Belships

Investor Presentation • Nov 9, 2023

COMPANY PRESENTATION | Q3 2023 NOVEMBER 2023

Highlights – Q3 2023

SOLID RESULTS IN CHALLENGING MARKETS, FURTHER GROWTH IN THE PIPELINE

• EBITDA of USD 33.0m
• Net result of USD 15.3m
• Declared dividend of NOK 0.45 per share
• TCE of USD 17 905 gross per day for owned fleet 78 per cent outperformance of market
• Added 2x Ultramax newbuildings with delivery 2026-27, zero cash invested
• Prepaid USD 13.2m of bank debt two debt free vessels in the fleet
• 87 per cent of ship days in Q4 2023 are fixed at USD 17 800 gross per day
• 42 per cent of ship days in the next four quarters are fixed at USD 17 800 gross per day
• Cash breakeven for 2024 is expected to remain unchanged at USD 10 900 per day
• The newest Supra/Ultramax fleet with 38 ships including eight newbuildings

Earnings summary

Average TCE	EBITDA
USD 17 905/day	USD 33.0m
Net result	Dividend
USD 15.3m	NOK 0.45 per share

Financial position
Assets	Equity and liabilities
Cash and cash equivalents	Book value equity
USD 138.9m	USD 298.1m
Book value ships	Lease liabilities
USD 723.3m	USD 449.9m
Net working capital	Bank debt
USD -8.9m	USD 115.5m

Our business – Dry Bulk Shipowning and Operating

Total Return last 5 Years: Share Price including Dividends

Fleet doubled, twice

Acquired 33x new vessels lower prices

Divestments

Sold all old/non-Eco vessels at higher prices

Higher leverage

Fixed interest rates at bottom of market

Added value

Expanded Lighthouse Navigation, sold Technical

Risk Management

Chartered out most of the fleet

30x Vessels on the water today......

• Lease durations until 2027-2034
• Average cost of debt 5.2 per cent

......and 8x Newbuildings coming in 2024-2027

64 000 dwt Ultramax Bulk Carriers Delivery

Q4 2024

Q4 2025

Q4 2025 – Q1 2026

Q1 2026

H2 2026

H2 2026 (new)

H1 2027

Q2-Q3 2027 (new)

• Japanese-built 64 000 dwt Ultramax represents the highest quality and efficiency availabletoday
• Japanese lease financing with fixed costs
• 100% leverage No cash invested
• Cost of capital 6.5 per cent fixed rate all in
• 7 years duration with optional period up to 10 years
• Purchase options during the charter, all in USD
• No obligation to acquire any of the vessels
• A levered bet on a historically low order book

No cash invested, zero impact on dividend capacity during construction

Lighthouse Navigation – Dry Bulk Operating

Ultramax – Superior Risk/Reward

Average earnings per day last 7 years

Historically Low Orderbook – Newbuilding prices increasing

Lowest fleet growth in decades – Ageing fleet

ORDERBOOK/SUPPLY: The order book for Supra/Ultramax bulk carriers is about 7-8 per cent of the sailing fleet. In 2024 there will still be about the same % supply growth as this year, as about 160 vessels are scheduled to deliver. In 2025-26, however, we are heading towards the lowest rate of supply growth, in decades.

NUMBERS: There are about 4 100 ships on the water today in the 45 – 65 000 dwt bracket. Only 1/3 of these are Ultramax vessels. The rest – are smaller, older and/or non-economical.

Even if newbuilding supply doubled it would take a decade to modernise the existing fleet – let alone be sufficient to scale the adaptation of new fuels like ammonia/methanol.

Reduced amount of newbuildings coupled with very little scrapping/recycling has led to a consistantly ageing fleet (see graph left below).

NEWBUILDING PRICES: Ordering activity remains low, cost inflation and high demand from other shipping segments has reduced the available shipbuilding capacity. A Japanese Ultramax newbuilding would today cost about USD 38 (up from USD USD 37m in Q2) with available delivery from 2027 onwards.

SECONDHAND VESSEL VALUES: Secondhand values turned up in September and October but are still lower than at the start of the year. Modern vessels are clearly higher in demand than older, less economical ships.

Vessel Efficiency (Utilisation) is Back to Normal

Average fleet congestion and voyage duration

THE SUPPLY SIDE: The number of new ships being delivered (the orderbook) minus the number of ships being sent for recycling represents the net fleet growth in any given quarter. However, the supply side (number of available ships) is further determined by an increase or decrease in vessel utilisation, comprising of voyage distance, waiting time in port and vessel sailing speed.

CONGESTION : Port congestion, as measured by the average waiting time in port for ships to discharge, reduced marginally during the third quarter. The increase in 2020/21 was primarily driven by global bottlenecks in supply chains, and now appear to have receded to normal pre-Covid levels.

VOYAGE DURATION: Durations spiked after the Russian invasion of Ukraine, as many countries found alternative sources for energy and commodities. Average voyages now at normal levels.

SAILING SPEED: Currently the average sailing speed is below theoretical maximum. If a rapid increase in rates occurs, average speeds tend to increase. The new regulations (EEXI) in 2023 and Carbon Intensity Index (CII) from 2024 are clear signs of a new emission landscape emerging. Many old/noneconomical ships have to reduce max speed in order to achieve compliance, however, this has not yet had any material impact on the market.

EU will implement its Emissions Trading System for shipping from 1 Jan 2024 and this will start to affect vessel voyage planning and attract modern/economical ships to European trades, and may cause longer voyages for the dry bulk fleet as a whole.

10 Source: Fearnleys, Clarksons Research

A Normal, but Finely Balanced Market

Current freight market - Spot and FFA

RATES – The Baltic Supramax Index (BSI-58) averaged 10 028 per day in Q3 2023 – slightly down from 10 763 in Q2. The market development was rather volatile as rates recovered from very low levels of USD 7 500 in June and then rose to above USD 14 000 in October. Ultramax vessels typically earn a premium of about 15 per cent to the standard Baltic Supramax Index (BSI-58).

In September, Belships chartered out two vessels for short periods of 3-6 months at a gross rate of just below USD 15 000 per vessel per day.

DEMAND – According to Fearnleys, preliminary estimates for Q3 2023 shipment volumes were 282 million tonnes, an all-time high again, after 275 million tonnes in the preceding quarter. The highest growth (quarter-onquarter) was seen in minor bulks (7 per cent), coal (7 per cent) and grains (4 per cent). Iron Ore (-15 per cent), breakbulk cargoes (-11 per cent) and steel products (-7 per cent) contributed negatively. Fertilizer shipments were up slightly in volume, by two per cent.

Importantly, overall volumes continue to grow and show that the demand side is stable and resilient despite the turmoil in financial markets and concerns over inflation and interest rates.

Significant de-risk: Highly Profitable Contract Coverage

Cash break-even is USD 10 900 per vessel per day

Payouts since dividend policy Q2 2021

Creating value and returning it to shareholders

Strong Downside Protection, Significant Upside

Potential free cash flow yield next four quarters

Solid free cash flow and dividend capacity even in lower markets

Free cash flow is defined as: Cash flow from operations less the aggregate of i) Debt and lease payments ii) Dry docking expenses {USD/NOK 11.1, Share price NOK 17.5, BSI forward curve next four quarters} – basis 7 Nov 23 Free cash flow yield basis Belships' current contract coverage and contribution from Lighthouse Navigation per quarter equal to average last 5 years

The Nicest House, in an Up-and-Coming Neighbourhood

The Newest Ultramax Fleet

No need for modernisation

Low Cost, Long Duration Financing

Fixed interest rates, unique optionality

Market Dynamics

Short term headwinds versus historically low supply-side

Dividend Capacity

Contract coverage and high cash position

Value

Discount to Net Asset Values and favourable risk/reward

Important Information

This presentation has been prepared by Belships ASA (the "Company") exclusively for information purposes. This presentation is confidential and may not be copied, distributed, reproduced, published or passed on, directly or indirectly, in whole or in part, or disclosed by any recipient, to any other person (whether within or outside such person's organisation or firm) or published in whole or in part, by any medium or in any form for any purpose or under any circumstances.

The information in this presentation speaks as of 8 November 2023 and the Company assumes no obligation to amend, correct or update the information in this presentation. None of the Company or any of their respective directors, officers, employees, agents, affiliates, advisors or any person acting on their behalf, shall have any liability whatsoever, (whether direct or indirect, in contract, tort or otherwise) for any loss whatsoever arising from any use of this presentation, or otherwise arising in connection with this presentation.

The contents of this presentation shall not be construed as legal, business or tax advice, and the furnishing of this presentation should not be considered as the giving of investment advice by the Company or any of its directors, officers, agents, employees or advisers. Prospective investors should consult its own legal, business or tax advisor as to legal, business or tax advice.

This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forwardlooking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or subsidiaries or any such person's directors, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments.

This presentation has been prepared for information purposes only, and does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for any securities in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter into, any investment activity.

This presentation is subject to Norwegian law and any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo district court as legal venue.

Consolidated Statement of Income and Financial Position

	Q3	Q3	YTD Q3	YTD Q3
USD 1 000	2023	2022	2023	2022	2022
Gross freight revenue Note	125 020	210 459	418 357	720 177	926 494
Voyage expenses	-35 249	-59 381	-102 915	-151 895	-204 769
Net freight revenue 2	89 771	151 078	315 442	568 282	721 725
Management fees	85	-345	1 241	3 470	4 228
Operating income 2	89 857	150 733	316 683	571 752	725 953
Share of result from j/v and assoc. comp.	1 007	6 299	5 816	25 122	30 963
T/C hire expenses	-36 215	-84 036	-144 078	-369 256	-450 524
Ship operating expenses	-15 714	-12 785	-44 810	-39 845	-55 571
Operating expenses management companies	-4 583	-2 633	-12 596	-16 970	-22 209
General and administrative expenses	-1 371	-1 218	-4 211	-5 469	-7 068
Operating expenses	-56 876	-94 373	-199 879	-406 418	-504 409
EBITDA	32 981	56 360	116 804	165 334	221 544
Depreciation and amortisation 3	-10 640	-10 753	-33 242	-28 068	-38 992
Gain on sale of ships 3	316	9 966	316	22 274	22 274
Other gains/(-losses)	-326	-1 695	431	2 874	1 342
Operating result (EBIT)	22 331	53 878	84 310	162 414	206 168
Interest income	868	302	1 839	400	958
Interest expenses	-8 375	-7 293	-25 398	-18 009	-26 106
Other financial items	1 022	556	840	-4 878	-1 877
Currency gains/(-losses)	-512	2 653	-1 202	2 784	-2 183
Net financial items	-6 998	-3 782	-23 922	-19 703	-29 208
Result before taxes	15 333	50 096	60 388	142 711	176 960
Taxes	-32	-251	-304	-2 115	-2 041
Net result from continuing operations	15 301	49 845	60 083	140 596	174 919
Result from discontinuing operation 5	0	-79	8 806	264	141
Net result for the period	15 301	49 766	68 889	140 860	175 060
Hereof majority interests	15 047	46 670	62 503	120 423	146 886
Hereof non-controlling interests	254	3 096	6 386	20 437	28 174
Earnings per share for continuing operations	0,06	0,20	0,24	0,56	0,69
Diluted earnings per share for continuing operations	0,06	0,19	0,24	0,55	0,68
Earnings per share	0,06	0,20	0,27	0,56	0,69
Diluted earnings per share	0,06	0,19	0,27	0,55	0,68

Consolidated statement of income Consolidated statement of financial position

		30 Sep	30 Sep	31 Dec
USD 1 000		2023	2022	2022
NON-CURRENT ASSETS	Note
Ships	3	723 305	724 314	747 042
Prepayment of ships		0	13 500	6 900
Property, Plant, and Equipment		972	3 806	3 702
Investments in j/v and assoc. companies		9 006	25 057	29 483
Other non-current assets		1 082	104	1 076
Total non-current assets		734 365	766 781	788 203
CURRENT ASSETS
Bunker inventory		9 938	15 288	14 675
Current receivables		45 044	75 893	57 544
Cash and cash equivalents		138 934	116 302	139 871
Total current assets		193 915	207 483	212 090
Total assets		928 281	974 264	1 000 293
EQUITY AND LIABILITIES
Equity
Paid-in capital		141 416	157 839	158 359
Retained earnings		127 149	91 739	98 864
Non-controlling interests		29 577	32 371	40 112
Total equity		298 142	281 949	297 335
NON-CURRENT LIABILITIES
Long-term interest bearing debt	4	537 889	516 613	555 202
Other non-current liabilities		828	1 633	1 729
Total non-current liabilities		538 717	518 246	556 931
CURRENT LIABILITIES
Current portion of interest bearing debt	4	27 512	69 133	50 053
Other current liabilities		63 909	104 936	95 974
Total current liabilities		91 422	174 069	146 027
Total equity and liabilities		928 281	974 264	1 000 293

Appendix: Uniform and Modern Fleet of 38 Bulk Carriers

Vessel	Built	DWT	Yard	Vessel	Built	DWT	Yard
NEWBUILD 8 (new)	2027	64 000	Japan	BELFUJI	2020	63 000	Imabari
NEWBUILD 7	2027	64 000	Japan	BELNIKE	2020	63 000	Imabari
NEWBUILD 6 (new)	2026	64 000	Japan	BELTANGO	2020	64 000	Mitsui
NEWBUILD 5	2026	64 000	Japan	BELFORTE	2019	64 000	Mitsui
NEWBUILD 4	2026	64 000	Japan	BELRAY	2019	61 000	Shin Kurushima
NEWBUILD 3	2025	64 000	Japan	BELNIPPON	2018	63 000	Imabari
NEWBUILD 2	2025	64 000	Japan	BELAFONTE	2017	63 000	Imabari
NEWBUILD 1	2024	64 000	Japan	BELHAVEN	2017	63 000	Imabari
BELMONDO	2023	64 000	Imabari	BELTIGER	2017	63 000	New Times
BELYAMATO	2022	64 000	Imabari	BELISLAND	2016	61 000	Imabari
BELTOKYO	2021	64 000	Imabari	BELINDA	2016	63 000	Hantong
BELFORCE	2021	61 000	Dacks	BELMONT	2016	63 000	Hantong
BELKNIGHT	2021	61 000	Dacks	BELATLANTIC	2016	63 000	Hantong
BELTRADER	2021	61 000	Dacks	BELLIGHT	2016	63 000	New Times
BELGUARDIAN	2021	61 000	Dacks	BELFRIEND	2016	58 000	Tsuneishi
BELMAR	2021	64 000	Imabari	BELTIDE	2016	58 000	Tsuneishi
BELFAST	2021	64 000	Imabari	BELFOREST	2015	61 000	Imabari
BELAJA	2020	61 000	Shin Kurushima	BELHAWK	2015	61 000	Imabari
BELMOIRA	2020	61 000	Shin Kurushima	BELSOUTH	2015	63 000	Hantong