Belships — Audit Report / Information 2017

Apr 24, 2018

Belships ASA

April 2018

Highlights

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Experienced owner and operator of high quality ships on medium to long‐term charters to highly reputable customers

USD 45m fixed multi‐year charter backlog providing predictable revenues

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Founded in 1918 and listed on the Oslo stock exchange since 1937 – one of the longest listed companies in Oslo

Continued focus on fleet expansion of modern dry bulk tonnage

Widely anticipated improving dry bulk market balance represents attractive window of opportunity for earnings‐ and asset value recovery

Management team with proven operational and growth track record

Business strategy and core activities

• • Tonnage provider to highly reputable and good credit risk customers
• •Pursue growth in portfolio size and customer base
• • Seek medium to long term charter arrangements maintaining a duration spread
• •Pure play on the dry bulk market
• •Preference for fuel efficient newbuildings
• •Cost efficiency in operation and administration
• • Transparency, impeccable corporate governance and shareholder friendly information philosophy
• • Targeting an efficiently priced equity with an attractive dividend flexibility to buying back own shares if undervalued

Legal structure

Modern fleet with average age 4.5 years

l n Ve ss e am e	Dw t	/ i l d Bu t y ar	Ty p e	Cu to s m er
ls Be ta r	5 8, 0 0 0	/ 2 0 0 9 Da y an g	bu l k Su p ra m ax	Ca te np o x
lno Be r	5 8, 0 0 0	/ 2 0 1 0 Da y an g	bu l k Su p ra m ax	Ca te np o x
loc Be ea n	8, 0 0 0 5	/ 2 0 1 1 Da an g y	bu l k Su p ra m ax	l l Ca i rg
l fo ) Be i t re s	6 1, 2 5 0	l V e s s e l n n a m Ve ss e am e / ba 2 0 1 5 Im i a r	e l bu l k U tra m ax	l l Ca i rg
) l lan d Be is i i	6 1, 2 5 0	/ ba 2 0 1 6 Im i a r	l bu l k U tra m ax	Ca te np o x
ln ) Be ip i i i p on	6 3, 6 0 0	/ ba 2 0 1 8 Im i a r	l bu l k U tra m ax	l l Ca i rg
/ ba b ) Im i n iv a r	6 3, 6 0 0	/ ba 2 0 2 0 Im i a r	l bu l k U tra m ax	Op en

i) Bareboat charter lease period of 12 years from 09/15 with USD purchase options after the third year.

ii) Bareboat charter lease period of 15 years from 03/16 with USD purchase options after the fifth year.

iii) Time charter period of 8+1+1+1 years from 01/18 with purchase options after the fourth year.

iv) Time charter period of 8+1+1 years from 02/20 with purchase options after the fourth year.

USD 45m fixed charter backlog with solid counterparties

Daily Summary of Baltic Exchange dry indices and time charter averages Date: 23 April 2018

Daily Summary of the Baltic Exchange Time Charter Routes

Route	Description	Size (MT)	Value $(\$)$	Change
BCI timecharter average	Weighted average of the 5 T/C routes	180000	16437	$+671$ $\triangle$
BPI 82 timecharter average	Weighted average of the 5 T/C routes	82500	11895	$-68$ $\blacktriangledown$
BPI timecharter average	Weighted average of the 4 T/C routes	74000	10286	$-61$ $\blacktriangledown$
BSI timecharter average	Weighted average of the 10 T/C routes	58328	11346	$+7$ $\triangle$
BSI 52 timecharter average	Derived value	52454	10995	$+44$ $\triangle$
BHSI 38 timecharter average	Weighted average of the 7 T/C routes	38200	10714	$-47$ $\blacktriangledown$
BHSI timecharter average	Weighted average of the 6 T/C routes	28000	9100	$-21$ $\blacktriangledown$

Baltic Exchange Sale & Purchase Assessments Date: 23rd April 2018

Vessel Type	Description	Size (MT)	Price in \$ m	Change
VLCC	5 years old	305 000	61,441	0,000
AFRAMAX	5 years old	105 000	29,823	$-0,028$
PR PROD TKR	5 years old	51 000	25,655	0,350
CAPESIZE	5 years old	180 000	33,748	0,021
PNMX (DRY)	5 years old	74 000	21,635	0,069
SUPER HANDY	5 years old	56 000	18,084	0,065

Marso

Alternative Scenarios

• Base Case (50-60%)
• Chinese Demand Grows Modestly
• Developing Asia Picks Up Some of the Slack
• Fleet Growth Slows Thru 2019, Then Accelerates
• Low Case (20-25%)
• Global Economic Slowdown Starts In 18H2
• High Case (20-25%)
• China & India See Further Gains In Coal Imports
• Port Delays Stay High
• Wild Card
• US Steel Tariffs

Grain Trade

Chinese Coal Balance

Marsoft

Impact of New Low Sulphur Regs

• ~10% of Fleet Expected To Have Scrubbers By 2020
• Mostly From New Deliveries
• Rest of Fleet Expected To Use MGO
• \$200-250/tonne Premium Expected
• Should Result In Slower Fleet Speed In 2020/21
• Despite Relatively Firm Rates

Cargo composition for Belships' fleet

Low fleet growth next three years is unprecedented and should boost rates

Ownership and share price performance

Shareholder overview

Sha reh old er	har # s es	%
( ide nd) Son AS Sve J. T ata rre ma	31 747 49 2	67. 0%
Tid shi ( dem and ) AS Ott o G . Ti ps	5 0 07 583	10. 6%
Eitz Red eri AS en	806 13 4	% 1.7
Bel shi ASA ps	498 00 0	% 1.1
AR Fo nds AS	416 18 3	0.9 %
ka Na To tsu ga ru	330 00 0	0.7 %
Ch l AS Ca ita rem p	320 00 0	0.7 %
Tid inv II A S est	315 41 4	0.7 %
n & Jen Co . AS sse	302 81 6	0.6 %
Cit iba nk (no min nt) ee acc ou	273 54 7	% 0.6
Car l Er ik S tee n	269 15 4	0.6 %
Jov oko AS	250 00 0	0.5 %
lan d Liv Sø	240 00 0	0.5 %
JSL AS	231 19 1	0.5 %
old AS L H ing AS	225 00 0	0.5 %
kst AR Ve AS	212 05 5	0.4 %
nha rd Kie llan d Ber	200 00 0	% 0.4
G H old ing AS HK	168 11 7	0.4 %
Kje ll E il L g ars en	160 00 0	0.4 %
aho Jom AS	160 00 0	0.4 %
Oth Sha reh old er ers	5 2 19 314	11. 0%
al o din har Tot uts tan g s es	47 352 00 0	10 0.0 %

Organization

Historical financials

Operating revenue

USDk

EBITDA

Financial statement

U SD k	20 15	20 16	20 17
Fre ig ht rev en ue	17 57 0 ,	21 33 8 ,	22 64 6 ,
t fe Ma na g em en es	41 4, 4	07 4, 7	66 3 4,
Op tin inc era g om e	21 98 4 ,	25 41 5 ,	27 30 9 ,
Sh ip o rat ing pe ex pe nse s	5, 71 7 -	8, 197 -	8, 175 -
Op tin hip t era g ex pe nse s s m an ag em en	3, 69 4 -	3, 40 5 -	3, 37 1 -
Ge ral d a dm inis tra tive ne an ex pe nse s	2, 70 0 -	2, 53 3 -	2, 49 3 -
EB ITD A	9, 87 3	11 28 0 ,	13 27 0 ,
Ma in rg	45 %	44 %	49 %
De cia tio nd ort isa tio pre n a am n	68 6 4, -	90 1 4, -	59 4, 7 -
Re l / im irm f s hip t o ve rsa pa en s	31 84 7 - ,	13 82 3 - ,	2, 54 4
f s Lo le o hip ss on sa	0	1, 46 3 -	39 7
EB IT	26 66 0 - ,	8, 90 7 -	11 61 4 ,
Ma in rg	Nm	Nm	43 %
Int inc st ere om e	29	13	26
Int st ere ex pe nse	2, 185 -	4, 83 3 -	4, 73 5 -
Ot r fi he ial ite na nc ms	67 4 -	76 1 -	36 1 -
Cu ain / ( los ) rre ncy g s se s	48 3 -	69	114
Re lt b for e t su e ax es	29 97 3 - ,	14 41 9 - ,	6, 65 8
Ta xe s	177 -	174 -	29 4 -
Ne lt t re su	30 15 0 - ,	14 59 3 - ,	6, 36 4
Ma in rg	-13 7%	-57 %	23 %
To tal ets ass	103 24 8 ,	105 61 2 ,	102 12 9 ,
Ne t d eb t	59 15 1 ,	76 33 9 ,	67 34 5 ,
Eq uity	34 83 1 ,	20 144 ,	26 38 2 ,

Year 2017

A i U S D t m o u n s n m	2 0 1 7	2 0 1 6
O i i t p e r a n g n c o m e	2 3 7	2 5 4
E B I T D A	3 3 1	3 1 1
/ l f h i i R I t e e r s a m p a r m e n o s p s v	2 5	3 8 1 ‐
l O i t t p e r a n g r e s u	6 1 1	8 9 ‐
l b f N t t t e r e s e o r e a u x	6 7	1 4 4 ‐

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

U S D 1 0 0 0	2 0 1 7	2 0 6 1
h ig Fre t r ev en ue	2 2 6 6 4	2 1 3 3 8
fe M t an ag em en es	4 6 6 3	4 0 7 7
Op ing inc t er a om e	2 7 3 0 9	2 5 4 1 5
h S ip ing t op er a ex p en se s	‐8 1 7 5	‐8 1 9 7
h Op ing ip t t er a ex p en se s s ma na g em en	‐3 3 7 1	‐3 4 0 5
l a d a dm in is ive Ge tra t ne ra n ex p en se s	‐2 9 3 4	‐2 5 3 3
ing Op t er a ex p en se s	1 4 0 3 9 ‐	‐1 4 1 3 5
( ) ing l Op E B I T D A t t er a re su	1 3 2 7 0	1 1 2 8 0
d a De ia ion isa ion t t t p re c a n mo r	‐4 5 9 7	‐4 9 0 1
im irm f s h ip Ne t t o p a en s	2 5 4 4	‐1 3 8 2 3
/ le f s h f fe Lo ip t o tra ts ss on sa o e c n o ne ro us co n c	3 9 7	‐1 4 6 3
( ) Op ing l E B I T t t er a re su	6 1 1 1 4	‐8 9 0 7
In inc te t re s om e	2 6	1 3
In te t e re s xp en se s	3 ‐4 7 5	8 3 3 ‐4
he f l O ina ia i t te r nc ms	‐3 6 1	‐7 6 1
/ (‐ los ) Cu ins rre nc y g a se s	1 1 4	6 9
f ina ia l i Ne t te nc m s	4 9 5 6 ‐	‐5 5 1 2
fo l be Re t ta su re xe s	6 6 8 5	9 ‐1 4 4 1
Ta xe s	‐2 9 4	‐1 7 4
l Ne t r t es u	6 3 6 4	‐1 4 9 3 5
f n l l He ing in tro te ts re o on ‐co n re s	6 0	5 3
f m j i in He ty te ts re o a or re s	6 3 0 4	‐1 4 6 4 6
he he O ive inc t r c om p re ns om e
/ ( ) ia l g in los de f ine d be f i lan Ac tu t p ar a s on ne s	‐6	‐3 9
l c he To ive inc ta om p re ns om e	6 3 5 8	‐1 4 6 3 2
f n l l He ing in tro te ts re o on ‐co n re s	6 0	5 3
f m He j i in ty te ts re o a or re s	6 2 9 8	‐1 4 6 8 5
ha ( ) Ea ing U S c t rn s p er s re en	1 3. 6 0	‐3 1. 1 8
( ) i lu d e ing ha S c D U te t ar n s p er s re en	3. 8 1 4	‐3 8 1. 1

Year 2017

CONSOLIDATED BALANCE SHEET

	3 1 De c	3 1 De c
U S D 1 0 0 0	2 0 1 7	2 0 1 6
A S S E T S
ixe d a F ts sse
h S ip s	9 1 2 4 2	9 3 0 0 9
d ha h Pr i im ire t te ep a ec r r	4 0 5	1 5 0 0
he f d a O ixe t ts r sse	2 0 8 0	1 9 7 4
l f ixe d a To ta ts sse	9 3 2 7 7	9 6 4 8 3
Cu t a ts rre n sse
ho iva b les S t‐ te r rm re ce	1 8 4 8	1 2 1 1
i d im ha h ire Pr t te ep a ec r r	0 9 1 5	0
h a d c h e len Ca iva ts s n as q u	5 4 5 9	7 9 1 8
l c To ta t a ts ur re n sse	8 4 0 2	9 1 2 9
l a To ta ts sse	1 0 2 1 2 9	1 0 5 6 1 2
Q S E U I T Y A N D L I A B I L I T I E
Eq i ty u
d‐ l Pa i in i ta ca p	4 3 6 2 0	4 3 6 2 0
d e Re ine ing ta ar n s	‐1 7 5 8 9	‐2 3 8 8 7
l l ing in No tro te ts n‐c on res	3 5 1	4 1 1
l e i To ta ty q u	2 6 3 8 2	2 0 1 4 4
l ia b i l i ies Lo ‐te t ng rm
de b Mo tg t r ag e	2 2 9 9 9	3 0 8 8 3
bo Ba i t c tm t re a om m en	4 0 8 1 6	4 2 8 1 1
l F ina ia ins tru ts nc me n	8	3 2 3
b l Pe ion ig ion t ns o a s	5 3 0	6 4 8
O he lon l ia b i l i ies t te t r g‐ rm	8 1 4 5	0 1 4 7
l lon l b l To ia i i ies ta te t g‐ rm	6 5 8 1 1	7 6 0 7 2
S ho l ia b i l i ies t‐ te t r rm
de b Mo tg t r ag e	5 0 0 0	5 0 0 0
bo Ba i t c tm t re a om m en	1 9 4 0	1 7 7 8
he ho l b l O ia i i ies t t‐ te t r s r rm	2 9 9 6	2 6 1 8
l s ho l ia b i l i ies To ta t‐ te t r rm	9 9 3 6	9 3 9 6
l e i d l ia b i l i ies To ta ty t q an u	1 0 2 1 2 9	1 0 5 6 1 2

Year 2017