THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document, you should consult your stockbroker, bank manager, solicitor, accountant or independent financial adviser who is authorised under the Financial Services and Markets Act 2000 (as amended) ("FSMA") if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom.

A copy of this document, which comprises a prospectus relating to Tufton Oceanic Assets Limited (the "Company") in connection with the issue of C Shares and/or Ordinary Shares prepared in accordance with the Prospectus Rules of the Financial Conduct Authority made under Section 84 of FSMA, has been delivered to the Financial Conduct Authority (the "FCA") in accordance with Rule 3.2 of the Prospectus Rules.

Application will be made to the London Stock Exchange for all of the C Shares issued and to be issued pursuant to the Issue to be admitted to the Specialist Fund Segment of the Main Market. Applications will be made for all of the Shares issued pursuant to each Subsequent Placing under the Placing Programme to be admitted to the Specialist Fund Segment of the Main Market. It is expected that Initial Admission will become effective and dealings in the C Shares will commence on 16 October 2018. It is expected that Admissions pursuant to Subsequent Placings under the Placing Programme will become effective and dealings will commence between 25 September 2018 and 24 September 2019.

The Company and each of the Directors, whose names appear on page 49 of this document, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

Prospective investors should read the entire document and, in particular, the section headed "Risk Factors" beginning on page 24 when considering an investment in the Company.

TUFTON OCEANIC ASSETS LIMITED

(a closed-ended investment company limited by shares incorporated under the laws of Guernsey with registered number 63061)

Placing and Offer for Subscription of C Shares for a target issue of up to 100 million C Shares at US\$1.00 per C Share1

and

Placing Programme of 200 million Ordinary Shares and/or 200 million C Shares

and

Admission to trading on the Specialist Fund Segment of the Main Market

Investment Manager Financial Advisers

Joint Placing Agents and

Tufton Oceanic Ltd. Nplus1 Singer Advisory LLP Hudnall Capital LLP

Nplus1 Singer Advisory LLP ("N+1 Singer"), which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no-one else in connection with the Issue and the Placing Programme and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in connection with the Issue and the Placing Programme. N+1 Singer is not responsible for the contents of this document. This does not limit or exclude any responsibilities which N+1 Singer may have under FSMA or the regulatory regime established thereunder.

¹ The Directors have reserved the right, in consultation with Hudnall and Nplus1 Singer, to increase the size of the Placing and Offer for Subscription to up to 150 million C Shares if there is demand with any such increase being announced through an RIS.

Hudnall Capital LLP ("Hudnall"), which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no-one else in connection with the Issue and the Placing Programme and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in connection with the Issue and the Placing Programme. Hudnall is not responsible for the contents of this document. This does not limit or exclude any responsibilities which Hudnall may have under FSMA or the regulatory regime established thereunder.

The Offer for Subscription will remain open until 11.00 a.m. on 10 October 2018 and the Placing will remain open until 3.00 p.m. on 10 October 2018. Persons wishing to participate in the Offer for Subscription should complete the Application Form set out in the Appendix to this document. To be valid, Application Forms must be completed and returned with the appropriate remittance, by post to the Receiving Agent, Computershare Investor Services PLC, Corporate Action Projects, Bristol, BS99 6AH or by hand (during business hours only) to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS13 8AE so as to be received by no later than 11.00 a.m. on 10 October 2018.

The Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or with any securities or regulatory authority of any state or other jurisdiction of the United States and the Shares may not be offered, sold, exercised, resold, transferred or delivered, directly or indirectly, within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the U.S. Securities Act). There will be no public offer of the Shares in the United States. The Shares are being offered or sold only outside the United States to non U.S. Persons in offshore transactions in reliance on the exemption from the registration requirements of the U.S. Securities Act provided by Regulation S thereunder. The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "U.S. Investment Company Act") and investors will not be entitled to the benefits of the U.S. Investment Company Act. This document should not be distributed into the United States or to U.S. Persons.

Neither the U.S. Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of the Shares or passed upon the adequacy or accuracy of this document. Any representation to the contrary is a criminal offence in the United States.

This document does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, Shares in any jurisdiction where such offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on the Company, the Investment Manager, the Asset Manager, Hudnall or N+1 Singer. The offer and sale of Shares has not been and will not be registered under the applicable securities law of Canada, Japan, Australia or the Republic of South Africa. Subject to certain exemptions, the Shares may not be offered to or sold within Canada, Japan, Australia or the Republic of South Africa or to any national, resident or citizen of Canada, Japan, Australia or the Republic of South Africa.

The Company is a registered closed-ended collective investment scheme pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and the Registered Collective Investment Schemes Rules 2015 as issued by the Guernsey Financial Services Commission (the "GFSC"). The GFSC takes no responsibility for the financial soundness of the Company or for the correctness of any statements made or opinions expressed with regard to it.

This document has not been reviewed by the GFSC and, in granting registration, the GFSC has relied upon specific warranties provided by the Administrator.

Dated: 25 September 2018

		Page
SUMMARY		4
RISK FACTORS		20
IMPORTANT INFORMATION
	VOLUNTARY COMPLIANCE WITH THE LISTING RULES	41
	EXPECTED TIMETABLE	43
	ISSUE STATISTICS AND PLACING PROGRAMME STATISTICS	44
DEALING CODES		44
	DIRECTORS, MANAGEMENT AND ADVISERS	45
PART 1	INFORMATION ON THE COMPANY	47
PART 2	BACKGROUND TO THE SHIPPING MARKET	57
PART 3	MARKET OPPORTUNITY	80
PART 4	INVESTMENT MANAGER, ASSET MANAGER AND INVESTMENT PROCESS	85
PART 5	DIRECTORS, MANAGEMENT AND ADMINISTRATION	94
PART 6	VALUATION REPORTS	98
PART 7	THE ISSUE	120
PART 8	THE PLACING PROGRAMME	124
PART 9	FINANCIAL INFORMATION ON THE COMPANY	129
PART 10	TAXATION	132
PART 11	GENERAL INFORMATION	138
PART 12	TERMS AND CONDITIONS OF THE PLACING AND THE PLACING PROGRAMME	163
PART 13	TERMS AND CONDITIONS OF APPLICATION UNDER THE OFFER FOR SUBSCRIPTION	172
PART 14	DEFINITIONS AND GLOSSARY	181
	NOTES ON HOW TO COMPLETE THE APPLICATION FORM	190
	APPENDIX – APPLICATION FORM	193

SUMMARY

Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in Sections A – E (A.1 – E.7).

This summary contains all the Elements required to be included in a summary for this type of security and issuer. Some Elements are not required to be addressed which means there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted into the summary because of the type of security and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable".

	Section A – Introduction and warnings
Element	Disclosure Requirement	Disclosure
A.1.	Warning	This summary should be read as an introduction to this document. Any decision to invest in Shares should be based on consideration of this document as a whole by the investor. Where a claim relating to the information contained in this document is brought before a court, the plaintiff investor might, under the national legislation of the member states of the European Union, have to bear the costs of translating this document before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this document or it does not provide, when read together with the other parts of this document, key information in order to aid investors when considering whether to invest in such securities.
A.2.	Subsequent resale or final placement of securities through financial intermediaries	Not applicable, the Company is not engaging any financial intermediaries for any resale or final placement of securities after publication of this document.

	Section B – Issuer
Element	Disclosure Requirement	Disclosure
B.1.	Legal and commercial name	Tufton Oceanic Assets Limited
B.2.	Domicile and legal form	The Company was incorporated and registered in Guernsey on 6 February 2017 with registered number 63061. The principal legislation under which the Company operates is the Companies Law.
B.5.	Group description	As at the date of this document the Company is the holding company of a group consisting of the Company and the following subsidiaries (the "Group"):
		Name	Country of incorporation	Principal activity	% ownership
		LS Assets Limited	Guernsey	Intermediate holding company	100
		Kale Limited	Isle of Man	Asset holding company	100*
		Swordfish Limited	Isle of Man	Asset holding company	100*
		Riposte Limited	Isle of Man	Asset holding company	100*
		Patience Limited	Isle of Man	Asset holding company	100*

		Name	Country of incorporation	Principal activity	% ownership
		Neon Limited	Isle of Man	Asset holding	75**
		Aglow Limited	Isle of Man	company Asset holding company	100*
		Dragon Limited	Isle of Man	Asset holding company	100*
		* shares.	wholly owned subsidiary of LS Assets Limited	The charterer holds 25 per cent. of the SPV by way of non-voting preference
B.6.	Major shareholders	Other than as set out in the table below, as at the Latest Practicable Date, the Company was not aware (by virtue of notifications made to it pursuant to the Disclosure Guidance and Transparency Rules) of any person who was directly or indirectly interested in 3 per cent. or more of the issued share capital of the Company:
		Name		Total voting rights	% of voting rights
		South Yorkshire Pensions Authority State Street Nominees Limited (on behalf of East Riding of		12,500,000	13.7
		Yorkshire Council) Pictet Asset Management Ltd City of Bradford Met District Council (on behalf of		10,000,000 9,100,000	10.99 10.0
		West Yorkshire Pension Fund) ISP Securities Ltd. BNY (OCS) Nominees (on behalf of Alder Investment		9,100,000 7,000,000	10.0 7.69
		Management Limited) Oyster – SICAV Newton Investment		6,800,000 5,050,000	7.47 5.55
		Management Limited		4,751,028	5.22
		The Company and the Directors are not aware of any other person who, directly or indirectly, jointly or severally, exercises or could exercise control over the Company. The Company and the Directors are not aware of any arrangements, the operation of which may at a subsequent date result in a change in control of the Company.
		All Shareholders have the same voting rights in respect of the share capital of the Company.
		The interests of the Directors and their connected persons are as follows:
		Director		Number of Ordinary Shares	% of issued Share capital
		Robert King Stephen Le Page Paul Barnes		35,000 15,000 5,000	0.038 0.016 0.005
		The interests of the Tufton Group key employees of the Investment Manager and other related parties are as follows:
		Name		Number of Ordinary Shares	% of issued Share capital
		Tufton Group Entities Tufton Group Employees		3,148,000 1,362,000	3.460 1.496
		Tufton Group non-executive directors		490,000	0.538

B.7.	Key financial information	The key audited figures that summarise the financial condition of the Company in respect of the period from incorporation to 30 June 2018, which have been extracted without material adjustment from the Company's historical financial information, are set out in the following tables. Investors should read the whole of such report and not rely solely on the key or summarised information set out below.
		Statement of Comprehensive Income
		For the period from 6 February 2017 to 30 June 2018
			US\$
		Income
		Net changes in fair value of Financial Assets
		designated at fair value through profit and loss	3,482,168
		Total net income	–––––––– 3,482,168
		Expenditure	––––––––
		Administration fees	(41,949)
		Audit fees	(79,700)
		Brokers fees	(41,510)
		Directors' fees	(84,769)
		Foreign exchange loss	(3,099)
		Insurance fee	(36,226)
		Listing fees Management fee	(2,312) (206,140)
		Professional fees	(16,022)
		Sundry expenses	(2,555)
		Total expenses	–––––––– (514,282)
		Operating profit	–––––––– 2,967,886
		Finance income	315,557
		Profit and comprehensive income	––––––––
		for the year	3,283,443
		Earnings per Ordinary Share (cents)	–––––––– 3.61
		Statement of financial position	––––––––
		At 30 June 2018
			US\$
		Non-current assets
		Financial Assets designated at fair value
		through profit and loss (Investment)	49,622,259
		Total non-current assets	–––––––– 49,622,259
			––––––––
		Current assets
		Trade and other receivables	34,796
		Cash and cash equivalents	43,030,736 ––––––––
		Total current assets	43,065,532 ––––––––
		Total assets	92,687,791 ––––––––
		Current liabilities
		Trade and other payables	224,348 ––––––––
		Total current liabilities	224,348
		Net assets	–––––––– 92,463,443
			–––––––– US\$
		Equity
		Share capital	89,180,000
		Retained reserves	3,283,443 ––––––––
		Total equity attributable to ordinary shareholders	92,463,443
			––––––––
		Net assets per Ordinary Share (cents)	101.61

		Save for (i) the Company carrying out a placing and offer for subscription of Ordinary Shares which raised gross proceeds of US\$91 million in December 2017 and (ii) the Company completing four acquisitions with an aggregate value of US\$43.3 million, there has been no significant change in the financial condition or operating results of the Company during the period covered by the historical financial information (being the date of incorporation to 30 June 2018).
		Save for (i) the Company making, or committing to make, three further acquisitions for, in aggregate, US\$44.65 million and (ii) the Company declaring its first dividend of 1.5 cents per Ordinary Share on 27 July 2018, there has been no significant change in the financial condition or operating results of the Company since the period covered by the historical financial information (being 30 June 2018, the date to which the Company's latest audited annual financial statements were prepared).
B.8.	Key pro forma financial information	Not applicable. No pro forma financial information is included in this document.
B.9.	Profit forecast	Not applicable. No profit forecast or estimate has been made for the Company.
B.10.	Description of the nature of any qualifications in the audit report on the historical financial information	Not applicable. No qualifications are included in any audit report on the historical financial information of the Company included by reference in this document.
B.11.	Qualified working capital	The Company is of the opinion that the working capital available to it is sufficient for its present requirements, that is for at least the next 12 months from the date of this document.
B.34.	Investment policy	Investment Objective The Company's investment objective is to provide investors with an attractive level of regular and growing income and capital returns through investing in secondhand commercial sea-going vessels. Investment Policy In order to achieve its investment objective, the Company will invest in a diversified Portfolio of secondhand commercial sea-going vessels. The Company will make investments through one or more underlying SPV(s) over which the Company will exercise control with regards to investment decisions and which will mainly be wholly owned by the Company and may be held through an intermediate holding company. The Company may from time to time invest through vehicles which are not wholly owned by it. In such circumstances, the Company will seek to secure controlling rights over such vehicles through shareholder agreements or other legal arrangements. The Company will at all times invest and manage its assets in a manner which is consistent with the objective of diversifying investment risk across the main vessel classifications ("Segments") in the shipping industry. Investment Restrictions The Company observes the following investment restrictions calculated, where relevant, at the point of investment: • No single vessel will represent more than 25 per cent. of Net Asset Value. • In terms of employment strategy, no investment will be made that results in exposure to the spot market, (being the market in which vessels are employed using single voyage employment contracts ("Spot Charters") (the "Spot Market")) accounting for more than 25 per cent. of Net Asset Value.

	• No investment will be made that results in any shipping Segment (i.e. Tankers, General Cargo, Containerships, Bulkers) accounting for more than 50 per cent. of Net Asset Value.
	• The Company will not invest in cruise ships.
	• The Company will not invest in other closed ended investment companies.
	• No vessel will be registered under the laws of a country which is not included in the white list of the Paris Memorandum of Understanding (or the equivalent of this list) or if doing so would be contrary to any sanction or prohibition imposed by the United Nations, the United States, the European Union or the United Kingdom.
	For the purposes of clarity it should be noted that where the above mentioned investment restrictions refer to a percentage of NAV, this is to be measured in respect of the Company's investment in the relevant SPV at the time of investment only.
	Borrowing and gearing policy
	The Company may, for investment purposes, employ leverage at the SPV level where there is free cashflow generated from contracted vessel employment to counterparties which are considered creditworthy. Any such loans will be subject to the following restrictions:
	• leverage will be at the SPV level without recourse to the Company or to other SPVs;
	• it is anticipated that on an ongoing basis, consolidated Company gearing (consolidated loans to consolidated Charter-Free Value) will not be greater than 40 per cent. "Charter-Free Value" is the market value of one or more vessels excluding the value of any existing Charter in respect of such vessel or vessels;
	• the loan to Charter-Free Value ratio in any SPV at the time of loan drawdown will not be greater than 50 per cent;
	• the repayment profile of any loan will not be greater than the term of the underlying contracted Charter cashflow;
	• the loan to Charter-Free Value ratio at any SPV will be further constrained such that the free cashflow generated by the vessel employment plus the expected scrap value of the vessel (where relevant) will be sufficient to amortise the loan in full;
	• where underlying Charter cashflow is of a fixed rate nature, the Investment Manager will seek to use interest rate swaps or fixed rate loans at the SPV level to provide for a known rate of interest under the terms of the loan agreement for all or part of the loan term. All security and other margin requirements under such interest rate swaps will be secured under the standard loan security arrangements; and
	• any refinancing exposure will be subject to the restrictions outlined above.
	Short term leverage may be utilised at the Company or intermediate holding company level for working capital or bridging purposes, but only to the extent that it is consistent with the AIFM's regulatory status and subject always to the consolidated Company gearing limits outlined above. Any such bridging loan finance will be short-term and not structural in nature.
	The timing of the deployment of leverage is at the discretion of the Board, in consultation with the Investment Manager.

		Hedging and derivatives As part of the Company's interest rate risk management, the Company may engage in interest rate hedging at the SPV level (by using interest rate swaps or fixed rate loans to provide for a known rate of interest under the terms of a loan agreement for all or part of any loan term) or otherwise seek to mitigate the risk of interest rate changes. All security and other margin requirements under such interest rate swaps will be secured under standard loan security arrangements. Shipping assets are generally valued in and earn US\$. Therefore, there will be no material currency risk. However, the Company may make limited investments denominated in currencies other than US\$ including Sterling and Euros. In the event of the Company making such investments, the Investment Manager will use its judgement, in light of the Company's investment policy, in recommending whether or
		not to effect any currency hedging in relation to any such investments. In addition to interest rate and currency hedging (as described above) the Company (through its SPV(s)) may enter into other shipping specialised hedging arrangements, such as bunker hedging against the cost of fuel exposure and hedging through Forward Freight Agreements ("FFAs") against freight market exposure.
		Cash management Pending investment, cash will be temporarily held as cash and/or invested in cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having a single -A (or equivalent) or higher credit rating as determined by an internationally recognised rating agency.
		The Company has an execution-only brokerage account with Canaccord Genuity Wealth Management in Guernsey which is used to place surplus cash with financial institutions on the instruction of the Investment Manager.
		Amendments to and compliance with the investment policy
		No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.
		In the event of a breach of the investment policy set out above, the Investment Manager shall inform the Board upon becoming aware of the same and if the Board considers the breach to be material, notification will be made to a Regulatory Information Service.
B.35.	Borrowing limits	The Company may, for investment purposes, employ leverage at the SPV level where there is free cashflow generated from contracted vessel employment to counterparties which are considered creditworthy. Any such loans will be subject to the following restrictions:
		• leverage will be at the SPV level without recourse to the Company or to other SPVs;
		• it is anticipated that on an ongoing basis, consolidated Company gearing (consolidated loans to consolidated Charter-Free Value) will not be greater than 40 per cent;
		• the loan to Charter-Free Value ratio in any SPV at the time of loan drawdown will not be greater than 50 per cent;
		• the repayment profile of any loan will not be greater than the term of the underlying contracted Charter cashflow;
		• the loan to Charter-Free Value ratio at any SPV will be further constrained such that the free cashflow generated by the vessel employment plus the expected scrap value of the vessel (where relevant) will be sufficient to amortise the loan in full;
		• short term leverage may be utilised at the Company or intermediate holding company level for working capital or bridging

		purposes, but only to the extent that it is consistent with the AIFM's regulatory status and subject always to the consolidated Company gearing limits outlined above;
		• where underlying Charter cashflow is of a fixed rate nature, the Investment Manager will seek to use interest rate swaps or fixed rate loans at the SPV level to provide for a known rate of interest under the terms of the loan agreement for all or part of the loan term. All security and other margin requirements under such interest rate swaps will be secured under the standard loan security arrangements; and
		• any refinancing exposure will be subject to the restrictions outlined above.
		Short term leverage may be utilised at the Company or intermediate holding company level for working capital or bridging purposes, but only to the extent that it is consistent with the AIFM's regulatory status and subject always to the consolidated Company gearing limits outlined above. Any such bridging loan finance will be short-term and not structural in nature.
		The timing of the deployment of leverage is at the discretion of the Board, in consultation with the Investment Manager.
B.36.	Regulatory status	The Company is not regulated or authorised by the FCA. The Company is regulated in Guernsey by the Commission as a registered closed-ended collective investment scheme pursuant to the POI Law and is required to comply with the RCIS Rules issued by the Commission.
		The Company is an alternative investment fund for the purposes of the AIFMD.
		The Company is subject to the Prospectus Rules and the Disclosure Guidance and Transparency Rules and voluntarily complies with certain provisions of the Listing Rules.
		The Investment Manager is authorised and regulated by the FCA. As at the date of this document, the Investment Manager is a small authorised AIFM for the purposes of AIFMD. It is intended that an application will be made by the Investment Manager to the FCA for the Investment Manager to become a "full scope" AIFM. If "full scope" status is granted, this will be announced by way of Regulatory Information Service and the Company will upload the relevant Article 23 disclosures to its website and appoint a depositary as required. The Investment Manager, in its capacity as the Company's AIFM, will also make the relevant notifications for the marketing of the Shares in the United Kingdom and elsewhere (if required).
B.37.	Typical investor	An investment in the Shares is only suitable for institutional, professional, professionally-advised and knowledgeable investors who understand, or who have been advised of, and are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses (which may equal the whole amount invested) that may result from such an investment.
B.38.	Investment of 20 per cent. or more in a single underlying issuer or investment company	Not applicable. The Company will not invest 20 per cent. or more in a single underlying issuer or investment company.
B.39.	Investment of 40 per cent. or more in another collective investment undertaking	Not applicable. The Company will not invest in another collective investment undertaking.

B.40.	Applicant's service	Investment Manager
	providers	The Company's investment manager is Tufton Oceanic Ltd. which acts as the Company's AIFM for the purposes of the AIFMD and is authorised and regulated by the FCA. The Investment Manager, pursuant to the terms of the Investment Management Agreement, and subject to the overall control and supervision of the Board, provides portfolio management and risk management services to the Company.
		Under the Investment Management Agreement, the Investment Manager regularly reviews the Company's investment policy, identifies potential investments for the Company and performs and/or procures all due diligence in relation to potential investments for the Company.
		The Investment Manager is entitled to receive from the Company in respect of its services provided under the Investment Management Agreement, an investment management fee payable quarterly in arrears equal to: (i) 0.85 per cent. per annum of the prevailing Net Asset Value up to US\$250 million; (ii) 0.75 per cent. per annum of the prevailing Net Asset Value in excess of US\$250 million but not exceeding US\$500 million; and (iii) 0.65 per cent. per annum of the prevailing Net Asset Value in excess of US\$500 million. For the purposes of calculating the investment management fee payable to the Investment Manager, cash and cash equivalents held by the Company will be excluded from the Net Asset Value.
		CarryCo is entitled to receive from the Company a performance fee in respect of a Calculation Period provided that the Total Return per Share at the end of the Calculation Period is greater than the High Watermark per Share. The performance fee due to CarryCo is an amount equal to 20 per cent. of the excess in Total Return per Share over the High Watermark per Share multiplied by the time weighted average number of Shares in issue during the Calculation Period.
		CarryCo shall receive 50 per cent. of the performance fee within 30 days of the conclusion of the annual general meeting of the Company immediately following the end of the Calculation Period. The remaining 50 per cent. shall be retained by the Company and, subject to being adjusted to take into account any subsequent underperformance, shall be paid out the next time a performance fee is due. Half of all subsequent performance fees shall also be deferred in this manner.
		No performance fee is payable if the Investment Manager's appointment is terminated for cause. If the Investment Manager's appointment is terminated other than for cause, the Investment Manager shall be entitled to receive all outstanding deferred performance fees (if any).
		CarryCo is a party to the Investment Management Agreement solely for the purposes of receiving any performance fee payable.
		The Investment Management Agreement is for an initial term of three years from 20 December 2017 and thereafter, subject to termination on not less than twelve months' written notice by either party. The Investment Management Agreement can be terminated at any time in the event of the insolvency of the Company or in the event that the Investment Manager ceases to be authorised and regulated by the FCA (including to act as the Company's AIFM) (if required to be so authorised and regulated to continue to carry out its duties under the Investment Management Agreement).
		The Company has an execution-only brokerage account with Canaccord Genuity Wealth Management in Guernsey which is used to place surplus cash with financial institutions on the instruction of the Investment Manager.
		Asset Manager Oceanic Marine Management Limited, an affiliate of the Investment
		Manager, enters into an asset management agreement with each SPV

		to provide the SPV with certain services including appointing technical and/or commercial managers and negotiating technical and commercial management agreements.
		The Asset Manager is entitled to receive a fee from each SPV of, currently, US\$150 per vessel per day.
		Administrator and Secretary
		Maitland Administration (Guernsey) Limited has been appointed by the Company to provide administration services and company secretarial services to the Company in accordance with the Administration Agreement. The Administrator provides day-to-day administrative services to the Company and is also responsible for the Company's general administrative and secretarial functions such as the calculation of the Net Asset Value and maintenance of the Company's accounting and statutory records.
		Under the terms of the Administration Agreement, the Administrator is entitled to administration fees on a sliding scale starting at 0.07 per cent. per annum of the prevailing Net Asset Value up to US\$150 million, reducing to 0.01 per cent. per annum of the prevailing Net Asset Value in excess of US\$300 million, subject to a minimum of £58,500 per annum. The Administrator is also entitled to a one-off set up fee of £4,750 in respect of the C Shares being issued pursuant to the Issue and an on-going administration fee of £1,000 per month for administering the C Shares until such C Shares have been converted into Ordinary Shares. Administration fees are calculated and payable quarterly in arrears.
		Registrar
		Computershare Investor Services (Guernsey) Limited has been appointed as the Company's Registrar pursuant to the Registrar Agreement. The Registrar is entitled to an annual fixed fee of £6,500 plus certain additional fees for services such as dividend and annual general meeting management.
		Receiving Agent
		Computershare Investor Services PLC has been appointed by the Company to provide receiving agent services in connection with the Offer for Subscription. The Receiving Agent is entitled to a fee of £5,500.
		Auditor
		PricewaterhouseCoopers CI LLP has been appointed auditor of the Company. The Auditor is entitled to an annual fee from the Company, which fee will be agreed with the Board each year in advance of the Auditor commencing audit work.
B.41.	Regulatory status. of Investment Manager	The Investment Manager is authorised and regulated by the FCA.
B.42.	Calculation of Net Asset Value	The NAV and NAV per Ordinary Share (and NAV per C Share, if applicable) of the Company is calculated on a quarterly basis by the Administrator and is then presented to the Board for approval and adoption. Calculations are made in accordance with IFRS.
		Details of each quarterly valuation are announced by the Company through a Regulatory Information Service as soon as practicable after the end of the relevant quarterly period.
		Suspension of the calculation of Net Asset Value
		The Directors may at any time, but are not obliged to, temporarily suspend the calculation of the NAV (and NAV per Ordinary Share and/or NAV per C Share, if applicable):
		• during any period when, as a result of political, economic, military or monetary events or any circumstances outside the control,

			responsibility and power of the Directors, disposal or valuation of a substantial part of the investments is not reasonably practicable without this being seriously detrimental to the interests of the Shareholders; or
		•	if, in the opinion of the Board, the Net Asset Value cannot be fairly calculated; or
		•	if any breakdown in the means of communication normally employed in determining the value of the investments or if for any reason the current prices on any market of a substantial part of the investments cannot be promptly and accurately ascertained; or
		•	if it is not reasonably practicable to determine the Net Asset Value on an accurate and timely basis.
			Should the calculation of the NAV of the Company be suspended then an announcement detailing such suspension will be notified immediately to the London Stock Exchange via a Regulatory Information Service.
B.43.	Cross liability		Not applicable. The Company is not an umbrella collective investment undertaking and as such there is no cross liability between classes or investment in another collective investment undertaking.
B.44.	No financial statements have been made up		The Company has commenced operations and historical financial information is incorporated by reference in this document. Please see key financial information at B.7.
B.45.	Portfolio		As at the date of this document, the Group has acquired, or committed to acquire, the following assets:
		Vessel	Vessel Type and Year of Build	Place of registration	Acquisition/ commitment charter Date	Earliest end of period	Expected end of charter period
		Swordfish	1700-TEU containership built 2008	Liberia	Feb '18	Apr '20	Apr '21
		Kale	1700-TEU containership built 2008	Liberia	Feb '18	Mar '20	Apr '21
		Patience	2500-TEU containership built 2006	Liberia	Mar '18	Mar '21	Sep '22
		Riposte	2500-TEU containership built 2009	Liberia	Mar '18	Mar '20	Mar '21
		Neon*	Mid-sized gas carrier built 2009	Greece	Jul '18	BB charter to 2025	BB charter to 2025
		Aglow	Handysize bulker built 2011	Liberia	Jul '18	N/A	N/A
		Dragon	Handysize bulker built 2010	Liberia	Sept '18	Sept '20	Mar '21
		*	The Company has acquired a 75 per cent. interest in this asset with an option to acquire the remaining 25 per cent. in due course.
B.46.	Net Asset Value		As at 30 June 2018, the audited NAV was US\$92.5 million and the audited NAV per Ordinary Share was US\$1.016.

		Section C – Securities
Element	Disclosure Requirement	Disclosure
C.1.	Type and class of securities	The Company is targeting an issue of up to 100 million C Shares at an Issue Price of US\$1.00 pursuant to the Issue, with the potential for the Directors to increase the size of the Issue to up to 150 million C Shares, subject to investor demand.
		The Company also intends to issue up to 200 million Ordinary Shares and/or 200 million C Shares in aggregate pursuant to the Placing Programme.
		The ISIN of the Ordinary Shares is GG00BDFC1649 and the SEDOL is BDFC164. The ticker for the Ordinary Shares is SHIP.
		The ISIN of the C Shares is GG00BG0QZS28 and the SEDOL is BG0QZS2. The ticker for the C Shares is SHPC.
C.2.	Currency	US Dollars.
C.3.	Details of share capital	The issued share capital of the Company as at the date of this document is comprised of 91,000,000 Ordinary Shares.
C.4.	Description of the rights attaching to the securities	The holders of the Shares shall be entitled to receive, and to participate in, any dividends declared in relation to the relevant class of shares that they hold.
		On a winding-up or a return of capital by the Company, if there are C Shares in issue, the net assets of the Company attributable to the C Shares shall be divided pro rata among the holders of the C Shares. For so long as C Shares are in issue the assets attributable to the C Shares shall at all times be separately identified and shall have allocated to them such proportion of the expenses or liabilities of the Company as the Directors fairly consider to be attributable to any C Shares in issue. The holders of Ordinary Shares shall be entitled to all of the Company's remaining net assets after taking into account any net assets attributable to any C Shares in issue.
		The Shares shall carry the right to receive notice of, attend and vote at general meetings of the Company. The consent of either the holders or Ordinary Shares or the holders of C Shares will be required for the variation of any rights attached to the relevant class of shares.
C.5.	Restrictions on the free transferability of the securities	Not applicable; there are no restrictions on the free transferability of the Shares save that the Articles of Incorporation provide that the Board may refuse to register a transfer of Shares if it would: (i) cause the Company's assets to be deemed "plan assets" for the purposes of the U.S. Plan Asset Regulations or the U.S. Code; (ii) give rise to an obligation on the Company to register as an "investment company" under the U.S. Investment Company Act or any similar legislation; (iii) give rise to an obligation on the Company to register under the U.S. Exchange Act, the U.S. Securities Act or any similar legislation; (iv) result in the Company not being considered a "foreign private issuer" as such term is defined in Rule 3b-4(c) under the U.S. Exchange Act; (v) result in a person holding Shares in violation of the transfer restrictions put forth in any Prospectus published by the Company, from time to time; (vi) cause the Company to be a "controlled foreign corporation" for the purposes of the U.S. Code; (vii) cause the Company to suffer any pecuniary disadvantage (including any excise tax, penalties or liabilities under ERISA or the U.S. Code); or (viii) result in any Shares being owned, directly or indirectly, by any person who is deemed to be a Non Qualified Holder in accordance with article 10.7 of the Articles.
C.6.	Admission	Applications will be made to the London Stock Exchange for (i) all of the C Shares issued pursuant to the Issue; and (ii) any Shares issued pursuant to each Subsequent Placing under the Placing Programme to be admitted to the Specialist Fund Segment of the Main Market.

		It is expected that Initial Admission will become effective, and that dealings in the C Shares offered pursuant to the Issue will commence, at 8.00 a.m. on 16 October 2018. It is expected that any further Admissions under Subsequent Placings will become effective and dealings will commence at any point between 25 September 2018 and 24 September 2019. All Shares to be issued pursuant to a Subsequent Placing under the Placing Programme will be issued conditional upon Admission occurring.
C.7.	Dividend policy	The Company intends to pay dividends on a quarterly basis with dividends declared in January, April, July and October.
		The Company declared its first dividend of 1.5 cents per Ordinary Share on 27 July 2018, which was paid on 17 August 2018. The Company intends to declare dividends from Q3 and Q4 earnings of 1.75 cents per Ordinary Share and thereby achieve the target of 5.0 cents per Ordinary Share in respect of its first calendar year. Going forward it is intended to continue quarterly dividends at 1.75 cents per Ordinary Share and to therefore achieve the targeted 7.0 cents per Ordinary Share per annum for future years. The target dividend distribution on the C Shares in their first year is expected to be 5.0 cents per C Share. Whilst it is intended that the conversion to Ordinary Shares will take place within the first year of the existence of the C Shares, if this is not the case then target distributions remain at 7.0 cents per C Share per annum thereafter.*
		The Company continues to target an IRR of 12 per cent.* per annum (net of expenses and fees) on a NAV basis on the original issue price over the long term.
		*This is a target only and not a profit forecast. There can be no assurance that the target can or will be met and should not be taken as an indication of the Company's expected or actual future results. Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company or assume that the Company will make any distributions at all and should decide for themselves whether or not the target dividend yield or IRR is reasonable or achievable. The target dividend yield is based on the IPO issue price of US\$1.00 per ordinary share.

	Section D – Risks
Element	Disclosure Requirement	Disclosure
D.1., D.2	Key information on the key	The key risk factors relating to the Company and its industry are:
	risks that are specific to the Company or its industry	• The Company has a limited operating history. Accordingly, investors have a limited basis on which to evaluate the Company's ability to achieve its investment objective and provide a satisfactory investment return.
		• The returns expressed in this document are targets only and are based on financial projections which are themselves based on estimates and assumptions about a variety of factors, including in relation to market conditions and the economic environment and the ability of the Company to implement its investment objective and policy. There can be no guarantee that the target returns of the Company can be achieved at the level set out in this document or that it's NAV will not decrease.
		• The shipping industry tends to be cyclical with attendant, often unpredictable and significant, volatility in spot freight rates, vessel values and vessel profitability. The time lag in the shipping industry between order and delivery of vessels heightens this cyclicality. Charter hire rates and vessel values are affected by the supply of, and demand for, vessels. The Company's cash flows may be exposed to market fluctuations in charter hire rates until such time as the Company's vessels are chartered. The capital value of the vessels acquired by the Company will also be exposed to fluctuations in the secondhand values of the vessels over the life of the investment. While exposure to such cyclicality

	and volatility may benefit the Company in certain circumstances, it may also adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.
	• The market price and value of the vessels in which the Company will invest may fluctuate due to a number of factors beyond the Company's control, including actual or anticipated fluctuations in the results of, and market perceptions concerning, the shipping industry, general economic, social or political developments, international trade policies, changes in industry conditions (including, for example, fluctuations in the supply of, and demand for, such vessels), changes in government or other regulation and other material events such as natural disasters, terrorism, piracy, storms or strikes. These factors may have a material adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.
	• The Company cannot guarantee that the due diligence investigation carried out by the Investment Manager with respect to any investment opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Any failure by the Investment Manager to identify relevant facts through the due diligence process may result in inappropriate investment recommendations being made to the Board, which may have a material adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.
	• A vessel that has been acquired in the secondary market may have conditions or defects that were not apparent prior to purchase (notwithstanding any inspections conducted) and which may require the Company to undertake costly repairs to the vessel. Furthermore, it is not usually possible to receive the benefit of warranties in respect of vessels that have been purchased on the secondhand market. Identification of such defects following the acquisition of a vessel may therefore adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.
	• The shipping industry is extensively regulated. The Company's vessels have to operate within the rules, international conventions and regulations adopted by the IMO, as well as other international, national, state and local laws, conventions and regulations in each of the jurisdictions in which the vessels owned by the Company operate as well as those of the country or countries in which such vessels are registered. Additional costs or investments may be incurred to maintain compliance with regulations.
	• The Company's business strategy is dependent on the ability of the Investment Manager to identify appropriate vessels and Charter counterparties and also on being able to invest the net proceeds of the Issue during an economic cycle that offers opportunities which meet the investment criteria of the Company. While the Investment Manager believes there to be a strong supply of suitable investment opportunities as at the date of this document, there can be no guarantee that such opportunities will continue to be available at the time of investment. Vessel acquisitions and Charters are also subject to influences from a broad range of market and financing factors which could decline from current conditions and negatively affect the ability of the Investment Manager to source suitable investment opportunities which may adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares. From time to

	time the Company may invest in vessels requiring modifications before commencing operations or, more likely, commencing long term employment with a charterer requesting such modifications. To the extent the Company invests in such vessels, it will be subject to the risks normally associated with such vessels, but also to losses due to cost overruns and/or delays. Any variation between actual vessel delivery dates and contracted delivery dates may affect operating results either due to postponed availability of cash flows, reduction in Charter rates or even full cancellation of Charter agreements. These factors may adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.
	• SPVs through which the Company will acquire vessels may utilise leverage (up to 50 per cent. of the Charter-free Value of the relevant vessel) to finance the purchase of the shipping assets. The SPVs will therefore likely be required to comply with loan covenants and undertakings, including loan to value covenants. A failure to comply with such covenants or undertakings may result in the relevant lenders requiring additional cash or ultimately recalling the relevant loans. In such circumstances, the SPVs may be required to sell the relevant vessel in order to repay the outstanding loan. This could adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.
	The key risks relating to the Investment Manager are:
	• The future ability of the Company to successfully pursue its investment policy may depend on the ability of the Investment Manager and Asset Manager to retain their existing key personnel and/or for each to recruit in good time individuals of similar experience and calibre, of which there can be no guarantee. Whilst the Investment Manager and Asset Manager have endeavoured to ensure that their personnel are suitably incentivised, the retention of key personnel cannot be guaranteed.
	• The Company is also subject to the risk that the Investment Management Agreement may be terminated and that no suitable replacement investment manager will be found. If the Investment Management Agreement is terminated and a suitable replacement is not secured in a timely manner or key personnel of the Investment Manager are not available to the Company with an appropriate time commitment, the ability of the Company to execute its investment strategy or achieve its investment objective may be adversely affected.
	• Information contained in this document relating to the past performance of the Investment Manager is provided for illustrative purposes only and is not indicative of the likely performance of the Company. Such past performance information has not been independently reviewed or audited for the purposes of inclusion in this document. Past performance is not necessarily indicative of future results.
	The key risks relating to regulation and taxation are:
	• Legal and regulatory changes could occur that may adversely affect the Company. Changes in the regulation of investment companies may adversely affect the Company's share price and the ability of the Company to successfully pursue its investment strategy.
	• Any change in the Company's tax status, or in taxation legislation or practice in either Guernsey or the United Kingdom or any jurisdiction in which SPVs are resident, may affect the value of the investments held by the Company or the Company's ability to pursue its investment policy successfully or achieve its investment objective, or may alter the after-tax returns to Shareholders.

D.3.	Key information on the key risks that are specific to the Shares	The key risks relating to the Shares are:
		• An investment in the Shares carries the risk of loss of capital. The value of a Share can go down as well as up and Shareholders may receive back less than the value of their initial investment and could lose all of the investment.
		• Shareholders have no right to have their Shares redeemed or repurchased by the Company and there can be no guarantee that a liquid market in the Shares will develop.
		• The Ordinary Shares or the C Shares may trade at a discount to NAV per Ordinary Share or NAV per C Share for a variety of reasons, including due to market conditions or to the extent investors undervalue the activities of the Company. While the Directors may seek to mitigate any discount to NAV per Ordinary Share through buy backs and/or redemptions of Ordinary Shares only, there can be no guarantee that they will seek to do so or that such actions will be successful if they do and the Directors accept no responsibility for any failure of any such strategy to effect a reduction in any discount.
		• Investments in shares traded on the SFS may have limited liquidity and may experience greater price volatility than shares listed on the premium segment of the Official List. Limited liquidity and high price volatility may result in Shareholders being unable to sell their Shares at a price that would result in them recovering their original investment.

	Section E – Offer
Element	Disclosure Requirement	Disclosure
E.1.	Proceeds and costs of the Issue	The costs and expenses of, and incidental to, the Issue are expected to be a maximum of 2 per cent. of the gross proceeds of the Issue and will be borne by the holders of C Shares only. On the basis that the estimated gross proceeds of the Issue are US\$100 million, the net proceeds of the Issue will be no less than US\$98 million. In the event that the Issue does not proceed all incurred costs and expenses shall be paid by the Company.
		The net proceeds of the Placing Programme are dependent, inter alia, on the Directors determining to proceed with a Subsequent Placing under the Placing Programme and the level of subscriptions received and the price at which such Shares are issued. It is expected that the costs of issuing Shares under the Placing Programme will be covered by issuing such Shares at the applicable Placing Programme Price and reflected in such price.
		The costs and expenses of any issue of C Shares under the Placing Programme will be paid out of the gross proceeds of such issue and will be borne by the holders of C Shares only.
E.2.a.	Reason for the Issue and use of proceeds	The Issue and the Placing Programme are intended to raise money for investment in accordance with the Company's investment policy.
		The gross proceeds of the Issue will be utilised in accordance with the Company's investment policy and to meet the costs and expenses of the Issue.
E.3.	Terms and conditions of the offer	The Issue comprises a Placing and Offer for Subscription for a target issue of up to 100 million C Shares to be issued at a price of US\$1.00 per C Share.
		The Issue is conditional, inter alia, on:
		• Initial Admission having become effective at or before 8.00 a.m. on 16 October 2018 or such later time and date as the Company, the Investment Manager, Hudnall and N+1 Singer may agree (being not later than 8.00 a.m. on 16 November 2018 ); and

		• the Placing Agreement becoming wholly unconditional (save as to Initial Admission) and not having been terminated in accordance with its terms at any time prior to Initial Admission.
		The Placing
		The Company, the Investment Manager, Hudnall and N+1 Singer have entered into the Placing Agreement pursuant to which Hudnall and N+1 Singer have agreed, subject to certain conditions, to use their reasonable endeavours to procure subscribers for the C Shares made available in the Placing.
		The latest time and date for receipt of placing commitments under the Placing is 3.00 p.m. on 10 October 2018.
		The Offer for Subscription
		C Shares to be issued at a price of US\$1.00 each are available to the public under the Offer for Subscription. The terms and conditions of application under the Offer for Subscription are set out in Part 13 of this document. An Application Form is set out at the end of this document. The terms and conditions should be read carefully before an application is made. Investors should consult their respective stockbroker, bank manager, solicitor, accountant or other financial adviser if they are in doubt about the contents of this document.
		The latest time and date for receipt of Application Forms under the Offer for Subscription is 11.00 a.m. on 10 October 2018.
		The Placing Programme
		Shares which may be made available under the Placing Programme will be at the applicable Placing Programme Price. The Placing Programme will open on the date of this document and will close on 24 September 2019 (or any earlier date on which it is fully subscribed, as agreed between the Company, N+1 Singer and Hudnall).
		Each allotment and issue of Shares pursuant to a Subsequent Placing under the Placing Programme is conditional, inter alia, on (i) the passing of the Resolutions at the Company's annual general meeting to be held on 24 October 2018; (ii) Admission of the relevant Shares occurring by no later than 8.00 a.m. on such date as the Company, the Investment Manager, N+1 Singer and Hudnall may agree from time to time in relation to that Admission, not being later than 24 September 2019, (iii) a valid supplementary prospectus being published by the Company if such is required by the Prospectus Rules and (iv) the Placing Agreement becoming wholly unconditional (save as to the relevant Admission) and not having been terminated in accordance with its terms prior to any subsequent Admission.
E.4.	Material interests	Not applicable. No interest is material to the Issue or the Placing Programme.
E.5.	Name of person selling securities	Not applicable. No person or entity is offering to sell Shares as part of the Issue.
E.6.	Dilution	If an existing Shareholder does not subscribe for C Shares under the Issue (which will ultimately convert into Ordinary Shares) and/or any C Shares and/or Ordinary Shares issued under the Placing Programme, such Shareholder's proportionate ownership and voting interests in the Company will be reduced.
E.7.	Estimated Expenses charged to the investor by the issuer	The costs and expenses of and incidental to the Issue are expected to be a maximum of 2 per cent. of the gross proceeds of the Issue and will be borne by the holders of C Shares only.
		It is expected that the costs of issuing Ordinary Shares under the Placing Programme will be covered by issuing such Ordinary Shares at the applicable Placing Programme Price. The costs and expenses of any issue of C Shares under the Placing Programme will be paid out of the gross proceeds of such issue and will be borne by the holders of C Shares only.

RISK FACTORS

Prospective investors should consider carefully all of the information set out in this document and the risks attaching to an investment in the Shares, including, in particular, the risks described below. An investment in the Shares is only suitable for investors who understand the risk of capital loss and that there may be limited liquidity in the underlying investments of the Company and in the Shares, for whom an investment in the Shares would be of a long term nature and constitute part of a diversified investment portfolio and who understand and are willing to assume the risks involved in investing in the Shares.

Prospective investors should note that the risks relating to the Company, its industry and the Shares summarised in the section of this document headed "Summary" are the risks that the Directors believe to be the most essential to an assessment by a prospective investor of whether to consider an investment in the Shares. However, as the risks which the Company faces relate to events and depend on circumstances that may or may not occur in the future, prospective investors should consider not only the information on the key risks summarised in the section of this document headed "Summary" but also, among other things, the risks and uncertainties described below.

The Directors believe the risks described below are the material risks relating to an investment in the Shares at the date of this document. Additional risks and uncertainties not currently known to the Directors, or that the Directors deem immaterial at the date of this document, may also have an adverse effect on the performance of the Company and the value of the Shares. Investors should review this document carefully and in its entirety and consult with their professional advisers before making an application to participate in the Issue.

FCA-authorised firms conducting designated investment business with retail customers under COB Rules are reminded that securities admitted to trading on the Specialist Fund Segment will be securities that may have characteristics such as: (i) variable levels of secondary market liquidity; (ii) sophisticated corporate structures; (iii) highly leveraged structures; and (iv) sophisticated investment propositions with concentrated risks and are therefore intended for institutional, professional and highly knowledgeable investors.

RISKS RELATING TO THE COMPANY

The Company has a limited operating history and investors have a limited basis on which to evaluate the Company's ability to achieve its investment objective

The Company has a limited operating history. Accordingly, investors have a limited basis on which to evaluate the Company's ability to achieve its investment objective and provide a satisfactory investment return.

The returns are targets only, are based on estimates and assumptions that are inherently subject to significant business and economic uncertainties and contingencies, and the actual rate of returns may be materially lower than such target

The returns expressed in this document are targets only and are based on financial projections which are themselves based on estimates and assumptions about a variety of factors, including in relation to market conditions and the economic environment and the ability of the Company to implement its investment objective and policy. There can be no guarantee that the target returns of the Company can be achieved at the level set out in this document or that it's NAV will not decrease. A variety of factors, including changes in financial market conditions, international trade policies, interest rates, exchange rates, government regulations, the global economic environment or the occurrence of risks described elsewhere in this document could adversely impact the Company's performance and its ability to achieve its target returns.

Investors should not place any reliance on the target returns in deciding whether to invest in the Company and should make their own determination as to whether the target returns are reasonable or achievable in deciding whether to invest in the Company. A failure by the Company to achieve its target returns or increase its NAV could adversely impact the value of the Shares and result in a loss of all or part of an investor's investment.

The Company has no employees and is reliant on the performance of third party service providers

The Company has no employees and the Directors have all been appointed on a non-executive basis. The Company is therefore reliant on the performance of third party service providers for its executive function. In particular, the Investment Manager, the Asset Manager, the Administrator and the Registrar will be performing services which are integral to the operation of the Company. Failure by any service provider to carry out its obligations with respect to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to meet its investment objective and successfully pursue its investment policy.

RISKS RELATING TO THE COMPANY'S INDUSTRY

Cyclicality of the shipping industry, including fluctuations in Charter hire rates, may affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or market price of Shares

The shipping industry tends to be cyclical with attendant, often unpredictable and significant, volatility in spot freight rates, vessel values and vessel profitability. The time lag in the shipping industry between order and delivery of vessels heightens this cyclicality. Charter hire rates and vessel values are affected by the supply of, and demand for, vessels. The factors that can influence the supply of, and demand for, vessel capacity include: the demand for and production of cargo (for example containerised cargoes), global and regional political and economic conditions, demand for products transported by the vessels, changes in methods of transportation, transportation costs and changes in seaborne and other transportation patterns. Factors that influence the supply of vessel capacity include: the number of new build deliveries, the demand for and construction of vessels of the same type, the scrapping rate of older vessels, vessel casualties, the number of vessels that are out of service and port productivity.

The Company intends to enter into Charter agreements in which the Charter hire rates will generally be fixed. Notwithstanding this, the Company's cash flows may be exposed to market fluctuations in Charter hire rates until such time as the Company's vessels are chartered. Typical Charter hire rates in the market may increase or decrease following the time at which the rate of the relevant Charter agreement is fixed. The capital value of the vessels acquired by the Company will also be exposed to fluctuations in the secondhand values of the vessels over the life of the investment. While exposure to such cyclicality and volatility may benefit the Company in certain circumstances, it may also adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Valuation of vessels in which the Company will invest may fluctuate

The market price and value of the vessels in which the Company will invest may fluctuate due to a number of factors beyond the Company's control, including actual or anticipated fluctuations in the results of, and market perceptions concerning, the shipping industry, general economic, social or political developments, changes in industry conditions (including, for example, fluctuations in the supply of, and demand for, such vessels), changes in government or other regulation and other material events such as natural disasters, terrorism, piracy, storms or strikes. The residual value of a vessel may also be adversely affected by factors such as poor maintenance (including by the Charter counterparties, when under a Bareboat Charter agreement, such maintenance is within their control) or as a result of a poor performance of the vessel relative to its intended function. Further, the depreciation rate of the vessels may vary over time and there can be no guarantee that the depreciation rate will not increase above that which has historically been the case.

The realisable value of the vessels may also be miscalculated. It may be relatively difficult for the Investment Manager to obtain reliable pricing information for valuation of the underlying vessels. The Investment Manager may conclude that certain quotations for vessels are not indicative of fair value by reason of a number of factors. A lack of reliable information, errors in assumptions or forecasts and/or an inability to successfully implement the investment policy in a particular case could, among other factors, result in the vessel having a lower realisable value than had, in fact, been anticipated. If the Company (through an SPV) is not able to realise an investment at the anticipated level of profitability, investment returns could be adversely affected.

As a result, the value ascribed by the Company to each vessel may be higher or lower than forecast and capital returns to Shareholders may, accordingly, be higher or lower than otherwise expected. If the value of a vessel is in fact lower than expected, it may mean that the Company (through an SPV) may be unable to dispose of it on satisfactory terms. These factors may have a material adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Technological innovation may lead to a reduction in the Charter rates and residual value of the vessels acquired by the Company

The Charter hire and the value and operational life of a vessel are determined by a number of factors including the vessel's size, type, efficiency, operational flexibility and physical life. Factors which determine a vessel's efficiency include its speed, fuel economy and the ability to be loaded and unloaded quickly. Flexibility is determined by features such as the ability to enter ports, utilise related port facilities and safely navigate through canals and straits. Physical life is related to the original design and construction, maintenance and the impact of the stress of operations and structural damage. If new vessels are built that are more efficient or flexible or have longer physical lives than the Company's vessels, competition from these more technologically advanced vessels could adversely affect the value of Charter hire payments which can be obtained in respect of, and the resale value of, the Company's vessels and may consequently adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

The due diligence process that the Investment Manager intends to undertake in evaluating specific investment opportunities for the Company may not reveal all facts that may be relevant in connection with such investment opportunities

The objective of the due diligence process to be undertaken in relation to specific investment opportunities will be to identify issues which might affect an investment decision. When conducting due diligence and making an assessment regarding an investment opportunity, the Investment Manager will be required to rely on the resources available to it, including internal sources of information, information provided by the target Charter counterparties which the Company is engaging with, and independent sources. The due diligence process may at times be required to rely on limited or incomplete information.

Investments will be selected in part on the basis of third party information and data, which may or may not include information filed with regulatory bodies. Although the Investment Manager will evaluate all such information and data and seek independent corroboration where it considers it appropriate and reasonably available, the Investment Manager may not be in a position to confirm the completeness, genuineness or accuracy of such information. In particular, the Investment Manager may be dependent in part upon the integrity of the management of the entities filing such information with government regulators and such reporting processes in general.

Further, investment analysis and decisions may be undertaken on an expedited basis in order to make it possible for the Company to take advantage of short-lived investment opportunities. In such cases, the available information at the time of an investment decision may be limited, inaccurate and/or incomplete. Furthermore, the Investment Manager may not have sufficient time to evaluate fully such information even if it is available.

The value of the investments made by the Company may be affected by fraud, misrepresentation or omission. Such fraud, misrepresentation or omission may increase the likelihood of a default in payment by Charter counterparties, or may adversely affect the ability of the Company or an SPV to enforce its contractual rights in respect of a vessel, or may have an adverse effect on the residual value of a vessel.

Accordingly, due to a number of factors, the Company cannot guarantee that the due diligence investigation carried out by the Investment Manager with respect to any investment opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Any failure by the Investment Manager to identify relevant facts through the due diligence process may result in inappropriate investment recommendations being made to the Board, which may have a material adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Defects in vessels acquired in the secondary market may not be apparent prior to purchase

A vessel that has been acquired in the secondary market may have conditions or defects that were not apparent prior to purchase (notwithstanding any inspections conducted) and which may require the Company to undertake costly repairs to the vessel. Such repairs may require the vessel to be put into drydock which would reduce the Company's fleet utilisation. Furthermore, it is not usually possible to receive the benefit of warranties in respect of vessels that have been purchased secondhand. Identification of such defects following the acquisition of a vessel may therefore adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

There can be no guarantee that Charter counterparties will not default on their obligations under the charter agreements

The Company mainly intends to invest in vessels that will enter into medium to long term Charters. While the Investment Manager will undertake due diligence in relation to Charter counterparties' creditworthiness and related factors, there can be no guarantee that such Charter counterparties will honour their contractual obligations. Defaults by such Charter counterparties may substantially adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Events which may occur during the operation of the vessels in which the Company will seek to invest may result in damage to the vessels or other loss or liability which may adversely affect returns to the Company

The vessels in which the Company will invest may be subject to unfortunate and/or force majeure events. Such events could include marine disasters (such as collisions, allisions, capsizings or groundings) incidents of piracy, environmental accidents, cargo and property losses or damage, mechanical failures, earthquakes, adverse weather conditions, assertion of eminent domain, embargoes and strikes, wars, riots, terrorist acts and similar events. These events could result in the partial or total loss of a vessel or significant down time, death or injury to persons, loss of revenue or property, environmental damage, higher insurance rates or delay or rerouting, among other potentially detrimental effects and in some circumstances Charter hire agreements may be terminated if the event is so catastrophic that it cannot be remedied within a reasonable time period. Such events may therefore adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Hull and machinery classification, vessel maintenance and modifications

The hull, machinery and equipment of every commercial vessel must be classed by an independent classification society. The Company will only engage classification societies who are members of the International Association of Classification Societies ("IACS"). The classification society certifies that a vessel is safe and seaworthy in accordance with its rules and regulations as well as those of the flag state of the vessel. In addition, each vessel must comply with, inter alia, the requirements of the International Maritime Organisation's ("IMO") (a specialised United Nations agency) Safety of Life at Sea Convention ("SOLAS"). Each of the Company's vessels will therefore be required to undergo a combination of annual, intermediate and special surveys. Each vessel will also be required to be drydocked at every five year special survey and, unless the class notation allows otherwise, at each intermediate survey (about 30 months after each special survey) for the inspection of the underwater parts of the vessel. Whilst the cost of planned maintenance is taken into account in the cost budgets for any vessel there is no guarantee that the actual expenditure will be carried out within budget. Also, if any vessel does not maintain its class or fails any annual, intermediate, or special survey, that vessel may be unable to trade between ports and would therefore be unemployable, which may adversely affect the Company's business, financial condition, result of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Vessels may suffer damage at any time and/or require rectification work that is identified during regular inspections at a drydocking facility. The costs associated with such unplanned maintenance are unpredictable and can be substantial. In addition, there may be a loss of earnings during the time the vessel is in transit to the dry dock, during repairs and ultimately repositioned. Each vessel will be insured against such accidental damages as well as the vessel's earnings for the time off hire during repair, however each insurance policy has excess provisions. Whilst adequate reserves will be maintained to cover such insurance excess, consequential losses as a result of such accidents can be substantial and these factors may have an adverse effect on the Company's business, financial condition, result of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

From time to time the Company may invest in vessels requiring modifications before commencing operations or, more likely, commencing long-term employment with a charterer requesting such modifications. To the extent the Company invests in such vessels, it will be subject to the risks normally associated with such vessels, but also to losses due to cost overruns and/or delays. Any variation between actual vessel delivery dates and contracted delivery dates may affect operating results either due to postponed availability of cash flows, reduction in Charter rates or even full cancellation of Charter agreements. These factors may adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

The cost of insurance may increase

Circumstances beyond the control of the Company may lead to increases in the cost of insurance. Likewise the insurance obtained may not cover all relevant risks. The Company may also be subject to calls or premiums in amounts based not only on the Company's own claim records but also the claim records of all other members of the protection and indemnity associations through which the Company receives indemnity insurance coverage for third party liability. The Company's insurance policies also will contain deductibles, limitations and exclusions which, although they may be standard in the shipping industry, may nevertheless increase the Company's costs. It is also possible that the insurance procured by the Company only covers business interruptions after a certain number of days off-hire up to a certain limit of off-hire days.

If an uninsured loss were to occur, the Company could lose its capital invested in the affected vessel in addition to revenue lost as a result of down time and the anticipated future revenue from such vessel. The Company would also continue to be obligated to repay any indebtedness or other obligations related to the vessel. If an uninsured liability to a third party were to occur, the Company may incur the cost of defence and settlement with, or court ordered damages to, that third party.

These factors may reduce the returns to the Company, which may have a corresponding adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

The acquisition and operation of secondhand vessels is associated with the exposure to increased operating costs which could adversely affect the Company's earnings and, as the fleet ages, the risks associated with older vessels could adversely affect the Company's ability to obtain profitable Charters.

The costs of maintaining a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology and ship design. These and other factors can make older vessels less desirable to charterers. Furthermore, governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment to a vessel, and may restrict the types of activities in which a vessel may engage. As the Company's vessels age, market conditions may not justify those expenditures or enable the Company to operate its vessels profitably during the remainder of their useful lives.

Compliance with the legal and regulatory requirements of the shipping industry and changes to such codes and regulations

The shipping industry is extensively regulated. The Company's vessels will have to operate within the rules, international conventions and regulations adopted by the IMO, as well as other international, national, state and local laws, conventions and regulations in each of the jurisdictions in which the vessels owned by the Company operate as well as those of the country or countries in which such vessels are registered. Additional costs or investments may be incurred to maintain compliance with regulations. The International Labour Organisation ("ILO") is also responsible for the development of labour standards applicable to seafarers worldwide.

The IMO has adopted a comprehensive framework of detailed technical regulations, in the form of international diplomatic conventions, which govern the safety of vessels and protection of the maritime environment and to which the Company and the vessels owned by the Company will be subject. For example, shipping companies and individual vessels are required to establish safety systems and have them certified by standardisation bodies. In complying with such IMO regulations and other regulations that may be adopted, additional costs may be incurred, for example, in meeting new maintenance, environmental and inspection requirements, in developing contingency arrangements for potential contamination by vessels and in obtaining insurance coverage. Because such conventions, laws and regulations are often revised, it is not possible to predict the long term costs of compliance. Compliance with such laws and regulations may entail significant expenses, including capital expenditure expenses for vessel design modifications and changes in operating procedures and insurance coverage.

In addition, vessel owners and managers are required by various governmental bodies to obtain permits, operating certificates and licences required for the operation of vessels. These permits may become costly or impossible to obtain or renew. In particular, the operation of the vessels will also be affected by the requirements set forth in the International Safety Management Code (the "ISM Code"). The ISM Code requires vessel technical managers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe vessel operation and describing procedures for dealing with emergencies. The failure of a vessel technical manager to comply with the ISM Code may subject such party, and subsequently the vessel owner or Bareboat Charterer, to increased liability, may decrease available insurance coverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports.

Changes in environmental laws, governmental regulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organisations and customer requirements or competition, may require the Company to make additional expenditures. As such conventions, laws, and regulations are often revised, it is not possible to predict with certainty the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale price or useful life of the vessels. These factors may reduce the returns to the Company, which may have a corresponding adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Environmental liability

The Company may be exposed to substantial risk of loss from environmental claims arising in respect of vessels owned by it, in particular if a vessel owned by the Company were to be involved in an incident with the potential risk of environmental damage, contamination or pollution. Such loss may exceed the value of the relevant vessel and any insurance held in respect of such losses. It is standard practice that pollution risks against third parties are covered by insurance under a Protection and Indemnity Club.

Furthermore, changes in environmental laws and regulations, such as the introduction of emissions reduction agreements, may create liabilities that did not exist at the time of acquisition of a vessel and that could not have been foreseen and which may cause the vessel to be retrofitted at significant cost in order to comply with these laws and regulations.

Generally, the Investment Manager will perform or cause to be performed market practice environmental due diligence in respect of all vessels considered for acquisition by the Company in order to identify potential sources of pollution, contamination or environmental hazard for which that vessel may be responsible and to assess the status of environmental regulatory compliance. There can be no assurance, however, that such due diligence will reveal all or any of the environmental liabilities relating to such vessels.

There is also a substantial risk that the involvement of a vessel in which the Company has an interest in an environmental disaster may harm the Company's reputation, which in turn may adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and the market price of the Shares.

Ship arrest or similar may require the posting of significant sums as security before such vessels are released

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of the Company's vessels could have an adverse effect on the financial performance of the Company. In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could therefore attempt to assert "sister ship" liability against a vessel owned by the Company for claims relating to another of the Company's vessels, which consequently may adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

A government could also requisition one or more of the vessels for title or for hire leading to a loss of earnings. Requisition for title occurs when a government takes control of a vessel and becomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated Charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Although the Company would be entitled to compensation in the event of a requisition of one or more of its vessels, the amount and timing of payment would be uncertain.

Occurrence of such events may therefore reduce returns to the Company, which may have a corresponding adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Liability could arise in the event that a cargo is delivered without an original bill of lading

There is a risk that liability could arise in the event that cargo is delivered without being presented with an original bill of lading. A counter-indemnity from the charterer is generally required to mitigate such liability. However, recovery of indemnified amounts from the charterer may not be possible. Protection and indemnity insurance in the shipping industry does not cover this type of risk. In the event that such liability is incurred, this may expose the Company to significant costs, which may have a corresponding adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Availability and identification of suitable vessels and Charter counterparties

The Company's business strategy is dependent on the ability of the Investment Manager to identify appropriate vessels and Charter counterparties and also on being able to invest the net proceeds of the Issue and/or the Placing Programme during an economic cycle that offers opportunities which meet the investment criteria of the Company. While the Investment Manager believes there to be a strong supply of suitable investment opportunities as at the date of this document, there can be no guarantee that such opportunities will continue to be available at the time of investment. Vessel acquisitions and Charters are also subject to influences from a broad range of market and financing factors which could decline from current conditions and negatively affect the ability of the Investment Manager to source suitable investment opportunities.

The ability of the Investment Manager to source investment opportunities will also be in part dependent on the industry relationships of its key personnel. The Company cannot be sure that the Investment Manager's relationships will be maintained (whether as a result of changes in key personnel of the Investment Manager or otherwise), or that these relationships will assist the Company in making suitable investments on financially attractive terms.

Moreover, the business of identifying and structuring investments of the types contemplated by the Company is competitive and involves a high degree of uncertainty. Competition for the transportation of cargo by sea is intense and depends on a number of factors including price, location, size, age, condition and the acceptability of a vessel and its managers to charterers. The process of obtaining new charters is highly competitive and generally involves an intensive screening process and competitive bids. The Company is likely to compete for desirable investments with well-established shipping companies and brokers, private investment funds, foreign investors, various types of financial institutions and their affiliates, family groups and wealthy individuals, some or all of which may have capital and resources in excess of those of the Company.

Accordingly, there can be no assurance that the Company will be able to identify and complete attractive investments, which may adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

The Spot Market may be utilised as part of an exit strategy in relation to a vessel, with this market being highly competitive and subject to significant fluctuations

Spot Charters are entered into as either voyage Charters or short-term Time Charters of less than 6 months' duration. The Company does not intend to pursue a Spot Charter hire market strategy at the time of acquisition of the relevant vessel although in accordance with its investment policy the Company may have exposure to the Spot Market of up to 25 per cent. of NAV. However, at the end of a medium to long term Charter period it may pursue the chartering of vessels on a Spot Charter basis as part of an exit strategy. Although dependence on Spot Charters is common with certain types of shipping companies in the industry, the Spot Charter market is highly competitive and Spot Charter rates are subject to significant fluctuations based upon the supply of and demand for seaborne shipping capacity. There can be no assurance that Spot Charters will be available at rates that will be sufficient to enable the Company to achieve its target returns. Consequently, use of the Spot Market may adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Leverage and interest on borrowings at SPV level

SPVs through which the Company will acquire vessels may utilise leverage (up to 50 per cent. of the Charter-free Value of the relevant vessel) to finance the purchase of the shipping assets. The SPVs will therefore likely be required to comply with loan covenants and undertakings, including loan to value covenants. A failure to comply with such covenants or undertakings may result in the relevant lenders requiring additional cash or ultimately recalling the relevant loans. In such circumstances, the SPVs may be required to sell the relevant vessel to repay the outstanding loan. Under the loan arrangements, there may also be circumstances (including the relevant SPV's failure to repay the relevant loan in full) under which the relevant lenders may enforce security and sell the relevant vessel on the market, and use the proceeds for discharge of the SPV's outstanding repayments under the loan arrangement. In either case, if a vessel is sold, in relation to that vessel the Company will receive only the proceeds left after deduction of the outstanding loan repayments and any other amounts owing under the loan arrangement. There may be no proceeds left after such deductions or the remaining proceeds may be substantially lower than the Company's initial investment in the vessel. An SPV may also be unable either to refinance any loan at the end of its term or realise the underlying vessel in order to satisfy in full the outstanding amount of any loan. Furthermore a lender may be unwilling to lend to an SPV at all and/or on suitable terms which could result in the SPV being unable to finance or re-finance the purchase of the vessel.

In addition, the SPVs may be exposed to the risk of interest rate fluctuations as borrowings may be obtained based on floating interest rate terms. Should floating interest rate terms be obtained, the SPV may or may not hedge against any interest rate risk, depending on market conditions, utilising instruments of whatever duration are considered to be appropriate. Shareholders should be aware that any increase in interest rates may increase the costs of the SPVs' borrowings. Shareholders should note that the relevant SPV is not obliged to hedge against interest rate risks and consequently its investments may be significantly exposed to such risks.

These factors could adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Hedging transactions

The Company may engage in hedging within the Portfolio. The use of hedging will not require the approval of Shareholders. If approved by the Board, the Company may utilise financial instruments such as forward contracts, options and interest rate swaps, caps and floors to seek to hedge against declines in the values of the Portfolio positions as a result of changes in currency exchange rates, certain changes in market interest rates and other events. It may not, however, be possible to hedge against a change or event at attractive prices or in sufficient size or at a price sufficient to protect the assets from the decline in value of the Portfolio positions anticipated as a result of such change or event, and the use of such hedging may result in lower returns on the Portfolio than would have occurred had such instruments not been utilised. In addition, it may not be possible to hedge against certain risks at all.

RISKS RELATING TO THE INVESTMENT MANAGER AND THE ASSET MANAGER

The Company is dependent on the expertise of the Investment Manager and the Asset Manager and their key personnel to properly evaluate attractive investment opportunities and to implement its investment strategy

In accordance with the Investment Management Agreement, the Investment Manager is responsible for the management of the Company's underlying investments. The Asset Manager will be responsible for ongoing asset management of vessels acquired by the Company or any of its SPV(s). The Company does not have employees and its Directors are appointed on a non-executive basis. The Investment Manager will have responsibility, inter alia, for the identification of suitable investment opportunities, the conduct of appropriate due diligence and, should the Board sanction and approve an acquisition, the conduct of the acquisition process. The Investment Manager will also be responsible for identifying suitable Charter counterparties and agreeing terms with them. The Asset Manager will have responsibility for ongoing asset management of the vessels acquired by each SPV. Accordingly, the success of the Company will depend on the respective abilities of the Investment Manager and the Asset Manager to carry out their respective roles.

The future ability of the Company to successfully pursue its investment policy may depend on the ability of the Investment Manager and Asset Manager to retain their existing key personnel and/or for each to recruit in good time individuals of similar experience and calibre, of which there can be no guarantee. Whilst the Investment Manager and Asset Manager have endeavoured to ensure that their personnel are suitably incentivised, the retention of key personnel cannot be guaranteed. Key personnel are not subject to restrictions on their departure from either the Investment Manager or the Asset Manager.

Events impacting but not entirely within the Company's, the Investment Manager's or the Asset Manager's control, such as financial performance, being acquired or making acquisitions or changes to internal policies and structures could in turn affect the ability to retain key personnel.

The Company is also subject to the risk that the Investment Management Agreement may be terminated and that no suitable replacement investment manager will be found. If the Investment Management Agreement is terminated and a suitable replacement is not secured in a timely manner or key personnel of the Investment Manager are not available to the Company with an appropriate time commitment, the ability of the Company to execute its investment strategy or achieve its investment objective may be adversely affected.

Past performance information is not necessarily indicative of future results

Information contained in this document relating to the past performance of the Investment Manager is provided for illustrative purposes only and is not indicative of the likely performance of the Company. Such past performance information has not been independently reviewed or audited for the purposes of inclusion in this document. Past performance is not necessarily indicative of future results.

In considering the past performance information contained in this document, prospective investors should bear in mind that past performance is not necessarily indicative of future results and there can be no assurance that the Company will achieve comparable results or be able to avoid losses.

Conflicts of Interest

The Tufton Group and any of its officers, directors, employees, agents and affiliates and any person or company with whom they are affiliated or by whom they are employed (together "Interested Parties" and each an "Interested Party") may be involved in activities which give or may give rise to conflicts of interest with the Company. In particular, the Interested Parties provide investment management and investment advice in relation to other funds/clients of the Tufton Group's asset-backed investments group ("Tufton ABI"). While Tufton ABI does not expect to manage funds with a similar investment policy to that of the Company there can be no assurance of this.

Under the terms of the Investment Management Agreement, the Investment Manager has confirmed that it will take all reasonable steps to avoid conflicts of interest. If such conflicts cannot be avoided, the Investment Manager is obliged to take all reasonable steps to identify, manage and monitor and (where applicable) disclose promptly to the Board conflicts of interest in order to prevent them from adversely affecting the interests of the Company and Shareholders and to ensure that the Company is treated fairly.

MARKET RISKS

General market risk

Market risk is risk associated with changes in market prices or rates. There are certain general market conditions in which any investment strategy is unlikely to be profitable. The Company does not have the ability to control or predict such market conditions.

General economic and market conditions, such as currencies, interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws and regulations, trade barriers, currency exchange controls and national and international political circumstances, including the impact of the UK leaving the EU following the eventual Brexit, may affect the price level, volatility and liquidity of securities' prices and result in losses in the value of the Company's assets. In particular, any inability of an SPV to access equity or credit may have an adverse effect on its ability to fully exploit its business opportunities, which in turn may impact on its value and, thus, the performance of the Portfolio.

The Company's investments will be concentrated in a specialised industry

The majority, if not all, of the Company's investments will (through SPVs) be vessels used in the shipping industry and so the Company will be subject to the risk associated with concentrating its investments in this asset class. Fluctuations in the supply of and demand for, and residual value of, such vessels may adversely affect returns to the Company, which may have a corresponding adverse effect on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

Worldwide operations, geopolitical risk and international trade policies

The Company intends to acquire vessels and enter into Charter agreements that allow for worldwide operation of the vessels on a medium to long term basis. The vessels will call at ports, and the charterers will be, located in various countries around the world, including emerging markets. The Company's business is therefore subject to political, economic and social conditions of the countries where these ports and charterers are located. For example, the Company may be exposed to risks of political unrest, war and economic and other forms of instability, such as natural disasters, epidemics, widespread transmission of communicable or infectious diseases, natural disasters, terrorist attacks, changes in government policies, taxation, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of the countries in which the Company operates and other events beyond its control which may adversely affect local economies, infrastructures and livelihoods. These events could result in disruption to charterers' business and seizure of, or damage to, customers' assets, or could give rise to difficulties to the Company in protecting its assets, including by enforcing its rights, in these jurisdictions. These events could also cause the partial or complete closure of particular ports and sea passages, such as the Suez or Panama canals, potentially resulting in higher costs, vessel delays and cancellations on some lines. Furthermore, these events could lead to reductions in the growth rate of world trade, which could reduce demand for vessels and/or services. The political, economic or social conditions in any of these countries may have an effect on charterers' business and financial conditions which may affect the creditworthiness of such charterers, and increase the risk of default by the charterer, which could adversely impact lease income under the Charter agreements for the vessels and, consequently, affect the stability of income flow to the Company.

Furthermore, during the period for which these Charter agreements subsist, political and economic change may occur at a different pace or in a different direction to that anticipated by the Company at the time the investment was made.

The value of the Company's investments could be adversely affected by abrogation of (or changes to) international agreements and national laws (in particular in relation to international conventions relating to the arrest of vessels) by the countries in which the vessels operate, failure of the designated national and international authorities to enforce compliance with the same laws and agreements, failure of local, national and/or international organisations to carry out their duties prescribed to them under the relevant agreements, revisions of these laws and agreements which dilute their effectiveness or conflicting interpretation of provisions of the same laws and agreements.

Additionally significant escalation of recent international trade policies of imposing import trade tariffs by both China and the United States could have an adverse impact on the Company's business.

Global financial markets

The global financial markets have experienced extreme volatility and disruption in recent years, as evidenced by a lack of liquidity in the equity and debt capital markets, significant write-offs in the financial services sector, the repricing of credit risk in the credit market and the failure of major financial institutions. Despite actions of government authorities, these events contributed to general economic conditions that have materially and adversely affected the broader financial and credit markets and reduced the availability of debt and equity capital.

The default of any financial institution could lead to defaults by other institutions. Concerns about, or default by, one financial institution could lead to significant liquidity problems, losses or defaults by other institutions, because the credit quality and integrity of many financial institutions may be closely related as a result of their credit, trading, clearing or other relationships. This risk is sometimes referred to as "systemic risk" and may adversely affect brokers, lending banks and other trading counterparties with whom the Company deals. The Company may, therefore, be exposed to systemic risk when it deals with various third parties, such as brokers, lending banks and other trading counterparties whose creditworthiness may be interlinked.

Further, recurring market deterioration may materially adversely affect the ability of a borrower (including SPVs through which the Company will hold vessels in which it is invested) to service its debts or, if required, refinance its outstanding debt. Financial market disruptions may also have a negative effect on the valuations of the Company's vessels (and, by extension, on the ability to meet dividend payments and the NAV and/or the market price of the Shares), and on the potential for liquidity events involving its investments. In the future, non-performing assets in the Portfolio may cause the value of the Portfolio to decrease if the Company is required to write down the values of its investments. Adverse economic conditions may also decrease the value of collateral securing some of its loans. Conversely, in the event of sustained market improvement, the Company may have access to only a limited number of potential investment opportunities, which could also result in limited returns to Shareholders.

A negative change in economic conditions in emerging markets may lead to a significant drop in global demand thereby affecting charter rates and vessel values

Currently, China and other emerging market economies such as India are the key driving forces behind the increase in seaborne trade in certain shipping segments and the demand for maritime transportation and logistics as they are some of the world's fastest growing economies in terms of GDP. It cannot be assumed that such growth will be sustained or that the Chinese economy will not experience a material decline from current levels in the future. A downturn in key emerging market economies could translate into reduced demand for shipping services and lower charter rates industry wide, thereby adversely affect the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares. In addition significant escalation of recent international trade policies of imposing trade tariffs by both China and the USA could have an adverse impact on the Company's business, financial condition, results of operations, ability to meet dividend payments and the NAV and/or the market price of the Shares.

RISKS RELATING TO AN INVESTMENT IN THE SHARES

An investment in the Shares carries the risk of loss of capital. The value of a Share can go down as well as up and Shareholders may receive back less than the value of their initial investment and could lose all of the investment

An investment in the Shares carries the risk of loss of capital. The value of a Share can go down as well as up and Shareholders may receive back less than the value of their initial investment and could lose all of the investment.

Shareholders have no right to have their Shares redeemed and/or repurchased by the Company and there can be no guarantee that a liquid market in the Shares will develop

Shareholders will have no right to have their Shares redeemed and/or repurchased by the Company at any time. While the Directors retain the right to effect repurchases and redemptions of Shares in the manner described in this document, they are under no obligation to use such powers at any time and Shareholders should not place any reliance on the willingness of the Directors so to act. Shareholders wishing to realise their investment in the Company may therefore be required to dispose of their Shares in the market. There can be no guarantee that a liquid market in the Shares will exist or that the Shares will trade at prices close to their underlying NAV. Accordingly, Shareholders may be unable to realise their investment at NAV per Ordinary Share or NAV per C Share (as the case may be) or at all.

The Ordinary Shares or C Shares may trade at a discount to the NAV per Ordinary Share or NAV per C Share and Shareholders may be unable to realise their investments through the secondary market at the NAV per Ordinary Share or NAV per C Share or at all

Either the Ordinary Shares and/or the C Shares may trade at a discount to NAV per Ordinary Share or NAV per C Share (respectively) for a variety of reasons, including due to market conditions or to the extent investors undervalue the activities of the Company. While the Directors may seek to mitigate any discount to NAV per Ordinary Share through buy backs and/or redemptions of Ordinary Shares only, there can be no guarantee that they will seek to do so or that such actions will be successful if they do and the Directors accept no responsibility for any failure of any such strategy to effect a reduction in any discount.

In the event that the Directors were to issue further Ordinary Shares in the future this could have a detrimental effect on the NAV of existing Ordinary Shares then in issue. The Directors will not, however, issue further Ordinary Shares at a discount to NAV without Shareholder approval.

Accordingly, Shareholders may be unable to realise their investment at NAV per Ordinary Share or at all.

Risks relating specifically to the C Shares

C Shares will be issued as separate classes of shares in the capital of the Company and will convert into Ordinary Shares at the Conversion Date. Pending conversion of such C Shares into Ordinary Shares, the portfolio of assets attributable to the C Shares will differ from the portfolio of assets attributable to the Ordinary Shares in terms of both performance (the assets in the portfolios will be different) and diversification (the portfolio of assets attributable to the C Shares may be more concentrated than the portfolio of assets attributable to the Ordinary Shares pending Conversion).

The Placing Programme and the Placing Programme Price

The Placing Programme is conditional upon the passing of the Resolutions at the Company's annual general meeting to be held on 24 October 2018. If the Resolutions are not passed, the Directors will not have sufficient authority to allot Ordinary Shares and/or C Shares in connection with the Placing Programme.

Whilst the Ordinary Shares to be issued pursuant to the Placing Programme will be issued at a premium to, and never lower than, the applicable published NAV per Ordinary Share at the time of issuance, the Placing Programme Price for the Ordinary Shares may be less than the quoted market price for the Ordinary Shares. The Placing Programme Price will be calculated by reference to the latest applicable published unaudited NAV per Ordinary Share. Such NAV per Ordinary Share will be determined on the basis of the information available to the Company at the time and may be subject to subsequent revisions. Accordingly, there is a risk that had such Placing Programme Price been calculated by reference to information that emerged after the calculation date, it could have been greater or lesser than the Placing Programme Price actually paid by the investors. If such Placing Programme Price should have been less than the Placing Programme Price actually paid, investors will have paid more than intended. If the Placing Programme Price should have been greater than the Placing Programme Price actually paid, investors will have paid less than intended and, in certain circumstances, the NAV per Ordinary Share of the existing Ordinary Share may have been diluted.

The basis upon which the C Shares of a relevant class will convert into Ordinary Shares of the relevant class will be calculated by reference inter alia to the NAV per Ordinary Share and the NAV per C Share at the Calculation Date. The applicable NAV per Ordinary Share and/or the applicable NAV per C Share may be less than the quoted market price for such Shares.

SFS quoted securities may experience higher volatility and carry greater risks than those listed on the Main Market.

Investments in shares traded on the SFS may have limited liquidity and may experience greater price volatility than shares listed on the premium segment of the Official List. Limited liquidity and high price volatility may result in Shareholders being unable to sell their Shares at a price that would result in them recovering their original investment.

RISKS RELATING TO REGULATION AND TAXATION

Changes in laws

Legal and regulatory changes could occur that may adversely affect the Company. Changes in the regulation of investment companies may adversely affect the Company's share price and the ability of the Company successfully to pursue its investment strategy.

The Company is not, and does not intend to become, registered in the U.S. as an investment company under the U.S. Investment Company Act and related rules

The Company has not, does not intend to, and may be unable to, become registered in the United States as an investment company under the U.S. Investment Company Act. The U.S. Investment Company Act provides certain protections to U.S. investors and imposes certain restrictions on companies that are registered as investment companies. As the Company is not so registered, and does not intend to register, none of these protections or restrictions is or will be applicable to the Company.

The Shares will be subject to purchase and transfer restrictions in the Issue and the Placing Programme and in secondary transactions as well as forced transfer provisions

In order to avoid both the Company being required to register under the U.S. Investment Company Act and the Company being subject to regulation under ERISA, the Company has imposed significant restrictions on the transfer of the Shares, which may materially affect the ability of Shareholders to transfer Shares in the United States or to U.S. Persons. The Shares may not be resold in the United States or to U.S. Persons. These restrictions may make it more difficult to resell the Shares and may have an adverse effect on the market value of the Shares.

Moreover, the Articles of Incorporation provide that no transfer to any person will be registered without the consent of the Directors if it would: (i) cause the Company's assets to be deemed "plan assets" for the purposes of the U.S. Plan Asset Regulations or the U.S. Code; (ii) give rise to an obligation on the Company to register as an "investment company" under the U.S. Investment Company Act or any similar legislation; (iii) give rise to an obligation on the Company to register under the U.S. Exchange Act, the U.S. Securities Act or any similar legislation; (iv) result in the Company not being considered a "foreign private issuer" as such term is defined in Rule 3b-4(c) under the U.S. Exchange Act; (v) result in a person holding Shares in violation of the transfer restrictions put forth in any Prospectus published by the Company, from time to time; (vi) cause the Company to be a "controlled foreign corporation" for the purposes of the U.S. Code; (vii) cause the Company to suffer any pecuniary disadvantage (including any excise tax, penalties or liabilities under ERISA or the U.S. Code); or (viii) result in any Shares being owned, directly or indirectly, by any person who is deemed to be a Non-Qualified Holder in accordance with article 10.7 of the Articles (each person described in (i) through (viii) above, a "Prohibited Person"), and in each of the cases described in (i) through (viii) above, only to the extent permitted under the Uncertificated Securities (Guernsey) Regulations 2009 or the CREST Rules.

If it shall come to the notice of the Directors that a Prohibited Person holds or is a beneficial owner of Shares; that any Shares are held or beneficially owned in a manner that would, in the absolute discretion of the Directors, prevent the Company from relying on the exemption from the obligation to register as an "investment company" under the U.S. Investment Company Act; or the holding or beneficial ownership of any Shares (whether on its own or in conjunction with any other Shares) would in the absolute discretion of the board of Directors cause the assets of the Company to be considered "plan assets" within the meaning of the U.S. Plan Asset Regulations, then any Shares which the Directors decide, in their absolute discretion, are Shares, which are held or beneficially owned as described above, must be dealt with as described the Articles.

The Company may become subject to regulation under ERISA

If 25 per cent. or more of any class of equity in the Company is owned, directly or indirectly, by U.S. Plan Investors that are subject to ERISA or Section 4975 of the U.S. Tax Code, the assets of the Company will be deemed to be "plan assets", subject to the constraints of ERISA and Section 4975 of the U.S. Tax Code. If this happens, transactions involving the assets of the Company could be subject to the fiduciary responsibilities of ERISA, the prohibited transaction provisions of ERISA and Section 4975 of the U.S. Tax Code and, among other things, the fiduciary of a plan subject to ERISA that is responsible for the plan's investment in the Shares could be liable for any ERISA violations by the Directors.

Changes in taxation

Any change in the Company's tax status, or in taxation legislation or practice in either Guernsey or the United Kingdom or any jurisdiction in which SPVs are resident, may affect the value of the investments held by the Company or the Company's ability to pursue its investment policy successfully or achieve its investment objective, or may alter the after-tax returns to Shareholders. Statements in this document concerning the taxation of Shareholders are based upon current Guernsey and UK and published practice, any aspect of which law and practice is, in principle, subject to change (potentially with retrospective effect), which change may adversely affect the ability of the Company to pursue its investment policy successfully or achieve its investment objective, and which may adversely affect the taxation of Shareholders.

Statements in this document take into account, in particular, the UK offshore fund rules contained in part 8 of the Taxation (International and Other Provisions) Act 2010. Should the Shares be regarded as being subject to the offshore fund rules this may have adverse tax consequences for certain UK resident Shareholders.

Adverse tax consequences to the Company could be derived from permanent establishment risks

The Company intends to conduct its operations in a manner that will not cause it to have a ''permanent establishment'' in any country or jurisdiction outside Guernsey. Likewise most or all SPVs will be incorporated and conduct operations in the Isle of Man. There can be no assurance that a particular country will not assert that the Company and/or any SPV has a permanent establishment in such country, and if such assertion were upheld, it could potentially result in adverse tax consequences to the Company and/or any SPV.

The Foreign Account Tax Compliance Act ("FATCA") and other similar exchange of information regimes including the impact of the Organisation for Economic Co-operation and Development's "Common Reporting Standard"

FATCA was enacted by the United States Congress in March 2010 and came into effect in 2013 (although implementation has been staggered). FATCA requires financial institutions to use enhanced due diligence procedures to identify U.S. Persons who have invested in either non-U.S. financial accounts or non-U.S. entities. Pursuant to FATCA, certain payments of (or attributable to) U.S.-source income, and (from 1 January 2019) the proceeds of sales of property that give rise to U.S.-source payments made to the Company, and (from the later of 1 January 2019 or the date of publication of certain final regulations) a portion of non-U.S.-source payments from certain non-U.S. financial institutions to the extent attributable to U.S.-source payments, will be subject to 30 per cent. withholding tax unless the Company agrees to certain reporting and withholding requirements, and certain Shareholders may themselves be subject to such withholding tax if they do not provide the Company with required information.

The Company intends to comply with Guernsey legislation implementing FATCA. As a result, Shareholders may be required to provide any information that the Company determines is necessary to allow the Company to satisfy its obligations under FATCA. However, under the intergovernmental agreement between the U.S. and Guernsey in relation to FATCA and Guernsey's implementation of that agreement, securities that are "regularly traded" on an established securities market, such as the Specialist Fund Segment, are not considered financial accounts and are not subject to reporting. For these purposes, the Shares will be considered "regularly traded" if there is a meaningful volume of trading with respect to the Shares on an on-going basis. Notwithstanding the foregoing, a Share will not be considered "regularly traded" and will be considered a financial account if the holder of the Share (other than a financial institution acting as an intermediary) is registered as the holder of the Share on the Company's share register. Such Shareholder will be required to provide information to the Company to allow the Company to satisfy its obligations under FATCA, although it is expected that whilst a Share is held in uncertificated form through CREST, the holder of that Share will likely be a financial institution acting as an intermediary. Additionally, even if the Shares are considered regularly traded on an established securities market, Shareholders that own Shares through financial intermediaries may be required to provide information to such financial intermediaries in order to allow the financial intermediaries to satisfy their obligations under FATCA. Notwithstanding the foregoing, the relevant rules under FATCA may change and, even if the Shares are considered regularly traded on an established securities market, Shareholders may, in the future, be required to provide information to the Company in order to allow the Company to satisfy its obligations under FATCA.

Failure by the Company to comply with FATCA, either pursuant to FATCA legislation or any applicable intergovernmental agreement could mean that the Company would become subject to a 30 per cent. withholding tax on certain U.S. source payments to the Company, which may have an adverse effect on the Company's performance.

Guernsey, along with approximately 100 jurisdictions, has implemented the Organisation for Economic Co-operation and Development's "Common Reporting Standard" ("CRS"). Certain disclosure requirements will be imposed in respect of certain Shareholders in the Company falling within the scope of the CRS. As a result, Shareholders may be required to provide any information that the Company determines is necessary to allow the Company to satisfy its obligations under such measures. Shareholders that own the Shares through financial intermediaries may instead be required to provide information to such financial intermediaries in order to allow the financial intermediaries to satisfy their obligations under the CRS.

The AIFMD may impair the ability of the Investment Manager to manage investments of the Company, which may materially adversely affect the Company's ability to implement its investment policy and achieve its investment objective

Based on the provisions of AIFMD and the Alternative Investment Fund Managers Regulations 2013 (SI 2013/1773) (the "AIFM Regulations"), the Board has been advised that the Company is an AIF within the scope of AIFMD and the AIFM Regulations. The Company operates as an externally managed AIF, with the Investment Manager being the Company's AIFM. The Company is a non-EEA AIF and the Investment Manager is an EEA AIFM. Currently, for the purposes of the AIFMD, the Investment Manager is a small authorised AIFM. The Investment Manager intends to apply to the FCA to become a "full scope" AIFM. If "full scope" status is granted, this will be announced by way of Regulatory Information Service and the Company will upload the relevant Article 23 disclosures to its website and appoint a depositary as required. The Investment Manager, in its capacity as the Company's AIFM, will also make the relevant notifications for the marketing of the Shares in the United Kingdom and elsewhere (if required).

The Investment Manager complies with various operational and transparency obligations in relation to the AIFMD in order to raise capital from EEA investors. In complying with these obligations, the Company may be required to provide additional or different information to or update information given to Shareholders and appoint or replace external service providers that the Company intends to use, including those referred to in this document. In addition, in requiring AIFMs to comply with these organisational, operational and transparency obligations, the AIFMD is likely to increase management and operating costs, and in particular regulatory and compliance costs, of the Company and/or the Investment Manager.

IMPORTANT INFORMATION

GENERAL

In assessing an investment in the Shares, investors should rely only on the information in this document and any supplementary prospectus published by the Company prior to Initial Admission. No person has been authorised to give any information or make any representations in relation to the Company other than those contained in this document and any such supplementary prospectus and, if given or made, such information or representations must not be relied upon as having been authorised by the Company, the Directors, the Investment Manager, the Asset Manager, Hudnall, N+1 Singer or any other person. Neither the delivery of this document nor any subscription or purchase of Shares made pursuant to this document shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since, or that the information contained herein is correct at any time subsequent to, the date of this document.

Applicants under the Offer for Subscription are strongly recommended to read and consider this document before completing an Application Form.

Apart from the responsibilities and liabilities, if any, which may be imposed on Hudnall by FSMA or the regulatory regime established thereunder or under the regulatory regime of any other jurisdiction, Hudnall accepts no responsibility whatsoever for the contents of this document or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Investment Manager, the Asset Manager, the Shares, the Issue or the Placing Programme. Hudnall accordingly disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of such document or any such statement.

Apart from the responsibilities and liabilities, if any, which may be imposed on N+1 Singer by FSMA or the regulatory regime established thereunder or under the regulatory regime of any other jurisdiction, N+1 Singer accepts no responsibility whatsoever for the contents of this document or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Investment Manager, the Asset Manager, the Shares, the Issue or the Placing Programme. N+1 Singer accordingly disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of such document or any such statement.

The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about and observe any such restrictions.

This document does not constitute, and may not be used for the purposes of, an offer or an invitation to apply for any Shares by any person: (i) in any jurisdiction in which such offer or invitation is not authorised; or (ii) in any jurisdiction in which the person making such offer or invitation is not qualified to do so; or (iii) to any person to whom it is unlawful to make such offer or invitation. The distribution of this document and the offering of Shares in certain jurisdictions may be restricted. Accordingly, persons into whose possession this document comes are required to inform themselves about and observe any restrictions as to the offer or sale of Shares and the distribution of this document under the laws and regulations of any jurisdiction in connection with any application for Shares, including obtaining any requisite governmental or other consent and observing any other formality prescribed in such jurisdiction. Save for the UK, no action has been taken or will be taken in any jurisdiction by the Company that would permit a public offering of Shares in any jurisdiction where action for that purpose is required, nor has any such action been taken with respect to the possession or distribution of this document other than in any jurisdiction where action for that purpose is not required.

The Shares are being offered and issued outside the United States in reliance on Regulation S. The Shares have not been nor will they be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States. In addition, the Company has not registered and will not register under the U.S. Investment Company Act. The Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering or the issue of the Shares or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the United States and the re-offer or resale of any of the Shares in the United States may constitute a violation of U.S. law.

The Articles of Incorporation contain restrictions on transfer of Shares as set out under the heading "Transfer of Shares" in paragraph 4.2.7 of Part 11 of this document.

GUERNSEY REGULATORY INFORMATION

The Company is a registered closed-ended collective investment scheme registered pursuant to the POI Law and RCIS Rules. The Commission, in granting registration, has not reviewed this document but has relied on specific warranties provided by the Administrator.

The Administrator has certain responsibilities under The Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999, as varied and supplemented from time to time, to verify the identity of investors. Failure to provide the necessary documentation may result in applications being rejected or in delays in the dispatch of documents under the Issue or the Placing Programme.

Pursuant to Data Protection Laws, the Company and/or its Registrar and/or the Administrator may hold personal data (as defined in the Data Protection Laws) relating to past and present Shareholders. The attention of investors is drawn to the Privacy Notice provided on the Company's website at www.tuftonoceanicassets.com.

INFORMATION TO DISTRIBUTORS

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("Directive 2014/65/EU"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing Directive 2014/65/EU; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the C Shares and the Ordinary Shares have been subject to a product approval process, which has determined that the C Shares to be issued pursuant to the Issue and any Ordinary Shares issued on conversion of those C Shares are: (i) compatible with an end target market of investors who meet the criteria of professional clients and eligible counterparties, each as defined in Directive 2014/65/EU; and (ii) eligible for distribution through all distribution channels as are permitted by Directive 2014/65/EU (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors should note that: the price of the C Shares and Ordinary Shares may decline and investors could lose all or part of their investment; the C Shares and Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the C Shares and Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue and/or the Placing Programme. Furthermore, it is noted that N+1 Singer and Hudnall will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Directive 2014/65/EU; or (b) a recommendation to any investors or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the C Shares and Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the C Shares and Ordinary Shares and determining appropriate distribution channels.

PRIIPS REGULATION

In accordance with the Packaged Retail and Insurance-based Investment Products (PRIIPS) Regulation (in force since January 2018) (the "PRIIPS Regulation") the Company is required to prepare a key information document ("KID") in respect of its Shares. These KIDs must be made available to retail investors prior to them making any investment decision and are available on the Company's website at http://www.tuftonoceanicassets.com/company-documents/. If you are distributing the Shares it is your responsibility to ensure the KIDs are provided to any clients that are "retail" clients.

The Company and the Investment Manager acknowledge that neither N+1 Singer nor Hudnall are manufacturers for the purposes of the PRIIPs Regulation. Neither of N+1 Singer or Hudnall make any representations, express or implied, or accepts any responsibility whatsoever for the contents of the KIDs prepared by the Company nor accepts any responsibility to update the contents of the KIDs prepared by the Company in accordance with the PRIIPS Regulation. Each of N+1 Singer and Hudnall accordingly disclaim all and any liability whether arising in tort or contract or otherwise which it or they might have in respect of the KIDs prepared by the Company.

The KIDs do not form part of this document and investors should note that the procedures for calculating the risks, costs and potential returns in the KIDs are prescribed by law. The figures in the KIDs may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed. It is a term of the Offer for Subscription that investors acknowledge that they have had an opportunity to consider the KID.

PRESENTATION OF INFORMATION

Market, economic and industry data

Market, economic and industry data used throughout this document is sourced from various industry and other independent sources. The Company and the Directors confirm that such data has been accurately reproduced and, so far as they are aware and are able to ascertain from information published from such sources, no facts have been omitted which would render the reproduced information inaccurate or misleading.

Currency presentation

Unless otherwise indicated, all references to "U.S. \$" or "cents" are to the lawful currency of the United States of America.

Definitions and glossary

A list of defined terms used in this document is set out at pages 185 to 192. A glossary is also provided at page 193.

Governing law

Unless otherwise stated, statements made in this document are based on the law and practice currently in force in England and Wales and/or the law and practice of Guernsey and are subject to changes therein.

Investment considerations

The contents of this document are not to be construed as advice relating to legal, financial, taxation, investment or any other matters. Prospective investors should inform themselves as to:

the legal requirements within their own countries for the subscription for, purchase, holding, transfer or other disposal of Shares;
any foreign exchange restrictions applicable to the subscription for, purchase, holding, transfer or other disposal of Shares which they might encounter; and
the income and other tax consequences which may apply in their own countries as a result of the subscription for, purchase, holding, transfer or other disposal of Shares.

Prospective investors must rely upon their own representatives, including their own legal advisers and accountants, as to legal, tax, investment or any other related matters concerning the Company and an investment in Shares.

An investment in Shares should be regarded as a long term investment. There can be no assurance that the Company's investment objective will be achieved.

This document should be read in its entirety before making any investment in the Shares. All Shareholders are entitled to the benefit of, are bound by and are deemed to have notice of, the provisions of the Memorandum and Articles of Incorporation, which investors should review.

Reference to credit ratings (Regulation (EC) No 1060/2008)

The credit rating agencies providing ratings to securities referred to in this document (if any) are each established in the EU and registered under Regulation (EC) No. 1060/2008 (as amended). As such each such credit rating agency is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website in accordance with the CRA Regulations.

Website

The contents of the Company's or Investment Manager's website, insofar as they relate to the Company, the Issue, the Placing Programme or the Shares, do not form part of this document. Investors should base their decision whether or not to invest in the Shares on the contents of this document and any supplementary prospectus published by the Company prior to Admission alone.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements, including, without limitation, statements containing the words "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or similar expressions. Such forward-looking statements involve unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Given these uncertainties, prospective investors are cautioned not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as at the date of this document. Subject to its legal and regulatory obligations (including under the Prospectus Rules), the Company expressly disclaims any obligations to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Prospectus Rules and the Disclosure Guidance and Transparency Rules.

Nothing in the preceding two paragraphs should be taken as limiting the working capital statement in paragraph 9 of Part 11 of this document.

FOR THE ATTENTION OF PROSPECTIVE INVESTORS IN THE EUROPEAN ECONOMIC AREA

In relation to each Relevant Member State (other than the UK), no C Shares have been offered or will be offered pursuant to the Issue and no Shares will be offered pursuant to the Placing Programme to the public in that Relevant Member State prior to the publication of a document in relation to the Shares which has been approved by the competent authority in that Relevant Member State, or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that offers of Shares to the public may be made at any time without the prior approval of Hudnall and N+1 Singer under the following exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State:

to any legal entity which is a "qualified investor" as defined in the Prospectus Directive;
to fewer than 100, or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive (as defined below), 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) in such Relevant Member State; or
in any other circumstances falling within Article 3(2) of the Prospectus Directive with the prior consent of Hudnall and N+1 Singer

provided that no such offer of Shares shall result in a requirement for the publication of a document pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a Relevant Member State (other than the UK) and each person who initially acquires any Shares or to whom any offer is made under the Issue will be deemed to have represented, acknowledged and agreed that it is a "qualified investor" within the meaning of Article 2(1)(c) of the Prospectus Directive.

For these purposes, the expression an "offer to the public" in relation to any offer of Shares in any Relevant Member State means a communication in any form and by any means presenting sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC (and the amendments thereto, including Directive 2010/73/EU) (the "2010 PD Amending Directive"), to the extent implemented in the Relevant Member State and includes any relevant implementing measure in each Relevant Member State.

In addition, Shares will only be offered to the extent that Shares: (i) are permitted to be marketed into the relevant EEA jurisdiction pursuant to the AIFM Directive (if and as implemented into local law); or (ii) can otherwise be lawfully offered or sold (including on the basis of an unsolicited request from a professional investor). Each person who initially acquires Shares or to whom any offer is made will be deemed to have represented, warranted to and agreed with Hudnall or N+1 Singer (as the case may be) and the Company that: (i) it is a "qualified investor" within the meaning of the law in that relevant member state implementing Article 2.1(c) of the Prospectus Directive; and (ii) if that relevant member state has implemented the AIFM Directive, that it is a person to whom Shares in the Company may lawfully be marketed under the AIFM Directive or under the applicable implementing legislation (if any) of that Relevant Member State.

FOR THE ATTENTION OF PROSPECTIVE INVESTORS IN GUERNSEY

The Shares may only be promoted in or from within the Bailiwick of Guernsey by persons regulated by the Guernsey Financial Services Commission as licensees under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, (as amended). Persons appointed by the Company and not licensed may not promote the Company in Guernsey to private investors and may only distribute and circulate any document relating to the Shares in Guernsey to persons regulated as licensees under the Protections of Investors (Bailiwick of Guernsey) Law, 1987 (as amended), the Banking Supervision (Bailiwick of Guernsey) Law, 1994, the Insurance Business (Bailiwick of Guernsey) Law, 2002 or the Regulation of Fiduciaries, Administration Business and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000, and provided that the provisions of Section 29(1)(cc) of the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) are satisfied. Promotion of the Shares in Guernsey may not be made in any other way.

FOR THE ATTENTION OF PROSPECTIVE INVESTORS IN JERSEY

This document may be circulated in Jersey only by persons who are registered by the Jersey Financial Services Commission in accordance with the Financial Services (Jersey) Law 1998, as amended ("FSL") for the conduct of financial services business and the distribution of this document, or are exempt from such registration in accordance with the FSL. In addition, this document may be circulated in Jersey only to persons similar to those to whom, and in a manner similar to that in which, it is for the time being circulated in the United Kingdom.

The distribution of this document in other jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions.

FOR THE ATTENTION OF PROSPECTIVE INVESTORS IN SWITZERLAND

The Company has not been licensed for distribution with the Swiss Financial Market Supervisory Authority (''FINMA'') as a foreign collective investment scheme pursuant to Article 120 of the Swiss Federal Act on Collective Investment Schemes of 23 June 2006, as amended (''CISA''). Also, the Company has not appointed a Swiss paying agent and representative and therefore may not be distributed in Switzerland (as defined by Art. 3 para. 1 CISA). Accordingly, in Switzerland the Shares offered pursuant to the Issue will only be offered and sold to prudentially regulated financial institutions pursuant to Article 10 para. 3 lit. a and b CISA; in addition, the Shares offered pursuant to the Issue may be sold under the reverse solicitation-exemption pursuant to Article 3 para. 2 lit. a CISA. This document and any other offering material relating to the Shares may only be handed out within these restrictions. Investors in the Shares pursuant to the Issue do not benefit from the specific investor protection provided by CISA and the supervision by the FINMA. The Shares are not publicly offered within the meaning of article 652a or 1156 of the Swiss Code of Obligations. As a consequence, this document is not a prospectus within the meaning of these provisions and may therefore not comply with the information standards required thereunder.

This document is not a listing prospectus according to article 27 et seq. of the Listing Rules of the SIX Swiss Exchange and may therefore not comply with the information standards required thereunder or under the listing rules of any other Swiss stock exchange.

VOLUNTARY COMPLIANCE WITH THE LISTING RULES

The Listing Rules applicable to closed-ended investment companies which are listed on the premium listing segment of the Official List of the UKLA do not apply to the Company. The Company is subject to the LSE Admission Standards whilst traded on the SFS. In addition, the Directors have resolved that, as a matter of best practice and good corporate governance, the Company will voluntarily comply with the following key provisions of the Listing Rules:

the Company is not required to comply with the Listing Principles set out at Chapter 7 of the Listing Rules. Nonetheless, the Company will comply with these Listing Principles;
the Company is not required to appoint a listing sponsor under Chapter 8 of the Listing Rules. It has appointed Hudnall and N+1 Singer as joint brokers and financial advisers to guide the Company in understanding and meeting its responsibilities in connection with Admission and also for compliance with Chapter 10 of the Listing Rules relating to significant transactions, with which the Company intends to voluntarily comply;
the Company is not required to comply with the provisions of Chapter 9 of the Listing Rules regarding continuing obligations. The Company will comply with the following provisions of Chapter 9 of the Listing Rules: (i) Listing Rule 9.3 (Continuing obligations: holders); (ii) Listing Rule 9.5 (Transactions); (iii) Listing Rule 9.6.4 to Listing Rule 9.6.21 other than Listing Rule 9.6.19(2) and Listing Rule 9.6.19(3) (Notifications); (iv) Listing Rule 9.7A (Preliminary statement of annual results and statement of dividends); and (v) Listing Rule 9.8 (Annual financial report);
the Company is not required to comply with the provisions of Chapter 11 of the Listing Rules regarding related party transactions. The Company will adopt a related party policy (in relation to which N+1 Singer and Hudnall, as financial advisers, will guide the Company) which shall apply to any transaction which it may enter into with any Director, the Investment Manager, the Asset Manager or any of their affiliates which would constitute a "related party transaction" as defined in, and to which would apply, Chapter 11 of the Listing Rules. In accordance with its related party policy, the Company shall not enter into any such related party transaction without first obtaining: (i) the approval of a majority of the Directors who are independent of the relevant related party; and (ii) a fairness opinion or third-party valuation (as appropriate) in respect of such related party transaction from an appropriately qualified independent adviser. This policy may only be modified with Shareholder approval. For the avoidance of doubt arrangements and agreements entered into between SPVs and the Asset Manager and/or Marine Services (IOM) Limited shall not be related party transactions for the purposes of this policy;
the Company is not required to comply with the provisions of Chapter 12 of the Listing Rules regarding market repurchases by the Company of its Shares. Nonetheless, the Company has adopted a policy consistent with the provisions of Listing Rules 12.4.1 and 12.4.2;
the Company is not required to comply with the provisions of Chapter 13 of the Listing Rules regarding contents of circulars. The Company however will comply with the following provisions of Chapter 13 of the Listing Rules: (i) Listing Rule 13.3 (Contents of all circulars); (ii) Listing Rule 13.4 (Class 1 circulars); (iii) Listing Rule 13.5 (Financial information in Class 1 Circulars); (iv) Listing Rule 13.7 (Circulars about purchase of own equity shares); and (v) Listing Rule 13.8 (Other circulars); and
the Company is not required to comply with the provisions of Chapter 15 of the Listing Rules (Closed-Ended Investment Funds: premium listing). Nonetheless, the Company will comply with the following provisions of Chapter 15 of the Listing Rules: (i) Listing Rule 15.4.2 to Listing Rule 15.4.11 (Continuing obligations); (ii) Listing Rule 15.5 (Transactions); and (iii) Listing Rule 15.6 (Notifications and periodic financial information).

The Company has adopted a voluntary share dealing code for the Directors and the Board is responsible for taking all proper and reasonable steps to ensure compliance with the share dealing code by the Directors.

The Specialist Fund Segment is an EU regulated market.

The Specialist Fund Segment securities are not admitted to the Official List. Therefore the Company has not been required to satisfy the eligibility criteria for admission to listing on the Official List and is not required to comply with the Listing Rules. The London Stock Exchange has not examined or approved the contents of this document.

It should be noted that the UK Listing Authority does not have the authority to monitor the Company's voluntary compliance with the Listing Rules applicable to closed-ended investment companies which are listed on the Specialist Fund Segment nor will it impose sanctions in respect of any failure of such compliance by the Company.

EXPECTED TIMETABLE

Expected Issue Timetable
Placing and Offer for Subscription opens	25 September 2018
Latest time and date for applications under the Offer for Subscription	11.00 a.m. on 10 October 2018
Latest time and date for commitments under the Placing	3.00 p.m. on 10 October 2018
Announcement of the results of the Issue	12 October 2018
Admission and dealings in the C Shares commence	8.00 a.m. on 16 October 2018
Crediting of CREST stock accounts in respect of the C Shares	16 October 2018
Share certificates despatched in respect of the C Shares	week commencing 22 October 2018 (or as soon as possible thereafter)
Expected Placing Programme Timetable
Placing Programme opens	25 September 2018
Publication of Placing Programme Price in respect of each Subsequent Placing	as soon as practicable following the closing of each Subsequent Placing pursuant to the Placing Programme
Admission and crediting of CREST stock accounts in respect of each Subsequent Placing	as soon as practicable following the allotment of Shares pursuant to the Placing Programme
Share certificates despatched in respect of Shares issued pursuant to the Placing Programme	as soon as practicable following the allotment of Shares pursuant to the Placing Programme

Placing Programme closes and last date for Shares to be admitted pursuant to the Placing Programme 24 September 2019

The dates and times specified are subject to change without further notice. All references to times in this document are to London time unless otherwise stated.

ISSUE STATISTICS AND PLACING PROGRAMME STATISTICS

Issue Statistics
Issue Price	US\$1.00
Target number of C Shares being issued*	100 million
Estimated gross proceeds of the Issue*	US\$100 million
Estimated net proceeds of the Issue*	US\$98 million
Net Asset Value per C Share at Initial Admission	US\$0.98

* The Company is targeting an Issue of up to US\$100 million with the potential for the Directors to increase the size of the Issue to up to US\$150 million, subject to investor demand. The number of C Shares to be issued pursuant to the Issue, and therefore the gross proceeds and net proceeds of the Issue, is not known as at the date of this document but will be notified by the Company via a Regulatory Information Service prior to Initial Admission.

Placing Programme Statistics

Maximum size of the Placing Programme 200 million Ordinary Shares and/or

The dealing codes for the Ordinary Shares will be as follows:

200 million C Shares (exclusive of C Shares issued pursuant to the Issue)

Placing Programme Price in respect of the Ordinary Shares, not less than the latest published Net Asset Value per Ordinary Share at the time of issue, or US\$1.00 per C Share for any issue of C Shares

DEALING CODES

ISIN GG00BDFC1649 SEDOL BDFC164 Ticker SHIP The dealing codes for the C Shares will be as follows: ISIN GG00BG0QZS28 SEDOL BG0QZS2 Ticker SHPC

DIRECTORS, MANAGEMENT AND ADVISERS

Directors	Robert King (Chairman) Stephen Le Page Paul Barnes
	all of the registered office below:
Registered Office	3rd Floor 1 Le Truchot St Peter Port Guernsey GY1 1WD
Investment Manager and AIFM	Tufton Oceanic Ltd. Albermarle House 1 Albermarle Street London W1S 4HA
Asset Manager	Oceanic Marine Management Limited 142 Franklin Roosevelt P.O Box 51309 CY-3504 Limassol Cyprus
Administrator and Company Secretary	Maitland Administration (Guernsey) Limited 3rd Floor 1 Le Truchot St Peter Port Guernsey GY1 1WD
Joint Placing Agent and Financial Adviser	Hudnall Capital LLP Adam House 7-10 Adam Street London WC2N 6AA
Joint Placing Agent and Financial Adviser	Nplus1 Singer Advisory LLP 1 Bartholomew Lane London EC2N 2AX
Solicitors to the Company as to English Law	Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU
Legal Advisers to the Company as to Guernsey Law	Carey Olsen (Guernsey) LLP Carey House Les Banques St. Peter Port Guernsey GY1 4BZ
Solicitors to the Joint Placing Agents and Financial Advisers	Norton Rose Fulbright LLP 3 More London Riverside London SE1 2AQ

Registrar	Computershare Investor Services (Guernsey) Limited 1st Floor, Tudor House Le Bordage St Peter Port Guernsey GY1 1DB
Receiving Agent	Computershare Investor Services PLC Corporate Action Projects Bristol BS99 6AH
Auditor and Reporting Accountant	PricewaterhouseCoopers CI LLP Royal Bank Place 1 Glategny Esplanade St Peter Port Guernsey GY1 4ND
Principal Bankers	Royal Bank of Scotland International Limited Royal Bank Place 1 Glategny Esplanade St Peter Port Guernsey

GY1 4BQ

PART 1 INFORMATION ON THE COMPANY

1. INTRODUCTION

The Company was incorporated with limited liability in Guernsey under the Companies Law on 6 February 2017 as a closed-ended company limited by shares. The Company invests in a diversified Portfolio of commercial sea-going vessels utilising a variety of employment/Charter strategies.

The Company's investment manager is Tufton Oceanic Ltd. which is authorised and regulated by the FCA and also acts as the Company's AIFM for the purposes of the AIFMD. Tufton has been a specialist fund manager in the maritime and energy markets since 2000 and as at 30 June 2018 had assets under management of c. US\$1.3 billion2. The Company has an independent board of non-executive directors.

The Ordinary Shares in the Company were admitted to trading on the Specialist Fund Segment of the Main Market in December 2017 in conjunction with a US\$91 million fundraising at IPO. As at the date of this document, and in accordance with its stated investment objective and investment policy, the Company has acquired, or committed to acquire, seven vessels and has now fully invested the net proceeds of the IPO. The Company has also declared its maiden dividend of US\$0.015 per Ordinary Share in accordance with its stated dividend policy.

Set out in Part 9 of this document are the extracts from the audited accounts of the Company for the period since incorporation to 30 June 2018.

Set out in Section A of Part 6 of this document are valuation certificates prepared by VesselsValue valuing six vessels that the Company has acquired, or committed to acquire, to-date. Set out in Section B of Part 6 of this document is a valuation report prepared by Grieg Shipbrokers valuing the Company's seventh vessel. The Company confirms that no material changes have occurred between the date of the respective valuations in the Valuation Reports and the date of this document.

The Company is planning to raise up to US\$100 million by the issue of C Shares, with the potential for the Directors to increase the size of the Issue up to US\$150 million, subject to investor demand, and also to instigate a Placing Programme that will permit the Company to issue up to a further 200 million Ordinary Shares and/or 200 million C Shares over the next 12 months.

2. INVESTMENT OBJECTIVE AND POLICY

Investment Objective

The Company's investment objective is to provide investors with an attractive level of regular and growing income and capital returns through investing in secondhand commercial sea-going vessels.

Investment Policy

In order to achieve its investment objective, the Company will invest in a diversified Portfolio of secondhand commercial sea-going vessels.

The Company will make investments through one or more underlying SPV(s) over which the Company will exercise control with regards to investment decisions and which will mainly be wholly owned by the Company and may be held through an intermediate holding company. The Company may from time to time invest through vehicles which are not wholly owned by it. In such circumstances, the Company will seek to secure controlling rights over such vehicles through shareholder agreements or other legal arrangements.

The Company will at all times invest and manage its assets in a manner which is consistent with the objective of diversifying investment risk across the main vessel classifications ("Segments") in the shipping industry.

² Unaudited figures derived from the Tufton Group's management information.

Investment Restrictions

The Company observes the following investment restrictions calculated, where relevant, at the point of investment:

No single vessel will represent more than 25 per cent. of Net Asset Value.
In terms of employment strategy, no investment will be made that results in the exposure to the spot market, (being the market in which vessels are employed using single voyage employment contracts ("Spot Charters") (the "Spot Market")), accounting for more than 25 per cent. of Net Asset Value.
No investment will be made that results in any shipping Segment (i.e. Tankers, General Cargo, Containerships, Bulkers) accounting for more than 50 per cent. of Net Asset Value.
The Company will not invest in cruise ships.
The Company will not invest in other closed ended investment companies.
No vessel will be registered under the laws of a country which is not included in the white list of the Paris Memorandum of Understanding (or the equivalent of this list), or if doing so would be contrary to any sanction or prohibition imposed by the United Nations, the United States, the European Union or the United Kingdom.

For the purposes of clarity it should be noted that where the above mentioned investment restrictions refer to a percentage of NAV, this is to be measured in respect of the Company's investment in the relevant SPV at the time of investment only.

Borrowing Policy

The Company may, for investment purposes, employ leverage at the SPV level where there is free cashflow generated from contracted vessel employment to counterparties which are considered creditworthy. Any such loans will be subject to the following restrictions:

leverage will be at the SPV level without recourse to the Company or to other SPVs;
it is anticipated that on an ongoing basis, consolidated Company gearing (consolidated loans to consolidated Charter-Free Value) will not be greater than 40 per cent. "Charter-Free Value" is the market value of one or more vessels excluding the value of any existing Charter in respect of such vessel or vessels;
the loan to Charter-Free Value ratio in any SPV at the time of loan drawdown will not be greater than 50 per cent;
the repayment profile of any loan will not be greater than the term of the underlying contracted Charter cashflow;
the loan to Charter-Free Value ratio at any SPV will be further constrained such that the free cashflow generated by the vessel employment plus the expected scrap value of the vessel (where relevant) will be sufficient to amortise the loan in full;
where underlying Charter cashflow is of a fixed rate nature, the Investment Manager will seek to use interest rate swaps or fixed rate loans at the SPV level to provide for a known rate of interest under the terms of the loan agreement for all or part of the loan term. All security and other margin requirements under such interest rate swaps will be secured under the standard loan security arrangements; and
any refinancing exposure will be subject to the restrictions outlined above.

Short term leverage may be utilised at the Company or intermediate holding company level for working capital or bridging purposes, but only to the extent that it is consistent with the AIFM's regulatory status and subject always to the consolidated Company gearing limits outlined above. Any such bridging finance will be short-term and not structural in nature.

The timing of the deployment of leverage is at the discretion of the Board, in consultation with the Investment Manager.

Hedging and derivatives

As part of the Company's interest rate risk management, the Company may engage in interest rate hedging at the SPV level (by using interest rate swaps or fixed rate loans to provide for a known rate of interest under the terms of a loan agreement either for all or part of any loan term) or otherwise seek to mitigate the risk of interest rate changes. All security and other margin requirements under such interest rate swaps will be secured under standard loan security arrangements.

Shipping assets are generally valued in and earn US\$. Therefore, there will be no material currency risk. However, the Company may make limited investments denominated in currencies other than US\$ including Sterling and Euros. In the event of the Company making such investments, the Investment Manager will use its judgement, in light of the Company's investment policy, in recommending whether or not to effect any currency hedging in relation to any such investments.

In addition to interest rate and currency hedging (as described above) the Company (through its SPV(s)) may enter into other shipping specialised hedging arrangements, such as bunker hedging against the cost of fuel exposure and hedging through Forward Freight Agreements ("FFAs") against freight market exposure.

Cash management

Pending investment, cash will be temporarily held as cash and/or invested in cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having a single –A (or equivalent) or higher credit rating as determined by an internationally recognised rating agency.

The Company has an execution-only brokerage account with Canaccord Genuity Wealth Management in Guernsey which is used to place surplus cash with financial institutions on the instruction of the Investment Manager.

Amendments to and compliance with the investment policy

No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.

In the event of a breach of the investment policy set out above, the Investment Manager shall inform the Board upon becoming aware of the same and if the Board considers the breach to be material, notification will be made to a Regulatory Information Service.

3. INVESTMENT OPPORTUNITY AND STRATEGY

Reproduced in Part 2 of this document is a report from VesselsValue, a leading ship valuation provider, which considers the world shipping market in the context of the Company's investment policy. Part 3 of this document contains the Investment Manager's views as to why there continues to exist an attractive opportunity for the Company to achieve its investment objective.

The Company's investments will be diversified across the core shipping Segments in line with where the Investment Manager identifies attractive opportunities with the intention of the Portfolio benefiting from a mix of strong cash yield and moderate capital gain potential.

The Investment Manager anticipates that the continuing focus of investment will be on the Containership, Tanker and General Cargo Segments with opportunistic investments in the Bulker Segment. The Portfolio will continue an emphasis on long term Bareboat and Time Charters strategies.

On the basis that the Issue raises US\$100 million it is anticipated that the net proceeds of the Issue will be invested within 6-9 months of Initial Admission and will be represented by approximately 8 vessels.

The Company may also, should the Investment Manager consider it to be in the best interests of Shareholders, dispose of any of its investments and re-invest the net proceeds in accordance with the Company's investment policy.

For further details on the Investment Manager's investment process please see the section headed "Investment Process" at paragraph 2 of Part 4 of this document.

4. CURRENT TRADING AND PROSPECTS

Following the successful IPO in December 2017, the Company has invested into 4 feeder Containerships all of which are engaged on medium term time Charters with an investment grade container operator. Total capital committed on these 4 vessels was US\$43.3 million of which US\$20.5 million was deployed in February 2018 and US\$22.8 million in March 2018. The average annualised cash on cash yield for these 4 investments is in line with the Company's investment objective.

Vessel	Vessel Type and Year of Build	Place of registration	Acquisition Date	Earliest end of charter period	Expected end of charter period	Owning company
Swordfish	1700-TEU contain ership built 2008	Liberia	Feb '18	Apr '20		Apr '21 Swordfish Limited
Kale	1700-TEU contain ership built 2008	Liberia	Feb '18	Mar '20	Apr '21	Kale Limited
Patience	2500-TEU contain ership built 2006	Liberia	Mar '18	Mar '21	Sep '22	Patience Limited
Riposte	2500-TEU contain ership built 2009	Liberia	Mar '18	Mar '20	Mar '21	Riposte Limited

Following the end of the financial period ended 30 June 2018, the Company has:

acquired a 75 per cent. interest in a 2009 built mid-sized gas carrier (MGC) in a seven year Bareboat sale and leaseback transaction with a major gas tanker operator for US\$21.75 million (with an option to acquire the remaining 25 per cent. interest in due course). The transaction yields are in excess of the Company's investment objective over the term of the Bareboat Charter;
acquired a 2011 built Handysize Bulker for US\$10 million which is employed in an international pool of Handysize vessels. Whilst employment is in effect guaranteed by the pool as long as the vessel is operationally available, earnings will fluctuate with the overall pool performance. Estimated transaction yield (after fees) during the next 3 years is in line with the Company's investment objective; and
committed to acquire a 2010 built Handysize Bulker for US\$ 12.9 million which is employed on a fixed rate 2.0 – 2.5 year Time Charter to a major private bulker operator. The yield during the Time Charter is in excess of the Company's investment objective.

In order to facilitate the acquisition of the 2010 built Handysize Bulker and in addition to utilising the remaining proceeds of the Company's IPO, an affiliate of the Investment Manager has made available to LS Assets Limited, the Company's intermediate holding company, a US\$1.5 million unsecured credit facility on normal commercial terms and in accordance with the Company's borrowing policy. The Directors do not consider that this is a transaction to which the related party transaction rules apply.

The Directors intend to use the net proceeds of the Issue and/or any Subsequent Placing under the Placing Programme to acquire further suitable investments in accordance with the Company's investment objective and investment policy.

5. INVESTMENT MANAGER'S TRACK RECORD

Since 2015 the Investment Manager has, on behalf of its pension fund clients and the Company, invested \$776.3m3 in acquiring 50 secondhand cargo vessels (9 Chemical Tankers, 2 Product Tankers, 11 Handysize Bulker, 17 Containerships, 2 Suezmax Tankers, 2 Supramax Bulkers, 1 Heavy Lift Geared Multi-Purpose Vessel, 2 Midsized Gas Carriers and 4 General Cargo Vessels). The average cash yield, net of applicable management fees on the vessels is 12.6 per cent.

³ Unaudited figures derived from the Tufton Group's management information.

6. PIPELINE

The table below includes details of identified opportunities that are consistent with the Company's investment objective and investment policy.

Type	No o f vessels	Su b -type	Ag e ( (y) y)	Propose d employment p y	Price pe Pr r vessel (\$m) (\$m )	P/ DRC	N et et Yield	Net IRR
	1	\$7. 25m a cquisition of25% stake in N same ter erms as the initial 75% stake		n Neon held by seller / charter	84%	Unl ev ever ed 7y avg. = c13%	Unlever ed = 11. 4% Levered = 12.9% 9% (40% leverage e)
s ker an T	Up to 4	Sma ll Gas Car arrier s Built Sout outh Korea	19	5y BB back to privat e Scandi andinavian seller	8. 75	90%	Unl ev ever ed c. 20%	Unlever ed c.13%
	Up to 2	Chemic al Tanker al s Built Japan apan	7	5 y T C to private Eur uropean operator	16. 0	75%	Unl ev ever ed 5y avg. = c.13%	Unlevered c. 13%
s pi hsr eni at noC C	2	Su -Panam b anam ax Built Sout outh Korea	12	2 -3y 3y TC to a large Eur uropean operator	13. 0	75%	Unl ev ever ed = c13%	Unlever ed = c12%
rs ekl Bu	2	Handys i z e Bulkers Built Sout outh Korea	6	2 -3y 3y TC t o a large trading hous house or large private Eur uropean operator	13. 0	75%	Unl ev ever ed = c14%	Unlever ed = c13%
al o er rg en Ca G	Up to 3	Multi P urpos ur e Heavy Li Lift Built Chi hina	10 and 15	5y (15y old) and 10y BB (10y 10y old) to private Eur uropean operator	8. 0	68%	Unl ev ever ed 10y avg. = c. 14%	Unlever ed c.12%

TC = Time Charter; BB = Bareboat Charter

There can be no assurances that any of the investments mentioned above will be made or that the assumptions as outlined in the above illustrations in respect of potential acquisitions will prove to be correct. The Investment Manager, in any event, will continue to evaluate other potential investments in accordance with the Company's investment policy.

7. DIVIDEND POLICY AND TARGET RETURNS

The Company intends to pay dividends on a quarterly basis with dividends declared in January, April, July and October.

The Company declared its first dividend of 1.5 cents per Ordinary Share on 27 July 2018, which was paid on 17 August 2018. The Company intends to declare dividends from Q3 and Q4 earnings of 1.75 cents per Ordinary Share and thereby achieve the target of 5.0 cents per Ordinary Share in respect of its first calendar year. Going forward it is intended to continue quarterly dividends at 1.75 cents per Ordinary Share and to therefore achieve the targeted 7.0 cents per Ordinary Share per annum for future years. The target dividend distribution on the C Shares in their first year is expected to be 5.0 cents per C Share. Whilst it is intended that the conversion to Ordinary Shares will take place within the first year of the existence of the C Shares, if this is not the case then target distributions remain at 7.0 cents per C Share per annum thereafter.4

The Company continues to target an IRR of 12 per cent. per annum (net of expenses and fees)4 on a NAV basis on the original issue price over the long term.

⁴ This is a target only and not a profit forecast. There can be no assurance that the target can or will be met and should not be taken as an indication of the Company's expected or actual future results. Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company or assume that the Company will make any distributions at all and should decide for themselves whether or not the target dividend yield or IRR is reasonable or achievable. The target dividend yield is based on the IPO issue price of US\$1.00 per ordinary share.

8. VALUATION

Valuation of the Company's assets

The Company has and will continue to acquire vessels through SPVs. While the SPVs' accounts will be prepared in accordance with IFRS and will report the fair values of those vessels in their balance sheets, it is intended that the Company will conduct its business so as to be considered to be an investment company (as set out in IFRS 10) for accounting purposes and therefore the Company's accounts will not be prepared on a consolidated basis.

The assets of the Company will consist mainly of its holdings in the SPVs and surplus cash balances and will be valued quarterly on a fair value basis with gains and losses recognised in profit or loss according to IFRS. The Company will be subject to external audit on an annual basis.

In assessing the value to be represented in the financial reports of the Company, indications of value will be developed in accordance with IFRS 13 (Fair Value Measurement). IFRS 13 defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". The Board is ultimately responsible, on behalf of the Company, for determining the fair value of the underlying investments held by the Company.

The Company invests through an intermediate holding company and the valuation methodology set out in this paragraph 8 reflects this.

The value of any shipping asset comprises the Charter-Free Value of the vessel plus the value (positive or negative) of any Charter or lease contracts attached to the vessel.

Since many of the vessels in the key target Segments trade in the secondhand market on a regular basis and are of reasonably standard design and construction, it is possible to ascertain broker valuations for most Charter-Free vessels which can be provided through many brokers in the key shipping hubs around the world. For Charter-Free Values, the Investment Manager will use the leading online valuation provider VesselsValue (www.vesselsvalue.com) to which the Investment Manager has subscribed for the last six years and is the current system of choice of many investment analysts and commercial and investment banks active in shipping. VesselsValue provides daily updated and vessel specific valuation services based on automated valuation models. The system has various algorithms that factor in each vessel's type, technical features, age, cargo capacity, freight earnings, market sentiment and recent vessel sales. The models are recalibrated daily to reflect the latest transaction and earnings information, allowing for daily update of the valuations of all vessels in their database. However, when the Investment Manager ascertains that a VesselsValue Charter-Free Value requires an adjustment, the Investment Manager will make such adjustment with the consent of the Board. Adjustments may include but are not limited to those for investments in a vessel that VesselsValue is not aware of or the Investment Manager believes VesselsValue does not account for correctly.

Vessels owned by the Company will in most cases have term employment contracts either as Time Charters or as Bareboat Charters. Such Charters will vary in term but would typically be in the 2 – 8 years' range. As the shipping markets can be volatile over time, the value of such Charters will therefore either add to or detract from the open market Charter-Free Value of the vessel. Under a Time Charter (akin to a "wet lease" in aircraft terms), the vessel owner provides a fully operational and insured vessel for use by the charterer. By contrast, under a Bareboat Charter (akin to a "dry lease" in aircraft terms), the vessel owner provides only the vessel to the charterer who is responsible for crewing, maintaining, insuring and operating the vessel. For most of the common vessels types that the Company intends to invest in, there is a fluid Charter market reported daily by freight brokers on the basis of Time Charter rates. Where the Company engages in Bareboat Charters, a Time Charter Equivalent ("TCE") contracted rate will be established by adding back to the Bareboat rate the utilisation factor, operational costs, intermediate/special survey provisions, other incidental costs and broker commissions.

Once a contracted Time Charter or a calculated TCE rate and period is known, this can then be compared to the market benchmark TCE rate and the difference discounted at a published industry WACC (weighted average cost of capital) to establish a negative or positive value of the Charter. This is then added to the Charter-Free Value to ascertain a value with Charter. VesselsValue has developed an addin module that allows for the input of TCE details and then calculates the charter value on the basis of their market freight rate and costs databases. The model sources the most appropriate benchmark TCE rates and WACC for the transaction in question.

There will be cases where the Company might invest in vessels which are (i) of a specialised nature and therefore fall out of the scope of VesselsValue or other mainstream brokers and/or (ii) where contracted employment does not have an available reference benchmark in the freight brokerage community. In such instances, the Company will always seek specialist broker valuations, but in the absence of that the Investment Manager will make its own assessment of value in accordance with its internal valuation policy for such cases. Such assessment will be based on the sum of (a) the present value of the bareboat equivalent of any contracted employment plus (b) the present value of the estimated value of the vessel at the end of any contracted employment in (a) above based on a straight line depreciated replacement cost methodology.

Where there is a long term Bareboat Charter in place for a specialised vessel then a discounted cash flow will be calculated for the remainder of the Charter period at the discount rate implied by the relevant transaction.

To the extent that a valuation of any vessel published in a financial report of the Company differs from that provided under the above policy, an explanation of the reason for this variation will be included in the relevant report.

The Investment Manager will periodically review the services provided by VesselValue and other similar service providers. In the event that the service provided by VesselsValue becomes unavailable or is deemed unsatisfactory the Investment Manager will agree with the Company an alternative valuation methodology and/or service provider.

The Investment Manager shall be able to amend the valuation policy from time to time, subject to Board consent. The Audit Committee will biannually review the reasonableness of the valuations included in the valuation analysis in order to be satisfied that they represent a reasonable estimate of the fair value of the assets held by the Company as included in the published year-end and interim accounts on the relevant reporting date.

Any freight derivatives will be valued at SPV level in accordance with IFRS. As freight derivatives will only be used for hedging purposes at the SPV level, these mark-to-market positions will only exist at SPV level and will therefore be included in the Company NAV.

Calculation of Net Asset Value

The NAV and NAV per Ordinary Share (and NAV per C Share, if applicable) of the Company will be calculated on a quarterly basis by the Administrator and will then be presented to the Board for approval and adoption. Calculations will be made in accordance with IFRS.

It is anticipated that details of the quarterly NAV (and NAV per Ordinary Share and NAV per C Share, if applicable), valuations will be announced by the Company through a Regulatory Information Service as soon as practicable after the end of the relevant quarterly period.

As at 30 June 2018 the audited NAV was US\$92.5 million and NAV per Ordinary Share was US\$1.016.

Suspension of the Calculation of Net Asset Value

The Directors may at any time, but are not obliged to, temporarily suspend the calculation of the NAV (and NAV per Ordinary Share and NAV per C Share, if applicable):

during any period when, as a result of political, economic, military or monetary events or any circumstances outside the control, responsibility and power of the Directors, disposal or valuation of a substantial part of the investments is not reasonably practicable without this being seriously detrimental to the interests of the Shareholders; or
if, in the opinion of the Board, the Net Asset Value cannot be fairly calculated; or
if any breakdown in the means of communication normally employed in determining the value of the investments or if for any reason the current prices on any market of a substantial part of the investments cannot be promptly and accurately ascertained; or
if it is not reasonably practicable to determine the Net Asset Value on an accurate and timely basis.

Should the calculation of the NAV of the Company be suspended then an announcement detailing such suspension will be notified immediately to the London Stock Exchange via a Regulatory Information Service.

9. REPORTS, ACCOUNTS AND MEETINGS

The audited accounts of the Company will be prepared in US\$ under IFRS. The Company's annual report and accounts will be prepared up to 30 June each year with the next accounting period of the Company ending on 30 June 2019. Copies of the report and accounts will be sent to Shareholders by the end of October in each year. The Company will also publish an unaudited half-yearly report covering the six months to 31 December in each year. The financial report and accounts and unaudited half yearly report once published will be available for inspection from the Administrator at the Company's registered office and on the Company's website www.tuftonoceanicassets.com.

Part 9 of this document incorporates by reference the audited accounts of the Company for the financial year ended 30 June 2018. The first annual general meeting of the Company will be held on 24 October 2018.

10. PREMIUM AND DISCOUNT MANAGEMENT AND BUY-BACK POLICY

The Board has the discretion to seek to manage, on an ongoing basis, the premium or discount at which the Shares may trade to their NAV through further issues and buy-backs, as appropriate.

Premium Management

The Directors currently have authority to issue (i) 18,200,000 Ordinary Shares and (ii) up to 200 million C Shares, on a non-pre-emptive basis.

The Company, in undertaking the Issue, is utilising the aforementioned authority to issue C Shares. At the annual general meeting of the Company to be held on 24 October 2018 the Company intends to seek further authority to issue up to 200 million Ordinary Shares and up to 200 million C Shares to be available for issue under the Placing Programme.

Investors should note that the issuance of new Ordinary Shares and/or C Shares is entirely at the discretion of the Board, and no expectation or reliance should be placed on such discretion being exercised on any one or more occasions or as to the proportion of new Ordinary Shares and/or C Shares that may be issued.

No Ordinary Shares will be issued at a price less than the prevailing published NAV per existing Ordinary Share at the time of their issue.

Discount Control

The Directors will consider repurchasing Ordinary Shares in the market if they believe it to be in Shareholders' interests as a whole and as a means of correcting any imbalance between supply of and demand for the Ordinary Shares.

An ordinary resolution has been passed granting the Directors authority to repurchase up to 14.99 per cent. of the Company's issued share capital during the period expiring on the conclusion of the earlier of the Company's next annual general meeting and the date 18 months after the date on which the resolution was passed. Renewal of this buy-back authority will be sought at the annual general meeting to be held on 24 October 2018 and at each subsequent annual general meeting.

Subject to working capital requirements, and at the absolute discretion of the Directors, excess cash will be used to repurchase Ordinary Shares should the Ordinary Shares close at a, or more than a, 10 per cent. average discount to NAV for a period of 90 consecutive days.

The Company will only make such repurchases through the market at prices (after allowing for costs) below the relevant prevailing NAV per Ordinary Share under the guidelines established from time-totime by the Board. The Directors will have regard to what they believe to be in the best interests of Shareholders and in compliance with the Articles, the Listing Rules (to the extent the Company has chosen to voluntarily comply), Companies Law and all other applicable legal and regulatory requirements. Under the Listing Rules, the maximum price (exclusive of expenses) which may be paid for an Ordinary Share must not be more than the higher of: (i) 5 per cent. above the average of the midmarket values of the Ordinary Shares for the five Business Days before the repurchase is made; or (ii) the higher of the price of the last independent trade and the highest current investment bid for Ordinary Shares.

Shareholders should note that the purchase of Ordinary Shares by the Company is at the absolute discretion of the Directors and is subject to the working capital requirements of the Company and the amount of cash available to the Company to fund such purchases. Accordingly, no expectation or reliance should be placed on the Directors exercising such discretion on any one or more occasions.

11. TREASURY SHARES

Any Ordinary Shares repurchased pursuant to the general authority referred to above may be held in treasury. The Companies Law allows companies to hold shares acquired by way of market purchase as treasury shares, rather than having to cancel them. These treasury shares may be subsequently cancelled or sold for cash. This would give the Company the ability to reissue Ordinary Shares quickly and cost efficiently, thereby improving liquidity and providing the Company with additional flexibility in the management of its capital base.

Unless authorised by Shareholders, no Ordinary Shares will be sold from treasury at a price less than the NAV per Ordinary Share at the time of the sale unless they are first offered pro-rata to existing Shareholders.

12. C SHARES

If there is sufficient demand at any time following Initial Admission or subsequent Admissions, the Company may seek to raise further funds through the issue of C Shares. The rights conferred on the holders of C Shares or other classes of shares issued with preferred or other rights shall not (unless otherwise expressly provided by the terms of the issue of the relevant shares) be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

The Articles contain the C Share rights, full details of which are set out in paragraph 4.2.16 of Part 11 of this document.

C Shares will be available for issue by the Company (subject to Admission) if the Directors consider it appropriate to avoid the dilutive effect that the proceeds of an issue might otherwise have on the existing assets of the Company. The Company has authority to issue up to 200 million C Shares pursuant to the Issue and will seek authority at its upcoming annual general meeting to issue up to 200 million C Shares pursuant to the Placing Programme. Shareholders' preemption rights over this unissued share capital have been and will be dis-applied.

13. CONTINUATION RESOLUTIONS

In the event that by 20 December 2020 the NAV of the Company does not equal or exceed US\$250 million, the Directors will propose an ordinary resolution at the annual general meeting in 2021 that the Company continues its business (the "Initial Continuation Resolution").

The Directors will (unless the Initial Continuation Resolution is not passed) propose an ordinary resolution at the annual general meeting to be held in 2024 that the Company continues its business (a "Continuation Resolution"). If this Continuation Resolution is passed, then the Directors shall every three years thereafter at the annual general meeting held following the publication of the audited accounts propose a further Continuation Resolution.

If the Initial Continuation Resolution or any Continuation Resolution is not passed, the Directors will put forward proposals for the reconstruction or reorganisation of the Company to Shareholders for their approval as soon as reasonably practicable following the date on which the Initial Continuation Resolution or any Continuation Resolution (as the case may be) is not passed. These proposals may or may not involve winding up the Company and, accordingly, failure to pass the Initial Continuation Resolution or any Continuation Resolution will not necessarily result in the winding up of the Company.

14. DISCLOSURE OBLIGATIONS

The provisions of Chapter 5 of the Disclosure Guidance and Transparency Rules (as amended from time to time) ("DTR 5") of the Financial Conduct Authority Handbook apply to the Company on the basis that the Company is a "non-UK issuer", as such term is defined in DTR 5. As such, a person is required to notify the Company of the percentage of voting rights it holds as a holder of Ordinary Shares and/or C Shares or holds or is deemed to hold through the direct or indirect holding of financial instruments falling within DTR 5 if, as a result of an acquisition or disposal of Ordinary Shares and/or C Shares (or financial instruments), the percentage of voting rights reaches, exceeds or falls below the relevant percentage thresholds being, in the case of a non-UK issuer, 5, 10, 15, 20, 25, 30, 50 and 75 per cent. However, pursuant to the Articles, DTR 5 is deemed to apply to the Company as though the Company were a UK "issuer" as such term is defined by DTR 5. As such, the relevant percentage thresholds that apply to the Company are 3, 4, 5, 6, 7, 8, 9, 10 per cent. and each 1 per cent. threshold thereafter up to 100 per cent., notwithstanding that in the absence of those provisions of the Articles such thresholds would not apply to the Company.

15. NON-MAINSTREAM POOLED INVESTMENTS AND MIFID II

The Company and the Investment Manager note the rules of the FCA on the promotion of nonmainstream pooled investments, effective from 1 January 2014. The Investment Manager confirms that it conducts the Company's affairs, and intends to continue to conduct its affairs, so that the Shares will be "excluded securities" under the FCA's conduct of business sourcebook. This is on the basis that the Company, which is resident outside the EEA, would qualify for approval as an investment trust by the Commissioners for HMRC under sections 1158 and 1159 of the Corporation Tax Act 2010 if resident and listed in the United Kingdom. Therefore, the Shares will not amount to non-mainstream pooled investments. Accordingly, promotion of the Shares will not be subject to the FCA's restriction on promotion of non-mainstream pooled investments.

The Investment Manager also confirms that it conducts the Company's affairs, and intends to continue to conduct its affairs, so that the Shares can be recommended by financial advisers to retail investors in accordance with the rules on the distribution of financial instruments under The Markets in Financial Instruments Directive II ("MiFID II"). The Directors consider that the requirements of Article 57 of the MiFID II delegated regulation of 25 April 2016 will be met in relation to the Company's Shares and that, accordingly, the Shares should be considered "non-complex" for the purposes of MiFID II.

PART 2 BACKGROUND TO THE SHIPPING MARKET

Please see below for an independent market report by Vessels Value Ltd.

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Disclaimer

In providing our Report, we are not making any recommendations to any person regarding the Prospectus in whole or in part and are not expressing any opinion on the terms or merits of any investment in the Company. Prospective investors must rely upon their own representatives, including their own legal advisers and accountants, as to legal, tax, investment or any other related matters concerning the Company and an investment therein. Use of this prospectus is always bound by the terms and conditions of Vessels Value Ltd as amended from time to time which are available at https://www.vesselsvalue.com/terms/.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f), we accept responsibility for the information within our Report and declare that we have taken all reasonable care to ensure that the information contained in this Report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I of the Prospectus Directive.

Yours faithfully,

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	On water		On order		Total
Vessel Types	Value (US\$bh)	Vessel No.	Value (US\$bh)	Vessel No.	Value (US\$bh)	Vessel No.
Tankers	244.9	13,361	48.6	928	293.5	14,289
General Cargo Vessels	60.2	10,188	2.1	267	62.3	10,455
Containerships	101.8	4,925	18.4	292	120.2	5,217
Bulkers	184.0	10,765	28.9	892	212.9	11,657
Offshore Supply Vessels	22.2	5,474	3.1	256	25.3	5,730

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Vessel Type	Number of Vessels	Value (US\$bn)	Total Size (m)	Size Range	Cargoes carried
Tankers
Crude Tanker	2,721	83.6	446 DWT	1,000 - 600,000 DWT	Crude oil
Product and Chemical Tankers	9,444	109.9	235.4 DWT	1,000 - 166,500 DWT	Gasoline, Chemical products
LPG	1,519	29.9	37.6 CBM	100 - 90,000 CBM	Liquid Petroleum Gas
LNG	605	70.1	92.3 CBM	1,100 - 300,000 CBM	Liquid Natural Gas
General Cargo Vessels
Multi-purpose Vessels	8,820	23.2	51.4 DWT	900 - 20,000 DWT	Wood, Steel, Building Materials, Bulk cargo
RORO and Car & Truck Carriers	1,635	39.1	21.5 DWT	400 - 8,500 CEU	Cars, Trucks
Containerships
Sub Panamax Containerships	2,744	26.2	4.2 TEU	500 - 3,000 TEU	Containers
Post Panamax Containerships	2,473	94.0	19.9 TEU	3,000 - 22,000 TEU	Containers
Bulkers
Non Geared Bulkers	5,052	122.6	619 DWT	20,000 - 450,000 DWT	Iron Ore, Coal, Grains
Geared Bulkers	6,605	90.3	301.1 DWT	20,000 - 210,000 DWT	Iron Ore, Coal, Steel products, Grains, Fertilisers, Minerals
Offshore Vessels
Offshore Supply Vessels	5,730	25.3	30.7 DWT	100 - 8,000 DWT	Platform supply

Grand Total	47,348	714.2

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PART 3 MARKET OPPORTUNITY

The Investment Manager believes that an attractive opportunity exists in terms of investment in secondhand vessels, as a result of a number of factors described below.

Lower availability of capital for the shipping industry from its traditional sources

In the Investment Manager's opinion shipping assets have traditionally been financed with significant amounts of bank debt, retained earnings and private wealth. This is largely because small and medium sized private shipping companies dominate the industry. As described further below, the traditional main sources of funding for shipping have shrunk, requiring industry players to sell assets or seek alternative sources of finance, such as by way of sale and leasebacks.

In the Investment Manager's experience, the main traditional sources of capital in the shipping industry are:

Bank debt/ship mortgages
Paid-in equity from families and retained earnings from their shipping investments
Private equity from high net worth individuals via limited partnerships
Public equity and public debt

The availability of each of these traditional sources of capital has shrunk in recent years and the Investment Manager believes that while these trends may moderate or flatten, they will not be reversed. In addition, institutional private equity has not been a traditional source of capital for shipping but was significant in 2011-2014. For the reasons set out below, the Investment Manager believes that the availability of institutional private equity for the shipping industry will be limited in the future.

Bank debt/ship mortgages

In 1992 US and UK banks were the most prevalent providers of debt capital to the shipping industry. Until the financial crisis of 2007-8, European banks were the primary lenders (according to Marine Money International, Petrofin and Tufton Oceanic, in 2008 the top ten lenders to the shipping industry were all European banks). Since 2008 there has been a marked decline in the amount of leverage that banks are willing to provide for shipping assets. Additionally, in the opinion of the Investment Manager, credit spreads have risen, loan term lengths have shortened and often amortisation has increased. It is the Investment Manager's belief that with loan term lengths being significantly shorter than the economic life of shipping assets and many European banks seeking to decrease their significant exposure, there is a funding gap for much of the industry as bank loans mature. This is the case throughout the industry other than for large companies with corporate structures which tend to be publicly listed or which are owned by families with significant wealth outside of shipping.

In addition, the Investment Manager believes that certain European banks that previously were not necessarily seeking to decrease their exposure to shipping are now seeking to do so because of problems they are facing with their exposure to offshore energy, which had been healthy until three years ago. However, over recent years there has been an increasing influence from Chinese and other Far Eastern banks replacing the declining dominance of the traditional Northern European lenders. Even though some Asian banks moved up in the league table of the active lenders to the shipping industry (according to Marine Money International, looking at the top ten lenders to the shipping industry between 2008 and 2017, the number of Asian banks increased from one to three), the total loan book has nonetheless shrunk significantly. According to Marine Money International, the volume of new bank loans decreased from c. US\$87.8 billion on average between 2007-2008 to c. US\$31.2 billion in 2017.

Paid-in equity from families and retained earnings from their shipping investments

In the Investment Manager's opinion, because the shipping markets have generally been weak since 2008, corporate liquidity is low in the majority of shipping companies, making new investments difficult for them. For example, according to Euro-Maritime there are approximately 200 shipping companies in Greece, and these companies have in aggregate historically had a significant market share in buying secondhand vessels. It is the Investment Manager's belief that because many of these companies are focused in wet and dry bulk, and dry bulk in particular has seen very poor financial results for most of 2014-2016, their current weaker financial position leads to less competition for assets that come to the secondhand market.

Private equity from high net worth individuals via limited partnerships

It is the Investment Manager's belief that from around 2000 to 2008, German high net worth individuals were a very important source of equity for the shipping industry. This was via limited partnerships known as "KGs" which generated personal tax benefits for these individuals which were often lawyers, doctors and dentists. In the Investment Manager's experience, most KGs raised debt from German banks, which feature prominently in the list of top lenders in 2008 in the chart above. A leading Hamburg shipbroker estimates that c. 440,000 individuals were investors in shipping KGs and in 2007 c. 26 per cent. of the vessels on order globally were owned by KGs. Since 2008, new investments in shipping through KGs is de minimis and many KGs have been liquidated or otherwise been unwilling sellers of vessels. Since 2015 the Investment Manager has acquired 37 vessels in sale processes involving distressed KGs and believes that the Company will continue to acquire vessels from these sources over the coming years.

Public equity and public debt

Shipping companies' access to public capital has decreased during the last few years. According to Marine Money International, public equity offerings decreased from an average of c. US\$7.2 billion in 2010-2014 to c. US\$4.7 billion in 2016-2017. Public debt offerings decreased from c. US\$12.6 billion in 2012 to c. US\$8.1 billion in 2017.

Institutional Private Equity

Institutional private equity in shipping was negligible before 2008. Although there was significant investment by private equity and hedge funds in 2011-2014 (according to Marine Money International, c. US\$18.1 billion), this has significantly moderated over the past few years (according to Marine Money International, from a peak of US\$7.5 billion in 2013 to only US\$1.3 billion in 2017). The Investment Manager believes that this burst of activity was due to the relative lack of investment opportunities in other industries during that period and therefore it is unlikely to be repeated. For example, many of those investors are much more interested in opportunities in the energy sector globally due to the size of the industry and because they have expertise in energy while they generally do not have expertise in shipping.

Shipping is a large and essential industry and demand for it is expected to grow

According to VesselsValue, the world shipping fleet was valued at US\$714 billion as at 30 June 2018 of which \$613 billion was on the water. Total turnover of secondhand vessels has been 3-5 per cent. of the total shipping fleet in operation per annum. on a US\$-value basis in recent years and was 3.7 per cent. in the year ended 30 June 2018. According to the IMO, c. 90 per cent. of global trade travels by sea.

Clarksons, the largest shipbroker in the world with extensive research capabilities, expects seaborne trade for the main Segments of shipping to grow by 4.0 per cent. in 2018. As of June 2018, Fearnley Securities, a maritime focussed investment bank, forecasts the below demand growth rates for key shipping Segments.

Crude Tankers	1-2%
Product Tankers	2-3%
Chemical Tankers	2-3%
LPG Carriers	7-8%
LNG Carriers	9-10%
Containerships	5-6%
Bulkers	2-3%

Source: Fearnley Securities

Shipping is fundamental to the economy, as popularised in the well-known books "The Box" and "Ninety Percent of Everything". Containerships, for example, have changed the dynamics of where goods are made and shipped to, transforming the global economy. The vessels in which the Company will invest are essential to the transportation of key goods and commodities which are vital for consumers globally and for the industrial development of developing countries.

Niche vessels (Ro-Ros, Car Carriers, Heavy Lift Geared Multi-Purpose Vessels, etc.) are of particular interest for the Company because their employment contracts tend to be long, helping secure long-term income streams. Operators/lessees of niche vessels tend to have strong commercial positions in their niches where there are high barriers to entry. They need to secure vessel capacity through long-term employment contracts to satisfy their underlying customers in industries such as cars, chemicals, industrial machinery and renewable energy.

Supply side correction is underway

World ordering over the twelve months prior to 30 June 2018 has been 1.7 per cent. of the world fleet which is only slightly above the historical low level of just over 1 per cent. witnessed in February 2016-2017. In the year to 30 June 2018, ordering represented just over 1,000 vessels which is approximately half of the average of 2,000 vessels ordered per annum over the last 22 years. These low levels of ordering are explained in further detail in the following sections (P/DRC being below parity and the potential for renewed shipyard cost inflation) and it is the Investment Manager's belief that the climate for renewed ordering is not favourable.

Scrapping in the LTM through December 2017 was 1.9 per cent. of the fleet having seen high spikes in both early 2015 and early 2016. Implementation of current and proposed regulatory changes with regards to ballast water management and fuel emissions over the coming years will increase pressure on older and less fuel efficient vessels to be scrapped.

Given the above two factors, the Investment Manager believes that supply side growth has slowed and is anticipated to remain subdued over the coming years albeit there are indications that new-build prices (having bottomed in 2017) have now started rising.

Many vessels are valued at significantly below their longterm average multiples of DRC

Financial stresses in the industry have led to values of secondhand vessels in many shipping Segments being significantly below their long-term average multiples of depreciated replacement cost ("DRC") with Bulkers and Containerships reaching 24-year lows in 2016. Specifically, as at 31 August 2018, values of secondhand Tankers were at 71 per cent. of DRC, values of secondhand Bulkers were at 88 per cent. of DRC and values of secondhand Containerships were at 71 per cent. of DRC. The Investment Manager believes that an attractive opportunity exists for the Company to acquire vessels at these low multiples before there is reversion towards historic long-term averages around 100 per cent. when supply and demand converge.

Price/DRC – 10 year old vessels

Source: Tufton Oceanic research at 31 August 2018

In addition to the Investment Manager's expectation of increased P/DRC, the Investment Manager also believes, as described below, that DRC will increase.

After a deflationary period of approximately 5 years, prices of new vessels are expected to increase moderately over the next 10 years

Values of secondhand vessels are correlated to the prices of new vessels, although the correlation is higher in very strong market conditions and lower in very weak market conditions, when near-term cash flows become a more significant part of the overall value of a vessel. Therefore, all else being equal, higher prices for new vessels have a positive impact on secondhand values.

In the Investment Manager's opinion, prices for new vessels are determined by the costs of production (primarily Asian labour, steel and machinery) and the bargaining power and corresponding profit margins of ship-yards and that both of these components drove prices for new vessels down for most of 2011 to early 2016. The Investment Manager's estimated shipyard cost index (indexed to 100 in January 2000) decreased in US\$ terms from c. 170 to c. 100 over this period. It is the Investment Manager's belief that shipbuilding capacity expanded rapidly pre 2008 and that since 2008, as the level of ordering has declined, overcapacity has been high and bargaining power been low for nearly all of that period.

In 2016 the Investment Manager's estimated shipyard cost index started increasing in US\$ terms as Asian labour costs continued their long-term uptrend and steel prices began to recover as excess capacity in Chinese steel production was reduced and iron ore prices increased. The Investment Manager believes that shipyard costs will increase over the next 10 years, even if only slowly in the short term, and that shipyard bargaining power has started to increase after a significant number of bankruptcies and closures in China and Korea.

The Investment Manager believes that higher prices for new vessels will facilitate increases in secondhand values of the vessels that will be owned by the Company.

Revenue earned by most of the Company's vessels is not affected by fluctuations in general shipping markets

The Company intends mainly to invest in vessels that will enter into medium to long-term Charters with carefully chosen counterparties and therefore the revenue earned by most of the Company's vessels will not be affected by the fluctuations, which are sometimes large, in the general shipping markets due to commodity prices, geopolitical events, other short term supply-demand factors, etc. The Investment Manager will perform due diligence including full credit analysis on the chartering counterparties to assess their quality and credibility.

PART 4 INVESTMENT MANAGER, ASSET MANAGER AND INVESTMENT PROCESS

1. INVESTMENT MANAGER

1.1 Description of the Investment Manager

The Company has, pursuant to the terms of the Investment Management Agreement, appointed Tufton Oceanic Ltd. to act as the Company's Investment Manager and to provide investment management services to the Company subject to the overall control and supervision of the Board.

The Investment Manager and its predecessors and affiliates have been focusing on the shipping and energy industries since Tufton Group was founded by Ted Kalborg in 1985. Tufton Group has been managing funds in the maritime and energy markets since 2000.

Locations: London, Isle of Man, Dubai, Cyprus

Tufton Group is privately owned and key employees have significant holdings in it and/or its operating subsidiaries. It is organised into two businesses: the hedge fund group (the "Hedge Fund Group") and the asset backed investments group ("Tufton ABI"), which share common support services. As at 30 June 2018, Tufton Group had c. US\$1.3 billion of assets under management5 – c. US\$0.2 billion under the Hedge Fund Group and c. US\$1.1 billion under Tufton ABI.

Tufton ABI manages private maritime investments for funds and other clients as well as the Company. It was launched in 2005 and from inception to 30 June 2018 it achieved a 13.0 per cent. per annum net realised IRR for investments in secondhand vessels (total equity value realised: US\$261 million). As at 30 June 2018, the vehicles managed or advised by Tufton ABI hold interests in 73 vessels6 plus a 13.3 per cent. interest in Gram Car Carriers Holdings Pte Ltd. Also, as at 30 June 2018, Tufton Group together with Blackstone entities held a 32.8 per cent. interest in Hafnia Tankers, which has a Norwegian OTC listing and which Tufton ABI played a leading part in creating. Blackstone, Garrison, Permal and Apicorp have invested in transactions alongside and sourced by Tufton Group.

In addition to its investment management and asset management capabilities, Tufton Group also has dedicated research, compliance, marketing, IT services, finance support / accounting and administration and support teams, which are shared between the Hedge Fund Group and Tufton ABI. The research team, using tools such as TRACS, generates a view on the shipping markets and the overall investment climate and produces market forecasts, risk analysis and scenarios that are used by both the Hedge Fund Group and Tufton ABI to form their investment views.

⁵ Unaudited figures derived from the Tufton Group's management information.

⁶ Including committed secondhand vessel acquisitions.

The Tufton Group has 52 employees operating from offices in London, Isle of Man, Dubai and Cyprus. The Tufton Group's competitive strength is the breadth of its experience and expertise in the shipping market. This includes not only investment management but also shipping finance, principal investment in public and private markets, in-house research and commercial and technical expertise.

The Investment Manager's employees have significant experience of investing and financing in the shipping industry. Each member of the Investment Committee has between 21 and 40 years of experience in the maritime financial markets either from an investment banking / commercial banking or from vessel owning/operating perspective.

The Investment Manager's role encompasses the identification of appropriate acquisition opportunities, conducting necessary due diligence and making recommendations to the Board. The Investment Manager (in conjunction with the Asset Manager) will also monitor the performance of the Company's Portfolio. The Investment Manager, which acts as the Company's AIFM for the purposes of the AIFMD, is authorised and regulated by the FCA. As at the date of this document, the Investment Manager is a small authorised AIFM for the purposes of AIFMD. It is intended that an application will be made by the Investment Manager to the FCA for the Investment Manager to become a "full scope" AIFM. If "full scope" status is granted, this will be announced by way of Regulatory Information Service and the Company will upload the relevant Article 23 disclosures to its website and appoint a depositary as required. The Investment Manager, in its capacity as the Company's AIFM, will also make the relevant notifications for the marketing of the Shares in the United Kingdom and elsewhere (if required).

For further details of the Investment Manager's track record please see the section headed "Investment Manager's Track Record" at paragraph 5 of Part 1 of this document.

1.2 Investment Management Fee

For the services described above and under the terms of the Investment Management Agreement, the Investment Manager is entitled to receive from the Company an investment management fee, calculated and payable quarterly in arrears, equal to: (i) 0.85 per cent. per annum of the prevailing Net Asset Value up to US\$250 million; (ii) 0.75 per cent. per annum of the prevailing Net Asset Value in excess of US\$250 million but not exceeding US\$500 million; and (iii) 0.65 per cent. per annum of the prevailing Net Asset Value in excess of US\$500 million. For the purposes of calculating the investment management fee payable to the Investment Manager, cash and cash equivalents held by the Company will be excluded from the Net Asset Value. The Investment Manager shall not be entitled to receive any other fees from the Company unless approved by the Board. The Investment Manager is entitled, in its sole discretion (but without limitation including the recognition of a historic long term relationship between the investor and the Investment Manager) and out of its own resources at any time, to rebate to some or all investors pursuant to the Issue, or to other parties, such part of any investment management fee payable to it pursuant to the terms of the Investment Management Agreement.

1.3 Performance Fee

Under the terms of the Investment Management Agreement, CarryCo is entitled to receive from the Company a performance fee in respect of a Calculation Period provided that the Total Return per Share at the end of the Calculation Period is greater than the High Watermark per Share. The performance fee due to CarryCo is an amount equal to 20 per cent. of the excess in Total Return per Share over the High Watermark per Share multiplied by the time weighted average number of Shares in issue during the Calculation Period.

CarryCo shall receive 50 per cent. of the performance fee within 30 days of the conclusion of the annual general meeting of the Company immediately following the end of the Calculation Period. The remaining 50 per cent. shall be retained by the Company and, subject to being adjusted to take into account any subsequent underperformance, shall be paid out the next time a performance fee is due. Half of all subsequent performance fees shall also be deferred in this manner.

No performance fee is payable if the Investment Manager's appointment is terminated for cause. If the Investment Manager's appointment is terminated other than for cause, the Investment Manager shall be entitled to receive all outstanding deferred performance fees (if any).

1.4 Investment Committee

The Investment Manager has established an Investment Committee comprising the following Tufton Group staff:

Ted Kalborg (Founder of the Tufton Group)

Mr. Ted Kalborg graduated with an MBA from Harvard in 1977. After graduation he joined Brown and Root where he held several line management positions including assignment as General Manager of Wilbar in Norway – a JV between Brown and Root and Wilhelm Wilhemsen ASA. Mr. Kalborg founded the Tufton Group in 1985 and is the Chairman of the investment committee for both the Hedge Fund Group and Tufton ABI and is a director of both the Investment Manager and of the Tufton Group. He is a member of the advisory board of A.M. Nomikos Shipping group of companies (bulk carriers) and a non-executive director of Dorian LPG (which has a New York Stock Exchange listing).

Erik A. Lind (Chief Executive Officer of the Tufton Group)

Mr. Erik Lind is an MBA graduate from the University of Denver in 1979. Prior to joining the Tufton Group in 2004, Mr. Lind held senior and executive positions with banking, financial institutions and shipping companies including Manufacturers Hanover, Oslobanken, GATX Capital and I.M. Skaugen ASA, having resided in New York, Oslo, Shanghai and London. In these roles he was, inter alia, involved with corporate acquisitions, ship/oil services financing portfolios and risk capital investments as well as extracting value from restructuring opportunities. Mr. Lind is a member of the investment and advisory committees for various of Tufton's asset backed funds, a director of Tufton Group and its principal subsidiaries, a member of the advisory board of A.M. Nomikos Shipping group of companies, a non-executive director of Gram Car Carriers Holdings Pte and the non-executive Chairman of the Board of DHT Holdings, Inc., a NYSE listed tanker company.

Andrew Hampson (Managing Director of Tufton ABI)

Mr. Andrew Hampson began his career with Bank of America in 1978 where he graduated through the bank's internal MBA level lending program. Mr. Hampson performed a variety of functions in the credit administration department and problem loan groups before becoming a credit and marketing officer in the bank's European ship lending department in 1986. In 1992 he joined Theisen Securities, a private maritime corporate finance house, where he primarily focused on providing debt related advisory and arranging services to a variety of worldwide shipping companies and debt providers. In 2001 he joined the Tufton Group initially to assist in the development of Tufton's corporate finance business and subsequently to build up Tufton's position as a dedicated fund manager in the shipping asset space. Mr. Hampson resides in London, is currently Managing Director of Tufton's ABI team, is a member of the Investment and Advisory Committees for various of Tufton's asset backed funds and is a director of the Investment Manager and of the Tufton Group.

Paulo Almeida (Portfolio Manager of Tufton ABI)

Mr. Paulo Almeida is the portfolio manager for Tufton's private equity activities and has been responsible for many of the investments made by Tufton ABI. He joined Tufton in early 2009 after nine years in investment banking and fund management at UBS and Macquarie. At Tufton, he was among the winners of the Marine Money 2013 M&A deal of the year for the transactions that created Hafnia Tankers. Shipping transactions he led at UBS received three IPO of the year awards from Marine Money and Jane's Transport Finance for 2005. Before business school, he spent four years in the shipping industry with the Skaarup Group. He worked for the group's founder, the late Ole Skaarup, who conceived the first dedicated dry Bulker the "Cassiopeia" which was delivered in 1954. Mr. Almeida holds a BSc in Naval Architecture and Marine Engineering from Webb Institute, an MSc in Finance from London Business School and an MBA with Honours from the University of Chicago Booth School of Business. While at Webb 1991-1995, he had work experience as an apprentice ship fitter at Electric Boat, as an engine and deck cadet with Exxon Shipping and in structural engineering at both Electric Boat and the Skaarup Group.

For more details with regards to the approval process of the Investment Committee, please refer to paragraph 2 below (Investment Process).

2. INVESTMENT PROCESS

2.1 Identification and Sourcing of Investments

Tufton Group has significant experience in the acquisition of secondhand commercial vessels including identification of propositions, due diligence, financing, structuring and implementation. By virtue of this experience, Tufton Group has developed an extensive network of relationships with shipping companies, ship brokers, charterers, pool operators, lawyers, banks, investment banks and other specialist advisers. Through these relationships, the Investment Manager is confident it will be able to identify opportunities to acquire vessels consistent with the Company's investment policy. Allied to these relationships and contacts, Tufton Group is able to draw upon the dedicated Tufton Group research team to assist the Investment Manager in forming a view on the shipping and energy markets and help identify the most favourable assets for acquisition that match the Company's investment policy and strategy.

The Investment Manager will focus on identifying vessel acquisition opportunities suitable for the Company based on its investment policy (e.g. dividend targets), diversification targets in terms of vessel types and credit exposures, risk-return characteristics of employment opportunities, vessel Segment outlook, vessel condition (as informed by the Asset Manager) and suitability for moderate leverage on a case-by-case basis. In parallel, the Asset Manager will develop employment opportunities for the vessel types the Investment Manager is pursuing for the Company.

The Investment Manager will review the relevant market sub-sectors and the secondhand vessel markets to identify the most favourable asset types for acquisition. Simultaneously, the Investment Manager will approach selected banks to see if any of the target vessels exist within their distressed assets portfolios. Once the initial target list has been established, the Investment Manager will review in detail vessel specifications to refine the target assets list. A final shortlist of target assets will then be agreed and prioritised.

2.2 Origination/Analysis

Once a suitable opportunity has been identified, the economics of the identified vessel will be financially modelled/analysed to determine appropriate terms and structure including bank debt, Charter rates and general commercial strategy. Outline terms will then be negotiated with the counterparty. Concurrent with negotiation of outline terms, investment and technical due diligence will commence.

Technical due diligence will include the review of the technical condition / history of the vessel through review of class records and press searches as well as a physical inspection to identify the level of maintenance and the condition of steel work and other mechanical parts (e.g. engine, cranes). Relevant data will also be collected from the logbooks of the vessel with regards to her performance, off-hire (when the vessel is not technically available) and any mechanical problems. The physical inspection of a secondhand vessel normally takes one working day and it is usually conducted when the vessel is at a port. Occasionally, when the vessel has a very short time at port or when the inspector wants to assess certain operational items, subject to the seller's approval, the inspector will sail 1-2 days with the vessel until the next port.

Commercial due diligence will include analysis of the market segment, review of the vessel by speaking to multiple charterers and ship-owners familiar with the specific vessel type and review of the market reputation and substance of the counterparties involved.

Credit due diligence will include full credit analysis on the chartering counterparties to assess their credit quality and to decide whether the counterparties involved are of substance. Additionally, there will be AML/KYC checks on all counterparties involved.

In respect of vessels to be acquired, the Investment Manager has the ability to monitor vessel values through the online VesselsValue platform (https://www.vesselsvalue.com/) which provides daily updated and vessel specific valuation service based on automated valuation models. The system has various algorithms that factor in each vessel's type, technical features, age, cargo capacity, freight earnings, market sentiment and recent vessel transactions. The models are recalibrated daily to reflect the latest transaction and earnings information, allowing the daily update of the valuations of all vessels in their database. However, when the Investment Manager ascertains that a VesselsValue Charter-Free Value requires an adjustment, the Investment Manager will make such adjustment with the consent of the Board. Adjustments may include but are not limited to those for investments in a vessel that VesselsValue is not aware of or the Investment Manager believes VesselsValue does not account for correctly.

Prior to agreeing a price for either an acquisition or disposal, the technical evaluation of the vessel, the VesselsValue value, DCF techniques as well as other independent third party valuations (brokers) will be considered. In the case of specialised vessels, various specialist brokers will be engaged for both the valuation and the sale and purchase process.

2.3 Investment Committee and Board Approval

Each investment proposal will be presented to the Investment Committee of the Investment Manager which meets on a weekly basis, for its approval. In reviewing each potential investment, the Investment Committee will consider a range of factors including a detailed analysis of the vessel's technical condition and other analysis from the Asset Manager, a full risk/reward analysis, downside stress testing, commercial/employment strategy, potential moderate leverage, market outlook, credit quality of charterer, market reputation of counterparties, deal modelling, exit strategy and any macro analysis that might be necessary to fully understand the investment.

The Investment Committee shall be quorate when three members are present. All Investment Committee recommendations will require unanimous approval of those members present at an Investment Committee meeting. Decisions for inspections and minor expenditures of up to US\$10,000 will require approval of two members of the Investment Committee.

The Investment Committee process may be iterative, resulting in further negotiations with the counterparty. Should the Investment Committee be in favour of an acquisition, an appropriate recommendation will be made to the Board who would ultimately determine whether an acquisition should be made.

2.4 Processing

Should the Board approve a transaction, it will delegate authority to the Investment Manager to develop the transaction accordingly and to the Investment Manager and the Asset Manager to negotiate transaction documents. The relevant acquisition, chartering and debt documentation will be prepared and reviewed first internally and then externally by legal counsel. Tufton Group's corporate service providers will establish investment SPV(s) and open bank accounts to fund the SPV(s) and, where applicable, bank debt will be drawn. The Investment Manager expects that most or all of the SPVs will be registered in the Isle of Man, as the Investment Manager is familiar with that jurisdiction. Marine Services (IOM) Limited, an affiliate of the Investment Manager, licensed by the Financial Supervision Commission (FSC) of the Isle of Man, will be the company secretary for each of the Isle of Man SPVs and may also act as company secretary to the non-Isle of Man incorporated SPVs. All fees payable to Marine Services (IOM) Limited will be on arm's length terms and will be approved by the Board.

Upon the satisfaction of any conditions previously imposed by the Investment Committee or the bank loan funding documentation or the Board, where applicable, completion of the acquisition of the vessel by the SPV will take place. All documents of title will be in the name of the SPV who will be the registered owner of the vessel and will be held by the relevant corporate secretary of the SPV.

2.5 Leverage

For certain investments, if recommended by the Investment Committee and approved by the Board, leverage will be arranged at the SPV level after completion of the acquisition in accordance with the Company's borrowing policy.

2.6 Investment Monitoring

The Investment Manager will continually monitor the progress of the Company's investments and the Asset Manager will continually monitor the technical condition and performance of the vessels as well as the operating costs and performance of the vessels' technical managers. This will include regular commercial and technical reporting in respect of each of the vessels owned by the Company's SPVs. The Investment Manager and/or Asset Manager will seek ad hoc additional reporting and updates where there has been a material event in the operation or condition of any vessel. The Investment Manager will update the Board on the progress of the Company's investments on a quarterly basis with additional updates where significant events have occurred.

2.7 Disposals

Exit options will be continually monitored. The Investment Manager will recommend to the Board disposal of investments when an appropriate opportunity arises and where, in the Investment Manager's opinion, such disposal would represent an attractive return on the Company's initial investment and/or would otherwise enhance the value of the Company. In certain cases when the Company has owned a vessel to the end of its economic life, the disposal of the vessels may be to a vessel scrap dealer.

3. CONFLICTS OF INTEREST

The Investment Manager's intention is to avoid conflicts of interest by not managing or advising funds with similar strategies over the same investment period. However, when this is not possible and there are funds with overlapping investment periods, these are governed by Tufton ABI's fair allocation policy.

3.1 Conflicts of interest in Tufton ABI

The Investment Manager may manage or advise multiple funds, fund-like vehicles and portfolios and the Tufton Group may hold proprietary investments during the life of the Company. Potential conflicts that may arise include allocation of:

investment opportunities
charter opportunities
capacity or terms available from technical managers
discounts that arise from bulk or repeat business

3.2 General Policy as to Managing Conflicts

Under the terms of the Investment Management Agreement, the Investment Manager has confirmed that it will take all reasonable steps to avoid conflicts of interest. If such conflicts cannot be avoided, the Investment Manager is obliged to take all reasonable steps to identify, manage and monitor and (where applicable) disclose conflicts of interest in order to prevent them from adversely affecting the interests of the Company and Shareholders and to ensure that the Company is treated fairly.

3.3 Allocation Policy

Allocation of Investment Opportunities

Without prejudice to the general policy of the Investment Manager in respect of conflicts of interests as outlined above, the Investment Manager aims to manage all conflicts that may arise within Tufton ABI. The Investment Manager expects to use relevant clients' target allocations to market Segments and, if applicable, sub-Segments as the primary factor for fair allocation of investment opportunities, Charters and costs but in specific circumstances the Investment Manager will in good faith deem it appropriate to take into account other factors such as: detailed strategies of the clients' accounts, performance objectives, restrictions on investments, the leverage that is necessary or desirable to complete an investment, constraints on an investment opportunity imposed by an industrial partner (e.g. outside equity and/or debt), potential for follow-on investments and risk/return targets. Target allocations will be subject to change over the lives of the accounts.

During the life of the Company, the Investment Manager will use reasonable efforts to allocate investment opportunities for all types of vessels "Pro Rata".

Pro Rata for the purposes of this policy shall mean that investment allocation rotation targets will be established at least once per quarter. These rotation targets will be based on the relevant clients' target allocations, on an asset value basis, to these Segments and to the relevant size or other sub-Segments where applicable. The rotation targets will take into account both:

the order in which undrawn or un-invested (as the case may be) capital became available to the Investment Manager; and
the extent to which over the previous six-month period the Investment Manager was able to comply with earlier rotation targets.

For the avoidance of doubt, individual vessels will not be divided amongst any accounts unless the relevant accounts permit this. The Investment Manager aims to allocate individual vessels within available portfolio opportunities, taken together with other similar vessels available on a rolling six-month basis, Pro Rata.

Allocation of Other Opportunities

The Investment Manager will also use reasonable efforts to allocate all other benefits or opportunities (including but not limited to charter opportunities, availability of attractive technical management contracts and bulk discounts of any form) to its clients' accounts primarily on the basis of capital allocated to the relevant Segments or sub-Segments (but including target allocations if appropriate to the situation) and their respective investment objectives and investment restrictions.

4. ASSET MANAGER

4.1 Description of the Asset Manager

The Asset Manager was established in 2009 to act as the asset manager for vessels owned by funds and vehicles managed or advised by Tufton ABI. As at 30 June 2018, there are 73 vessels7 owned by vehicles managed or advised by Tufton ABI. The Asset Manager is based in Cyprus and employs 11 professionals, who have significant experience in ship management and operations.

Roine Ahlquist is the Managing Director of the Asset Manager. Mr. Ahlquist joined Tufton in 2016 from Eastern Pacific Shipping (part of the Ofer family controlled Quantum Pacific group of companies), where he spent 9 years in New York, Singapore and London holding various management and leadership positions, most recently as Managing Director of Eastern Pacific Shipping UK. He is a Master Mariner and has served in the merchant marine on deep sea crude and product tankers, Ro-Ro ships and cruise vessels. Mr. Ahlquist holds an MBA from London Business School and a BSc in Nautical Science from Kalmar University in Sweden.

4.2 Services

The Asset Manager enters into an asset management agreement with each SPV and provides the following services:

• vetting of potential technical managers and surveyors (the technical manager is responsible for the maintenance and operations of the relevant vessel so that it remains at all times in compliance with the applicable international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessel operates, as well as in the country of its registration);

⁷ Including committed secondhand vessel acquisitions.

appointing technical and/or commercial managers (the commercial manager is responsible for the preparation, negotiation and execution of vessel employment contracts, for cargo bookings and for the efficient handling of cargo claims);
negotiating technical and commercial management agreements;
managing and supervising the technical managers' operating costs and technical performance against pre-agreed KPI's or other performance metrics;
supervising and monitoring technical managers' performance against industry recognised or other performance metrics with regards to health, safety, security, environment and quality international standards;
negotiating, coordinating and cooperating with the technical managers to perform major periodical maintenance events;
monitoring the technical condition of all vessels;
reviewing technical documentation, arranging surveys and providing technical budgets for target vessels;
managing and supervising commercially the arrangement of continuous employment for the vessels;
providing input on the technical, operational and commercial aspects of the investment papers produced for the Investment Committee on any given proposal;
managing technical, operational and commercial aspects of vessel acquisition and divestment closings;
arranging marine insurance;
providing input for and compiling data for periodic reporting; and
arranging the centralised purchasing of parts and consumables, where appropriate.

4.3 Asset Management Fee

For the services outlined above, the Asset Manager is entitled to receive a fee from each SPV of, ("Asset Management Fee"), currently, US\$150 per vessel per day.

4.4 Provision of technical management and / or commercial management directly by the Asset Manager

The Asset Manager will regularly review the value for money being obtained through the use of third party technical and commercial managers. Where the Asset Manager can achieve savings of at least 5 per cent. by undertaking in-house functions otherwise conducted by third-party technical managers, then on the Investment Manager's recommendation and with the consent of the Board, the Asset Manager will perform these functions and will charge a rate 10 per cent. less than the industry standard for the vessel type and size in question and the Asset Management Fee shall be reduced as follows:

Should the Asset Manager undertake full technical management services for an SPV, the Asset Management Fee shall be reduced by the technical management component of the Asset Management Fee (which is currently US\$100 per vessel per day);
Should the Asset Manager undertake partial technical management services for an SPV, the Asset Management Fee shall be reduced by the technical management component of the Asset Management Fee (which is currently US\$100 per vessel per day) pro-rata for the technical management services being provided.

On the Investment Manager's recommendation and with the consent of the Board, the Asset Manager will have the right to charge an SPV 80 per cent. of the third party commercial management fees or the commissions that are saved when the Asset Manager substitutes a broker in a chartering transaction. This will generally correspond to 1.00 per cent. of Charter revenue which is 80 per cent. of the market standard broker commission of 1.25 per cent.

Should the Asset Manager undertake commercial management services for an SPV, the Asset Management Fee shall be reduced by the commercial management component of the Asset Management Fee (which is currently US\$50 per vessel per day).

In no event will the Asset Manager take on full technical management services for more than 50 per cent. of the vessels in any asset Segment so as to ensure ongoing third party service benchmarking both in terms of cost and quality/performance.

PART 5 DIRECTORS, MANAGEMENT AND ADMINISTRATION

1. DIRECTORS

The Directors are responsible for the determination of the Company's investment policy and strategy and have overall responsibility for the Company's activities including the approval of investments and divestments, review of investment activity and performance and the control and supervision of the Investment Manager and the Asset Manager. All of the Directors are non-executive and are independent of the Investment Manager and the other service providers.

The Directors meet at least four times a year to, inter alia, review and assess the Company's investment policy and strategy, the risk profile of the Company, the Company's investment performance, the performance of the Company's service providers, including the Investment Manager, the Asset Manager and Administrator, and generally to supervise the conduct of its affairs. The audit committee meets at least twice per annum.

The Directors are as follows:

Robert King, Chairman (aged 55)

Mr King is a non-executive director for a number of open and closed ended investment funds including Golden Prospect Precious Metals Limited, Chenavari Capital Solutions Limited, CIP Merchant Capital Limited and Weiss Korea Opportunities Fund Limited. Before becoming an independent non-executive director in 2011 he was a director of Cannon Asset Management Limited and their associated companies. Prior to this he was a director of Northern Trust International Fund Administration Services (Guernsey) Limited (formerly Guernsey International Fund Managers Limited) where he had worked from 1990 to 2007. He has been in the offshore finance industry since 1986 specialising in administration and structuring of offshore open and closed ended investment funds. He is British and resides in Guernsey.

Stephen Le Page, non-executive Director (aged 62)

Mr Le Page is a chartered accountant and chartered tax adviser. He was a partner in PricewaterhouseCoopers LLP in the Channel Islands from 1994 until his retirement in September 2013. During his career his main role was as an audit partner working with a wide variety of financial services businesses and structures. Mr Le Page also led that firm's audit and advisory businesses for approximately ten years and for five of those years was the Senior Partner (equivalent to Chief Executive) for the Channel Islands firm. Since his retirement Mr Le Page has joined a number of boards as a non-executive director including, Highbridge Multi-Strategy Fund Limited, Volta Finance Limited, MedicX Fund Limited, Princess Private Equity Holding Limited and Channel Islands Property Fund Limited, all of which he serves as chairman of the audit committee. He is a past chairman of the Guernsey International Business Association and a past President of the Guernsey Association of Chartered and Certified Accountants. He resides in Guernsey.

Paul Barnes, non-executive Director (aged 61)

Mr Barnes is a recently retired banker with experience in asset backed, structured and project financing with wide geographic exposure including Asia, Central/Eastern Europe, North and Latin America and Scandinavia. Between 2010 and 2015 Mr Barnes worked for BNP Paribas as managing director and co-head of its EMEA Shipping and Offshore business. He was also head of risk monitoring for Global Shipping at BNP Paribas. Prior to that, Mr Barnes had served as head of shipping (London) at Fortis Bank, head of specialised industries at Nomura International and as Corporate Finance Director of Barclays Bank and as a Director of its Shipping Industry Unit. He resides in the United Kingdom.

2. OTHER SERVICE PROVIDERS

2.1 Administrator and Secretary

Maitland Administration (Guernsey) Limited (formerly R&H Fund Services (Guernsey) Limited) has been appointed as administrator and secretary to the Company pursuant to the Administration Agreement (further details of which are set out in paragraph 6.4 of Part 11 of this document).

Maitland Administration (Guernsey) Limited was incorporated with limited liability in Guernsey on 20 January 2010 and is licensed by the Guernsey Financial Services Commission under The Protection of Investors (Bailiwick of Guernsey) Law, 1987.

The Administrator forms part of the Maitland group established in Luxembourg in 1976. Maitland is a global advisory, administration and family office firm providing legal, fiduciary investment and fund administration services to private, corporate and institutional clients. The group employs over 1,100 staff across 12 jurisdictions and collectively administer in excess of £250 billion in assets.

The Administrator provides day-to-day administration services to the Company and is also responsible for the Company's general administrative and secretarial functions such as the calculation of the Net Asset Value and maintenance of the Company's accounting and statutory records.

Under the terms of the Administration Agreement the Administrator is entitled to an administration fee on a sliding scale starting at 0.07 per cent. per annum of the prevailing Net Asset Value up to US\$150 million, reducing to 0.01 per cent. per annum of the prevailing Net Asset Value in excess of US\$300 million subject to a minimum of £58,500 per annum. The Administrator is also entitled to a one-off set up fee of £4,750 in respect of the C Shares being issued pursuant to the Issue and an on-going administration fee of £1,000 per month for administering the C Shares until such C Shares have been converted into Ordinary Shares.

2.2 Registrar

Computershare Investor Services (Guernsey) Limited has been appointed as registrar to the Company pursuant to the Registrar Agreement (further details of which are set out in paragraph 6.5 of Part 11 of this document). In such capacity, the Registrar will be responsible for the transfer and settlement of Shares held in certificated and uncertificated form. The Register may be inspected at the office of the Registrar.

Under the terms of the Registrar Agreement, the Registrar is entitled to an annual fixed fee of £6,500 plus certain additional fees for services such as dividend and annual general meeting management. The Registrar is also entitled to reasonable expenses under the Registrar Agreement.

2.3 Receiving Agent

Computershare Investor Services PLC has been appointed as receiving agent to the Company for the purposes of the Offer for Subscription pursuant to the Receiving Agent Agreement (further details of which are set out in paragraph 6.6 of Part 11 of this document). The Receiving Agent is entitled to a fee of £5,500.

2.4 Auditor

PricewaterhouseCoopers CI LLP provides audit services to the Company. The annual report and accounts are prepared according to accounting standards laid out under IFRS. The Auditor is entitled to an annual fee from the Company, which fee will be agreed with the Board each year in advance of the Auditor commencing audit work.

3. FEES AND EXPENSES OF THE COMPANY

3.1 Issue and Placing Programme expenses

The costs and expenses of and incidental to the Issue are expected to be a maximum of 2 per cent. of the gross proceeds of the Issue and will be borne by the holders of C Shares only. On the basis that the estimated gross proceeds of the Issue are US\$100 million, the net proceeds of the Issue will be US\$98 million. In the event that the Issue does not proceed all incurred costs and expenses shall be paid by the Company.

The net proceeds of the Placing Programme are dependent, inter alia, on the Directors determining to proceed with a Subsequent Placing under the Placing Programme and the level of subscriptions received and the price at which such Shares are issued. It is expected that the costs of issuing Shares under the Placing Programme will be covered by issuing such Shares at the Placing Programme Price.

The costs and expenses of any issue of C Shares under the Placing Programme will be paid out of the gross proceeds of such issue and will be borne by the holders of C Shares only.

3.2 On-going annual expenses

Ongoing annual expenses of the Company will be borne by the Company including fees paid to the Directors and service providers as detailed in paragraphs 2.1 to 2.4 of this Part 5 above and paragraph 1.2 of Part 4 of this document, travel, accommodation, printing, audit, finance costs, due diligence and legal fees. These fees and all reasonable out-of-pocket expenses of the Investment Manager, the Asset Manager, the Administrator and Company Secretary, the Registrar, the Auditor and the Directors relating to the Company will also be borne solely by the Company.

4. THE TAKEOVER CODE

The Takeover Code applies to the Company.

5. CORPORATE GOVERNANCE

The Board supports high standards of corporate governance and the development of corporate governance policies and procedures in compliance with the requirements of the AIC Code and the relevant provisions of the UK Corporate Governance Code.

The Company is a member of the AIC and complies with the principals of good governance contained in the AIC Code (which complements the UK Corporate Governance Code and provides a framework of best practice for listed investment companies) with reference to the AIC Guide. The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company as an investment company.

The Company will seek to comply with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code and will disclose any areas of non-compliance in its annual report and accounts.

The UK Corporate Governance Code includes provisions relating to:

the role of the chief executive;
the appointment of a senior independent director;
executive directors' remuneration; and
the need for an internal audit function.

The Board considers these provisions are not relevant to the position of the Company, being an externally advised investment company with an entirely non-executive board, and the Company does not therefore comply with them.

The GFSC's Finance Sector Code of Corporate Governance (the "Code") applies to the Company. The GFSC has stated in the Code that companies which report against the UK Corporate Governance Code or the AIC Code are deemed to meet the requirements of the Code, and need take no further action. Accordingly, as the Company will report against the AIC Code, it will be deemed to meet the requirements of the Code.

The Company's audit committee, which consists of all members of the Board, is chaired by Stephen Le Page and meets at least twice a year. The Board considers that the members of the audit committee have the requisite skills and experience to fulfil the responsibilities of the audit committee. The audit committee examines the effectiveness of the Company's control systems. It reviews the half-yearly and annual reports and will receive information from the Investment Manager. It will also review the scope, results, cost effectiveness, independence and objectivity of the external auditor.

The Board is responsible for considering the terms of appointment of the Investment Manager and other service providers of the Company and it will annually review such appointments and the terms of the Investment Management Agreement and other service providers' agreements.

6. DIRECTORS' SHARE DEALING

The Directors comply with the share dealing code adopted by the Company following implementation of the Market Abuse Regulation on 3 July 2016 in relation to their dealings in Shares. The Board are responsible for taking all proper and reasonable steps to ensure compliance with the share dealing code by the Directors.

PART 6 VALUATION REPORTS

SECTION A

The below valuation certificates prepared by VesselsValue in respect of six vessels in the Portfolio have been issued on 21 September 2018. The valuation date of each valuation certificate is 29 June 2018, save in respect of the valuation certificates for the two vessels which were acquired, or committed to be acquired, following the end of the financial period ended 30 June 2018, and accordingly have been valued as at 25 July 2018 and 20 September 2018 respectively (based on the dates on which they were acquired, or committed to be acquired, by the Company).

0DUNHW9DOXDWLRQ&HUWL¿FDWH

Category	Single Vessel
Issue Date	21 Sep 2018
Methodology Version	VV2
Valuation Date	29 Jun 2018
Issued To	Jonathan Hill of Tufton Oceanic

Market Value Vessel Ship Status

\$12.84m 6ZRUG¿VK Live

\$OOYDOXDWLRQVLQWKLVFHUWL¿FDWHDUHLQ86'ROODUV86'VXEMHFWWRWKH'LVFODimer attached.

		'HF&6%&.DRKVLXQJ7DLZDQ
*	LOA / Beam / Draft	175.1m / 27.9m / 9.5m
/LEHULD	Main Engine	0\$1% : 7S60MCC7 15,820 kW @
		105 RPM /RZ6SHHG'LHVHO
	Geared	<hv[&5< td=""></hv[&5<>
	TEU Nominal	1,713
	TEU 14T Homo	1,259
	Reefer Plugs	377
	+\$1'<&217\$,1(5 '19*/ 22,300 MT 07HႋLPDWHG/7	Built

Previous 10 Sales in Sector

Sale Date	Price	Sold Name	Type	Size	Blt	Yard
20 Jun 2018	\$8.00m	Saturn	+\$1'<&217\$,1(5	7(8	'08	-LDQJVX <dqj]lmldqj< td=""></dqj]lmldqj<>
19 Jun 2018	\$2.95m	Maymyo Star	+\$1'<&217\$,1(5	7(8	'95	&6%&.DRKVLXQJ
08 Jun 2018	\$14.25m	%X[KDUPRQ\	68%3\$1\$0\$;&217	7(8	'07	+':
07 Jun 2018	\$8.30m	6XႇRON7UDGHU	68%3\$1\$0\$;&217	7(8	'02	SSW Fahr
06 Jun 2018	\$9.25m	6HDMDGH	+\$1'<&217\$,1(5	7(8	'10	Avic Weihai Shipyar
06 Jun 2018	\$10.50m	Seapearl	+\$1'<&217\$,1(5	7(8	'11	:XKX;LQOLDQ6KLSEX
05 Jun 2018	\$9.10m	Magari	+\$1'<&217\$,1(5	7(8	'07	-LDQJVX <dqj]lmldqj< td=""></dqj]lmldqj<>
01 Jun 2018	\$8.00m	Hai Lian	68%3\$1\$0\$;&217	7(8	'02	9RONVZHUIW
25 May 2018	\$6.90m	\$UXQD,36\$	+\$1'<&217\$,1(5	7(8	'04	-LDQJVX <dqj]lmldqj< td=""></dqj]lmldqj<>
22 May 2018	\$11.00m	Welle	68%3\$1\$0\$;&217	7(8	'05	67;2ႇVKRUH

Methodology

The vessel's market value is estimated using five factors:

1. Type

Each ship type is modelled independently.

2. Features

Relative scores are assigned to all features recorded in the vessel database.

3. Age and 4. Cargo Capacity

The nonlinear dependences of value on age and cargo capacity are modelled using mathematical functions with adjustable parameters which allow them to assume a variety of shapes. Constraints are imposed on these parameters by application of economic principles and broking expertise.

5. Freight earnings

Time charters, spot freight rates and forward freight agreements are used to create indicators of freight market sentiment for each ship type. Signal processing techniques are applied to these indicators to maximise their correlation with vessel values.

Algorithms

The model is calibrated using confirmed sales prior to the date of valuation. Sales in circumstances which make them unreflective of fair market value (e.g. with charter) are excluded. Calibration is performed by computational algorithms which automatically adjust the parameters of the mathematical functions to best fit the sales data using multiple, nonlinear, constrained and weighted regression analysis. The software is run daily to ensure valuations reflect the latest sales and earnings information.

Glossary of Terms

Age - Age of a vessel at the time of sale.

Built - Year in which the vessel was delivered from its shipyard.

Category - Indicates whether the valuation is for a single vessel or portfolio of vessels.

Certificate Number - Unique identification code for each valuation certificate.

Features - a property of a vessel that has been given a score eg builder.

Historical Values - Market values of the vessel or portfolio prior the Issue Date. These are expressed for the first day of each month displayed.

IMO - International Maritime Organisation vessel identification number.

Issue Date - Date of creation of the valuation certificate.

Issued to - Email of the registered subscriber to VesselsValue.com by whom the valuation certificate was requested.

Market Value - An estimate of fair market price, in US Dollars (USD), as at the valuation date only and is based on the price VesselsValue estimates as its opinion in good faith that the vessel would obtain in a hypothetical transaction between a willing buyer and a willing seller on the basis of prompt charter free delivery at an acceptable worldwide delivery port, for cash payment on standard sale terms. Please see disclaimer below for more information.

Method - Indicates the valuation method used.

Monthly values - are as at 1st of the month.

Name - Current name of vessel or portfolio.

Previous 10 Sales in Sector - The previous 10 (ten) sales prior to the valuation date (in the same sector as the valued vessel).

Price - Approximate price, in US Dollars (USD), at which a vessel was sold.

Sale Date - Approximate date on which a vessel was sold.

Size - Cargo carrying capacity of the vessel in units appropriate to the Type (e.g. DWT, TEU, CBM, CUFT, etc.).

Sold Name - Name under which a vessel was sold.

Status :

Cancelled - Newbuilding terminated prior to launch Dead - Scrapped or lost Launched - Newbuilding on the water but not yet delivered

Live - Existing vessel trading or laid up Newbuild - On order or under construction Type - Type of vessel (e.g. VLCC, Capesize, etc.)

Valuation Date - Date for which valuation of the vessel or portfolio applies. This can be the same date as the Issue Date (in the case of a current valuation) or it can be prior to the Issue Date (in the case of a historical valuation).

Yard - Shipyard in which the vessel was built.

Methodology Version - The version of valuation methodology that this certificate was generated using.

Disclaimer

(a) The Market Value provided is an estimate of fair market price, in US Dollars (USD), as at the valuation date only, and is based on the price VesselsValue estimates as its opinion in good faith that the vessel would obtain in a hypothetical transaction between a willing buyer and a willing seller on the basis of prompt charter free delivery at an acceptable worldwide delivery port, for cash payment on standard sale terms.

(b) If the Market Value is lower than the Demolition Value the latter is displayed and denoted by an asterisk . The estimated Demolition Value is calculated by multiplying the lightweight in long tons by the current demolition price assuming delivery to a ship breaking yard in the Indian subcontinent but with all other terms per above.

(c) For the purposes of that opinion it is assumed that the particulars of the vessel are correct, and that the vessel is in good, sound and seaworthy condition, free of maritime liens and all debts whatsoever, fully classed to the requirements of her present classification society, free of class recommendations, with clean and valid trading certificates, and where relevant to type and age of vessel with full oil majors, Rightship and any other relevant approvals in place. It should be noted that VesselsValue has neither made a physical inspection of the vessel nor inspected her class records.

(d) No warranty is given as to the condition of the vessel, the correctness of its stated characteristics or particulars, or the state of or availability of its records.

(e) Any changes or corrections or altering of the Methodology could result in different valuations for the same vessel on the same valuation date but on different issue dates or times.

(f) The estimated Market Value is for the valuation date only and no assurance is given that the value will be sustained or is realisable in an actual transaction.

(g) See also Terms and Conditions set forth at www.vesselsvalue.com/terms.

Declaration

For the purposes of Prospectus Rule 5.3.3R(2)(f), we are responsible for this report as part of the prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the prospectus in compliance with item 1.2 of annex 1 of the Prospectus Directive.

Notes

A valuation with an asterisk next to it denotes that the vessel is being valued at scrap value (where this happens, it will usually be for older ships). This is calculated by using lightweight multiplied by the current demolition price assuming delivery at the demolition yard.

0DUNHW9DOXDWLRQ&HUWL¿FDWH

Category	Single Vessel
Issue Date	21 Sep 2018
Methodology Version	VV2
Valuation Date	29 Jun 2018
Issued To	Jonathan Hill of Tufton Oceanic

Market Value Vessel Ship Status

\$12.56m Kale Live

\$OOYDOXDWLRQVLQWKLVFHUWL¿FDWHDUHLQ86'ROODUV86'VXEMHFWWRWKH'LVFODimer attached.

Type	+\$1'<&217\$,1(5	Built	24 Sep 2008 CSBC Kaohsiung Taiwan
IMO	*	LOA / Beam / Draft	175.1m / 27.9m / 9.5m
Flag	/LEHULD	Main Engine	MAN B&W 7S60MCC7 15,820 kW @
Class	'19*/		105 RPM /RZ6SHHG'LHVHO
Ice Class		Geared	<hv[&5< td=""></hv[&5<>
DWT	22,300 MT	TEU Nominal	1,713
LDT	07HႋLPDWHG/7	TEU 14T Homo	1,259
		Reefer Plugs	377

Previous 10 Sales in Sector

Sale Date	Price	Sold Name	Type	Size	Blt	Yard
20 Jun 2018	\$8.00m	Saturn	+\$1'<&217\$,1(5	7(8	'08	-LDQJVX <dqj]lmldqj< td=""></dqj]lmldqj<>
19 Jun 2018	\$2.95m	Maymyo Star	+\$1'<&217\$,1(5	7(8	'95	CSBC Kaohsiung
08 Jun 2018	\$14.25m	%X[KDUPRQ\	68%3\$1\$0\$;&217	7(8	'07	+':
07 Jun 2018	\$8.30m	6XႇRON7UDGHU	68%3\$1\$0\$;&217	7(8	'02	SSW Fahr
06 Jun 2018	\$9.25m	6HDMDGH	+\$1'<&217\$,1(5	7(8	'10	Avic Weihai Shipyar
06 Jun 2018	\$10.50m	Seapearl	+\$1'<&217\$,1(5	7(8	'11	:XKX;LQOLDQ6KLSEX
05 Jun 2018	\$9.10m	Magari	+\$1'<&217\$,1(5	7(8	'07	-LDQJVX <dqj]lmldqj< td=""></dqj]lmldqj<>
01 Jun 2018	\$8.00m	Hai Lian	68%3\$1\$0\$;&217	7(8	'02	Volkswerft
25 May 2018	\$6.90m	\$UXQD,36\$	+\$1'<&217\$,1(5	7(8	'04	-LDQJVX <dqj]lmldqj< td=""></dqj]lmldqj<>
22 May 2018	\$11.00m	Welle	68%3\$1\$0\$;&217	7(8	'05	67;2ႇVKRUH