Annual Report (ESEF) • Apr 11, 2024
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Download Source FileBelships ASA Annual Report 2023 3 Letter to the shareholders 4 Highlights 2023-2024 5 Key figures 6 Group figures 2023 7 Operational structure 8 Lighthouse Navigation 11 ESG summary 16 Directors’ report 2023 21 Fleet overview 23 Consolidated financial statements 24 Consolidated statement of income 25 Consolidated statement of comprehensive income 26 Consolidated statement of financial position 28 Consolidated statement of cash flow 29 Consolidated statement of changes in equity 30 Notes to the consolidated accounts 56 Belships ASA financial statements 57 Income statement 58 Balance sheet 60 Cash flow statement 61 Notes to the parent accounts 72 Auditors report 79 Corporate governance 87 Corporate social responsibility FINANCIAL CALENDAR 2024 Annual General Meeting 8 May Result for the 1st quarter 8 May Result for the 2nd quarter 22 August Result for the 3rd quarter 14 November Content 2 We are pleased to present you with our Annual Report for 2023 which represents a year of solid profitability, with a net result of USD 86m and dividends to the shareholders totalling USD 56m. We maintained a high degree of contract coverage which reduced short-term risks and we continued to develop and expand our fleet for the future. We believe we have a strategy aligned for improving sustainability and navigating volatile shipping markets. Five years have passed since the merger between Belships ASA and the Lighthouse Group. Our goal was to develop the company through strategic investments aimed at expansion, and to obtain competitive returns for our shareholders. Over the past five calendar years, the total return (as measured by the increase in the value of the share plus dividends) has been 436 per cent. The dividends alone amount to 132 per cent of the share price from the time of the merger, thereby surpassing full repayment of equity. The past year was dominated by escalating geopolitical tensions, with the devastatingly prolonged war in Ukraine and military conflicts in the Middle East region, in particular. Despite these challenges, we were able to keep our ships and crew out of harm’s way and did not encounter any security incidents during the operation of our vessels. Amidst these challenging circumstances, the shipping industry, with its vessels and seafarers, plays a crucial role in facilitating the global supply chain for food, energy, and materials. At the heart of global trade, dry bulk shipping is instrumental in ensuring the efficient transportation of essential commodities. We take the environmental impact of shipping seriously and we support initiatives aimed at reducing the carbon footprint within the maritime industry. It is encouraging that we have made progress through the modernisation of our fleet and we strive to achieve further improvements. In 2023, we entered into agreements to acquire 8x Ultramax newbuildings of 64 000 deadweight, scheduled for delivery between 2024 and 2027. The Japanese- designed bulk carriers entering our fleet represent the highest quality and lowest fuel consumption available today and will contribute to reducing Belships’ carbon emissions on an intensity basis. Dry bulk markets display promising supply and demand prospects for the next few years. Belships is well positioned as a shipowning and operating company stocklisted in Oslo, with a fleet of 38x modern Supra/ Ultramax vessels, including newbuildings. Financial discipline remains fundamentally important to our strategy, and with robust contract coverage for 2024, paired with fleet financing secured for many years ahead, we expect to generate free cash flow and continue to pay quarterly dividends. We firmly believe that good corporate governance and transparency creates a more valuable business. Our goal is to generate value from shipowning and operating, and to return capital competitively over time. We look forward to serving you and navigate towards the next milestone. Peter Frølich Lars Christian Skarsgård Chair of the Board Chief Executive Officer Letter to the shareholders 3 BELSHIPS ANNUAL REPORT 2023 Highlights 2023-2024 Demonstrating ability to create value Financial Strength and Sustainability Prepaid about USD 40m of bank debt, increasing the number of unencumbered vessels to four. Most of Belships’ debt, including lease liabilities, has been secured until 2030 with fixed interest rates, reducing the Company’s exposure to volatile financial markets. Newbuilding Program Entered into agreements to acquire 8x new Ultramax bulk carriers under construction in Japan 2024-2027. All financed through Japanese leases, requiring no direct cash investment and resulting in no impact on dividend capacity before delivery. Strategic Partnership and Divestment of Technical Management Business Belships agreed to divest the ownership of Belships Management Singapore (BMS) to V.Group. Belships also entered into a long-term partnership together with V.Group, and BMS remains the exclusive provider of ship management services. Declared Dividend Distribution NOK 2.35 per share (USD 56m). Attractive and Uniform Fleet The newest and most modern fleet of its kind, with 38x Supra/Ultramax bulk carriers including newbuilding. Number of shareholders ~4 900 Market capitalisation USD ~500m Commercial Platform Continued strong performance from Lighthouse Navigation, achieving consecutive profits in every quarter. 4 USD 1 000 Footnote 2023 2022 INCOME STATEMENT Operating income 427 764 725 953 EBITDA 1 157 612 221 544 EBIT 2 112 539 206 168 Net result before tax 84 996 176 960 Net result for the year 86 240 175 060 BALANCE SHEET Non-current assets 745 370 788 203 Current assets 187 495 212 090 Total assets 932 864 1 000 293 Equity 305 561 297 335 Non-current liabilities 544 160 556 931 Current liabilities 83 144 146 027 Total equity and liabilities 932 864 1 000 293 KEY FINANCIAL FIGURES Cash and cash equivalents 128 276 139 984 EBITDA 1 157 612 221 544 Interest expenses 33 184 26 106 Interest coverage ratio 3 3.39 7.90 Current ratio 4 2.26 1.45 Net profit ratio 5 0.20 0.24 EQUITY Share capital 59 466 59 466 Equity ratio 6 0.33 0.30 Return on total assets % 7 12.67 20.30 Return on equity % 8 28.22 58.88 KEY FIGURES SHARES Market price USD 1.81 1.45 Market price NOK 18.38 14.28 Number of shares 253 136 666 253 136 666 Diluted average number of shares (excluding treasury shares) 254 421 458 253 774 300 Equity per share USD 9 1.21 1.17 Earnings per share USD 0.34 0.69 EBITDA per share USD 0.62 0.87 Price/earnings ratio 10 5.33 2.10 Price/book ratio 11 1.50 1.23 Price/EBITDA ratio 2.92 1.66 Key figures As at 31 December 1) EBITDA – is defined as operating result adjusted for depreciation and amortisation, other gains/(losses), interest income, interest expenses and other financial items 2) EBIT – is defined as operating result adjusted for interest income, interest expenses and other financial items 3) Interest coverage ratio – is equal to earnings before interest and taxes (EBIT), divided by interest expenses 4) Current ratio – is defined as total current assets, divided by total current liabilities 5) Net profit ratio – is defined as result after taxes, divided by operating income 6) Equity ratio – is equal to shareholders’ equity including non-controlling interest, divided by total assets 7) Return on total assets – is defined as result before taxes adjusted for interest expenses, divided by total capital 8) Return on equity – is defined as net result for the year, divided by equity 9) Equity per share – is defined as total equity, divided by number of issued shares at end of period 10) Price/earnings ratio – is defined as market price of share, divided by earnings per share 11) Price/book ratio – is defined as market price of share, divided by equity per share Time charter equivalent (TCE) – is defined as freight revenues less voyage expenses divided by the number of available on-hire days 5 BELSHIPS ANNUAL REPORT 2023 Belships is a shipping company listed on the Oslo Stock Exchange and is a fully integrated shipowner and operator of dry bulk carriers. Our fleet comprises modern Supra/Ultramax vessels, averaging around four years of age. All key functions are managed internally by a seasoned management team with a proven track record. Belships ASA Group figures 2023 Operating Income 427 764 thousand USD EBITDA 157 612 thousand USD Net result 86 240 thousand USD Cash break-even 2023 10 900 USD per shipday Sailed distance 1 450 000 nautical miles Number of shipdays 11 000 Average year built 2020 Financial highlights Consolidated balance sheet as per December 31, 2023 ($ million) Assets Total Ships Other assets Cash Total Equity Interest bearing debt Other liabilities 128.3 73.0 731.6 932.9 63.9 563.4 305.6 932.9 631 Total Ships Other assets Cash Total Equity Interest bearing debt Other liabilities 128.3 73.0 731.6 932.9 63.9 563.4 305.6 932.9 631 Equity and liabilities People Lighthouse Navigation: 102 Ship management: 27 Belships ASA: 8 Seafarers: 494 Total Ships Other assets Cash Total Equity Interest bearing debt Other liabilities 128.3 73.0 731.6 932.9 63.9 563.4 305.6 932.9 631 6 BELSHIPS ANNUAL REPORT 2023 Operational structure Offices Lighthouse Navigation Commercial Operator Belships Shipowning 50.01 %100 % 36 Ultramax Ships 2 Supramax Ships Belships ASA Oslo Lighthouse Navigation Bangkok, Oslo, Singapore, Melbourne 7 BELSHIPS ANNUAL REPORT 2023 Lighthouse Navigation is a dry bulk operating company with a long track record of positive results. Lighthouse provides chartering and operational services for the Belships fleet, alongside managing a fleet of chartered-in tonnage across the Supramax, Ultramax, and Handysize segments. Lighthouse Navigation Commercial operations Lighthouse Navigation has its roots and experience tracing back to the 1990s. Since merging with Belships ASA in 2018, the Company has evolved and expanded its commercial platform. Lighthouse Navigation collaborates with a wide range of international charterers and traders engaged in the freight markets for dry bulk commodities. With an annual volume of about 10 million tonnes and an annual turnover surpassing USD 350 million, the Company boasts a global presence, with offices in Bangkok, Oslo, Singapore, and Melbourne, catering to clients worldwide. Specialising in commercial management for vessels owned by Belships ASA and other clients, Lighthouse Navigation also oversees Orient Asia Lines BV (OAL), a subsidiary since 2010. OAL manages a liner operation, providing regular service from Southeast Asia to the Middle East and the Eastern Mediterranean. Their expertise lies in transporting forestry products such as sawn timber, wood pulp and paper, plywood, and medium density fibreboard (MDF), along with handling project cargoes, steels, and machinery. Additionally, Lighthouse Navigation controls Siam Thara Agency Co., Ltd, established in January 2014. Siam Thara Agency offers comprehensive advice on ports, logistics, and commodities for both export and import operations in Thailand, distinguishing itself as a leading agent in the region. With a dynamic approach, Lighthouse Navigation aims to sustain its growth trajectory, continually expanding its business and operations to accommodate parcel and commodity trades. EBITDA and Net Result Strong financial development and a profitable track record. EBITDA - mUSD Net Result - mUSD 19 6.5 5.7 64.1 60.0 27.2 20 21 22 23 19 2.8 3.4 56.3 54.5 22.1 20 21 22 23 19 6.5 5.7 64.1 60.0 27.2 20 21 22 23 19 6.5 5.7 64.1 60.0 27.2 20 21 22 23 Lighthouse Navigation employees 102 Average number of vessels operated 90 8 BELSHIPS ANNUAL REPORT 2023 Lighthouse Navigation Commercial operations 9 10 ESG summary Sustainability at Belships At Belships, we work to ensure that ESG factors are considered in everything we do. We have established policies and procedures to ensure consistent ESG management and risk mitigation. The overall responsibility for ESG compliance and performance lies with the Board of Directors, and with the CEO ensuring implementation of the Board’s decisions in our daily operations. Belships produces an annual sustainability report (see www.belships.com) that can be read in conjunction with this ESG summary. The Belships’ Sustainability Report meets the disclosure requirements of the Sustainability Accounting Standards Board (SASB) Marine Transportation Standard (2018) and the Norwegian Shipowners Association’s Guidelines for ESG Reporting in the Shipping and Offshore Industries. ENVIRONMENT Belships remains strongly committed to environmental stewardship and sustainable operations. Our operations are guided by environmental standards, adhering to all environmental regulations. Belships closely monitors the development of all environmental regulations. We will continue to comply with all legislation and follow best practices to minimise our impact on the environment. GHG Emissions As concerns for climate change continues to grow, major efforts will be required throughout the sector to meet the IMOs 2050 GHG reduction ambition. In 2023, the IMO adopted the 2023 Strategy on Reduction of GHG emissions from ships, marking a significant step towards decarbonising international shipping. Belships support this strategy through ongoing operational improvements and investment decisions. The EU is also striving to reduce emissions within the shipping industry. In January 2024, the EU’s Emission Trading System (EU ETS), will be extended to include CO2 emissions from large ships over 5.000 gross tonnage entering EU ports. Belships currently has a modern uniform fleet of 38 bulk carriers, including eight newbuildings, with an average age of about four years. Over the last four years, Belships has completely modernised its fleet, and we Belships is determined to be proactive and contribute to a sustainable shipping industry through modernisation and transparency. Sustainability is central to our business model, focusing on long-term value creation and responsible participation in the global shipping market. Environment ◉ Reducing emissions ◉ Energy efficiency ◉ Ecological impact Social ◉ Health and safety ◉ Human and labour rights ◉ Diversity ◉ Training and development Governance ◉ Anti-corruption ◉ Data security and privacy ◉ Sustainable procurement 11 BELSHIPS ANNUAL REPORT 2023 have phased out all ‘non-eco’ design vessels. Therefore, we are of the opinion that we are operating the best possible existing vessels available in the market in our segment. In adherence to the IMO 2023 Strategy for reduction of GHG emissions from ships, Belships’ vessels meet the new emissions standards without necessitating further investments. This compliance showcases the competitive edge we hold through the ownership of a modern fleet. In 2023, our scope 1 GHG emission were 374 378 metric tons carbon dioxide equivalents (CO 2 e), measured using a financial control approach (2022: 372 787). The minor increase of 0.4 per cent increase in total emissions seen in 2023 was a result of operating a larger fleet. Belships continues to see a positive development in energy efficiency and reduction in emissions on an intensity basis. The AER improved by 12 per cent. All emissions data are verified by DNV. Emissions 2023 2022 2021 GHG emissions (tonnes CO 2 e) 374 378 372 787 309 159 SO X (tonnes) 866 971 847 NO X (tonnes) 7 021 8 496 6 981 PM (tonnes) 633 607 503 Emissions indices 1 2023 2022 2021 EEOI (g CO 2 e/ tonne-nm) 7.27 8.05 8.46 EEDI (g CO 2 e/ tonne-nm) 3.67 3.64 3.94 AER (g CO 2 e/dwt-nm) 4.26 4.85 4.89 Climate risk Our industry is impacted by climate change, such as rising sea levels, more frequent and severe storms and changes in temperature and weather patterns. This may affect our operations as well as the infrastructure and supply chains supporting the shipping industry. Belships acknowledge the importance of climate risk and its impact on the future of the shipping industry. We take steps to mitigate our climate risk and reduce our carbon footprint by investing in more fuel-efficient vessels. We assess our divestment and investment strategy on a regular basis, taking into consideration the fleet emission profile and how the Company may be impacted by stricter regulations, technological development, market demand and physical climate risks. Decarbonisation of the fleet has been a part of our strategy ever since we commenced a major growth and modernisation strategy in 2019. From a financial perspective, energy efficiency and a low emission fleet means flexibility in terms of speed and potentially lower carbon tax. We will continue to assess our climate risk to ensure that potential risks are mitigated. Biodiversity and ecosystems Marine transportation may have a negative impact on biodiversity and ecosystems if not managed properly. We recognise our responsibility to safeguard the oceans and have policies and procedures in place to comply with applicable rules and regulations. Our focus areas are on managing fuels and chemical substances to avoid spills into water, proper waste management and to avoid the spread of invasive species by meeting the requirements of the Ballast Water Management Convention. In 2023, Belships maintained its track record of zero incidents related to untreated ballast water, oil spills or waste disposal. All vessels are fully fitted with Ballast Water Treatment Systems. 1 EEOI – Energy Efficiency Operating Index, EEDI – Energy Efficiency Design Index (for newly acquired ships), AER – Annual Efficiency Ratio. See www.imo.org for further information. 12 BELSHIPS ANNUAL REPORT 2023 SOCIAL Belships is continuously working towards fostering an engaging, safe and inclusive work environment where we take action to secure that all workers have decent working conditions and that we continue to improve the work environment for all our employees. Creating a responsible safety culture We are dedicated to ensuring the safety of our operations for our employees, our customers and any personnel associated with our operations. Our approach to health and safety is documented in Belships’ Health and Safety Policy. Management communicates frequently with company personnel to promote safety and instil safe work habits through the use of company media directed at, and training of, both our crew and shore-based personnel. In 2023, Belships was able to uphold our track record of no serious injuries or work-related fatalities. Our lost time injury frequence (LTIF) decreased from 2.00 to 0.44. All recorded injuries were minor. Injury rates 2023 2022 2021 LTIF 0.44 2.00 1.00 Serious injuries 0 0 0 Fatalities 0 0 0 Our personnel management structure Belships Management, the former subsidiary based in Singapore, has been at the forefront of crewing and technical management of Belships’ fleet. On 30th of June 2023, the branch came under the ownership of V.Group. Now operating under the V.Group umbrella, Belships Management remains the exclusive provider of ship management services for Belships. A dedicated and well-trained ship and onshore team monitors the health, safety, environment and quality performance of our fleet. Employee development and welfare Belships’ employees are our key resource and essential to the future success of the Company. Our focus is on creating favourable employment conditions which in turn lead to the attraction and retention of the right employees. A key component to our approach is the investment we make in the training and development of our personnel. We continuously develop and implement crew welfare initiatives to meet our goal of maintaining high retention rates and thereby create safe and high performing vessels. In 2023, our retention rates for officers and ratings were at 98 per cent. All crew are provided wages, benefits and conditions of work in line with industry standards. All crew are covered by the NISCBS union agreement. Retention rates 2023 2022 2021 Shore-based personnel (Belships Administration) 87% 100% 90% Officers 98% 98% 83% Ratings 98% 99% 80% Human and labour rights Good and safe working conditions are the foundation for how we approach human rights management within the Belships Group. Our impact goes beyond our workforce and seafarers and can reach across the globe, through the trade and operation of our vessels, with suppliers of goods and services that take part in our value chain. Belships supports and respects the human rights of all individuals and groups that may be affected by our operations. Our commitment is guided by internationally recognised labour and human rights standards as defined in the International Bill of Rights, the ILO Fundamental Conventions on Labour Standards and the UN Guiding Principles on Business and Human Rights. We expect our suppliers to operate at the same ESG standards as we do. The Norwegian Transparency Act came into force in July 2022. The law requires businesses to carry out human rights due diligence (HRDD) throughout their supply chain. We have focused our effort on ensuring compliance with the law. An important first step in HRDD is to identify salient human rights issues. These are issues where Belships may have the biggest adverse impacts on people if not managed properly. In 2023, we started developing our HRDD processes, including integrating responsible business practices within the Company to manage the identified risks. Our Human Rights Policy, which was published on our website in 2022 provided a basis for this work. There were no reported incidents related to human and labour rights in 2023. 13 BELSHIPS ANNUAL REPORT 2023 GOVERNANCE The Belships Board is responsible for strategic oversight of all company activity, including sustainability. The Board of Directors is guided by Belships’ Corporate Governance Policy, which is publicly available on our website. Our governance procedures and related control mechanisms are essential to minimise ESG risks and to guide the implementation of ethical business practices. Belships has a zero-tolerance policy for corruption in any form. Our stance on anti-corruption, as well as our policies for ensuring that employees and business partners adhere to high standards of business and personal ethics, are laid out in our Code of Conduct. Our Code of Conduct is available online and circulated internally through ISM. Our efforts to combat corruption includes regular anti-corruption training to all required crew throughout the year. There were no reported ethics or corruption incidents in 2023 (2022: 0). Employees who observe or become aware of a situation that they believe to be a violation of the Code of Business Conduct are to report on such incidents. There were no whistle-blowing reports made in 2023 (2022: 0). Data privacy and security Protecting employee, customer and company data held at Belships is critically important to us. We want our employees and business partners to be confident that their data is safe and secure, and we are transparent in how we use it. We are committed to doing the right thing when it comes to how we collect, use and protect data. We comply with all applicable data privacy and protection requirements in the countries in which we operate, including the EU’s General Data Protection Regulation (GDPR). With the Company becoming increasingly digital as we employ more technologically advanced and sophisticated software, we have invested in secure systems and professionals to protect our assets against cybercrime in addition to adopting new regulatory requirements. There were no reports of data privacy or security breaches in 2023 (2022: 0). 14 BELSHIPS ANNUAL REPORT 2023 15 Directors’ report 2023 Growth and profitability The dry bulk market 2023 Supramax spot market rates started the year at USD 10 600, then dropped to a low of about USD 7 000 in mid-February, a seasonally low period for dry bulk. Fundamentals had weakened from the previous year, with somewhat lower rates of volume growth. Nevertheless, the Supramax spot market rallied to a high of almost USD 15 000 by the end of March, driven by a strong upturn in China’s demand for coal and iron ore. As China’s demand slowed together with rest of the World, the markets declined. Congestion levels then began to rewind, with less waiting time effectively increasing vessel capacity supply. The Supramax spot market was painfully weak through the summer, bottoming in early August at around USD 8 000. Thereafter, fundamentals improved considerably, and a continued upturn followed. The market peaked at over USD 17 000 in December, retracting somewhat towards year-end. The new Baltic Ultramax Index commenced publishing in 2023 and, albeit not based on identical routes as the Supramax index, averaged at a USD 2 000 premium to the BSI-58 index referenced here above. Overall shipment volumes in the Supra/Ultramax segment were very high in 2023, almost 10 per cent higher than in 2022, and with the three last quarters of 2023 recording successive all-time high records. The growth was primarily driven by Coal (+20 per cent), Iron Ore (+80 per cent), and Steel products (+7 per cent). This all related to China’s strong import demand and the country’s surge in steel product exports. Shipment volume growth was also positive in other commodity groups, with minor bulks, fertilisers and grains – all up about five per cent. Breakbulk shipments, however, remained unchanged. The Supra/Ultramax segment saw the highest shipment volume growth of all the dry bulk segments in 2023. Total dry bulk shipment volumes,across all sizes were up by 3.7 per cent, while total ton-time growth (calculated as shipment volumes multiplied by average voyage duration) was up by 3.1 per cent. The Supra/Ultramax market was therefore weighed down by lower shipment volume growth in the larger size segments, paired with lower average voyage duration and congestion reversal compared to 2022. In 2023, vessel deliveries concluded with a total of 140 ships, accumulating 8.6 million deadweight tonnage (dwt), a notable increase from the previous year’s figures of 97 ships totalling 6 million dwt. As of April 2024, the current count stands at 24 ships delivered, amounting to a total of 1.5 million dwt with approximately 150 ships still slated for delivery throughout 2024. Next year, about 140 ships with a total dwt capacity of 9.1 million is expected to deliver. The precise number of deliveries is subject to change due to potential delays in construction, cancellations of orders, or inaccuracy in reporting. Fleet growth ended at 3.9 per cent in 2023, and is likely to remain around the same level in 2024, according to Fearnleys. The current ratio of the orderbook to the existing fleet stands at about 8 per cent. In 2023, the number of newbuilding orders placed reached 173 ships, marking an increase of about 15 per cent compared to 2022. The number of ships delivered each quarter is compared against the existing fleet of Supra/Ultramax vessels currently afloat, numbering about 4 100 in total. The orderbook for dry bulk remains close to all-time lows, hovering around 8 per cent. Relatively low newbuilding activity persists in the dry bulk sector, largely due to uncertainty surrounding fuel and propulsion systems, which limits new orders. Additionally, higher input costs, full orderbooks, and sustained high demand in other vessel segments influence shipyard dynamics. Delivery slots at reputable shipyards are increasingly scarce, with reports of new orders extending into 2027 and even 2028. A potential lead time of four years for a bulk carrier is unprecedented. Operations Belships currently has a modern uniform fleet of 38 bulk carriers, including eight newbuildings, with an average age of about four years. All ships operated satisfactorily 16 BELSHIPS ANNUAL REPORT 2023 without significant unscheduled off-hire. The operating expenses continued at a competitive level. Ship transactions during the year include delivery of the BELMONDO newbuilding, and the sale of BELVEDERE. During 2023, Belships entered into agreements for the acquisition of eight newbuilding vessels all fully financed as part of the transactions. Net earnings in 2023 per ship for the entire fleet amount to USD 18 992 versus BSI index of USD 11 240 gross per day. Relative performance versus spot indices is affected by a high number of fixed period time charter contracts that contribute to our coverage for 2024 and 2025 at levels far above current market rates. In addition, Lighthouse Navigation operated on average about 60 ships on short-term charter during 2023. Results The Group had an operating income of USD 427.8m in 2023 (USD 726.0m), giving an EBITDA of USD 157.6m (USD 221.5m) and a consolidated operating result of USD 112.5m (USD 206.2m). Net result for the Group was USD 86.2 (USD 175.1m). The parent company’s net result for the year was USD 36.5m (USD 116.5m). The Board proposes the result for the year allocated as follows: Transfer to other retained earnings: -36.5m Total allocations: -36.5m Financial and Corporate Matters At the end of 2023, the book equity ratio was 33 per cent. Value-adjusted equity ratio is significantly higher. Interest bearing bank debt amounted to USD 102.4m and lease liabilities amounted to USD 461.0m. The consolidated cash balance was USD 128.3m. The Board considers the Group’s solvency and financial position to be sound. Cash flow from operations, combined with the total available liquidity, is expected to be more than sufficient to finance the Group’s obligations in 2024. At the end of each reporting period, the Company assesses whether there are any impairment indicators present. The Company has concluded that the decline in freight rates seen in 2023 is an impairment indicator pursuant to IAS 36. Consequently, Belships carried out an impairment test of ships owned or recognised as right-of-use assets at the end of the quarter. Recoverable amounts were higher than carrying amounts for all ships and no impairments were recorded. At the end of 2023, Belships held 371 800 treasury shares at an average cost of NOK 10.70 per share. The CEO held 5 000 000 options while outstanding employee share options totalled 600 000 at year-end. The Group’s primary market risk exposure is predominantly tied to fluctuations in freight rates, with secondary exposure to changes in interest rates and fuel prices. Belships aims to minimise counterpart risk and time charter contracts are entered into with highly reputable charterers. The Group had no research and development costs in 2023. All owned ships are under the ownership of Norwegian companies, and the majority of the Company’s operations in Norway are within the Norwegian tonnage tax regime as of year-end. The Group had deferred tax liabilities of USD 6.5m as at 31 December 2023. Going Concern The annual accounts are presented on a going concern basis in accordance with § 3 – 3 of the Norwegian Accounting Act. The Group’s liquidity reserves are considered robust. Current activity is expected to generate sufficient liquidity to cover current debt and operating expenses throughout 2024. Based on this the conditions for a going concern are in place. The consolidated accounts have been prepared in 17 BELSHIPS ANNUAL REPORT 2023 accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The information in the accounts gives a true and accurate representation of the Company’s and the Group’s assets, liabilities, financial position, and results. The annual accounts give a fair view of the development, profit, and overall financial position of Belships ASA and describe the most significant risks and uncertainties facing the Group and its parent company. Safety and the Environment Belships aims to minimise environmental impact from its activities and strives to improve safety. Measures are taken to prevent and minimise the impact on the environment. Belships is actively dedicated to enhancing standards, both onboard its vessels and within its shore-based operations. Pollution from ship operations is governed by several national and international environmental standards and certifications. Belships fully complies with official requirements concerning safety and environmental standards. All our ships are equipped to meet regulatory standards and requirements and the modern fleet of Belships represents lower emissions and energy consumption compared to industry averages. There were no serious or material incidents in 2023. Organisation Belships is headquartered in Oslo, from where it conducts financial, strategic development and investor relations together with the overall management of the Group’s activities. Chartering and commercial operations are handled from Lighthouse Navigation’s offices in Bangkok and Oslo. Technical management including crewing is managed by Belships Management Singapore, a former subsidiary of Belships, sold to V.Group during the fiscal year. Belships established a strategic partnership with V.Group for its fleet and ship management business, with Belships Management (Singapore) remaining the exclusive provider of ship management services to Belships ASA post-acquisition. The Group employed 106 office staff at the end of 2023. Ships under technical management employed 494 officers and crew members. Sick leave was less than 2 per cent in 2023. The Group was not subject to any serious work-related accidents in 2023. We are an equal opportunity employer with all qualified applicants receiving consideration for employment. The working environment in the companies within the Group is considered good. Belships ASA has purchased and maintains a liability insurance that covers potential liabilities for the Board of Directors and executive management of the Company. Corporate Social Responsibility Belships is a shipping company with global reach and a hundred years of history. The Board is well aware of the direct and indirect impact Belships’ activities have on the outside world as well as the Company’s shareholders. Belships is determined to create long- term shareholder values and at the same time act as a responsible participant in the society. The most important issues for our business and our shareholder in respect of Corporate Social Responsibility (CSR) are: ◉ Environment ◉ Human and labour rights ◉ Anti-corruption It is our policy to follow the standards, laws and regulations set by the national and international maritime regulatory authorities, but we also strive to uphold moral and ethical behaviour as part of our culture. Please refer to our Human Rights Policy published on our website, which covers the reporting required according to the Norwegian legislation introduced in the Transparency Act. Belships reports on safety and environment in the annual report. Belships does not tolerate any corrupt practices with our suppliers, customers or government entities affecting our business. Belships pays attention to the working conditions and safety within our operations. Please see the separate statement of corporate social responsibility. Corporate Governance Belships’ goals and strategy are based on sound principles of corporate governance. The Company has been listed on the Oslo Stock Exchange since 1937, 18 BELSHIPS ANNUAL REPORT 2023 and is subject to the Norwegian Accounting Act, the Securities Trading Act, and the Public Limited Company Act. Belships follows the Norwegian code of good corporate governance of 14 October 2021. Please see the separate statement of corporate governance on page 79. Outlook The Baltic Exchange Supramax index is currently about USD 14 500, with Ultramax bulk carriers earning about USD 17 000 in the spot market. The FFA market (Forward Freight Agreements) has improved and currently indicates that the market will retain this level for the rest of the year. This is a significant improvement in sentiment, and if it materialises, we would expect a meaningful increase in ship values compared to the start of the year. Lighthouse Navigation continues to deliver good results, and posted consecutive profits every quarter in 2023, which display good risk management and execution skills. Activity has been positive so far in 2024 and we expect continued profitability contributing to Belships’ dividend capacity. Belships has contract coverage ensuring significantly higher profitability than the current spot market. 42 per cent of ship days in 2024 are covered at about USD 16 700 per day. Furthermore, we now have nine vessels chartered out on floating rate, index-linked contracts. This is because we believe the rates and market sentiment has a good probability of improving during the year, and Belships has the right to convert to fixed rate during the charter period. All period contracts are fixed with highly reputable and recognised charterers in the dry bulk market. Belships financing has been secured for many years ahead, and most of the debt is with fixed interest rates significantly below current market levels, mainly due to favourable leasing terms. Belships is therefore able to combine meaningful leverage with a low cash breakeven of USD 10 900 per day per vessel in 2024. With eight Ultramax newbuildings under construction for delivery between 2024 and 2027, Belships will be taking over new vessels whilst the orderbook and the rate of supply growth approaches the lowest levels in 30 years. Since they are all leased without Belships investing any cash, this will not affect our dividend capacity before delivery. We believe the best way for Belships to approach the green shift is to own and operate the most efficient vessels currently available, with a financing structure which gives us unparalleled optionality and flexibility. We are focused on financial discipline and returning capital to our shareholders. A competitive return for our shareholders is to be obtained through an increase in the value of the Company’s shares and the payment of dividends, as measured by the total return. Since we announced a new dividend policy in Q2 2021, we have returned a total of NOK 8.70 per share (USD 224.3m) to shareholder and at the same time we have continued to deliver profitable growth and fleet expansion. Based on Belships’ current contract coverage and market expectations, we expect to generate free cash flow and continue to pay quarterly dividends. Oslo, 10 April 2024 Peter Frølich Chair of the Board Sten Stenersen Board member Jorunn Seglem Board member Marianne Møgster Board member Frode Teigen Board member Carl Erik Steen Board member Birthe Cecilie Lepsøe Board member Lars Christian Skarsgård Chief Executive Officer 19 BELSHIPS ANNUAL REPORT 2023 The Board and Chief Executive Officer have today considered and approved the annual report and financial statements for the Belships Group and its parent company Belships ASA for 2023. The Board has based this declaration on reports and statements from the Group’s chair and CEO, on the results of the Group’s activities and on other information that is essential to assess the Group’s position, provided to the Board of the parent company under obligation by the Group’s administration and subsidiaries. To the best of our knowledge: ◉ the 2023 financial statements for the Group and parent company have been prepared in accordance with all applicable accounting standards ◉ the information provided in the financial statements gives a true and fair representation of the Group and parent company’s assets, liabilities, profit and overall financial position as of 31 December 2023 ◉ the annual report provides a true and fair overview of: – the development, profit and financial position of the Group and parent company – the most significant risks and uncertainties facing the Group and the parent company Directors’ responsibility statement Oslo, 10 April 2024 Peter Frølich Chair of the Board Sten Stenersen Board member Jorunn Seglem Board member Marianne Møgster Board member Frode Teigen Board member Carl Erik Steen Board member Birthe Cecilie Lepsøe Board member Lars Christian Skarsgård Chief Executive Officer 20 BELSHIPS ANNUAL REPORT 2023 Supramax and Ultramax bulk carriers are very versatile, equipped with cranes (“geared”) in order to load and discharge a mul- titude of cargoes, and can enter most ports of the world. All of our ships are of eco-design combining high cargo capacity with lower fuel / energy consumption. Vessel Type Built DWT Yard Flag BELVICTORY Ultramax 2027 64 000 Japan TBA BELTEMPO Ultramax 2027 64 000 Japan TBA BELROSSO Ultramax 2026 64 000 Japan TBA BELAVANTI Ultramax 2026 64 000 Japan TBA BELFUTURE Ultramax 2026 64 000 Japan TBA BELFORTUNE Ultramax 2025 64 000 Japan TBA BELFOX Ultramax 2025 64 000 Japan TBA BELGRACE Ultramax 2024 64 000 Japan TBA BELMONDO Ultramax 2023 64 000 Imabari Norwegian BELYAMATO Ultramax 2022 64 000 Imabari Norwegian BELTOKYO Ultramax 2021 64 000 Imabari Norwegian BELFORCE Ultramax 2021 61 000 Dacks Norwegian BELKNIGHT Ultramax 2021 61 000 Dacks Norwegian BELTRADER Ultramax 2021 61 000 Dacks Norwegian BELGUARDIAN Ultramax 2021 61 000 Dacks Norwegian BELMAR Ultramax 2021 64 000 Imabari Norwegian BELFAST Ultramax 2021 64 000 Imabari Norwegian BELAJA Ultramax 2020 61 000 Shin Kurushima Norwegian BELMOIRA Ultramax 2020 61 000 Shin Kurushima Norwegian BELFUJI Ultramax 2020 63 000 Imabari Panama BELNIKE Ultramax 2020 63 000 Imabari Marshall Islands BELTANGO Ultramax 2020 64 000 Mitsui Panama BELFORTE Ultramax 2019 64 000 Mitsui Singapore BELRAY Ultramax 2019 61 000 Shin Kurushima Norwegian BELNIPPON Ultramax 2018 63 000 Imabari Norwegian BELAFONTE Ultramax 2017 63 000 Imabari Norwegian BELHAVEN Ultramax 2017 63 000 Imabari Norwegian BELTIGER Ultramax 2017 63 000 New Times Norwegian BELISLAND Ultramax 2016 61 000 Imabari Norwegian BELINDA Ultramax 2016 63 000 Hantong Norwegian BELMONT Ultramax 2016 63 000 Hantong Norwegian BELATLANTIC Ultramax 2016 63 000 Hantong Norwegian BELLIGHT Ultramax 2016 63 000 New Times Norwegian BELFRIEND Supramax 2016 58 000 Tsuneishi Norwegian BELTIDE Supramax 2016 58 000 Tsuneishi Norwegian BELFOREST Ultramax 2015 61 000 Imabari Norwegian BELHAWK Ultramax 2015 61 000 Imabari Norwegian BELSOUTH Ultramax 2015 63 000 Hantong Norwegian Total Average built DWT 38 Vessels 2020 2 379 000 Fleet overview Directors’ responsibility statement 21 22 Consolidated financial statements Consolidated financial statements 24 Consolidated statement of income 25 Consolidated statement of comprehensive income 26 Consolidated statement of financial position 28 Consolidated statement of cash flow 29 Consolidated statement of changes in equity 30 Notes to the consolidated accounts 30 Note 1 General information 31 Note 2 Accounting principles 35 Note 3 Estimates and judgement 35 Note 4 Revenue 36 Note 5 Segment information 38 Note 6 Ships and other fixed assets 40 Note 7 Interest-bearing debt 41 Note 8 Bank deposits 41 Note 9 Related parties 41 Note 10 Receivables and liabilities 42 Note 11 Investments and group companies 44 Note 12 Equity 45 Note 13 Earnings per share 46 Note 14 Salaries, number of employees 47 Note 15 Other general administrative expenses 48 Note 16 Options to employees 49 Note 17 Financial market risk 51 Note 18 Taxes 52 Note 19 Operating expenses 53 Note 20 Discontinued operations 54 Note 21 Environmental issues 54 Note 22 Contingencies 54 Note 23 Subsequent events 23 USD 1 000 Note 2023 2022 Operating income Gross freight income 563 441 926 494 Voyage expenses -139 085 -204 769 Net freight income 424 356 721 725 Management fees 3 408 4 228 Total operating income 4,5 427 764 725 953 Operating expenses Share of result from j/v and associated companies 11 6 407 30 963 T/C hire expenses 7 -194 155 -450 524 Ship operating expenses 19 -60 865 -55 571 Operating expenses ship management 19 -16 306 -22 209 Payroll expenses 14 -3 841 -5 250 Other general administrative expenses 15 -1 392 -1 818 Total operating expenses -270 152 -504 409 EBITDA 157 612 221 544 Depreciations and amortisation 6 -45 738 -38 992 Gain on sale of ships 316 22 274 Other gains/(losses) 350 1 342 Operating result (EBIT) 112 539 206 168 Financial income and expenses Interest income 2 527 958 Interest expenses 7,10 -33 184 -26 106 Other financial items 2 065 -1 877 Currency exchange gain/(loss) 1 049 -2 183 Net financial items -27 543 -29 208 Net result before tax 84 996 176 960 Tax 18 -7 562 -2 041 Net result from continuing operations 77 434 174 919 Result from discontinuing operation 20 8 806 141 Net result for the year 86 240 175 060 Hereof majority interests 75 895 146 886 Hereof non-controlling interests 11 10 346 28 174 Earnings per share from continuing operations (USD) 13 0.31 0.69 Diluted earnings per share from continuing operations (USD) 13 0.30 0.69 Earnings per share (USD) 13 0.34 0.69 Diluted earnings per share (USD) 13 0.34 0.69 Consolidated statement of income 24 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS USD 1 000 Note 2023 2022 Net result for the year 86 240 175 060 Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Actuarial gain/(loss) on defined benefit plan 0 13 Items that may be subsequently reclassified to profit or (loss): Exchange differences -29 -129 Total comprehensive income 86 211 174 944 Hereof majority interests 75 870 146 770 Hereof non-controlling interests 10 342 28 174 Majority interests from continuing operations 67 064 146 629 Majority interests from discontinuing operations 8 806 141 Consolidated statement of comprehensive income 25 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS USD 1 000 Note 2023 2022 ASSETS Non-current assets Tangible fixed assets Ships 6 731 596 747 042 Prepayment of ships 0 6 900 Property, Plant and Equipment 6 883 3 702 Total fixed assets 732 479 757 644 Financial fixed assets Investments in j/v and associated companies 11 9 934 29 483 Cash and cash equivalents (restricted) 8 0 113 Other non-current receivables 2 956 963 Total financial assets 12 890 30 559 Total non-current assets 745 370 788 203 Current assets Bunker inventory 8 556 14 675 Trade debtors 4 028 14 885 Other receivables 10 46 634 42 659 Cash and cash equivalents (restricted) 8 171 2 638 Cash and cash equivalents 8 128 105 137 233 Total current assets 187 495 212 090 932 864 1 000 293 Consolidated statement of financial position As at 31 December 26 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS USD 1 000 Note 2023 2022 EQUITY AND LIABILITIES Equity Paid-in capital 141 736 158 359 Retained earnings 128 935 98 864 Non-controlling interests 34 890 40 112 Total equity 12 305 561 297 335 Liabilities Non-current liabilities Pension obligations 954 865 Deferred tax 18 6 537 107 Long-term interest-bearing debt 7 536 668 555 202 Other non-current liabilities 0 757 Total other non-current liabilities 544 160 556 931 Current liabilities Current portion of interest-bearing debt 7 26 735 50 053 Tax payable 18 1 066 1 842 Public taxes and duties payable 266 5 517 Trade creditors 7 845 6 909 Other current liabilities 10 47 231 81 706 Total current liabilities 83 144 146 027 Total liabilities 627 303 702 958 932 864 1 000 293 Consolidated statement of financial position As at 31 December Oslo, 10 April 2024 Peter Frølich Chair of the Board Sten Stenersen Board member Jorunn Seglem Board member Marianne Møgster Board member Frode Teigen Board member Carl Erik Steen Board member Birthe Cecilie Lepsøe Board member Lars Christian Skarsgård Chief Executive Officer 27 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS USD 1 000 Note 2023 2022 CASH FLOW FROM OPERATIONS Net result before tax 84 996 176 960 Adjustments to reconcile result before tax to net cash flows: Depreciations/impairment on fixed assets 6 45 738 39 031 Gain on sale of ships 6 -666 -23 616 Share-based compensation expense 16 1 278 1 057 Share-based compensation payment 16 0 -8 150 Difference between pension expenses and paid pension premium 0 13 Share of result from j/v and associated companies 11 -6 407 -31 065 Dividend received from j/v and associated companies 11 26 204 14 646 Net finance costs 27 543 29 208 Working capital adjustments: Change in trade debitors and trade creditors 0 4 297 Change in other current items -24 910 310 Interest received 2 527 962 Interest paid 7 -33 184 -26 106 Financing costs -700 -1 270 Income tax paid 18 -1 526 -4 718 Net cash flow from operating activities 120 893 171 559 CASH FLOW FROM INVESTING ACTIVITIES Proceeds from sale of ships 6 27 082 66 097 Proceeds from sale of shares in subsidiary 10 666 0 Payment of ships 6 0 -86 580 Payment of other investments -1 848 -2 516 Net cash flow from investing activities 35 900 -22 999 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from non-current debt 7, 17 18 900 66 569 Repayment of non-current debt 7, 17 -108 272 -37 014 Dividend paid -79 017 -143 448 Net cash flow from financing activities -168 389 -113 893 Net change in cash and cash equivalents during the period -11 595 34 667 Cash and cash equivalents at 1 January 139 871 105 204 Cash and cash equivalents at 31 December * 128 276 139 871 ) Includes restricted cash. See note 8 for further details. Consolidated statement of cash flow 28 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Consolidated statement of changes in equity Majority interest Paid-in Retained Non- Share Treasury Share Other Other controlling Total USD 1 000 capital shares premium equity equity interest equity 2023 Equity as at 31 December 2022 59 466 -128 62 228 36 793 98 864 40 112 297 335 Share issue 0 0 0 56 0 0 56 Share-based payment expense 0 0 0 1 278 0 0 1 278 Dividend paid 0 0 0 -17 957 -40 795 -20 265 -79 017 NCI transactions 0 0 0 0 -5 004 4 701 -303 Net result for the year 0 0 0 0 75 919 10 322 86 240 Other comprehensive income 0 0 0 0 -49 20 -29 Total comprehensive income 0 0 0 0 75 870 10 342 86 211 Equity as at 31 December 2023 59 466 -128 62 228 20 170 128 935 34 890 305 561 2022 Equity as at 31 December 2021 59 466 -128 62 228 37 236 82 739 31 378 272 919 Share-based payment expense 0 0 0 1 057 0 0 1 057 Share-based compensation payment 0 0 0 -1 500 -6 650 0 -8 150 Dividend paid 0 0 0 0 -124 008 -19 440 -143 448 NCI transactions 0 0 0 0 13 0 13 Net result for the year 0 0 0 0 146 886 28 174 175 060 Other comprehensive income 0 0 0 0 -116 0 -116 Total comprehensive income 0 0 0 0 146 770 28 174 174 944 Equity as at 31 December 2022 59 466 -128 62 228 36 793 98 864 40 112 297 335 29 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 1 GENERAL INFORMATION Belships ASA is a fully integrated owner and operator of dry bulk ships. Belships ASA is a public limited liability company that is incorporated and domiciled in Norway and listed on the Oslo Stock Exchange. The head office is located at Lilleakerveien 6D in Oslo, Norway. Copies of the consolidated financial statements may be downloaded from www.belships.com, or by inquiry to the Company’s head office. The consolidated financial statements have been approved by the Board on 10 April 2024. Belships has obtained approval from Oslo Stock Exchange and Norwegian tax authorities to publish its financial statements only in English. NOTE 2 SUMMARY OF THE MOST IMPORTANT ACCOUNTING PRINCIPLES USED A) BASIS OF PREPARATION The consolidated financial statements of Belships ASA (the Parent Company), and its subsidiaries (the Group), have been prepared in accordance with IFRS® Accounting Standards as adopted by the EU. The Group accounts have been prepared on a historical cost basis, except for derivatives and shares held for trading, which are measured at fair value. The Group accounts are presented with uniform accounting principles for identical transactions and events under otherwise identical conditions. The annual accounts are presented on a going concern basis. The Board considers that the conditions for a going concern are in place. B) CONSOLIDATION PRINCIPLES Control is established when the Group is exposed to variable returns from its association with the investee and possesses the authority to influence those returns through its control over the investee. The process of consolidating a subsidiary commences upon the Group gaining control over it and concludes when the Group relinquishes control. Unrealised gains arising from transactions with affiliated companies are eliminated by offsetting the Group’s share of the company/enterprise. Similarly, unrealised losses are eliminated, but only if there is no indication of impairment on the asset being transferred internally. C) CURRENCY TRANSACTIONS Functional currency and reporting currency Accounting transactions undertaken by respective Group companies use the currency ordinarily used by the financial environment in which they oper- ate (functional currency). The Group accounts are presented in USD. The accounts for the units in the Group which have a functional currency different from the Group’s reporting currency, convert their accounts into the reporting currency according to the following guidelines: ◉ Assets and debts are converted according to conversion rates on the balance sheet date ◉ Income and costs are converted according to yearly average conversion rates Transactions in foreign currency Transactions in foreign currency are converted to the functional currency at the rate at time of the transaction. Monetary items in foreign currency are converted into functional currency using the rate at the balance sheet date. Non-monetary items which are measured at historical cost expressed in foreign currency, are converted into functional currency using the currency rate at the time of the transaction. Non-monetary items, which are measured at fair value expressed in foreign currency, are converted at the currency rate on the date of measurement. Currency rate changes are recognised continuously against profit and loss during the accounting period. Currency rates at year end was NOK 0.0983 (0.1014) and SGD 0.7578 (0.7199). D) ACCOUNTS RECEIVABLE Trade and other receivables are measured at transaction price upon initial recognition and subsequently measured at amortised costs. Notes to the consolidated accounts All amounts in the notes are in USD 1 000 unless otherwise stated 30 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Note 2 Accounting principles E) TANGIBLE FIXED ASSETS Tangible fixed assets are measured at acquisition cost, net of accumulated depreciation and impairments losses. When assets are sold or divested, the carrying amount is deducted and any gains or losses are recognised in the profit and loss account. Acquisition cost for tangible fixed assets is the purchase price, including taxes and charges, and expenses directly related to preparing the asset for use. Expenses incurred after the asset has been put to use, are recognised in the profit and loss account, whereas other expenses which are expected to create future financial gains are capitalised. An estimated docking element is recognised as a separate component of the ship for depreciation purposes on the first occasion a ship is booked in the accounts. The amount corresponds to the estimated docking costs for the period. The docking component is depreciated on a straight-line basis over the period to the next planned drydocking. Residual value has been taken into account, and this is estimated based on steel value of the ship at the balance sheet date less estimated cost to demolish the ship. Book value is compared to market value and value in use to assess the need for any further impairment compared to the ordinary depreciation plan. At the end of each reporting period, every fixed asset is assessed for impairment indicators as described under section M) Impairment of assets. The depreciation period and method are assessed annually and are based on the management’s estimates of the ships’ future useful life. The same applies to residual value. In accordance with IFRS, the ships have been separated into components for depreciation purposes. The ships excluding capitalised drydocking are depreciated as one unit, as the value of any part of the ship with a useful lifetime other than 25 years is considered to be insignificant. Depreciation is calculated on a straight-line basis over the estimated useful life of the ships taking its residual value into consideration. The useful life, which is also considered as the economic life of the ships, has been estimated to 25 years. Residual value is estimated based on steel prices of the ships less cost to demolish and is reassessed every year-end. Dry docking expenses are depreciated until next planned dry docking, typi- cally 30-60 months. Other assets have a useful life of 3-5 years. F) LEASING The liability arising from leasing agreements is recognised at net present value of remaining lease payments, discounted using the interest rate implicit in the lease. Interests are charged to the statement of income over the lease period. The associated right-of-use asset equals the initial lease liability adjusted for payments made before the lease commencement date and initial direct costs. After the commencement date, the right-of-use asset is depreciated in accordance with the requirements in IAS 16 Property, Plant and Equipment. At the end of each reporting period, every right of use asset is assessed for impairment indicators as described under section O) Impairment of assets. The Group has chosen the option to allocate the service component embedded in all long-term time charter contracts to ship operation expenses. The Group has also elected to use the recognition exemp- tions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets). G) FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognised when the Company becomes party to the contractual obligations of the relevant instrument. The Company classifies its financial instruments in the following categories: at fair value through profit and loss (FVTPL) or at amortised cost. The Group determines the classification of financial instruments at initial recognition. Currently, the Group does not apply hedge accounting. Classification and measurement Financial instruments at fair value through profit and loss This category comprises financial assets and liabilities held for trading, including all derivative instruments. Financial instruments in this category are initially recorded at fair value, and transaction costs are expensed in the consolidated statement of profit and loss. Realised and unrealised gains and losses arising from changes in the fair value are included in the consolidated statements of profit and loss in the period in which they arise. Financial instruments at amortised cost Financial assets and liabilities in this category are initially recognised at fair value, and subsequently carried at amortised cost, using the effective interest method less any allowance for impairment. This category includes accounts receivable, accounts payable, loans, lease liabilities and other borrowings. Financial assets at Fair value through profit and loss (FVTPL) The Group currently has equity investments (see note 11) in unlisted shares. Financial assets at FVTPL are carried in the statements of financial posi- tion at fair value with net changes in fair value recognised in profit or loss. Impairment of trade receivables and contract assets At each reporting date, the Company measures the loss allowance for the trade receivables and contract asset at an amount equal to the lifetime expected credit losses. For accounts receivables and contract assets, the Group uses a simplified approach in calculating expected credit losses. The Company recognises a loss allowance using factors including aging of accounts, historical experience, customer concentration, customer creditworthi- ness and current industry and economic trends. An impairment loss, amounting to any difference between the carrying amount of the loss allowance and the expected credit losses at the reporting date, is recognised in the consolidated statement of profit and loss. Expected credit loss is immaterial. 31 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Derivative financial instruments and hedging The Group uses derivative financial instruments to reduce its exposure to bunker prices and the freight market. Derivative instruments are recognised in the consolidated statements of financial position at their fair values. Realised and unrealised gains and losses attributable to derivative instruments are recognised as other financial items, net, as they arise. Financial liabilities Financial liabilities are classified at initial recognition as financial liabilities at FVTPL, loans and borrowings or payables. All financial liabilities are recognised initially at fair value and, in the case of loans/borrowings and payables net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans. The subsequent measurement depends on classification. No financial liabilities have currently been designated at FVTPL. Interest-bearing loans are after initial recognition measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liability through the amortisation process or when derecognised. Fair value estimation Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using assumptions that market participants would use when pricing the asset or liability. All assets and liabilities for which fair values are measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted market prices included in Level 1 are directly or indirectly observable. Level 3: Inputs are unobservable. H) EQUITY (i) Debt and equity Financial instruments are classified as debt or equity according to the underlying substance of the contractual agreement. Interest, dividend, gains, and losses related to a financial instrument classified as debt, is presented as income or expense. (ii) Treasury shares Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue, or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consider- ation, if reissued, is recognised in share premium. Share options exercised during the reporting period are fulfilled with treasury shares. (iii) Costs related to equity transactions Transaction costs directly related to equity transactions are charged directly against the equity after tax deductions. I) REVENUE RECOGNITION Revenue recognition in the Group relates to three different types of revenue; ◉ Time Charter (freight income) ◉ Voyage charter (freight income) ◉ Other revenues such as technical, crewing, port agency, logistical and management fees. Time Charter The Group considers time charter contracts to contain both lease and service components. For time charter contracts where the Group acts as lessor and which does not transfer substantially all risks and rewards incidental to ownership of the ship are accounted as operational leases. Revenues are recognised in accordance with IFRS 15, and the Group only recognises time charter revenue when the ships are on-hire. The contract period starts when the ships is made available to the customer and ends on agreed return date. When the ships are off-hire the Group does not recognise any time charter revenues except if the contracts can be negotiated with rates and for periodical maintenance days in accordance with contract, on which reve- nue is recognised. Time charter agreements where the Group acts as lessee are accounted in accordance with IFRS 16 (See item F). Voyage Charter In a Voyage Charter contract, the charterer hires the ship to transport a specific agreed-upon cargo for a single voyage. The consideration for such a contract is determined based on a freight rate per metric ton of cargo carried or occasionally on a lump sum basis. The charterer is responsible for any short loading of cargo or dead freight. The voyage charter party generally has standard payment terms of 90/95% freight paid within three to five days after completion of loading. We have determined that our voyage charter contracts consist of a single performance obligation of transporting the cargo within a specified period. Therefore, the performance obligation is met evenly as the voyage progresses through recognition of revenues 32 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS and costs on a straight-line basis over the estimated voyage days from the commencement of loading to completion of discharge. Costs to obtain a voyage contract is immediately expensed as the Group has elected to apply the optional practical expedients for contracts expected to be recog- nised within a year. Other revenue/Management fee The Group also provides port agency and logistical services on ships not operated by the Group. Revenue on such services is recognised over time, as the performance obligation is satisfied over time. For such revenue, the Group has a right to consideration from the customer in an amount that corre- sponds directly with the value to the customer of the Group’s performance completed to date. This revenue is classified as Management fees. J) EMPLOYEE BENEFITS Defined contribution pension scheme All current employees in Norwegian companies are member of the Company’s defined contribution scheme. The premium is charged as incurred by operations. Social security tax expense is recognised based on the pension plan payments. Defined benefit pension scheme The Company has unfunded pension liabilities. These relate to early retirement and pension to persons, that have not been included in the service pension scheme. Pension obligations are estimated by an independent actuary, and the relevant amounts are considered to be negligible. K) INVESTMENT IN ASSOCIATES AND JOINT VENTURES A joint venture is a type of joint arrangement whereby the parties that have joint control have the right to the net assets of the joint venture. Joint con- trol is the contractually agreed sharing of control of the arrangement, which exists only when decisions about relevant activities require unanimous consent of the parties sharing control. An associate is an entity in which the Group has significant influence. Significant influence is the power to par- ticipate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The Group’s investments in joint ventures and associates are accounted for by using the equity method. Under this method, the investment is initially recognised at cost. Goodwill relating the associate or joint venture is included in the carrying amount of the investment and not tested for impairment individually. The income statement reflects the Group’s share of the net result after tax of the associate or joint venture. Any change in other compre- hensive income of the associate or joint venture is presented separately in the Group’s other comprehensive income. L) TAXES ON INCOME Tax expenses consist of tax payable and changes in deferred tax. Deferred tax or tax assets are calculated on all differences between accounting values and tax values of assets and liabilities, except for temporary differences related to investments in subsidiaries, affiliated companies, or jointly controlled enterprises when the Group controls when the temporary differences’ reversal, which is not expected to occur in the foreseeable future. Deferred tax assets are recognised when it is likely that the Company will generate sufficient profit for tax purposes in future periods to utilise the tax asset. Similarly, the Company will decrease the deferred tax asset if it no longer considers it likely to utilise the deferred tax asset. Deferred tax liabilities and deferred tax assets are measured on the basis of prevailing tax rates for the companies in the Group where temporary differ- ences have occurred, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Tax payable is calculated with the tax rate in the actual tax regime. Deferred tax liabilities and deferred tax assets are entered at nominal value calculated with the tax rate in the actual tax regime and are classified as long-term liability or intangible fixed asset in the balance sheet. Tax payable and deferred tax related to equity transactions are directly recorded against equity. In addition to companies subject to ordinary taxation in Norway, Singapore and China, the Group consists of companies within the shipping taxation scheme in Norway and Singapore. The deferred tax positions associated with the different tax regimes cannot be offset. A corresponding situation also applies to tax positions between jointly controlled operations and the rest of the Group. These cannot be offset. M) IMPAIRMENT OF ASSETS At the end of each reporting period, each ship is assessed for impairment indicators. The same process applies when events or changes suggest that the ship’s value might not be fully recoverable. When determining if impairments are necessary, assets are grouped based on the smallest level with distinct and mainly separate cash flows, meaning each ship is considered individually. Impairment is calculated as the difference between the asset’s carrying amount and the value considered as recoverable. The recoverable amount is the higher of the asset’s fair value less cost to sell and its value-in-use to the Group. Value-in-use is calculated by discounting anticipated future cash flows from the asset. When it is assumed that the asset’s value is lower than its carrying amount, an impairment loss is recognised. Impairment loss recognised in earlier periods is reversed only in case of changes to the estimates used to determine the recoverable amount. However, the reversal amount can only bring the book value after reversal to a maximum of the value it would have been recorded at if it had not been impaired previously. Such reversals are recorded in the profit and loss statement. 33 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS N) EVENTS AFTER THE BALANCE SHEET DATE New information after the balance sheet date regarding the Company’s financial position as of the balance sheet date is taken into consideration in the annual accounts. Events after the balance sheet date that do not affect the Company’s financial position as of the balance sheet date, but which will have an impact on the Company’s financial position in the future, are disclosed if significant. O) SHARE-BASED PAYMENTS The employees of Belships ASA have received options to purchase company shares. Market value of the awarded options is measured at time of the award and charged to expense over the vesting period as a payroll cost with corresponding increase in other paid-in equity. The market value of the options granted is estimated using the Black and Scholes option pricing model. P) CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, bank deposits and other short-term and liquid investments to be redeemed within 3 months. Cash and cash equivalents are recognised at nominal values in the balance sheet. Q) RESTRICTED DEPOSITS Restricted cash include all deposits in separate accounts, which will be used to cover accrued taxes withheld for employees and deposits provided as security for certain guarantees. R) REPORTING BY SEGMENTS Operating segments are components of a business that are evaluated regularly by the chief operating decision maker for the purpose of assessing per- formance and allocating resources. The Group’s chief operating decision maker is the CEO. The Group is divided into the operating segments dry bulk and technical management. The dry bulk segment is further divided into 2 reportable segments: own ships (owned or leased) and operation/commer- cial management (Lighthouse Navigation), which is how the information is presented to the Management and the Board. Transactions between the business units are based on market conditions. Segment turnover, segment costs and segment results include transactions between segments. S) CASH FLOW STATEMENT The cash flow statement has been prepared using the indirect method. Liquid assets include cash, bank deposits (restricted and unrestricted) and other short-term investments which can be converted to cash within 3 months. For restricted deposits, see note 8. T) CLASSIFICATION FINANCIAL POSITION The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is considered current when it is: ◉ expected to be realised or intended to sold or consumed in normal operating cycle ◉ held primarily for the purpose of trading ◉ expected to be realised within twelve months after the reporting period or ◉ cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current. A liability is considered current when it is: ◉ expected to be settled in normal operating cycle ◉ held primarily for the purpose of trading ◉ due to be settled within twelve months after the reporting period or ◉ there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as noncurrent assets and liabilities. 34 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 4 REVENUE Belships has entered into period time charters with various parties during 2023. The remaining fleet have been operated in the spot market by Belships’ subsidiary Lighthouse Navigation. Gross earnings in 2023 per ship for the entire owned fleet amount to USD 18 992 versus BSI index of USD 11 240 gross per day. 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 affected by a certain number of period time charter contracts which contribute to our contract coverage for 2024-2025. In addition to the future lease payments from chartered out vessels on firm hire rate, Belships has entered into agreements to charter out nine vessels on floating index-linked contracts. These vessels will earn an average premium of 116 per cent of the Baltic Supramax Index. Belships has the option to convert any part of the remaining period to a fixed rate based on the prevailing FFA curve from time to time. NOTE 3 USE OF ESTIMATES AND JUDGEMENT IN PREPARATION OF THE ANNUAL ACCOUNTS Preparing the annual accounts in accordance with IFRS® Accounting Standards as adopted by the EU requires the management to use estimates and assumptions affecting the amounts reported in the accounts with notes. The management assumptions and valuations are based on experience and on miscellaneous other factors assumed to be reasonable and appropriate. This particularly applies to impairment assessment of ships. Future events can entail a change in these estimates. Estimates and the underlying assumptions are evaluated on an ongoing basis. Changes in accounting estimates are entered in the period when the changes occur. If the changes also apply to future periods, the effect is distributed over the current and future periods and appears in the current note. Impairment assessment – ships At the end of each reporting period, every ship is assessed for impairment indicators. The same applies when events or changes occur that may entail that the asset’s carrying amount may not be recovered. In assessing the need for impairments, assets are grouped at the lowest level at which there is identifiable and predominantly independent cash inflows, which means per ship. Impairment is calculated as the difference between the asset’s carry- ing amount and the value considered as recoverable. The recoverable amount is the higher of the asset’s fair value less cost to sell and its value-in-use to the Group. Value-in-use is calculated by discounting anticipated future cash flows from the asset. When it is assumed that the asset’s value is lower than its carrying amount, an impairment loss is recognised. Impairment loss recognised in prior periods are only reversed if there are changes to the estimates used to determine the recoverable amount. How- ever, the amount of reversal is limited such that the post-reversal book value does not exceed the value at which the asset would have been recorded if it had not been impaired previously. These reversals are accounted for in the profit and loss statement. Revenue types 2023 2022 Time Charter revenues 293 059 415 243 Voyage charter revenues 270 381 511 251 Other revenues 3 408 4 228 Total 566 848 930 722 Future lease payments from chartered out vessels 2024 2025 2026 2027 2028 Subsequent Total Time Charter revenues 91 464 5 534 0 0 0 0 96 998 Voyage charter revenues 29 709 0 0 0 0 0 29 709 Total 121 173 5 534 0 0 0 0 126 707 35 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Lighthouse 1 January - 31 December 2023 Belships Navigation Eliminations TotalGross freight revenue 204 845 357 070 1 525 563 441 Voyage expenses -10 871 -130 669 2 456 -139 085 Net freight revenue 193 974 226 401 3 980 424 356 Management fees 0 7 388 -3 980 3 408 Operating income 193 974 233 790 0 427 764 Share of result from j/v and assoc. companies 0 6 407 0 6 407 T/C hire expenses 0 -194 155 0 -194 155 Ship operating expenses -58 304 -2 561 0 -60 865 Operating expenses ship management 0 -16 306 0 -16 306 General and administrative expenses -5 233 0 0 -5 233 Operating expenses -63 537 -206 615 0 -270 152 Operating result (EBITDA) 130 437 27 175 0 157 612 Depreciation and amortisation -38 582 -7 156 0 -45 738 Gain on sale of ship 316 0 0 316 Other gains/(losses) 0 350 0 350 Operating result 92 171 20 368 0 112 539 Interest income 1 412 1 115 0 2 527 Interest expenses -32 949 -235 0 -33 184 Other financial items 1 338 727 0 2 065 Currency gains/(-losses) -119 1 168 0 1 049 Net financial items -30 318 2 775 0 -27 543 Result before tax 61 853 23 143 0 84 996 Tax -6 537 -1 025 0 -7 562 Net result from continuing operations 55 316 22 118 0 77 434 Result from discontinuing operation 8 806 0 0 8 806 Net result 64 122 22 118 0 86 240 Hereof majority interests 64 122 11 772 0 75 895 Hereof non-controlling interests * 0 10 346 0 10 346 Assets 816 370 116 494 0 932 864 Liabilities 573 585 53 718 0 627 303 Cash flow from operating activities 112 892 8 002 0 120 893 Cash flow from investing activities 35 900 0 0 35 900 Cash flow from financing activities -141 161 -27 228 0 -168 389 * Non-controlling interests is mainly related to the subsidiaries Lighthouse Navigation Management AS (50.50%) and Lighthouse Navigation Pte Ltd (50.01%). See note 11. NOTE 5 SEGMENT INFORMATION The segment reporting aligns with the criteria established for reporting to the Chief Operating Decision Maker (CEO). Assessment of segment per- formance is grounded in profit or loss metrics, consistently measured with those of the consolidated financial statements. While the Group centrally manages financing and income taxes, these are allocated to respective operating segments. Transfer pricing between segments mirrors arm’s length transactions with third parties. Operating segments engage in worldwide activities, offering shipping services across major trade routes. Given that charterers determine trade routes on an individual basis without specific geographic focus for ships, geographical segments are not presented. The segment reporting has been updated from 2022, with the removal of the Ship Management segment, as it pertains to discontinued operations. Please refer to note 20 for additional information. 36 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Lighthouse 1 January - 31 December 2022 Belships Navigation Eliminations TotalGross freight revenue 241 261 683 865 1 368 926 494 Voyage expenses -14 341 -193 173 2 745 -204 769 Net freight revenue 226 920 490 692 4 113 721 725 Management fees 0 12 041 -7 813 4 228 Operating income 226 920 502 733 -3 700 725 953 Share of result from j/v and assoc. companies 0 30 963 0 30 963 T/C hire expenses -1 747 -448 777 0 -450 524 Ship operating expenses -56 551 -2 720 3 700 -55 571 Operating expenses ship management 0 -22 209 0 -22 209 General and administrative expenses -7 068 0 0 -7 068 Operating expenses -65 366 -442 743 3 700 -504 409 Operating result (EBITDA) 161 554 59 990 0 221 544 Depreciation and amortisation -33 142 -5 850 0 -38 992 Gain on sale of ship 22 274 0 0 22 274 Other gains/(losses) 0 1 342 0 1 342 Operating result 150 686 55 482 0 206 168 Interest income 613 345 0 958 Interest expenses -25 737 -369 0 -26 106 Other financial items -2 163 286 0 -1 877 Currency gains/(-losses) -3 002 819 0 -2 183 Net financial items -30 289 1 081 0 -29 208 Result before tax 120 397 56 563 0 176 960 Tax -19 -2 022 0 -2 041 Net result from continuing operations 120 378 54 541 0 174 919 Result from discontinuing operation 141 0 0 141 Net result 120 519 54 541 0 175 060 Hereof majority interests 120 519 26 367 0 146 886 Hereof non-controlling interests * 0 28 174 0 28 174 Assets 833 844 166 449 0 1 000 293 Liabilities 615 296 87 662 0 702 958 Cash flow from operating activities 126 467 45 092 0 171 559 Cash flow from investing activities -22 999 0 0 -22 999 Cash flow from financing activities -94 453 -19 440 0 -113 893 * Non-controlling interests is mainly related to the subsidiaries Lighthouse Navigation Management AS (50.50%) and Lighthouse Navigation Pte Ltd (50.01%). See note 11. 37 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 6 SHIPS AND OTHER FIXED ASSETS Ships, owned Ships, right-to-use assets Capitalis. Capitalis. Property, drydock. drydock. Ships plant and Ships expenses Total Ships expenses Total total equipm. 2023 Cost per 1 January 257 662 12 726 270 388 554 507 15 285 569 792 840 180 3 927 Additions * 0 594 594 53 553 2 254 55 806 56 401 0 Disposals -27 347 -633 -27 981 0 0 0 -27 981 -2 353 Reclassified ** 29 713 0 29 713 0 -29 932 0 -29 932 -218 Cost per 31 December 260 028 12 687 272 715 578 128 17 539 595 667 868 382 1 574 Depreciations per 1 January 40 609 6 505 47 114 40 477 5 547 46 024 93 138 225 Depreciation for the year 11 097 1 744 12 840 29 334 3 098 32 432 45 272 466 Disposals -1 474 -150 -1 624 0 0 0 -1 624 0Reclassified ** 616 0 616 -616 0 -616 0 0Depreciations per 31 Dec 50 847 8 099 58 946 69 195 8 645 77 840 136 786 691 Book value per 31 December 209 181 4 588 213 769 508 933 8 894 517 827 731 596 883 30-60 30-60 3-5Useful life 25 years months 25 years months years ) Additions include a revision of the BELFUJI lease, resulting in an increase of USD 17.6m.) Option to acquire BELAFONTE was exercised in 2023.2022 Cost per 1 January 270 248 14 724 284 972 375 807 12 747 388 554 673 526 4 195 Additions 28 012 2 753 30 765 191 923 1 354 193 277 224 042 150 Disposals -50 303 -3 567 -53 870 -18 580 0 -18 580 -72 450 -418 Reclassified * 9 705 -1 184 8 521 5 357 1 184 6 541 15 062 0 Cost per 31 December 257 662 12 726 270 388 554 507 15 285 569 792 840 180 3 927 Depreciations per 1 January 34 880 6 201 41 081 25 223 2 661 27 884 68 965 23 Depreciation for the year 10 192 1 656 11 848 24 050 2 661 26 711 38 559 472 Disposals -9 656 -1 127 -10 783 -3 603 0 -3 603 -14 386 -269 Reclassified * 5 193 -225 4 968 -5 193 225 -4 968 0 0 Depreciations per 31 Dec 40 609 6 505 47 114 40 477 5 547 46 024 93 138 225 Book value per 31 December 217 053 6 221 223 274 514 030 9 738 523 768 747 042 3 702 ) BELLIGHT was in 2022 refinanced as a sale-leaseback while option to acquire BELNIPPON was exercised. 38 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Accum. Capital. Accum. Built Cost ordinary drydock. deprec. on BookSpecification of the Group’s ships year Ownership price deprec. expenses dd expens. value Belsouth 2015 100% 24 535 -7 284 1 279 -800 17 730 Belinda 2016 100% 24 569 -6 990 921 -630 17 869 Belmont 2016 100% 24 596 -6 935 986 -580 18 066 Belatlantic 2016 100% 24 360 -6 590 920 -414 18 276 Belnippon 2018 100% 32 531 -10 004 579 0 23 106 Belhaven 2017 100% 23 410 -3 372 935 -333 20 640 Beltiger 2017 100% 21 650 -2 123 1 227 -430 20 325 Beltide 2016 100% 27 000 -2 647 1 000 -433 24 920 Belfriend 2016 100% 27 000 -2 488 1 000 -400 25 112 Belafonte 2017 100% 29 713 -1 989 0 0 27 724 Ships, owned 259 364 -50 422 8 847 -4 020 213 769 Belforest 2015 BBC 24 920 -5 197 777 -505 19 995 Belisland 2016 BBC 25 838 -5 299 739 -394 20 883 Belray 2019 BBC 27 351 -4 084 1 050 -653 23 663 Belaja 2020 BBC 26 962 -3 779 1 271 -783 23 671 Belmoira 2020 BBC 26 961 -3 780 1 233 -783 23 630 Belfast 2021 BBC 26 964 -2 767 1 000 -583 24 613 Beltrader 2021 BBC 24 953 -2 056 1 000 -467 23 431 Belguardian 2021 BBC 24 953 -2 059 1 000 -467 23 427 Belknight 2021 BBC 25 453 -2 135 1 000 -467 23 852 Belforce 2021 BBC 26 343 -2 145 1 000 -450 24 748 Belmar 2021 BBC 27 083 -2 237 1 000 -467 25 380 Belhawk 2015 BBC 21 437 -2 157 1 538 -433 20 384 Beltokyo 2021 BBC 32 925 -2 492 1 000 -417 31 017 Bellight 2016 BBC 22 825 -4 120 1 009 -454 19 260 Belyamato 2022 BBC 32 013 -1 263 1 000 -217 31 534 Belmondo 2023 BBC 33 425 -1 117 1 000 -183 33 124 Belfuji 2020 TC 33 448 -7 855 0 0 25 592 Beltango 2020 TC 32 801 -2 128 0 0 30 674 Belgrace 2020 TC 33 981 -2 207 0 0 31 774 Belforte 2019 TC 37 368 -2 467 0 0 34 901 Texel Island 2012 TC 10 766 -10 144 0 0 623 Quanzhou 2017 TC 2 556 -905 0 0 1 650 Ships, right-to-use assets 581 328 -72 394 16 616 -7 723 517 827 Total fleet 840 692 -122 817 25 463 -11 743 731 596 Fleet The Group controlled a fleet of 30 ships at the end of the year. Additionally, the Group operated two vessels under short-term lease agreements, bring- ing the total fleet count to 32 ships. Ship transactions during the year include delivery of the newbuilding BELMONDO and sale of BELVEDERE. Impairment tests At the end of each reporting period, the Group assesses whether any impairment indicators are present. The Group has identified the decline in freight rates in 2023 as an impairment indicator under IAS 36. Consequently, Belships conducted impairment tests for four of the ships at year-end. These tests revealed significant headroom between the value-in-use and book value for all vessels. Each ship is considered a separate cash-generating unit, and recoverable amounts were compared against carrying amounts at the end of the year. Recoverable amounts, based on value-in-use, were derived from present value calculations of estimated cash flows over the ship’s useful life. Assump- tions reflect management’s best estimate of economic conditions over the remaining useful life, with sensitivity mainly to revenue and cost of capital assumptions based on current contracts and historical rates from the Baltic Supramax index (BSI-58). Operating and capital expenditure estimates were derived from Board-approved budgets. While climate-related factors, such as volatile market conditions and impending regulatory requirements, were considered, they did not indicate impairment, with management noting no adverse effects on the fleet’s value. 39 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NPV of NPV of Built Leased Lease Purchase Discount lease purchase Non-Vessel year year Ownership maturity option rate payments option Current currentBELMONDO 2023 2023 Bareboat 2033 2027-2033 4.7% 11 654 17 012 1 323 27 342 BELYAMATO 2022 2022 Bareboat 2032 2026-2032 4.4% 11 021 16 501 1 372 26 149 BELTOKYO 2021 2021 Bareboat 2033 2025-2033 4.6% 9 244 17 977 1 394 25 828 BELFORCE 2021 2021 Bareboat 2031 2024-2031 4.6% 7 529 14 053 1 279 20 302 BELKNIGHT 2021 2021 Bareboat 2028 2024-2028 5.2% 9 120 11 751 1 209 19 662 BELTRADER 2021 2021 Bareboat 2031 2025-2031 5.1% 8 907 11 857 1 168 19 595 BELGUARDIAN 2021 2021 Bareboat 2031 2025-2031 5.1% 8 907 11 857 1 168 19 595 BELMAR 2021 2021 Bareboat 2031 2025-2031 5.2% 15 389 10 137 1 169 24 357 BELFAST 2021 2021 Bareboat 2031 2025-2031 6.3% 13 059 9 521 902 21 678 BELAJA 2020 2020 Bareboat 2027 2024-2027 5.7% 6 669 14 074 1 238 19 505 BELMOIRA 2020 2020 Bareboat 2027 2024-2027 5.7% 6 501 14 139 1 244 19 396 BELFUJI 2020 2020 Time Charter 2028 2024-2028 6.4% 8 667 17 871 787 25 748 BELNIKE 2020 2020 Time Charter 2027 2025-2027 5.0% 7 456 18 903 1 093 25 265 BELTANGO 2020 2020 Time Charter 2027 2025-2027 5.0% 7 254 21 179 921 27 512 BELFORTE 2019 2019 Time Charter 2026 2022-2026 5.0% 5 704 21 494 810 26 388 BELRAY 2019 2019 Bareboat 2026 2023-2026 5.6% 6 007 14 389 1 282 19 114 BELISLAND * 2016 2021 Bareboat 2032 2024-2032 4.5% 9 193 8 437 1 442 16 188 BELLIGHT * 2016 2022 Bareboat 2032 2024-2032 4.4% 8 384 9 607 1 454 16 537 BELFOREST * 2015 2022 Bareboat 2033 2025-2033 4.2% 8 634 11 274 1 465 18 443 BELHAWK * 2015 2021 Bareboat 2031 2024-2031 4.5% 9 736 7 086 1 538 15 285 Lighthouse Navigation vessels Texel Island 2012 2022 Time Charter 2024 N/A 5.25 % 651 0 651 0 Quanzhou 2017 2023 Time Charter 2024 N/A 5.25 % 1 666 0 1 666 0 Total Ships 181 348 279 117 26 575 433 890 Offices N/A N/A Lease 2021-63 N/A 5-6% 500 0 161 339Total lease liabilities 181 848 279 117 26 735 434 229 ) The bareboat charters for BELHAWK, BELFOREST, BELLIGHT and BELISLAND are accounted for as financial liability under IFRS 9. Belships has elected to present these vessels under lease liabilities in the disclosure as this better reflects the economic substance of the entered sale leaseback transactions. NOTE 7 INTEREST-BEARING DEBT The Group’s interest-bearing debt includes lease agreements for vessels as well as bank debt. All bareboat agreements are regarded by the Group as meeting the lease definition under IFRS 16. Long-term time charter contracts, on the other hand, comprise both lease and service components. During the year, the initial BELFUJI lease calculation was revised to reflect the assumption of exercising the purchase option, resulting in a USD 17.6m addition in both the right-of-use asset and the lease liability. T/C hire expenses T/C hire expenses of USD 194.2m relates to chartering activity in Lighthouse Navigation. Expenses comprise short-term hire of tonnage and services from other shipowners. Specification of lease agreements The purchase options can be exercised at any point during the time period in the Purchase option column. The price of declaring the option decreases over time. 40 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Payment Schedule 2024 2025 2026 2027 2028 Subsequent Total Lease payments -46 635 -46 514 -45 550 -33 756 -17 575 -11 300 -201 330 Exercising purchase options 0 0 -58 200 -102 200 -153 295 -29 700 -343 395 Total -46 635 -46 514 -103 750 -135 956 -170 870 -41 000 -544 725 All lease agreements have fixed interest rates for the entire duration of the charters. The cash flow above includes interest payments. Belships has no obligation to purchase any of the leased vessels. All purchase options are denominated in USD. Loan facilities The vessel BELAFONTE was financed during the year utilising the accordion tranche made available under the Group’s loan facility. Total outstanding under the loan facilities at the end of the year was USD 102.4m. Arrangement fee and other transaction costs related to the mortgage debt were initially recorded as a reduction of the debt in the balance sheet, and subsequently amortised over the loan period in accordance with the amortised cost principle. The difference between the outstanding loan amount and book value is amortised financial expenses of USD 1.0m as of year-end. The Group has several covenant requirements including requirements related to equity ratio, net working capital and available liquidity. The Group remained compliant with all covenants during and at the end of the year. Repayment Schedule 2024 2025 2026 2027 2028 Subsequent Total Instalments 0 -9 707 -9 707 -83 824 0 0 -103 238 Interests -7 290 -6 129 -5 528 -1 289 0 0 -20 236 Total -7 290 -15 836 -15 235 -85 113 0 0 -123 474 NOTE 8 BANK DEPOSITS The Group’s bank balance amounted to USD 128 276 (139 984) at year end. Short-term restricted cash is related to employees withholding tax. NOTE 9 RELATED PARTIES No loans are issued, or security provided with respect to the Company’s shareholders or associated parties. NOTE 10 RECEIVABLES AND LIABILITIES Current receivables and other current liabilities mainly consist of accrued revenues and receivables and liabilities related to the ordinary operation of the ships. All current receivables and liabilities are due within 12 months. 41 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 11 INVESTMENTS AND GROUP COMPANIES Companies included in the consolidated accounts: Ownership/ Business location Main activity voting percentage Belships Shipholding AS Oslo Shipping 100.00% Belships Shipholding II AS Oslo Shipping 100.00% Bel Ship I AS Oslo Shipping 100.00% Bel Ship II AS Oslo Shipping 100.00% Belsouth AS Oslo Shipping 100.00% Belinda AS Oslo Shipping 100.00% Belmont AS Oslo Shipping 100.00% Belatlantic AS Oslo Shipping 100.00% Belhaven AS Oslo Shipping 100.00% Beltiger AS Oslo Shipping 100.00% Beltide AS Oslo Shipping 100.00% Belfriend AS Oslo Shipping 100.00% Belnippon AS Oslo Shipping 100.00% Belvedere Ship AS Oslo Shipping 100.00% Belafonte Ship AS Oslo Shipping 100.00% Belships Lighthouse AS Oslo Shipping 100.00% 1 Lighthouse Navigation Management AS Oslo Commercial management 50.50% 2 Lighthouse Navigation Pte Ltd Singapore Commercial management 50.01% 1 Lighthouse Navigation Management AS Lighthouse Navigation AS Oslo Commercial management 100.00% 2 Lighthouse Navigation Pte Ltd Afri-Bulk Navigation Private Limited Singapore Commercial management 100.00% Lighthouse Maritime Limited Hong Kong Commercial management 100.00% Lighthouse Navigation Co Ltd Thailand Commercial management 100.00% Siam Thara Agency Co Ltd Thailand Agency 57.50% Investment in joint venture Ownership/ Business location voting percentage Orient Asia Lines Ltd Hong Kong 50.00% Orient Asia Lines BV The Netherlands 50.00% Lineco Holding BV The Netherlands 50.00% 42 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS The share of profit and loss and balance sheet items for investments in joint ventures and associates are recognised based on equity method: Orient Asia LineCo 2023 Lines Ltd Holding BV Total Gross revenue 34 245 0 34 245 EBITDA 699 0 699EBIT 699 0 699Net result 699 12 341 13 040 Total comprehensive income 699 12 341 13 040 Non-current assets 74 10 856 10 930 Current assets 4 509 10 011 14 520 Total assets 4 583 20 867 25 450 Non-current liabilities 0 0 0Current liabilities 2 777 3 349 6 126 Total liabilities 2 777 3 349 6 126 Total equity opening balance 1 342 71 713 73 055 Profit for the year 699 12 341 13 040 Capital distribution/reduction -309 -66 900 -67 209 Total equity closing balance 1 732 17 154 18 886 Owner’s interest 866 8 577 9 443 Minor share in other associated companies 0 0 491 ) A share of result amounting to 113 (62) in a minor associated company is not included in the table.2022 Gross revenue 22 864 0 22 864 EBITDA 2 832 0 2 832 EBIT 2 832 0 2 832 Net result 2 832 59 174 62 006 Total comprehensive income 2 832 59 174 62 006 Non-current assets 0 18 888 18 888 Current assets 6 227 53 346 59 573 Total assets 6 227 72 234 78 461 Non-current liabilities 0 0 0Current liabilities 4 885 54 4 939 Total liabilities 4 885 54 4 939 Total equity opening balance 692 27 039 27 731 Profit for the year 2 832 59 174 62 006 Capital distribution/reduction -2 832 -29 000 -31 832 Total equity closing balance 692 57 213 57 905 Owner’s interest 692 28 606 29 298 Minor share in other associated companies 0 0 185 43 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 12 EQUITY Share capital Belships ASA’s 253 136 666 shares, each with a face value of NOK 2.00, was as of 31 December 2023 distributed among 4 864 shareholders. Each share has one vote. Number of shares 2023 2022 Ordinary shares, issued and paid-in per 1 January 253 136 666 253 136 666 Ordinary shares, issued and paid-in per 31 December 253 136 666 253 136 666 Dividend paid (NOK per share) 2.35 4.65 Treasury shares The Company holds 371 800 treasury shares in total with an average cost price of NOK 10.70 as of 31 December 2023. Authorisation to issue new shares At the Annual general meeting in 2023 the Board received authorisation to issue up to 125 million new shares. The 20 largest shareholders in Belships ASA at 31 December 2023 Number of shares Percentage 1 KONTRARI AS 104 000 000 41.08 % 2 KONTRAZI AS 32 500 000 12.84 % 3 JAKOB HATTELAND HOLDING AS 11 000 000 4.35 % 4 DNB BANK ASA 9 985 670 3.94 % 5 LGT BANK AG 9 350 214 3.69 % 6 WENAASGRUPPEN AS 8 149 330 3.22 % 7 JAHATT AS 5 000 000 1.98 % 8 AL MARITIME HOLDING PTE LTD 4 519 922 1.79 % 9 SAXO BANK A/S 2 607 323 1.03 % 10 STATE STREET BANK AND TRUST COMP 2 588 821 1.02 % 11 SIX SIS AG 2 269 461 0.90 % 12 UBS SWITZERLAND AG 2 156 958 0.85 % 13 THE BANK OF NEW YORK MELLON SA/NV 1 542 462 0.61 % 14 STAVANGER FORVALTNING AS 1 520 000 0.60 % 15 CITIBANK EUROPE PLC 1 192 565 0.47 % 16 THE BANK OF NEW YORK MELLON 1 033 945 0.41 % 17 SONATA AS 1 000 000 0.10 % 18 INTERACTIVE BROKERS LLC 969 541 0.38 % 19 THE BANK OF NEW YORK MELLON 962 327 0.38 % 20 STATE STREET BANK AND TRUST COMP 952 610 0.38 % Total 20 largest shareholders 203 301 149 80.31 % Other shareholders 49 835 517 19.69 % Total number of shares 253 136 666 100.00 % 44 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Number of shares owned by board members in Belships ASA Number Outstanding of shares options Peter Frølich (chair) 100 000 0 Frode Teigen 1 136 500 000 0 Carl Erik Steen 179 154 0 Birthe Cecilie Lepsøe 7 500 0 Jorunn Seglem 35 000 0 Number of shares owned by the management in Belships ASA Number Outstanding of shares options * Lars Christian Skarsgård, CEO 2 900 000 5 000 000 Yngve Aslaksen Gram, CFO 3 330 000 300 000 1) Includes shares held by Kontrari AS and Kontrazi AS, companies controlled by Frode Teigen.2) Includes shares held by AS Torinitamar, a company owned by Lars Christian Skarsgård.3) Includes shares held by Kryptogram AS, a company owned by Yngve Aslaksen Gram.) See note 16 for more information about separate share option plan. NOTE 13 EARNINGS PER SHARE Basic earnings per share is the ratio between net result of the year attributable to ordinary equity holders (i.e. net profit with dividend deducted) and the issued average number of shares outstanding during the period. When calculating diluted earnings per share, net result attributable to ordinary equity holders and the number of issued average outstanding shares are adjusted for share options. In “the denominator” all share options (see note 16) which are “in-the-money” and exercisable are taken into consider- ation. In the calculations, share options are considered as having been converted at the time they were awarded. Average number of shares 2023 2022Average number of issued shares 253 136 666 253 136 666 Treasury shares -371 800 -371 800 Average number of options outstanding 1 656 592 1 537 654 Diluted average issued number of shares 254 421 458 254 302 520 Earnings per share 2023 2022Net result for the year 86 240 175 060 Earnings per share 0.34 0.69 Diluted earnings per share 0.34 0.69 45 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 14 SALARIES, NUMBER OF EMPLOYEES 2023 2022Salaries 1 434 1 569 Social security tax 511 277 Pension expenses 108 121 Share-based payments * 1 481 2 979 Other allowances 307 305 Total payroll expenses 3 841 5 250 ) Incl. social security tax Number of full-time office staff in 2023 was 145 (160) for the Group of which 19 in the Norwegian companies. Payroll expenses in Lighthouse Navigation are reclassified as operating expenses management companies. See note 19 for more details. Loan to employees No loans to employees exist at year-end 2023. Remuneration CEO CFOSalary 497 218Share-based payment 0 176 Pension expenses 19 19 Other remuneration 2 2 Total 518 414 Remuneration in accordance with the Accounting Act § 7-31b is presented in note 11 in the parent company accounts. Other remuneration includes telephone, insurance agreements etc. Bonus No bonus scheme was adopted for 2023. Share options Share options to the employees are described in note 16. The Chief Executive Officer has a separate option scheme which is also described in note 16. 46 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Remuneration to the board 2023 2022The Board 208 208 Audit committee 19 18 Nomination committee 5 5 Board members are not awarded share options. The Group’s fees to the auditor (excluding vat) 2023 2022Remuneration for audit services 438 299 Other assurance services 18 18 Assistance related to tax 63 65 Other audit related assistance 30 21 Total 549 403 NOTE 15 OTHER GENERAL ADMINISTRATIVE EXPENSES 2023 2022Office expenses 134 137 Furniture, office supplies 194 270 Travelling, entertainment costs 196 58 Other services 524 857 Other general administrative expenses 345 496 Total administrative expenses 1 392 1 818 Administration expenses in Singapore and Bangkok are reclassified as operating expenses ship management. See note 19 for more details. 47 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 16 OPTIONS TO EMPLOYEES At the Annual General Meeting (AGM) in 2022, the Board was authorised to issue up to 600 000 share options to employees. The option price is 105% of closing share price on the day of the AGM. The authorisation is valid for two years. In accordance with this authorisation, options to buy 600 000 shares at NOK 23.00 were awarded in May 2023. Of this, 0 options have been exercised. 100 000 options from an earlier option program were exercised in 2023. The above mentioned option programs require a service period of 12 months before they can be exercised. The options can be exercised after one year from the date of the AGM which approved the option program and runs unto the date of the next AGM. The option programs include all employees in the parent company. The employees must be employed in the Company at the time when the options can be exercised in order to have a right to exercise them. Summary of outstanding options 2023 2022 Outstanding options 1 January 5 100 000 5 049 300 Awarded 600 000 5 400 000 Exercised -100 000 -5 349 300 Outstanding options 31 December 5 600 000 5 100 000 Employee share option plan Fair value of options has been calculated using the Black and Scholes options pricing model. The fair value of options awarded in 2023 was NOK 2.46. The following forms the basis for the calculation: Share price at the time the option was awarded: The share price is set as equal to the stock exchange share price when the option was awarded. Exercise price per option: The exercise price was 105 % of the stock exchange market price when the option was awarded. Volatility: Historic volatility set as indication of future volatility. Expected volatility equals a historic volatility of 39%. Duration of options: It is assumed that all employees will exercise their options when the service period has been completed. Risk free interest rate: Interest rate used as a basis for calculating options is equal to the interest rate on government bonds over the duration of the options, i.e. 5.00% for 2023. Decrease in the number of employees: Expected reduction is 0. Share option plan Chief Executive Officer The CEO in Belships, Lars Christian Skarsgård was in March 2022 granted options to subscribe for up to five million shares in the Company with an exercise price of NOK 18.64 per share. The Company may honour exercised options by delivery of new shares in a share issue, by sale of existing shares, or by way cash settlement (i.e. payment of the difference between the market price of the shares less the exercise price). Options that have not been exercised will lapse if Skarsgård terminates his position as CEO or if he is terminated from his position with cause. If Skarsgård is terminated from his position without cause during the first 12 months, 2/3 of the options will lapse and if he is terminated from his position without cause during the first 24 months, 1/3 of the options will lapse. If Skarsgård is terminated without cause during the exercise period, the options will lapse unless they are exercised within three months. The fair value of the options at time of award in March 2022 was NOK 6.89 per share. The calculated cost of USD 1 278 (excluding social security tax) has been recognised as an expense in 2023. 48 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 17 FINANCIAL MARKET RISK Financial market risk is considered to be the risk of changes in foreign exchange rates and interest rates that may affect the value of the Group’s assets, obligations and future cash flows. Belships has a continuing focus on its risk exposure. Derivatives may be used to reduce financial market risk, but are only used to hedge specific exposures. When use of derivatives is considered appropriate, only well-known conventional derivative instruments are considered, i.e. OTC agreements such as swaps, options and forward freight agreements. Derivative transactions are only made with reputable financial institutions. Credit risk relating to these derivatives is therefore limited. Belships is only using derivatives to reduce or limit risk related to fluc- tuations in interest and foreign exchange rates. Financial derivatives are not used to obtain financial revenues through fluctuating interest rates, nor are financial derivatives used when there is no underlying exposure. INTEREST RATE RISK Belships manages interest risk primarily through entering lease agreements with fixed interest rates. Hedging the Group’s interest exposure from the floating bank debt is considered on an ongoing basis. Entering into interest rate hedging agreements are based on developments in the interest rate market and internal analysis. The table below shows the sensitivity related to changes in interest rate levels. The calculation includes interest-bearing bank debt. Sensitivity to changes in interest rate levels 2023 2022Change in the interest rate level in basis points -100/100 -100/100 Effect on result before tax -259/259 1 189/-1 189 Average effective interest rate on debt (%) 2023 2022Interest-bearing loans 7.63 4.30 Financial leases 5.08 5.08 Capital structure and equity capital The primary objective of the Group’s capital management is to achieve best possible credit rating, and to maximise the shareholders values. The Company’s goal is to maintain an equity capital ratio of at least 35%. The equity ratio is calculated by dividing the book equity to total assets as shown below: 2023 2022Total equity as at 31 December 305 561 297 335 Total assets 932 864 1 000 293 Equity ratio as at 31 December 33 % 30 % Interest-bearing debt 563 403 605 255 Other current liabilities 56 408 95 974 Cash reserves 128 276 139 871 Net debt 491 535 561 358 Equity 305 561 297 335 Total equity and net debt 797 096 858 693 Net debt ratio 38 % 35 % 49 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Liquidity risk Liquidity risk is the risk that suitable sources of funding for the Group’s business activities may not be available. Prudent liquidity risk management implies maintaining sufficient cash balances, credit facilities and other financial resources to maintain financial flexibility under dynamic market conditions. The Group’s principal source of liquidity are operating cash flows from its operational assets. In addition to its operating cash flows, the Group relies on the debt capital markets for long-term funding. At year-end 2023 the Group has outstanding interest-bearing debt of USD 563.4 million. Available cash and cash equivalents amount to USD 128.3 million. Credit risk There will always be a credit risk related to the Group’s business. Belships monitors this risk and the strategy is to carefully select counterparts. The customers are often recurring, historically losses have been low and the risk related to any specific customer’s insolvency or inability to compensate for the services provided is considered low. Currency risk The functional currency of Belships is USD as the majority of the Group’s transactions are denominated in USD. Currency risks arise in connection with transactions that are completed in other currencies than USD, mainly in NOK or THB. This applies mainly to administrative expenses, salaries and declaration of ship purchase options. Fair value measurements The valuation has the following classification of levels for measuring fair value: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Valuation based on other observable factors, either directly (prices) or indirectly (derived from prices), than quoted prices included within level 1 of the asset or obligation. Level 3: Valuation based on factors not taken from observable markets (not observable assumptions). Fair value is defined as present value of future cash flows. For the above derivatives, fair value is confirmed by the financial institution, which is counterpart. The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts. The long-term liabilities have floating interest rate with a fixed margin. The margin is considered not to have significantly changed since drawing date, thus carrying amount is considered a reasonable estimate of fair value. Summary of financial assets and obligations Cash Flows Non-cash charges Interest 01.01.2022 Proceeds Repayment Charges New leases 31.12.2022 Interest-bearing loans 110 913 40 831 -9 414 -509 0 141 821 Financial leases 326 435 25 738 -27 600 -829 139 690 463 434 Total 437 348 66 569 -37 014 -1 338 139 690 605 255 Cash Flows Non-cash charges Interest 01.01.2023 Proceeds Repayment Charges New leases 31.12.2023 Interest-bearing loans 141 821 16 500 -56 126 231 0 102 426 Financial leases 463 434 2 400 -52 146 -106 47 395 460 977 Total 605 255 18 900 -108 272 125 47 395 563 403 The bareboat charters for BELHAWK, BELFOREST, BELLIGHT and BELISLAND are accounted for as financial liability under IFRS 9. Belships has elected to present these vessels under lease liabilities in the disclosure as this better reflects the economic substance of the entered sale leaseback transactions. 50 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Financial liabilities measured at amortised cost 2023 2022Interest-bearing loans 102 426 141 821 Financial leases 460 977 463 434 Total 563 403 605 255 The fair value of credit facilities and obligations under financial leases is estimated by discounting future cash flows using rates currently available for debt on similar items. The obligations under financial leases as of 31 December 2023 reflects best timing estimate of declaring purchase options. Further, the lease agreements are newly entered into, and there have not been any significant changes in the credit risk of the Group. Fair value of the obligations under financial leases are therefore not considered to be materially different from book value as of the reporting date. The Group has not made observations indicating that there has been any significant difference between the fair value and carrying amount except for unamortised loan transaction costs. NOTE 18 TAXES Tonnage tax The Companies subject to Tonnage tax are exempt from ordinary tax on their shipping income. Companies within the tonnage tax system in Norway and in Singapore pay a tonnage fee based on the size of the ship. Tonnage tax is recognised as other operating expenses. Ordinary taxation Further, in Norway, Thailand and Singapore the Group has several management companies subject to ordinary income tax, with a tax rate from 17 % to 22 %. In Norway, the Group has a significant tax loss carried forward, currently without any convincing evidence of utilising the tax losses. Accordingly, no deferred tax asset related to temporary differences is recorded related to the Norwegian companies within ordinary tax regime. In Singapore and Thailand there are minimal temporary differences related to the commercial and ship management operation. In Thailand the Com- pany has a tax payable related to ordinary company taxation of USD 419 (1 506) and payable tax in Singapore amounting to USD 96 (43). Reconciliation of the year’s income tax expense 2023 2022 Result for the year before tax 84 996 176 960 Result from companies within the tonnage tax regime -66 656 -122 715 Net result for companies subject to ordinary company taxation 18 340 54 245 Statutory tax rate (Norway) 22% 22% Estimated tax expense at statutory rate 4 035 11 934 Net non tax related expenses/(income) 4 844 -208 Results from joint venture and associated companies -1 410 -6 834 Difference between Norwegian, Singapore and Thailand regional national tax -1 487 -459 Tax effect of deferred tax asset not recorded in the balance sheet including exchange rate effect -835 -2 393 Adjustment in respect of priors 2 414 0 Total income tax expense/(income) 7 562 2 041 51 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS Tax loss carried forward The Group had a tax loss carried forward of 4 807 as at 31 December 2023 in Norway. No deferred tax benefits are recognised in the balance sheet. Calculation of deferred taxes is based on temporary differences between statutory books and tax values which exist at the end of the year. In accordance with IAS 12, tax reducing temporary differences and tax increasing temporary differences, which are either reversed or can be reversed within the same period and jurisdiction, are assessed and recorded as a net amount. Deferred tax per 31 December 2023 2022 Temporary differences Deferred sale gain/(loss) fixed asset 28 703 29 851 Property, Plant and Equipment -38 -46 Accrued option expenses -2 247 0 Pensions -182 -188Other temporary differences -4 563 1 700 Total temporary differences 36 887 31 317 Non-deductible interest cost carried forward ordinary tax regime -2 367 -2 347 Tax loss carried forward ordinary tax regime -4 807 -28 483 Net temporary differences 29 713 487 Nominal tax rate on deferred tax 22% 22% Deferred tax assets 0 0 Deferred tax liability 6 537 107 Deferred tax recognised in the Balance sheet 6 537 107 Deferred tax assets not recognised in the Balance sheet 0 0 NOTE 19 SPECIFICATIONS OPERATING EXPENSES AND OTHER FINANCIAL ITEMS 2023 2022Ship operating expenses Crew expenses 26 940 25 476 Maintenance and spare parts 10 947 9 224 Insurance 3 755 3 374 Other ship operating expenses 19 223 17 497 Total ship operating expenses 60 865 55 571 Operating expenses management companies Administration costs 11 468 16 581 General & selling expenses 4 192 5 147 Fixed costs 645 481 Total operating expenses management companies 16 306 22 209 52 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 20 DISCONTINUED OPERATIONS In June, Belships entered into an agreement to divest its 100 per cent shareholding in Belships Management (Singapore) Pte Ltd., a technical and crew management company established in 1983, which currently manages dry bulk vessels for Belships ASA and other international clients. The shares have been acquired by a company in V.Group. An office lease in Singapore is in process of being sold, and the proceeds will be received by Belships ASA. Closing of the transaction was completed on 30th June 2023. Furthermore, Belships entered into a strategic partnership with V.Group for Belships’ fleet and ship management business. Following the acquisition by V.Group, Belships Management (Singapore) will continue to be the sole provider of ship management services to Belships ASA. This partnership was formalised on 30th June 2023. Discontinued operations Discontinued operations include intercompany transactions between Belships Management Singapore and the ship owning companies in Belships ASA. Deferred consideration for the office lease is included under current receivables in the balance sheet. 2023 2022Management fees 2 569 4 768 Operating income from discontinued operations 2 569 4 768 Share of result from j/v and assoc. comp. 59 102 Operating expenses management companies -2 050 -4 454 Operating expenses from discontinued operations -1 991 -4 352 EBITDA from discontinued operations 578 416 Depreciation and amortisation -20 -39 Operating result (EBIT) from discontinued operations 558 377 Interest income 2 4 Interest expenses 0 0 Other financial items -6 -18 Currency gains/(-losses) 26 -179 Net financial items from discontinued operations 22 -193 Result before taxes from discontinued operations 580 184 Taxes -96 -43 Profit after income tax of discontinued operations 484 141 Gain on sale of the subsidiary after income tax 8 322 0 Profit from discontinued operations 8 806 141 Hereof majority interests from discontinued operations 8 852 142 Hereof non-controlling interests from discontinued operations -46 -1 Net cash flow operating activities from discontinued operations 463 1 108 Net cash flow investing activities from discontinued operations 0 0 Net cash flow financing activities from discontinued operations -879 -78 53 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS NOTE 21 ENVIRONMENTAL ISSUES The Company has not incurred any penalties for violating environmental rules and regulations, nor is it obligated to take any specific actions in response. NOTE 22 CONTINGENCIES The Board is not aware of any material disputes the Company may be in involved in as at 31 December 2023. NOTE 23 SUBSEQUENT EVENTS In January, Belships voluntarily prepaid USD 13.5m of bank debt. After this Belships has four debt free vessels in the fleet. In January, Belships entered into agreements to charter out four vessels on index-linked contracts for periods of minimum one year each. The vessel will earn a premium of between 116-120 per cent of the Baltic Supramax Index. The vessels were delivered in Q1, after completing their previous con- tracts. This brings the total number of vessels on floating index-linked contracts to ten. Based on the financial results in Q4 2023 the Board declared a dividend payment of NOK 0.60 per share (USD 14.5m in total) equivalent to about 80 per cent of the net result adjusted for minority interests. 54 BELSHIPS ANNUAL REPORT 2023 CONSOLIDATED ACCOUNTS 55 Belships ASA Financial statements Belships ASA financial statements 57 Income statement 58 Balance sheet 60 Cash flow statement 61 Notes to the parent accounts 61 Note 1 Accounting policies 63 Note 2 Fixed assets 64 Note 3 Salaries, number of employees 65 Note 4 Options to employees 66 Note 5 Other general administrative expenses 66 Note 6 Tax 67 Note 7 Shares 68 Note 8 Intercompany balances 68 Note 9 Receivables and liabilities 68 Note 10 Bank deposits 68 Note 11 Equity 70 Note 12 Financial market risk 70 Note 13 Related parties 70 Note 14 Subsequent events 56 USD 1000 Note 2023 2022 Operating income Other operating income 623 637 Gain on sale of lease agreements 0 9 997 Gain on sale of shares in subsidiary 7 10 851 0 Total operating income 11 475 10 635 Operating expenses Ship operating expenses -14 -49 Payroll expenses 3, 4 -3 841 -5 250 Other general administrative expenses 5 -875 -1 139 Depreciation of fixed assets 2 -16 -91 Total operating expenses -4 747 -6 530 Operating result 6 728 4 105 Financial income and expenses Share dividend 11 547 117 380 Interest income 276 94 Interest income on loan to subsidiary 8 -2 364 2 309 Interest expenses 0 -2 Interest expenses on loan to subsidiary 8 -2 003 -232 Other financial items 7 22 748 -3 029 Currency exchange gain/-loss -227 -2 157 Net financial items 29 978 114 363 Net result before tax 36 706 118 468 Income tax expense 6 -236 -2 005 Net result for the year 36 471 116 464 Appropriations of net result: Transfer from/(to) other retained earnings -36 471 -116 464 Total -36 471 -116 464 Income statement BELSHIPS ANNUAL REPORT 2023 57 PARENT COMPANY ACCOUNTS USD 1000 Note 2023 2022 ASSETS Fixed assets Tangible fixed assets Other fixed assets 2 0 16 Total tangible fixed assets 0 16 Financial fixed assets Shares in subsidiaries 7 450 085 144 065 Loan to subsidiaries 8 132 144 80 375 Total financial assets 582 229 224 440 Total fixed assets 582 229 224 456 Current assets Trade debtors 0 312 Intercompany balances 8 91 218 148 444 Other receivables 2 160 291 Cash and cash equivalents 10 53 346 32 395 Total current assets 146 725 181 442 TOTAL ASSETS 728 954 405 898 Balance sheet As at 31 December BELSHIPS ANNUAL REPORT 2023 58 PARENT COMPANY ACCOUNTS USD 1000 Note 2023 2022 EQUITY AND LIABILITIES Equity Paid-in capital Share capital 59 466 59 466 Treasury shares -125 -125 Share premium 62 228 62 228 Other paid-in capital 0 9 575 Total paid-in capital 121 570 131 144 Retained earnings Other equity 115 025 126 456 Total equity 11 236 594 257 599 Liabilities Non-current liabilities Deferred tax 6 2 241 2 005 Pension obligations 182 188 Intercompany balances 8 109 828 47 445 Total non-current liabilities 112 251 49 638 Current liabilities Public taxes and duties payable 193 337 Trade creditors 70 107 Intercompany balances 8 379 173 97 425 Other current liabilities 672 792 Total current liabilities 380 108 98 661 Total liabilities 492 359 148 299 TOTAL EQUITY AND LIABILITIES 728 954 405 898 Balance sheet As at 31 December Oslo, 10 April 2024 Peter Frølich Chair of the Board Sten Stenersen Board member Jorunn Seglem Board member Marianne Møgster Board member Frode Teigen Board member Carl Erik Steen Board member Birthe Cecilie Lepsøe Board member Lars Christian Skarsgård Chief Executive Officer BELSHIPS ANNUAL REPORT 2023 59 PARENT COMPANY ACCOUNTS USD 1000 Note 2023 2022 CASH GENERATED FROM OPERATIONS Net result before tax 36 706 118 468 Adjustments to reconcile result before tax to net cash flows: Gain on sale of lease agreements 0 -9 997 Gain on sale of shares in subsidiary -10 851 0 Depreciation of fixed assets 2 16 91 Share-based payment transaction expense 4 1 278 1 057 Share-based payment transaction payment 4 0 -8 150 Difference between pension expenses and paid pension premium 0 -13 Net finance items 7 -29 978 -114 363 Working capital adjustments: Change in trade debitors and trade creditors 275 -1 062 Change in current intercompany balances 1 463 13 712 Change in other short-term items -2 505 912 Interest received 276 94 Interest paid 0 -2 Net other financial items 2 789 -1 356 Net cash flow from operations -559 -608 CASH FLOW FROM INVESTING ACTIVITIES Sale proceeds from fixed asset disposals 0 129 Dividend and group contributions received 2 189 142 880 Cash issue in subsidiary 0 -55 300 Proceeds from sale of shares in subsidiary 10 666 0 Change in intercompany balances 24 900 0 Net cash flow from investing activities 37 755 87 709 CASH FLOW FROM FINANCING ACTIVITIES Dividend paid 11 -58 752 -124 008 Change in intercompany balances 42 507 0 Instalments lease commitments 0 55 300 Net cash flow from financing activities -16 245 -68 708 Net change in cash and cash equivalents 20 951 18 393 Cash and cash equivalents at 1 January 32 395 14 002 Cash and cash equivalents at 31 December 53 346 32 395 Restricted bank deposits 10 102 110 Cash flow statement BELSHIPS ANNUAL REPORT 2023 60 PARENT COMPANY ACCOUNTS Notes to the parent accounts NOTE 1 ACCOUNTING POLICIES Belships ASA is an owner and operator of subsidiaries owning dry bulk ships. At the end of the year, the Group controlled a fleet of 30 ships. The Company is also providing commercial management through subsidiaries. The Company is a public limited liability company incorporated and domiciled in Norway and listed on Oslo Stock Exchange. The head office is located at Lilleakerveien 6D in Oslo, Norway. The financial statements have been approved by the Board on 10 April 2024. The accounts are prepared in accordance with Norwegian Generally Accepted Accounting Principles (NGAAP). The accounts form part of the consolidated accounts of Belships ASA. Belships has obtained approval from Oslo Stock Exchange and Norwegian tax authorities to only publish its financial statements in English. All amounts in the notes are in USD 1 000 unless otherwise stated. A) Classification of balance sheet items Assets intended for long-term ownership or use are classified as fixed assets. Other assets inclusive accounts receivable within 12 months are classified as current assets. Liabilities due within 12 months, are classified as short-term liabilities. Current assets are reported at the lower of cost and net realisable value, while current liabilities are carried at the nominal value at drawdown date. B) Taxes on income Tax expenses consist of tax payable and changes in deferred tax. Deferred tax/tax assets are calculated on all differences between accounting values and tax values of assets and liabilities. Deferred tax assets are recognised when it is likely that the Company will generate sufficient profit for tax purposes in future periods to utilise the tax asset. Similarly, the Company will decrease the deferred tax asset if it no longer considers it likely to utilise the deferred tax asset. Deferred tax and deferred tax asset are measured on the basis of expected future tax rates. Deferred tax and deferred tax assets are entered at nominal value and are classified as financial fixed assets (long-term liability) in the balance sheet. Tax payable and deferred tax related to equity transactions are directly recorded against equity. C) Tangible fixed assets Tangible fixed assets are measured at acquisition cost, net of accumulated depreciation and impairments losses. When assets are sold or divested, the carrying amount is deducted and any gains or losses are recognised in the income statement. Acquisition cost for tangible fixed assets is the purchase price, including taxes and charges and expenses directly related to preparing the asset for use. Expenses incurred after the asset has been put to use, are recognised in the income statement, whereas other expenses which are expected to create future financial gains are capitalised. D) Investments in other companies Investments in subsidiaries and jointly controlled companies are accounted for in the parent company using the cost method. At the end of each year, each investment in subsidiaries is assessed for impairment indicators. When it is assumed that the investment’s value is lower than its carrying amount, an impairment loss is recognised. BELSHIPS ANNUAL REPORT 2023 61 PARENT COMPANY ACCOUNTS E) Accounts receivable Accounts receivable are booked at nominal amount less expected loss. F) Cash flow statement The cash flow statement has been prepared using the indirect method. Liquid assets includes cash, bank deposits (restricted and unrestricted) and other short-term investments, which can be converted to cash within 3 months. For restricted deposits, see note 11. G) Equity (i) Treasury shares Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in share premium. Share options exercised during the reporting period are fulfilled with treasury shares. (ii) Costs related to equity transactions Transaction costs directly related to equity transactions are charged directly against the equity after tax deductions. H) Employee benefits Defined contribution pension scheme All employees are member of the Company’s defined contribution scheme. The premium is charged as incurred by operations. Social security tax expense is recognised based on the pension plan payments. Defined benefit pension scheme The company has unfunded pension liabilities. These relate to early retirement and pension to persons, that have not been included in the defined contribution pension scheme. There are 3 retired persons included in this scheme. Pension obligations are estimated by an independent actuary, and the relevant amounts are considered to be negligible. I) Provisions A provision is recorded when the Company has a liability (legal or constructive) as a result of a previous event, where it is likely (more likely than not) that there will be a financial settlement as a result of this liability and that the size of the sum can be reliably determined. If the effect is considerable, the provision is calculated by discounting the expected future cash flow with a discount rate before tax, which reflects the market’s evaluation of the time value of money and, if relevant, risks specifically connected to the liability. Provisions for loss-creating contracts are included when the Company’s expected income from a contract is lower than the inevitable costs which were incurred in discharging the obligations of the contract. J) Revenue recognition Belships ASA provides administrative, commercial and project management services, including accounting, legal, IT, project, and office services. Income from these services is recognised as they are rendered. Interest income is recognised using the effective interest method based on when it is earned. The dividend received from subsidiaries is accounted for in the same year in which the dividend has been accrued for in the subsidiary. If the dividend exceeds the prorated share of retained earnings after the acquisition of the shares, the excess portion represents a repayment of capital and conse- quently reduces the acquisition cost accordingly. K) Transactions in foreign currency Transactions in foreign currency are converted at the rate at the time of the transaction. Monetary items in foreign currency are converted into USD using the rate on the balance sheet date. Non-monetary items which are measured at historical rates expressed in foreign currencies, are converted into USD using the currency rate at the time of the transaction. Currency rate changes are charged against income during the accounting period. L) Contingent gains and losses Provisions are made for contingent losses deemed probable and quantifiable. Contingent gains are not recognised. BELSHIPS ANNUAL REPORT 2023 62 PARENT COMPANY ACCOUNTS M) Related party transactions Transactions with related parties are carried out at market terms. See note 15 for further information. N) Events after the balance sheet date New information after the balance sheet date regarding the Company’s financial position as of the balance sheet date is taken into consideration in the annual accounts. Events after the balance sheet date that do not affect the Company’s financial position as of the balance sheet date, but which will have an impact on the Company’s financial position in the future are revealed if significant. O) Use of estimates in preparation of the annual accounts The management has used estimates and assumptions that have affected assets, debt, income, costs and information on potential liabilities. This applies particularly to share-based remuneration. Future events can entail a change in these estimates. Estimates and the underlying assumptions are evaluated on an ongoing basis. Changes in accounting estimates are entered in the period when the changes occur. If the changes also apply to future periods, the effect is distributed over the current and future periods. P) Share-based remuneration The employees in Belships ASA have received options to purchase shares in the Company. The market value of the awarded options is measured at the time of the award and charged to expense over the vesting period as a wage cost with corresponding increase in other paid-in equity. The market value of the options granted is estimated using the Black and Scholes option pricing model. NOTE 2 FIXED ASSETS 2023 2022 Other fixed assets Other fixed assets Non Non Depreciable depreciable Depreciable depreciable assets assets Total assets assets Total Cost price As at 1 January 207 0 207 506 61 567 Disposals 0 0 0 -299 -61 -360 As at 31 December 207 0 207 207 0 207 Depreciations As at 1 January 191 0 191 278 0 278 Depreciation for the year 16 0 16 91 0 91 Disposals 0 0 0 -178 0 -178 As at 31 December 207 0 207 191 0 191 Book value at 31 December 0 0 0 16 0 16 BELSHIPS ANNUAL REPORT 2023 63 PARENT COMPANY ACCOUNTS NOTE 3 SALARIES, NUMBER OF EMPLOYEES 2023 2022 Salaries 1 434 1 569 Social security tax 511 277 Pension expenses 108 121 Share-based payments * 1 481 2 979 Other allowances 307 305 Total 3 841 5 250 ) Incl. social security tax The average number of employees in 2023 was 8 (9). Remuneration CEO CFO Salary 497 218 Share-based payment transaction expense 0 176 Pension expenses 19 19 Other allowances 2 2 Total 518 414 Other allowances include telephone, insurance agreements etc. Pensions All the employees in the parent company are members of a defined contribution scheme, which is in line with the occupational pension scheme for employees in Norway in accordance with the act on Mandatory occupational pensions. Annual payable cost is reflected in the income statements and the Company does not have any further liabilities related to this scheme. Total pension costs amounted to 108 (121) in 2023. Share options For information about share options, see note 4. The CEO has a separate option scheme which also is described in note 4. Remuneration to the Board 2023 2022 The Board 208 208 Audit Committee 19 18 Nomination Committee 5 5 Total 232 231 Board members are not awarded share options. Guidelines for the remuneration of the executive management of Belships ASA In conformity with the provisions of section 6-16a of the Norwegian Public Limited Liability Companies Act, the Board has prepared the following statement on the Company’s guidelines for the remuneration of the executive management: • Belships will have a competitive bonus scheme to ensure that the Company will have the necessary capacity and competence. • Belships will seek to have fixed salaries at market terms. There will also be a variable part (bonuses and share options), which will be evaluated annually. Fees to the auditor (excluding vat) 2023 2022 Remuneration for audit services 118 98 Other assurance services 12 6 Assistance related to tax matters 8 2 Other audit related assistance 2 5 Total 140 111 Loans to employees There exist no loans to employees at year-end 2023. BELSHIPS ANNUAL REPORT 2023 64 PARENT COMPANY ACCOUNTS NOTE 4 OPTIONS TO EMPLOYEES At the Annual general meeting (AGM) in 2022, the Board was authorised to issue up to 600 000 share options to employees. The option price is 105% of closing share price on the day of the AGM. The authorisation is valid for two years. In accordance with this authorisation, options to buy 600 000 shares at NOK 23.00 were awarded in May 2023. Of this, 0 options have been exercised. 100 000 options from an earlier option programme were exercised in 2023. The above mentioned option programs require a service period of 12 months before they can be exercised. The option can be exercised after one year from the date of the AGM which approved the option program and runs unto the date of the next AGM. The option programs include all employees in the parent company. The employees must be employed in the Company at the time when the options can be exercised in order to have a right to exercise them. Summary of outstanding options 2023 2022 Outstanding options 1 January 5 100 000 5 049 300 Awarded 600 000 5 400 000 Exercised -100 000 -5 349 300 Outstanding options 31 December 5 600 000 5 100 000 Employee share option plan Fair value of options has been calculated using the Black and Scholes options pricing model. The fair value of options awarded in 2023 was NOK 2.46. The following forms the basis for the calculation: Share price at the time the option was awarded: The share price is set as equal to the stock exchange share price when the option was awarded. Exercise price per option: The exercise price was 105 % of the stock exchange market price when the option was awarded. Volatility: Historic volatility set as indication of future volatility. Expected volatility equals a historic volatility of 39%. Duration of options: It is assumed that all employees will exercise their options when the service period has been completed. Risk free interest rate: Interest rate used as a basis for calculating options is equal to the interest rate on government bonds over the duration of the options, i.e. 5.00% for 2023. Decrease in the number of employees: Expected reduction is 0. Share option plan Chief Executive Officer The CEO in Belships, Lars Christian Skarsgård was in March 2022 granted options to subscribe for up to five million shares in the Company with an exercise price of NOK 18.64 per share. The Company may honour exercised options by delivery of new shares in a share issue, by sale of existing shares, or by way cash settlement (i.e. payment of the difference between the market price of the shares less the exercise price). Options that have not been exercised will lapse if Skarsgård terminates his position as CEO or if he is terminated from his position with cause. If Skarsgård is terminated from his position without cause during the first 12 months, 2/3 of the options will lapse. Similarly, if he is terminated from his position without cause during the first 24 months, 1/3 of the options will lapse. If Skarsgård is terminated without cause during the exercise period, the options will lapse unless they are exercised within three months. The fair value of the options at time of award in March 2022 was NOK 6.89 per share. The calculated cost of USD 1 278 (excluding social security tax) has been recognised as an expense in 2023. BELSHIPS ANNUAL REPORT 2023 65 PARENT COMPANY ACCOUNTS NOTE 5 OTHER GENERAL ADMINISTRATIVE EXPENSES 2023 2022 Office expenses 134 137 Other services 258 419 Data, office equipment a.o. 150 266 Communication, advertising 32 52 Travel expenses 84 58 Other general administrative expenses 218 208 Total 875 1 139 NOTE 6 TAX Tax result for the year 2023 2022 Result for the year before tax 36 706 118 468 Change in temporary differences 37 4 001 Permanent differences / other -29 689 -94 709 Translation differences 199 0 Tax basis for the year 7 253 27 761 Group contribution received 0 6 209 Use of tax losses carry forward -7 253 -33 970 Basis for tax payable 0 0 Taxes payable (22%) 0 0 Total income tax expense 0 0 In accordance with NGAAP, tax reducing temporary differences and tax increasing temporary differences that are reversed, or can be reversed in the same period are assessed and the amount recorded net. Reconciliation of tax expense 2023 2022 Result for the year before tax 36 706 118 468 Statutory tax rate 22% 22% Estimated tax expense at statutory rate 8 075 26 063 Permanent differences / other -6 532 -20 836 Expected tax expense 1 544 5 227 Translation differences 22 -327 Change in recognised deferred taxes 0 2 005 Change in not recognised deferred tax assets -1 330 -4 900 Actual tax expense 236 2 005 Effective tax percentage 1% 2% BELSHIPS ANNUAL REPORT 2023 66 PARENT COMPANY ACCOUNTS Deferred tax per 31 December 2023 2022 Deferred sale fixed asset gain/(loss) 12 208 15 747 Revaluation long-term balances 10 769 0 Financial derivatives -5 515 0 Accrued option expenses -2 247 0 Pension obligations -182 -188 Temporary differences fixed assets -38 -46 Sum temporary differences included in change in temporary differences 14 994 21 705 Impairment loss shares in subsidiaries abroad 0 0 Tax loss carried forward -4 807 -6 401 Net temporary differences 10 187 9 112 Nominal tax rate on deferred tax 22% 22% Deferred tax liability/assets 2 241 2 005 Deferred tax liability/assets in Balance sheet 2 241 2 005 Deferred tax assets not in Balance sheet 0 0 NOTE 7 SHARES Business Time of Ownership/ Result of Book office purchase Cost price Voting share Equity the year value Shares in subsidiaries Belships Lighthouse AS Oslo 27.01.93 1 591 100% 615 15 296 615 Belships Shipholding AS Oslo 05.02.19 84 358 100% 105 867 4 753 84 358 Belships Shipholding II AS * Oslo 20.05.21 368 112 100% 399 151 38 515 365 112 Lighthouse Navigation Management AS Oslo 09.12.85 4 34% 3 696 2 364 0 Total 450 085 In June, Belships entered into an agreement to divest its 100 per cent shareholding in Belships Management (Singapore) Pte Ltd., a technical and crew management company established in 1983, which currently manages dry bulk vessels for Belships ASA and other international clients. The shares have been acquired by a company in V.Group. An office lease in Singapore is in process of being sold, and the proceeds will be received by Belships ASA. Closing of the transaction was completed on 30th June 2023, resulting in a gain of USD 10.9m. Belships ASA has made a group contribution of USD 357m to Belships Shipholding II AS, increasing the value of its investment. Also, the Company received group contributions from Belships Lighthouse AS and Belships Shipholding AS totalling USD 76m, of which USD 9.3m has been recognised as financial income. Additionally, a previous impairment of Belships Lighthouse AS has been reversed, resulting in a financial income of USD 17.7m. ) Bellight AS was merged with Belships Shipholding II AS in 2023. BELSHIPS ANNUAL REPORT 2023 67 PARENT COMPANY ACCOUNTS NOTE 8 INTERCOMPANY BALANCES No interest is calculated on current intercompany balances, as these items are only considered as ordinary operating balances. Interest at market terms is calculated on non-current intercompany balances, and the balance fall due when the cash position allows it. Calculated interest income and expenses on non-current intercompany balances amounted to -2 364 (2 309) and 2 003 (232) accordingly. NOTE 9 RECEIVABLES AND LIABILITIES All current receivables and liabilities are due within 12 months. NOTE 10 BANK DEPOSITS Total bank deposit amounted to 53 346 (32 395) at year-end. Restricted funds for withholding tax for employees amounted to 102 (110) at 31 December 2023. NOTE 11 EQUITY Paid-in Retained Share Treasury Share Other Other Total capital shares premium equity equity equity Equity per 31 December 2022 59 466 -125 62 228 9 575 126 456 257 599 Dividend 0 0 0 -10 852 -47 900 -58 752 Share-based expenses 0 0 0 1 278 0 1 278 Result for the year 0 0 0 0 36 471 36 471 Equity per 31 December 2023 59 466 -125 62 228 0 115 025 236 594 Share capital Belships ASA’s 253 136 666 shares, each with a face value of NOK 2.00, was as of 31 December 2023 distributed among 4 864 shareholders. Each share has one vote. Number of shares 2023 2022 Ordinary shares, issued and paid-in per 1 January 253 136 666 253 136 666 Ordinary shares, issued and paid-in per 31 December 253 136 666 253 136 666 Dividend paid (NOK per share) 2.35 4.65 Treasury shares The Company holds 371 800 treasury shares in total with an average cost price of NOK 10.70 as of 31 December 2023. Authorisation to issue new shares At the Annual general meeting in 2023 the Board received authorisation to issue up to 125 million new shares. BELSHIPS ANNUAL REPORT 2023 68 PARENT COMPANY ACCOUNTS The 20 largest shareholders in Belships ASA at 31 December 2023 Number of shares Percentage 1 KONTRARI AS 104 000 000 41.08% 2 KONTRAZI AS 32 500 000 12.84% 3 JAKOB HATTELAND HOLDING AS 11 000 000 4.35% 4 DNB BANK ASA 9 985 670 3.94% 5 LGT BANK AG 9 350 214 3.69% 6 WENAASGRUPPEN AS 8 149 330 3.22% 7 JAHATT AS 5 000 000 1.98% 8 AL MARITIME HOLDING PTE LTD 4 519 922 1.79% 9 SAXO BANK A/S 2 607 323 1.03% 10 STATE STREET BANK AND TRUST COMP 2 588 821 1.02% 11 SIX SIS AG 2 269 461 0.90% 12 UBS SWITZERLAND AG 2 156 958 0.85% 13 THE BANK OF NEW YORK MELLON SA/NV 1 542 462 0.61% 14 STAVANGER FORVALTNING AS 1 520 000 0.60% 15 CITIBANK EUROPE PLC 1 192 565 0.47% 16 THE BANK OF NEW YORK MELLON 1 033 945 0.41% 17 SONATA AS 1 000 000 0.10% 18 INTERACTIVE BROKERS LLC 969 541 0.38% 19 THE BANK OF NEW YORK MELLON 962 327 0.38% 20 STATE STREET BANK AND TRUST COMP 952 610 0.38% Total 20 largest shareholders 203 301 149 80.31 % Other shareholders 49 835 517 19.69 % Total number of shares 253 136 666 100.00 % Number of shares owned by board members in Belships ASA Number Outstanding of shares options Peter Frølich (chair) 100 000 0 Frode Teigen 1 136 500 000 0 Carl Erik Steen 179 154 0 Birthe Cecilie Lepsøe 7 500 0 Jorunn Seglem 35 000 0 Number of shares owned by the management in Belships ASA Number Outstanding of shares options * Lars Christian Skarsgård, CEO 2 794 900 5 000 000 Yngve Aslaksen Gram, CFO 3 330 000 300 000 1) Includes shares held by Kontrari AS and Kontrazi AS, companies controlled by Frode Teigen 2) Includes shares held by AS Torinitamar, a company owned by Lars Christian Skarsgård 3) Includes shares held by Kryptogram AS, a company owned by Yngve Aslaksen Gram ) See note 4 for more information about separate share option plan. BELSHIPS ANNUAL REPORT 2023 69 PARENT COMPANY ACCOUNTS NOTE 12 FINANCIAL MARKET RISK Currency risk Currency risks arise in connection with transactions that are completed in other currencies than USD and consist mainly of dividend payments and administrative expenses in NOK. No currency hedging agreements have been entered into. The Company does not use hedge accounting. Credit risk There will always exist a credit risk related to the Company’s business. Belships monitors this risk, and the strategy is to carefully select counterparts. Historical losses have been limited. NOTE 13 RELATED PARTIES The Company receives a commission for acting as guarantor for mortgage debt in the subsidiaries Belships Shipholding AS and Belships Shipholding II AS. The fee amounted to 2 884 (2 708) in 2023. The Company received a management fee of 678 (557) in 2023 from its subsidiaries for auditing, accounting, project management and board fees. All intercompany transactions have been conducted to market terms. Except for the above mentioned, it has not been issued loans or provided security to or from shareholders or related parties. NOTE 14 SUBSEQUENT EVENTS Based on the financial results in Q4 2023 the Board declared a dividend payment of NOK 0.60 per share (USD 14.5m in total) equivalent to about 80 per cent of the net result adjusted for minority interests. BELSHIPS ANNUAL REPORT 2023 70 PARENT COMPANY ACCOUNTS 71 Auditors report PricewaterhouseCoopers AS, Kanalsletta 8, Postboks 8017, NO-4068 Stavanger T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of Belships ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Belships ASA, which comprise: • the financial statements of the parent company Belships ASA (the Company), which comprise the balance sheet as at 31 December 2023, the income statement and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • the consolidated financial statements of Belships ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2023, the statement of income, comprehensive income, changes in equity and cash flow for the year then ended, and notes to the financial statements, including material accounting policy information. In our opinion • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 5 years from the election by the general meeting of the shareholders on 23 May 2019 for the accounting year 2019. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. PricewaterhouseCoopers AS, Kanalsletta 8, Postboks 8017, NO-4068 Stavanger T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of Belships ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Belships ASA, which comprise: • the financial statements of the parent company Belships ASA (the Company), which comprise the balance sheet as at 31 December 2023, the income statement and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • the consolidated financial statements of Belships ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2023, the statement of income, comprehensive income, changes in equity and cash flow for the year then ended, and notes to the financial statements, including material accounting policy information. In our opinion • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 5 years from the election by the general meeting of the shareholders on 23 May 2019 for the accounting year 2019. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 72 BELSHIPS ANNUAL REPORT 2023 2 / 5 The Group’s business activities are largely unchanged compared to last year. We have not identified regulatory changes, transactions or other events that qualified as new Key Audit Matters for our audit of the 2023 financial statements. Impairment assessments of ships continues to be an area of focus this year. Key Audit Matters How our audit addressed the Key Audit Matter Impairment assessments of ships The Group holds ships with a carrying amount of USD 731 596 thousand on 31 December 2023. The ships comprise 78% of total assets. Indicators of impairment were assessed by management and considered present for the Group’s vessels during 2023 due to decline in freight rates. As such, an impairment test was deemed n ecessary. Management considered, among other, the ships’ estimated fair value less cost of sale, and assessed market conditions in the dry bulk market, including factors such as contract rates and contract coverage. Management also considered other extern al and internal factors of relevance. The estimated fair value less cost of sale was based on valuation reports from two external ship brokers. For four of the Group’s vessels, the carrying value was lower than the fair value less cost of sale. Consequentl y, a value-in-use calculation for those vessels was performed by management. Management’s assessment of recoverable amounts of vessels, particularly as it relates to calculation of value -in-use, requires estimates and assumptions relating to operational and market factors and involves a high degree of judgement. Further, the calculation of value -in-use requires financial modelling of the cash flows related to the cash generating units, which can be complex and may require use of additional judgement. We f ocused on impairment assessments of ships due to the magnitude of amounts involved and the high degree of judgement applied by management. As always, when dealing with management judgement and complex calculations, there is an inherent risk of errors that may materially impact net profit. Management identified no impairment recognition for the vessels. Refer to notes 2E, 2 M and 6 to the consolidated financial statements, where management explains the ir impairment assessment of the ships. We evaluated and challenged management’s assessment of impairment indicators and the process by which the assessment was performed. We assessed management’s accounting policy against the requirements in IFRS Accounting Standards and obtained explanations on how the requirements of IAS 36 were met. We also assessed the year-on-year consistency of the applied accounting policy. Furthermore, we evaluated management’s process and related control activities for determining estimated recov erable amounts. We obtained the valuation reports used by management when estimating the ships’ fair value less cost of sale. We assessed the competence and objectivity of the external brokers, and interview ed representatives from the broker firms to unde rstand how the fair value estimates were compiled. We also satisfied ourselves that the brokers were provided with the appropriate input to perform an estimate of fair value, such as build date, build location , and key metrics of the vessels. We found that management had a sufficient understanding of the valuation reports and of the basis of which they were prepared . Furthermore, we did a reperformance of the comparison of estimated fair values less cost of sale to the carrying amount of each ship. Based on the procedures described, we agreed that value -in- use calculations were needed for four vessels. We obtained management ’s value-in-use calculation s. For each cash generating unit, we assessed the key inputs in the calculation of value- in -use and assessed the mathematical and methodological integrity of management’s impairment models. We challenged management on key assumptions applied in the model. Our procedures included tracing input data to contracts and budget s approved by the Board of Directors and co nsidering whether charter hire rates and utili sation were consistent with our knowledge of the industry. We also compared management’s assessment of charter hire to the external source; the Baltic Index (BSI 58). In addition, w e compared utilisation levels against historical utilisation for 73 BELSHIPS ANNUAL REPORT 2023 Auditors report 3 / 5 such vessels. When we considered management’s analysis of sensitivity, we noted that the forecasted cash flow was sensitive to changes to assumptions, and , most of all, day rates. We assessed the discount rate by comparing the assumptions uses to build the discount rate with observed external market rate data and internal data. We considered that the used discount rate was within an appropriate range. Overall, w e found the assumptions applied by management in estimating the ships’ value-in-use to be reasonable. We evaluated the disclosures to the financial statement and found that reasonable explanations of the valuation process and uncertainties inherent in the assumptions were provided. No matters of consequence arose from the procedures described above. Other Information The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report • is consistent with the financial statements and • contains the information required by applicable statutory requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements of the Company that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation of the consolidated financial statements of the Group that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU. Management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. 74 BELSHIPS ANNUAL REPORT 2023 4 / 5 The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's and the Group's internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 75 BELSHIPS ANNUAL REPORT 2023 Auditors report 5 / 5 We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Report on Compliance with Requirement on European Single Electronic Format (ESEF) Opinion As part of the audit of the financial statements of Belships ASA, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name Belships ASA – Annual Report 2023 (ESEF) have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements. In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation. Management’s Responsibilities Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Stavanger, 10 April 2024 PricewaterhouseCoopers AS Tom Notland State Authorised Public Accountant 76 BELSHIPS ANNUAL REPORT 2023 77 78 Corporate governance as adopted by the Board on 10 April 2024 Transparency and fairness creates value All relevant parties must be confident that the Company is soundly operated and that the corporate governance is well defined, fit for purpose and carried out with integrity and independence. Belships’ competitiveness hinges on stakeholders’ and prospective customers’ trust in the Company’s integrity and ethical behaviour. Board members, management and employees will therefore always strive to uphold and develop trust in the Company. Belships’ values and ethical guidelines are intended to safeguard good corporate ethics. Pursuant to section 3-3 (B) of the Norwegian Accounting Act and the Code (as defined below), the Board reviews and updates the Company’s principles for corporate governance on an annual basis. This report is included in the Company’s annual report. IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE Belships’ corporate governance policy is based on The Norwegian Code of Practice for Corporate Governance (the Code), most recently revised on 14 October 2021 and issued by the Norwegian Corporate Governance Policy Board. The policy is designed to establish a basis for good corporate governance to support achievement of the Company’s core objectives on behalf of its shareholders, including the achievement of sustainable profitability. By pursuing the principles of corporate governance, the Board and management contributes to achieving open communication, equal rights for all shareholders and good control and corporate governance mechanisms. The Board assesses and discusses the corporate governance policy on a yearly basis. Belships aspire to comply with the recommendations of the Code. If the Code is deviated from, the deviation is described and explained in the relevant section of this statement. THE BUSINESS The Board of Directors has defined clear objectives, strategies and risk profiles for the Company’s business that are evaluated on a yearly basis. These objectives, strategies and risk profiles contributes to the Company’s value creation for the shareholders in a sustainable manner, which also implies that the Board of Directors takes economic, social and environmentally considerations into account when setting and monitoring the objectives, strategies and risk profiles. EQUITY AND DIVIDEND CAPITAL STRUCTURE As at 31 December 2023, the Group had a total equity of USD 305.6m, corresponding to an equity ratio of 33 per cent. Value adjusted equity is significantly higher. The Board deems the liquidity position of the Company to be strong, with cash and cash equivalents of USD Good corporate governance is a prerequisite for cooperation based on trust between the long-term growth and the greatest possible value for its shareholders over time. 79 BELSHIPS ANNUAL REPORT 2023 128.3m, whilst interest-bearing bank debt amounted to USD 102.4m. Leasing liabilities at the end of the quarter amounted to USD 461.0m The Board is of the view that the capital structure of the Company is appropriate to the Company’s objectives, strategies and risk profile. DIVIDEND POLICY Belships 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 of the Company. The Board will ask for an authorisation to distribute dividend at the general meeting in 2024. AUTHORISATIONS TO THE BOARD OF DIRECTORS At the general meeting in 2023, the Board was granted an authorisation to increase the share capital with up to NOK 1 200 000 (corresponding to 600 000 new shares, each with a par value of NOK 2). The authorisation can be used in connection with the Company’s share option programme for employees. The authorisation is valid until the general meeting in 2024, but not longer than 30 June 2024. At the general meeting in 2023, the Board was also granted an authorisation to increase the share capital with up to NOK 250 000 000 (corresponding to 125 000 000 new shares, each with a par value of NOK 2). This authorisation covers more than one purpose, but the Board is of the view that such authorisation gives the Board a flexibility to increase the share capital either in connection with acquisitions, to raise equity or a combination of the two, depending on the specific needs of the Company. The authorisation is valid until the general meeting in 2024, but not longer than 30 June 2024. The Board was also granted an authorisation to, on behalf of the Company, acquire up to 25 000 000 treasury shares (corresponding to a total par value of NOK 50 000 000) at the Board’s discretion. The authorisation is valid until the general meeting in 2024, but not longer than 30 June 2024. The authorisation was not limited to a specific purpose in order to give the Board sufficient flexibility. EQUAL RIGHTS FOR SHAREHOLDERS AND TRANSACTIONS WITH RELATED PARTIES When increasing share capital through the issue of new shares for cash payment, the Company’s shareholders have normally a pre-emptive right to subscribe for the new shares. If the Board resolves to carry out an increase in share capital and waive the pre-emptive rights of existing shareholders on the basis of an authorisation granted to the Board, this will only be done where justified in light of the Company’s and the shareholders’ interests. Such justification will be published in connection with the announcement of the increase in capital. The Board has not made any resolutions to increase the share capital based on the authorisations granted at the general meeting in 2023. The Board was given an authorisation at the general meeting in 2023 to acquire treasury shares. No such transactions have taken place in 2023. Any transactions the Company carries out in its own shares should be carried out either through the stock exchange or at prevailing stock exchange prices if carried out in any other way. If there is limited liquidity in the Company’s shares, the Company should consider other ways to ensure equal treatment of all shareholders. SHARES AND NEGOTIABILITY The shares in Belships are freely negotiable and there are no restrictions on any party’s ability to own, trade or vote for the share in the Company. GENERAL MEETING The Board seeks to ensure that as many of the Company’s shareholders as possible can participate in the general meeting and that the resolutions and any supporting documentation are sufficiently detailed, comprehensive, and specific, allowing shareholders to understand and form a view on all matters to be considered at the general meeting. In the notice of the general meeting, it may be decided that shareholders who wish to take part in the general meeting, either in person or by proxy, must notify the Company to this effect by a deadline of up to two (2) days before the general meeting. The Board has previously considered the need for an independent Chair for the general meeting on a case by-case basis. The Chair of the Board, Peter Frølich, was 80 BELSHIPS ANNUAL REPORT 2023 elected to Chair the Company’s annual general meeting for 2023. The general meeting is always able to elect an independent Chair for the general meeting if it wishes to. Shareholders should be able to vote on each individual matter, including on each individual candidate nominated for election. Shareholders who cannot attend the meeting in person should be given the opportunity to vote. The Company should design the form for the appointment of a proxy to make voting on each individual matter possible and should nominate a person who can act as a proxy for shareholders. NOMINATION COMMITTEE The Company’s articles of association state that the Company shall have a Nomination Committee of two or three members. The members of the Committee, including the Chair, shall be elected by the general meeting. Unless otherwise resolved by the general meeting, the elections shall be held every two years. The Nomination Committee shall make recommendations to the general meeting for the election of shareholder elected Board members and members of the Nomination Committee, and the remuneration to the members of the Board of Directors and the Nomination Committee. The remuneration to the members of the Nomination Committee shall be resolved by the general meeting. The general meeting has established guidelines for the Nomination Committee. The Nomination Committee does not include any Executive personnel or any member of the Company’s Board of Directors. The Committee will hold individual discussions with each member of the Board of Directors. The members of the Nomination Committee are currently Vegard Gjerde and Olav Kristian Falnes, both elected by the annual general meeting in 2023. The Nomination Committee has held formal and informal meetings in preparation for the Annual General Meeting to discuss Board composition, Board remuneration and Committee remunerations. The Nomination Committee has also discussed the Committee’s work. The Nomination Committee has asked the Company’s major shareholders whether they have any specific proposals or views on the candidates to be proposed by the Committee. In addition, the Committee has held discussions with the Chief Executive Officer (CEO), Chair of the Board and with all the individual members of the Board which principally focused on how the Board functions and whether its members have the expertise required. BOARD – COMPOSITION AND INDEPENDENCE The Board consists of seven members and one observer, and the Board is made up of directors with broad experience and knowledge of the sector in order to attend to the common interests of all shareholders and meet the Company’s need for expertise, capacity and diversity. Five directors are independent of the majority shareholder. The Board does not include members of the Executive Management. The Chair of the Board is elected by the general meeting. The term of office for the Board members is one year, and members may be re-elected. Further information regarding the expertise of the members of the Board and information on their record of attendance at Board meetings is included in the annual report. Board members are encouraged to own shares in the Company, and 6 of 7 directors own or represent shares in the Company amounting to a total of 61 per cent of the Company’s outstanding shares. Further information regarding the Board is included in the annual report. THE WORK OF THE BOARD OF DIRECTORS The Board has the final responsibility for the management and organisation of the Company and supervising routine management and business activities. This involves that the Board is responsible for establishing control arrangements to secure that the Company operates in accordance with the adopted values and Code of Conduct as well as with shareholders’ expectations of good corporate governance. The Board primarily looks after the interests of all the shareholders, but is also responsible for the Company’s other stakeholders. The Board’s main task is to ensure that the Company develops and creates value. Furthermore the Board shall contribute to the shaping of and implementation of the Group’s strategy, ensure appropriate supervision and control of management and in other ways ensure that the Group is well operated and organised. The Board sets the objectives for the financial performance and adopts the Company’s plans and budgets. Items of major strategic or financial importance for the Group are the responsibility of the Board. The Board hires the CEO, defines his or her work description and authority and sets his or her salary and other compensation. The Board each year produces 81 BELSHIPS ANNUAL REPORT 2023 82 an annual plan for its work as recommended. The Board have adopted instructions for its own work and for the Executive Management. The rules of procedure that apply to the Chief Executive Officer specify his or her responsibilities and the decisions that have to be approved by the Board. The Board can decide to deviate from instructions in certain cases. The Board and Executive personnel shall make the Company aware of any material interests that they may have in items to be considered by the Board. The Board will also be chaired by some other member of the Board if the Board is to consider matters of a material character in which the Chair of the Board is, or has been, personally involved. The Board receives regular financial reports on the Group’s economic and financial status. The Board establishes an annual plan for its work and evaluates its performance and expertise annually. The Board meets at least 6 times a year and receives a monthly report on the Company’s operations. In addition, the Board is consulted on or informed about matters of special importance. AUDIT COMMITTEE The Audit Committee consists of Birthe Cecilie Lepsøe (Chair) and Peter Frølich. The Committee’s objective is to act as a preparatory working Committee and support in connection with the Board’s supervisory roles with respect to financial reporting and the effectiveness of the Company’s internal control system. The members of the Audit Committee are independent of the Company and at least one member of the Audit Committee is competent in respect of finance and audit. The Board has prepared rules of procedure for the Audit Committee. The Committee has held 5 meetings since the annual general meeting in 2023. REMUNERATION COMMITTEE The Remuneration Committee consists of Birthe Cecilie Lepsøe (Chair) and Peter Frølich. The Committee’s objective is to act as a preparatory working committee in connection with the Board’s supervisory roles with respect to compensation and incentives within the Company. The members of the Remuneration Committee are independent of the Company. RISK MANAGEMENT AND INTERNAL CONTROL The Board is responsible for ensuring that the Company has sound internal control and believes that the systems for risk management implemented by the Company are appropriate in relation to the extent and nature of the Company’s activities. The Company’s systems for internal control are closely linked to the Company’s guidelines for corporate social responsibility. The Board annually reviews the Company’s most important areas of exposure to risk and its internal control arrangements. REMUNERATION TO THE BOARD The Company endeavours to grant directors a remuneration based on market terms, which reflect the responsibility, expertise, time commitment and the complexity of the Company’s activities. The remuneration to directors is approved by the Company’s annual general meeting. The remuneration of the Board should not be linked to the Company’s performance. The Company should not grant share options to members of its Board. Members of the Board and/or companies with which they are associated should not take on specific assignments for the Company in addition to their appointment as a member of the Board. If they do nonetheless take on such assignments, this should be disclosed to the full Board. The remuneration for such additional duties should be approved by the Board. Any remuneration in addition to normal directors’ fees should be specifically identified in the annual report. REMUNERATION TO THE EXECUTIVE MANAGEMENT The Board has prepared guidelines for the remuneration of the Executive Management, pursuant to the law, which are submitted to the general meeting. These guidelines support Belships’ commercial strategy, long-term interests, and financial viability. A report on the salary and other remuneration to the Executive Management will be prepared in accordance with the rules of the Norwegian Public Companies Act and relevant regulations. The Company has a share option scheme that applies to all employees in the head office of Belships ASA, including the Executive Management. In addition, the Chief Executive Officer has a separate option arrangement. General meeting has voted separately on the approval of the authorisation to the Board to issue shares to honour the option program. Performance- related remuneration is subject to an absolute limit. INFORMATION AND COMMUNICATION Belships regards timely and accurate information as essential for obtaining a price for the share that will reflect The Company’s underlying value and prospects. 83 BELSHIPS ANNUAL REPORT 2023 The Company keeps Oslo Stock Exchange, the stock market and shareholders fully updated through interim reports, annual reports and press releases on important events. The Company’s financial calendar, along with its annual and interim reports, is accessible through both the Company’s website and the Oslo Stock Exchange publication system. All shareholders have equal access to financial and other material company information. COMPANY TAKEOVER The Board has established guidelines for how to act in the event of a take-over bid. If such a bid should be made, the Board considers it important that shareholders are treated equally and that the Company’s operations are not unnecessarily disturbed. The Board shall ensure that shareholders are given sufficient information and time to form a view of the offer. The Board shall not seek to prevent or obstruct take-over bids for the Company’s business or shares unless there are particular reasons to do so. Any agreement with a bidder for the shares of the Company that acts to limit the Company’s ability to arrange other bids for the Company’s shares should only be entered into where such an agreement clearly is in the common interest of the Company and the shareholders. This provision shall also apply to any agreement on the payment of financial compensation to a bidder if the bid does not proceed. In the event of a take-over bid for the Company’s shares, the Board shall not exercise authorisations or pass any resolutions with the intention of obstructing the take- over bid unless this is approved by the general meeting subsequent to the announcement of the bid. If an offer is made for the shares in the Company, the Board shall issue a statement making a recommendation as to whether shareholders should or should not accept the offer. The Board’s statement on a bid shall make it clear whether the views expressed are unanimous, and if this is not the case, it shall explain the basis on which specific members of the Board have excluded themselves from the Board’s statement. Before issuing its final statement the Board shall arrange for an evaluation of the financial aspects of the bid from an independent expert. The evaluation shall include an explanation and shall be made public no later than at the time the Board’s statement is made public. AUDITOR The auditor submits the main features of the Company’s annual audit plan to the Audit Committee. The auditor is always invited to be present during the Board’s discussion of the annual accounts. At this meeting the Board is briefed on the annual accounts and any other issues of particular concern to the auditor. Part of the meeting is also executed without the presence of the CEO and other Executive Management. The Board has implemented guidelines in respect of use of the auditor by the Executive Management for services other than the audit. The Board reviews the Company’s internal control procedures together with the auditor at least annually. The Company’s auditor is PricewaterhouseCoopers AS. The auditing and counselling fees appear from the notes to the accounts. The Board makes a running assessment of whether the audit is performed in a satisfactory manner. 84 BELSHIPS ANNUAL REPORT 2023 AIMING FOR THE BEST STANDARDS OF CORPORATE GOVERNANCE Commercial management Belships performs all commercial management in-house and has no related party transactions. Board Independence Belships’ Board of Directors consists of seven members, whereof five are independent. Since 2007, more than 40 per cent of the Board has been represented by female board members. Finance and vessel transactions Belships utilises only external advisors or brokers in any transactions and no related third parties. Board Policy The Board has separate Audit, Remuneration and Board Nomination Committees. Belships does not have any shareholder disenfranchisement policies such as poison pills or similar. Transparency The Company and Board maintain sound principles of transparency and fairness in regard to availability of information, presentations and practices. 85 86 Corporate social responsibility as adopted by the board on 10 April 2024 Strong commitment to quality and responsibility MISSION AND CORE VALUES Belships has a clearly defined mission statement and a set of core values which we believe will ensure that the Company continues to grow and develop its value creating and sustainable business. Our mission ◉ To be a leading provider of shipping transportation services Our core values ◉ Deliver Quality to our Customers ◉ Preserve Safety and the Environment ◉ A place for Learning and Teamwork for our People ◉ Create Value for our Shareholders Our core values are reflected in everything we do. They are an integrated part of how we conduct our business. APPLICABILITY This Corporate Social Responsibility Policy applies to all employees and all members of the Board of Directors of the Company and of the Company’s subsidiaries and to any other person or entity acting for or on behalf of the Company. The policies set out in the Corporate Social Responsibility Policy should be read and understood in conjunction with Belships’ Code of Conduct and the guidelines and obligations contained therein. OUR CSR AMBITIONS – MAIN AREAS OF FOCUS Environment International shipping contributes to global emissions of greenhouse gases (GHG) through consumption of bunkers. Although international shipping is a contributor to global emissions, it produces substantially less emissions per unit distance than other methods of transportation when carrying a shipment. Belships recognises its environmental responsibility and strives to comply with and maintain high standards in order to reduce the environmental impact from its operations. The Company is focusing on reducing bunkers consumption, which is the main source of the shipping sector’s emissions of CO2, NOX, and SOX. Belships’ ambition is to optimise energy consumption to reduce its environmental impact by investing in new ships and designs, but also taking measures aimed at reducing the footprint of existing vessels where possible. Continuous efforts are made to reduce the general waste produced by the ships and to dispose of waste onshore in a controlled manner at approved port waste reception facilities. The fleet complies with the IMO recommendations on waste management. Pollution by invasive species carried with ballast water has become an important issue. All our ships have ballast water treatment systems in place. Belships is business for our customers, employees, and shareholders. Our aim is to ensure that our business practices as well as our investments are sustainable and contribute to economic development, with care for the environmental and social impact we have on society. 87 BELSHIPS ANNUAL REPORT 2023 closely monitoring the development of all environmental regulations. The Company will continue to comply with all legislation and follow best practices to minimise the Company’s impact on the environment. Human rights and labour rights It is Belships’ policy to integrate attention to human rights and labour rights into its existing business processes. In practice, a large part of the human and labour rights agenda is covered by the Company’s health and safety efforts. The health and safety of our employees is a key priority for Belships. As an international and multi-cultural employer, the Company respects international and local legislation, including the provision of the International Labour Organization’s Maritime Labour Convention of 2006 (MLC). The MLC is commonly known as the “seafarers’ bill of rights”, and sets out seafarers’ right to decent working conditions, including elements such as minimum age of seafarers, payment of wages, hours of work or rest, onboard medical care, paid annual leave and freedom of association. Belships’ employees are a key resource to the Company. The Company will continue to focus on attracting and keeping the best qualified and motivated employees. As a global organisation, Belships has a diversified working environment in which employment, promotions, responsibility, and job enrichment are based on qualifications and abilities, and not on gender, age, race, sexual orientation and political or religious views. The Company does not tolerate discrimination in any form. Belships aims to continuously provide and enhance healthy, high-quality working conditions, both onshore and onboard vessels. Belships’ goal is to run the operations of the Company with zero fatal accidents. There were no fatal accidents in 2023. Attracting and retaining qualified seafarers remain an area of strategic importance for Belships. The objective is to strengthen Belships’ brand and image. To ensure a continued recruitment of dedicated and qualified officers, Belships is engaged in training of seafarers onboard the Company’s vessels. The Company will continue to develop and implement crew welfare initiatives in order to meet the Company’s ambition of maintaining the retention rate and thereby create safe and well performing vessels. Piracy, hi-jacking, and kidnapping continues to represent a significant risk in certain regions of the world. To create a safe environment for our crew and vessels, the Company has adopted best management practices consistent with the industry standards and recommendations from governing bodies. Specifically, all our ships are registered with the EU Naval Force (Maritime security centre) which co-ordinates ships’ transit schedules with the appropriate naval ships in the Gulf of Aden and Somali basin. An internal risk assessment is also made prior to entering a voyage in any part of the world. Depending on the present conditions and individual risk factors for the particular ship, preventive measures are evaluated for each transit in accordance with Belships’ policy. There were no incidents of attempted hijackings of ships in the Belships fleet in 2023. Anti-corruption Belships believes that corruption prevents well functioning business processes and curbs economic development. Belships focuses on transparency in its business practices, supports free enterprise and competes in a fair and ethical manner. Corruption or corrupt behaviour is not accepted by Belships, and we will actively strive to fight it. 88 BELSHIPS ANNUAL REPORT 2023 BELSHIPS ASA Lilleakerveien 6D P O Box 23 Lilleaker N-0216 Oslo, Norway Organisation no. 930 776 793 MVA www.belships.com 5967007LIEEXZXJCKO492023-01-012023-12-315967007LIEEXZXJCKO492022-01-012022-12-315967007LIEEXZXJCKO492023-12-315967007LIEEXZXJCKO492022-12-315967007LIEEXZXJCKO492021-12-315967007LIEEXZXJCKO492022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXJCKO492023-01-012023-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXJCKO492023-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXJCKO492022-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXJCKO492023-01-012023-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXJCKO492023-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXJCKO492022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXJCKO492023-01-012023-12-31ifrs-full:SharePremiumMember5967007LIEEXZXJCKO492023-12-31ifrs-full:SharePremiumMember5967007LIEEXZXJCKO492022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXJCKO492023-01-012023-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXJCKO492023-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXJCKO492022-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXJCKO492023-01-012023-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXJCKO492023-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXJCKO492022-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXJCKO492023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXJCKO492023-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXJCKO492021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXJCKO492022-01-012022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXJCKO492021-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXJCKO492022-01-012022-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXJCKO492021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXJCKO492022-01-012022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXJCKO492021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXJCKO492022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXJCKO492021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXJCKO492022-01-012022-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXJCKO492021-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXJCKO492022-01-012022-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:USDiso4217:USDxbrli:shares
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