ANNUAL REPORT 2015

We are excited about our journey over the coming years

DEAR READER

I am proud to present the annual report for Belships ASA, and to introduce you to a company with a long history, extensive experience, strong expertise and a promising future.

From its origin in 1918 and focus on specialized heavy liá ships, the company made a valuable contribution for the Allied forces during World War II and during the Korean War. Later on, the company also entered both the tanker- and the energy sector.

Today Belships ASA has developed into a pure dry bulk player with full concentration on one non-specialized asset type. The company has been stock listed on the Oslo Stock Exchange since 1937.

Our subsidiary, Belships Management (Singapore) Pte Ltd, has made its mark on one of the world's most challenging industries for over 30 years – an industry where clients manage valuable assets and demand the highest level of expertise and ability from their partners. We focus without compromise on strict risk management to minimize the hazards to both people and the environment and we appreciate the demands and challenges made by our esteemed clients.

Belships ASA outlined in 2013 a bold newbuilding program for eco-design Ultramax bulk carriers to be constructed by Imabari Shipbuilding Group in Japan. This strategic move has transformed the business area into a state-of-the-art dry bulk service provider with high focus on quality, fuel eÚciency and emission control. The Company took delivery of one 61,000 dwt Ultramax in September 2015 and a sister vessel in March 2016. A 63,000 dwt Ultramax, owned by a sister company of the shipbuilder and scheduled for delivery in Q1 2017, will be leased by the Company with purchase options. The Ørst two ships carry traditional names for Belships: "Belforest" and "Belisland". From delivery, "Belisland" will be servicing Canpotex for the remaining 5 year charter period of "Belocean". The charter rate for this period will increase as a reÙection of the expected bunker saving for Canpotex. "Belforest" was chartered to Cargill for 10-14 months from delivery, and Cargill has also chartered in "Belocean" for a 10-15 months period.

Our corporate strategy is to provide our reputable clients a reliable transportation solution based on long-term charters and partnership. We will have focus on growth in portfolio size and diversiØcation of our customer base through a careful selection of counterparts.

We are excited about our journey over the coming years.

Bernt Ulrich Müller Chief Executive Ocer Belships ASA

KEY FINANCIAL FIGURES

USD 1 000		2015	2014
Operating income		21 984	22 079
Operating result		-26 660	1 086
Net result for the year		-30 150	-1 601
EBITDA		9 873	8 560
Total assets		103 248	114 465
Equity		34 831	65 051
Equity per share	NOK	6.56	10.33
Interest coverage ratio		-10.23	0.37
Current ratio	%	115.31	127.64
Equity ratio	%	33.74	56.83
Earnings per share	US cent	-64.42	-3.42

FLEET LIST

SHIP		OWNER SHIP	BUILT YEAR	DWT	EMPLOYMENT	T/C-RATE (NET USD/DAY)
Supramax
M/S Belstar	1	100 %	2009	58 018	T/C to 08/19	16 000
M/S Belnor	1	100 %	2010	58 018	T/C to 05/20	16 000
M/S Belocean	1	100 %	2011	58 018	T/C to 03/16	16 000

Ultramax

M/S Belforest	2	BB	2015	61 320
M/S Belisland	2	BB	2016	60 950	T/C to 03/21	17 300
Imabari newbuilding	3	T/C	2018	63 000

1) In case of any sale, Belships has an option to cancel two of the three time charter parties after respectively 5 and 7 years from the ships were delivered.

2) Belships has signed an agreement with Canpotex Shipping Services Ltd to replace M/S Belocean with the second newbuilding (M/S Belisland). The rate will be adjusted to USD 17.300/day net with e᯿అect from the date of delivery and until the expiry of the existing c/p period.

3) Delivery during 1st quarter of 2018 for long-term lease with purchase option. Charter period is eight years with three annual renewal options. Purchase option may be exercised at the end of year 4 to JPY 3.01 billion, with an annual decrease of JPY 110 million.

CHARTER COVERAGE

All indices are close to all-time low levels

DIRECTORS' REPORT 2015

THE DRY BULK MARKET

Aáer a modest short-lived rally in Q3, dry bulk freight rates fell back again in Q4 to record-low levels. The key drivers behind the deteriorating freight rates have been falling iron ore, coal and steel product trades. The world wide Ùeet utilization rate has dropped to 84%*.

For 2015 as a whole, Chinese steel production fell by 2.3%, while Chinese iron ore imports rose by 1.8% due to a drop in domestic ore production.

Indian coal imports were up 50% during Ørst half 2015, but recent Øgures show declining coal imports in the second half of the year due to a surge in domestic Indian coal production. The Indian steam coal imports declined by 5% during 2015.

A further negative factor in Q4 was a weaker than usual seasonal increase in US grain exports, which hurt demand for smaller bulkers.

The Capesize-index ended the fourth quarter at USD 4,695 per day, whereas the Panamax-index ended at USD 3,692 per day. The Supramax-index ended the quarter at USD 4,703 per day. As per today the Cape index stands at USD 2,221 per day, Panamax-index at USD 3,098 per day and Supramax-index at USD 3,875 per day. All these indices are close to all-time low levels.

*) according to Marsoæ

OPERATIONS

M/S Belstar, M/S Belnor and M/S Belocean continued in 2015 on their long-term charter parties to Canpotex Shipping Services Ltd., Canada. Canpotex is one of the world's largest exporters of potash, a fertilizer product imported in large volumes by countries such as China, India and Brazil. The net time charter rate is USD 16,000 per day. The newbuilding M/S Belforest was delivered to Cargill in September for a 10-14 month period at a net charter rate of USD 7,800 per day.

The company's tonnage is modern, and all ships operated satisfactorily without signiØcant o×-hire except for the planned drydocking of M/S Belnor and M/S Belocean. The operating expenses were close to budgeted levels.

Belships' newbuilding program with Imabari Shipbuilding Group in Japan includes 2 x 61,000 dwt eco-design Ultramax bulk carriers delivered in September 2015 and March 2016 respectively. In addition Belships has signed a long term lease agreement with purchase option for a slightly larger vessel with delivery Q1 2018.

The subsidiary Belships Management (Singapore) Pte Ltd made a positive contribution from technical management services. The company expanded its customer base, and currently provides technical management for 20 ships, including Belships' own ships.

RESULTS

The Group had an operating income of USD 22 984 000 in 2015 (USD 22 079 000), giving a EBITDA of USD 9 873 000 (USD 8 560 000) and a consolidated operating result of USD -26 660 000 (USD 1 086 000).

The decrease in operating result by USD 27.7 million is mainly explained by impairment of ships due to the weak market. The pretax result was USD -29 973 000 (USD -1 578 000), while net result for the Group was USD -30 150 000 (USD -1 601 000).

The parent company's net result for the year was NOK -36 111 000 (NOK -10 447 000). The Board proposes the result for the year to be allocated as follows:

AMOUNTS IN NOK

PROVISION FOR DIVIDEND	0
TRANSFER FROM OTHER RETAINED EARNINGS	-36 111 000
TOTAL ALLOCATIONS	-36 111 000

GOING CONCERN

The annual accounts are presented on a going concern basis in accordance with § 3 – 3 of the Norwegian Accounting Act.

Belships has three long-term T/C agreements with Canpotex. The sale & leaseback of M/S Belforest (Q3-2015) and M/S Belisland (Q1- 2016) provided additional liquidity to the Group.

The main shareholder has provided an on demand guarantee of USD 5 million. Current activity will also generate suÚcient liquidity to cover current debt throughout 2016. Based on this, the Board considers that the conditions for a going concern are in place.

The consolidated accounts have been prepared in 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, Ønancial position and results as a whole. The annual accounts give a fair view of the development, proØt and overall Ønancial position of Belships ASA and the Group, and describe the most signiØcant risks and uncertainties facing the Group and the parent company.

SAFETY AND THE ENVIRONMENT

Belships aims to minimize environmental impact from its activity, and strives to improve safety. Measures are taken to prevent the business polluting the environment. Belships works consciously to improve standards, on board and ashore. Pollution from ships is governed by a number of national and international environmental standards and certiØcations. Belships meets oÚcial requirements in terms of safety and the environment.

The newbuildings from Imabari Shipbuilding have low emissions of pollutants and have ballast water treatment systems.

ORGANISATION

Belships is headquartered in Oslo, from where most of its commercial and Ønancial business including insurance is handled. Technical management is handled from Singapore. There has been no change within the senior management in 2015.

Management activities in Singapore were stable over the year. The Group employed 63 oÚce sta× at the end of 2015. Ships under management had 401 crew members on board. The sick leave was less than 2% in 2015. The Group was not subject to any serious accidents in 2015.

Belships aims to treat women and men equally. No discrimination on the grounds of gender is tolerated. Of the Group's oÚce sta×, 33 are women. The working environment at the various companies within the Group is considered to be good.

FINANCIAL AND OTHER MATTERS

The Group's solvency and Ønancial position is satisfactory. By end of 2015 the book equity of the Belships share was NOK 6.56, while the book equity ratio was 33.7 %. Aáer delivery of the M/S Belisland, the book equity ratio is reduced to around 30%. Current activity will generate suÚcient liquidity to cover current debt throughout 2016.

Consolidated liquidity was USD 8.0 million as at 31 December 2015, against USD 8.1 million at the beginning of the year. Total mortgage debt had a balance of USD 41.3 million at year-end and was reduced by USD 5.0 million during 2015.

In Q3 Belships entered into a 12 year sale and lease back agreement for M/S Belforest, including purchase options. The contract price for the M/S Belisland, which was delivered 15 March 2016, amounted to USD 28.25 million. Instalment of USD 2.8 million was paid in 2015 and Ønanced by the company's surplus liquidity. Remaining newbuilding instalments were at year end USD 19.8 million. In Q1 2016 Belships entered into a sale and leaseback agreement for M/S Belisland. The ship was sold and leased back for a period of 15 years with purchase options from year 5 onwards. Sales amount was USD 24 million. This transaction improved Belships cash position with USD 7 million. Both leases are considered to be Ønancial leases.

The Group has conducted impairment tests in line with IAS 36, valuing the ships and the newbuilding contract based on observable market values of equivalent ships and contracts today, and including the discounted added value of the charter parties entered into. These internal valuations indicated that there was a need for impairment of the company's ship investments with a total of USD 31.8 million in 2015. In March 2016, M/S Belisland replaced M/S Belocean for the remaining 5 years of the charterparty with Canpotex, resulting in an impairment on M/S Belocean of USD 14.9 million. The corresponding value of M/S Belisland's charterparty is not included in the Group's balance sheet as the ship is held at cost, however when testing for impairment going forward, the value of the charterparty will be included.

Belships has reached an agreement to postpone the delivery of the t/c-ship. The ship will be delivered in Q1 2018 instead of Q1 2017 as previously agreed.

Belships aims to provide its shareholders with a competitive dividend yield, but the current market do not allow any payment of dividend.

At the end of 2015 Belships held 548,000 treasury shares in total at an average cost of NOK 9.91 per share. In February 2015 the employees were granted options to purchase 200,000 shares at a strike price of NOK 5.89. These options can be exercised until the annual general meeting in 2016. Additional 200,000 shares were awarded in August 2015 at a strike price of NOK 3.89. These options can be exercised from annual general meeting 2016 until the annual general meeting in 2017.

The Belships' share value has decreased by 40 per cent in the course of 2015. By comparison, the OSEBX increased by 6%. A total of 2,112,000 shares were traded in 124 of the 251 trading days. 2,448,000 shares were traded in 2014 in 146 of the 250 trading days.

The Group is exposed to market risks due to changes in FX rates, interest rates, freight rates and oil prices.

The Group's income and costs are mainly in USD. Belships' foreign exchange exposure is linked to administrative costs in Norway and in Singapore. Compared to the Group's cash Ùows, however, this exposure is limited. Hedging of the Group's interest exposure is considered on an ongoing basis. The hedging level of interest rate exposure is currently around 70%. The long-term interest rate is at a historical low level.

Consolidated Statements of Comprehensive Income

1 JANUARY – 31 DECEMBER / USD 1 000	NOTE	2015	2014
Operating income
Freight income		17 570	17 912
Other operating income		4 414	4 167
Total operating income	4	21 984	22 079
Operating expenses
Timecharterhire		0	-804
Ship operating expenses	8	-5 717	-5 434
Operating expenses ship management	8	-3 694	-3 741
Payroll expenses	9	-1 933	-2 474
Other general administrative expenses	6	-767	-1 066
Depreciations on ᴀ밄xed assets	7	-4 686	-4 274
Impairment of ships	7	-31 847	-3 200
Total operating expenses		-48 644	-20 993
Operating result		-26 660	1 086
Financial income and expenses
Interest income		29	124
Interest expenses	13	-2 185	-1 961
Currency exchange gain/(loss)		-483	-550
Other ᴀ밄nancial items	8	-674	-277
Net ᴀ밄nancial items		-3 313	-2 664
Net result before tax		-29 973	-1 578
Tax	12	-177	-23
Net result for the year		-30 150	-1 601
Hereof non-controlling interests		109	80
Hereof majority interests		-30 259	-1 681
Other comprehensive income
Other comprehensive income not to be reclassi᯿贄ed to pro᯿贄t or loss in subsequent periods:
Actuarial gain/(loss) on deᴀ밄ned beneᴀ밄t plan		-23	-99
Total comprehensive income		-30 173	-1 700
Hereof non-controlling interests		109	80
Hereof majority interests		-30 282	-1 780
Earnings per share (US cent)	11	-64.42	-3.42
Diluted earnings per share (US cent)	11	-64.42	-3.42

Consolidated balance sheets

PER 31 DECEMBER / USD 1 000	NOTE	2015	2014
FIXED ASSETS
Tangible ᴀ밄xed assets
Ships	7	87 730	88 920
Newbuilding instalments	7	4 225	14 125
Other ᬬxed assets	7	1 676	1 877
Total ᴀ밄xed assets		93 631	104 922
Financial ᴀ밄xed assets
Financial investments	14	152	165
Other long-term receivables	13	200	303
Total ᴀ밄nancial assets		352	468
Total ᴀ밄xed assets		93 982	105 390

CURRENT ASSETS
Trade debtors	13	4	44
Other receivables	13	1 269	967
Cash and cash equivalents	15	7 993	8 064
Total current assets		9 266	9 075
TOTAL ASSETS		103 248	114 465
EQUITY
Paid-in capital		43 588	43 563
Retained earnings		-9 202	21 080
Non-controlling interests		445	408
Total equity	20	34 831	65 051
LIABILITIES
Provision for liabilities
Pension obligations	17	796	1 138
Other long-term liabilities
Mortgage debt	13	35 767	40 651
Obligation under ᬬnance leases	13	21 809	0
Financial instruments	22	602	515
Other long-term liabilities		1 407	0
Total other long-term liabilities		59 585	41 166
Short-term liabilities
Current portion of mortgage debt/lease liability	13	5 688	5 000
Tax payable	12	121	48
Public taxes and duties payable		301	325
Trade creditors		380	381
Other short-term liabilities	13	1 547	1 356
Total short-term liabilities		8 036	7 110
Total liabilities		68 417	49 414

TOTAL EQUITY AND LIABILITIES		103 248	114 465

Consolidated cash Ùow statements

1 JANUARY – 31 DECEMBER/USD 1 000	NOTE	2015	2014
CASH FLOW FROM OPERATIONS
Net result before tax		-29 973	-1 578
Adjustments to reconcile result before tax to net cash ⤀褅ows:
Depreciations on ⤀褅xed assets	7	4 686	4 274
Impairment of ships	7	31 847	3 200
Share-based compensation expense	16	25	259
Di⤀ㄆerence between pension expenses and paid pension premium	17	-205	-262
Net ⤀褅nance costs		3 313	2 664
Working capital adjustments:
Change in trade debitors and trade creditors		39	-213
Change in other short-term items		-213	-90
Interest received		29	124
Interest paid		-2 185	-1 961
Income tax paid		-41	-35
Net cash 獮潣ow from operating activities		7 322	6 382
CASH FLOW FROM INVESTING ACTIVITIES
Payment newbuilding contracts	7	-22 615	-8 475
Sale of ship (net sales amount)	7	27 634	0
Prepayment bareboat hire		-6 000	0
Payment of other investments		-1 732	-898
Net cash 獮潣ow from investing activities		-2 713	-9 373
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of long-term debt	13	-22 137	-51 662
Proceeds from new loan	7	18 373	49 425
Paid costs related to ⤀褅nancing		-559	0
Dividend paid to shareholders		0	-393
Net cash 獮潣ow from 䘲╳nancing activities		-4 323	-2 630
Net change in cash and cash equivalents during the period		286	-5 621
Cash and cash equivalents at 1 January		8 064	14 282
Change currency NOK deposits		-357	-597
Cash and cash equivalents at 31 December		7 993	8 064
Restricted bank deposits	15	1 996	605

Consolidated statements of changes in equity

				Majority interests
			Paid-in				Non controlling interest
USD 1000	Note	Share capital	Treasury shares	Share premium reserves	Other equity	Other equity		Total equity
As at 31 December 2015
Equity as at 31 December 2014		14 272	-166	13 751	15 707	21 079	408	65 051
Net result for the year		0	0	0	0	-30 259	109	-30 150
Other comprehensive income	17	0	0	0	0	-23	0	-23
Total comprehensive income		0	0	0	0	-30 282	109	-30 173
Share-based payments	16	0	0	0	25	0	0	25
Non-controll. interests transact.		0	0	0	0	0	-72	-72
Equity as at 31 December 2015		14 272	-166	13 751	15 732	-9 203	445	34 831
As at 31 December 2014
Equity as at 31 December 2013		14 272	-166	13 751	15 448	23 252	401	66 958
Net result for the year		0	0	0	0	-1 681	80	-1 601
Other comprehensive income		0	0	0	0	-99	0	-99
Total comprehensive income		0	0	0	0	-1 780	80	-1 700
Dividend to shareholders		0	0	0	0	-393	0	-393
Share-based payments		0	0	0	259	0	0	259
Non-controll. interests transact.		0	0	0	0	0	-73	-73
Equity as at 31 December 2014		14 272	-166	13 751	15 707	21 079	408	65 051

NOTE 1 GENERAL INFORMATION

Belships is an owner and operator of dry bulk tonnage on long term charters to reputable customers. The company is also providing ship management services.

Belships ASA is registered in Norway and listed on the Oslo Stock Exchange. The head oÚce is located in Lilleakerveien 4 in Oslo, Norway.

Copies of the consolidated Ønancial statements may be downloaded from www.belships.com, or by inquiry to the company's head oÚce.

The consolidated Ønancial statements have been approved by the Board on 18 March 2016.

Belships has obtained approval from Oslo Stock Exchange and Norwegian tax authorities to publish its Ønancial statements only in English.

All amounts in the notes are in USD 1 000 unless otherwise stated.

NOTE 2 SUMMARY OF THE MOST IMPORTANT ACCOUNTING PRINCIPLES USED

A) BASIS OF PREPARATION

The consolidated Ønancial statements of Belships ASA (the "Parent Company"), and all its subsidiaries (the "Group"), have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The Group accounts have been prepared on a historical cost basis, except for derivatives and shares, 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 in accordance with § 3 – 3 of the Norwegian Accounting Act. Belships has three long-term T/C agreements against Canpotex, which is favourable in the current market. Further the sale & leaseback of M/S Belforest (Q3-2015) and M/S Belisland (Q1-2016) provided additional liquidity to the Group. With the declining market it is a risk that the company will fell below minimum value clauses in the loan agreement. The main shareholder has provided an on demand guarantee of USD 5 million. Based on this, the Board considers that the conditions for a going concern are in place. Nevertheless Belships is dependent upon a return in the market from 2017 or explore alternatives for additional funding.

B) CONSOLIDATION PRINCIPLES

The consolidated Ønancial statements comprise the Ønancial statements of Belships ASA and its subsidiaries as at 31 December 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to a×ect those returns through its power over the investee.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

Unrealised gains from transactions with aÚliated companies are eliminated with the Group's share of the company/enterprise. Unrealised losses are likewise eliminated, but only to the degree that there is no indication of loss of value on the asset being sold internally.

C) CURRENCY TRANSACTIONS

Functional currency and reporting currency

Accounting transactions undertaken by respective Group companies use the currency ordinarily used by the Ønancial environment in which they operate (functional currency). The Group accounts are presented in USD.

The accounts for the units in the Group which have a functional currency di×erent 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 monthly 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 proØt and loss during the accounting period. Currency rates at year end was USD 8.8090 (2014: USD 7.4332) and SGD 6.2386 (2014: SGD 5.6218).

D) ACCOUNTS RECEIVABLE

Trade receivables are recognised at face value less any impairment. Provision for impairment is made when there is objective evidence of impairment that a×ects the estimated future cash-Ùow.

E) TANGIBLE FIXED ASSETS

Tangible Øxed 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 proØt and loss account. Acquisition cost for tangible Øxed assets is the purchase price, including taxes and charges and expenses directly related to preparing the asset for use. Expenses incurred aáer the asset has been put to use, are recognised in the proØt and loss account, whereas other expenses which are expected to create future Ønancial gains are capitalised. An estimated docking element is recognised as a separate component of the ship for depreciation purposes on the Ørst 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 the 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. 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 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 insigniØcant.

Newbuilding contracts

Newbuilding contracts are recognised as a Øxed asset based on instalments paid to the yard. Building supervision costs and project costs related to the newbuilding contracts are capitalised.

See section L) regarding treatment of borrowing costs.

F) LEASING

Group as a lessee

A lease is classiØed at the inception date as a Ønance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Group is classiØed as a Ønance lease.

Operating lease payments are recognised as an operating expense in the statement of proØt or loss on a straight-line basis over the lease term.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classiØed as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

G) FINANCIAL INSTRUMENTS

Financial instruments under the scope of IAS 39 are classiØed in the following categories:

Ønancial assets at market value through proØt or loss (held for trading purposes)
available for sale
loans and receivables
held to maturity investments
other obligations

Financial assets with Øxed or determinable cash Ùow which are not listed in an active market are classiØed as loans and receivables. Investments held to maturity, loans and receivables and other liabilities are measured at amortised cost.

H) PROVISIONS

A provision is recognised when the company has a liability (legal or constructive) as a result of a previous event and where it is probable (more probable than not) that there will be a Ønancial settlement as a result of this liability and that the size of the sum can be reliably determined. If the e×ect is material, the provision is estimated by discounting the expected future cash Ùow with a discount rate before tax which reÙects the market's evaluation of the time value of money and, if relevant, risks speciØcally connected to the liability.

A provision is recognised for any unavoidable net loss arising from the contract, the unavoidable cost under a contract reÙect the least net cost of exiting from the contract, i.e. the lower of the cost of fulØlling the contract; and any compensation of penalties arising from failure to fulØll the contract.

I) EQUITY

(i) Debt and equity

Financial instruments are classiØed as debt or equity according to the underlying substance of the contractual agreement. Interest, dividend, gains and losses related to a Ønancial instrument classiØed 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 proØt or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any di×erence between the carrying amount and the consideration, if reissued, is recognised in share premium. Share options exercised during the reporting period are fulØlled with treasury shares.

(iii) Costs related to equity transactions

Transaction costs directly related to equity transactions are charged directly against the equity aáer tax deductions.

J) REVENUE RECOGNITION

Revenue is recognised when it is likely that the economic beneØts which will Ùow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenues from time charter accounted for as operational leases are recognized on a straight line basis over the rental periods of such charters, as service is performed.

K) EMPLOYEE BENEFITS

De×ned contribution pension scheme

All employees are member of the company's deØned contribution scheme. The premium is charged as incurred by operations. Social security tax expense is recognized based on the pension plan payments.

De×ned bene×t pension scheme

Actuarial gains and losses arising from changes in actuarial assumptions are recognised as other comprehensive income in the period in which they arise. The cost of providing beneØts under the deØned beneØt plan is determined using the projected unit credit method.

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.

L) BORROWING COSTS

Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

M) CONTINGENT ASSETS AND OBLIGATIONS

Contingent liabilities are not recognised in the annual accounts. SigniØcant contingent liabilities are disclosed, with the exception of contingent liabilities in which the possibility of loss is considered distant. Contingent assets are not recognised in the annual accounts but are disclosed if there is a certain probability that a signiØcant beneØt will be added to the Group.

N) TAXES ON INCOME

Tax expenses consist of tax payable and changes in deferred tax. Deferred tax/tax assets are calculated on all di×erences between accounting values and tax values of assets and liabilities, with the exception of temporary di×erences related to investments in subsidiaries, aÚliated companies or jointly controlled enterprises when the Group controls when the temporary di×erences will be reversed, and that is not expected to occur in the foreseeable future.

Deferred tax assets are recognised when it is likely that the company will have suÚcient proØt for tax purposes in subsequent periods that will enable the company to utilise the tax asset. Similarly, the company will reduce the deferred tax asset to the extent the company no longer regards it as being likely that it can utilize 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 di×erences have occurred, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax liabilities and deferred tax assets are entered at nominal value calculated with the tax rate in the actual tax regime and are classiØed as long-term liability or intangible Øxed asset in the balance sheet. Tax payable and deferred tax are entered directly against equity to the extent the tax items relate to equity transactions.

In addition to companies subject to ordinary taxation in Norway, Singapore and China, the Group consists of one company within the shipping taxation scheme in Singapore. The deferred tax positions associated with the di×erent tax regimes cannot be o×set. A corresponding situation also applies to tax positions between jointly controlled operations and the rest of the Group. These cannot be o×set.

O) IMPAIRMENT OF ASSETS

At the end of each quarter, every ship is assessed for any possible impairment. 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 identiØable and predominantly independent cash inÙows, which means per ship. Impairment is calculated as the di×erence 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 Ùows 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 may only be so high that book value aáer reversal at most corresponds to the value at which the asset would have been registered if it had not been impaired earlier. Such reversals are recorded in the proØt and loss.

Financial assets classiØed as being available for sale are written down when there are objective indications that the asset has declined in value. An accumulated loss (the di×erence between acquisition cost and current market value, with deduction of impairments previously included in the result and any amortisation amounts) is included in the proØt and loss account. If the market value of a debt instrument classiØed as available for sale increases in a subsequent period, and the increase can objectively be linked to an event that took place aáer the impairment was included in the proØt and loss, the impairment loss will be reversed over the proØt and loss account.

Impairment loss for an investment in an equity instrument classiØed as held for sale, will not be reversed over the proØt and loss account.

P) EVENTS AFTER THE BALANCE SHEET DATE

New information aáer the balance sheet date regarding the company's Ønancial position as of the balance sheet date is taken into consideration in the annual accounts. Events aáer the balance sheet date that do not a×ect the company's Ønancial position as of the balance sheet date, but which will have an impact on the company's Ønancial position in the future are disclosed if signiØcant.

Q) SHARE-BASED PAYMENTS

Employees and management in Belships ASA 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.

R) CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand, bank deposits and other short-term and in particular liquid investments to be redeemed within 3 months. Cash and cash equivalents are recognised at nominal values in the balance sheet. Restricted deposits have been included.

S) 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.

T) 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 performance and allocating resources. The Groups chief operating decision maker is the CEO. The operating segments consist in dry cargo and technical operations, 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.

U) RELATED PARTY TRANSACTIONS

Transactions with related parties are carried out at market terms. See note 10 for further information.

V) CASH FLOW STATEMENT

The cash Ùow 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 15.

W) CLASSIFICATION BALANCE SHEET

The Group presents assets and liabilities in statement of Ønancial position based on current/non-current classiØcation.

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 aáer the reporting period

• cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months aáer the reporting period

All other assets are classiØed 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 aáer the reporting period

• there is no unconditional right to defer the settlement of the liability for at least twelve months aáer the reporting period

The Group classiØes all other liabilities as non-current. Deferred tax assets and liabilities are classiØed as non-current assets and liabilities.

X) IFRSS AND IFRICS ISSUED BUT NOT YET EFFECTIVE

The Ønancial statements have been prepared based on standards e×ective for the year ending 31 December 2015. IASB has issued the following relevante standards/amendments that are not yet e×ective and not yet approved by the EU:

IFRS 9 Financial Instruments

IFRS 9 will eventually replace IAS 39 Financial Instruments: Recognition and Measurement. In order to expedite the replacement of IAS 39, the IASB divided the project into phases: classiØcation and measurement, hedge accounting and impairment. New principles for impairment were published in July 2014 and the standard is now completed. The parts of IAS 39 that have not been amended as part of this project have been transferred into IFRS 9. If not early adopted, the standard becomes e×ective 1 January 2018. The group has made a preliminary assessment of the e×ect of the standard, and not identiØed any material impact on the group Ønancial position of performance.

IFRS 15 Revenue from Contracts with Customers

The IASB and the FASB have issued their joint revenue recognition standard, IFRS 15. The standard replaces existing IFRS revenue requirements. The core principle of IFRS 15 is that revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reÙects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard applies to all revenue contracts and provides a model for the recognition and measurement of sales of some non-Ønancial assets (e.g., disposals of property, plant and equipment). The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required e×ective date.

NOTE 3 USE OF ESTIMATES AND JUDGEMENT IN PREPARATION OF THE ANNUAL ACCOUNTS

Preparing the annual accounts in accordance with IFRS as adopted by EU requires the management to use estimates and assumptions a×ecting the amounts reported in the accounts with notes. The management assumptions and valuations are based on past experience and on miscellaneous other factors assumed to be reasonable and appropriate. This applies in particular to pensions, share-based payments, deferred tax assets, impairment of Øxed assets and the ships' residual value. 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 e×ect is distributed over the current and future periods and appears in the current note.

SHIPS – IMPAIRMENT ASSESSMENT

The Group assess, at each reporting date, whether there are any indications that the ships may be impaired. Impairment is only made if carrying amount is higher than the asset's recoverable amount. Fair value is calculated based on observable market values. Estimating future cash Ùows will always be subject to uncertainty. Any changes in the required rate of return and the assessment of counterparty risk will also a×ect the value.

Remaining useful life is estimated on the date of the presentation of accounts. The useful life of the assets and the method of depreciation are evaluated yearly. See note 7 for additional details.

LEASE ASSESMENT

The Group entered into one sale & leaseback agreement in 2015. Based on the content of the agreement the management's judgement is that the sale & leaseback is a Ønancial lease. If judged di×erently, it would have had an e×ect on the income statement and statement of Ønancial position.

DEFERRED TAX ASSET

The deferred tax asset is only recognised if it can be established as probable that the asset can be realised through a future tax deduction. The probability of this is estimated by the management and the estimate is subject to uncertainties relating to the underlying assumptions for calculating future tax results.

Deferred tax assets are not recognised. See note 12 for additional details.

NOTE 4 SEGMENT INFORMATION

The Belships Group was in 2015 divided into operating segments: dry bulk and and technical management, based on how the reporting to the Chief Operating Decision Maker (CEO) is made.

Segment performance is evaluated based on proØt or loss and is measured consistently with proØt or loss in the consolidated Ønancial statements. The Group's Ønancing (including Ønance costs and Ønance income) and income taxes are managed on a Group basis but are allocated to applicable operating segments.

Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.

Operating income in the dry bulk segment is related to own ships which are mainly chartered to Canpotex Shipping Services Ltd. Except for this customer, the company had no other customers in either 2015 or 2014 where income accounted for more than 10% of the total turnover.

The operating segments have worldwide activities. The shipping market in general o×ers a global service covering major global trade routes. This is also the matter for the Group. Due to this, Ønancial position is not allocated to geographical segments.

1 JANUARY – 31 DECEMBER 2015	DRY CARGO	TECHNICAL MANAGEMENT	ADMINI STRATION	GROUP TRANSACTIONS	TOTAL
Freight revenue	17 273	0	0	297	17 570
Management fees – external	0	4 151	263	0	4 414
Management fees – internal	0	476	300	-776	0
Operating income	17 273	4 627	563	-479	21 984
Operating expenses	-6 193	-3 694	0	476	-9 411
General administrative expenses	-46	0	-2 657	3	-2 700
Operating expenses	-6 239	-3 694	-2 657	479	-12 111
Operating result (EBITDA)	11 034	933	-2 094	0	9 873
Depreciations on ᕔxed assets	-4 582	-45	-59	0	-4 686
Impairment of ships	-31 847	0	0	0	-31 847
Operating result	-25 395	888	-2 153	0	-26 660
Finance incomes	0	14	15	0	29
Finance expenses	-2 403	-66	-873	0	-3 342
Result before tax	-27 798	836	-3 011	0	-29 973
Tax	0	-177	0	0	-177
Net result	-27 798	659	-3 011	0	-30 150
Hereof non-controlling interests	0	109	0	0	109
Hereof majority interests	-27 798	550	-3 011	0	-30 259
Assets	94 149	3 570	5 529	0	103 249
Liabilities	65 364	1 866	1 186	0	68 417
Cash ᕔow from operating activities	8 675	906	-2 259	0	7 322
Cash ᕔow from investing activities	-2 703	0	-10	0	-2 713
Cash ᕔow from ᕔnancing activities	-5 730	1 407	0	0	-4 323

1 JANUARY – 31 DECEMBER 2014	DRY CARGO	PRODUCT TANK	TECHNICAL MANAGEMENT	ADMINI STRATION	GROUP TRANSACTIONS	TOTAL
Freight revenue	16 846	774	0	0	292	17 912
Management fees – external	0	0	3 857	310	0	4 167
Management fees – internal	0	0	431	308	-739	0
Operating income	16 846	774	4 288	618	-447	22 079
Operating expenses	-5 865	-804	-3 741	0	431	-9 979
General administrative expenses	-47	-10	0	-3 499	16	-3 540
Operating expenses	-5 912	-814	-3 741	-3 499	447	-13 519
Operating result (EBITDA)	10 934	-40	547	-2 881	0	8 560
Depreciations on ᕔxed assets	-4 126	0	-51	-97	0	-4 274
Impairment of ships	-3 200	0	0	0	0	-3 200
Operating result	3 608	-40	496	-2 978	0	1 086
Finance income	0	0	57	112	0	169
Finance expenses	-2 222	0	-32	-579	0	-2 833
Result before tax	1 386	-40	521	-3 445	0	-1 578
Tax	0	0	-23	0	0	-23
Net result	1 386	-40	498	-3 445	0	-1 601
Hereof non-controlling interests	0	0	80	0	0	80
Hereof majority interests	1 386	-40	418	-3 445	0	-1 681
Assets	109 470	0	3 915	1 080	0	114 465
Liabilities	47 353	0	500	1 562	0	49 415
Cash ᕔow from operating activities	8 689	-40	549	-2 816	0	6 382
Cash ᕔow from investing activities	-9 298	0	0	-75	0	-9 373
Cash ᕔow from ᕔnancing activities	-2 236	0	0	-393	0	-2 629

NOTE 5 LEASE AGREEMENTS

LEASE OBLIGATIONS

Belships ASA entered on 25 September 2015 into a sale and lease back agreement for M/S Belforest. The bareboat period is 12 years with purchase options from year 3 onwards. The transaction is considered as a Ønancial lease.

CONTRACTED TIME CHARTER REVENUE

M/S Belstar, M/S Belnor and M/S Belocean are on 10-years time charters to Canpotex Shipping Services Ltd from time of delivery from yard in 2009, 2010 and 2011 respectively, at a net rate of USD 16 000 per day. There is no option to charter beyond this period. Belships ASA has the option to sell maximum two of the Canpotex-ships aáer 5 alternatively 7 years without obligation to continue the Charter. On 25 February 2016, M/S Belocean ended her contract with Canpotex. The ship was replaced by the newbuilding M/S Belisland at a net rate of USD 17,300 per day with e×ect from time of delivery 15 March 2016 until the expiry of the remaining 5 year period. Cargill, chartered from end of February M/S Belocean for 10-15 months at an average net rate of USD 3,750 per day.

AS AT 31 DECEMBER 2015	< 1 YR	1-5 YR	> 5 YR
Contractual payments from chartered out ships	21 199	60 461	1 070
Obligations related to long-term operational lease of ships	2 306	9 204	15 485
AS AT 31 DECEMBER 2014	< 1 YR	1-5 YR	> 5 YR
Contractual payments from chartered out ships	17 520	69 733	9 578

Lease obligations are nominal amounts.

NOTE 6 OTHER GENERAL ADMINISTRATIVE EXPENSES

OTHER GENERAL ADMINISTRATIVE EXPENSES	2015	2014
O埤ce expenses	197	251
Furniture, o埤ce supplies	82	92
Travelling, entertainment costs	86	93
Other services	228	264
Other general administrative expenses	175	366
Total administrative expenses Norwegian companies	767	1 066

NOTE 7 SHIPS AND OTHER FIXED ASSETS

			2015					2014
			Ships					Ships
	New buildings	Ships excl. dry dock	Capital. costs dry dock	Total	Other ⤀褅xed assets	New buildings	Ships excl. dry dock	Capital. costs dry dock	Total	Other ⤀褅xed assets
Cost per 1 January	14 125	118 756	954	119 710	4 896	5 650	118 756	1 481	120 237	4 821
Additions	22 600	26 734	2 755	29 489	71	8 475		0 823	823	75
Disposals	-28 250		0 0	0	-47	0		0 -1 350	-1 350	0
Cost per 31 Desember	8 475	145 490	3 709	149 199	4 920	14 125	118 756	954	119 710	4 896
Depreciations per 1 Jan.	0	30 467	324	30 791	3 490	0	23 463	1 350	24 813	3 342
Depreciation for the year	0	3 817	764	4 581	105	0	3 803	324	4 127	148
Impairment	5 750	26 097		0 26 097	0	0	3 200	0	3 200	0
Disposals	-1 500		0 0	0	-30	0		0 -1 350	-1 350	0
Deprec. as at 31 Dec.	4 250	60 381	1 088	61 469	3 566		0 30 466	324	30 790	3 490
Book value per 31 Dec.	4 225	85 109	2 621	87 730	1 355	14 125	88 290	630	88 920	1 406
Other ⌀⌅xed assets	0		0 0	0	320	0		0 0	0	471
Total book value at 31 Dec	4 225	85 109	2 621	87 730	1 675	14 125	88 290	630	88 920	1 877

SPESIFICATION OF THE GROUP'S SHIPS	BUILT YEAR	OWNERSHIP	COST PRICE	BOOK VALUE
Supramax
M/S Belstar	2009	100 %	40 542	23 229
M/S Belnor	2010	100 %	39 893	26 090
M/S Belocean	2011	100 %	38 320	14 000
Ultramax
M/S Belforest	2015	B/B	26 734	24 411

The three supramax ships were in 2015 engaged on time charter contracts for 10 years to Canpotex Shipping Services Ltd from time of delivery. The counterparty risk is considered to be low. The ships have operated satisfactorily over the year. Reference is made to note 13 regarding Ønancing of the ships. M/S Belforest a 61,000 dwt Ultramax bulk carrier was delivered from Imabari Shipbuilding in Japan on 25 September 2015 and was at time of delivery sold and leased back for a period of 12 years with purchase options from year 3 onwards. The ship is Ønanced by mortgage debt. The transaction is considered as a Ønancial lease. The ship was at time of delivery chartered to Cargill for 10-14 months.

IMPAIRMENT TESTS

Impairment tests for the company's assets are performed in accordance with IAS 36. Due to the decling dry bulk market (charter rates/vessel values), Belships has had several impairment indicators in 2015, accordingly impairment tests have been performed every quarter. The ships, newbuildings and charterparties have been valued based on observable market values. The estimated market values were based upon two independent broker valuations. The calculations were made on the remaining 4 – 6 years of the timecharter-agreements and a weighted average cost of capital ratio (WACC) of 8%. In the calculation of the required rate of return, the risk-free interest rate was set at the 10-year LIBOR at 2%, and the margin was Øxed at 4% which is approximately equal to margin on external loan and implicit interest on the lease agreement. The equity risk premium was set at 6%, which is the estimated additional return required by investors in order to invest in a market portfolio above a risk-free interest rate. Based on these internal valuations, an impairment loss of total USD 31.8 million has been recognised during 2015 (USD 3.2 million in 2014). For ships/newbuildings where the Group has entered into sale & leaseback agreements, the implied price in the agreement has also been taken into consideration in the impairment test.

The Company's impairment model has taken into consideration market expectations of future development in the dry bulk market. If the market continue to further detoriate, or the period until recovery is prolonged, additional impairment can be expected.

SENSITIVITY ANALYSIS OF IMPAIRMENT TESTS OF THE SHIPS	BELSTAR	BELNOR	BELOCEAN	BELFOREST
WACC increase with 1%:
Change in market value of the ships (incl. c/p agreements)	-181	-249	0	-2
Market rate increase 5% and ship values increase 2.5%:
Change in market value of the ships (incl. c/p agreements)	-68	-105	350	600

If the general charter rate increase more than expected in the company's impairment model, this will have a negative impact on the net present value on ships currently trading on long favorable charters, but partly o×set by an increase in underlying broker values on the Company's ships. For ships without a long favorable charter, an increase in market value will have positive e×ect. If the general charter rate decrease more than expected, this will have a negative impact and additional impairment based on underlying broker values.

NEWBUILDING

M/S Belisland, a 61 000 dwt Ultramax bulk carrier, was delivered 15 March 2016. Total newbuilding commitment amounted to USD 28.3 million of which USD 8.48 million was paid at year-end. Further payment of USD 2.83 million was made 1 February 2016 and the remaining USD 16.95 million was made upon delivery. At time of delivery the ship was sold to a Japanese counterpart and leased back for a period of 15 years with purchase options from year 5 onwards. The transaction is considered as a Ønancial lease. The company is not aware of any pledges on the ship. The newbuilding is chartered to Canpotex for 5 years. The newbuilding contract is impaired with USD 4.25 million according to market value at corresponding ships as per yearend. The newbuilding contract for M/S Belforest was in Q2 2015 impaired with USD 1.5 million according to market value.

CALCULATION OF DEPRECIATIONS

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 has shorter useful lifetime and is depreciated until the next planned dry docking, typically 30-60 months. Other assets have a useful life of 3-5 years, except for the oÚce premises in Singapore in which the useful life is estimated at 57 years.

Reference is made to note 5 regarding contracted time charter incomes for the ships.

NOTE 8 SPECIFICATIONS OPERATING EXPENSES AND OTHER FINANCIAL ITEMS

	2015	2014
Ship operating expenses
Crew expenses	3 121	2 780
Maintenance and spare parts	1 426	1 229
Insurance	675	646
Other ship operating expenses	495	779
Total ship operating expenses	5 717	5 434
Operating expenses ship management
Administration costs	2 448	2 599
General & selling expenses	622	684
Fixed costs	625	458
Total operating expenses ship management	3 694	3 741
Other ⌀⌅nancial items
Net unrealised gain/(loss) on interest swaps	-87	314
Borrowing costs	-426	-483
Other 圬nancial items	-161	-108
Total other ⌀⌅nancial items	-674	-277

NOTE 9 SALARIES, NUMBER OF EMPLOYEES

	2015	2014
Salaries	1 303	1 522
Social security tax	260	293
Pension expenses	142	203
Other allowances	228	457
Total payroll expenses Norwegian companies	1 933	2 474

Average number of oÚce sta× in 2015 was 63 (62 in 2014) of which 8 in the Norwegian companies.

Loans to employees are speciØed in note 13. Loans to members of the management amounted to 62 at yearend (94 in 2014).

REMUNERATION	CHIEF EXECUTIVE OFFICER	FINANCIAL DIRECTOR	COMMERCIAL DIRECTOR
2015
Salaries (incl. bonus)	362	178	209
Pension expenses (dened contribution)	19	19	19
Other remuneration	64	23	24
2014
Salaries (incl. bonus)	490	221	259
Pension expenses (dened contribution)	24	24	24
Other remuneration	38	32	40

Remuneration in accordance with the Accounting Act § 7-31b is presented in note 10 in the parent company accounts.

BONUS

No bonus scheme was adopted for 2015. Nor for 2016.

SHARE OPTIONS

The Chief Executive OÚcer has a separate option scheme. For details see note 16.

For share options to the employees, see note 16. The Board members have not been awarded share options.

ALLOWANCE TO THE BOARD

The Board has received 79 in remuneration in 2015 (2014: 99), divided into 19 to the Chairman and 15 to each of the other members. Additional, 3 of the board members represent an audit committee and have received 11 in remuneration in 2015 (2014: 14), divided into 5 to the Chairman and 3 to each of the other members. The remunerations are paid in NOK.

THE GROUP'S FEES TO THE AUDITOR (EXCLUDING VAT)	2015	2014
Remuneration for audit services	65	83
Other assurance services	0	14
Assistance related to tax	11	8
Other audit related assistance	14	21
Total	89	126

NOTE 10 RELATED PARTIES

In connection with the waiver the Group received on the Mortgage debt on 29 December 2015, Sonata issued an on-demand guarantee amounting to USD 5 million to the lender. The guarantee carries an interest of 5%.

The subsidiary Belships Management AS provides accounting services to Sonata AS, which is owned by the chairman and his family. Fees amounted to 128 in 2015 (2014: 159).

All fees are in line with prevailing market rates.

No loans were issued or security provided with respect to the company's shareholders or associated parties. Certain members of the management have loans from the company. These totaled 62 as of 31 December 2015 (2014: 94).

NOTE 11 EARNINGS PER SHARE

Basic earnings per share is the ratio between net result of the year attributable to ordinary equity holders (i.e. net proØt 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 consideration. In the calculations, share options are considered as having been converted at the time they were awarded.

The diluted earnings per share is equal to the basic earnings per share, as the Group's result before tax are negative.

AVERAGE NUMBER OF SHARES (EXCLUDING TREASURY SHARES)	2015	2014
Average number of issued shares	46 804 000	46 804 000
Average number of options outstanding	400 000	200 000
Diluted average issued number of shares	47 204 000	47 004 000
EARNINGS PER SHARE
Net result for the year	-30 150	-1 601
Earnings per share (US cent)	-64.42	-3.42
Diluted earnings per share (US cent)	-64.42	-3.42

NOTE 12 TAXES

	2015	2014
Income tax expense	177	23

In accordance with IAS 12 for treatment of taxes, tax reducing temporary di×erences and tax increasing temporary di×erences that are reversed, or can be reversed in the same period and jurisdiction are assessed and the amount recorded net.

RECONCILIATION OF THE YEAR'S INCOME TAX EXPENSE	2015	2014
Result for the year before tax	-29 973	-1 578
Statutory tax rate (Norway)	27 %	27 %
Estimated tax expense at statutory rate	-8 093	-426
Non tax deductible expenses	8 596	4
Non taxable income	0	-110
Non taxed shipping income in Singapore	-1 202	-79
Di⤀ㄆerence between Norwegian and Singapore regional national tax	-49	22
Refund income tax in China	0	-106
Tax e⤀ㄆect of deferred tax asset not recorded in the balance sheet including exchange rate e⤀ㄆect	925	718
Total income tax expense/(income)	177	23

TAX LOSS CARRIED FORWARD

The Group had a tax loss carried forward of USD 47.7 million as at 31 December 2015 (2014: USD 48.8 million) in Norway. No deferred tax beneØts are recognised in the balance sheet. The Group's revenue is generated mainly by companies in Singapore that are either within the national tonnage tax regime or are subject to regular national taxation. Dividends from these companies are nontaxable to the recipients. Taxable income subject to ordinary Norwegian taxation does not indicate any reporting of deferred tax beneØts.

Future tax payable in the Group is expected to be low.

DEFERRED TAX PER 31 DECEMBER	2015	2014
Temporary dierences
Deferred sales gain/(loss)	0	2 034
Accruals	297	-67
Pensions	-796	-1 138
Total temporary dierences	-499	829
Tax loss carried forward	-47 689	-48 793
Net temporary dierences	-48 188	-47 964
Deferred tax assets (27%)	-13 011	-12 950
Deferred tax assets recognised in the Balance sheet	0	0
Deferred tax assets not recognised in the Balance sheet	-13 011	-12 950

Calculation of deferred taxes is based on temporary di×erences between statutory books and tax values which exist at the end of the year.

NOTE 13 RECEIVABLES AND LIABILITIES

RECEIVABLES DUE LATER THAN 12 MONTHS	2015	2014
Loans to employees 1)	195	285
Other long-term receivables	5	19
Total long-term receivables	200	304

1) The average interest rate used for loans to employees was 2.72% in 2015 (2014: 2.63%). The repayment period is ᯿贄ve years.

MORTGAGE DEBT

In 2014 Belships entered into a new long-term Ønancing agreement for M/S Belstar, M/S Belnor and M/S Belocean. The loan facility of USD 50 million is secured for a period of 6 years. The following principal conditions applies to the loan: agreed interest rate is LIBOR pluss margin of 2.75%, minimum market value of the ships is 110% of the outstanding loan balance, minimum value adjusted equity on a consolidated basis is 25% and the Group shall at all times have available liquidity of at least USD 5 million or 6% of total interest bearing debt.

The ship values dropped signiØcantly towards the end of the year. In order to avoid breach of loan covenants, Belships received a waiver from ship mortgage lender in December 2015. Main revised terms in the waiver period until 1 January 2017 are as follows: Minimum cash USD 4 million, minimum value 90%, increase in margin of 0.25% and on-demand guarantee from main shareholder of USD 5 million. All the covenants were fulØlled as of 31 December 2015. The market value of the ships were 96% of the outstanding loan balance at year-end.

BAREBOAT COMMITMENT

REPAYMENT SCHEDULE	2016	2017	2018	2019	SUBSEQ	TOTAL
Mortgage debt	5 000	5 000	5 000	5 000	21 250	41 250
Obligation under ᴀ밄nance leases	688	764	845	932	18 580	21 809
Total	5 688	5 764	5 845	5 932	39 830	63 059

NEWBUILDING COMMITMENT

M/S Belisland, a 61 000 dwt Ultramax bulk carrier, has been under construction at Imabari Shipbuilding in Japan and was delivered 15 March 2016. Total newbuilding commitment amounted to USD 28.3 million of which USD 8.48 million was paid at year-end. Further payment of USD 2.83 million was made 1 February 2016 and the remaining USD 16.95 million was paid upon delivery. The ship was at time of delivery sold to a Japanese counterpart and leased back for a period of 15 years with purchase options from year 5 onwards. The transaction is considered as a Ønancial lease. The newbuilding contract is impaired with USD 4.25 million.

INTEREST SWAP AGREEMENTS

In August 2011 Belships entered into a Ùoating to Øxed interest rate swap agreement with 2 years forward start at 2.2% with a remaining duration of 3.5 years covering USD 15 million, reducing by USD 5 million per year. Another interest swap agreement with forward start in September 2015 was entered into in June 2015 at a rate of 1.9% and with a duration of 5 years covering USD 20 million, reducing by USD 2 million per year.

Hedging the Group's interest exposure is considered on an ongoing basis. Hedge accounting is not used.

CURRENT RECEIVABLES AND SHORT-TERM LIABILITIES

Current receivables consist mainly of accrued revenues, and receivables related to operation of the ships. Other short term liabilities mainly include short term liability related to the ordinary operation of the ships. All current receivables and liabilities are due within 12 months.

NOTE 14 INVESTMENTS AND GROUP COMPANIES

	2015	2014
Shares 1)	152	161
Prepaid pension costs	0	4
Total	152	165

1) The shares are stated at fair value and are de᯿贄ned as "available for sale"

THE FOLLOWING COMPANIES ARE INCLUDED IN THE CONSOLIDATED ACCOUNTS:	BUSINESS LOCATION	MAIN ACTIVITY	OWNERSHIP/ VOTING PERCENTAGE
Belships Management AS	Oslo	Management	100 %
Belships Management (Singapore) Pte Ltd	Singapore	Technical management	100 %
Belships Supramax Singapore Pte Ltd	Singapore	Shipping	100 %
Belships Chartering AS	Oslo	Shipping	100 %
Belships Management (Singapore) Pte Ltd
Belships (Tianjin) Ship Management & Consultancy Co Ltd	China	Crewing	75 %
Belships (Shanghai) Shipmanagement Co Ltd	China	Crewing	60 %

NOTE 15 BANK DEPOSITS

The Group's bank balance amounted to 7 993 at year-end (2014: 8 064). Restricted cash amounts to 1 996, of which 1 450 (2014: 0) relates to deposit/guarantee related to external loan, USD 458 (2014: 511) to swap clearing account and USD 88 (2014: 94) relates to withholding tax employees.

NOTE 16 OPTIONS TO EMPLOYEES

At the Annual general meeting (AGM) in 2014, the Board was authorised to issue up to 200 000 share options to employees. The option price was 105% of closing price on the day of the AGM. The authorization is valid for two years. In accordance with this authorisation, options to buy 200 000 shares at NOK 5.89 was awarded in Ørst quarter 2015. No options have been exercised. At the AGM in 2015, the Board was authorised to issue up to 200 000 share options to employees. The option price is 105% of closing price on the day of the AGM. The authorization is valid for two years. In accordance with this authorisation, options to buy 200 000 shares at NOK 3.89 was awarded in August 2015.

Both option programs require a service period of 12 months before they can be exercised. The options can be exercised 12 to 24 months aáer being awarded. 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 2015 2014

Outstanding 1 January	200 000	200 000
Awarded	200 000	200 000
Exercised	0	0
Not exercised	0	-200 000
Outstanding 31 December	400 000	200 000

Market value of options estimated using the Black and Scholes options pricing model. For the options awarded in 2014 and 2015 the market value per share was NOK 1.33 and NOK 0.75 respectively. The market value of outstanding share options are calculated at time of award and charged against proØt & loss over the period until they can be exercised. In 2015 the calculated costs amounted to 17 and 8 for the 2014- and 2015-options respectively.

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 39.0%. Duration of options: It is assumed that all employees will exercise their options when the service period has been completed. The term of the options is estimated at two years.

Dividend: Estimated dividend per share is NOK 0 per year.

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. 0.65% for 2015.

Decrease in the number of employees: Expected reduction is 0.

SHARE OPTION PLAN CHIEF EXECUTIVE OFFICER

In addition to the above share option plan the CEO has an own share option plan with the following conditions: The right to subscribe for up to 2 million shares in Belships ASA at a subscription price of NOK 7.00, of which:

500 000 shares may be subscribed for if the company's market value exceeds NOK 500 million (Sub-option A).
The remaining 1.5 million shares may be subscribed for if the company's market value exceeds NOK 1 billion (Sub-option B). Suboption B is for 2 million shares if Sub-option A is not exercised within the time allowed for Sub-option A.

The market value is the product of the volume-weighted closing price of the company's shares on the Oslo stock exchange in a 15-day period and the number of outstanding shares less treasury shares and/or shares Belships issues aáer the option agreement date. Sub-option A expires 30 June 2016, while sub-option B expires 30 June 2018.

NOTE 17 PENSIONS

DEFINED CONTRIBUTION SCHEME

All the employees are member of the company's deØned contribution scheme. Annual payable cost is reÙected in the income statements and the company does not have any future liabilities related to this scheme. Total costs related to these schemes amounted to 120 in 2015 (2014: 148). Pension costs in Singapore is reclassiØed as operating expenses ship management and amounted to 227 in 2015 (2014: 207).

DEFINED BENEFIT SCHEME

In addition to deØned contribution scheme, the company has unfunded pension liabilities which are covered through the daily operations. These relate to early retirement and pension to persons, that have not been included in the deØned contribution scheme. There are 7 retired persons included in this scheme.

Pension commitments are calculated by an independent actuary. The basis for the calculation is shown below. The new mortality table (K2013) for Norway is used in the calculations.

Social security costs are recorded based on net pension obligation in the balance sheet included estimate discrepancy.

ASSUMPTIONS	2015	2014
Discount rate	2.70 %	2.30 %
Future wage adjustment	2.50 %	2.75 %
Pension adjustment/G-adjustment	2.50 %	2.75 %
Return on pension plan assets	2.70 %	2.30 %

CHANGES IN THE PRESENT VALUE OF THE DEFINED BENEFIT OBLIGATION

1 January	-1 138	-1 644
Interest cost	-21	-55
Beneᣬts paid	226	417
Actuarial (gains)/losses on obligation	-23	-99
Currency exchange gain/(loss)	160	243
31 December	-796	-1 138
PENSION EXPENSES IN CONSOLIDATED ACCOUNTS	2015	2014
Pension expenses deᣬned beneᣬt scheme	21	55
Pension expenses deᣬned contribution scheme	120	148
Net pension expenses in consolidated accounts	141	203

NOTE 18 SUBSEQUENT EVENTS

SALE AND LEASE BACK AGREEMENT FOR M/S BELISLAND

Belships ASA entered in February 2016 into a sale and lease back agreement with a Japanese counterpart for M/S Belisland. The ship was delivered 15 March 2016 and was at time of delivery sold and leased back for a period of 15 years with purchase options from year 5 onwards.

TIMECHARTER CONCLUDED FOR M/S BELOCEAN

M/S Belocean ended her charter with Canpotex on 25 February 2016. The ship was replaced by the newbuilding M/S Belisland at a net rate of USD 17,300 per day with e×ect from time of delivery 15 March until the expiry of the remaining 5 year period. Cargill, Geneva, has from end of February charter M/S Belocean for 10-15 months at an average net rate of USD 3,750 per day.

POSTPONE DELIVERY OF THE T/C-SHIP

Belships has reached an agreement to postpone the delivery of the t/c-ship. The ship will be delivered in Q1 2018 instead of Q1 2017 as previously agreed.

No further material events have taken place aáer 31 December 2015.

NOTE 19 ENVIRONMENTAL ISSUES

The company has not been charged any penalties due to breach of environmental rules and regulations, and is not committed to implement any speciØc actions in that respect. For further information see the Directors' report.

SHARE CAPITAL

Belships ASA's 47 352 000 shares, each with a face value of NOK 2.00, was as of 31 December 2015 distributed among 451 shareholders (2014: 456). Each share has one vote.

TREASURY SHARES

The company holds 548 000 treasury shares in total with an average cost price of NOK 9.91 as of 31 December 2015. Belships ASA has lent 50 000 of the treasury shares to ABG Sundal Collier Norge ASA (ASC) in connection with ASC' role as liquidity provider for the company's shares on Oslo Stock Exchange.

AUTHORISATION TO ISSUE NEW SHARES

At the Annual general meeting in 2015 the Board received authorisation to issue up to 4.7 million new shares. The authorisation has not been used and is valid to the next ordinary Annual general meeting.

DIVIDEND

The Board of Directors of Belships ASA will at the general meeting on 28 April 2016 propose to not distribute dividend (2015: 0).

	NUMBER OF SHARES	2015	2014
	Ordinary shares, issued and paid-in per 1 January	47 352 000	47 352 000
	Share issue	0	0
	Ordinary shares, issued and paid-in per 31 December	47 352 000	47 352 000
	Dividend paid (NOK per share)	0.00	0.05
	THE 20 LARGEST SHAREHOLDERS IN BELSHIPS ASA AT 31 DECEMBER 2015	NUMBER OF SHARES	PERCENTAGE
1	Sonata AS	28 856 030	60.94 %
2	Tidships AS	6 201 058	13.10 %
3	Sverre J. Tidemand	2 891 462	6.11 %
4	Skandinaviska Enskilda Banken AB	987 419	2.09 %
5	Gemsco AS	537 058	1.13 %
6	Belships ASA	498 000	1.05 %
7	Carlings AS	400 000	0.84 %
8	Tidinvest II AS	315 414	0.67 %
9	Granada Management AS	315 000	0.67 %
10	Jenssen & Co A/S	302 816	0.64 %
11	Chrem Capital AS	270 000	0.57 %
12	Kontrari AS	250 000	0.53 %
13	Toru Nagatsuka	250 000	0.53 %
14	Liv Søland	240 000	0.51 %
15	ASL Holding AS	225 000	0.48 %
16	JSL AS	211 000	0.45 %
17	Carl Erik Steen	207 203	0.44 %
18	Bernhard Kielland	200 000	0.42 %
19	ABG Sundal Collier ASA (market-making)	179 602	0.38 %
20	Torstein Søland	130 000	0.27 %
	Total 20 largest shareholders	43 467 062	91.80 %
	Other shareholders	3 884 938	8.20 %
	Total number of shares	47 352 000	100.00 %

NUMBER OF SHARES OWNED BY BOARD MEMBERS IN BELSHIPS ASA	OWNED SHARES	OUTSTANDING OPTIONS
Sverre J. Tidemand *	31 747 492	0
Christian Rytter *	270 000	0
Carl Erik Steen	207 203	0
Other members	0	0

*) Includes shares owned by family and companies with ownership of more than 50%, and shares owned by companies in which one has negative control.

NUMBER OF SHARES OWNED BY THE MANAGEMENT IN BELSHIPS ASA	OWNED SHARES	OUTSTANDING OPTIONS
Ulrich Müller, Chief Executive O⤀ꀈcer *	0	120 000
Stein H. Runsbech, Commercial Director	40 000	66 000
Osvald Fossholm, Financial Director	0	66 000

*) See note 16 for more information about separate share option plan.

For changes in equity, see separate statement.

The Board is not aware of any material disputes the company may be in involved in at 31 December 2015.

NOTE 22 FINANCIAL MARKET RISK

Financial market risk is considered to be the risk of changes in foreign exchange rates and interest rates that may a×ect the value of the Group's assets, obligations and future cash Ùows.

Belships has a continuing focus on its risk exposure. Derivatives may be used to reduce Ønancial market risk, but are only used to hedge speciØc exposures. When use of derivatives are considered appropriate, only well-known conventional derivative instruments are considered, i.e. OTC agreements such as swaps, options and forward rate agreements. Derivative transactions are only made with renowned Ønancial institutions. Credit risk relating to these derivatives is therefore limited.

Belships is only using derivatives to reduce or limit risk related to Ùuctuations in interest and foreign exchange rates. Financial derivatives are not used to obtain Ønancial revenues through Ùuctuating interest rates, nor are Ønancial derivatives used when there is no underlying exposure.

See note 8 for the speciØcation of other Ønancial items.

INTEREST RATE RISK

The long-term interest rate is at a historical low level. Belships strategy is to manage interest risk. Hedging the Group's interest exposure is considered on an ongoing basis. Entering into interest rate hedging agreements are based on developments in the interest rate market and internal analysis.

In August 2011 Belships entered into an interest rate swap agreement with 2 years forward start at 2.2% with a remaining duration of 3 years covering USD 15 million, reducing by USD 5 million per year. The market value of the agreement amounts to -295 at yearend (2014: -515). Another interest swap agreement with forward start was entered into in June 2015 at a rate of 1.9% and with a duration of 5 years covering USD 20 million, reducing by USD 2 million per year. Market value of this agreement amounts to -307 at yearend. The hedging level of interest rate exposure is currently around 70%. The market value of the agreements are recorded as long-term liability.

The Group has in 2015 and in Q1 2016 entered into two Ønancial lease agreements, which also limit the interest rate exposure as the interest rate is Øxed throughout the period.

The table below shows the sensitivity related to changes in interest rate levels. The calculation includes total interest-bearing debt.

SENSITIVITY TO CHANGES IN INTEREST RATE LEVELS	2015	2014
Change in the interest rate level in basis points	-100/+100	-100/100
E᯿అect on result before tax	438/-438	480/-480
AVERAGE EFFECTIVE INTEREST RATE ON DEBT (%)
Mortgage debt	3.10	3.25

CAPITAL STRUCTURE AND EQUITY CAPITAL

The primary objective of the Group's capital management is to achieve best possible credit rating, and to maximize 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:

	2015	2014
Total equity as at 31 December	34 831	65 051
Total assets	103 248	114 465
Equity ratio as at 31 December	34 %	57 %

Net debt is deØned as interest-bearing debt (short and long-term) and accounts payable less cash. Equity comprises paid-in share capital and retained earnings.

	2015	2014
Interest-bearing debt	63 264	45 651
Trade creditors	380	381
Cash reserves	-7 993	-8 064
Net debt	55 651	37 968
Equity	34 831	65 051
Total equity and net debt	90 482	103 019
Net debt ratio	62 %	37 %

LIQUIDITY RISK

The Group's solvency and Ønancial position is considered to be satisfactory. The debt ratio increased in 2015 mainly due to delivery of new ship and payment of instalments to the shipyard during the year. Total current assets is exceeding total short-term liabilities as at 31 December.

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. Historical losses have been small. The Group's ships are employed on long-term charter to Canpotex Shipping Services Ltd and to Cargill, which is considered to be solid and reputable counterparts.

There is no class of Ønancial assets that is past due and/or impaired except for trade receivables. All accounts receivable in the balance sheet are due within 30 days from the balance sheet date.

CURRENCY RISK

The functional currency of all the consolidated companies is USD since the major part of revenues and costs are in USD. Belships currency exposure is related to administrative expenses in Norway, Singapore and China. This exposure is considered to be limited. At year end the Group had a cash balance in NOK of approximately 3.8 million (2014: NOK 12 million). Belships has no currency hedge agreements as at 31 December 2015.

The company does not use hedge accounting.

FAIR VALUE MEASUREMENTS

The valuation has the following classiØcation 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).

There was no change in levels in 2015. Interest swap and currency exchange contracts are valued in accordance with the principles described as level 2. Fair value is deØned as present value of future cash Ùows. For the above derivatives, fair value is conØrmed by the Ønancial institution, which is counterpart. The fair values of current Ønancial assets and liabilities carried at amortised cost approximate their carrying amounts. The long-term liabilities have Ùoating interest rate with a Øxed margin. The margin is considered not to have signiØcantly changed since drawing date, thus carrying amount is considered a reasonable estimate of fair value.

	LOANS AND RECEIVABLES		CHANGE IN FAIR VALUE THROUGH PROFIT AND LOSS		AVAILABLE FOR SALE		TOTAL
SUMMARY OF FINANCIAL ASSETS AND OBLIGATIONS *	2015	2014	2015	2014	2015	2014	2015	2014
Financial assets
Investments					152	165	152	165
Financial instruments				13			0	13
Other long-term receivables	200	304					200	304
Trade debtors	4	44					4	44
Other receivables	1 269	967					1 269	967
Bank deposits	7 993	8 064					7 993	8 064
Financial obligations
Mortgage debt	-41 250	-46 250					-41 250	-46 250
B/B commitment	-22 497						-22 497	0
Financial instruments			-602	-515			-602	-515
Trade creditors	-380	-381					-380	-381
Other short-term liabilities	-1 847	-1 681					-1 847	-1 681
Total	-56 508	-38 934	-602	-502	152	165	-56 959	-39 271

*) The ᯿贄gures express both book value and fair value as these are identical.

	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
ASSETS AND OBLIGATIONS MEASURED AT FAIR VALUE	2015	2014	2015	2014	2015	2014	2015	2014
Forward exchange contracts				13			0	13
Financial investments					152	165	152	165
Mortgage debt			-41 250	-46 250			-41 250	-46 250
B/B commitment			-22 497				-22 497	0
Interest agreement			-602	-515			-602	-515
Total			-64 349	-46 752	152	165	-64 197	-46 587

Belships ASA income statements

1 JANUARY – 31 DECEMBER/ NOK 1 000	NOTE	2015	2014
Operating income
Freight income	2	6 457	0
Other operating income	10	3 986	3 857
Total operating income		10 443	3 857
Operating expenses
Ship operating expenses	9	-3 922	0
Payroll expenses	10	-15 581	-15 589
Other general administrative expenses	11	-5 671	-6 089
Depreciation of xed assets	2	-2 914	-611
Impairment of xed assets	2	-48 357	0
Total operating expenses		-76 446	-22 289
Operating result		-66 003	-18 432
Financial income and expenses
Share dividend	8	17 496	2 481
Interest income		120	451
Interest expenses	12	-6 223	-28
Interest expense on loan to subsidiary	4	-150	-93
Other nancial items	9	7 842	9 858
Currency exchange gain/-loss	9	10 806	-4 684
Net ⤅nancial items		29 891	7 985
Net result before tax		-36 111	-10 447
Income tax expense	16	0	0
Net result for the year		-36 111	-10 447
Appropriations of net result:
Transfer from/(to) other retained earnings		36 111	10 447
Total		36 111	10 447

Belships ASA balance sheets

FIXED ASSETS Tangible ⤀褅xed assets Ship 2 215 036 Instalments newbuildings 2 37 218 Other xed assets 2 5 329 5 716 Total tangible ⤀褅xed assets 257 584 Financial ⤀褅xed assets Shares in subsidiaries 8 241 518 281 802 Other shares and stakes 141 165 Other long-term receivables 12 1 764 2 161 Total ⤀褅nancial assets 243 422 284 128 Total ⤀褅xed assets 501 006 CURRENT ASSETS Other receivables 4 904 Cash and cash equivalents 5 35 922 Total current assets 40 826 Total assets 541 832 EQUITY Paid-in capital Share capital 94 704 Treasury shares -1 096 Share premium reserve 93 333 Other paid-in capital 106 463 Total paid-in capital 293 404 293 181 Retained earnings Other equity 27 044 Total equity 6 320 448 LIABILITIES Long-term liabilities Bareboat commitment 12 190 586 Pension obligations 7 7 008 Financial instruments 14 2 400 Intercompany balances 4 5 764 Total long-term liabilities 205 758 Short-term liabilities Bareboat commitment, current portion 12 6 060 Public taxes and duties payable 1 392 2 419 Trade creditors 788 Intercompany balances 4 6 126 Other short-term liabilities 1 260 Total short-term liabilities 15 626 Total liabilities 221 384 Total equity and liabilities 541 832 403 602	AS AT 31 DECEMBER/ NOK 1 000	NOTE	2015	2014


				0
				84 880

				90 596






				374 724

				1 019
				27 859
				28 878
				403 602



				94 704
				-1 096
				93 333
				106 240


				63 358
				356 539


				0
				8 458
				0
				5 538
				13 996

				0

				699
				29 947
				2
				33 067
				47 063

BELSHIPS ANNUAL REPORT 2015 Side 43 av 69

Belships ASA cash Ùow statements

1 JANUARY – 31 DECEMBER/ NOK 1 000	NOTE	2015	2014
CASH GENERATED FROM OPERATIONS
Net result before tax		-36 111	-10 447
Adjustments to reconcile result before tax to net cash ᨰows:
Depreciation of ᨘxed assets	2	2 914	611
Impairment of tangible ᨘxed assets	2	48 357	0
Gain/loss from sale of ᨘxed assets		0	6
Share-based payment transaction expense	3	223	1 927
Diᩈerence between pension expenses and paid pension premium	7	-1 654	-2 278
Change in pension contribution and premium fund		24	438
Finance income		-36 264	-12 790
Finance expenses		6 373	4 805
Working capital adjustments:
Change in trade debitors and trade creditors		89	-774
Change in intercompany balances		-23 594	32 916
Change in other short-term items		-2 519	569
Interest received		120	451
Interest paid		-19	-121
Net other ᨘnancial items		-8 355	5 174
Net cash ᨰow from operations		-50 416	20 487

CASH FLOW FROM INVESTING ACTIVITIES
Investments in ᨘxed assets	2	-88	-443
Sale proceeds from ᨘxed asset disposals	2	51 235	665
Dividends/Group contribution received	8	17 496	2 481
Repayment share capital subsidiary	8	40 284	0
Instalments newbuildings	2	-45 567	-51 997
Bareboat hire paid		-5 278	0
Change in other investments		397	101
Net cash ᨰow from investing activities		58 479	-49 193

CASH FLOW FROM FINANCING ACTIVITIES
Dividend paid to shareholders		0	-2 340
Net cash ᨰow from ᨘnancing activities		0	-2 340
Net change in cash and cash equivalens		8 063	-31 046
Cash and cash equivalents at 1 January		27 859	58 905
Cash and cash equivalents at 31 December	5	35 922	27 859

Restricted bank deposits	5	4 812	4 500

NOTE 1 ACCOUNTING POLICIES

Belships is an owner and operator of dry bulk ships on long-term charter to reputable customers. Belships ASA is registered in Norway and listed on the Oslo Stock Exchange. The head oÚce is located in Lilleakerveien 4 in Oslo, Norway.

The Ønancial statements have been approved by the Board on 18 March 2016.

The accounts are prepared in accordance with Norwegian Generally Accepted Accounting Principles (NGAAP). The accounts form part of the consolidated accounts of Belships ASA. The consolidated Ønancial statements have been prepared in accordance with IFRS as adopted by EU.

All amounts in the notes are in NOK 1 000 unless otherwise stated.

Belships has obtained approval from Oslo Stock Exchange and Norwegian tax authorities to only publish its Ønancial statements in English.

A) CLASSIFICATION OF BALANCE SHEET ITEMS

Assets intended for long-term ownership or use are classiØed as Øxed assets and others as current assets, with all accounts receivable within one year classiØed as current assets. Liabilities due within 12 months, are classiØed 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 di×erences between accounting values and tax values of assets and liabilities.

Deferred tax assets are entered in the accounts when it is likely that the company will have suÚcient proØt for tax purposes in subsequent periods that will enable the company to utilise the tax asset. The companies enter previously unentered deferred tax assets to the extent it has become likely that the company can utilise the deferred tax asset. Similarly, the company will reduce the deferred tax asset to the extent the company no longer regards it as being likely that it can utilize the deferred tax asset. Deferred tax and deferred tax asset are measured on the basis of expected future tax rates for the companies in the group where temporary di×erences have occurred.

Deferred tax and deferred tax assets are entered at nominal value and are classiØed as Ønancial Øxed assets (long-term liability) on the balance sheet.

Tax payable and deferred tax are entered directly against equity to the extent the tax items relate to equity transactions.

C) TANGIBLE FIXED ASSETS

Tangible Øxed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses. When assets are sold or divested, capitalised value is deducted and any gains or losses are entered in the proØt and loss account. Acquisition cost for tangible Øxed assets is the purchase price, including expenses directly related to preparing the asset for use. Expenses incurred aáer the asset has been put to use are entered in the proØt and loss account, whereas other expenses which are expected to create future Ønancial gains are capitalised. Other Øxed assets are depreciated at the declining balance method. Depreciation period and method are evaluated every year.

Newbuilding contracts

Newbuilding contracts are recorded as a Øxed asset based on instalments paid to the yard. Building supervision costs and project costs related to the newbuilding contracts 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.

E) ACCOUNTS RECEIVABLE

Accounts receivable are booked at nominal amount less expected loss.

F) CASH FLOW STATEMENT

The cash Ùow 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 5.

G) EQUITY

(i) Treasury shares

between the carrying amount and the consideration, if reissued, is recognised in share premium. Share options exercised during the reporting period are fulØlled with treasury shares.

(ii) Costs related to equity transactions

Transaction costs directly related to equity transactions are charged directly against the equity aáer tax deductions.

H) EMPLOYEE BENEFITS

De×ned contribution pension scheme

All employees are member of the company's deØned contribution scheme. The premium is charged as incurred by operations. Social security tax expense is recognized based on the pension plan payments.

De×ned bene×t pension scheme

Actuarial gains and losses arising from changes in actuarial assumptions are charged and credited to equity through other comprehensive income in the period in which they arise.

I) PROVISIONS

A provision is entered in the accounts 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 Ønancial settlement as a result of this liability and that the size of the sum can be reliably determined. If the e×ect is considerable, the provision is calculated by discounting down the expected future cash Ùow with a discount rate before tax which reÙects the market's evaluation of the time value of money and, if relevant, risks speciØcally connected to the liability.

Provisions for loss-creating contracts are included when the group'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

Gains will be taken to income when it is likely that transactions will generate future Ønancial gains which will be attributable to the company and the sum can be reliably estimated. Interest rate income is taken to income based on e×ective interest method according to when it is earned.

Dividend received from subsidiaries is accounted for in the same year as dividend has been accrued for in the subsidiary. If such dividend exceeds the prorata share of retained earnings aáer the acquisition of the shares, such excess portion represents repayment of capital and 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 Norwegian kroner using the rate on the balance sheet date. Non-monetary items which are measured at historical rates expressed in foreign currencies, are converted into Norwegian kroner using the currency rate at the time of the transaction. Non-monetary items which are measured at market value expressed in foreign currency are converted at the currency rate on the balance sheet date. 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 quantiØable. Contingent gains are not recognised.

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

O) USE OF ESTIMATES IN PREPARATION OF THE ANNUAL ACCOUNTS

The management has used estimates and assumptions that have a×ected assets, debt, income, costs and information on potential liabilities. This applies particularly to pension liabilities, 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 e×ect is distributed over the current and future periods.

P) EARNINGS PER SHARE

Earnings per share are calculated by dividing the net result by a weighted, average number of shares in the reporting period. Diluted earnings per share are calculated on the basis the dilution e×ect of issued options and convertible loans, if any.

Q) 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.

R) FINANCIAL INSTRUMENTS

Financial instruments are valued at lowest of cost and estimated fair value.

NOTE 2 FIXED ASSETS

				2015				2014
			Ship			Other ⤀褅xed assets			Other ⤀褅xed assets
	New building	Ship excl. dry dock. costs	Capital. dry dock. costs	Total ships	Deprec. assets	Non deprec. assets	Total other 圬xed assets	Deprec. assets	Non deprec. assets	Total other 圬xed assets
Cost price
As at 1 January	84 880	0		0 0	16 799	4 093	20 892	16 356	4 093	20 449
Additions	190 169	228 067	7 678	235 745	68	20	88	443	0	443
Disposals	-219 528	0		0 0	0	0	0	0	0	0
As at 31 December	55 521	228 067	7 678	235 745	16 867	4 113	20 980	16 799	4 093	20 892
Depreciations
As at 1 January	0	0		0 0	14 676		0 14 676	14 065		0 14 065
Depreciation for the year	0	2 056	384	2 440	475	0	475	611	0	611
Impairment (accumul.)	30 088	18 269		0 18 269	0	500	500	0	500	500
Disposals	-11 785	0		0 0	0	0	0	0	0	0
As at 31 December	18 303	20 325	384	20 709	15 151	500	15 651	14 676	500	15 176
Book value at 31 Dec.	37 218	207 742	7 294	215 036	1 716	3 613	5 329	2 123	3 593	5 716

NEWBUILDING

M/S Belisland, a 61 000 dwt Ultramax bulk carrier, has been under construction at Imabari Shipbuilding in Japan and was delivered 15 March 2016. Total newbuilding commitment amounts to USD 28.3 million (NOK 248.9 million) of which USD 8.48 million (NOK 74.6 million) was paid at year-end. Further payment of USD 2.83 million (NOK 24.9 million) was made 1 February 2016 and the remaining USD 16.95 million (NOK 149.3 million) was made upon delivery. The ship was at time of delivery sold to a Japanese counterpart and leased back for a period of 15 years with purchase options from year 5 onwards. The transaction is considered as a Ønancial lease. The company is not aware of any pledges on the ship. The newbuilding is chartered to Canpotex for 5 years. The newbuilding contract was impaired with 30 088 according to market value at year-end. See note 7 in the consolidated accounts regarding impairment.

SHIP

M/S Belforest, a 61,000 dwt Ultramax bulk carrier was delivered on 25 September 2015 and at same time sold and leased back for a period of 12 years with purchase options from year 3 onwards. The transaction is considered as a Ønancial lease. The ship is Ønanced by mortgage debt. The ship was from delivery chartered to Cargill for a 10-14 month period at charter rate of around USD 8,000 per day.

The ship is impaired with 18 269 according to the market value. See note 7 in the consolidated accounts regarding impairment.

OTHER FIXED ASSETS

Depreciable assets include vehicles, oÚce furniture and oÚce equipment. Depreciation period is 3-5 years. Non-depreciable assets include apartment and art, which is being tested for impairment annually.

NOTE 3 OPTIONS TO EMPLOYEES

SUMMARY OF OUTSTANDING OPTIONS	2015	2014
Outstanding 1 January	200 000	200 000
Awarded	200 000	200 000
Exercised	0	0
Not exercised	0	-200 000
Outstanding 31 December	400 000	200 000

Market value of options estimated using the Black and Scholes options pricing model. For the options awarded in 2014 and 2015 the market value per share was NOK 1.33 and NOK 0.75 respectively. The market value of outstanding share options are calculated at time of award and charged against proØt and loss over the period until they can be exercised. In 2015 the calculated costs amounted to 147 and 76 for the 2014- and 2015-options respectively.

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.

Dividend: Estimated dividend per share is NOK 0 per year.

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. 0.65% for 2015.

Decrease in the number of employees: Expected reduction is 0.

SHARE OPTION PLAN CHIEF EXECUTIVE OFFICER

500 000 shares may be subscribed for if the company's market value exceeds NOK 500 million (Sub-option A).
The remaining 1.5 million shares may be subscribed for if the company's market value exceeds NOK 1 billion (Sub-option B). Suboption B is for 2 million shares if Sub-option A is not exercised within the time allowed for Sub-option A.

NOTE 4 INTERCOMPANY BALANCES

No interest is calculated on short-term intercompany accounts as these items are only considered as ordinary operating balances. 150 are paid to a subsidiary related to long-term intercompany accounts of 5 764 at yearend.

Interest at market terms is calculated on long-term intercompany balances, and the balance fall due when the cash position allows it.

NOTE 5 BANK DEPOSITS

The company's bank balances amounted to 35 922 at year-end. Restricted funds for withholding tax for employees amounted to 773 at 31 December 2015. Other restricted deposits amounts to 4 039.

NOTE 6 EQUITY

		PAID-IN			RETAINED
	SHARE CAPITAL	TREASURY SHARES	SHARE PREMIUM RESERVES	OTHER EQUITY	OTHER EQUITY	TOTAL
Equity per 31 December 2014	94 704	-1 096	93 333	106 240	63 358	356 538
Actuarial (gains)/losses on obligation	0	0	0	0	-203	-203
Share-based payments	0	0	0	223	0	223
Result for the year	0	0	0	0	-36 111	-36 111
Equity per 31 December 2015	94 704	-1 096	93 333	106 463	27 044	320 448

SHARE CAPITAL

Belships ASA's 47 352 000 shares, each with a face value of NOK 2.00, was as of 31 December 2015 distributed among 451 shareholders (2014: 456). Each share has one vote.

TREASURY SHARES

AUTHORISATION TO ISSUE NEW SHARES

DIVIDEND

The Board of Directors of Belships ASA will at the general meeting on 28 April 2016 propose to not distribute dividend (2015: 0).

	THE 20 LARGEST SHAREHOLDERS IN BELSHIPS ASA AT 31 DECEMBER 2015	NUMBER OF SHARES	PERCENTAGE
1	Sonata AS	28 856 030	60.94 %
2	Tidships AS	6 201 058	13.10 %
3	Sverre J. Tidemand	2 891 462	6.11 %
4	Skandinaviska Enskilda Banken AB	987 419	2.09 %
5	Gemsco AS	537 058	1.13 %
6	Belships ASA	498 000	1.05 %
7	Carlings AS	400 000	0.84 %
8	Tidinvest II AS	315 414	0.67 %
9	Granada Management AS	315 000	0.67 %
10	Jenssen & Co A/S	302 816	0.64 %
11	Chrem Capital AS	270 000	0.57 %
12	Kontrari AS	250 000	0.53 %
13	Toru Nagatsuka	250 000	0.53 %
14	Liv Søland	240 000	0.51 %
15	ASL Holding AS	225 000	0.48 %
16	JSL AS	211 000	0.45 %
17	Carl Erik Steen	207 203	0.44 %
18	Bernhard Kielland	200 000	0.42 %
19	ABG Sundal Collier ASA (market-making)	179 602	0.38 %
20	Torstein Søland	130 000	0.27 %
	Total 20 largest shareholders	43 467 062	91.80 %
	Other shareholders	3 884 938	8.20 %
	Total number of shares	47 352 000	100.00 %

NUMBER OF SHARES OWNED BY BOARD MEMBERS IN BELSHIPS ASA	OWNED SHARES	OUTSTANDING OPTIONS
Sverre J. Tidemand *	31 747 492	0
Christian Rytter *	270 000	0
Carl Erik Steen	207 203	0
Other members	0	0

*) Includes shares owned by family and companies with ownership of more than 50%, and shares owned by companies in which one has negative control.

NUMBER OF SHARES OWNED BY THE MANAGEMENT IN BELSHIPS ASA	OWNED SHARES	OUTSTANDING OPTIONS
Ulrich Müller, Chief Executive O᯿ᜇcer *	0	120 000
Stein H. Runsbech, Commercial Director	40 000	66 000
Osvald Fossholm, Financial Director	0	66 000

*) See note 3 for more information about separate share option plan.

NOTE 7 PENSIONS

DEFINED CONTRIBUTION SCHEME

DEFINED BENEFIT SCHEME

Pension commitments are calculated by an independent actuary. The basis for the calculation is shown below. The new mortality table (K2013) for Norway is used in the calculations.

Social security costs are recorded based on net pension obligation in the balance sheet included estimate discrepancy.

	2015	2014
Assumptions
Discount rate	2.70 %	2.30 %
Future wage adjustment	2.50 %	2.75 %
Pension adjustment/G-adjustment	2.50 %	2.75 %
Return on pension plan assets	2.70 %	2.30 %
Composition of the net pension obligations per 31 December
Net pension obligations as at 1 January	8 458	9 999
Interest on accrued pension obligations	174	347
Employer benets paid	-1 827	-2 625
Actuarial (gains)/losses on obligation	203	737
Net pension obligations as at 31 December	7 008	8 458
NET PENSION EXPENSES	2015	2014
Pension expenses dened benet scheme	174	347
Pension expenses dened contribution scheme	968	930
Total pension expenses	1 142	1 277

NOTE 8 SHARES

	BUSINESS OFFICE	TIME OF PURCHASE	COST PRICE	OWNER SHIP/ VOTING SHARE	COMPANY'S SHARE CAPITAL	NUMBEROF SHARES OWNED	PAR VALUE	BOOK VALUE
Shares in subsidiaries
Belships Management AS	Oslo	09.12.85	7 493	100 %	100		2 TNOK 50	657
Belships Management (Singapore) Pte Ltd 1)	Singapore	31.12.83	12 075	100 %	TSGD 60	60 000	SGD 1	12 076
Belships Supramax Singapore Pte Ltd 2)	Singapore	18.06.09	253 782		100 % MSGD 58.5	58.5 mill.	SGD 1	223 382
Belships Chartering AS	Oslo	27.01.93	221 181	100 %	5 403	2 700	TNOK 2	5 403
Total								241 518

1) The company has provided dividend of 17 496 in 2015

2) The subsidiary completed a reduction in the share capital of SGD 6.6 million equivalent NOK 40.3 million in 2015.

NOTE 9 SPECIFICATIONS

SHIP OPERATING EXPENSES	2015	2014
Crew expenses	-2 071	0
Maintenance and spare parts	-129	0
Insurance	-397	0
Management fee	-482	0
Other ship operating expenses	-844	0
Total ship operating expenses	-3 922	0
OTHER FINANCIAL ITEMS	2015	2014
Guarantee commission 1)	10 901	10 237
Financing costs	-1 951	0
Other ࿼nancial items	-1 108	-379
Total other nancial items	7 842	9 858

1) The company is acting as a guarantor for the mortgage debt in the subsidiary Belships Supramax Singapore. A guarantee fee of 3% of loan balance has being charged.

CURRENCY GAIN/(LOSS) IN INCOME STATEMENT	2015	2014
Realised currency exchange gain	26 598	798
Unrealised currency exchange gain	0	306
Realised currency exchange loss	-15 792	-5 788
Total	10 806	-4 684

NOTE 10 SALARIES, NUMBER OF EMPLOYEES

SALARY EXPENSES	2015	2014
Salaries	10 505	9 590
Social security tax	2 096	1 843
Pension expenses	1 142	1 277
Other allowances	1 837	2 879
Total	15 581	15 589

Belships was charging the subsidiary Belships Management AS with a management fee amounting to 3 986 in 2015 (2014: 3 858).

The average number of employees in 2015 was 8 (2014: 8).

REMUNERATION TO THE MANAGEMENT	CHIEF EXECUTIVE OFFICER	FINANCIAL DIRECTOR	COMMERCIAL DIRECTOR
Salary	2 916	1 438	1 685
Share-based payment transaction expense	23	13	13
Pension expenses (de⌀⌅ned contribution)	156	156	156
Other allowances	489	172	180

There exist no severance pay agreement.

SHARE OPTIONS

For information about share options, see note 3. The CEO has a separate option scheme that was approved in the annual general meeting in May 2015. See note 3 for details.

BOARD REMUNERATION

Board members are not awarded share options. The Board has received 643 in remuneration in 2015 (2014: 624), divided into 161 to the Chairman and 120 to each of the other members. Additional, 3 of the board members represent an audit committee and have received 90 in remuneration in 2015 (2014: 86), divided into 34 to the Chairman and 28 to each of the other members.

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 Øxed 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)	2015	2014
Remuneration for audit services	220	260
Other assurance services	0	90
Assistance related to tax matters	51	4
Other audit related assistance	111	130

LOANS TO EMPLOYEES

Loans to employees amounted to 1 719 as at 31 December 2015 (2014: 2 116). Of this, 548 to the management. See note 12 for details.

NOTE 11 OTHER GENERAL ADMINISTRATIVE EXPENSES

	2015	2014
O⤀ꀈce expenses	1 584	1 579
Other services	1 702	1 434
Data, o⤀ꀈce equipment a.o.	661	579
Communication, advertising	346	380
Travel expenses	691	585
Other general administrative expenses	687	1 532
Total	5 671	6 089

NOTE 12 RECEIVABLES AND LIABILITIES

BAREBOAT COMMITMENT

NEWBUILDING COMMITMENT

M/S Belisland, a 61 000 dwt Ultramax bulk carrier, has been under construction at Imabari Shipbuilding in Japan and was delivered 15 March 2016. Total newbuilding commitment amounted to USD 28.3 million (NOK 248.9 million) of which USD 8.48 million (NOK 74.6 million) was paid at year-end. Further payment of USD 2.83 million (NOK 24.9 million) was made 1 February 2016 and the remaining USD 16.95 million (NOK 149.3 million) was paid upon delivery. The ship was at time of delivery sold to a Japanese counterpart and leased back for a period of 15 years with purchase options from year 5 onwards. The transaction is considered as a Ønancial lease.

INTEREST SWAP AGREEMENT

In June 2015 Belships entered into an interest swap agreement with forward start in September 2015 at a rate of 1.9% and with a duration of 5 years covering USD 20 million, reducing by USD 2 million per year.

LOANS TO EMPLOYEES

Loans to employees amounted to 1 719 as at 31 December 2015 (2014: 2 116). The average interest rate used for loans to employees was 2.72% in 2015 (2014: 2.63%). The repayment period is Øve years.

All short-term receivables and liabilities are due within 12 months.

NOTE 13 SUBSEQUENT EVENTS

SALE AND LEASE BACK AGREEMENT FOR M/S BELISLAND

TIMECHARTER CONCLUDED FOR M/S BELOCEAN

M/S Belocean entered her charter with Canpotex on 25 February 2016. The ship will be replaced by the newbuilding M/S Belisland at a net rate of USD 17,300 per day with e×ect from time of delivery around 15 March until the expiry of the remaining 5 year period. Cargill, Geneva, has from end of February charter M/S Belocean for 10-15 months at an average net rate of USD 3,750 per day.

POSTPONE DELIVERY OF THE T/C-SHIP

Belships has reached an agreement to postpone the delivery of the t/c-ship. The ship will be delivered in Q1 2018 instead of Q1 2017 as previously agreed.

No further material events have taken place aáer 31 December 2015.

NOTE 14 FINANCIAL MARKET RISK

CURRENCY RISK

The functional currency of the company is USD and the presentation currency is NOK. Balance sheet items in USD are converted to NOK at currency rate of 8.8090, which was Norges Bank's exchange rate at 31 December 2015 (2014: 7.4332). The company's revenue has the recent years been limited. Revenues consist primarily of management fees, dividends and group contributions from subsidiaries. Operating revenues and expenses in the subsidiaries are primarily in USD. The income and expenses related to the ship are in USD. At year end the company had a cash balance in NOK of approximately 3.8 million (2014: NOK 12 million).

To hedge payments of the administrative expenses in Norway, the company entered in December 2014 into 2 forward contracts to sell USD corresponding NOK 10 million at a currency rate of USD 7.5122 in June 2015 and further to sell USD corresponding NOK 10 million at a currency rate of USD 7.5222 in December 2015. The net loss related to these hegdings amounted to 1 538 in 2015.

Due to limited risk, no further hedging agreement towards NOK has been concluded.

The company does not use hedge accounting.

INTEREST SWAP AGREEMENT

An interest swap agreement with forward start in September 2015 was entered into in June 2015 at a rate of 1.9% and with a duration of 5 years covering USD 20 million, reducing by USD 2 million per year. Market value of this agreement amounts to -2 400 at yearend. The market value of the agreement are recorded as long-term liability.

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 15 RELATED PARTIES

The company performs management services for a subsidiary and receives fee for this. The fee amounted to 3 986 in 2015 (2014: 3 858).

The company receives a commission for acting as guarantor for mortgage debt in the subsidiary Belships Supramax Singapore Pte Ltd. This amounted to 10 901 in 2015 (2014: 10 238). See note 9.

All intercompany transactions have been conducted to market terms.

In connection with the waiver the Group received on the mortgage debt on 29 December 2015, Sonata issued an on-demand guarantee amounting to USD 5 million to the lender. The guarantee carries an interest of 5%. Except for this, it has not been issued loans or provided security to or from shareholders or related parties.

Members of the management have loans from the company. These amounts to 548 per 31 December 2015 (2014: 702).

NOTE 16 TAX

TAX RESULT FOR THE YEAR FOR BELSHIPS ASA	2015	2014
Result for the year before tax	-36 111	-10 447
Change in temporary diᴀ촄erences	-11 323	-1 102
Permanent diᴀ촄erences / other	-17 555	-2 394
Tax basis for the year	-64 989	-13 943
Taxes payable (27%)	0	0
Total income tax expense	0	0

In accordance with NGAAP, tax reducing temporary di×erences and tax increasing temporary di×erences that are reversed, or can be reversed in the same period are assessed and the amount recorded net.

RECONCILIATION OF TAX EXPENSE	2015	2014
Result for the year before tax	-36 111	-10 447
Statutory tax rate	27 %	27 %
Estimated tax expense at statutory rate	-9 750	-2 821
Permanent diᴀ촄erences / other	-4 740	-646
Expected tax expense	-14 490	-3 467
Change in deferred tax assets	14 490	3 467
Actual tax expense	0	0
Eᴀ촄ective tax percentage	0 %	0 %
DEFERRED TAX PER 31 DECEMBER	2015	2014
Pensions	-7 008	-8 458
Pension plan assets	0	24
Interest swap	-2 400	0
Temporary diᴀ촄erences ᴀ㔄xed assets	12 296	0
Impairment loss on ᴀ㔄xed assets	-500	-500
Impairment loss on shares in subsidiaries abroad	-30 400	-30 400
Tax loss carried forward	-305 051	-240 052
Net temporary diၨerences	-333 062	-279 386
Deferred tax assets (27%)	-89 927	-75 434
Deferred tax assets in Balance sheets	0	0
Deferred tax assets not in Balance sheets	-89 927	-75 434

Calculation of deferred taxes is based on temporary di×erences between statutory books and tax values which exist at the end of the year. Deferred tax assets are not recorded in the balance sheet, as future utilization of tax losses cannot be reasonably assured.

Belships' values and ethical guidelines are intended to safeguard good corporate ethics

CORPORATE GOVERNANCE

Good corporate governance is a prerequisite for cooperation based on trust between the company's owners, its Board and management, with a view to achieving the objective of long-term growth.

All relevant parties must be conØdent that the company is soundly operated and that the corporate governance is well deØned, Øt 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 behavior. 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.

Operations

The company's business is operation, purchase and sale of ships as well as participation in companies with similar objectives. The company is listed on the Oslo Stock Exchange and is for the time being engaged in dry bulk and technical management of ships.

Share capital and dividends

Belships aims to maximize the value for the company's share through an eÚcient and proØtable management of the company's resources. A competitive return is to be obtained through growth in the value of the company's shares and the payment of competitive dividends. When increasing share capital through the issue of new shares for cash payment, the company's shareholders have normally a pre-emptive right of subscription.

The Board will propose private placements or the issue of shares as consideration in connection with investments only when this will safeguard the long-term interests of existing shareholders.

Until the coming General Meeting (GM), the Board is entitled to acquire on behalf of the company 200 000 own shares and to issue 4 700 000 new shares under conditions determined by the GM.

Equal rights for shareholders and transactions with related parties

The company has only one class of shares and the company's articles of association contain no limitations on voting rights. All shares carry equal rights and can be transferred freely.

In situations where the Board proposes that existing shareholders should waive their right to subscribe for shares, this will only be done where justiØed in light of the company's and the shareholders' interests. The justiØcation shall be published in connection with the announcement of the increase in capital.

Belships provides limited management services to the company's principal shareholder. These services are provided at market terms. Any material transactions with closely related parties follow from sections 3-8 and 3-9 of the Norwegian Limited Liability Companies Act, and the agreements are adopted by the GM on the basis of a report submitted to the GM beforehand. The option programs are adopted by special authorization from the GM.

General Meeting

The GM is the company's supreme authority. The GM elects the Board and the auditor. Pursuant to the Limited Liability Companies Act, notice of GM must be sent to the shareholders no later than 21 days before the GM is to be held. The GM must be held by 30 June. Shareholders are registered in the Shareholders' Register with address. All shareholders are entitled to attend the GM and must give notice of attendance two days before the meeting is held. The Board, the company's management and the auditor attend GMs.

Election committee and audit committee

Considering the scope of the company's operations, the Board considers it reasonable and appropriate that the company should only have one board committee: the audit committee. The committee is made up of Christian Rytter (Chairman), Kjersti Ringdal and Sissel Grefsrud.

Members of the Board represent, directly and indirectly, more than 50 per cent of the shareholdings in Belships ASA. For this reason, no election committee has been established. The Board fulØlls this role itself, and the work to review candidates for the Board is handled by ad hoc committees of the Board and chaired by the Chairman.

Board – composition and independence

The Board shall consist of 3-7 members. The Board elects its chairman. Members may be re-elected every two years. Board appointments are communicated through the notice of GM and the members are elected by majority vote.

The Board is made up of directors with broad experience and knowledge of the sector. Four directors are independent of day-to-day management, the majority shareholder and major business connections. Three directors own shares in the company.

The duties of the Board, risk management and internal control

The Board supervise the work of the administration. This means that the Board must review and approve strategies and follow up the implementation of the resolutions adopted.

Strategic decisions or decisions of material importance must be approved by the Board. The Board also appoints the Chief Executive OÚcer and determines his/her remuneration and the general framework for the Group's wage level.

The Board has prepared rules of procedure for the Chief Executive OÚcer, which specify his responsibilities and the decisions that have to be approved by the Board. The Board's duties comprise the review and supervision of the Group's internal control procedures and risk management. The same applies to ensuring that the company's integrity is safeguarded.

Focus is on ensuring that the Board functions as a team of independent members. The Board has also prepared rules of procedure for the Board's audit committee, which is to support the Board in performing its duties relating to reporting, audit, internal control and overall risk management.

The Board has an overall responsibility for safety, security and the environment. Our subsidiary in Singapore, which is responsible for the technical operation of Belships own and other ships, concentrates in particular on these matters.

The Board meets at least six 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.

Remuneration of directors

Remuneration of directors is approved by the company's GM. The remuneration is granted at the end of the year of service. Directors have no options to buy shares in the company, nor do they receive compensation other than the Board fees. The company endeavors to grant directors a remuneration based on market terms.

Remuneration to o⌀ਈcers

The Board prepares guidelines for the remuneration of oÚcers, pursuant to the law, which are submitted to the GM. Remuneration to the Chief Executive OÚcer is approved by the Board on the Chairman's recommendations.

In 2012 the company introduced a bonus scheme that applies to all employees in Norway and was e×ective as of 2013. The Chief Executive OÚcer has an option to purchase shares. Details concerning the remuneration of the company's oÚcers are provided in a separate note to the accounts.

Information and communication

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 also has a website, which is regularly updated. Belships regards timely and accurate information as essential for obtaining a price for the share that will reÙect the company's underlying value and prospects.

Company takeover

The Board has not prepared any principles 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's actions will take this into account in such a situation.

Auditor

The company's auditor attends at least one Board meeting a year, normally in connection with the presentation of the annual accounts. In its meeting with the auditor, the Board focuses in particular on procedures relating to the company's internal control as well as current accounting issues.

The Board and the auditor meet at least once a year without the Chief Executive OÚcer or other executives being present. The auditor also attends the company's GM and has access to the company's minutes of board and GMs. The Board reviews the auditor's engagement on an annual basis.

The company's auditor is Ernst & Young. Besides ordinary audits, Belships receives assistance from Ernst & Young in connection with accounting and tax issues within the Øeld in which the auditor can assist under the rules of independence. The auditing and counseling fees appear from the notes to the accounts.

The company's management meets the auditor regularly to discuss current tax and accounting issues.

The Board makes a running assessment of whether the audit is performed in a satisfactory manner.

Strong commitment to customers and quality creates value

CORPORATE SOCIAL RESPONSIBILITY

Belships main contribution to society is to grow a long-term, sustainable value-creating business for our stakeholders. Our aim is to ensure that our business practices as well as investments are sustainable, and contribute to long-term economic, environmental and social development.

Belships has a clearly deØned vision and mission statement and a set of core values, which we believe will ensure that the Company grows a value-creating and sustainable business.

Vision

Strong commitment to customers and quality creates value.

Mission

We are an ambitious global organization with focus on:
Safety & environment
Customers
Quality
People

Core values

Respect
Commitment
Sincerety & Honesty

Our core values are reÙected in everything we do. They are an integrated part of how we conduct our business.

Belships has identiØed the Company's material sustainability issues and their potential impact on our business. With reference to the Norwegian Accounting Act section 3-3c, the following chapters present how Belships integrates the most material sustainability issues into its business strategies and processes.

1. Environment

International shipping contributes signiØcantly to global emissions of greenhouse gases (GHG) through consumption of bunkers. Although international shipping is a signiØcant contributor to global emissions, it produces substantially less emissions per unit distance when carrying a shipment than other methods of transportation.

Belships recognizes its environmental responsibility and strive 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 optimize bunker consumption and the company conducts improvement projects and testing aimed at reducing its environmental impact, including hull cleaning and propeller polishing in addition to testing of fuel additives for improved combustion, both aimed at reducing fuel consumption and air pollution.

Belships are further certiØed with Environmental Management Systems CertiØcate ISO 14001 as well as ISO 9001:2000. The certiØcates are issued by the classiØcation society and establish environmental standards and implementation routines. Continuous e×orts are made in order to reduce the general waste produced by the vessels and to dispose of waste onshore in a controlled manner at approved port waste reception facilities. The Ùeet complies with the IMO recommendations on waste management.

Pollution by invasive species carried with ballast water has become an important issue. The Company's newbuildings will have ballast water treatment systems in place. Belships is actively preparing for the expected implementation of stricter regulations on ballast water treatment entering into force.

Belships is closely monitoring the development of all environmental regulation. The Company will continue to comply with all legislation and follow best practices to minimize the Company's impact on the environment.

2. Human and Labour rights

It is Belships policy to integrate attention to human and labor rights into its existing business processes. In practice, a large part of the human and labor rights agenda is covered by the Company's health and safety e×orts. The health and safety of our employees is a key priority for Belships. As an international and multi-local industrial employer, the Company respects international and local legislation, including the provision of the International Labor Organization's Maritime Labor Convention of 2006 (the "MLC"). The MLC is widely 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 values its employees as a key resource. The Company will continue to focus on attracting and keeping the best qualiØed and motivated employees. As a global organization, Belships has a diversiØed working environment in which employment, promotions, responsibility and job enrichment are based on qualiØcations and abilities and not on gender, age, race 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. Crewing and technical management are handled by Belships' subsidiaries in Singapore and China. These companies also have external customers and o×er ship management-services to ship owners worldwide. A dedicated and well-trained ship- and onshore team is monitoring the health, safety, environment and quality performance.

Belships' goal is to run the operations of the Company with zero fatal accidents. This goal was achieved in 2015.

Attracting and retaining qualiØed seafarers remains an area of strategic importance for Belships. The objective is to strengthen Belships' brand and image. To ensure a continued recruitment of dedicated and qualiØed oÚcers, Belships is engaged in training of seafarers and education of cadets and has 160 cadet positions onboard the Company's vessels. The Company will further develop the crewing strategy and the implementation of crew welfare initiatives in order to meet the Company's ambition of maintaining the oÚcers' retention rate at a high level and maintaining a challenging and motivating work place, thus creating top performing vessels.

Belships faces same challenges as other shipping companies when it comes to piracy. Piracy is still a challenge for the shipping industry and cannot be solved by the Company or the shipping industry alone. It must be dealt with by the international community and relevant authorities of UN working together. To create a secure environment in which our crew feels safe, the company has adopted a best management-practice consistent with the industry standards and under suggestion by Intertanko and Oil Companies International Marine Forum to deter piracy. All of our vessels are registered with the EU Naval Force (Maritime security centre) which co-ordinates vessel's transit schedules with the appropriate naval vessels in the Gulf of Aden and Somali basin. Depending on the present conditions and individual risk factors for the particular vessel, preventive measures are evaluated for each transit in accordance with Belships' piracy policy. There were no incidents of attempted hijackings of Belships-vessels in 2015.

3. Anti-corruption

Belships has deØned a set of core values being reÙected in everything the Company does, and are an integrated part of how the Company does its business.

Belships believes that corruption prevents well-functioning business processes and curbs economic development. Corruption or corrupt behavior is not accepted by the Company. Belships focuses on transparency in its business practices, supports free enterprise and competes in a fair and ethical manner.

AI Terminal

Belships

3553_rns_2016-03-31_f68ec231-5cc8-464a-a19e-19c4fd043511.pdf

ANNUAL REPORT 2015

We are excited about our journey over the coming years

DEAR READER

KEY FINANCIAL FIGURES

FLEET LIST

Ultramax

CHARTER COVERAGE

All indices are close to all-time low levels

DIRECTORS' REPORT 2015

THE DRY BULK MARKET

OPERATIONS

RESULTS

AMOUNTS IN NOK

GOING CONCERN

SAFETY AND THE ENVIRONMENT

ORGANISATION

FINANCIAL AND OTHER MATTERS

Consolidated Statements of Comprehensive Income

Consolidated balance sheets

Consolidated cash Ùow statements

Consolidated statements of changes in equity

NOTE 1 GENERAL INFORMATION

NOTE 2 SUMMARY OF THE MOST IMPORTANT ACCOUNTING PRINCIPLES USED

A) BASIS OF PREPARATION

B) CONSOLIDATION PRINCIPLES

C) CURRENCY TRANSACTIONS

Functional currency and reporting currency

Transactions in foreign currency

D) ACCOUNTS RECEIVABLE

E) TANGIBLE FIXED ASSETS

Newbuilding contracts

F) LEASING

Group as a lessee

Group as a lessor

G) FINANCIAL INSTRUMENTS

H) PROVISIONS

I) EQUITY

(i) Debt and equity

(ii) Treasury shares

(iii) Costs related to equity transactions

J) REVENUE RECOGNITION

K) EMPLOYEE BENEFITS

De×ned contribution pension scheme

De×ned bene×t pension scheme

L) BORROWING COSTS

M) CONTINGENT ASSETS AND OBLIGATIONS

N) TAXES ON INCOME

O) IMPAIRMENT OF ASSETS

P) EVENTS AFTER THE BALANCE SHEET DATE

Q) SHARE-BASED PAYMENTS

R) CASH AND CASH EQUIVALENTS

S) RESTRICTED DEPOSITS

T) REPORTING BY SEGMENTS

U) RELATED PARTY TRANSACTIONS

V) CASH FLOW STATEMENT

W) CLASSIFICATION BALANCE SHEET

X) IFRSS AND IFRICS ISSUED BUT NOT YET EFFECTIVE

IFRS 9 Financial Instruments

IFRS 15 Revenue from Contracts with Customers

NOTE 3 USE OF ESTIMATES AND JUDGEMENT IN PREPARATION OF THE ANNUAL ACCOUNTS

SHIPS – IMPAIRMENT ASSESSMENT

LEASE ASSESMENT

DEFERRED TAX ASSET

NOTE 4 SEGMENT INFORMATION

NOTE 5 LEASE AGREEMENTS

LEASE OBLIGATIONS

CONTRACTED TIME CHARTER REVENUE

NOTE 6 OTHER GENERAL ADMINISTRATIVE EXPENSES

NOTE 7 SHIPS AND OTHER FIXED ASSETS

IMPAIRMENT TESTS

NEWBUILDING

CALCULATION OF DEPRECIATIONS

NOTE 8 SPECIFICATIONS OPERATING EXPENSES AND OTHER FINANCIAL ITEMS

NOTE 9 SALARIES, NUMBER OF EMPLOYEES

BONUS

SHARE OPTIONS

ALLOWANCE TO THE BOARD