Belships

Earnings Release • Oct 25, 2016

Belships ASA : Rapport 3. kvartal 2016

Belships ASA : Rapport 3. kvartal 2016

HIGHLIGHTS

* Operating income of USD 6.4 m (Q2 2016: USD 6.4 m)

* EBITDA of USD 2.6 m (USD 3.0 m)

* Net result of USD 0.3 m (USD 0.4 m)

* All ships operating normally - modern fleet - average age 4 years

* Contract coverage 100% for delivered ships - around USD 70 million fixed

charter

Third quarter 2016 results

Belships operating income in 3rd quarter 2016 was USD 6.4 million (Q2 2016: USD

6.4 million), while EBITDA amounted to USD 2.6 million (USD 3.0 million). The

Group's operating result amounted to USD 1.5 million (USD 2.1 million), while

total comprehensive income for 3rd quarter 2016 was USD 0.3 million (USD 0.4

million). The decrease in operating result is mainly related to ship operating

expenses, which are slightly above budget.

Impairment tests of the company's assets were performed in accordance with IAS

36. Based on an assessment of broker values and long-term charters, no

impairment has been recorded in 3rd quarter.

Fleet status

M/S Belstar, M/S Belnor and M/S Belisland have continued the long-term contracts

to Canpotex of Canada. Canpotex is one of the world's largest exporters of

potash, a fertilizer product imported in large volumes by countries such as

China, India and Brazil. M/S Belocean and M/S Belforest are both still on time

charter to Cargill. The first open position will be for M/S Belocean around

April 2017.

All ships have sailed without significant off-hire. Technical management is

handled by Belships Management (Singapore), with a total fleet of 20 ships under

technical management.

Newbuilding program

Belships' remaining newbuilding program with Imabari Shipbuilding in Japan

includes one 63.000 dwt eco-design Ultramax bulk carrier on a long-term T/C-

agreement incl. purchase option for delivery in January 2018.

Financial and corporate matters

As per 30 September the Group's cash totaled USD 8.4 million compared to USD

8.6 million as per 30 June 2016.

The mortgage debt balance as per 30 September USD was 37.5 million. Net lease

obligation as at 30 September was USD 45.0 million. In addition Belships has a

long-term loan facility of SGD 2 million, secured by the lease agreement for our

Singapore office. Net lease obligation and mortgage debt were reduced by USD

1.8 million in 3rd quarter.

Hedging the Group's interest exposure is considered on an ongoing basis. The

hedging level of interest rate exposure is currently around 75% (leases

excluded). The long-term interest rate is still at a historical low level.

At the end of the 3rd quarter of 2016, the book value per share amounted to NOK

3.27 (USD 0.41), while the equity ratio was 17.7%. Added value related to the

long-term charter party for M/S Belisland is not reflected in the balance sheet.

Market highlights

The Capesize-index ended the 3rd quarter at USD 12,710 per day, whereas the

Panamax-index ended at USD 5,815 per day. The Supramax-index ended the quarter

at USD 7,180 per day. As per today the Cape index stands at USD 9,128 per day,

Panamax-index at USD 7,386 per day and Supramax-index at USD 7,370 per day.

There is an increasing buying interest for modern dry bulk tonnage. It is

typically the traditional ship owning companies that are active, not the fund

managers as we saw in 2012-13. More than 400 dry cargo ships have changed hands

year-to-date in transactions close to USD 4 bn. According to the Baltic S&P

Assessment the latest valuation of a 5-year old Supramax is USD 12.9 m.

Growing demand from China has pushed up the international prices for both iron

ore and coal. It is believed that China will be forced to shut down loss-making

and high pollution domestic production of iron ore and coal and import more,

helping to absorb some of the tonnage overcapacity. The smaller sized ships like

Supramax/Ultramax with cranes should benefit from growing Chinese exports of

steel products and imports of minor bulks like bauxite, fertilizer, soya beans

and grains.

Strategy

Belships is concentrating 100% on the dry bulk market, with 5 x modern

Supramax/Ultramax in service. In addition we will take delivery of a 63,000 dwt

Ultramax from Imabari Shipbuilding in January 2018 for long term lease incl.

purchase option.

Outlook

Iron ore import to China in 2016 is expected to reach a record high of about

1bn tons, and the imported volumes of coal are also higher compared to last

year. For the aggregate market this translates into a ton-mile demand growth of

approx 2%.

Ordering of new ships is down to almost zero and the high scrapping activity

continues, although at a slower pace than during Q1-Q2. The scrapping activity

this year may still end up around 35-40 m dwt, which, if so, will almost

outbalance the expected deliveries of new ships during 2016 adjusted for

slippage, delays and cancellations. From troubled Chinese shipyards we expect

non-deliveries or slippage of a significant number of Ultramaxes scheduled for

delivery in 2016-17.

Belships ships are chartered out on fixed rates to reputable counterparts,

representing a future nominal gross hire of around USD 70 million.

Focus will be to further develop Belships as an owner and operator of modern

bulk carriers to reputable counterparts. Our ambition is to build a portfolio of

quality ships and robust charter parties that will generate distributable cash

flows.

Oslo, 25 October 2016

THE BOARD OF BELSHIPS ASA

Questions may be directed to:

CEO Ulrich Müller

Phone: +47 22 52 76 15

Email: um@belships.no

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