufton Oceanic Assets Limited
("Tufton Oceanic Assets" or the "Company")
Interim Results for the six month period ended 31 December
2022
Tufton Oceanic Assets announces its interim results for the six
month period ended 31 December 2022. A copy of the Interim Report
and Unaudited Financial Statements will shortly be available on the
Company's website in the Investor Relations section at
www.tuftonoceanicassets.com.
For further information, please contact:
Tufton Investment Management Ltd (Investment
Manager)
Andrew Hampson
Paulo Almeida +44 (0) 20 7518 6700
N+1 Singer
James Maxwell, Alex Bond (Corporate Finance)
Alan Geeves, James Waterlow, Sam Greatrex
(Sales) +44 (0) 20 7496 3000
Hudnall Capital LLP
Andrew Cade +44 (0) 20 7520 9085
Highlights
-- Portfolio Operating Profit was strong at US$27.0m (vs.
US$17.4m in the financial period ending 31 December 2021) but NAV
Total Return over the financial period was negatively impacted by
unrealised losses in bulkers and the remaining containership,
Riposte.
-- NAV Total Return was -0.6% during the financial period, 7.7%
in 2022 and 91.1% since inception.
-- The 31 December 2022 NAV was US$431.6m (GBP358.8m) or US$1.402 (GBP1.165) per share.
-- The Investment Manager expects the bulker market to improve
from 2Q23, aided by the easing of Covid-related restrictions in
China and strong supply-side fundamentals.
-- After the end of the financial period, the Company agreed to
divest Riposte with realised net IRR exceeding 12%. The aggregate
realised net IRR on the Company's containerships over the past five
years is c.27%.
-- The Company agreed to acquire two product tankers, Mindful
and Courteous, below DRC, financed primarily by a new US$60m loan
which is secured on Mindful, Courteous, Marvelous and
Exceptional.
-- The Company is well positioned to benefit from the ongoing
strength in the product tanker and chemical tanker markets and the
expected improvement in the bulker market.
-- Encouraged by strong visible cash flows from increased
charter cover, diversification and continued supply-side recovery,
the Company raised its target annual dividend from $0.080 to $0.085
per share, which commenced from 4Q22.
-- The Company is forecast to have a dividend cover of c.1.8x
over the next 18 months (through the end of 2Q24) after reinvesting
the proceeds from the divestment of Riposte.
-- The Company's operating emissions intensity improved by c.34%
YoY in 2022 primarily because of capital re-allocation. We expect
further improvement as Energy Saving Device ("ESD") retrofits on
eight vessels are fully completed by mid 2023 and on another three
vessels by the end of the year.
-- We prioritise crew welfare and have especially taken action
to improve the welfare of the Ukrainian crew members on board the
Company's vessels.
-- The Investment Manager's principals acquired an additional
613,000 ordinary shares during the financial period such that
Investment Manager-related shareholders owned 3.2% of the issued
share capital at 31 December 2022.
Chairman's Statement
Introduction
On behalf of the Board, I present the Interim Financial
Statements of the Company for the period ended 31 December
2022.
During the financial period, the Company acquired two product
tankers and agreed to divest its last containership, Riposte, after
the end of the financial period. The fleet as at 31 December 2022
consisted of eight handysize bulkers, an ultramax bulker, one
containership and thirteen tankers. Full details of the investment
portfolio are set out in the Investment Manager's Report.
Performance
As at 31 December 2022, the Company's NAV was US$431.6m, being
US$1.402 per share (US$447.5m and US$1.450 per share as at 30 June
2022). NAV Total Return over the period was -0.6%. Despite a strong
operating profit, performance was impacted by unrealised capital
value losses. The bulker and containership markets weakened over
the financial period. The Investment Manager expects the bulker
market to improve from 2Q23, aided by the easing of Covid-related
restrictions in China and strong supply-side fundamentals.
The Company is well positioned to benefit from the ongoing
strength in the product tanker and chemical tanker markets and the
expected improvement in the bulker market.
The Average Charter Length on the Company's product tankers at
31 December 2022 was 2.3 years. Encouraged by the strong charter
coverage, the Company raised its target annual dividend from
US$0.08 to US$0.085 per share, commencing from 4Q22. The Company is
forecast to have a dividend cover of c.1.8x over the next 18 months
(through the end of 2Q24) after reinvesting the proceeds from the
divestment of Riposte.
During the year, the Company's share price decreased from
US$1.230 per share as at the close of business 30 June 2022 to
US$1.150 per share as at the close of business 31 December
2022.
Discount Management
On average, the Company's shares traded at an 18% discount to
NAV over the financial period. As at 10 March 2023, the Company's
shares traded at a 18% discount to the ex-dividend 31 December 2022
NAV. In November and December 2022, the Company (in accordance with
the authority granted to it by Shareholders) repurchased 850,000
shares at a cost of US$969,451. Refer to Note 5 for more details.
At the end of the financial period, there were 850,000 Shares held
in Treasury and 307,778,541 Shares outstanding.
From the period end the Company has bought back an additional
710,000 shares with 1,560,000 Shares held in Treasury and
307,068,541 Shares outstanding as at 15 March 2023.
Dividends
During the period the Company declared and paid dividends to
shareholders as follows:
Period end Dividend Announce Ex div Record Paid date
per share date date date
(US$)
Ordinary shareholders
30.06.22 0.02000 19.07.22 28.07.22 29.07.22 12.08.22
30.09.22 0.02000 18.10.22 27.10.22 28.10.22 11.11.22
A further dividend of US$0.02125 per share was declared on 17
January 2023 for the quarter ending 31 December 2022. The dividend
was paid on 10 February 2023 to holders of shares on record date 27
January 2023 with an ex-dividend date of 26 January 2023.
Russian Invasion of Ukraine
None of the Company's vessels were directly impacted by the war
in Ukraine and all remain fully insured against war perils. 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 will
remain 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. The Board and the Investment Manager
remain watchful in monitoring the war and its consequences for
shipping and the Company.
Covid-19
The global economy has largely recovered from the negative
impact of Covid. The delays to crew rotation caused by national
restrictions put in place to contain the spread of Covid were
largely resolved by 4Q22. The introduction of Covid-related
restrictions in China over the summer of 2022 impacted the bulker
market and increased planned capex and off-hire for some of the
Company's vessels. There is a growing consensus that the easing of
Covid-related restrictions in China from January will lead to
improvement in the bulker market.
Corporate Governance
The Company is a member of the Association of Investment
Companies ("AIC") and complies 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 (the "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.
The Company established a Management Engagement Committee during
the period which is chaired by Paul Barnes and includes all of the
members of the Board. The purpose of the committee is to formulate
the reviews undertaken of the Investment Manager and the other key
service providers. The annual reviews were undertaken during 4Q22
and 1Q23. Further information of the findings of the reviews will
be included in the Audited Financial Statements each year.
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.
Environmental, Social, Governance ("ESG")
Our Investment Manager continues to integrate ESG factors into
its investment recommendations and asset ownership practices. As
you will see in the Investment Manager's Report on pages 20 to 26
there is significant focus given to the ESG aspects of the
Company's operations.
Crew welfare continued to be a significant area of focus with
the Investment Manager paying special attention to the Ukrainian
crew members on the Company's vessels. Where requested, we will
assist in the repatriation of crew members or extension of crew
contracts.
The Board has reviewed and approved the Investment Manager's
Responsible Investment Policy and Implementation Report for the
Company. Shareholders can view the policy and the implementation
report on the Company's website. Being a closed-end investment
company listed on the Specialist Funds Segment of the London Stock
Exchange, the Company is not required to have disclosure aligned
with the Task Force on Climate-related Financial Disclosures
("TCFD") framework. Nevertheless, the Investment Manager supports
the framework and will publish a separate sustainability report
later this year based on TCFD guidelines.
Annual General Meeting
The Annual General Meeting ("AGM") of the Company was held on 27
October 2022. I am pleased to report that all the resolutions were
duly passed.
Outlook
The Investment Manager expects:
-- the bulker market to improve from 2Q23;
-- the Company's chemical tankers to benefit from strong
supply-side fundamentals and the tight product tanker market;
and
-- further upside in secondhand values of bulkers and tankers
due to limited shipyard capacity for new deliveries and tighter
environmental regulations which increase newbuild prices.
The Investment Manager continues to seek good investment
opportunities across the segments.
...........................
Rob King
Non-executive Chairman
Board Members
The Company's Board of Directors comprises four 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 key 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
They also served during the year ended 30 June 2022, and their
brief biographies are available in the annual report as at that
date.
Investment Manager's Report
Highlights of the Financial Period
The Company continued to re-allocate capital, in line with its
investment strategy and commitment to ESG. During the financial
period, the Company acquired two fuel-efficient product tankers and
after the end of the financial period agreed to divest its last
containership. The capital re-allocation has better positioned the
Company to benefit from the ongoing strength in the product tanker
and chemical tanker markets and the expected improvement in the
bulker market from 2Q23.
During the financial period, the product and chemical tanker
markets strengthened while the bulker and containership markets
weakened. We expect the product and chemical tanker markets to
remain strong in the medium term, the bulker market to improve from
2Q23 and the containership market to remain relatively weak in
2023. Please see the Shipping Market section of this report for
details.
This section utilises alternative measures, applied on an
unconsolidated basis, to analyse performance. Please see the
Definitions on pages 51 to 55 for details of the measures. NAV
Total Return was -0.6% during the financial period, 7.7% for 2022
and 91.1% since inception. The effectiveness of our strategy of
diversification across the major segments, conservative leverage
and strong charter cover is evidenced by the portfolio performance
and growing dividend through a variety of market conditions since
the Company's listing in December 2017.
Portfolio Operating Profit was strong at US$27.0m (vs. US$17.4m
in the financial period ending 31 December 2021) mainly as the
Company benefited from a larger bulker fleet and higher bulker time
charter rates. While the bulker market weakened over the financial
period, we expect it to improve from 2Q23, aided by the easing of
Covid-related restrictions in China and strong supply-side
fundamentals. At 31 December 2022, the Average Charter Length on
the Company's bulkers was 0.3 years. We expect the improving bulker
market will offer opportunities to employ our bulkers on charters
at higher rates than at the end of the financial period.
There was a loss of US$16.5m in charter-free value as the bulker
and containership markets weakened during the financial period. The
fall in bulker and containership charter-free values outweighed the
rise in product tanker and chemical tanker charter-free values. We
expect the bulker market and charter-free values to improve from
2Q23. The Company started divesting containerships from mid 2021 in
anticipation of a weaker market and agreed to divest its last
containership, Riposte, just after the end of the financial period.
The realised net IRR on Riposte exceeds 12% and the aggregate
realised net IRR on the Company's containerships over the past five
years is c.27%.
There was a loss of US$17.1m in charter value mainly due to
rising product tanker time charter rates. The Company did not
benefit significantly from higher charter values on bulkers, which
had only 0.3 years of Average Charter Length at the end of the
financial period. At the end of the financial period, the portfolio
had a total negative charter value of US$43.3m. This will trend to
zero (i.e. increase NAV) in the medium term. Ceteris paribus, the
negative charter value will unwind by c.US$18m in 2023. During the
financial period, the rise in product tanker charter-free values
slightly lagged the rise in time charter rates as the market
strengthened. Product tanker charter-free values should rise
further as confidence builds in the duration of the market strength
- or, if rates were to moderate, negative charter value should
unwind more than charter-free values drop.
Both tankers and bulkers benefit from strong supply-side
fundamentals. The low orderbook in both segments will result in
slowing fleet growth. We expect further upside in secondhand values
of bulkers and tankers due to limited shipyard capacity and tighter
environmental regulations which increase newbuild prices.
Highlights of the financial period also include:
-- The Company acquired two product tankers, Mindful and
Courteous, below Depreciated Replacement Cost ("DRC"). The
acquisitions were financed primarily by a new US$60m loan with a
SOFR cap of 3.5% for the first three years which is secured on
Mindful, Courteous, Marvelous and Exceptional.
-- The Company agreed to divest its last containership, Riposte,
after the end of the financial period.
-- Our investment activity continues to demonstrate our
commitment to capital re-allocation and ESG. With these
transactions, we have re-allocated capital to position the
portfolio for the greater upside potential in fuel-efficient
tankers.
-- The Dividend Cover for the financial period was c.0.5x. This
was lower than our long-run expectation because of high planned
capex and off-hire. Capex and off-hire were higher than previously
expected due to the impact of Covid-related restrictions in
China.
-- At 31 December 2022, the Company forecast much lower planned
capex and off-hire in the next 18 months.
-- At 31 December 2022, the Company's Consolidated Gearing Ratio was 13.7%.
-- The Company's fleet had no unplanned commercial idle time
(voids) during the financial period.
-- The Company's operating emissions intensity, as measured by
the Energy Efficiency Operating Index ("EEOI"), improved by c.34%
YoY in 2022 primarily because of capital re-allocation. We expect
further improvement in emissions intensity with ESD retrofits.
-- ESD retrofits are substantially complete on seven of the
Company's vessels. We expect ESD retrofits on eight vessels will be
fully completed by mid 2023 and another three vessels by the end of
the year.
-- We prioritise crew welfare and have especially taken action
to improve the welfare of the Ukrainian crew members on board the
Company's vessels.
-- We aim to minimise coal carriage on the Company's vessels
without negative financial impact. During 2022, only one of the
Company's bulkers, Masterful, carried coal, accounting for <2%
of the total cargo carried by the Company's bulkers.
The Assets
As at 31 December 2022, the Company owned twenty-three
vessels.
Containership
At the end of the financial period, Riposte was on a fixed-rate
time charter to a major investment-grade container shipping group.
The Company agreed to divest Riposte after the end of the financial
period.
Tankers
Employment for vessels owned by the Company at the end of the
financial period:
-- Octane and Sierra were on time charters to an investment grade oil major.
-- Pollock, Dachshund, Cocoa and Daffodil were on time charters
to a major commodity trading and logistics company which exercised
its optional periods on Dachshund and Pollock until mid 2024.
-- Marvelous, Mindful and Courteous were on time charters to the
same major commodity trading and logistics company.
-- Exceptional was on a time charter to a leading tanker shipping company.
-- At 31 December 2022, the Average Charter Length of the product tankers was 2.3 years.
-- The gas carrier Neon operated on a bareboat charter, under
which the Company provides only the vessel to the charterer, who is
responsible for crewing, maintaining, insuring, and operating
it.
-- Two chemical tankers, Orson and Golding, were employed in a
leading chemical tanker pool. As described in the Company's
Prospectus, a pool is a revenue sharing structure run by a
specialist third party or another ship owner.
Acquisitions:
The Company agreed to acquire:
-- Two product tankers, Mindful and Courteous, for US$73.0m in
September 2022. The vessels were delivered to the Company in
December 2022. The acquisitions were financed primarily by a new
US$60m loan which is secured on Mindful, Courteous, Marvelous and
Exceptional.
Mindful, Courteous, Marvelous and Exceptional are in the top
quartile of fuel efficiency in their market segment.
Bulkers
Employment for vessels owned by the Company at the end of the
financial period:
-- Awesome and Auspicious were on time charters to a leading operator of bulkers.
-- Charming was on a time charter to a leading dry bulk shipping
company. Charming's time charter was extended by 5-8 months from
October 2022.
-- Laurel was on a time charter to a leading owner and operator of bulkers.
-- Idaho and Mayflower were on time charters to a leading owner and operator of bulkers.
-- Mayflower's time charter was extended by 5-7 months from December 2022.
-- Rocky IV, Anvil and Masterful were on time charters to a
leading merchant and processor of agricultural goods.
Awesome, Auspicious, Masterful and Charming are in the top
quartile of fuel efficiency in their market segment. Average
Charter Length on our bulkers was 0.3 years at the end of the
financial period. We expect the improving bulker market from 2Q23
will offer opportunities to employ our bulkers on charters at
higher rates than at the end of the financial period.
The Company's fleet across all segments is well maintained and
performed well, though certain vessels had minor Covid-related
disruptions or suffered supply chain issues and inflationary
pressures.
As at 31 December 2022:
SPV(+) Vessel Type Acquisition Earliest end Latest Expected
and Year of Date of charter end of end of charter
Build period charter period**
period
Riposte 2500-TEU containership March February July February
built 2009 2018 2023 2023 2023
------------------------- -------------- ----------------- -----------
Neon Mid-sized LPG July August August August
carrier built 2018 2025 2025 2025
2009
------------------------- -------------- ----------------- ----------- ----------------
Sierra Medium-range December June July July
("MR") 2018 2024 2025 2025
product tanker
built 2010
------------------------- -------------- ----------------- ----------- ----------------
Octane MR December May June June
product tanker 2018 2024 2025 2025
built 2010
------------------------- -------------- ----------------- ----------- ----------------
Cocoa Handysize October October January January
product tanker 2020 2023 2026 2025
built 2008
------------------------- -------------- ----------------- ----------- ----------------
Pollock Handysize December April
product tanker 2018 2024
built 2008
------------------------- -------------- ------------------------------------------------
Daffodil Handysize October October March March
product tanker 2020 2023 2026 2025
built 2008
------------------------- -------------- ----------------- ----------- ----------------
Dachshund Handysize February May
product tanker 2020 2024
built 2008
------------------------- -------------- ------------------------------------------------
Golding 25,600 DWT stainless April NA - vessel is employed in a pool
steel chemical 2021
tanker
built 2008
------------------------- -------------- ------------------------------------------------
Mayflower Handysize bulker June May July July
built 2011 2021 2023 2023 2023
------------------------- -------------- ----------------- ---------
Laurel Handysize bulker July June October June
built 2011 2021 2023 2023 2023
------------------------- -------------- ----------------- ---------
Orson 20,000 DWT stainless July NA - vessel is employed in a pool
steel chemical 2021
tanker
built 2007
------------------------- -------------- ----------------------------------------------
Idaho Ultramax bulker July February July February
built 2011 2021 2023 2023 2023
------------------------- -------------- ------------- ----------- ------------------
Anvil Handysize bulker September February May February
built 2013 2021 2023 2023 2023
------------------------- -------------- ------------- ----------- ------------------
Rocky IV Handysize bulker September October January January
built 2013 2021 2022 2023 2023
------------------------- -------------- ------------- ----------- ------------------
Exceptional MR April April April April
product tanker 2022 2023 2024 2024
built 2015
------------------------- -------------- ------------- ----------- ------------------
Awesome Handysize bulker January September March September
built 2015 2022 2023 2024 2023
------------------------- -------------- ------------- ----------- ------------------
Auspicious Handysize bulker February September March September
built 2015 2022 2023 2024 2023
------------------------- -------------- ------------- ----------- ------------------
Masterful Handysize bulker April January April January
built 2015 2022 2023 2023 2023
------------------------- -------------- ------------- ----------- ------------------
Charming Handysize bulker June March June March
built 2015 2022 2023 2023 2023
------------------------- -------------- ------------- ----------- ------------------
Marvelous MR July November November November
product tanker 2022 2025 2027 2025
built 2014
------------------------- -------------- ------------- ----------- ------------------
Mindful MR December December November December
product tanker 2022 2025 2027 2025
built 2016
------------------------- -------------- ------------- ----------- ------------------
Courteous MR December December November December
product tanker 2022 2025 2027 2025
built 2016
------------------------- -------------- ------------- ----------- ------------------
Notes:
+ SPV that owns the vessel.
** Based on our assessment of the prevailing market conditions
as at 31 December 2022.
Riposte, the last containership in the portfolio, was divested
in February 2023.
Investment Performance
NAV per share was US$1.402 at 31 December 2022. US$ NAV Total
Return for the financial period was -0.6% and for calendar year
2022 was 7.7%. During the financial period, Portfolio Operating
Profit contributed US$27m (vs. US$17.4m in the financial period
ending 31 December 2021) mainly as the Company benefited from a
larger bulker fleet and higher bulker time charter rates.
There was a Loss in Capital Value of US$33.6m or US$0.109 per
share mainly due to the fall in bulker and containership values as
those markets weakened over the financial period. We expect the
bulker market and charter-free values to improve from 2Q23. After
the end of the financial period, the Company agreed to divest
Riposte.
From 1
From 1 Jul Jul 2021
Figures below are in US$m unless otherwise 2022 to 31 to 31 Dec
stated Dec 2022 2021
Total ship-days 3,908 3,947
Revenue 57.0 48.5
Operating Expense (26.0) (28.1)
------------ -----------
Gross Operating Profit 31.0 20.4
Gross Operating Profit / Time-Weighted
Capital Employed 15.0% 13.6%
Loan interest and fees (1.6) (0.8)
Gain/(loss) in Capital Values (33.6) 57.2
------------ -----------
Portfolio (loss) / profit (4.2) 76.8
Interest income 0.0 0.0
Fund Level Fees and Expenses (2.4) (2.2)
Performance fee accrual 4.0 (2.4)
(Loss) / Profit for the period (2.6) 72.2
------------ -----------
Portfolio Operating Profit 27.0 17.4
------------ -----------
Loan interest and fees were higher compared to 2H21 as a new
US$60m loan was committed and drawn for the acquisitions of two
product tankers, Mindful and Courteous, during the financial
period. The new loan is secured on Mindful, Courteous, Marvelous
and Exceptional. The accrued performance fee was unwound because
the Total Return per Share was slightly lower than the High
Watermark per Share at the end of the financial period.
The Company benefited from a significant improvement in the
market for chemical tankers as tankers which can trade both
chemicals and products shifted to the tightening product tanker
market. The chemical tanker market benefits from strong supply-side
fundamentals with a low orderbook (c.4% of fleet for stainless
steel tankers) and a strong demand growth forecast of c.6% CAGR
(2022-2024). Gross operating profit for chemical tankers during the
financial period was negatively impacted by the planned off-hire of
Orson and Golding, which are operating in a chemical tanker
pool.
Segment Performance Product Chemical Gas Tanker Containership Bulkers Total
During the Financial Tankers Tankers
Period
US$m unless otherwise
stated
Gross Operating Profit 8.3 1.4 2.1 1.2 18.0 31.0
Loan interest & fees (1.6) - - - - (1.6)
Gain/(loss) in charter-free
values 55.7 5.1 (0.6) (23.4) (53.3) (16.5)
Gain/(loss) in charter
values (32.8) - - 10.9 4.8 (17.1)
Portfolio profit 29.6 6.5 1.5 (11.3) (30.5) (4.2)
------------------------------ --------- --------- ----------- -------------- -------- -------
Segment Exposure and Product Chemical Gas Tanker Containership Bulkers Total
Forecast Yields* Tankers Tankers
% of NAV 42.9% 9.0% 5.9% - 37.6% 95.5%
Forecast Net Yields* 9.0% 23.8% 15.8% NA 15.7% 12.0%
----------------------- --------- --------- ----------- -------------- -------- ------
(*) Based on the pro forma fleet and market values at 31
December 2022
At 31 December 2022, the Company's vessels had an average age of
c.11 years and were chartered to ten different counterparties. The
forecast net yield on the product tankers slightly fell to 9.0% at
the end of December 2022 from 10.6% at the end of June largely due
to the rise in asset values during the financial period.
The Shipping Market
The Company focuses on three main shipping segments: tankers,
bulkers and containerships. The Clarksea Index, a broad vessel
earnings indicator from Clarksons Research, ended the financial
period at US$29,657/day, c.29% lower than at the end of June 2022
and c.15% lower than at the end of December 2021, because of
weakness in the containership and bulker markets. In January 2023,
the IMF forecast 2.9% world GDP growth in 2023, 0.2 percentage
points higher than its forecast of October 2022. The easing of
Covid-related restrictions in China has paved the way for a
faster-than-expected recovery. Global seaborne trade is expected to
grow by 1.5% in 2023. In comparison, seaborne trade grew by c.3%
CAGR in the two decades leading up to 2021.
We believe the shipping market is in a multi-year upcycle
because of the relative lack of investment in new capacity
(supply). The combination of commodity price inflation and reduced
shipyard capacity has increased newbuild prices. This led to higher
values for secondhand vessels. The Clarksons Research Newbuilding
Price Index has risen c.29% since the end of 2020 while the
Clarksons Research Secondhand Price Index has risen c.57% over the
same period. We expect further upside in secondhand values of
bulkers and tankers due to limited shipyard capacity and tighter
environmental regulations which increase newbuild prices. Clarksons
Research estimates that global shipbuilding capacity is 40% lower
compared to a decade ago.
This section utilises data from our Tufton Real-Time Activity
Capture System ("TRACS") which analyses satellite data to track the
international shipping fleet by the major segments. TRACS utilises
the draught of each vessel as a proxy for its utilisation and
thereby enables us to have a close to real-time measure of shipping
demand. Other research data used in this section is from Clarksons
Research, unless specified otherwise.
Tankers
According to the US Energy Information Administration, world
petroleum liquids demand is expected to grow 1.1% in 2023 and 1.7%
in 2024 after growing by more than 2% in 2022. We had expected
improvement in tanker demand in 2022 along with the recovery in
global oil demand. The improvement in tanker demand was accelerated
as the war in Ukraine partially replaced some demand for short-haul
product tanker cargoes with demand for long-haul: increasing
Russian exports to Asia, notably India, and higher European imports
from non-Russian suppliers including the Middle East, the US and
Asia. 1-year time charter rates for MR product tankers rose 48% to
c.US$30,000/day at the end of the financial period, the highest
since 2005. Beyond the current market strength, supply-side
dynamics are supportive for product and chemical tankers with the
orderbook at only c.5% of fleet. The easing of Covid-related
lockdowns in China, refinery expansions in the Middle East and Asia
as well as slowing fleet growth suggest the product tanker market
will remain strong in the medium term. The Company acquired four MR
product tankers in 2022: Exceptional, Marvelous, Courteous and
Mindful.
25-30% of MR product tankers are capable of engaging in the
chemicals/veg oil trade. The chemical tanker market benefits from
the strength in product tankers as MR product tankers shift to the
tightening product tanker market. The chemical tanker market also
benefits from strong supply-side fundamentals with a low orderbook
(c.4% of fleet for stainless steel tankers) and strong demand
growth forecast of c.6% CAGR (2022-2024). The Company's chemical
tankers benefit from this trend as they are employed in a
revenue-sharing pool and have spot market exposure.
At the end of the financial period, the Company had 10 product
tankers on fixed-rate charters with Average Charter Length of 2.3
years and two chemical tankers that operate in a pool . We believe
the product and chemical tanker markets, well supported by strong
supply-side fundamentals, offer potential for strong operating
profit and capital appreciation.
Bulkers
Over the financial period, the bulker market weakened due to the
impact of Covid-related restrictions in China, a slowdown in global
industrial production and the easing of port congestion. 1-year
time charter rates for Handysize bulkers fell c.41% to
US$12,375/day. We expect the bulker market to improve from 2Q23,
aided by the easing of Covid-related restrictions in China, as the
market has strong supply-side fundamentals. The bulker orderbook is
only c.7% of fleet compared to c.80% of fleet in 2008 when the
increase in rates resulted in an ordering boom. Further, c.14% of
the Handysize bulker fleet is >=20 years old compared to the
orderbook of c.7% of fleet which suggests negative net supply
growth as the oldest and least efficient vessels are recycled. As
at the end of the financial period , the Company had 9 bulkers on
fixed-rate charters with Average Charter Length of 0.3 years.
Containerships
The containership market weakened over the financial period.
Consumer demand weakened due to the impact of inflationary pressure
on consumers, Covid-related lockdowns in China and the war in
Ukraine. The effect of weak demand was exacerbated by easing port
congestion. Over the financial period, 1-year time charter rates
for small (2500-TEU) containerships fell 75% to US$18,750/day. The
containership orderbook was c.29% of fleet at the end of the
financial period. Fleet growth is expected to accelerate to c.7% in
2023. We expect the containership market to remain relatively weak
and have re-allocated capital by divesting containerships to
reinvest in fuel-efficient tankers and bulkers. After the end of
the financial period, the Company agreed to divest its last
containership. The orderbook for small containerships remains
relatively low at c.14% of fleet compared to c.24% of fleet which
is at least 20 years old and will continue to seek opportunities as
they arise.
Across the main segments, asset values and time charter rates
reflect our thesis of supply-side adjustment to varying degrees. In
bulkers and tankers, the combination of tightening environmental
regulations and lower shipyard capacity suggest newbuild prices
will remain high thereby also supporting secondhand prices.
Clarksons Research estimates that global shipbuilding capacity is
40% lower compared to a decade ago. Many newbuild designs
incorporate more flexible machinery and storage systems to handle
multiple fuel types to reduce emissions. These further increase
newbuild prices.
The shipping industry has a history of being resilient during
periods of disruption. Despite the negative impact of the war in
Ukraine, the product tanker market strengthened to record highs at
the end of the financial period as demand for long-haul cargoes
outpaced demand for short-haul cargoes and the supply side remains
supportive with slowing fleet growth. New environmental regulations
from the International Maritime Organisation ("IMO") to measure and
improve vessel carbon emission intensity incentivise lower speeds
resulting in reduced shipping capacity, aiding the supply-side
adjustment. Fuel-efficient vessels such as the Company's recent
acquisitions are likely to be favoured.
Environmental, Social and Governance ("ESG")
We emphasise the principles of Responsible Investment in the
management of clients' assets through awareness and integration of
ESG factors into our investment process in the belief that these
factors have a positive impact on long-term financial performance.
We recognise that our first duty is to act in the best financial
interests of the Company's shareholders and to achieve good
financial returns against acceptable levels of risk, in accordance
with the objectives of the Company. Since December 2018, we are a
signatory of the United Nations Principles of Responsible
Investment ("UN PRI") and have a Responsible Investment policy
statement (most recently revised in June 2022) which is available
on the Company's website. Current areas of ESG focus include:
1. Assessment of the fuel efficiency and environmental impact of potential acquisitions
2. Regular review of our fleet to identify opportunities for improving fuel efficiency
3. Reducing environmental impact across the asset life cycle
4. Responsible vessel recycling
5. Health and safety of the crew on our vessels
6. Enhanced security to lower risk of contraband
7. Compliance with all international sanctions imposed by the US, UK, EU and UN
8. Promoting acceptance and implementation of ESG principles with our business partners
We are committed to reducing greenhouse gas emissions and
aligning our funds to the temperature goals of the Paris Agreement
by fully transitioning to zero carbon energy sources by 2050 and
investing in zero carbon capable vessels before 2030. In September,
we appointed a Senior Adviser for Decarbonisation.
In SHIP, we aim to achieve greenhouse gas reduction and
participate in the energy transition by:
-- investing in ESDs;
-- deploying digital tools to measure and optimise fuel consumption;
-- increasing the use of zero-emission fuels by 2030; and
-- favouring long-term charters that minimise coal carriage without negative financial impact
Being a closed-end investment company listed on the Specialist
Fund Segment of the London Stock Exchange, the Company is not
required to report against the TCFD framework. Nevertheless, we
believe the TCFD recommendations provide a useful framework to
increase transparency on climate-related risks and opportunities
within financial markets and intend to publish a sustainability
report later this year on that basis. As a member of the AIC, the
Company reports against the AIC Code of Corporate Governance on a
comply or explain basis. Our Senior Management (i.e. the CEO and
the CIO) is committed to Responsible Investment and oversees the
implementation of our Responsible Investment policy statement. We
devote more than 4 full time employee equivalents to ESG
integration-related analysis and implementation in aggregate. The
policy statement is reviewed at least annually and approved by the
Company's Board. The Company's Board does not have a separate ESG
committee but collectively reviews implementation progress against
the policy statement and issues an implementation review report
which is also publicly available on the Company's website.
The Board recognises that climate change and related risks will
have an impact on the Company's business and considers
climate-related risks and opportunities when approving investment
decisions. The Board maintains ultimate responsibility for the
policy and its implementation and is committed to upholding high
standards of corporate governance.
We are a signatory of the UN PRI since 2018. In the 2021 UN PRI
signatory assessment, we received a 5-star rating in the
Infrastructure category, the highest rating in that category and
above the median rating of our peer group. We received a 4-star
rating in the Investment and Stewardship Policy category which was
also above the median rating of our peer group. Please see the for
details. We are a member of the Getting to Zero Coalition, an
alliance of more than 200 organisations including 160 companies
within the maritime, energy, infrastructure and finance sectors.
The Coalition is committed to getting commercially viable deep sea
zero-emission vessels into operation by 2030, towards full
decarbonisation by 2050. In February 2022, we became a Mission
Ambassador to the Maersk Mc-Kinney Møller Center for Zero Carbon
Shipping ("MMCZCS"), a not-for-profit research and development
organisation. We expect to benefit from the Center's extensive work
in fuel transition and technologies.
Environmental
We are reducing emissions from the Company's vessels through
investment in ESDs and promoting best operational practices such as
regular hull/propeller cleaning and optimal use of auxiliary
engines. We have invested in digital technologies for performance
monitoring and emissions reduction, which provide data and insights
for further emissions reduction and efficiency gains. Sustainable
biofuels are expected to be part of the long-term fuel mix on the
path to decarbonisation. We aim to increase the use of sustainable
biofuels following successful trials.
The potential for ESDs often depends on how efficient a vessel
design is already (the more modern the vessel the smaller the
impact of ESDs). The choice of ESDs also depends on whether a
vessel is operating near its original design parameters or not. The
selection of ESDs, the investment required, retrofit timing,
commercial arrangements for fuel savings and returns will vary from
vessel to vessel depending upon the results of energy efficiency
studies, prevailing market conditions and commercial
considerations. We have engaged a consulting firm of naval
architects to conduct energy efficiency studies on the Company's
vessels and select the appropriate ESDs for retrofit. Energy
efficiency studies will be carried out on all the Company's
acquisitions.
We have invested c.US$0.5m per vessel on ESDs such as propeller
boss cap fins, Mewis or Schneekluth ducts and variable frequency
drives. The expected return from the ESD investments is c.20% based
on the expected increased hire rate (premium) to reflect fuel
savings, from all the ESDs, of c.10% on each vessel. We expect
further upside on ESD retrofits as we better capture savings from
rising fuel prices and carbon prices. We also assess the
suitability of advanced ESDs like wind-assisted propulsion or air
lubrication for the Company's vessels and have invested in rotor
sails for a vessel in another fund that we manage.
Although we have experienced some supply chain delays in the
procurement and retrofit of ESDs, we expect ESD retrofits on eight
vessels will be fully completed by mid 2023 and on another three
vessels by the end of the year. Where possible, the ESD retrofits
are planned to coincide with each vessel's scheduled special survey
to minimise installation cost. ESD retrofit studies are in progress
on four other vessels. The other six Company vessels are already
fuel-efficient relative to their peers but will nevertheless be
evaluated for further improvement including the retrofit of
ESDs.
We have started receiving the hire rate premium for the ESD
retrofits on Laurel and Idaho. Golding and Orson operate in a pool
and will benefit directly from the fuel savings based on the
prevalent fuel prices. We are in discussion with the charterer of
Cocoa, Daffodil, Pollock and Dachshund for the hire rate premium to
reflect the fuel savings from the retrofits.
Total CO2 emissions from the Company's fleet in 2022 was 315,708
tonnes. With a growing portfolio of vessels, this measure is less
relevant to the Company than normalised measures of emissions
intensity. Total CO2 emissions from the portfolio are calculated
from the fuel consumption of the Company's vessels for propulsion
and onboard power generation. The majority of the Company's vessels
are on time charter or operate in a pool wherein the Company does
not have full operating control of the vessels but is responsible
for the regular surveys and maintenance of the vessels. Data from
one vessel (Neon) on long-term bareboat charter is excluded as the
Company does not have operating control of the vessel and is not
responsible for the regular surveys or maintenance of the
vessel.
From 2023, the IMO requires the reporting of vessel carbon
intensity using the Carbon Intensity Indicator ("CII"). The CII
measures how efficiently a vessel transports goods and is given in
grams of CO2 emitted per cargo-carrying capacity and nautical mile.
All else equal, a lower CII is indicative of a more efficiently
operated asset. The Portfolio CII improved by c.24% in 2022 mainly
because of the capital re-allocation.
Environmental Metrics 2022 2021
Total CO2 emissions (tonnes) 315,708 401,348
-------- --------
CII (g CO2/dwt-nautical mile) 7.7 10.1
-------- --------
EEOI (g CO2/tonne-nautical mile) 13.9 21.1
-------- --------
Oil spills None None
-------- --------
Of the three major segments, containerships tend to have the
highest emissions intensity due to higher operating speeds. The
Company started divesting containerships from mid 2021 to
re-allocate capital into fuel-efficient tankers and bulkers.
The EEOI is a measure of operational emissions intensity defined
as the mass of CO2 emitted per unit of transport work. The EEOI
measures a ship's fuel efficiency. Like the CII, a lower EEOI is
indicative of a more efficiently operated asset. We have utilised
the EU MRV (Monitoring, Reporting and Verification) methodology for
calculating the EEOI using data on total CO2 emissions and total
cargo transported by the Company's fleet for the 2022 calendar
year. The emissions intensity of the Company's vessels as measured
by the EEOI for 2022 improved by c.34% YoY. We expect further
reduction in emissions intensity from ESD retrofits as they are
completed in 2023. Since the Company's vessels operate on time
charters or within a pool, we are typically not involved in
determining specific voyage parameters and are therefore not able
to influence the geographic and cargo carriage metrics of the
fleet. We can only directly influence CII and EEOI metrics from the
vessel's technical parameters (such as by retrofitting ESDs) and
fleet composition.
We are committed to the deployment of new technologies to reduce
emissions and have invested in the retrofit of rotor sails on a
large bulker owned in another fund that we manage. The Company will
benefit from our knowledge and experience as we continue to
evaluate the suitability of such new technologies for the Company's
vessels. The Company's vessels utilise compliant fuel (Very Low
Sulphur Fuel Oil and Marine Gas Oil). Only one vessel, Marvelous,
is capable of utilising Heavy Fuel Oil as it has an open-loop
scrubber. According to DNV research, c.5,000 vessels in the global
fleet are scrubber-equipped with 81% having open-loop scrubbers.
The scrubber on Marvelous is compliant with current regulations and
enables the vessel to earn a premium rate for utilising cheaper
Heavy Fuel Oil.
We have proactively implemented a policy to favour long-term
charters that minimise coal carriage without negative financial
impact. Over 2022, only one of the Company's bulkers (Masterful)
carried coal, accounting for <2% of the total cargo carried by
the Company's bulkers over the year.
All of the Company's vessels have Ballast Water Treatment
Systems ("BWTS") installed except for the gas carrier Neon (on a
bareboat charter) where the charterer is responsible for BWTS
installation and compliance. BWTS prevent the translocation of
marine organisms from one region to another and help preserve
biodiversity. While BWTS installation will be mandatory from late
2024, we have expedited the installation of BWTS on Company vessels
in line with our commitment to be ahead of regulatory
requirements.
Biodiversity can also be impacted by waste generated from
shipping, particularly plastic waste. We are installing water
purification systems on all vessels to replace drinking water in
plastic bottles. The crew on each vessel are being provided with
complimentary, refillable, metal drinking water bottles.
Environmental benefits include an estimated annual reduction in the
supply of plastic-packaged water by 11,000 (1 Litre) bottles per
vessel and an annual reduction of CO2 by 2 tonnes per vessel.
The average age of the Company's vessels is c.11 years. Based on
the current portfolio and target segments, we do not expect the
Company to have recycling candidates in its portfolio in the near
future. When recycling situations do arise, the Company will follow
industry best practices in adopting the Hong Kong International
Convention for the Safe and Environmentally Sound Recycling of
Ships.
For investment and divestment decisions, we consider the
historic environmental performance and energy efficiency metrics of
candidate vessels as well as other important information on
potential environmental impact including the status of BWTS and
history of compliance to environmental and safety regulations. We
also consider the candidate track record and capability (in
addition to commercial terms) before recommending the appointment
of the technical manager for each vessel.
Social
The Company has no employees. The crew on board the Company's
vessels are employed by our technical managers. We consider crew
health and safety to be a priority and work closely with our
technical managers to promote best practices and establish a strong
safety culture, exceeding regulatory standards. The technical
managers have implemented a collection of comprehensive safety
procedures, policies, and protocols on board vessels that conform
to our guidelines. Safety performance is monitored by collecting
and tracking a comprehensive list of industry Key Performance
Indicators ("KPIs") every quarter, ensuring that any significant
incidents are reported upon with follow-up actions taken.
We are a signatory to:
-- Maritime UK's Mental Health in Maritime pledge to promote
quality of mental health and well-being in the industry.
We have engaged Mental Health Support Solutions GmbH ("MHSS") to
provide a free counselling service for crew members to help them
handle concerns of stress, anxiety, and personal issues while on
board.
-- Maritime UK's Women in Maritime pledge to build an employment
culture that actively supports and celebrates gender diversity at
all levels in the industry.
The Company has no employees. As an Investment Manager, we have
made a conscious effort to build a supportive employment culture.
As at the end of the financial period, we had c.38% female
employees and 17% female employees at the Senior Management
level.
-- The Neptune Declaration since January 2021, supporting
measures to ensure timely relief of crew and putting measures in
place to manage any pandemic-related travel restrictions.
As a result of Covid-related restrictions, crew rotation was
significantly delayed between mid 2020 and the end of the financial
period. We monitored and facilitated (sometimes at additional cost)
the prompt rotation of overdue crew members. The number of overdue
crew members was also reported to the Board on a quarterly basis.
As a result of our proactive approach to ensure timely relief, the
Company's vessels had fewer crew members overdue for rotation
compared to peers. We are pleased to note that the issue of overdue
crew members is substantially resolved in the industry as of early
2023. We remain prepared to swiftly act should new disruptions to
crew rotations arise in the future.
We are specifically monitoring the safety and well-being of the
Ukrainian crew members on board the Company's vessels. The war
could increase stress on crew members and may exacerbate challenges
to crew rotation due to the closure of airports. We have engaged
with all our technical managers to address these issues. Where
requested, we will assist in the repatriation of crew members or
extension of crew contracts. We are concerned about potential
conflict between Ukrainian and Russian crew members. Whilst no
problems have arisen to date, we have instructed our technical
managers to closely monitor the environment on board the Company's
vessels for potential conflicts.
We are committed to the deployment of new technologies towards
improving crew health and safety and are deploying ShipIN
FleetVision on all the Company's vessels. ShipIN Fleetvision
leverages machine learning camera vision technology to enhance the
safety and security of crew and cargo as well as prevent pollution,
while improving real-time, ship-to-shore collaboration.
Governance
We aim to promote acceptance and implementation of ESG
principles by business partners through an annual survey and
feedback and conduct an annual survey of all the Company's
technical managers which includes KPIs to assess their performance
on numerous metrics including ESG. The results of the survey are
communicated to the technical managers to ensure best practices are
shared.
We have a strict reporting policy for our technical managers. We
employ a third party to conduct independent inspections of the
Company's vessels on a regular basis to assist in evaluating the
performance of the technical managers. These independent
inspections include assessment of key aspects of vessel condition
as well as regulatory compliance and crew health and safety. We
update the Board on the progress of the Company's investments every
quarter with additional updates where significant events have
occurred.
We continue to closely monitor adherence to sanctions regimes
from the US, UK, EU and UN. The employment contracts for the
Company's vessels are structured to exclude trading in sanctioned
regions. Additionally, we monitor compliance through regular
inspection of vessel logs and satellite data to monitor the
movements of all the Company's vessels. Through regular contact
with our charterers, legal counsel and insurers, we are ensuring
that all vessels continue to trade in full compliance with all
relevant sanctions laws. All vessels remain insured against
war-like events. We have had no issues to date with any vessels
being damaged or blocked. We continue to monitor the consequences
of the war for shipping and the Company.
We have formally requested all our charterers and vessel
managers to desist from trade with Russia wherever legally possible
except for humanitarian purposes. The Master of each vessel may
refuse to allow the vessel to trade in areas assessed as "perilous"
where there is heightened physical risk to the vessel or its crew.
The Master of the vessel will always have the last say on the
safety of the vessel and crew and we will always support the
position of the Master in a dispute with charterers or other
interested parties.
We have a zero-tolerance policy towards bribery and adhere to
the UK Bribery Act with the following policies in place:
-- payment controls requiring dual sign-off/authorisation of all payments;
-- gifts and entertainment policies that restrict staff from giving and receiving gifts;
-- recruitment policies and ongoing monitoring of the fitness
and propriety of staff including their honesty, integrity, and
financial soundness; and
-- FCA Conduct rules and a Code of Ethics which require staff to
conduct themselves appropriately.
We are also a member of the Maritime Anti-Corruption Network
("MACN").
Principal Risks and Uncertainties
The Directors have reconsidered the principal risks and
uncertainties effecting the Company. The directors consider that
the principal risks and uncertainties have not significantly
changed since the publication of the Annual Report for the year
ended 30 June 2022. The risks and associated risk management
processes, including financial risks, can be found in the Annual
Report for the financial year ending 30 June 2022.
The risks referred to and which could have a material impact on
the Company's performance for the remainder of the current
financial year relate to:
-- Shipping and financial markets;
-- Commercial risks around charter payments;
-- Damage to the Company's assets;
-- Cost overruns;
-- Regulatory and legislative compliance;
-- Safety, health and environment;
-- Service quality of the Investment Manager and other Service Providers;
-- Liquidity.
Interim Report of the Directors
The Directors present their Interim Report and the Condensed
Interim Financial Statements of the Company for the six-month
period ended 31 December 2022.
The Company was registered in Guernsey on 6 February 2017 and is
a registered closed-ended investment scheme under the POI Law. The
Company's Shares were listed on the Specialist Funds Segment of the
Main Market of the London Stock Exchange on 20 December 2017 under
the ticker SHIP.
Investment Objective
The Company's investment objective is to provide investors with
an attractive level of regular and growing income and capital
returns through investing in secondhand commercial sea-going
vessels. The Board monitors the Investment Manager's activities
through strategy meetings and discussions as appropriate. The
Company has established a wholly owned subsidiary that acts as a
Guernsey holding company for all its investments, LS Assets
Limited, which is governed by the same Directors as the
Company.
All vessels acquired, vessel-related contracts and costs are
held in SPVs domiciled in the Isle of Man or other jurisdictions
considered appropriate by the Company's advisers. The Company
conducts its business in a manner that results in it qualifying as
an investment entity (as set out in IFRS 10: Consolidated Financial
Statements) for accounting purposes and as a result applies the
investment entity exemption to consolidation. The Company therefore
reports its financial results on a non-consolidated basis.
Subject to the solvency requirements of the Companies Law, the
Company intends to pay dividends on a quarterly basis. The
Directors expect the dividend to grow, in absolute terms, modestly
over the long term. In July 2021 the Company raised its target
annual dividend to US$0.08 per share (previously US$0.075 per
share). Encouraged by strong visible cash flows from increased
charter cover, diversification and continued supply-side recovery,
the Company again raised its target annual dividend from US$0.080
to US$0.085 per share, which commenced from 4Q22.
The Company aims to achieve a NAV Total Return of 12% or above
(net of expenses and fees) on the Issue Price over the long
term.
Results and dividends
The Company's performance during the period is discussed in the
Chairman's Statement on pages 3 - 6. The results for the year are
set out in the Condensed Statement of Comprehensive Income on page
32.
Related Parties
Details of related party transactions that have taken place
during the period and of any material changes are set out in Note
13 of the Condensed Interim Financial Statements.
Directors
The Directors of the Company who served during the period and to
date are set out on page 7.
Directors' interests
The Directors held the following interests in the share capital
of the Company either directly or beneficially as of 31 December
2022, and as of the date of signing these Financial Statements:
31 December 30 June 2022
2022
Shares Shares
R King 60,000 45,000
S Le Page 40,000 40,000
P Barnes 5,000 5,000
C Rødsæther 30,000 20,000
The Directors fees are disclosed below:
Payable from Paid from Paid from
1 January 2023 1 July 2022 1 July 2021
To To to
30 June 2023 31 December 30 June
2022 2022
Director GBP GBP GBP
R King 21,000 19,000 36,610
S Le Page 19,250 17,500 34,000
P Barnes 17,750 16,250 31,550
C Rødsæther 17,750 16,250 31,550
Other Interests
Tufton Investment Management Holding Limited group ("Tufton
Group") shareholders, employees, non-executive directors and former
shareholders held the following interests in the share capital of
the Company either directly or beneficially.
As at 31 December 2022
% of issued
Name Ordinary Shares Share Capital
Tufton Shareholders 5,988,133 1.90
Tufton Staff 466,261 0.15
Tufton Non-Executive Directors 403,279 0.13
Former Tufton Shareholders 3,041,740 0.99
As at 30 June 2022
% of issued
Name Ordinary Shares Share Capital
Tufton Group Shareholders 5,375,133 1.74
Tufton Group Staff 466,261 0.15
Tufton Group Non-Executive
Directors 403,279 0.13
Former Tufton Group Shareholders 3,041,740 0.99
Share buybacks and discount management
Subject to working capital requirements, and at the absolute
discretion of the Board, excess cash may be used to repurchase
Shares. The Directors may implement Share buyback at any time
before the 90-day guideline set out in the Prospectus where they
feel it is in the best interest of the Company and all
Shareholders.
The Company purchased 850,000 of its own Shares at an average
price of US$1.14 per Share during November and December 2022. Refer
to Note 5 for more details. There were 850,000 Shares held in
Treasury and 307,778,541 Shares outstanding as at the end of the
financial period. The Company bought back a further 710,000
ordinary shares, between the end of the financial period and 15
March 2023, at an average price of US$1.14. The purchased shares
will be held in treasury. The Company had 307,068,541 Shares
outstanding as at the date of approval of these accounts.
Going concern
In assessing the going concern basis of accounting the Directors
have, together with discussions and analysis provided by Tufton,
had regard to the guidance issued by the Financial Reporting
Council. They have considered recent market volatility, the Russian
invasion of Ukraine, and the potential impact of Covid restrictions
in China on the current and future operations of the Company and
its investments. Cash reserves are held at the LS Assets Limited
and SPV levels and rolled up to the Company as required to enable
expenses to be settled as they fall due.
Based on these activities and bearing in mind the nature of the
Company's business and assets, the Directors consider that the
Company has adequate resources to continue in operational existence
for at least twelve months from the date of approval of the Interim
Report and the Condensed Interim Financial Statements. For this
reason, they continue to adopt the going concern basis in preparing
the Interim Report and the Condensed Interim Financial
Statements.
Responsibility Statement
For the period from 1 July 2022 to 31 December 2022
The Directors are responsible for preparing the Interim Report
and Condensed Interim Financial Statements, which have not been
audited or reviewed by an independent auditor, and confirm that to
the best of their knowledge:
-- the Condensed Interim Financial Statements have been prepared
in accordance with International Accounting Standard (IAS) 34,
Interim Financial Reporting;
-- the Interim Report includes a fair review of the information required by:
-- DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the Condensed
Interim Financial Statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
-- DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Approved by the Board of Directors on 16 March 2023 and signed
on behalf of the Board by:
.............................. ..............................
Rob King Stephen Le Page
Non-executive Chairman Director
Condensed Statement of Comprehensive Income
For the 6-month period ended 31 December 2022
31 December 31 December
2022 2021
Notes US$ US$
Income (Unaudited) (Unaudited)
Net changes in fair value
of financial assets at fair
value through profit or
loss 4 (4,314,159) 76,730,838
Foreign exchange gain - 1,008
Total net (loss) / income (4,314,159) 76,731,846
Expenditure
Administration fees (85,547) (83,577)
Audit fees (119,636) (79,757)
Corporate Broker fees (75,000) (75,000)
Directors' fees 15 (80,996) (88,055)
Directors' expenses (3,892) (238)
Foreign exchange loss (10,144) -
Insurance fee (4,925) (3,025)
Investment management fee 11 (1,815,843) (1,645,783)
Legal fees - (26,287)
Performance fees 12 3,980,432 (2,419,323)
Professional fees (66,096) (109,239)
Sundry expenses (13,716) (21,486)
Total credit / (expenses) 1,704,637 (4,551,770)
------------ ------------
Operating (loss) / profit (2,609,522) 72,180,076
Finance income 1,246 4,348
(Loss) / Profit and comprehensive
income for the period (2,608,276) 72,184,424
============ ============
IFRS Earnings per ordinary
share (cents) 6 (0.85) 25.34
============ ============
There were no potentially dilutive instruments in issue at 31
December 2022.
All activities are derived from continuing operations.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a Statement of Other
Comprehensive Income has not been prepared. The accompanying notes
are an integral part of these condensed interim financial
statements.
Condensed Statement of Financial Position
At 31 December 2022
31 December 30 June
2022 2022
Notes US$ US$
Non-current assets (Unaudited) (Audited)
Financial assets designated
at fair value
through profit or loss 4 442,578,561 446,892,720
Total non-current assets 442,578,561 446,892,720
------------ ------------
Current assets
Trade and other receivables 18,800 5,740,385
Cash and cash equivalents 11,018 8,823
Total current assets 29,818 5,749,208
------------ ------------
Total assets 442,608,379 452,641,928
------------ ------------
Current liabilities
Trade and other payables 11,001,541 5,098,219
Total current liabilities 11,001,541 5,098,219
------------ ------------
Net assets 431,606,838 447,543,709
============ ============
Equity
Ordinary share capital 5 309,289,530 310,272,983
Retained reserves 5 122,317,308 137,270,726
Total equity attributable
to ordinary shareholders 431,606,838 447,543,709
============ ============
Net assets per ordinary
share (cents) 8 140.23 145.01
============ ============
The accompanying notes are an integral part of these condensed
interim financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on
16 March 2023 and signed on its behalf by:
________________________________
_____________________________
Rob King Stephen Le Page
Non-executive Chairman Director
Condensed Statement of Changes in Equity
For the 6-month period ended 31 December 2022
Ordinary Retained
share capital earnings Total
Notes US$ US$ US$
For the six months
ended
31 December 2022 (Unaudited)
Shareholders' equity
at 1 July 2022 310,272,983 137,270,726 447,543,709
Loss and comprehensive
income for the period - (2,608,276) (2,608,276)
Share buybacks 5 (969,451) - (969,451)
Share issue costs 5 (14,002) - (14,002)
Dividends paid 7 - (12,345,142) (12,345,142)
Shareholders' equity
at 31 December 2022 309,289,530 122,317,308 431,606,838
=============== ============= =============
Ordinary Retained
share capital earnings Total
US$ US$ US$
For the six months
ended
31 December 2021 (Unaudited)
Shareholders' equity
at 1 July 2021 259,657,871 52,988,084 312,645,955
Profit and comprehensive
income for the period - 72,184,424 72,184,424
Share issue 51,429,265 - 51,429,265
Share issue costs (827,640) - (827,640)
Dividends paid 7 - (10,674,634) (10,674,634)
Shareholders' equity
at 31 December 2021 310,259,496 114,497,874 424,757,370
=============== ============= =============
The accompanying notes are an integral part of these condensed
interim financial statements.
Condensed Statement of Cash Flows
For the 6-month period ended 31 December 2022
31 December 31 December
2022 2021
Notes US$ US$
(Unaudited) (Unaudited)
Cash flows from operating
activities
(Loss) / profit and comprehensive
income for the period (2,608,276) 72,184,424
Adjustments for:
Purchase of investments 4 - (49,560,001)
Change in fair value on investments 4 4,314,159 (76,730,838)
Operating cash flows before
movements in working capital 1,705,883 (54,106,415)
Changes in working capital:
Movement in trade and other
receivables 5,721,585 5,740,147
Movement in trade and other
payables 5,903,322 8,663,489
Net cash generated from
/ (used in) operating activities 13,330,790 (39,702,779)
------------- -------------
Cash flows from financing
activities
Share issue costs 5 (14,002) 50,601,625
Net cost from share buybacks 5 (969,451) -
Dividends paid to Ordinary
shareholders 7 (12,345,142) (10,674,634)
Net cash (utilised in) /
generated from financing
activities (13,328,595) 39,926,991
------------- -------------
Net movement in cash and
cash equivalents during the
period 2,195 224,212
Cash and cash equivalents
at the beginning of the period 8,823 29,989
Cash and cash equivalents
at the end of the period 11,018 254,201
============= =============
The accompanying notes are an integral part of these condensed
interim financial statements.
Notes to the Condensed Interim Financial Statements
For the 6-month period ended 31 December 2022
1. General information
The Company was incorporated with limited liability in Guernsey
under the Companies (Guernsey) Law, 2008, as amended, on 6 February
2017 with registered number 63061, and is regulated by the GFSC as
a registered closed-ended investment company. The registered office
and principal place of business of the Company is 1 Le Truchot, St
Peter Port, Guernsey, Channel Islands, GY1 1WD.
The Company had 308,628,541 ordinary shares in issue on 1 July
2022 all of which were listed on the Specialist Funds Segment of
the Main Market of the London Stock Exchange.
During the current period, the Company bought a total of 850,000
of its own ordinary shares at an average price of US$1.14 per
Share. Further details are noted in Note 5. The total number of
Company's shares in issue was 307,778,541 at the end of the
financial period.
2. Significant accounting policies
(a) Basis of Preparation
The Condensed Interim Financial Statements have been prepared on
a going concern basis in accordance with IAS 34 Interim Financial
Reporting, and applicable Guernsey law. These Condensed Interim
Financial Statements do not comprise statutory Financial Statements
within the meaning of the Companies (Guernsey) Law, 2008, and
should be read in conjunction with the Financial Statements of the
Company as of and for the year ended 30 June 2022, which were
prepared in accordance with International Financial Reporting
Standards. The statutory Financial Statements for the year ended 30
June 2022 were approved by the Board of Directors on 23 September
2022. The opinion of the auditors on those Financial Statements was
not qualified. The accounting policies adopted in these Condensed
Interim Financial Statements are consistent with those of the
previous financial year and the corresponding interim reporting
period can be found in the Annual Report for the financial year
ending 30 June 2022 , except for the adoption of new and amended
standards as set out below.
Compliance with IFRS
The financial statements have been prepared on a going concern
basis in accordance with International Financial Reporting
Standards ("IFRS"), which comprise standards and interpretations
approved by the International Accounting Standards Board ("IASB")
and International Financial Reporting Interpretations Committee
("IFRIC"), Listing rules and applicable Guernsey law.
Historical cost convention
The financial statements have been prepared on a historical cost
basis modified by the revaluation of investments at fair value
through profit or loss. The principal accounting policies adopted,
and which have been consistently applied (unless otherwise
indicated), are set out below.
Basis of non-consolidation
The Directors consider that the Company meets the investment
entity criteria set out in IFRS 10. As a result, the Company
applies the mandatory exemption applicable to investment entities
from producing consolidated financial statements and instead fair
values its investments in its subsidiaries in accordance with IFRS
13. The criteria which define an investment entity are as
follows:
-- an entity that obtains funds from one or more investors for
the purpose of providing those investors with investment services;
and
-- an entity that commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income or both (including having an exit
strategy for investments); and
-- an entity that measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Directors consider that the Company's objective of pooling
investors' funds for the purpose of generating an income stream and
capital appreciation is consistent with the definition of an
investment entity, as is the reporting of the Company's net asset
value on a fair value basis.
(b) New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 December 2022 reporting periods and have not been
early adopted by the Company. These standards, amendments or
interpretations are not expected to have a material impact on the
Company in the current or future reporting periods and on
foreseeable future transactions.
(c) Standards, amendments and interpretations effective during the year
There are no standards, amendments to standards or
interpretations that are effective for annual periods beginning on
1 July 2022 that have a material effect on the financial statements
of the Company.
3. Critical Accounting Judgements and Estimates
The preparation of financial statements requires management to
make estimates and judgements that affect the amounts reported for
assets and liabilities as at the Statement of Financial Position
date and the amounts reported for revenue and expenses during the
period. The nature of the estimation means that actual outcomes
could differ from those estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in
which the estimates are revised and in any future years
affected.
Information about significant judgements, estimates and
assumptions which have the greatest effect on the recognition and
measurement of assets, liabilities, income and expenses were the
same as those that applied to the Annual Report and Financial
Statements for the year ended 30 June 2022.
Critical judgements in applying the Company's accounting
policies - IFRS 10: Consolidated Financial Statements
The audit committee considered the application of IFRS 10, and
whether the Company meets the definition of an investment
entity.
The Company owns the investment portfolio through its investment
in LS Assets Limited ("LSA"). The investment by LSA comprises the
NAVs of the SPVs. The Company holds 100% voting shares in LSA and
has all the characteristics of an investment company. Cash is held
at the LSA level and transferred to the Company when needed to
cover expenditure.
In the judgement of the Directors, the Company meets the
investment criteria set out in IFRS 10 and they therefore consider
the Company to be an investment entity in terms of IFRS 10. As a
result, as required by IFRS 10, the Company is not consolidating
its subsidiary but is instead measuring it at fair value in
accordance with IFRS 13.
The criteria which define an investment entity are documented in
Note 2 (a).
The Company's objective of pooling investors' funds for the
purpose of generating an income stream and capital appreciation is
consistent with the definition of an investment entity.
Critical judgements and estimates in applying the Company's
accounting policies - financial assets at fair value
Specific capital adjustments are considered as part of the
valuation process for standard vessels, mainly the adjustment for
BWTS installed on vessels is considered an enhancement to the
charter-free value, initially recognised at cost and straight line
depreciated from the commissioning date to 8 September 2024.
At the current and prior period ends, the charter-free valuation
of one vessel was provided by broker valuation rather than
VesselsValue, as elected by the Investment Manager given limited
transactions in this vessel type.
At the current period and prior period ends, one vessel was
valued at its expected sale price.
Critical Accounting Estimates
The unobservable inputs which significantly impact the fair
value have been determined to be the charter-free valuation and
market charter rates for standard vessels and the discount rate
applied for specialised vessels.
Specific capital adjustments are considered as part of the
valuation process for standard vessels, mainly the adjustments for
BWTS and scrubbers installed. BWTS installed by the Company's SPVs
are considered to be an enhancement to the charter-free value. They
are initially recognised at cost and straight line depreciated from
the commissioning date to 8 September 2024. Scrubbers are
considered an enhancement to the charter-free value using an
estimated valuation from a shipbroker, and straight-line
depreciated over 5 years.
At 31 December 2022, one vessel was treated as a specialist
vessel (one vessel at 30 June 2022).
The specialist vessel was valued on a DCF basis by the
Investment Manager using vessel specific information including the
appropriate discount rate, which is reviewed on a regular basis to
ensure it remains relevant to the project and market risk
parameters.
The Prospectus sets out the basis on which non-typical and
specialist vessels would be valued.
There were no other material areas of estimation for the
Company.
4. Financial Assets designated at fair value through profit or loss (Investment)
The Company owns the investment portfolio through its investment
in LSA, which comprises the NAV of the SPVs and residual assets and
liabilities in LSA. The NAVs consist of the fair value of vessel
assets and the SPVs' residual net assets and liabilities. The whole
investment portfolio is designated by the Board as a Level 3 item
on the fair value hierarchy because of the lack of observable
market information in determining the fair value. As a result, all
the information below relates to the Company's Level 3 assets only,
with respect to the requirements set out in IFRS 7. The investment
held at fair value is recorded under Non-Current Assets in the
Statement of Financial Position as there is no current intention to
dispose of its investment in LSA but at the underlying SPV level
one of the vessels was contracted to be sold as at 31 December
2022.
The changes in the financial assets measured at fair value
through profit or loss (for which the Company has used Level 3
inputs to determine fair value, after considering dividends
declared (see Note 7)) are as follows:
31 December 30 June
2022 2022
US$ US$
LSA (Unaudited) (Audited)
Brought forward cost
of investment 299,483,224 249,923,223
Total investment acquired
in the period / year - 49,560,001
Carried forward cost of
investment 299,483,224 299,483,224
Brought forward unrealised
gains on valuation 147,409,496 57,804,789
Movement in unrealised
(losses) / gains on
valuation (4,314,159) 89,604,707
Carried forward unrealised
gains on valuation 143,095,337 147,409,496
Total investment at
fair value 442,578,561 446,892,720
============== ============
The SPVs and holding companies Handy Holdco Limited and Product
Holdco Limited, which are also SPVs, are incorporated in the Isle
of Man. The subsidiary company LS Assets Limited is incorporated in
Guernsey. The country of incorporation is also their principal
place of business.
Breakdown of Fair Value:
Name 31 December 30 June Direct Principal Ownership Ownership
2022 2022 or indirect activity at 31 at 30
US$ US$ holding December June
2022 2022
Holding
LS Assets Limited - - Direct company 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Aglow Limited(1,
6) 101,309 107,202 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Antler Limited(1,
6) 68,175 74,463 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Anvil Limited 19,573,459 23,591,722 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Auspicious Limited 22,010,283 25,929,027 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Awesome Limited 21,958,158 25,638,607 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Bear Limited(1,
2) 76,521 77,702 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Candy Limited(1) 11,679 37,192 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Charming Limited 21,057,463 25,109,394 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Citra Limited(1) 205,230 220,238 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Cocoa Limited(3) - - Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Courteous Limited(5) - - Indirect SPV 100% -
------------ ------------- ------------- ------------- ---------- ----------
Dachshund(3)
Limited - - Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Daffodil Limited(3) - - Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Dragon Limited(1,
6) 119,606 133,991 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Echidna Limited(1,
6) 79,220 34,275 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Exceptional
Limited(5) - - Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Golding Limited 20,105,693 17,868,732 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Handy HoldCo SPV (Holding
Limited 44,431,951 32,455,919 Indirect Company) 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Idaho Limited 23,733,651 25,150,084 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Kale Limited(1,
6) 140,731 109,304 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Laurel Limited 16,936,250 19,486,868 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Lavender Limited(1) 13,193 18,736,992 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Marvelous Limited(5) - - Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Masterful Limited 22,044,111 25,761,402 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Mayflower Limited 17,514,882 20,030,420 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Mindful Limited(5) - - Indirect SPV 100% -
------------ ------------- ------------- ------------- ---------- ----------
Neon Limited 27,156,298 32,633,044 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Octane Limited 21,381,954 19,243,615 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Orson Limited 15,967,898 11,704,544 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Parrot Limited(1) 415,280 660,649 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Patience Limited(1) 676,822 475,673 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Pollock Limited(1,3) - - Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Product HoldCo SPV (Holding
Limited 73,305,051 - Indirect Company) 100% -
------------ ------------- ------------- ------------- ---------- ----------
Riposte Limited 13,950,131 24,996,021 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Rocky IV Limited 19,165,273 23,280,175 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Sierra Limited 21,570,430 19,474,698 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Swordfish Limited
(1, 2) 100,033 137,229 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Vicuna Limited
(1) 35,820 97,243 Indirect SPV 100% 100%
------------ ------------- ------------- ------------- ---------- ----------
Cash held pending
investment (4) 740,593 29,805,237
------------ -------------
Residual net
assets / (liabilities)
(4) 17,931,413 (7,604,525)
------------ -------------
*Total investment
at fair value 442,578,561 446,892,720
------------ -------------
The net change in the movement of the fair value of the
investment is recorded in the Statement of Comprehensive
Income.
(*) Vessels are valued at fair value in each of the SPVs shown
in the table above and combined with the residual net liabilities
of each SPV to determine the fair value of the total investment
attributable to LSA.
(1) Vessel sold.
(2) Company in the process of dissolution.
(3) These SPVs report zero fair value in the table above because
they are owned by the intermediate holding company Handy Holdco
Limited and are included in Handy Holdco Limited's fair value.
(4) The cash held pending investment and residual net
liabilities are held in LSA.
(5) These SPVs report zero fair value in the table above because
they are owned by the intermediate holding company Product Holdco
Limited and are included in Product Holdco Limited's fair
value.
(6) Company has been dissolved.
The movement in the fair value of the investment is recorded in
the Condensed Statement of Comprehensive Income.
5. Share capital and reserves
Number Gross amount Issue costs Share capital
of shares (US$) (US$) (US$)
Total issue at
30 June 2022 308,628,541 316,282,156 (6,009,173) 310,272,983
------------ ------------- ------------ --------------
Share issue costs - - (14,002) (14,002)
------------ ------------- ------------ --------------
Share buyback
9 November 2022 (100,000) (113,227) - (113,227)
------------ ------------- ------------ --------------
Share buyback
17 November 2022 (40,000) (45,693) - (45,693)
------------ ------------- ------------ --------------
Share buyback
22 November 2022 (100,000) (114,229) - (114,229)
------------ ------------- ------------ --------------
Share buyback
23 November 2022 (100,000) (114,229) - (114,229)
------------ ------------- ------------ --------------
Share buyback
25 November 2022 (100,000) (114,229) - (114,229)
------------ ------------- ------------ --------------
Share buyback
28 November 2022 (100,000) (114,229) - (114,229)
------------ ------------- ------------ --------------
Share buyback
29 November 2022 (25,000) (28,559) - (28,559)
------------ ------------- ------------ --------------
Share buyback
30 November 2022 (25,000) (28,308) - (28,308)
------------ ------------- ------------ --------------
Share buyback
5 December 2022 (25,000) (28,308) - (28,308)
------------ ------------- ------------ --------------
Share buyback
22 December 2022 (35,000) (39,981) - (39,981)
------------ ------------- ------------ --------------
Share buyback
28 December 2022 (100,000) (114,229) - (114,229)
------------ ------------- ------------ --------------
Share buyback
29 December 2022 (50,000) (57,115) - (57,115)
------------ ------------- ------------ --------------
Share buyback
30 December 2022 (50,000) (57,115) - (57,115)
------------ ------------- ------------ --------------
Total in issue
at
31 December 2022 307,778,541 315,312,705 (6,023,175) 309,289,530
------------ ------------- ------------ --------------
Retained reserves
Retained reserves comprise the retained earnings as detailed in
the Condensed Statement of Changes in Equity.
6. Earnings per share calculated in accordance with IFRS
31 December 31 December
2022 2021
US$ US$
(Unaudited) (Unaudited)
(Loss) / profit and comprehensive
income for the period (2,608,276) 72,184,424
Weighted average number of
ordinary shares 308,495,117 284,876,271
Earnings per ordinary share
(cents) (0.85) 25.34
Diluted Earnings per ordinary
share (cents) (0.85) 25.34
The weighted average number of ordinary shares is 308.5m shares
(2021: 284.9m shares).
7. Dividends
The Company declared the following dividends to Ordinary
Shareholders in respect of the profit for the periods
indicated:
Period end Dividend Ex div Net Dividend Record Paid date
per share date paid date
Dividends declared for the period ended 31 December 2022:
30 June 28 July 29 July 12 August
2022 US$0.02 2022 US$6,172,571 2022 2022
----------- ----------- ------------- ----------- ------------
30 September 27 October 28 October 11 November
2022 US$0.02 2022 US$6,172,571 2022 2022
----------- ----------- ------------- ----------- ------------
Dividends declared for the period ended 31 December 2021:
30 June 29 July 30 July 13 August
2021 US$0.01875 2021 US$5,063,206 2021 2021
----------- ----------- ------------- ----------- ------------
30 September 28 October 29 October 12 November
2021 US$0.02 2021 US$5,611,428 2021 2021
----------- ----------- ------------- ----------- ------------
Under the Companies (Guernsey) Law, 2008, the Company can
distribute dividends from capital and revenue reserves, subject to
a prescribed net asset and solvency test. The net asset and
solvency test considers whether a company is able to pay its debts
when they fall due, and whether the value of a company's assets is
greater than its liabilities. The Board confirms that the Company
passed the net asset and solvency test for each dividend paid.
8. Net assets per ordinary share
31 December 30 June
2022 2022
US$ US$
(Unaudited) (Audited)
Shareholders' equity 431,606,838 447,543,709
Number of ordinary shares 307,778,541 308,628,541
Net assets per ordinary
share (cents) 140.23 145.01
9. Financial risk management
The Company's activities expose it to a variety of financial
risks; market risk (including price risk, currency risk and
interest rate risk), credit risk and liquidity risk.
The condensed interim financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; they should be read in conjunction
with the Company's Audited Financial Statements as at 30 June
2022.
There have been no significant changes in the management of risk
or in any risk management policies since the last Statement of
Financial Position date.
10. Financial assets and liabilities not measured at fair value
Cash and cash equivalents and trade and other receivables are
liquid assets whose carrying value represents fair value. The fair
value of other current assets and liabilities would not be
significantly different from the values presented at amortised
cost.
11. Management fee
The Investment Manager is entitled to receive an annual fee,
calculated on a sliding scale, as follows:
(a) 0.85 per cent per annum of the quarter end Adjusted Net
Asset Value up to US$250 million;
(b) 0.75 per cent per annum of the quarter end Adjusted Net
Asset Value in excess of US$250 million but not exceeding US$500
million; and
(c) 0.65 per cent per annum of the quarter end Adjusted Net
Asset Value in excess of US$500 million.
For the period ended 31 December 2022 the Company incurred
US$1,815,843 (2021: US$1,645,783) in management fees of which
US$880,688 (2021: US$871,872) was outstanding at 31 December
2022.
12. Performance fee
Tufton ODF Partners LP shall be entitled to a performance fee in
respect of a Calculation Period provided that the Total Return per
Share on the Calculation Day for the Calculation Period of
reference is greater than the High Watermark per Share.
Any fee accruing as at the end of the Calculation Period is paid
50% subsequent to the end of that period, with the remaining 50%
being retained by the Company and deferred until the next time that
a performance fee payment is due, being adjusted for any subsequent
underperformance during that time.
A performance fee of US$nil (2021: US$2,419,323) was accrued at
31 December 2022.
13. Related parties
The Investment Manager, Tufton Investment Management Ltd, is a
related party due to having key management personnel in common with
the subsidiaries of the Company. All management fee transactions
with the Investment Manager are disclosed in Note 11.
Tufton ODF Partners LP is a related party due to being the
beneficiary of any performance fee paid by the Company. All
performance fee transactions are disclosed in Note 12.
Transactions with LSA and subsidiary SPVs are not disclosed.
The Directors of the Company and their shareholdings are stated
in the Interim Report of the Directors, page 29.
14. Controlling party
In the opinion of the Directors, on the basis of shareholdings
advised to them, the Company has no immediate or ultimate
controlling party.
15. Remuneration of the Directors
The remuneration of the Directors was US$80,996 (2021:
US$88,055) for the period which consisted solely of short-term
employment benefits (refer to the Interim Report of the Directors
on page 29). At 31 December 2022, Directors' fees of US$nil (2022:
US$19,789) were outstanding.
16. Events after the reporting period
On 3 January 2023, the Company agreed to divest its last
containership, Riposte, for US$13m.
The Company purchased a total of 710,000 ordinary shares at a
price of US$1.14 per share post period end to 15 March 2023.
On 17 January 2023, the Company declared a dividend of
US$0.02125 per ordinary share for the quarter ending 31 December
2022. The dividend was paid on 10 February 2023 to holders of
ordinary shares recorded on the register as at close of business on
27 January 2023 with an ex-dividend date of 26 January 2023.
There has not been any other matter or circumstance occurring
subsequent to the end of the financial period that has
significantly affected, or may significantly affect, the operations
of the company or the state of affairs of the company in the
current or future financial years.
Corporate Information
Directors
Robert King, Chairman
Stephen Le Page
Paul Barnes
Christine Rødsæther
Registered office
3(rd) Floor
1 Le Truchot
St Peter Port
Guernsey
GY1 1WD
Investment Manager and AIFM
Tufton Investment Management Ltd ("Tufton IML")
70 Pall Mall
1(st) Floor London
SW1Y 5ES
Asset Manager
Tufton Management Limited
3(rd) Floor, St George's Court
Upper Church Street
Douglas
Isle of Man IM1 1EE
Secretary and Administrator
Maitland Administration (Guernsey) Limited ("MAGL")
3(rd) Floor
1 Le Truchot
St Peter Port
Guernsey
GY1 1WD
Joint Placing Agents and Financial Advisers
Hudnall Capital LLP
Adam House
7-10 Adam Street
London
WC2N 6AA
Singer Capital Markets
1 Bartholomew Lane
London
EC2N 2AX
Guernsey Legal Advisers
Carey Olsen (Guernsey) LLP
PO Box 98, Carey House
Les Banques
St Peter Port
Guernsey
GY1 4BZ
UK Legal Advisers
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Registrar
Computershare Investor Services (Guernsey) Limited
1(st) Floor, Tudor House
Le Bordage
St Peter Port
Guernsey
GY1 1DB
Receiving Agent
Computershare Investor Services PLC
The Pavillions
Bridgewater Road
Bristol
BS99 6AH
Independent Auditor to the Company
PricewaterhouseCoopers CI LLP
Royal Bank Place
1 Glategny Esplanade
St Peter Port
Guernsey
GY1 4ND
Principal Bankers
Barclays Bank Plc
Guernsey International Banking
PO Box 41
St Peter Port
Guernsey
GY1 3BE
Definitions
The following definitions apply throughout this document unless
the context requires otherwise:
AIC The Association of Investment Companies
AIFM An alternative investment fund manager
Adjusted Net Asset Value The Net Asset Value less uninvested monies
(cash and cash
value equivalents) held by the Company from
time to time excluding monies arising on
or from the realisation of or a distribution
from an Investment
Asset Manager Tufton Management Limited (formerly Oceanic
Marine Management Limited)
Auditor PricewaterhouseCoopers CI LLP
Average Charter Length Total forecast EBITDA from charters in place,
divided by the expected annualised EBITDA
of those charters
CAGR Compound Annual Growth Rate. A business and
investing specific term for the geometric
progression ratio that provides a constant
rate of return over the time period
Calculation Day The last business day of each Calculation
Period
Calculation Period (a) The period starting on Admission and
ending on the earlier of (i) 30 June 2024;
(ii) the commencement of the winding up of
the Company; and (iii) the termination of
the Manager's appointment; and
(b) If the previous Calculation Year ended
on 30 June of the previous year, each successive
period starting on 1 July and ending on the
earlier of (i) 30 June three years later;
(ii) the commencement of the winding up of
the Company; and (iii) the termination of
the Manager's appointment
Calculation Year 1 July to 30 June
Companies Law The Companies (Guernsey) Law, 2008 as amended
Company Tufton Oceanic Assets Limited (Guernsey registered
number 63061) which, when the context so
permits, shall include any intermediate holding
company of the Company and the SPVs
Consolidated Gearing Loans to charter-free value on a consolidated
Ratio basis
Directors or Board The Board of Directors of the Company
Disclosure Guidance The disclosure guidance and transparency
and Transparency Rules rules made by the Financial Conduct Authority
or DTRs under Section 73A of FSMA
Dividend Cover Portfolio Operating Profit less capex less
debt amortisation, divided by dividends for
the period
EBITDA Earnings before interest, taxes, depreciation
and amortisation
Energy Efficiency Existing The emissions intensity of a vessel calculated
Ship Index or EEXI using its design characteristics
Energy Efficiency Operating The operating emissions intensity of a vessel
Index or EEOI calculated using the emissions from that
vessel
Environmental, Social, ("ESG"), A n evaluation of the company's
and Governance collective conscientiousness for environmental,
social and governance factors
FCA The UK Financial Conduct Authority
FSMA The Financial Services and Markets Act 2000
and any statutory modification or re-enactment
thereof for the time being in force
Financial Reporting The UK Financial Reporting Council
Council or FRC
Forecast Net Yield Forecast EBITDA minus any capex accruals
for the vessels in the portfolio divided
by the time-weighted vessel values
Fund Level Fees and Investment management fee and other professional
Expenses fees and expenses at fund level
GFSC or Commission The Guernsey Financial Services Commission
Gain/(Loss) in Capital Fair value gains and losses (being the change
Value in charter-free value + change in charter
value) from marking assets to market in accordance
with the valuation policy of the Company
Gain/(Loss) in Capital Gain/(Loss) in Capital Value divided by the
Value per Share weighted-average number of ordinary shares
during that period
Gross Operating Profit Operating income before gain/(loss) of capital
values, loan interest, fees, and all other
fund level expenses
High Performance Fee In respect of any Calculation Period, an
Amount amount equal to the Performance Fee Pay-Out
Amount for the previous Calculation Period
where a Performance Fee was payable
High Watermark per Share The higher of: (i) US$1.00 increased by the
Hurdle; and (ii) if a Performance Fee has
previously been paid, the Total Return per
share on the Calculation Day for the last
Calculation Period (if any) by reference
to which a Performance Fee was paid
Historic Performance In respect of any Calculation Period, an
Fee Amount amount equal to be Performance Fee Pay-Out
Amount for the previous Calculation Period
where a performance fee was payable
Hurdle US$1.00 (Issue Price) increased by 12 per
cent. compounded
annually and expressed as a percentage
IFRIC International Financial Reporting Interpretations
Committee
IFRS International Financial Reporting Standards
IRR Internal rate of return - the Internal rate
of return is the interest rate at which the
net present value of all the cash flows (both
positive and negative) from a project or
investment equal zero, and is a common performance
indicator used in investment funds
Investment Manager Tufton Investment Management Ltd
Issue Price US$1.00 per Share
LPG Carrier A vessel used to transport liquefied petroleum
gas
LS Assets Limited or The Guernsey holding company owning the SPVs
LSA through which the Company investment into
vessels
Listing Rules The listing rules made by the UKLA pursuant
to Part VI of FSMA
London Stock Exchange London Stock Exchange
or LSE
Main Market The main market for listed securities operated
by the London Stock Exchange
NAV Total Return The change in NAV plus distributions paid
by the Company during the period, divided
by the initial NAV
Net Asset Value or NAV The value, as at any date, of the assets
of the Company after deduction of all liabilities
of the Company and in relation to a class
of shares in the Company, the value, as at
any date of the assets attributable to that
class of shares after the deduction of all
liabilities attributable to that class of
shares determined in accordance with the
accounting policies adopted by the Company
from time to time
Operating Expense Expenses incurred during vessel and subsidiary
company operations
Overdue Crew Relief Crew members staying on board vessels beyond
or contractual periods
Overdue Crew Rotation
POI Law The Protection of Investors (Bailiwick of
Guernsey) Law, 2020, as amended
Paris Agreement The Paris Agreement is a legally binding
international treaty on climate change
Performance Fee Amount 20 per cent. of the excess in Total Return
per Share and the High Watermark per Share
multiplied by the time weighted average number
of Shares in issue during the Calculation
Period
Performance Fee Pay-Out In respect of the relevant Calculation Period,
Amount an amount equal to "A", where:
A = (0.5 x B) + C;
B = the Performance Fee Amount; and
C = an amount equal to the High Performance
Fee Amount
Portfolio The Company's portfolio of investments from
time to time
Portfolio Operating Gross Operating Profit and interest income
Profit less loan interest and fees, Fund Level Fees
and Expenses
Prospectus The Placing and Offer for Subscription document
for the Company dated 8th December 2017
Register The register of members of the Company
Relevant Number of Shares For any Calculation Period the time weighted
average number of Ordinary Shares in issue
during such Calculation Period
Responsible Investment A strategy and practice to incorporate environmental,
social and governance (ESG) factors in investment
decisions and active ownership
Revenue Charter income net of broker commissions
and charter related costs
SFS or Specialist Funds The Specialist Funds Segment of the Main
Segment Market (previously known as the Specialist
Fund Market or SFM)
SPV or Special Purpose Corporate entities, formed and wholly owned
Vehicle (directly or indirectly) by the Company,
specifically to hold one or more vessels,
and including (where the context permits)
any intermediate holding company of the Company
Segment Classifications of vessels within the shipping
industry including, inter alia, Tankers,
General Cargo, Containerships and Bulkers
Ship-days The sum of the number of days each vessel
was owned in the fund over the financial
period
Time-Weighted Capital Time-weighted capital invested in vessels
Employed
Total Return per Share The Net Asset Value per Ordinary Share on
any Calculation Day adjusted to:
(i) include the gross amount of any dividends
and/or distributions paid to an Ordinary
Share since Admission;
(ii) not take account of any accrual made
in respect of the performance fee itself
for that Calculation Period;
(iii) not take account of any accrual made
in respect of any prevailing Historic Performance
Fee Amount (as adjusted pursuant to the operation
of this paragraph below);
(iv) not take account of any increase in
Net Asset Value per Share attributable to
the issue of Ordinary Shares at a premium
to Net Asset Value per Share or any buyback
of any Ordinary Shares at a discount to Net
Asset Value per Ordinary Share during such
Calculation Period;
(v) not take account of any increase in Net
Asset Value per Share attributable to any
consolidation or sub-division of Ordinary
Shares;
(vi) take into account any other reconstruction,
amalgamation or adjustment relating to the
share capital of the Company (or any share,
stock or security derived therefrom or convertible
there into); and
(vii) take into account the prevailing Net
Asset Value of any C Shares in issue
Tufton Group Tufton Investment Management Holding Ltd
and its subsidiaries
United Kingdom or UK The United Kingdom of Great Britain and Northern
Ireland
VesselsValue VesselsValue Limited, a third party provider
of vessel valuations to the Company and Investment
Manager
GBP or Sterling The lawful currency of the United Kingdom
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END
IR EAXDKFFPDEFA
(END) Dow Jones Newswires
March 17, 2023 03:00 ET (07:00 GMT)
Tufton Oceanic Assets (LSE:SHIP)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Tufton Oceanic Assets (LSE:SHIP)
Gráfica de Acción Histórica
De May 2023 a May 2024
