Belships

Quarterly Report • Nov 12, 2021

QUARTERLY REPORT – Q3 2021

12 November 2021

Belships ASA

Lilleakerveien 6D, N-0283 Oslo, Norway www.belships.com Enterprise no: NO 930776793 MVA

STRONG QUARTER – RETURNING VALUE TO SHAREHOLDERS

HIGHLIGHTS

• Operating income of USD 205.3m (USD 43.3m)
• EBITDA of USD 57.1m (USD 5.9m) including USD 23.3m from Lighthouse Navigation
• Net result of USD 35.2m (USD -4.2m)
• Declared dividend of USD 16.0m (NOK 0.55 per share)
• Net TCE of USD 25 378 per day for owned fleet
• Entered into agreements to acquire two new Ultramax bulk carriers
• 77 per cent of ship days in Q4 are booked at about USD 29 000 net per day. 42 per cent of ship days in the next four quarters are booked at about USD 25 500 net per day
• Modern fleet of 30 vessels with an average age of about 4 years and cash breakeven of about USD 10 500 per day

Subsequent events

• BELFRI (2007) was delivered to its new owners in October 2021. Net cash flow upon delivery was approximately USD 9.0m after repayment of outstanding loans.
• Belships entered into an agreement for the acquisition of two bulk carriers of 58 000 dwt built in 2016 by a Japanese shipyard to be named BELFRIEND and BELTIDE upon delivery. The purchase price was USD 28.0m per vessel, of which 60 per cent will be financed under a new bank loan facility. Delivery is expected November-December 2021.
• Belships entered into an agreement for the acquisition of a Japanese Ultramax newbuilding resale of 64 000 dwt to be named BELMONDO. Delivery is expected January 2023.
• BELCARGO (2008) was delivered to its new owners in November 2021. Net cash flow upon delivery was approximately USD 11.0m after repayment of outstanding loans.
• BELHAVEN has been fixed for a time charter contract for about 22-24 months duration at a gross rate of USD 26 250 per day. The contract commenced during October 2021.
• Previously announced time charter contract on BELPAREIL for about 23-25 months duration at a gross rate of USD 25 500 per day has been cancelled due to delays under current voyage.
• BELSOUTH has been fixed for a time charter contract for about 23-25 months duration at a gross rate of USD 25 500 per day. The contract commenced during November 2021.
• BELHAWK, an Ultramax bulk carrier of 61 000 dwt built in 2015 was delivered in November 2021 and has commenced a time charter contract for about 3-5 months at a gross rate of USD 35 000 per day.

Financial results commentary

Belships reports a net result of USD 35.2m for Q3 2021, compared to a net result of USD -4.2m for Q3 2020. The increase in net result is mainly caused by the improved freight market and Belships

increased fleet during the last year. EBITDA contribution from Lighthouse Navigation was USD 23.2m in Q3 2021 compared to USD 0.9m in Q3 2020. The increase in EBITDA from Lighthouse Navigation is due to the expansion of the companies in addition to rapidly improved freight markets. Net freight revenue for owned vessels was USD 106.0m in Q3 2021 compared to USD 43.7m in Q3 2020. The increase in net freight revenue is driven by an increase in TCE on owned vessels from 9 067 in Q3 2020 to 25 378 in Q3 2021 and an increase in active days of about 25 per cent.

Fleet status

Time charter equivalent per ship in the quarter were recorded at USD 25 378 net per day versus BSI index of USD 32 478 net per day for the same period. The inherent lag in our business means that when the spot markets fall, our outperformance will tend to be higher. Conversely, when the market rises, our performance will tend to lag on a short-term basis. It is also caused by a certain number of vessels in the fleet performing period time charter contracts which contributed to increase our contract coverage for 2022-2023.

Approximately 77 per cent of available ship days in Q4 are booked at about USD 29 000 net per day. Approximately 42 per cent of available ship days in the next four quarters are booked at about USD 25 500 net per day.

BELATLANTIC and BELLIGHT were drydocked in the quarter. The remaining fleet sailed without significant off-hire in the quarter with a total of 1 981 on-hire days.

BELTIGER, BELTRADER, BELGUARDIAN and BELKNIGHT were delivered in August. BELFORCE and BELMAR were delivered in September.

Updated delivery schedule for new vessels: BELTIDE is expected mid-November 2021 BELFRIEND is expected beginning of December 2021 BELTOKYO is expected mid-December 2021 BELYAMATO is expected Q4 2022 BELMONDO is expected January 2023

Transactions

In July, Belships entered into an agreement for the sale of BELFRI (2007). Delivery of the vessel occurred in October and Belships realised a gain of approximately USD 4.6m. Net cash flow upon delivery was USD 9.0m after repayment of outstanding loans.

In July, Belships entered into an agreement for the acquisition of two 64 000 dwt Ultramax newbuilding resales under construction at a Japanese shipyard. BELTOKYO is expected to be delivered December 2021 and BELYAMATO is expected to be delivered November 2022. BELTOKYO will be leased on a bareboat charter for a period of 12 years. The estimated cash breakeven for the vessel upon delivery is about USD 11 750 per day including operational expenses. The agreement comes with purchase options and there are no obligations to purchase the vessel. A similar financing arrangement is expected to be arranged for BELYAMATO before delivery.

In August, Belships has entered into an agreement for the sale of BELCARGO (2008). Delivery of the vessel occurred in November 2021 and Belships will realise a gain of approximately USD 5.5m. Net cash flow upon delivery will be approximately USD 11.0m after repayment of outstanding loans.

Belships' fleet has increased and improved with only modest cash investments, signalling the competitive advantage Belships has in sourcing ship finance. The Japanese-designed Ultramax bulk carriers entering the fleet represent the highest quality and lowest fuel consumption available in the market today.

Lighthouse Navigation

Lighthouse Navigation has delivered another record quarter with EBITDA of USD 23.3m for the third quarter, bringing the year-to-date EBITDA up to USD 41.3m. We expect to make provisions for potential loss-making contracts if the reduction in forward freight assessments observed so far in the fourth quarter continue towards the end of the year.

Sustainability

Belships aims for the highest standards in corporate governance and is well placed to deliver emission cuts in line with industry ambitions for 2030. Belships published a comprehensive sustainability report in 2020 (ESG Report) reflecting our ongoing commitment to transparency and meeting investor and stakeholder expectations.

Covid-19 has greatly impacted seafarers, and we have signed the Neptune declaration on Seafarer Wellbeing and Crew Change to join forces with more than 600 shipping companies to influence governments and policy makers to adopt relief measures for our essential workers.

Financial and corporate matters

At the end of the quarter, cash and cash equivalents was USD 106.5m, while mortgage debt was USD 135.2m.

Net leasing liability at the end of the quarter was USD 281.4m. Leasing liabilities have been calculated under the assumption that Belships will exercise its options to acquire all Ultramax bulk carriers on bareboat charter, whereas we have assumed that the company will not exercise the purchase options on time-chartered vessels BELNIPPON and BELFUJI. Belships has no contractual obligation to acquire any of its leased vessels.

At the end of the quarter, book value per share amounted to NOK 8.03 (USD 0.91), corresponding to a book equity ratio of 31 per cent.

Dividend policy

Belships ASA aims to distribute quarterly cash dividends targeting about 50 per cent of net result adjusted for non-recurring items.

Other surplus cash flow may be used for accelerated amortisation of debt, share buy-backs or vessel acquisitions considered to be accretive to shareholders' value.

Belships believes this approach will create value for shareholders and has the flexibility to manage the company and support the continued growth.

Dividend payment

Based on the financial result in the third quarter 2021 the Board declared a dividend payment of USD 16.0m (NOK 0.55 per share) equivalent to about 64 per cent of net result adjusted for noncontrolling interests.

Market highlights

In the third quarter, we observed steady improvements in the spot rates with the Baltic Supramax 58 index averaging USD 32 478 net per day, up from USD 25 406 net per day in the preceding quarter. The very strong sentiment continued into the fourth quarter before peaking towards the end of October, whereafter the spot rates have trended downwards significantly.

Total Supramax shipment volumes ended at 258 million tons in Q3, slightly down from 266 million tons in Q2. About 85 million tons being shipped in each month during the quarter, is still very high historically. Preliminary estimates for shipments in October show all-time high shipments of 94 million tons.

Demand growth has been strong across almost all commodities and regions, as the global manufacturing boom continued through Q3. Shipments of Iron Ore, Grains, Fertilizers, Steels and Minor Bulks are all on track for all-time highs this year, whereas Coal shipments are still lagging. If the year-to-date run rate of Coal shipments continue in the coming months, shipments will end slightly below both 2020 and 2019 levels. However, the winter restocking season is expected to begin shortly and according to Fearnleys, this year could still end up being a record year for coal shipments. It is also undeniable that the fleet productivity is lower than usual as caused by the continued disruptions stemming from the COVID-19 pandemic. Port waiting times, general congestion and many vessels having to deviate and wait in order to manage crew changes is absorbing vessel capacity. Nevertheless, global port congestion levels dropped from around 370 vessels at the start of October to around 300 vessels at the start of November.

According to Fearnleys, 31 vessels were delivered in the third quarter, up from 23 in the second quarter. The vessel delivery schedule for the remainder of this year says 24 during the fourth quarter, including the 19 already delivered. This would take the full year total to 126, which is lower than last year's 143. Next year, without assuming any slippage or cancellation, the order book indicates only 131 scheduled for delivery.

The publicly quoted orderbook indicates fleet growth will drop next year and then even further in 2023, also according to Clarksons Research. There will be changes to this outlook for fleet growth as the amount of newbuilding orders being placed over the next 12 months are uncertain and it is also normal that 10-20 per cent of the orderbook ends up being cancelled, deferred or simply incorrect. However, we expect relatively low newbuilding activity as the lack of conviction and alternatives for fuel and propulsion systems will continue to restrain ordering activity in the near term. Most importantly, demand for newbuildings in other segments than dry cargo is absorbing most of the shipbuilding capacity for 2022-2023 and has led to strong increases in newbuilding prices.

Prices for secondhand vessels increased considerably in the third quarter and appeared strongly supported by freight market earnings. Current value estimates for five-year old Japanese Ultramax

bulk carriers trended up 20 per cent since the start of the third quarter. Contract for a Japanese Ultramax for delivery in 2024 was reportedly concluded at USD 35m. Newbuilding prices in general continued to increase due to increased steel prices and relatively high demand from other shipping segments.

Outlook

The Baltic Exchange Supramax index YTD 2021 has averaged USD 25 500 net per day. The strong market has continued into the fourth quarter, though spot rates, and forward expectations, have been revised down from peak levels. Freight Forward Agreements (FFA) currently indicate a market for Supramax and Ultramax of about USD 25 000 and 27 000 per day for the remaining part of the year. FFA for next year, 2022, is currently indicating an average of USD 20 000 per day for Ultramax bulk carriers.

As we mentioned in previous reports, the supply side as observed from the number of deliveries and the publicly quoted orderbook for our segment is historically low. On the back of stable demand, we remain optimistic in terms of market prospects. About 77 pct of available days in Q4 are booked at USD 29 000 net per day. For the next four quarters, Belships has secured contract coverage for about 43 per cent of available ship days at USD 25 500 net per day.

We will continue to pursue opportunities for further growth whilst being selective and disciplined in the use of our capital. The purpose of growth is to increase profitability and the value and attractiveness of owning our shares. A competitive return for our shareholders is to be obtained through increase in the value of the company's shares and the payment of dividends, as measured by the total return. Based on current market expectations, we expect to generate significant free cash flow and aim to pay a quarterly dividend as announced with our dividend policy.

Belships has a uniform and modern fleet of 30 Supra/Ultramax bulk carriers well positioned to capitalise on a strong dry bulk market. We are focused on maintaining a solid balance sheet and liquidity position. Our strategy is to continue developing Belships as an owner and operator of geared bulk carriers, through quality of operations and accretive growth opportunities.

12 November 2021

THE BOARD OF BELSHIPS ASA

Peter Frølich Chairman

Frode Teigen Sverre Jørgen Tidemand Marianne Møgster

Carl Erik Steen Birthe Cecilie Lepsøe Jorunn Seglem

Lars Christian Skarsgård CEO

CONSOLIDATED STATEMENT OF INCOME

The quarterly figures are not audited

	Q3	Q3	YTD Q3	YTD Q3
USD 1 000	2021	2020	2021	2020	2020
Gross freight revenue Note	238 169	54 889	511 150	142 237	220 332
Voyage expenses	-34 306	-12 591	-93 666	-41 147	-61 065
2 Net freight revenue	203 863	42 298	417 484	101 090	159 267
Management fees	1 397	1 035	4 569	4 416	6 095
2 Operating income	205 260	43 333	422 053	105 506	165 362
Share of result from j/v and assoc. comp.	3 598	196	6 081	1 511	3 052
T/C hire expenses	-125 262	-23 484	-260 187	-53 759	-90 401
Ship operating expenses	-14 675	-10 634	-35 040	-30 002	-38 675
Operating expenses management companies	-10 689	-2 622	-21 605	-8 234	-11 861
General and administrative expenses	-1 090	-849	-3 463	-2 356	-3 491
Operating expenses	-148 118	-37 393	-314 214	-92 840	-141 376
EBITDA	57 142	5 940	107 839	12 666	23 986
3 Depreciation and amortisation	-6 780	-6 823	-20 633	-21 250	-27 286
3 Impairment	0	0	0	-4 868	-4 957
Gain on sale of ships	0	0	0	2 469	2 469
Other gains/(-losses)	0	-282	-6 739	2 056	1 165
Operating result (EBIT)	50 362	-1 165	80 467	-8 927	-4 623
Interest income	224	236	655	743	985
Interest expenses	-4 000	-3 386	-10 841	-10 435	-13 668
Other financial items	-950	-13	-1 294	-389	-729
Currency gains/(-losses)	-798	282	-946	636	875
Net financial items	-5 524	-2 881	-12 426	-9 445	-12 537
Result before taxes	44 838	-4 046	68 041	-18 372	-17 160
6 Taxes	-9 619	-127	6 173	-234	-583
Net result	35 219	-4 173	74 214	-18 606	-17 743
Hereof majority interests	25 024	-4 260	55 503	-18 156	-19 898
Hereof non-controlling interests	10 195	87	18 711	-450	2 155
Earnings per share	0.14	-0.02	0.29	-0.08	-0.08
Diluted earnings per share	0.14	-0.02	0.30	-0.08	-0.08

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Q3	Q3	YTD Q3	YTD Q3
USD 1 000	2021	2020	2021	2020	2020
Net result	35 219	-4 173	74 214	-18 606	-17 743
Other comprehensive income not to be reclassified
to profit or (loss) in subsequent periods:
Actuarial gain/(loss) on defined benefit plans	0	0	0	0	-10
Items that may be subseq. reclassified to profit or (loss):
Exchange differences	95	32	75	72	63
Total comprehensive income	35 314	-4 141	74 289	-18 534	-17 690
Hereof majority interests	25 119	-4 228	55 578	-18 084	-19 761
Hereof non-controlling interests	10 195	87	18 711	-450	2 071

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The quarterly figures are not audited

		30 Sep	30 Sep	31 Dec
USD 1 000		2021	2020	2020
NON-CURRENT ASSETS	Note
Intangible assets	6	11 178	2 506	1 770
Ships, owned	3	203 105	223 500	214 494
Ships, right-of-use assets	3	308 661	160 667	157 143
Prepayment of lease obligations on ships		0	3 000	3 000
Property, Plant, and Equipment		4 375	4 312	4 878
Investments in j/v and assoc. companies		5 779	1 883	2 123
Other non-current assets		2 373	13 392	5 394
Total non-current assets		535 471	409 260	388 802
CURRENT ASSETS
Asset held for sale	3	21 349	0	5 917
Bunkers		14 963	6 174	5 344
Current receivables		64 031	13 053	30 431
Cash and cash equivalents		106 461	35 453	33 985
Total current assets		206 804	54 680	75 677
Total assets		742 275	463 940	464 479
EQUITY AND LIABILITIES
Equity
Paid-in capital		158 678	137 830	137 962
Retained earnings		49 773	7 633	5 956
Non-controlling interests		23 131	3 937	6 099
Total equity		231 582	149 400	150 017
Non-current liabilities
Mortgage debt	4	120 907	132 313	119 561
Lease liability	5	265 447	124 484	127 754
Other non-current liabilities		2 189	2 364	2 769
Total non-current liabilities		388 543	259 161	250 084
Current liabilities
Mortgage debt	4	14 268	10 368	22 176
Lease liability	5	15 975	19 375	11 986
Other current liabilities		91 907	25 636	30 216
Total current liabilities		122 150	55 379	64 378
Total equity and liabilities		742 275	463 940	464 479

CONSOLIDATED STATEMENT OF CASH FLOW

The quarterly figures are not audited

	30 Sep	30 Sep	31 Dec
USD 1 000	2021	2020	2020
Cash flow from operating activities
Net result before taxes	68 041	-18 372	-17 160
Adjustments to reconcile profit before tax to net cash flows:
Depreciations/impairment on fixed assets	20 633	26 118	32 243
Gain on sale of ships and other gains/(losses)	2 165	-2 469	-2 469
Share-based compensation expense	375	413	545
Difference between pension exps and paid pension premium	0	0	-66
Share of result from j/v and associated companies	-6 081	-1 511	-3 052
Net finance costs	12 426	9 445	12 537
Change in current items	18 556	6 027	4 928
Interest received	655	743	985
Interest paid	-10 841	-10 435	-13 668
Financing costs	-379	0	0
Income tax paid	-578	-958	-1 119
Net cash flow from operating activities	104 972	9 001	13 704
Cash flow from investing activities
Proceeds from sale of ships	19 012	0	0
Payment of ships and right of use assets	-35 425	-12 250	-15 250
Received instalments from sale of ships	1 579	2 011	2 615
Additions to ships	-4 346	-7 452	-5 672
Net cash flow from investing activities	-19 180	-17 691	-18 307
Cash flow from financing activities
Proceeds from non-current debt	13 050	14 700	14 700
Paid-in capital (net)	15 952	0	0
Repayment of non-current debt	-28 917	-14 901	-20 101
Sold treasury shares	129	0	0
Dividend paid	-13 530	-84	-439
Net cash flow from financing activities	-13 316	-285	-5 840
Net change in cash and cash equivalents during the period	72 476	-8 975	-10 443
Cash and cash equivalents at 1 January	33 985	44 428	44 428
Cash and cash equival. at end of period (incl. restricted cash)	106 461	35 453	33 985

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The quarterly figures are not audited

USD 1 000
			Majority interest
		Paid-in			Retained
As at 30 September 2021	Share capital	Treasury shares	Share premium reserves	Other paid-in equity	b Other equity	Non controlling interests	Total equity
Equity as at 31 December 2020	53 617	-166	47 775	36 736	5 956	6 099	150 017
Share issue	5 849	0	14 907	-454	0	0	20 302
Sale of treasury shares	0	38	0	0	91	0	129
Share-based payment expense	0	0	0	375	0	0	375
Dividend paid	0	0	0	0	-11 852	-1 678	-13 530
Net result for the period	0	0	0	0	55 503	18 711	74 214
Other comprehensive income	0	0	0	0	75	0	75
Total comprehensive income	0	0	0	0	55 578	18 711	74 289
Equity as at 30 September 2021	59 466	-128	62 682	36 657	49 773	23 132	231 582
As at 30 September 2020
Equity as at 31 December 2019	50 403	-166	39 499	36 191	25 717	4 471	156 115
Share issue	3 214	0	8 276	0	0	0	11 490
Dividend paid	0	0	0	0	0	-84	-84
Share-based payment expense	0	0	0	413	0	0	413
Net result for the period	0	0	0	0	-18 156	-450	-18 606
Other comprehensive income	0	0	0	0	72	0	72
Total comprehensive income	0	0	0	0	-18 084	-450	-18 534
Equity as at 30 September 2020	53 617	-166	47 775	36 604	7 633	3 937	149 400

KEY FINANCIAL FIGURES

		30 Sep	30 Sep	31 Dec
		2021	2020	2020
EBITDA	USD 1000	107 839	12 666	23 986
Interest coverage ratio		7.42	-0.86	-0.34
Current ratio		1.69	0.99	1.18
Equity ratio		0.31	0.32	0.32
Earnings per share	USD	0.29	-0.08	-0.08
Earnings per share	NOK	2.57	-0.76	-0.66
Equity per share	USD	0.91	0.65	0.66
Equity per share	NOK	8.03	6.21	5.61
Number of issued shares at end of period		253 136 666	228 175 404	228 175 404
Diluted average issued shares (excl. treasury shares)		248 198 446	224 419 198	227 490 765

DEFINITION OF NON-IFRS FINANCIAL MEASURES

The Group's financial information is prepared in accordance with international financial reporting standards ("IFRS") as adopted by the European Union. In addition, it is the management's intention to provide alternative performance measures that are regularly reviewed by management to enhance the understanding of the Group's performance, but not instead of, the financial statements prepared in accordance with IFRS. The alternative performance measures presented may be determined or calculated differently by other companies. Due to the recent establishment of the enlarged Group, Management is in the initial phase of assessing its external financial reporting and performance measures are therefore subject to change.

The alternative performance measures are intended to enhance comparability of the results and to give supplemental information to the users of the Group's external reporting.

• § Time charter equivalent (TCE) is defined as freight revenues less voyage expenses divided by the number of available on-hire days
• § Current ratio - is defined as total current assets, divided by total current liabilities
• § EBITDA is the earnings before interest, taxes, depreciation and amortisation
• § EBIT is the earnings before interest and taxes. It can be calculated by the result before tax added by the interest
• § Equity ratio is equal to shareholders' equity including non-controlling interest, divided by total assets
• § Interest coverage ratio is equal to earnings before interest and taxes (EBIT), divided by interest expenses
• § Book equity per share is defined as total equity, divided by number of issued shares at end of period

NOTES TO THE CONSOLIDATED ACCOUNTS

The consolidated financial statements are presented in USD thousands unless otherwise indicated

Note 1 Accounting principles

These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting". They do not include all of the information required for full annual financial reporting and should be read in conjunction with the consolidated financial statements of Belships for the year ended 31 December 2020.

EPS is calculated based on actual outstanding shares in Belships ASA.

This report was approved by the Board of Directors on 12 November 2021.

Note 2 Segment information

USD 1 000				January - September 2021
	Own	Lighthouse	Ship	Admin.	Group	Total
	ships	Navigation	managm.		transactions
Gross freight revenue	119 678	390 667	0	0	805	511 150
Voyage expenses	-13 681	-81 578	0	0	1 593	-93 666
Net freight revenue	105 997	309 089	0	0	2 398	417 484
Management fees	0	6 155	3 182	0	-4 768	4 569
Operating income	105 997	315 244	3 182	0	-2 370	422 053
Share of result from j/v and assoc. comp.	0	6 080	1	0	0	6 081
T/C hire expenses	0	-260 187	0	0	0	-260 187
Ship operating expenses	-36 154	-1 256	0	0	2 370	-35 040
Operating exps management companies	0	-18 609	-2 996	0	0	-21 605
General and administrative expenses	-197	0	0	-3 266	0	-3 463
Operating expenses	-36 351	-273 972	-2 995	-3 266	2 370	-314 214
EBITDA	69 646	41 272	187	-3 266	0	107 839
Depreciation and amortisation	-18 927	-1 401	-122	-183	0	-20 633
Gain on sale of ship	0	0	0	0	0	0
Other gains/-losses	-6 739	0	0	0	0	-6 739
Operating result (EBIT)	43 980	39 871	65	-3 449	0	80 467
Interest income	625	27	3	0	0	655
Interest expenses	-10 697	-101	-8	-35	0	-10 841
Other financial items	-1 285	0	-9	0	0	-1 294
Currency gains/(-losses)	245	52	-3	-1 240	0	-946
Net financial items	-11 112	-22	-17	-1 275	0	-12 426
Result before taxes	32 868	39 849	48	-4 724	0	68 041
Taxes	0	-4 965	-40	11 178	0	6 173
Net result	32 868	34 884	8	6 454	0	74 214
Hereof majority interests	32 868	16 245	-64	6 454	0	55 503
Hereof non-controlling interests	0	18 639	72	0	0	18 711
Assets	583 889	126 180	4 917	27 289	0	742 275
Liabilities	428 241	77 865	2 386	2 201	0	510 693

Note 2 Segment information, continued

			January - September 2020
USD 1 000	Own	Lighthouse	Ship	Admin.	Group	Total
	ships	Navigation	managm.		transactions
Gross freight revenue	56 191	86 046	0	0	0	142 237
Voyage expenses	-12 494	-29 925	0	0	1 272	-41 147
Net freight revenue	43 697	56 121	0	0	1 272	101 090
Management fees	0	4 345	3 415	0	-3 344	4 416
Operating income	43 697	60 466	3 415	0	-2 072	105 506
Share of result from j/v and assoc. comp.	0	1 491	20	0	0	1 511
T/C hire expenses	-386	-53 373	0	0	0	-53 759
Ship operating expenses	-30 253	-1 822	0	0	2 072	-30 003
Operating exps management companies	0	-5 873	-2 361	0	0	-8 234
General and administrative expenses	-258	0	0	-2 097	0	-2 355
Operating expenses	-30 897	-59 577	-2 341	-2 097	2 072	-92 840
EBITDA	12 800	889	1 074	-2 097	0	12 666
Depreciation and amortisation	-18 784	-2 022	-47	-397	0	-21 250
Impairment	-4 868	0	0	0	0	-4 868
Gain on sale of ship	2 469	0	0	0	0	2 469
Other gains	2 056	0	0	0	0	2 056
Operating result (EBIT)	-6 327	-1 133	1 027	-2 494	0	-8 927
Interest income	726	7	3	7	0	743
Interest expenses	-10 331	-80	-13	-11	0	-10 435
Other financial items	-408	0	-10	29	0	-389
Currency gains/(-losses)	-28	3	1	660	0	636
Net financial items	-10 041	-70	-19	685	0	-9 445
Result before taxes	-16 368	-1 203	1 008	-1 809	0	-18 372
Taxes	0	-96	-138	0	0	-234
Net result	-16 368	-1 299	870	-1 809	0	-18 606
Hereof majority interests	-16 368	-735	756	-1 809	0	-18 156
Hereof non-controlling interests	0	-564	114	0	0	-450
Assets	418 140	37 819	4 850	3 131	0	463 940
Liabilities	285 991	25 090	2 483	976	0	314 540

Note 2 Segment information, continued

USD 1 000			Q1 - 2021					Q1 - 2020
	Own ships	LHN	Ship mgmt	Adm/ Grp.trs	Total	Owned ships	LHN	Ship mgmt	Adm/ Grp.trs	Total
Gross freight revenue	27 504	79 197	0	589	107 290	20 005	29 470	0	0	49 475
Voyage expenses	-4 354	-28 000	0	0	-32 354	-5 240	-12 909	0	357	-17 792
Net freight revenue	23 150	51 197	0	589	74 936	14 765	16 561	0	357	31 683
Management fees	0	1 687	1 089	-1 323	1 453	0	1 600	1 306	-1 033	1 873
Operating income	23 150	52 884	1 089	-734	76 389	14 765	18 161	1 306	-676	33 556
Share of result from j/v and assoc. comp.	0	761	-1	0	760	0	573	0	0	573
T/C hire expenses	0	-46 672	0	0	-46 672	0	-15 583	0	0	-15 583
Ship operating expenses	-11 135	-414	0	734	-10 815	-10 158	-419	0	676	-9 901
Operating exps management companies	0	-3 049	-914	0	-3 963	0	-1 962	-961	0	-2 923
General and administrative expenses	-95	0	0	-874	-969	-138	0	0	-731	-869
Operating expenses	-11 230	-49 374	-915	-140	-61 659	-10 296	-17 391	-961	-55	-28 703
Operating result (EBITDA)	11 920	3 510	174	-874	14 730	4 469	770	345	-731	4 853
Depreciation and amortisation	-6 982	-469	-42	-47	-7 540	-6 054	-655	-13	-6	-6 728
Gain on sale of ship	0	0	0	0	0	2 469	0	0	0	2 469
Other gains/-losses	-6 734	0	0	0	-6 734	2 936	0	0	0	2 936
Operating result (EBIT)	-1 796	3 041	132	-921	456	3 820	115	332	-737	3 530

USD 1 000			Q2 - 2021					Q2 - 2020
	Own ships	LHN	Ship mgmt	Adm/ Grp.trs	Total	Owned ships	LHN	Ship mgmt	Adm/ Grp.trs	Total
Gross freight revenue	36 840	128 917	0	-66	165 691	16 285	21 588	0	0	37 873
Voyage expenses	-4 267	-23 513	0	774	-27 006	-4 335	-6 880	0	451	-10 764
Net freight revenue	32 573	105 404	0	708	138 685	11 950	14 708	0	451	27 109
Management fees	0	2 108	1 016	-1 405	1 719	0	1 363	1 312	-1 167	1 508
Operating income	32 573	107 512	1 016	-697	140 404	11 950	16 071	1 312	-716	28 617
Share of result from j/v and assoc. comp.	0	1 725	-2	0	1 723	0	728	14	0	742
T/C hire expenses	0	-88 253	0	0	-88 253	0	-14 692	0	0	-14 692
Ship operating expenses	-9 828	-419	0	697	-9 550	-9 342	-841	0	716	-9 467
Operating exps management companies	0	-6 053	-900	0	-6 953	0	-1 824	-865	0	-2 689
General and administrative expenses	-82	0	0	-1 322	-1 404	-1	0	0	-637	-638
Operating expenses	-9 910	-93 000	-902	-625	-104 437	-9 343	-16 629	-851	79	-26 744
Operating result (EBITDA)	22 663	14 512	114	-1 322	35 967	2 607	-558	461	-637	1 873
Depreciation and amortisation	-5 720	-467	-42	-84	-6 313	-6 506	-934	-12	-247	-7 699
Impairment	0	0	0	0	0	-4 868	0	0	0	-4 868
Other gains/-losses	-5	0	0	0	-5	-598	0	0	0	-598
Operating result (EBIT)	16 938	14 045	72	-1 406	29 649	-9 365	-1 492	449	-884	-11 292

USD 1 000	Q3 - 2021					Q3 - 2020
	Own ships	LHN	Ship mgmt	Adm/ Grp.trs	Total	Owned ships	LHN	Ship mgmt	Adm/ Grp.trs	Total
Gross freight revenue	55 334	182 553	0	282	238 169	19 901	34 988	0	0	54 889
Voyage expenses	-5 060	-30 065	0	819	-34 306	-2 919	-10 136	0	464	-12 591
Net freight revenue	50 274	152 488	0	1 101	203 863	16 982	24 852	0	464	42 298
Management fees	0	2 360	1 077	-2 040	1 397	0	1 382	797	-1 144	1 035
Operating income	50 274	154 848	1 077	-939	205 260	16 982	26 234	797	-680	43 333
Share of result from j/v and assoc. comp.	0	3 594	4	0	3 598	0	190	6	0	196
T/C hire expenses	0	-125 262	0	0	-125 262	-386	-23 098	0	0	-23 484
Ship operating expenses	-15 191	-423	0	939	-14 675	-10 753	-562	0	681	-10 634
Operating exps ship management	0	-9 507	-1 182	0	-10 689	0	-2 087	-535	0	-2 622
General and administrative expenses	-20	0	0	-1 070	-1 090	-119	0	0	-730	-849
Operating expenses	-15 211	-131 598	-1 178	-131	-148 118	-11 258	-25 557	-529	-49	-37 393
Operating result (EBITDA)	35 063	23 250	-101	-1 070	57 142	5 724	677	268	-729	5 940
Depreciation and amortisation Other gains/-losses	-6 225 0	-465 0	-38 0	-52 0	-6 780 0	-6 224 -282	-433 0	-22 0	-144 0	-6 823 -282
Operating result (EBIT)	28 838	22 785	-139	-1 122	50 362	-782	244	246	-873	-1 165

Note 3 Ships

At the end of each reporting period, the Company assesses whether there are any impairment indicators present. The Company has concluded that there are no impairment indicators pursuant to IAS 36.

Belships took delivery of 6 Ultramax bulk carriers during the quarter named BELTIGER, BELTRADER, BELGUARDIAN, BELKNIGHT, BELFORCE and BELMAR.

In July, Belships entered into an agreement for the sale of BELFRI (built 2007). Delivery of the vessel occurred in October and Belships will realise a gain of approximately USD 4.6m. Net cash flow upon delivery will be approximately USD 9.0m after repayment of outstanding loans.

In August, Belships has entered into an agreement for the sale of BELCARGO (built 2008). Delivery of the vessel occurred in November 2021 and Belships will realise a gain of approximately USD 5.5m. Net cash flow upon delivery will be approximately USD 11.0m after repayment of outstanding loans.

Note 4 Mortgage debt

Belships entered into a new USD 140m loan facility in April 2019. The first tranche of USD 110m replaced previous loan arrangements. The loan has a margin of 275 basis points over LIBOR and matures in Q2 2024. The next instalment on the first tranche is due in Q4 2021.

The second tranche of USD 30m was made available for fleet expansion and utilised to acquire BELCARGO, BELFRI and BELHAVEN. The second tranche has a margin of 275 basis points over LIBOR and semi-annual repayments.

Belships has entered into a third tranche under the loan agreement of USD 37.5m made available for future fleet expansion. USD 13.05m has been committed to finance the acquisition of BELTIGER while USD 24.45m remain available. The third tranche has a margin of 275 basis points over LIBOR and semi-annual repayments.

The USD 14m loan acquired as part of the acquisition of shares in BELLIGHT AS has a margin of 275 basis points over LIBOR and matures in Q2 2024.

Total mortgage debt at the end of the quarter amounted to USD 135.2m. Transaction costs related to the mortgage debt were initially recorded as a reduction of debt in the balance sheet and subsequently amortised over the loan period in accordance with the amortised cost principle.

Belships was in compliance with all covenants during the quarter.

Note 5 Leasing

In July, Belships entered into an agreement for the acquisition of two 64 000 dwt Ultramax newbuilding resales under construction at a Japanese shipyard. BELTOKYO is expected to be delivered Q4 2021 and BELYAMATO is expected to be delivered Q4 2022. BELTOKYO will be leased on a bareboat charter for a period of 12 years. The estimated cash breakeven for the vessel upon delivery is about USD 11 750 per day including operational expenses. Belships will pay a sum of USD 4m upon signing the contract, expected to occur during Q4 2021. The agreement comes with purchase options significantly below current market values and can be exercised after the fourth year until the end of the charter. There are no obligations to purchase the vessel. A similar financing arrangement is expected to be arranged for BELYAMATO before delivery. The agreements are conditional upon certain steps to be completed by the parties involved. Conclusion is expected within Q4 2021.

Leasing liabilities at the end of the quarter arising from bareboat obligations and long-term time charters were USD 281.4m. Corresponding right-of-use assets, including upfront payments relating to the purchase options, were recorded at USD 308.7m.

Belships has no obligation to purchase any of the leased vessels.

Note 6 Taxes

The Company recognised USD 19.8m in deferred tax assets previously not recognised consisting of USD 26.1m in tax loss carried forward offset by USD 6.3m in temporary differences per Q1 2021. The deferred tax assets were recognised by the Company after concluding it is likely that the company will have sufficient profit in subsequent periods to utilise the tax assets after the significant improvements seen in the freight market during Q1 2021.

The tax expense in Q3 of USD 9.6m is comprised of a reduction in deferred tax assets of USD 5.9m and tax payable of USD 3.7m

Note 7 Subsequent events

BELFRI (built 2007) was delivered to its new owners in October 2021. Net cash flow upon delivery was approximately USD 9.0m after repayment of outstanding loans.

Belships entered into an agreement for the acquisition of two bulk carriers of 58 000 dwt built in 2016 by a Japanese shipyard to be named BELFRIEND and BELTIDE upon delivery. The purchase price was USD 28.0m per vessel, of which 60% will be refinanced under a new bank loan agreement. Delivery is expected by the end of November 2021.

Belships entered into an agreement for the acquisition of a Japanese Ultramax newbuilding resale of 64 000 dwt to be named BELMONDO upon delivery. BELMONDO is expected for delivery during January 2023.

BELCARGO (built 2008) was delivered to its new owners in November 2021. Net cash flow upon delivery was approximately USD 11.0m after repayment of outstanding loans.

BELHAVEN has been fixed for a time charter contract for about 22-24 months duration at a gross rate of USD 26 250 per day. The contract commenced during October 2021.

Previously announced time charter contract on BELPAREIL for about 23-25 months duration at a gross rate of USD 25 500 per day has been cancelled due to delays under current voyage.

BELSOUTH has been fixed for a time charter contract for about 23-25 months duration at a gross rate of USD 25 500 per day. The contract commenced during November 2021.

BELHAWK, an Ultramax bulk carrier of 61 000 dwt built in 2015 was delivered in November 2021 and has commenced a time charter contract for about 3-5 months at a gross rate of USD 35 000 per day.

20 LARGEST SHAREHOLDERS

Updated 11 November 2021

	Number of
Shareholder	shares	%
KONTRARI AS	101 500 000	40.10%
KONTRAZI AS	32 500 000	12.84%
SONATA AS	17 747 492	7.01%
LGT BANK AG	11 645 918	4.60%
JAKOB HATTELAND HOLDING AS	11 000 000	4.35%
MEGLERKONTO INNLAND DNB NOR BANK ASA	9 971 507	3.94%
WENAASGRUPPEN AS	8 149 330	3.22%
JAHATT AS	4 000 000	1.58%
SAXO BANK A/S	3 148 508	1.24%
STAVANGER FORVALTNING AS	2 850 000	1.13%
UBS SWITZERLAND AG	2 620 792	1.04%
KILSHOLMEN AS	2 153 574	0.85%
BARCLAYS CAPITAL SEC. LTD FIRM	1 763 639	0.70%
OLE KETIL TEIGEN	1 500 000	0.59%
STATE STREET BANK AND TRUST COMP	1 360 474	0.54%
J.P. MORGAN SECURITIES PLC	1 248 826	0.49%
THE BANK OF NEW YORK MELLON SA/NV	1 203 316	0.48%
SIX SIS AG	1 162 580	0.46%
MORGAN STANLEY & CO. INTERNATIONAL	1 055 697	0.42%
CLEARSTREAM BANKING S.A.	1 038 723	0.41%
OTHER SHAREHOLDERS	35 516 290	14.03%
TOTAL OUTSTANDING SHARES	253 136 666	100.00%

FLEET LIST

Updated 12 November 2021

Ship	Ownership	Built year	Dwt	Yard
Ultramax
BELMONDO (NEWBUILD)	TBD1	2023	64 000	Imabari
BELYAMATO (NEWBUILD)	TBD2	2022	64 000	Imabari
BELTOKYO (NEWBUILD)	BBC3	2021	64 000	Imabari
BELFORCE	BBC4	2021	61 000	Dacks
BELKNIGHT	BBC5	2021	61 000	Dacks
BELTRADER	BBC6	2021	61 000	Dacks
BELGUARDIAN	BBC6	2021	61 000	Dacks
BELMAR	BBC7	2021	64 000	Imabari
BELFAST	BBC8	2021	64 000	Imabari
BELMOIRA	BBC9	2020	61 000	Shin Kurushima
BELAJA	BBC9	2020	61 000	Shin Kurushima
BELFUJI	TC10	2020	63 000	Imabari
BELRAY	BBC9	2019	61 000	Shin Kurushima
BELNIPPON	TC10	2018	63 000	Imabari
BELHAVEN	100%	2017	63 000	Imabari
BELTIGER	100%11	2017	63 000	New Times
BELISLAND	BBC12	2016	61 000	Imabari
BELINDA	100%	2016	63 000	Hantong
BELMONT	100%	2016	63 000	Hantong
BELATLANTIC	100%	2016	63 000	Hantong
BELLIGHT	100%	2016	63 000	New Times
BELFRIEND (TO BE DELIVERED)	100%	2016	58 000	Tsuneishi
BELTIDE (TO BE DELIVERED)	100%	2016	58 000	Tsuneishi
BELHAWK	BBC13	2015	61 000	Imabari
BELFOREST	BBC14	2015	61 000	Imabari
BELPAREIL	100%	2015	63 000	Hantong
BELSOUTH	100%	2015	63 000	Hantong
BELOCEAN	100%	2011	58 000	Dayang
BELNOR	100%	2010	58 000	Dayang
BELSTAR	100%	2009	58 000	Dayang

1) On delivery January 2023

2) On delivery Q4 2022

3) On delivery December 2021 12 years bareboat charter with purchase options after fourth year

4) Delivered Q3 2021 10 years bareboat charter with purchase options after third year

5) Delivered Q3 2021 7 years bareboat charter with purchase options after third year

6) Delivered Q3 2021 10 years bareboat charter with purchase options after fourth year

7) Delivered Q3 2021 10 years bareboat charter with purchase options after fourth year

8) Delivered Q1 2021 10 years bareboat charter with purchase options after fourth year

9) 7 years bareboat charter with purchase options after fourth year

10) 8 years time charter with purchase options after fourth year

11) Delivered Q3 2021

12) 11 years bareboat charter with purchase options after third year

13) On delivery 2H 2021 9.5 years bareboat charter with purchase options after third year

14) Purchase option declared, conclusion expected during Q1 2022

There are no purchase obligations on any of the above lease agreements.