For the period from
31 March 2021 (date of incorporation)
to 31 March 2022
Annual report and audited
Consolidated financial statements
Contents
Taylor Maritime Investments Limited
Group Overview
Group overview
Key highlights 1
Financial highlights 2
Summary information 3
Investment policy 4
Strategic review
Chairman’s statement 6
Chief Executive Officer’s statement 7
Market review 9
Portfolio and operational review 12
Financial review 14
Environmental, Social and Governance review 16
Stakeholders report 27
Statement of principal risks and uncertainties 29
Going concern and viability statement 31
Governance
Board of Directors 33
Executive team 34
Corporate governance 35
Report of the Nomination and Remuneration Committee 39
Report of the Risk and Audit Committee 43
Report of the ESG and Engagement Committee 46
Directors’ report 48
Statement of Directors’ responsibilities 50
Independent Auditor’s report 51
Financial statements
Consolidated statement of comprehensive income 57
Consolidated statement of changes in shareholders’ equity 58
Consolidated statement of financial position 59
Consolidated statement of cash flows 60
Notes to the consolidated financial statements 61
Additional information
Assets and Liabilities information (look-through basis) – unaudited 82
Management and Administration 83
Appendix – Alternative performance measures – unaudited 84
Appendix – Definitions and glossary 86
Appendix – ESG data summary – unaudited 88
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
• Taylor Maritime Investments Limited (the “Company”) concluded a successful initial public offering on
27 May 2021, raising US$254 million (comprising US$160 million cash and US$94 million in consideration
shares), followed by a subsequent capital raise of US$75 million on 28 July 2021
• The Group’s Total Net Asset Value (“NAV”) return per Ordinary Share was +81.3%
2
for the period from
the Initial Public Offering (“IPO”) on 27 May 2021 to 31 March 2022
• The Company’s Ordinary Shares closed at a price of US$1.42 on 31 March 2022. The Company’s total
share price return per Ordinary Share was +45.5%
2
for the period from the IPO on 27 May 2021 to 31
March 2022
• As at 31 March 2022, the Group’s fleet consisted of 31 vessels (including vessels contracted to sell)
with a total market value of US$546 million. Of the 31 vessels, 29 are Handysize
3
and 2 are Supramax
3
• During the period, the Group, through the subsidiary Good Falkirk (MI) Limited, also completed an
acquisition of a 26.6% stake in Grindrod Shipping Holdings Ltd., a dual NASDAQ and Johannesburg
Stock Exchange listed shipping business (NASDAQ: GRIN, JSE: GSH “Grindrod Shipping”) secured at an
average price of US$17.64 per share. At 31 March 2022, Grindrod Shipping’s share price was US$25.44
per share, amounting to US$125 million of the Group’s NAV. The Group also received two dividends of
US$0.72 per share in both December 2021 and March 2022 (total dividends of US$1.44 per share for the
period) from Grindrod Shipping, representing an annualised yield of c.16%
2
on the investment
• The fleet’s average net time charter rate at 31 March 2022 was approximately US$18,600 per day, with an
average duration of six months and generating an average annualised unlevered return
2
in excess of 24%
• The average age of the fleet is 11.4 years
• Total dividends paid in respect of the period ended 31 March 2022, amounted to 8.47 US cents
4
, representing
a dividend yield on the Initial Issue Price of approximately 10% on an annualised basis.
Group
1
overview
Key highlights
1
“Group” consists of The Company and its subsidiaries, see note 6 for details.
2
See “Alternative Performance Measures” on pages 84-85.
3
See “Definitions and Glossary” on pages 86-87.
4
Total dividends delcared during the period ended 31 March 2022 amounted to 3.50 US cents and the remaining 4.97 US cents were declared post 31 March 2022.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Group overview
Financial highlights
at 31 March 2022
Net Assets
US$575,248,769
Net Asset Value per share
US$1.7420
Share price at period end
US$1.42 / £1.09
Discount to Net Asset Value
1
(18.5%)
Ongoing charges figure
2
0.93%
Total NAV Return
1
81.3%
1
See “Alternative Performance Measures” on pages 84 – 85.
2
Total ongoing charges, calculated in accordance with the AIC guidance, is for the consolidated Group (The Company, TMI Management (HK) Limited (“TMIHK”), TMI
Advisors (UK) Limited (formerly TMI Management (UK) Limited) (“TMIUK”) and TMI Advisor Pte. Limited (“TMI Singapore”)) annualised for the period, divided by the
average NAV for the period. See “Alternative Performance Measures” on pages 84 – 85.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Principal activity
The Company was registered in Guernsey under the Companies (Guernsey) Law, 2008 on 31 March 2021. The Company’s
registration number is 69031 and it is regulated by the Guernsey Financial Services Commission as a registered closed-
ended collective investment scheme pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 2020, the
Registered Collective Investment Scheme Rules 2021 and the Prospectus Rules 2021. The Company’s Ordinary Shares
were admitted to the premium listing segment of the Official List of the UK Listing Authority and began trading on the
Main Market of the London Stock Exchange (“LSE”) on 27 May 2021 (Stock Code TMI).
At 31 March 2022, the Company has a total of 330,215,878 Ordinary Shares in issue, each with equal voting rights.
Investment objective
The Company’s investment objective is to provide investors with an attractive level of regular, stable and growing income
and the potential for capital growth through investing primarily in vessels, usually employed, or to be employed, on fixed
period Charters.
The Company will target a Total NAV Return of 10% to 12% per annum (net of expenses and fees but excluding any tax
payable by Shareholders) over the medium to long term.
Dividend policy
The Company intends to pay dividends on a quarterly basis with dividends declared in January, April, July and October.
The Group is targeting stable cashflow generation with quarterly dividend payments of 1.75 cents per Ordinary Share
representing an annual yield of 7% on the IPO price of US$1.00, with the intention to grow dividends.
Management
The Company is a self-managed investment company led by a Board of Non-Executive and Executive Directors (the
“Board” or the ”Directors”) (whose details appear on page 33) and a full time Executive Team (whose details appear on
page 34).
The Executive Team of experienced industry professionals led by Edward Buttery previously worked closely together at
the Commercial Manager, Taylor Maritime (HK) Limited. Established in 2014, Taylor Maritime (HK) Limited is a privately
owned management business with a seasoned team that includes the founders of dry bulk shipping company Pacific
Basin Shipping (listed in Hong Kong 2343.HK) and gas shipping company BW Epic Kosan (formerly Epic Shipping) (listed
in Oslo BWEK:NO).
The Executive Team are based in Guernsey, London and Singapore (previously in Hong Kong and London). As detailed
further in note 10, the services of the Executive Team are provided pursuant to an intra Group advisory and services
agreement between TMI Management (HK) Limited (“TMIHK”) and the Company. From 1 March 2022 Edward Buttery,
Chief Executive Officer of the Group, is based in Guernsey and directly employed by the Company.
The internal management structure ensures the Company is focused on delivering shareholder value, and the Executive
Team are incentivised by linking a substantial part of their remuneration package to shareholder returns through the NAV
performance targets, see the Nomination and Remuneration Report for details. The decision to adopt an internal
management structure should, in future, ensure a competitive ongoing charges ratio as no third party investment
advisor/manager fees are paid which are linked to assets under management.
Group overview
Summary information
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Group overview
Investment policy
In order to achieve its investment objective, the Group will invest in
a diversified portfolio of vessels which will primarily be Geared
Handysize and Supramax bulk vessels. These vessels, which have
their own loading and discharging equipment, are mostly acquired
second-hand, leveraging valuations that are below long-term
average prices and Depreciated Replacement Cost.
The Group holds its shipping assets through Special Purpose
Vehicles (“SPVs”) which are wholly owned and controlled by the
Company and are held through an intermediate holding company
called TMI Holdco Limited (“Holdco”). The Company may acquire
vessels through asset purchases (in which case the vessel will be
transferred to an SPV) or through the acquisition of the relevant
vessel owning SPV. The Company may, in exceptional
circumstances, also invest in vessels through joint ventures with
other parties, other non-wholly-owned structures or listed
investments, although, in such circumstances, the Company will
seek, wherever possible, to have a controlling interest.
The Group will pursue its income strategy through a balanced
employment strategy, comprising short term Charters (less than 6
months), medium term Charters (more than 6 months) and long
term Charters (greater than a year) and will benefit from staggered
renewals, with a view to flattening the income curve.
For more information, please visit www.taylormaritimeinvestments.com.
The Company and the subsidiaries as detailed in the note 6 make
up the group of companies (the “Group”).
Key strategic objectives
The Group will realise its investment policy by applying the following
strategic objectives.
Acquisition Strategy – the Group has a selective growth strategy
focusing on accretive opportunities to increase shareholder
returns. Through the deep experience and longstanding industry
relationships of the Executive Team, the Group will seek to invest in
mainly Japanese second-hand vessels at below long-term average
prices and Depreciated Replacement Cost to achieve an excellent
rate of return over the remaining life of its assets. Acquisition can
be through direct purchase or, if exceptional investment
opportunities arise, through joint ventures, other non-wholly owned
structures or listed investments.
Income Strategy – to maintain a long-term stable income stream,
by diversifying charter contracts over different periods depending
on market conditions and limiting exposure to any one charter
counterparty while always applying prudent leverage (no long-term
structural debt) and cash management.
Sustainability Strategy – to ensure the long-term sustainability of
the fleet by integrating environmental factors into our fleet
maintenance and renewal strategy, and by ensuring, at a broader
level, that we are a responsible corporate citizen applying the
highest governance and social standards in all our operations and
interactions with stakeholders.
Why invest
Attractive valuations and disciplined investment strategy
The Group’s assets will mostly be acquired second-hand, leveraging
valuations that are below long-term average prices and Depreciated
Replacement Cost. This is supported by access to a Revolving
Credit Facility (“RCF”) and the ability to recycle capital through
asset disposals.
Sustainable yield and returns through long term ungeared
structure
The Company intends to pay dividends on a quarterly basis with
dividends declared in January, April, July and October. The Group
targets a Total NAV Return of 10% to 12% p.a. (net of expenses and
fees) over the medium to long term. The Group prioritises its ability
to deliver its dividend, as stated at IPO, consistently. This is
supported by the Group’s commitment to a long-term ungeared
approach with access to a RCF to bridge investments where
appropriate and a commitment to limit aggregate borrowings to a
maximum of 25% of gross assets.
Downside protection through diversification of cargoes and ports
due to vessel class versatility
Handysize vessels are relatively small and “geared”, meaning they
have their own loading and discharging equipment. These features
make Handysize vessels versatile and allow them to access a wide
range of ports, to and from which they carry a range of necessity
goods - principally food stuffs such as grains and cereals, fertilisers
and raw materials related to infrastructure building - ensuring
broad diversification of fleet activity.
Shareholder alignment through self-managed fund structure
The internalised fund management structure results in no NAV
based or performance based fees paid to an external investment
advisor with costs expected to reduce over time in comparison to
NAV and where rewards are aligned with shareholder interests.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic
review
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic review
Strategic review
Chairman’s statement
Dear Shareholders,
On behalf of the Board, I thank you for your continued support. It is
a pleasure to present my inaugural report for what has been an
outstanding first period of trading.
The Company has made a dynamic, well-timed and successful
start as a listed investment company. The basis of our investment
proposition was and remains the vital role that shipping plays in the
global trade system by transporting significant commodity
volumes over long distances in the most cost-effective way. We are
currently invested predominantly in Handysize dry bulk vessels, the
workhorses of the dry bulk shipping trade, which are responsible
for carrying essential goods such as grain, fertilisers and basic
building materials around the world. Demand for our ships is
expected to grow by 2.1% in 2022 against a sustained historically
low orderbook resulting in a forecast Global net fleet growth of only
1.9%. Ongoing restraint with respect to newbuild ordering, given
technological uncertainty, could mean that fundamentals remain
strong well into 2024.
Profitability and investment prospects
The Group’s strategy is to provide an attractive level of regular
stable income with the potential for capital growth through our
investments. The Group seeks to maintain a responsible long-term
capital structure and selective accretive growth strategy (through
investments, divestments and reinvestment) to maximise
shareholder value. Our capital structure is designed to permit the
continuation of our dividend payments throughout the cycle. The
successful implementation of our strategy is evidenced by the
excellent levels of profitability and cashflow we have generated in
the 10 months to our financial reporting date. The Board monitors
closely the level at which the Company’s shares trade relative to the
NAV and continues to consider share buybacks versus alternative
investment opportunities.
Acquisition of Grindrod Shipping Holdings
Ltd. (“Grindrod Shipping”)
The acquisition of a 26.6% stake in Grindrod Shipping is evidence
of the Group’s ability to deploy capital nimbly into complementary
assets. This investment has already generated both capital
appreciation and cash returns through dividends. We have laid
strong foundations for a constructive (and ongoing) working
relationship with this company and now have director representation
on Grindrod Shipping’s board of directors.
Environmental, Social and Governance
(“ESG”)
ESG themes are a key focus for the Group, presenting opportunities
as well as challenges. The Group is developing a clear roadmap
and programme of activities to ensure that we hit each milestone
along the path of reaching net zero by 2050. The first step in that
process is the baseline carbon footprint of the fleet in this first
period of operation. We are proud to be able to include our progress
in this area within the ESG Review of this report. Whilst
transportation of commodities by sea generates less greenhouse
gases than any alternative form of transport, we are not complacent
and are committed to investing in reducing our carbon footprint
wherever possible.
The professionalism and welfare of the crew members serving on
board of the Group's vessels is integral to our business. They have
navigated the difficult problems presented by COVID-19 with
resilience and dedication, supported by our technical managers.
We are also responding to challenges presented by the war in
Ukraine, the well-being of shipboard personnel being our primary
concern in such circumstances. As announced at the time, the
Group has one vessel in Ukraine which was loading maize when the
conflict began. Fortunately, the crew that were onboard were safely
evacuated and repatriated. In the light of the ongoing hostilities, the
Group’s policy is that its fleet will not operate in the conflict zone
and, of course, will continue to be fully compliant with applicable
international sanctions.
Good fundamentals
The fundamentals of the Group’s business and the geared dry bulk
market remain strong. While potential structural changes in the
global political landscape and an inflationary environment with
rising interest rates make it difficult to predict with certainty
whether the current profitable market rates are here to stay or
whether they will fluctuate, there are good grounds for optimism.
Historically shipping has been an inflation hedge and our business’
outlook is further underpinned by the absence of new Handysize
bulk carriers. I therefore believe that we are well positioned to
continue to prosper and deliver strong cashflow, capital appreciation
and compelling shareholder returns in 2022 and beyond.
Nicholas Lykiardopulo
Independent Chair
13 July 2022
1
See “Definitions and Glossary” on pages 86 - 87
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic review
Chief Executive Officer’s statement
Dear Shareholders,
I am delighted to be writing to you at the end of our first financial
period as an investment company since our listing on the LSE’s
Premium Segment on 27 May 2021. We have created a
differentiated shipping investment opportunity offering growth,
value creation and shareholder returns. We deliver this through a
combination of sustainable yield and capital appreciation generated
by high quality assets and an experienced, professional
management team. Our leading position in the niche Handysize
market is aimed at delivering consistent earnings through the
cycle, whilst our growth strategy is selective and we are committed
to a long-term financially prudent approach without long-term debt.
Utilisation of capital raised
The Company listed with a market capitalisation of US$254 million
and, after a follow-on fundraise in July 2021 of US$75 million, we
were able to take advantage of attractive second-hand asset prices
in a rapidly rising market and increased the fleet from 23 seed
assets to a peak of 32 vessels. These purchases along with the
acquisition of the Grindrod Shipping holding (see below) contributed
to the strong growth in the Group’s NAV from US$249 million at IPO
to US$575 million at 31 March 2022, a NAV growth of 81.3% per
Ordinary Share.
As the market strengthened, we recycled capital into an accretive
growth opportunity, by locking in the sale of two assets at very
attractive IRRs and reinvesting the realised capital into a minority
stake in Grindrod Shipping at an average purchase price of
US$17.64 per share. The Grindrod Shipping fleet is highly
complementary to the Group’s own vessels, comprising
predominantly modern, high-quality Japanese built geared dry bulk
vessels. At 31 March 2022, Grindrod Shipping’s share price was
US$25.44 per share and the Group’s 26.6% ownership stake
therefore made a strong contribution of US$125 million to the
Group’s NAV at the period end, an uplift of US$38 million on the
investment (c.43%).
In addition to the capital gain, the significant earnings potential of
the Grindrod Shipping fleet translated into favourable cash returns
through dividends for the Group.
Paul Charles Over, a director of the Group’s Commercial Manager,
joined the Grindrod Shipping board of directors on 17 February
2022 as a non-executive director and representative of the Group.
Our charter policy
Our average charter rate at IPO was US$14,942 and at the end of
our first financial period was US$18,600, an increase of 24%.
Commercially, we have varied charter durations across the fleet to
strike a balance between higher short-term charter rates and
longer-term earnings visibility, resulting in increased stability in
shareholder returns, attractive yields and NAV appreciation. We are
always mindful of managing seasonal changes in demand which,
in the short-term, influence our choice of charter duration mix. Even
while rates dropped towards the end of the 4th quarter of 2021 and
in early 2022 (owing to normal easing ahead of Chinese New Year)
our average charter rate remained stable. Furthermore, during the
Chinese New Year period, a time of typical seasonal weakness, we
deliberately fixed a portion of the fleet on short-term charters as we
anticipated a strengthening market in the lead up to summer which
has allowed us to fix longer-term charters at better rates. We will
continue to seek to secure longer period charters for a growing
percentage of our fleet to ensure stability of cash flows over the
next few years.
Profitability
Our first period of trading as an investment company delivered
promising financial results and cash generation with US$253
million of profit. On a look-through basis
1
, this was made up of
US$79 million of operating profit, after finance costs, and US$174
million was fair value gain. Our capital structure is strong, with a
healthy balance sheet and liquidity generated by charters and
vessel sales (at the date of writing, in total, the Group has sold four
ships, with one further ship contracted to be sold – the average IRR
across the five sales is in excess of 100%). As a Group we continue
to maintain a robust operating cash flow as well as having US$20
million of an undrawn revolving credit facility available.
1
“Look-through basis” reflects the Group and SPV results on a consolidated basis, which comprises the Group and the underlying SPVs (see note 6 for list of SPVs). The
primary statements on pages 57 - 60, comprises the Group results only, where the SPVs look-through results are reflected through the “financial assets at fair value
through profit or loss”, see note 2 b) for “Basis of Preparation and Consolidation” for details on consolidation.
Strategic review Chief Executive Officer’s statement continued
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
ESG
We are fortunate to have, via our external technical managers,
extremely dedicated and professional teams at sea and ashore
operating the Group’s fleet in challenging conditions, particularly in
view of disruptive regional COVID-19 restrictions, which persisted
for much of 2021 and early 2022. The crew serving aboard the
Group’s vessels have responded magnificently and we have them
and our technical managers to thank for their unstinting dedication.
Crew welfare is a core pillar of both the Group and our technical
managers’ strategies. This year we supported The Mission to
Seafarers charity and remain committed to being an active force in
evolving social responsibility within the shipping sector. The
Company has set aside a budget for charitable purposes to sustain
our commitment in the next year, see “Community engagement” on
page 26 for further details.
Sustainability is at the heart of the way we manage the Company,
and the profile and management of the fleet is integral to this. We
are committed to achieving our long-term target of zero carbon
emissions by 2050 and to combining industry efforts to promote
and achieve that target with a comprehensive programme to
improve existing vessel energy efficiency. More investment is being
directed to vessel modifications, primarily retrofits during regular
maintenance periods, and we are in dialogue with major customers
around trialling lower carbon fuels and energy saving measures. In
terms of protecting marine biodiversity, the entire fleet will be fitted
with ballast water management systems by the end of 2022
(except one vessel to be completed in 2023).
Looking forward
As we transition into the new financial year, a meaningful portion of
the fleet is positioned to capture improvements in rates in what we
expect will be a strong market for 2022, with analysts forecasting
2.1% tonne mile growth for minor bulk and 2.7% for 2023 against a
net fleet supply growth of 1.9% and -2.2% respectively (Clarksons
Research June 2022). The short-term impact of the war in Ukraine
has been a shift in trading patterns for the shipping of necessity
goods, both in terms of goods being sourced from alternative
suppliers and with Russian exports being shipped to different
destinations. So far, the net change to demand seems to be
negligible for our segment, once the decrease in volumes is offset
by increased tonne-miles. We have seen rising global food prices
as Ukraine and Russia are significant suppliers of wheat, barley and
maize. While commodity prices and inflationary pressures are
building, as my Chairman mentions, shipping has traditionally been
an inflationary hedge. We continue to monitor this and the impact
of other macro factors on growth such as rising interest rates and
COVID-19 restrictions in China. We expect current COVID-19
restrictions in China to be transitory and for demand to rebound, as
experienced following previous lockdowns.
Whilst acknowledging uncertainty in the wider economy, I am
optimistic about our segment given tightening supply over the next
two years and possibly longer. This is due to an orderbook at
historical lows and the unlikelihood of a significant uptick in
contracting given both cost inflation and pending deep-seated
change to ship designs to meet evolving environmental demands.
I am grateful for your support thus far and we will continue to work
tirelessly to create value in the Company and for you, our
shareholders.
Edward Buttery
Chief Executive Officer
13 July 2022
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Baltic Handysize Index (“BHSI”)
2,500
2,000
1,500
1,000
500
0
1,596
1,651
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019
2021
Trailing 12M Average
2020
2022
Annual change in dry bulk demand (billion tonne-miles)
1
Minor bulk demand (billion tonne-miles) and handy fleet supply
growth (dwt)
1
Fleet Supply YoY %
Tonne-Mile Demand YoY %
2016 2017 2018 2019 2020 2021 F-2022 F-2023
2016 2017 2018 2019 2020 2021 F-2022 F-2023
2.5%
1.5%
590
1,300
648
144
202
1,035
400
551
6.3%
2.0%
4.2%
2.5%
1.4%
2.2%
1.6%
-0.5%
5.4%
2.1%
2.7%
-2.2%
1.9%
2.8%
Iron Ore Minor Bulk Grain Trade Coal
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
Demand supply spread 4.9%
Market summary
After the disruptions experienced during the early stages of the
pandemic, 2021 saw a strong rebound in seaborne trade with trade
in minor bulks (i.e. the segment of the dry bulk market covering a
wide variety of commodities such as forest products, iron and steel
products, fertilisers, agricultural products, ores and minerals, cement
and other construction materials, and scrap metal), the Group’s main
cargoes, growing by 5.0% in tonnage terms after a 2.6% contraction
in 2020. The grain trade, another key cargo for Handysize ships, was
steady at 1.5% growth for 2021 after a strong year of 7.6% growth in
2020. Despite the typical seasonal weakness and disruptions to
trade patterns caused by geopolitical events, charter rates remained
much higher than usual for the time of year as we entered 2022 and
climbed swiftly in the latter part of the first quarter.
• The Baltic Dry Index (“BDI”) averaged 2,041 in Q1 2022, an
increase of 17% compared to Q1 2021 (1,739) and 245%
compared to Q1 2020 (591);
• The Baltic Handysize Index Time Charter Average (“BHSI TCA”)
1
,
an index adjusted by the Group to reflect the average deadweight
tonnage (“dwt”) of the fleet was USD 22,880 net, up 45% on Q1
2021’s index of USD 15,780 net and 270% on Q1 2020 index of
USD 6,187 net;
• Over the period from IPO through to end of March 2022, the
Baltic Handysize Index (“BHSI”)
1
increased c.29% from 1,341 to
1,735, reaching a peak of 2,062; the first time the index has
passed the 2,000 mark since September 2008;
• A significant spread between supply growth and demand growth
reopened in 2021, the manifestation of a longer-term trend, as
minor bulk demand grew by 5.4% in tonne-miles while Handysize
supply growth was 2.8%;
• The tight supply situation put upward pressure on charter rates
and vessel valuations followed suit over the period with the
Clarksons 10 year old benchmark valuation for a 32,000 dwt built
Handysize increasing from US$13.5 million at the end of May
2021 to US$18.5 million at the end of March 2022, an uplift of
US$5 million or c.37%;
• Valuations were last at these levels in 2011 and were consistently
above these levels from 2005 to 2011 during China’s growth
phase post-World Trade Organisation entry.
Demand
• The International Monetary Fund (“IMF”) estimated 6.1% global
growth in 2021 (a key driver of dry bulk demand) and in April
forecasted 3.6% growth each year for 2022 and 2023;
• Clarksons reports 3.7% growth in tonne mile demand for the dry
bulk sector in 2021 which is forecast to soften to 1.4% in 2022;
• Minor bulk demand, in tonne mile terms, increased 5.4% in 2021
with a firm 2.1% demand increase forecast for 2022
1
.
• Rates through the period, particularly in the first half, were
supported by a firm underlying demand following the rebound
from 2020 with dry bulk trade volumes well above pre-pandemic
levels. Additional support for Handysize rates also came from
container cargoes being carried on dry bulk ships and from port
congestion, both of which might recede in the medium term;
• Early 2022 saw usual seasonal weakness in the approach to the
Chinese New Year and with the Beijing Winter Olympics; the
market firmed in the latter half of the first quarter of 2022 and
continued to firm through May;
Strategic review
Market review
1
Source: Clarksons Research June 2022.
Strategic review Market review continued
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Handysize supply development (dwt million)
1
Number of Handysize new orders per year
1
Orderbook (as % of dry bulk fleet segments)
1
Global fleet age profile (% of fleet by age group)
1
71
118
128
160
380
696
476
192
379
161
135
323
199
132
20
71
82
128
88
127
15
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2.0%
2.5% 2.2%
1.6%
2.8%
2.2%
-2.2%
6.0
4.0
2.0
0.0
-2.0
-4.0
-6.0
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2017
Deliveries
Demolitions
YoY %
2018 2019 2020 2021 F-2022 F-2023
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Number DWT
5.1%
5.6%
7.1%
7.8%
9.0%
9.1%
6.1%
6.0%
Handysize HandysizeSupramax SupramaxPanamax PanamaxCapesize Capesize
>25 Years
>20 Years
>15 Years
8.8%
15.8%
25.2%
4.5%
11.4%
22.2%
3.7%
13.9%
26.0%
0.1%
2.4%
13.4%
Fleet supply
• Supply growth remains constrained in the Handysize segment in
particular, underpinning an ongoing positive outlook for at least
the next 24 months for charter rates and valuations; Clarksons
estimated net Handysize fleet growth of 2.8% for 2021 with
current forecasts of 1.9% growth for 2022 and net contraction of
2.2% in 2023 subject to actual fleet removals;
• With 8.8% of the fleet over 25 years old and a further 0.5% turning
25 by the end of 2022, research analysts expect older, less
efficient tonnage to be further removed from the fleet in 2023;
• Meanwhile, the Handysize orderbook, the primary vessel-type in
the Group’s fleet, fell below 6% at the end of 2020, the first time
since 2003, and currently sits at 5.6%. The Handysize orderbook
remains the tightest of all dry bulk segments which includes
Supramax, Panamax and Capesize vessels;
• Through 2021, dry bulk carriers accounted for only 22% of total
vessel newbuildings ordered vs. 32% average over the previous
15 years. By comparison, containerships were responsible for
41% of newbuildings ordered in 2021 versus 14% in the previous
15 years, filling shipyard berths up for delivery through 2024
1
;.
• Although strong charter rates have traditionally led to an increase
in new ship ordering activity, the Group considers that the current
cycle has its own particular characteristics which may limit
ordering, in part due to newbuild price inflation, orders in other
segments consuming shipyard capacity and the continuing
uncertainty surrounding decarbonisation and its impact on
future (not yet available) ship designs, exacerbated by a long
delay between order and delivery;
• Beyond 2023, effective supply is expected to further decrease
due to lower operating speeds required to meet International
Maritime Organisation (“IMO”) emissions reduction targets.
1
Source: Clarksons Research June 2022.
Strategic review Market review continued
Page 11
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Outlook
Given the underlying fundamentals of the Handysize segment,
particularly tight fleet supply, the Group anticipates two to three
years of further strength in the market dependent upon potential
new supply which the Group follows closely. Nevertheless, the
Group continues to monitor the risk of macro uncertainties, in
relation to inflation, higher interest rates and a possible recession in
the context of ongoing recent China COVID-19 lockdowns (expected
to be transitory as reflected in freight futures) and the Russia/
Ukraine conflict and their impact on growth, trade flows and food
and energy security.
Russia/Ukraine crisis
As referred to in the Chairman Statement, the Group had one vessel
directly affected by the situation in Ukraine. The crew have been
safely evacuated but the ship remains in port, intact, is fully insured
for all risks and is being closely monitored by the Commercial
Manager and Technical Manager. From a market perspective,
Clarksons data puts Ukraine (49 million tonnes) and Russia (38
million tonnes) at c.17.7% of the seaborne grain trade. We have
already seen trade patterns adapt as grain demands are satisfied
from other sources with Black Sea grain buyers looking to North
and South America as a substitute. However, based on recent
trading history, we estimate little impact on the Group’s trading as
port calls to Ukraine and Russia accounted for under 2% and 3%
respectively of total port calls by our ships. The Group’s policy is
that our fleet will not operate in a conflict zone and we will continue
to be fully compliant with applicable international sanctions. We
will continue to monitor the geopolitical events and the ongoing
impact of the crisis.
1
Source: Clarksons Research June 2022.
Page 12
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic review
Portfolio and operational review
Portfolio summary
• The Group was able to source and execute efficiently through the
period the acquisition of the 23 seed assets plus an additional 9
vessels — all at competitive prices, — with smooth transitions
into ownership despite the challenging conditions owing to
COVID-19;
• The Group maintained a focus on growth through investment in
the highest quality Japanese vessels available secondhand, at a
discount to long-term average prices and Depreciated
Replacement Cost. As a result, the Group benefited from
significant capital appreciation across the fleet;
• Owing to the rapid increase in asset values in the physical market,
the Group sought alternative attractively priced investment
opportunities. As a result, during the period, the Group completed
the acquisition of a 26.6% stake in Grindrod Shipping at an overall
average price of US$17.64 per share. Based in Singapore,
Grindrod Shipping is an international shipping company that
owns an attractive, modern fleet which is highly complementary
to the Group’s portfolio. At the end of the period, Grindrod
Shipping’s share price was US$25.44 per share, an uplift of
US$38 million or c.43%, and, in both December 2021 and March
2022, the Company received a dividend of US$0.72 per share
totaling US$3.7 million representing an annualised yield of c.16%
on the investment;
• The Grindrod Shipping acquisition was consistent with the
Group’s strategy of seeking accretive growth opportunities to
increase shareholder returns and demonstrates management’s
ability to recycle capital effectively as the transaction was part
financed by the sale of two vessels which were agreed in
December 2021 and completed in Q1 and Q2 2022;
• A further three vessels were identified for sale in March 2022.
Two sales completed after the reporting period. As announced
on 27 June 2022, the Company later decided not to sell the third
vessel and instead fixed the vessel on a 1 year time charter at a
40% average annualised unlevered gross yield. The Company
also agreed to sell a fifth vessel due to be completed before the
end of August 2022;
• The average IRR for the five vessels sold was 116% with an
average Multiple on Invested Capital (“MOIC”)
1
of 1.62x;
• At 31 March 2022, the Group’s fleet consisted of 31 vessels, but
will reduce to 27 vessels (26 Handysize vessels and one
Supramax vessel) after the completion of all sales.
SPV Vessel type DWT Year of build Country of build
1 Gabinius (MI) Limited Handysize 28,300 2012 Japan
2 Good Heir (MI) Limited Handysize 28,400 2012 Japan
3 Aurelius (MI) Limited Handysize 28,400 2012 Japan
4 Good Salmon (MI) Limited Handysize 31,900 2009 Japan
5 Cassius (MI) Limited Handysize 31,900 2010 Japan
6 Decius (MI) Limited Handysize 31,900 2010 Japan
7 Good Titan (MI) Limited Handysize 31,900 2008 Japan
8 Gaius (MI) Limited Handysize 32,100 2009 Japan
9 Junius (MI) Limited Handysize 32,100 2012 Japan
10 Good Queen (MI) Limited Handysize 32,200 2009 Japan
11 Good Yeoman (MI) Limited Handysize 32,200 2008 Japan
12 Good Earl (MI) Limited Handysize 32,300 2009 Japan
13 Great Fox (MI) Limited Handysize 32,300 2009 Japan
14 Good Count (MI) Limited Handysize 32,600 2006 Japan
15 Great Ewe (MI) Limited Handysize 32,600 2007 Japan
16 Good Duke (MI) Limited Handysize 33,100 2011 Japan
17 Good Fiefdom (MI) Limited Handysize 33,200 2008 Japan
18 Good Title (MI) Limited Handysize 33,200 2010 Japan
19 Hosidius (MI) Limited Handysize 33,200 2008 Japan
20 Horatio (MI) Limited Handysize 33,600 2012 Japan
21 Good Edgehill (MI) Limited Handysize 33,700 2011 Japan
22 Good Stag (MI) Limited Handysize 33,800 2004 Japan
23 Forshall (MI) Limited Handysize 37,200 2012 Japan
24 Julius (MI) Limited Handysize 37,200 2012 Japan
25 Lucius (MI) Limited Handysize 37,200 2012 Japan
26 Good Grace (MI) Limited Handysize 37,700 2020 Japan
27 NordRubicon Shipping Company Limited Handysize 38,000 2016 China
28 Good Uxbridge (MI) Limited Handysize 38,200 2012 Japan
29 Billy (MI) Limited Handysize 38,500 2011 Japan
30 Brutus (MI) Limited Supramax 55,600 2011 Japan
31 Antony (MI) Limited Supramax 58,700 2012 Japan
Fleet Average 34,942 2010
The Group’s fleet list – delivered vessels as at 31 March 2022
1
See “Alternative Performance Measures” on pages 84-85.
Strategic review Portfolio and operational review continued
28%
10%
38%
10%
14%
Less than 10%
10% - 20%
20% - 30%
30% - 40%
Over 40%
78%
14%
4%
4%
0 – 6 months
6 – 12 months
12 – 24 months
24 months+
11%
14%
32%
7%
36%
9 - 12k
12 - 15k
15 - 18k
18 - 21k
21 or more
79%
21%
Charterers with 1 vessel
Charterers > 2 vessels
Atlantic
Pacific
55%
45%
Fleet employment renewal
Page 13
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Employment and operations
• The fleet’s average net time charter rate at the close of the period
was approximately US$18,600 per day, with an average duration
of six months and average annualised unlevered gross return in
excess of 24%;
• This compares favourably with the same figures as at the end of
30 June 2021 (the Company’s first quarter end), when the
average net time charter rate for the fleet was approximately
US$15,600 per day, with an average duration of 10 months and
an average annualised unlevered gross yield of 20%;
• Updating for new charters agreed post-period end, at the date of
reporting the fleet average net charter rate is approximately
US$19,200 per day. The updated average annualised unlevered
gross cash yield for the fleet is in excess of 25% and the updated
average remaining charter duration is seven months.
1
All chart data at 31 March 2022
Average Annualized Unlevered Gross
Cash Yield (%)
1
Vessels by charterer
1
Net time charter rates per day
1
Fleet employment renewal
1
Delivered Fleet Location
1
Page 14
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic review
Financial review
Investment performance
• Net Asset Value (“NAV”) per ordinary share grew from US$0.98 to
US$1.74, an increase of 81.3% since IPO on 27 May 2021;
• In terms of underlying assets, as at 31 March 2022, the Group’s
fleet consisted of 31 vessels with a total market value of US$546
million and the investment in Grindrod Shipping had a total
market value of US$125 million;
• On 27 October 2021, the Company declared its first interim
dividend of 1.75 US cents per Ordinary Share for the period from
1 July 2021 to 30 September 2021. Total dividend of US$5.8
million was paid on 24 November 2021. On 27 January 2022, the
Company declared its second interim dividend of 1.75 US cents
per Ordinary Share for the period from 1 October 2021 to 31
December 2021. Total dividend of US$5.8 million was paid on 23
February 2022. On 21 April 2022, the Company declared its third
interim dividend of 1.75 US cents per Ordinary Share for the
period from 1 January 2022 to 31 March 2022. Total dividend of
US$5.8 million was paid on 19 May 2022;
• On 6 May 2022, the Company declared a special interim dividend
of 3.22 US cents per Ordinary Share for the period from IPO to 31
March 2022. Total special interim dividend of US$10.63 million
was paid on 10 June 2022. This takes the total dividends declared
for the period from IPO to 31 March 2022 to 8.47 US cents per
ordinary share, representing a dividend yield on the Initial Issue
Price of approximately 10% on an annualised basis;
• Dividend Cover
1
for the financial period to 31 March 2022 was
6.5x (not including the dividends declared post period end), 4.3x
(inclusive of the final quarter dividend declared in April 2022) and
2.7x (inclusive of the final quarter dividend declared in April 2022
and the special dividend declared in May 2022);
• The Group’s annualised ongoing charges ratio for the period
ended 31 March 2022 was 0.93%.
Investment performance - Group look-through
2
information
31 March 2021 (date of incorporation)
to 31 March 2022
Total vessel days
3
7,502 days
US$ millions
Revenue
4
133.49
Operating expenses
5
(44.74)
Gross operating profit 88.75
Finance costs
6
(3.66)
Gain in capital values
7
174.00
Portfolio profit 259.09
Fund expenses
8
(6.21)
Profit for the period (before tax) 252.88
Financing
• The Group remains committed to a financially prudent approach,
maintaining a modest level of borrowing via the RCF (see below)
to support dividend yield and to protect the downside risk;
• At IPO, the Group had long term debt of US$30 million associated
with the acquisition of the seed fleet. During the period, the full
US$30 million was repaid;
• The Group has access to a short-term revolving credit facility
(“RCF”) which allows the Group to act nimbly and pursue
appropriate, selective growth investment opportunities as they
arise. The borrower is the Company’s subsidiary TMI Holdco
Limited but is guaranteed by the Company, see note 13 for
details. During the period the Group increased the available RCF
from US$60 million to US$160 million in line with the growth of
the Group since IPO;
• Total RCF that was drawn at 31 March 2022 was US$140 million
with debt over gross assets ratio as at 31 March 2022 of 19.1%.
The intention is to repay drawn funds from future operating
cashflows and vessel sales. Each tranche of loan drawn on the
RCF is required to be repaid within 18 months.
1
See “Alternative Performance Measures” on pages 84 - 85.
2
““Look-through basis” reflects the Group and SPV results on a consolidated basis, which comprises the Group and the underlying SPVs (see note 6 for list of SPVs).
The primary statements on pages 57 - 60, comprises the Group results only, where the SPVs look-through results are reflected through the “financial assets at fair
value through profit or loss”, see note 2 b) for “Basis of Preparation and Consolidation” for details on consolidation.
3
Vessel days : Total number of days all vessels have been owned by the Group over the financial period to 31 March 2022.
4
Revenue : Charter income net of commissions and charter related costs plus dividend income.
5
Operating expenses : Expenses incurred during vessel operations and general administrative expenses incurred by the SPVs.
6
Finance costs: Includes loan interest and fees, offset by interest income.
7
Gain in capital values : Non-cash fair value gains and losses from marking assets to market in accordance with the valuation policy of the Group.
8
Fund expenses : Direct fund costs and investment management overheads
Strategic review Financial review continued
Page 15
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic review Financial review continued
$1.85
$1.65
$1.45
$1.25
$1.05
$0.85
$0.65
$0.98
$1.45
US$480m
$0.38
US$125m
$(0.42)
(US$138m)
$0.33
US$108m
$1.74
US$575m
NAV
27/05/2021
FMV - Fleet FMV
- Grindrod
Debt
3
Net Current
Assets
NAV
31/03/2022
Profit for
the period
Fair value
gain
Share
premium
2
Dividend
paid
NAV
31/03/2022
$0.24
$0.53
$0.03
$(0.03)
$1.74
NAV valuation
• NAV per Ordinary Share was US$1.74 at 31 March 2022 with
US$0.24 contributed from profit for the period and US$0.53 from
fair value gain;
• Total NAV return was 81.3% for the period, driven by operating
profit, increase in vessel values and an attractive gain on the
Grindrod Shipping investment which appreciated strongly over
the investment cost;
• Breakdowns of the movements in the portfolio’s Net Asset Value
and its component parts are shown below;
• Vessel asset valuations are undertaken on a quarterly basis and
are determined by taking the average of two independent broker
valuations. As the brokers’ valuations are prepared on a charter-
free basis, the Executive Team assesses the difference in value
arising from the contracted charter versus market rate, and,
where the difference is material, factors the adjustment into the
valuation (see pages 66-67 for additional details);
• Vessels contracted for sale are held at the contracted sale price.
1
NAV components presented on a look-through basis to the Group SPVs.
2
Share premium generated from US$75 million capital raise in July 2021.
3
Net of loan financing fee
NAV per Ordinary Share bridge from IPO
on 27 May 2021 to 31 March 2022
NAV
1
components
as at 31 March 2022
Page 16
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic review
Environmental, Social and Governance review
ESG Strategy & United Nations Sustainable Development Goals (“SDGs”)
The Group has designed a comprehensive ESG strategy and
roadmap which permeates throughout the business and everyday
decision making. The Group's approach is underpinned by six key
ESG priorities, in the context of which KPIs are measured and
progress is tracked against.
The Group engages actively with its shareholders to achieve
collective ESG responsibilities and ambitions. The shipping
industry, irreplaceably serving the basic needs of global society, is
in a position to contribute positively to the SDGs. The Group has
elected to focus on the six key SDGs that most closely align with
our purpose and ambitions as an investment company.
The Group’s ESG priorities and progress in FY22
ESG priorities FY22 SDG Alignment
Responsible investment • Acquisitions aligned to the Group’s ESG commitment and focusing on
vessels of relatively energy efficient design, built in Japan;
• ESG internal assessments undertaken during due diligence phase are
prioritised to address potential gaps. This allows us to make informed
decisions on the potential environmental performance of a new vessel.
Climate change
and Environmental
Management
• Emissions target commitment: committed to achieving a long-term target of
net zero emissions;
• Fleet energy efficiency measures: ongoing, comprehensive programme
to improve vessel energy efficiency, including retrofits at scheduled
maintenance events, including boss cap fins, wake-equalising ducts and
advanced hull coatings;
• Plastic reduction onboard campaign: full fleet roll out of water mineralisers
and re-usable water bottles, reducing the use of single use plastic onboard;
• Real-time emissions data: daily monitoring of fleet emissions and carbon
intensity metrics;
• Protecting marine biodiversity: entire fleet to be fitted with Ballast Water
Management Systems by end of 2022, with one final vessel to be completed
in 2023;
• Reducing sulphur emissions: exclusive use of very low sulphur fuel.
Onshore and
at Sea Safety
• Selection of technical managers with high safety standards: ongoing
monitoring of safety KPIs, safety protocols in place onboard vessels and
incident sharing;
• Promote safety at sea and prevention of human injury/loss of life, exceeding
regulatory standards for crew;
• 24/7 remote/telephone medical assistance for seafarers at sea;
• Safety training: training and seminars for officers and crew to promote safety
culture, strict drug/alcohol policies and a whistleblowing policy for crew;
• Additional O2 tanks supplied during the onset of COVID-19 as well as supply
of O2 concentrators.
Compliance and conduct • Environmental regulations: well positioned to meet the upcoming IMO
regulations commencing from January 2023;
• ESG reporting: commitment to transparency and strong ESG reporting.
Community and employee
engagement
• Supporting crew welfare initiatives: signatory to the “Neptune Declaration on
Seafarer Wellbeing and Crew Change”;
• Training and development: supporting seafarer cadet training programmes
onboard vessels;
• Community support: supporting charities which align with our core values.
Strong corporate
governance
• Premium listing on LSE: ensures strong corporate governance and
adherence to UK’s highest standards of regulation;
• ESG Policy steered by independent board ESG committee;
• Diversity in action: 75% female independent directors and 50% female
executive team;
• Zero tolerance of bribery and corruption: active members of Maritime Anti-
Corruption Network.
1
International Chamber of Shipping
Strategic review Environmental, Social and Governance review continued
Page 17
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Approach to ESG reporting
The Group’s ESG strategy and objectives are set and monitored by
the ESG and Engagement Committee which reports to the Board.
As an internally managed investment company, the Executive
Team works with the external technical managers, commercial
manager and other key stakeholders to progress its decarbonisation
priorities and other critical environmental, social and governance
objectives.
The Group’s ESG policy, which is reviewed by the Board at least
annually, is published on the Company’s website.
Reporting standards approach
This annual report represents the Group’s first comprehensive ESG
data disclosure, serving as the performance baseline going forward.
In December 2020, the FCA published a policy statement defining
new rules for companies with a UK premium listing requiring them
to make disclosures consistent with the recommendations of the
Task Force on Climate Related Disclosures (“TCFD”) from 1 January
2021. Whilst the Company is a closed-ended investment company,
and therefore not within scope of the TCFD regulation this financial
year, the Group has commenced its journey towards aligning
disclosure with the TCFD and adopting its recommendations.
These disclosures are expected to evolve over the coming year as
the Group develops its net-zero pathway, including the inclusion of
1.5C/well below 2C scenario analysis.
The Group's ESG disclosures are also guided by the Sustainability
Accounting Standard Board (“SASB”) for Marine Transportation as
well as elements of the Global Reporting Initiative (“GRI”).
Incorporating these two frameworks in addition to TCFD provides a
complementary sector-focused angle to the Group's reporting
approach.
The Group will continually refine and improve its approach to ESG
reporting as it develops a further understanding of climate change
and associated risks and opportunities.
The table below presents the progress to date in commencing to adopt the TCFD recommendations.
TCFD Section Disclosure
Governance
Disclose the organisation’s governance around climate-related risks
and opportunities.
Annual report: ESG and Climate Governance (pages 18 – 19)
Strategy
Disclose the actual and potential impact of climate-related risks
and opportunities on the organisation’s businesses, strategy, and
financial planning where such information is material.
Annual report: ESG Strategy & UN SDGs (page 16)
Annual report: Climate-related Risk and Risk Management (page 20)
Risk
Disclose how the organisation identifies, assesses, and manages
climate-related risks.
Annual report: Climate-related Risk and Risk Management (page 20)
Metrics & targets
Disclose the metrics and targets used to assess and manage
relevant climate-related risks and opportunities where such
information is material.
Annual report: Environmental Approach (pages 21 – 24)
Annual report: Social Approach (pages 25 – 26)
Annual report: Appendix 1 ESG data table (pages 88 – 81)
Stakeholder engagement
Collective action is required to solve complex challenges affecting
the shipping industry. The Group and its Service Providers are in
regular open dialogue with key stakeholders on issues relating to
decarbonisation, welfare and legislation.
The Group has identified its principal stakeholder groups, its
approach to engagement with these stakeholders, outcomes of
these engagements and how this directly impacts the Group's ESG
strategy. This can be viewed on pages 27-28.
Strategic review Environmental, Social and Governance review continued
Page 18
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Role of the Board and ESG and engagement committee
The Board and the ESG and Engagement Committee oversee the
strategic direction and evolution of the Group’s ESG strategy,
consideration of climate related risks and opportunities and
corporate policies. Specific roles include:
1) Integration of ESG factors and climate-related risk into
investment decisions and core business strategy
The Board, with the advice of the ESG and Engagement Committee,
ensures continued integration and consideration of ESG matters into
the Group’s core business strategy, organisation, and investments.
At an investment level, the Board takes into consideration the ESG
credentials and climate-related resilience of a potential asset
acquisition, including consideration of historic environmental
performance and energy efficiency metrics. These factors are also
taken into consideration in asset divestment decisions.
2) Climate-Related Risk
The ESG and Engagement Committee is responsible for identifying and
evaluating climate-related risks, advising the Board on appropriate and
effective risk management and ensuring internal controls are in place.
For a detailed overview of climate-related risks, see page 20.
3) Group ESG Policy
The Group’s ESG policy is set by the independent ESG and
Engagement Committee, chaired by Helen Tveitan. The committee
meets at least four times throughout the year and the policy is
reviewed at least annually.
Role of the ESG steering group and ESG taskforce
The Group’s ESG Steering Group comprises the Executive Team
and Sustainability Manager. It accesses and evaluates the activities
of the ESG Taskforce and ensures any decisions are brought to the
attention of the Executive Team and Board in a timely manner. The
role of the ESG Steering Group is to assess the progress of the
Group’s strategic ESG projects.
The ESG Taskforce comprises various subject matter experts from
different functions, namely the Deputy CEO (“DCEO”) and
Sustainability Manager, senior management from the Group’s
Commercial Manager and senior management and specialist staff
from the Group’s Technical Manager.
The ESG Taskforce undertakes the everyday ESG projects and
related activities (see table below for overview of activities). The
ESG Taskforce receives regular presentations from both internal
and external subject matter experts, ensuring they stay abreast of
emerging ESG policies, upskilling employees on climate-related
topics and sharing best practice.
Role of the ESG Taskforce
Track and monitor ESG KPIs
Ongoing regulation and compliance review
Fleet decarbonisation programme
Pilot technology project proposals
ESG integration into vessel management
ESG integration into crew management
ESG and climate governance
Approach to governance
Robust governance is embedded in the Group’s constitution as a Guernsey investment company listed on the Premium Segment of the
London Stock Exchange. ESG is embedded within the Group’s central governance framework. The Company adheres to the AIC Code of
Corporate Governance (the “AIC Code”) and is a Member of the Association of Investment Companies (“AIC”). The AIC Code addresses the
principles and provisions of the UK Corporate Governance Code (the “UK Code”), as well as setting out additional provisions on issues that
are of specific relevance to the Company. The Board has recognised that climate change and related risks will have an impact on the
business and has started to develop the Group’s plan to become a net-zero business. Climate considerations are embedded within the
Group's broader ESG governance framework, where climate-related risks and opportunities are considered at each level of the organisation.
The Group's wider governance structure can be found on pages 35 – 38.
Role of the Board and ESG and Engagement Committee
Industry Associations
Board Board of Directors Quarterly
Board sub-committees
ESG & Engagement
Committee
Quarterly
Executive Team
led by DCEO
ESG Steering Group Bi-weekly
Management
ESG Taskforce
(Members include representatives from the
Group Commercial Manager and
TechnicalManager)
Bi-weekly
Strategic review Environmental, Social and Governance review continued
Page 19
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
ESG and climate governance continued
Policies and procedures
The Board has established a comprehensive set of policies
concerning the Group’s governance, to ensure strong corporate
ethics and sensible business values. The Group has few employees
and conducts a substantial part of its business through key service
providers, hence these service providers have been requested to
confirm their own policies and procedures, which are then cross-
checked with the Groups’.
Key policies include:
• Anti-Bribery and Corruption
• Code of ethics
• Modern slavery
• Whistleblowing
• Sanctioned and High Risk Jurisdictions
• Conflict of interest
• Prevention of tax evasion
• Diversity and inclusion (See page 26 for further details)
• End of vessel recycling policy (See page 24 for further details)
All the Group's policies have been approved by the Board and are
reviewed on an annual basis to ensure they include any recent
regulatory developments.
Anti-Bribery and Corruption
The Group takes a zero-tolerance approach to bribery and
corruption, in adherence to the UK Anti-Bribery Act 2010. A key
component of this approach is the Group's Commercial Manager's
membership of the Maritime Anti-Corruption Network, leading
industry efforts to enforce zero tolerance for facilitation payments
and corrupt practices. The network of over 165 shipping companies,
works collectively towards ending maritime corruption and
fostering fair trade.
Sanctioned and high-risk jurisdictions
The Group monitors the sanction regimes enacted by the UK, EU,
US and the UN. The Group and its service providers maintain strict
policies and do not carry out business with sanctioned parties. The
Group has worked closely with its Commercial Manager to ensure
charter parties exclude sanctioned parties.
KPI
FY22
Performance
Number of calls at ports in countries that have the
20 lowest ranking in Transparency International’s
Corruption Perception Index
3
Whistleblowing
The Group is committed to creating an ethical, safe and transparent
working environment. A whistle-blower is defined as an employee
who reports an activity or occurrences that they consider to be
illegal, unethical, or inappropriate. Employees are aware of the
appropriate action and channels by which to communicate such
activity. The Group's whistleblowing policy is updated annually.
Modern slavery and human trafficking
The Group is opposed to all forms of modern slavery and strives to
conduct business in a responsible and ethical manner. The Group’s
policy and procedures with respect to modern slavery and human
trafficking are included in the Group's Modern Slavery Act
statement. The statement is reviewed by the Board annually and
can be found on the Company’s website.
Criminal Finances Act
The Group has a zero tolerance commitment to preventing persons
associated with it from engaging in criminal facilitation of tax
evasion. The Board has satisfied itself in relation to its key service
providers and the Executive Team that they have reasonable
provisions in place to prevent the criminal facilitation of tax evasion
by their own associated persons and will not work with service
providers who do not demonstrate the same zero tolerance
commitment to preventing persons associated with them from
engaging in criminal facilitation of tax evasion.
Industry & legislative engagement
Engagement with third parties and industry groups is paramount in
the shipping industry. Both the Group and its service providers
interact with a number of stakeholders on a daily basis.
The Group is an active participant and contributor to several
industry associations. These bodies are tackling some of the key
challenges the shipping industry faces and require collaborative
efforts and a platform for regulatory authorities, asset owners,
operators, charterers to interact and tackle some of the most
pressing industry challenges. These associations include the
following:
• The Neptune Declaration on Seafarer Wellbeing and Crew Change
• Getting to Zero Coalition, Global Maritime Forum
The Group's interests are represented through its Commercial
Manager at the following associations:
• Hong Kong Shipowners Association
• Intercargo
• Maritime Anti-Corruption Network (“MACN”)
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Climate related risks and risk management
Risk identification and assessment
The Group's approach to climate-related risk management is
aligned with the priorities set out by the Task Force on Climate-
related Financial Disclosures (“TCFD”).
The Group has integrated climate-related risks into the overall Risk
Management process outlined on pages 29 -30, which is a key agenda
point in the quarterly ESG & Engagement Committee Board meeting.
The Group's comprehensive risk assessment procedures are well-
designed to detect and manage climate-related company-wide
risks that might have a substantial impact on the business.
The Group's risk evaluations focus on both physical and transition
climate threats as well as their financial implications. These risks
are categorised under three different time horizons:
• Short-term: <3 years
• Medium-term: 3 - 10 years
• Long-term: >10 years +
Business hazards associated to climate change are assessed at
Board level, based on input from a number of internal and external
sources (e.g. industry risk assessment, market-based risks,
customers, the Board, investors, and other stakeholder feedback).
Output of risk assessment
Transition
risks Risk & opportunity drivers Time horizon Potential impact on business
Policy &
legal risks
• Vessel decarbonisation regulations: coming into play from 2023,
with carbon intensity requirements tightening year on year;
• Market-based Greenhouse Gas (“GHG”) measures:
implementation of ETS ("Emissions Trading Systems") or a
carbon levy on fuel. Vary between geographies and starting
to incorporate the shipping industry;
• Enhanced ESG reporting obligations: increasingly stringent
disclosure required for ESG data and various reporting frameworks.
Medium-term • Speed of regulation shift poses challenges to
mid/long term business planning;
• Increased operating costs: higher compliance
costs, funding fleet retrofits to meet
decarbonisation targets and capital required for
emissions.
Market
risks
• Shifts in agricultural production (increased demand due
to population growth and changing supply patterns due to
weather events);
• Changing customer requirements and demand for more
‘locally’ produced goods;
• Decreased demand for fossil fuel products (i.e. coal);
• Increased demand for low emission/carbon neutral
transportation.
Long-term • New contractual arrangements and business
model with customers may be required.
Technology
risks
• Ability of new technology to be fit for purpose Long-term • Capex risk, need to link capex to longer term
customer commitments.
Energy
source
• Use of lower-emission sources of energy and phasing out of
fossil fuels.
Long-term • Reduced exposure to GHG emissions and therefore
less sensitivity to changes in cost of carbon;
• Challenges associated with returns on
investment in low-emission technology;
• Increased capital availability (e.g. as more investors/
customers favour lower-emission transport);
• Reputational benefits resulting in increased
demand for services.
Reputational
risk
• Stigmatization of the shipping sector/stakeholder concern
over shipping companies’ contribution to climate change.
Long-term • Reduced revenue from decreased demand for
goods/services.
Physical Risks Time-frame Potential impact on business
• Increased severity and frequency of extreme
weather events e.g. Cyclones, hurricanes, floods,
droughts, and associated geographical shifts in
agricultural production;
• Long-term risk of increased sea level rising.
Medium-term • Disruption to vessel operations;
• Disruption to available cargoes;
• Insurance impact;
• Increased repair and maintenance costs.
Risk Mitigation & Resilience
The Group engages with its broader stakeholder groups (pages 27 – 28) on managing and mitigating climate-related risks, including active
participation in industry bodies specifically tackling decarbonization and the transition to zero-carbon fuels, such as the Getting to Zero Coalition.
Risk type Mitigations & building resilience
Transition • Divestment of less efficient vessels – gradual fleet renewal with younger, more efficient ships;
• Ongoing preparation for environmental regulations compliance;
• Extensive fleet retrofitting programme in place to adopt energy-efficient technologies;
• Supporting the development of zero-carbon fuels and vessels through industry collaboration/bodies;
• Voluntarily offsetting shore-side emissions;
• Engagement with broader stakeholders and customers on decarbonisation efforts.
Physical • Engagement of competent technical managers with robust planned maintenance programmes to ensure vessels are
resilient when exposed to adverse conditions;
• Adoption of latest technology routing and weather systems, enabling the avoidance of dangerous weather events.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Bulk Carrier
Crude tanker
Products tanker
Chemical tanker
LPG Tanker
LNG tanker
Refrigerated Cargo
General Cargo
Container ship
Rail Freight
Vehicle Transport Ship
Ro-Ro Ferry
All HGVs
Van (BEV)
Large Ropax ferry
Vans (Diesel/Fuel)
Freight flights
- 0.2 0.4 0.6 0.8 1.0 1.2
kg CO
2
e
Source: UK Government 2021 Emission factors for GHG Reporting
Environmental approach
Industry landscape:
90% of global trade by volume moves by sea and there is no more
efficient way than shipping to move bulk commodities on a per
tonne basis. Nevertheless, the maritime industry accounts for just
under 3% of the world’s annual GHG emissions.
While responsible for ~3% of global emissions, shipping remains a
very carbon efficient mode of transport with a much lower carbon
footprint per unit transport work when compared to other modes of
transport such as air freight and trucking.
With the world transitioning towards a zero-carbon future, our chosen
asset class – geared bulk carriers – will continue to play an integral
part in commodity supply chains for decarbonising economies.
Most of the cargoes carried on Group handysize ships are non-
fossil fuel related, focusing instead on food supply, basic materials
for housing and public infrastructure, and recycled metals. The
Handysize asset class has a relatively limited exposure to carriage
of thermal coal (less than 3% of cargo carried on average) and the
Group intends to entirely phase out carriage of this cargo on its
vessels over time.
Industry targets:
In 2018, the principal international body governing shipping, the
International Maritime Organisation (“IMO”), committed to industry
wide GHG targets:
• Reduction in the global fleet’s carbon intensity (CO
2
per tonne
mile), of at least 40% by 2030 and 70% by 2050 (vs 2008
baseline);
• Absolute reduction in total GHG emissions by 50% (from a 2008
baseline); and
• Full fleet decarbonisation by 2100 at the latest.
Decarbonisation regulatory developments:
The IMO adopted new Marine Pollution (“MARPOL”) amendments
requiring ships to combine both technical and operational
measures to meet the IMO’s 2030 carbon intensity reduction
targets. In addition to new IMO regulations, the global shipping
industry will also be exposed to regional market-based measures
related to carbon emissions.
The IMO regulations are a positive step change in terms of setting
out a clear regulatory path to achieving industry targets however it
is the Group's hope that the IMO will tighten these targets to align
with a net-zero by 2050 target, designed to limit global warming to
1.5 degrees over pre-industrial levels.
Freight transport emissions comparison by tonne/km
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Environmental approach continued
Industry progress towards decarbonisation targets
Under the Energy Efficiency Operational Indicator (“EEOI”) metric,
the global fleet has already reduced its carbon intensity by over
20% relative to 2008 as of 2018, leaving a further 20% reduction to
hit the IMO’s minimum 40% reduction target by 2030. The dry-bulk
asset class already represents the most efficient vessel in terms of
carbon intensity; however, the Group believes there is still significant
progress to be made to achieve both intensity and absolute
emissions reduction.
Decarbonisation roadmap
The Group is constantly searching for new ways to minimise its
environmental impact by enhancing fleet operations and reducing
GHG emissions. The Group is committed to helping decarbonise
the industry through innovation and collaboration – with customers,
financiers, other shipowners, and industry associations and
decarbonisation forums.
A more urgent pace of change is required to respond to the climate
crisis, which is why the Group has joined 150 other Getting to Zero
Coalition members in signing the ‘Call to Action for Shipping
Decarbonisation’, calling for a more ambitious long-term target of
zero carbon emissions by 2050. The Group has clearly defined a
set of near-term initiatives to achieve its decarbonisation goals:
Short-term
Present - 2030)
• Fleet energy efficiency gains;
• Full compliance with environmental
regulations;
• Interim lower emissions fuels e.g. biofuels.
Mid-term (2030+) • Reduce our fleet GHG emissions in line
with or exceeding the current IMO targets
of 40% carbon intensity reduction by 2030;
• Commence adoption of zero-carbon or
alternate fuels (once technically viable
and safe).
Long-term
(2050)
• Operate a net-zero carbon fleet.
Principles in achieving our decarbonisation objectives
Working with customers
The Group cannot achieve net-zero carbon goals without the
shared vision, cooperation, and co-investment of its customers
towards decarbonising the supply chain.
Working with bodies across and outside of the industry
The Group recognises the need to be engaged with shipping
industry associations and decarbonisation forums to create
momentum to decarbonise shipping. The Group is a member of
the Getting to Zero Coalition and a signatory to its Call to Action for
full decarbonisation of the shipping sector.
Transparency and accountability
The Group will continue to report its emissions using recognised
frameworks as well as reporting progress against tangible actions.
Environmental performance
The Group measures the fleet’s energy consumption and emissions
on an ongoing basis and aims to report emissions at least annually,
using FY22 performance data as the baseline against which to
report progress against going forward:
KPI Metric
FY22
Performance
Gross Scope 1 emissions 4,119
- Off-hire fuel consumption Metric Tonnes (“Mt”) CO
2
4,115
- Office-related emissions Mt CO
2
4
Scope 2 emissions Mt CO
2
2
Gross Scope 3 emissions: Mt CO
2
265,714
- Fuel consumption whilst
on charter
Mt CO
2
265,684
- Corporate business travel Mt CO
2
30
% Very Low Sulphur Fuel
Oil (“VLSFO”)
Percentage (%) 88.6%
EEOI (fleet average) Grams of CO
2
/tonne
of cargo. nautical mile
(“GCO
2
/t--nm”)
11.96
Average Efficiency Ratio
(“AER”) (fleet average)
Grams of CO
2
/dwt.
nautical mile (“GCO
2
/
dwt.nm”)
7.23
The EEOI metric is a useful representation of the fleet’s average fuel
efficiency and emissions, showing the CO
2
emissions per unit of
transport work within a given period. A lower EEOI is indicative of a
more efficient vessel (all variables being equal). In FY22 the fleet
average EEOI was 11.96.
The AER metric represents the ratio of annual total CO2 emission
per deadweight capacity and nautical mile (distanced travelled).
The AER metric uses the vessel’s deadweight capacity as a proxy
for actual cargo carried. In FY22 the fleet's average AER was 7.23.
The Group's current target is to reduce the fleet's carbon intensity
and remain within the current IMO decarbonisation trajectory.
The fleet is on time-charter and therefore a substantial proportion
of the Group's emissions associated with fuel combusted onboard,
lies within Scope 3 emissions. Charterers give orders for
employment of the vessel, are responsible for the purchase of fuel,
and have direct operational control of the vessel, influencing the
routing and speed.
A small proportion of the total fuel volume consumed onboard is
consumed whilst ‘off hire’, and therefore lies within Scope 1
emissions. This scenario occurs when vessels are taken out of
service for dry-dockings or repairs, deviate for crew changes or
undertake ballast voyages to the next load port for charterers to
commence a charter.
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LED Lighting
Fuel oil
Additives
PBCF
Fuel oil homogenisers
Wake
equalising ducts
Variable frequency drive
High-performance paints
Autopilot upgrade
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Environmental approach continued
Initiatives to directly meet decarbonisation targets
1) Operational and technical efficiencies on existing fleet
The Group, in collaboration with its Technical Managers' dedicated
emissions team, continually monitors the fleet's energy efficiency and
GHG emissions, resulting in adjustments and improvements to vessel
operations to increase fuel efficiency and reduce emissions.
Operational measures to reduce emissions include use of advanced
weather routing systems, increased frequency of hull cleaning and
propeller polishing to remove marine bio build up and reduce drag.
2) Adopting energy-efficiency technologies
The Group invests in retrofitting a range of energy efficiency devices
to the fleet (including newly acquired vessels), including:
• energy efficiency monitoring systems – real time monitoring of
fuel consumption and torque, allowing real time diagnostics and
adjustments to vessel operation;
• propeller boss cap fins (“PBCF”) – create more efficient propeller
vortex, reducing drag;
• advanced hull coatings – allow smoother surface for longer and
reducing friction;
• LED lighting – replacing conventional lighting across the vessel;
• engine power limiters – capping fuel consumption and therefore
top speed;
• air lubrication systems; and
• wake-equalising ducts – optimise the flow of water to the propeller,
enabling vessels to sail at the same speed with less power.
A combination of these technical measures will result in a lower
fuel consumption of the fleet.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Environmental approach continued
FY22 progress:
The Group's fleet retrofitting programme commenced in FY22, with
notable progress made throughout the year. Four vessels went into
drydock allowing for the installation of energy saving devices such
as boss-cap fins, LED lighting and wake-equalising ducts. Vessels
within the fleet will enter drydock in FY23 giving a window of
opportunity for energy saving devices and retrofits to be installed.
3) Piloting new technologies and alternate fuels:
The Group will contribute its know-how, vessel assets, and financial
resources to real world trials with customers and developers of
promising low/zero carbon technologies and fuels.
4) Environmentally aligned vessel Investment/Divestment Strategy:
Any vessel acquired is subject to extensive checks to assess its
current condition and the steps needed to bring it up to targeted
technical and energy efficiency standards, including the retrofit
options. The Group's starting point is to prioritise acquisition of
vessels of well known, high quality and efficient designs, built in
Japan.
Air Quality
KPI Unit
FY22
Performance
Nitrogen Oxides (“NOx”) Mt 4,907
Sulphur Oxides (“SOx”) Mt 785
In 2020, the IMO introduced new sulphur cap legislation reducing the
maximum sulphur content of marine fuel from 3.5% to 0.5%. The
entire Group fleet is within compliance of the 2020 rules, having
achieved 100% adoption of Very Low Sulphur Fuel Oil (“VLSFO”).
NOx emissions are generated from the combustion of marine fuels,
by the reaction of nitrogen and oxygen gases during the fuel
combustion process. SOx and NOx emissions closely correlate
with fuel consumption and associated CO
2
emissions.
The Group's long-term target is to achieve zero SOx and NOx
emissions by 2050, in line with the Group net-zero carbon target.
End of vessel life recycling policy
Based on the average age of the existing portfolio the Group does
not expect to own vessels due for recycling in the near future.
Nonetheless the Group is committed to follow the practices of the
Hong Kong International Convention for the Safe and Environmentally
Sound Recycling of Ships, 2009, the EU Ship Recycling Regulations
and the Basel Convention, as set out in the Group’s Recycling Policy.
Marine biodiversity and pollution
Ballast Water Management
100% of ballast water on Group vessels is processed through
Ballast Water exchange or Ballast Water Management Systems
(“BWMS”). In compliance with the International Ballast Water
Management Convention, aimed at conserving marine biodiversity,
by 31 March 2022 69% of Group vessels were fitted with BWMS,
with the majority of the remaining vessels being fitted by the end of
2022.
100% of the fleet use environmentally friendly lubricants or positive air
pressure systems removing the lube oil/seawater interface entirely.
KPI Unit FY22 Performance
BWMS installed % 69%
Ballast Water Exchange % 31%
Reducing our plastic consumption onboard
During the last year a “Plastics Free” campaign commenced roll-out
across the fleet, with mineralised water fountains and reusable
water bottles successfully installed and distributed fleet-wide,
saving 15,000 plastic bottles from being used and disposed of
onboard annually.
The Group’s vessels have been involved in trialling the EYESEA app
which enables the collection of anonymous data used to map the
problem of ocean pollution, whether from plastic, oil, fishing nets,
or wrecks. Crews are encouraged to report marine pollution, and
the data assists governments and volunteers in either stopping the
problem at source or coordinating clean-up efforts.
Garbage
Garbage compactors have been installed on 100% of Group
vessels.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Social approach
The shipping industry is subject to several social challenges
including physical health, safety and mental wellbeing of crew (who
are often at sea for extended periods of time), as well as ongoing
COVID-19 related restrictions limiting crew changes at ports.
In close partnership with the Group's technical managers, who are
responsible for arranging crewing, the Group is committed to
making vessels safe and attractive workplaces for seafarers, to
promote diversity and equality of opportunity and to engage with
communities where the Group operates.
Health and safety
The Group, alongside its technical managers, has created a strong
safety culture both onshore and offshore, exceeding regulatory
standards. The Group has three key objectives:
1) Zero fatalities
2) Zero injuries
3) Create a culture of sharing lessons from incidents/near misses
The Group's technical managers have implemented a collection of
comprehensive safety procedures, policies, and protocols on-board
vessels, helping the crew mitigate the daily risks faced during
vessel operations. Vessel safety performance is monitored by
collecting and tracking performance against a comprehensive list
of industry KPIs and ensuring that any significant incidents are
reported upon with follow up actions taken.
KPI FY22 Performance
Lost Time Incident Rate (“LTIR”) 0.85
No. of marine casualties, percentage
classified as very serious
0
No. of Conditions of Class or
Recommendations
0
Port State Control (“PSC”) Deficiencies ratio 1.21
Incidents and Injuries
In FY22, the Group registered three lost-time shipboard injuries in
over 3.5 million working hours, resulting in an LTIR of 0.85.
Vessel Safety Ratings
Ten of the Group’s ships have now been “QUALSHIP 21” certified by
the United States Coast Guard, a programme which recognises
and rewards vessels and shipowners for their commitment to
safety and quality.
Safety onshore
Safety onshore is also of paramount importance and the Group
endorses safety procedures at offices and when travelling on
behalf of the business. This includes work-station safety
procedures, first-aid trained employees at all offices and medical
insurance covering employees when travelling abroad.
COVID 19
COVID-19 related restrictions continue to pose a major challenge to
the wellbeing of the global merchant seafaring community. As
many as 400,000 seafarers were stranded around the world during
the onset of the global pandemic, with some forced to remain on
vessels for up to two years. Disproportionate quarantine and travel
restrictions exist for seafarers, despite measures in place for
infection control and in certain areas, seafarers are denied access
to medical facilities.
The Group's technical managers have been involved in concerted
efforts to seek options to arrange crew changes wherever possible,
if necessary diverting vessels to ports which are open to crew
transits at a particular time, at additional expense to the Group as
the shipowner.
The Group has worked closely with its technical managers to
ensure crew members have received vaccines, prioritising one
dose vaccines where feasible, as well as a full fleet roll out of
medical oxygen concentrators on-board. Over 90% of all crew on
board have received COVID-19 vaccines and the majority of crew
are now vaccinated before joining a vessel.
The Group’s Commercial Manager became a signatory to the
“Neptune Declaration” and industry initiative calling for “key worker”
status for seafarers globally.
Security at sea
The dry-bulk shipping industry by nature is exposed to a wide-range
of ports/countries to access communities often located remotely,
delivering much-needed cargoes for their livelihoods. The Group and
its commercial and technical managers monitor the positions of
vessels closely and ensure necessary security steps are taken if
vessels enter high-risk waters or ports (e.g. threat of piracy, thieves).
There are certain high-risk areas through which our vessels transit,
including the Persian Gulf, the Gulf of Aden, the Gulf of Guinea, the
Malacca Strait and more recently, the Black Sea. Measures include:
• Crew safety briefings before entering high-risk ports;
• Enhanced around-the clock deck inspections;
• Anti-piracy equipment; and
• War risk insurance cover.
Seafarer welfare and mental health
At the same time, in line with the Group’s policy, measures have been
taken to improve quality of life and protect the health of crews aboard
the Group’s vessels. The Group adheres to the Maritime Labour
Convention (2006) regulating working hours and welfare standards
for crew.
The Group has worked hard with its technical managers to
implement crew welfare initiatives, including:
• Onboard wellbeing: healthy menu plans, mentoring, sharing best
practice;
• Access to 24/7 radio medical helpline, giving medical advice to
seafarers whilst at sea; and
• Provision of enhanced high speed broadband capability, allowing
better and more frequent communications with their families ashore.
Strategic review Environmental, Social and Governance review continued
Female
Male
50% 50%
Female
Male
25%
75%
Female
Male
50% 50%
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Social approach continued
Diversity and inclusion
The Board is committed to creating a diverse and inclusive
environment where everybody’s contribution is appreciated and
their voices are heard. The Board believes that variety in gender,
age, ethnicity, and personal traits, among other things, contributes
to a more balanced and successful team.
Board nominees are chosen on the basis of merit and a set objective
criteria. The Board is dedicated to being non-discriminatory and
believes in offering equal opportunity to everyone. This is stated in
the Company Diversity & Inclusion Policy, which is reviewed annually.
The Company's Board consists of three different nationalities, has
75% female independent directors and the Board and the Group
personnel consist of 50% female members. For further details on
Board member’s profiles, please refer to page 33.
The Group’s employees are based primarily in London, Singapore
and Guernsey, consisting of eight employees, spanning five
nationalities. Of these eight, four form the Executive Team (see
page 34 for their profiles).
The COVID-19 pandemic and recent crisis in Ukraine has presented
a variety of challenges for the crew supply sector. The Group is
working with its Technical Managers on maintaining a diverse
crewing strategy across the fleet, as well as promoting opportunities
for female seafarers on board. In FY22, there were over twenty
nationalities present on-board Group vessels, and the first female
officer cadet was welcomed onboard.
Training and development
The Group, in close collaboration with its technical managers, has
agreed to sponsor cadet training programmes on-board Group
vessels, giving crew the required sea-time and training to progress
in their rankings.
The Group's technical managers also provide onshore training and
seminars for officers and crew to promote safety culture.
Community engagement
The Company has allocated a budget of US$200,000 per annum in
support of welfare and community initiatives.
Earlier this year the Commercial Manager became a signatory to
the “Neptune Declaration on Seafarer Wellbeing and Crew Change”,
an industry initiative of more than 850 companies calling for “key
worker” status for seafarers globally, and for facilitation of crew
changes and air connectivity between key maritime hubs.
Also see Appendix – ESG Data Summary on pages 88 to 91.
TMI Board TMI EmployeesTMI Independent Board Members
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Section 172
Whilst directly applicable to companies incorporated in the UK, the
Board recognises the intention of the AIC Code that matters set out
in section 172 of the Companies Act, 2006 are reported. The Board
strives to understand the views of the Group’s key stakeholders and
to take these into consideration as part of its discussions and
decision-making process.
Whilst the primary duty of the Directors is owed to the Company as
a whole, all Board discussions involve careful consideration of the
longer-term consequences of any decisions and their implications
for stakeholders. Particular consideration is given to the continued
alignment of interests between the activities of the Company and
those that contribute to delivering the Board’s strategy, which
include the Executive Team, the Company Secretary, recipients of
the Company’s capital and providers of long-term debt finance.
The Board’s commitment to maintaining high-standards of
corporate governance; its policy for active shareholder engagement,
combined with the Directors’ duties enshrined in Company law; the
constitutive documents; the Disclosure Guidance and Transparency
Rules; and the Market Abuse Regulation, ensure that Shareholders
are provided with frequent and comprehensive information
concerning the Company and its activities.
Group engagement with stakeholders
The Board of Directors recognise their individual and collective duty
to act in good faith and in a way that is most likely to promote the
success of the Company for the benefit of its members as a whole,
whilst also having regard, amongst other matters, to the Company’s
key stakeholders and the likely consequences of any decisions
taken during the year.
Below we have identified our principal stakeholder groups, how we
engage with these stakeholders, the outcome of these
engagements and how this impacts our Group strategy and
performance, operational matters, financing strategy, dividend
policy and our ESG strategy.
Internal/
External Stakeholder Group Engagement and key outputs Engagement Channel
External
Shareholders/Investors The Board and Executive Team hold meetings and regularly
engage with our shareholders and investors on the
robustness of our company strategy, our ESG priorities and
our performance.
Our two-way communication with our investors/shareholders
means that they are able to provide useful challenges and
feedback, and in turn we provide them with the information
needed to make informed investment decisions.
Maintaining close engagement with our shareholders on
Group strategy and ESG priorities is of paramount importance
to us. We take onboard feedback from our investors
regarding performance expectations, dividend policies and
ESG strategies and ensure that these are met as a minimum
requirement.
The Directors will attend the first Annual General Meeting on 7
September 2022 to meet with the shareholders and to answer
any questions they may have.
• Annual, Interim & Quarterly
reporting
• Annual General Meetings
• Individual investor and
analyst meeting/calls
• Press releases
• Website updates
Service Providers We work closely with our service providers, including our
commercial and technical managers, inputting into ESG
projects, vessel decarbonisation strategy and environmental
policy compliance and overall smooth operations of the fleet.
Our joint ‘ESG Taskforce’ provides a collaborative touch point
for us to work on these initiatives, driving our collective ESG
agenda and implementation and tracking of KPIs.
For more detail on the activities of the Taskforce, please refer
to page 18.
• Daily contact regarding the
commercial and technical
management of Group
vessels
• Bi-weekly joint ‘ESG
Taskforce’
Customers Together with our Service Providers we maintain close
relationships with our customers, ensuring our vessels are
leading in terms of performance and service.
We seek regular feedback from our customers to ensure we
are constantly improving our customer offer.
• Day-to-day chartering
enquiries and fixing
• Informal meetings
• Customer events
• Service feedback
Administrator, professional
advisors
Close engagement with our administrator and our
professional advisors allows us to keep abreast of regulatory
developments and advice on the appropriate way in which we
should respond.
• Ongoing communication
andweekly touch-points
Strategic review
Stakeholders report
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Group engagement with stakeholders continued
Internal/
External,
continued Stakeholder Group, continued Engagement and key outputs, continued
Engagement Channel,
continued
External
Corporate Broker, PR advisor Our PR advisors and corporate broker provide us with key
advice on capital markets strategy, and investor priorities
including around ESG.
• Ongoing communication and
weekly touch-points
Communities The Group and its Service Providers recognise the need to
provide positive social impact to communities and operate in
a responsible and ethical way.
We continually look for organisations to support and local
initiatives which align with our values.
• Active participation in
seafarer communities
through training programmes
• Supporting charitable
initiatives that align with our
values
Regulators and authorities The Group and its Service Providers contribute to the wider
shipping community and play a role in the international
dialogue with legislators and other industry bodies.
We ensure the Group is compliant with all existing
regulations, and engage with professional advisers with
regards to any future regulations impacting the Group.
• Formal meetings
Industry Associations and
bodies
The Group and its Service Providers participate actively in
several industry associations bodies, spanning seafarer
welfare efforts, decarbonisation alignment and general
shipping forums.
• Industry coalitions
• Industry association
membership
Internal
Board of Directors Our Board is ultimately responsible for setting the strategic
direction of the Group and monitoring performance.
The Nomination and Remuneration Committee has
responsibility to assist with the composition of the Board,
performance of Board members, induction of new directors,
appointment of committee members and succession
planning for the directors and other senior executives.
• Quarterly Board meeting
• Quarterly Board committee
meetings
Group Employees The Executive Team and their support teams are key to our
success and we want them to succeed both as individuals
and as a team.
The Executive Team has responsibility for employee
engagement within the Group. There are eight employees
within the Group, including the Executive team.
The Executive Team strive to maintain a fair and equal
workplace, as well as providing the opportunity for employees
to grow and develop.
The Executive Team maintain an open-door policy with all
employees.
• Town hall meetings
• Daily interactions between
colleagues and management
• Training programs
• Open-door policy
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Strategic review
Statement of principal risks
and uncertainties
Risks and uncertainties
The Board is responsible for and has in place a rigorous risk management
framework and risk matrix to identify, assess, mitigate, manage and
review and monitor those risks. This is all reviewed at least twice a year
by the Board, in conjunction with the Risk and Audit Committee, and on
a much more frequent basis by the Executive Team.
The Board has categorised the risks the Group faces into four
broad areas Market Risks, Operational Risks, ESG Risks as well as
Financial Risks, and have carried out a robust assessment of each
risk area and its potential impact on the performance of the Group
including risks that would threaten its business model, future
performance, solvency and liquidity.
The Board pays regard to any emerging risks. The Board is constantly
alert to the identification of any emerging risks, in discussion with the
Executive Team. The Board will then assess the likelihood and
impact of any such emerging risks, and will discuss and agree
appropriate strategies to mitigate and/or manage the identified
risks. Emerging risks are managed through discussion of their
likelihood and impact at Board meetings at least twice a year. Should
an emerging risk be determined to have any potential impact on the
Group, appropriate mitigating measures and controls are agreed.
The Board considers there are two main emerging risks facing the
Group. These are:
• regulation to combat the impact of climate change and the
speed of its implementation.
• ongoing market and economic risks arising from global market
instability and high inflation following the COVID-19 pandemic and the
war in Ukraine which affect shipping and the global economy directly.
In respect of the Group’s system of internal controls and reviewing
its effectiveness, the Directors:
• are satisfied that they have carried out a robust assessment of
the emerging and principal risks facing the Company and the
Group, including those that would threaten its business model,
future performance, solvency or liquidity; and
• have reviewed the effectiveness of the risk management and internal
control systems including material financial, operational and
compliance controls (including those relating to the financial reporting
process) and no significant failings or weaknesses were identified.
Strategic review Statement of principal risks and uncertainties continued
Principal risks
The key risks which the Board considers have been faced by the Group during the financial period are detailed in the table below.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Risk/Description Control / Mitigation
Market Risk
Downturn in global demand for shipping – the demand
for shipping may decline either because of a reduction in
international trade or decline in world GDP having an impact
on the achievable charter rates and the resale value of
vessels.
Impacts our Acquisition and Income Strategy
Diversification of fleet and Charter lengths and Charterer quality – This risk
cannot be mitigated but the impact can be reduced by diversification of the age
and type of vessels in the fleet; and by good research into market and technical
developments within shipping to anticipate future demand and supply. In
addition, controls are in place to ensure careful management of charter income
by both quality of charterer and also by duration of fixed term charters.
Market, ESG and Governance Risk
Change in regulation as the shipping industry moves
to reduce GHG emissions – with increasing momentum
towards zero carbon shipping through rules and market-
based measures, some of the fleet may be rendered less
competitive or obsolete over time.
Impacts our Acquisition Strategy and Sustainability
Strategy
Reduction of existing fleet emissions and research into new low emissions
technology – This risk is mitigated through acquisition of relatively fuel-efficient
vessels, and through working with the commercial and technical managers
to reduce the GHG intensity of existing fleet via technical and operational
measures.
Implementation of regulation and market-based measures may be phased in
over several years, providing an opportunity to manage the impact gradually by
spread of scheduling of dry dockings to enable controlled upgrades. The Group
is heavily engaged within the industry and in cross industry efforts to develop
low/zero carbon ship solutions.
ESG and Governance Risk
Pollution Damage – the Group may be exposed to substantial
risks of loss, including financial loss and reputational
damage, from a vessel owned by the Group being involved
in an incident of environmental damage, contamination or
pollution.
Impacts our Income and Sustainability Strategy
Pollution Damage mitigation measures – The Company has established
an ESG and Engagement Committee to oversee ESG matters including the
performance of our vessels’ commercial and technical management, to
mitigate the risk of non-compliance with regulations leading to a breach of
environmental regulations.
All of the Group’s vessels comply with regulations set out by the International
Maritime Organisation and coastal states.
The Group ensures that a proactive safety culture is promoted by the technical
managers, reducing the risk of accidents and pollution. In the event that
pollution does occur, vessels are adequately insured through Protection and
Indemnity mutual clubs for environmental loss.
Operational and ESG and Governance Risk
Non-compliance with safety standards and crew welfare
standards – if high standards of safety and crew welfare are
not upheld on each vessel a major incident could occur which
would be damaging reputationally for the Group, lead to
financial loss and potentially make Group vessels unattractive
workplaces for seafarers.
Impacts our Sustainability Strategy
Non-compliance with safety and crew welfare standards – The safe operation
of the Group’s vessels are governed by the International Safety Management
code, and it is the responsibility of the technical managers to comply with all
applicable rules and regulations.
In addition it is central to the Group’s culture to promote seafarer welfare above
and beyond regulatory compliance. In particular, during the COVID-19 global
crew change crisis, the Group is committed to finding solutions to repatriate
seafarers who have reached the end of their contract as soon as possible, and
to enhance levels of welfare to those seafarers on board.
The technical managers' respective safety records are reviewed quarterly by the
ESG and Engagement committee.
Financial Risk
Liquidity Risk – the income of the Group is subject to
variation and a significant downturn in the charter spot rate
could mean a significant shortfall in cash.
Impacts our Income Strategy
Liquidity requirement modelling – The Group models under various stress tests
the future liquidity depending on various market charter rates and ensure it
keeps appropriate cash buffers. In addition, the Group has a secured Revolving
Credit Facility to meet any temporary cash flow shortfalls.
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Going concern
The Group has considerable financial resources, and after making
enquiries, the Directors, at the time of approving the Consolidated
Financial Statements, have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for a period of at least 12 months from the date of approval of
these Consolidated Financial Statements.
In June 2021, the Group successfully completed the deployment of
the proceeds raised at IPO and subsequently in August, successfully
completed the deployment of the proceeds raised at the Placing in
July 2021. The portfolio of vessels is expected to generate enough
cash flows to pay on-going expenses and returns to Shareholders.
As part of their considerations of the appropriateness of adopting
the going concern basis, the Directors have considered the cash
position, the performance of the portfolio and they have carried out
a robust assessment of the Group’s solvency and liquidity position
using a scenario analysis on possible outcomes.
The Board also consider the factors that may impact future
performance, such as ongoing market and economic risks of the
COVID-19 pandemic and the war in Ukraine which directly affect
shipping and the global economy. The Board will continue to
monitor these events, however, at this stage they are not expected
to significantly impact the performance of the Group. See the
“Market review” section on page 11 for further details.
Following the assessments and considerations detailed above, the
Board have concluded that it is appropriate to adopt the going
concern basis in the preparation of these Consolidated Financial
Statements, as the Group has adequate financial resources to
meet its liabilities as they fall due for at least the 12 month period
from the date of the approval of the Consolidated Financial
Statements.
Viability statement
The Board has evaluated the long-term prospects of the Group,
beyond the 12 month time horizon assumption within the going
concern framework.
The Directors have selected a three-year window for evaluating the
potential impact to the Group on the following basis:
1. A key risk facing the Group is a downturn in the global demand
for shipping, this in turn will be driven by global macro-economic
factors which are difficult to model beyond the medium term.
Changes in the economic landscape would impact the value of
the fleet as well as the likely charter income.
2. Changes in regulation to meet the demands of climate change
are evolving rapidly, making longer term predictions difficult.
3. The Group revolving credit facility matures in 2024. The facility,
as planned, has been used to acquire assets and will be repaid
out of operational cash. The operational risk associated with this
strategy is within the 3 year time horizon.
4. The long-term charter contracts entered into by the Group tend
to be less than 3 years.
On a quarterly basis the Board routinely reviews the future financial
model of the Group for 36 months including daily cash breakeven,
liquidity and debt positions under both a base and a stress case
scenario. The key assumption in these models is the daily charter
rate which is modelled at various levels from the current average to
levels at plus or minus 50% to 60% from that rate. The results of
which are to establish any obvious stress points on the key metrics
of cash breakeven, liquidity and debt. There are no issues that may
impact the Group’s viability. The Group does not model a charterer
default as the TMI Group diversifies its income across a range of
charter counterparty to minimise the effect of any default.
As part of the review of the financial model the Board considers the
adequacy of the level of cash reserves held in respect of dry-
docking costs and replacement reserves and ring fences such
reserves to ensure that it maintains adequate cash levels to
maintain the future operations of the Group.
The Group employs modest gearing for cash flow purposes only,
the earnings scenarios outlined above look at the gross and net
debt position assuming no change in market value of the ships.
The Group’s ships are readily realisable in the market and the
Directors believe the Group would be able to sell ships from the
fleet to repay the loan facility if required. In addition, to breach Loan
to Value (“LTV”) covenants of the current facility would require a
substantial fall of 37% in the value of the ships in the collateral pool.
In such an eventuality, the Group has further ships which could be
added to the collateral pool if required.
Based on the assessments made and in the context of the Group’s
business model, strategy and operational arrangements set out
above, the Directors have a reasonable expectation that the Group
will be able to continue in operations and meet its liabilities as they
fall due over the three years to March 2025. For this reason, the
Board also considers it is appropriate to continue adopting the
going concern basis in preparing the Annual Report and
Consolidated Accounts as disclosed above.
This Strategic Review taken as a whole was approved by the Board
of Directors on 13 July 2022:
Nicholas Lykiardopulo
Independent Chair
Strategic review
Going concern and viability statement
Governance Governance continued
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Governance
Governance
Page 33
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Taylor Maritime Investments Limited Annual Report and Audited Consolidated Financial Statements
Governance
Governance
Governance
Board of directors
Nicholas Lykiardopulo Independent Chair
Nicholas Lykiardopulo is a leading figure in the international
shipping business, with extensive experience in shipping,
commodities, and finance. At his family shipping business, Neda
Maritime, he advised on the completion of a total of US$3 billion in
purchases, disposals and financing of shipping assets, and in the
purchase and subsequent sale of two mid-size UK businesses. He
has also advised on numerous investments in financial products,
both on behalf of Neda as well as in his role as Director of The UK
Mutual Steamship Association of Bermuda. Nicholas is a Director
of BW Epic Kosan Ltd, the largest owner and operator of pressurized
LPG carriers and on the Board of Diorasis International SA, an
alternative Investment Advisory firm based in Luxembourg. He
holds an MA from Oxford University and is a Fellow of the Institute
of Chartered Shipbrokers.
Edward Buttery Chief Executive Officer
Edward Buttery joined the Supramax trading desk at Clarksons
shipbrokers in 2005 after attending Oxford University. He went on
to be a chartering manager at Pacific Basin between 2006 and
2008. He served as the Deputy COO of dry bulk shipping operator
Asia Maritime Pacific from 2008 to 2010. During this time he sat
the Institute of Chartered Ship broker’s examinations for which he
was awarded prizes including the President’