Belships

Investor Presentation • Aug 17, 2022

COMPANY PRESENTATION | Q2 2022 AUGUST 2022

Belships ASA – Owner and Operator of Bulk Carriers

Highlights – Q2 2022

Earnings summary CONTINUED GROWTH, PROFITABILITY, AND DIVIDEND

• Operating income of USD 194.0m (USD 140.4m)
• EBITDA of USD 48.9m (USD 36.0m) including USD 9.4m from Lighthouse Navigation
• Net result of USD 31.6m (USD 22.5m)
• Declared dividend of USD 19.5m (NOK 0.75 per share)
• TCE of USD 24 437 gross per day for owned fleet
• Acquired five modern Ultramaxes and divested one vessel, net cash invested USD 6m
• Secured time charter contracts for five vessels for periods of about 2 years
• 97 per cent of ship days in Q3 are booked at about USD 24 200 gross per day. 72 per cent of ship days in the next four quarters are booked at about USD 23 500 gross per day.
• Modern fleet of 31 vessels with an average age below four years and daily cash breakeven for 2022 of about USD 10 000 per vessel

Q2 2022	Q2 2021
Average TCE	Average TCE
USD 24 437/day	USD 18 031/day
EBITDA	EBITDA
USD 48.9m	USD 36.0m
Net result	Net result
USD 31.6m	USD 22.5m

Financial position
Assets	Equity and liabilities
Cash and cash equivalents	Book value Equity
USD 130.8m	USD 266.5m
Ships	Interest bearing debt
USD 696.0m	USD 567.3m
Other assets	Other liabilities
USD 136.7m	USD 129.7m

Proven Ability to Execute Growth Strategy

Execution

Acquisitions

Purchased 24 new ECO vessels

Divestments

Sold 10 oldest vessels in fleet

Cash Investment Net cash invested of USD -5m

Financing 75 per cent of debt with fixed interest rates

Added value creation

Expanded Lighthouse Navigation

Result

Uniform Fleet

31x modern ECO bulk carriers

Low cost model Cash breakeven of USD 10 000

Dividends

NOK 4.85 per share since Q2 2021

Total return Top performing dry-bulk share last 3 years

Market Cap USD 100m USD 500m

Lighthouse Navigation – Dry Bulk Operating

Track record

Profitable every year since inception in 2009

Risk Management

Skin in the game - leading employees invested

Growth

Offices in 4 countries with 80 employees

Volume

About 65 vessels under operation*

Performance

Average EBITDA of USD 12.7m last eight quarters

Ultramax – Superior Risk/Reward

Average earnings per day - Last 3 years

Ultramax: BSI58 plus 10% premium Kamsarmax: BPI82 Capesize: BCI 5TC Source: Baltic Exchange

| BELSHIPSASA | 6

Market Update – Historically Low Orderbook

Lowest fleet growth in decades

ORDERBOOK/SUPPLY - The order book for Supra/Ultramax bulk carriers is about 6 per cent. In relative terms, we are heading towards the lowest rate of supply growth in 30 years. 58 Supra/Ultramax bulk carriers have been delivered year-to-date. Only 41 vessels are scheduled to be delivered for the remaining part of the year. 103 vessels are scheduled to be delivered in 2023, however, it may be lower as some orders are usually, delayed, cancelled or incorrectly reported.

The new regulations (EEXI) in 2023 might cause a slight contraction on the supply side as older vessels may have to reduce their maximum sailing speed. However, high bunker prices have already resulted in a moderate reduction in average sailing speeds, therefore reducing the chance for any dramatic effects from new regulations in January 2023.

NEWBUILDING PRICES: Ordering activity for bulk carriers remains low, prices have increased due to rising input costs and high demand from other shipping segments. This has reduced the available shipbuilding capacity for bulk carriers for the next two years. A Japanese Ultramax newbuilding would today cost in the region of USD 38m with delivery in end 2024/beginning 2025.

SECONDHAND VESSEL VALUES: The value of a 5-year old Japanese-built Ultramax today is in the region of USD 34m. With current earnings in the region of USD 20 000 per day and net annual cash flow per vessel USD 4m, it is clearly in favour of buying existing vessels rather than contracting newbuildings.

Supra/Ultramax order book

Market Update – Highly Profitable Levels

Current freight market - Spot and FFA

RATES – The Baltic Supramax Index (BSI-58) averaged 28 900 per day – up from USD 25 115 in the first quarter. In May rates peaked above USD 30 000 per day. The FFA market is currently trading at USD 19 000 for Supramaxes for the near term, with Ultramaxes earning an additional premium.

CARGO – Breakbulk/minor bulks increased 8%, whereas iron ore dropped significantly. Growth in minor bulk commodities reflect high rates of global industrial production, whereas iron ore continues to be impacted both by lower demand from China and disappointments in output from South America. Chinese steel production is still down y-o-y. Grain volumes fell 6% y-o-y, notably impacted by the lack of Ukrainian exports where ports remained closed. Coal has returned to growth with stock building in Europe and the recent ban on Russian coal into EU, this is expected to accelerate. High demand in the container markets continue to add support as some cargoes typically transported in containers are being shipped in bulk carriers. Total dry bulk volumes for Supra/Ultramax showing q-o-q growth. Shipment volumes for July also increased despite the soft rate sentiment in the same month.

CONGESTION - Port congestion in general has increased over the past three years. Extra waiting time in port has abated somewhat from earlier this year, however is still a factor in most regions.

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 recession fears has lowered GDP growth estimates, still positive for 2023. China economic stimulus expected to continue which tends to support infrastructure and dry bulk demand.

Significant de-risk: Highly Profitable Contract Coverage

Cash breakeven for remaining open days in 2023 is below zero

Payout since dividend policy Q2 2021

Focus on returning value to shareholders

Undervalued – Strong Downside Protection

Potential free cash flow yield next four quarters

60%

Significant free cash flow and dividend capacity

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 9.7, Mcap USD 500m, BSI 17 504} – basis 11 Aug 22

Free cash flow yield basis Belships' current contract coverage and contribution from Lighthouse Navigation equal to average last eight quarters

Belships ASA - Investment Highlights

Platform

Proven track record – growth delivered

Market

Lowest orderbook in 30 years

Visibility

Highly profitable contract coverage

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 11 August 2022 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		2022	2021	2022	2021	2021
Gross freight revenue	Note	251 431	165 691	509 718	272 981	808 237
Voyage expenses		-61 712	-27 006	-92 514	-59 360	-164 929
Net freight revenue	2	189 719	138 685	417 204	213 621	643 308
Management fees		4 298	1 719	6 301	3 172	7 366
Operating income	2	194 017	140 404	423 505	216 793	650 674
Share of result from j/v and assoc. comp.		6 521	1 723	18 887	2 483	14 323
T/C hire expenses		-128 402	-88 253	-285 220	-134 925	-400 710
Ship operating expenses		-13 698	-9 550	-27 060	-20 365	-50 457
Operating expenses management companies		-7 839	-6 953	-16 403	-10 916	-30 756
General and administrative expenses		-1 650	-1 404	-4 251	-2 373	-4 795
Operating expenses		-145 068	-104 437	-314 047	-166 096	-472 395
EBITDA		48 949	35 967	109 458	50 697	178 279
Depreciation and amortisation	3	-9 099	-6 313	-17 335	-13 853	-28 735
Gain on sale of ships	3	0	0	12 308	0	15 333
Other gains/(-losses)		1 075	-5	4 569	-6 739	-4 048
Operating result (EBIT)		40 925	29 649	109 000	30 105	160 829
Interest income		96	212	100	431	815
Interest expenses		-5 637	-3 325	-10 716	-6 841	-15 881
Other financial items		-3 818	-196	-5 446	-344	-2 308
Currency gains/(-losses)		690	99	49	-148	-1 325
Net financial items		-8 669	-3 210	-16 013	-6 902	-18 699
Result before taxes		32 256	26 439	92 987	23 203	142 130
Taxes		-696	-3 951	-1 893	15 792	-8 708
Net result		31 560	22 488	91 094	38 995	133 422
Hereof majority interests		27 015	15 565	73 753	30 479	103 983
Hereof non-controlling interests		4 545	6 923	17 341	8 516	29 439
Earnings per share		0.12	0.09	0.36	0.16	0.54
Diluted earnings per share		0.12	0.09	0.35	0.16	0.53

Consolidated statement of income Consolidated statement of financial position

		30 Jun	30 Jun	31 Dec
USD 1 000		2022	2021	2021
NON-CURRENT ASSETS	Note
Intangible assets		0	17 074	0
Ships	3	677 316	383 190	580 628
Prepayment of ships		13 500	12 210	0
Property, Plant, and Equipment		3 955	4 836	4 227
Investments in j/v and assoc. companies		18 295	4 176	13 997
Other non-current assets		472	2 553	821
Total non-current assets		713 538	424 039	599 673
CURRENT ASSETS
Assets held for sale	3	18 651	0	23 933
Bunker inventory		33 607	12 220	16 492
Current receivables		66 899	39 586	52 332
Cash and cash equivalents		130 797	63 363	105 204
Total current assets		249 954	115 169	197 961
Total assets		963 492	539 208	797 634
EQUITY AND LIABILITIES
Equity
Paid-in capital		157 637	154 319	158 802
Retained earnings		64 002	36 499	82 739
Non-controlling interests		44 820	13 115	31 378
Total equity		266 459	203 933	272 919
NON-CURRENT LIABILITIES
Deferred tax		4 595	0	0
Long-term interest bearing debt	4	516 445	254 434	412 881
Other non-current liabilities		1 676	2 247	1 757
Total non-current liabilities		522 716	256 681	414 638
CURRENT LIABILITIES
Current portion of interest bearing debt	4	50 839	24 858	24 467
Other current liabilities		123 478	53 736	85 610
Total current liabilities		174 317	78 594	110 077
Total equity and liabilities		963 492	539 208	797 634

Uniform and Modern Fleet of 31 Bulk Carriers

Vessel	Built	DWT	Yard	Vessel	Built	DWT	Yard
Newbuild TBN BELMONDO	2023	64 000	Imabari	BELNIPPON	2018	63 000	Imabari
Newbuild TBN BELYAMATO	2022	64 000	Imabari	BELAFONTE	2017	63 000	Imabari
BELTOKYO	2021	64 000	Imabari	BELHAVEN	2017	63 000	Imabari
BELFORCE	2021	61 000	Dacks	BELTIGER	2017	63 000	New Times
BELKNIGHT	2021	61 000	Dacks	BELISLAND	2016	61 000	Imabari
BELTRADER	2021	61 000	Dacks	BELINDA	2016	63 000	Hantong
BELGUARDIAN	2021	61 000	Dacks	BELMONT	2016	63 000	Hantong
BELMAR	2021	64 000	Imabari	BELATLANTIC	2016	63 000	Hantong
BELFAST	2021	64 000	Imabari	BELLIGHT	2016	63 000	New Times
BELAJA	2020	61 000	Shin Kurushima	BELFRIEND	2016	58 000	Tsuneishi
BELMOIRA	2020	61 000	Shin Kurushima	BELTIDE	2016	58 000	Tsuneishi
BELFUJI	2020	63 000	Imabari	BELVEDERE	2015	66 000	Mitsui
BELGRACE	2020	63 000	Imabari	BELFOREST	2015	61 000	Imabari
BELTANGO	2020	64 000	Mitsui	BELHAWK	2015	61 000	Imabari
BELFORTE	2019	64 000	Mitsui	BELSOUTH	2015	63 000	Hantong
BELRAY	2019	61 000	Shin Kurushima