Belships

Investor Presentation • Aug 21, 2023

COMPANY PRESENTATION | Q2 2023 AUGUST 2023

Our business – Dry Bulk Shipowning and Operating

Highlights – Q2 2023

Earnings summary STRONG OPERATIONAL PERFORMANCE, FURTHER GROWTH IN THE PIPELINE

• EBITDA of USD 40.5m including USD 6.8m from Lighthouse Navigation
• Net result of USD 25.8m
• Declared dividend of NOK 0.60 per share
• TCE of USD 19 099 gross per day for owned fleet 77 per cent outperformance of market
• Strategic partnership with V.Group and divestment of technical management business, realised book gain of USD 8.5m
• Sold 2015-built BELVEDERE, net cash of USD 10m after debt repayment
• Added 2x Ultramax newbuildings with delivery 2026-2027, zero cash invested
• 91 per cent of ship days in Q3 2023 are fixed at USD 18 100 gross per day
• 58 per cent of ship days in the next four quarters are fixed at USD 18 100 gross per day
• Cash breakeven for 2023 of about USD 10 900 per vessel per day
• The newest Supra/Ultramax fleet with 36 ships including newbuildings

Average TCE	EBITDA
USD 19 099/day	USD 40.5m
Net result	Dividend
USD 25.8m	NOK 0.60 per share

Financial position
Assets	Equity and liabilities
Cash and cash equivalents	Book value equity
USD 148.2m	USD 300.9m
Book value ships	Lease liabilities
USD 760.4m	USD 457.6m
Net working capital	Bank debt
USD -14.3m	USD 145.0m

New Fleet – Unparalleled Optionality

• All with fixed interest rates, zero covenants
• All leases with purchase options, no obligations
• Average maturity in 2032
• No covenants restricting dividend distributions
• Maturity in 2027

Newbuildings with Zero Cash Invested

Q4 2024

Q4 2025

Q4 2025

1H 2026

2H 2026

• Japanese-built 64 000 dwt Ultramax represents the highest quality and efficiency available today
• Japanese lease financing with fixed costs
• 100% leverage No cash invested
• 7 years duration with optional period upto 10 years
• Average cash breakeven about USD 14 100/day
• 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

Zero impact on cash and dividend capacity during construction period

Lighthouse Navigation – Dry Bulk Operating

Undervalued – Strong Downside Protection

Potential free cash flow yield next four quarters

40%

Significant 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 10.6, Share price NOK 17.3, BSI forward curve next four quarters} – basis 18 Aug 23 Free cash flow yield basis Belships' current contract coverage and contribution from Lighthouse Navigation per quarter equal to average last 5 years

Ultramax – Superior Risk/Reward

Average earnings per day last 7 years

Compelling Supply Side – Historically Low Orderbook

Lowest fleet growth in decades – Ageing fleet

ORDERBOOK/SUPPLY - The order book for Supra/Ultramax bulk carriers is about 7 per cent. We are heading towards the lowest rate of supply growth in 30 years. Reduced amount of newbuildings coupled with very little scrapping/recycling has led to a consistantly ageing fleet (see graph left below).

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

100x vessels are scheduled to be delivered in 2023. 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.

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 in the region of USD 37m with available delivery from end 2026 onwards.

SECONDHAND VESSEL VALUES: Secondhand values have decreased 10-15 per cent since May and are now back at about the same level as at the start of the year. Modern vessels are clearly higher in demand than older, less economical ships.

Vessel Utilisation Back to Normal – Though, Speed is Still Low

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: The increase was primarily driven by global bottlenecks in supply chains, and now appear to have receded to 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 pre-war levels.

SAILING SPEED: Currently the average sailing speed is below theoretical maximum. If a rapid increase in rates occur, average speeds tend to increase historically. The new regulations (EEXI) in 2023 and Carbon Intensity Index (CII) from 2024 are clear signs of a new emission landscape emerging. Many old/non-economical ships have to reduce max speed in order to achieve compliance, however this has no impact on the current market. We believe it will be a competitive advantage to operate the most modern fleet possible over the next 5-10 years.

From Cold to Lukewarm – Increased Expectations

Current freight market - Spot and FFA

RATES – The Baltic Supramax Index (BSI-58) averaged 10 763 per day – slightly up from 10 171 in Q1. The Baltic Exchange Supramax spot index is currently about USD 9 500 after being very weak thru the summer and now seems to have bottomed out. Freight Forward Agreements (FFA) currently indicate a market average of about USD 13 500 for an Ultramax for the remaining part of the year.

DEMAND – According to Fearnleys, preliminary estimates for Q2 2023 shipment volumes were 275 million tonnes, an all-time high. Quarter-on-quarter, the highest growth was seen in minor bulks, steel products and fertilizer shipments, which all increased more than 10 per cent. Coal and grains shipments contributed negatively, falling by 4.5 and 3.5 per cent, respectively. Shipments of grains out of Ukrainian ports has come to a complete stop. Further, iron ore shipments dropped by 16 per cent, and breakbulk shipments fell by a mere half per cent.

FOOD, ENERGY AND INFRASTRUCTURE – Seaborne iron ore is predominantly driven by Chinese demand for steel production, whereas minor bulks tend to correlate closer with wider GDP growth. Rising inflation and interestrates has lowered GDP growth forecasts, though the risk of a recession and hard landing seems to fade. China reopening has delayed and underperformed, whilst economic stimulus is expected to support dry bulk demand in the medium term.

Significant de-risk: Highly Profitable Contract Coverage

2023 Belships cash break-even USD 10 900 per vessel per day

Payouts since dividend policy Q2 2021

Creating value and returning it to shareholders

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

The Newest Ultramax Fleet

No need for modernisation

Low Cost and Flexible Financing

Fixed interest rates, with unique optionality

Market Dynamics

Short term headwinds vs lowest orderbook in 30 years

Dividend Capacity Secured

Solid contract coverage and cash position

Value

Discount to NAV and outsized dividend yield

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 18 August 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

	Q2	Q2	YTD Q2	YTD Q2
USD 1 000	2023	2022	2023	2022	2022
Gross freight revenue Note	145 473	251 431	293 337	509 718	926 494
Voyage expenses	-30 898	-61 712	-67 666	-92 514	-204 769
Net freight revenue 2	114 575	189 719	225 671	417 204	721 725
Management fees	624	3 113	1 155	3 815	4 228
Operating income 2	115 199	192 832	226 826	421 019	725 953
Share of result from j/v and assoc. comp.	1 379	6 483	4 809	18 823	30 963
T/C hire expenses	-56 132	-128 402	-107 863	-285 220	-450 524
Ship operating expenses	-14 761	-13 698	-29 096	-27 060	-55 571
Operating expenses management companies	-3 731	-6 823	-8 013	-14 337	-22 209
General and administrative expenses	-1 500	-1 650	-2 840	-4 251	-7 068
Operating expenses	-74 745	-144 090	-143 003	-312 045	-504 409
EBITDA	40 454	48 742	83 823	108 974	221 544
Depreciation and amortisation 3	-11 331	-9 089	-22 602	-17 315	-38 992
Gain on sale of ships 3	0	0	0	12 308	22 274
Other gains/(-losses)	-1 073	1 075	757	4 569	1 342
Operating result (EBIT)	28 050	40 728	61 978	108 536	206 168
Interest income	559	95	971	98	958
Interest expenses	-8 551	-5 637	-17 023	-10 716	-26 106
Other financial items	371	-3 815	-182	-5 434	-1 877
Currency gains/(-losses)	-2 842	793	-690	131	-2 183
Net financial items	-10 463	-8 564	-16 924	-15 921	-29 208
Result before taxes	17 587	32 164	45 054	92 615	176 960
Taxes	-225	-680	-272	-1 864	-2 041
Net result from continuing operations	17 362	31 484	44 782	90 751	174 919
Result from discontinuing operation 5	8 458	76	8 806	343	141
Net result for the period	25 820	31 560	53 588	91 094	175 060
Hereof majority interests	24 266	27 015	47 456	73 753	146 886
Hereof non-controlling interests	1 554	4 545	6 132	17 341	28 174
Earnings per share for continuing operations	0.07	0.12	0.18	0.36	0.69
Diluted earnings per share for continuing oper.	0.07	0.12	0.18	0.36	0.69
Earnings per share	0.10	0.12	0.21	0.36	0.69
Diluted earnings per share	0.10	0.12	0.21	0.36	0.69

Consolidated statement of income Consolidated statement of financial position

		30 Jun	30 Jun	31 Dec
USD 1 000		2023	2022	2022
NON-CURRENT ASSETS	Note
Ships	3	760 412	677 316	747 042
Prepayment of ships		0	13 500	6 900
Property, Plant, and Equipment		1 064	3 955	3 702
Investments in j/v and assoc. companies		7 847	18 295	29 483
Other non-current assets		1 050	472	1 076
Total non-current assets		770 373	713 538	788 203
CURRENT ASSETS
Assets held for sale	3	0	18 651	0
Bunker inventory		9 217	33 607	14 675
Current receivables		33 055	66 899	57 544
Cash and cash equivalents		148 234	130 797	139 871
Total current assets		190 506	249 954	212 090
Total assets		960 879	963 492	1 000 293
EQUITY AND LIABILITIES
Equity
Paid-in capital		141 096	157 637	158 359
Retained earnings		133 879	64 002	98 864
Non-controlling interests		25 937	44 820	40 112
Total equity		300 912	266 459	297 335
NON-CURRENT LIABILITIES
Deferred tax		0	4 595	0
Long-term interest bearing debt	4	557 482	516 445	555 202
Other non-current liabilities		845	1 676	1 729
Total non-current liabilities		558 327	522 716	556 931
CURRENT LIABILITIES
Current portion of interest bearing debt	4	45 100	50 839	50 053
Other current liabilities		56 540	123 478	95 974
Total current liabilities		101 640	174 317	146 027
Total equity and liabilities		960 879	963 492	1 000 293

Appendix: Uniform and Modern Fleet of 36 Bulk Carriers

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