Belships

Investor Presentation • Nov 10, 2022

COMPANY PRESENTATION | Q3 2022 NOVEMBER 2022

Belships ASA – Owner and Operator of Bulk Carriers

Highlights – Q3 2022

Earnings summary CONTRACT COVERAGE SECURES PROFITABILITY AND DIVIDEND OUTLOOK FOR 2023

• Operating income of USD 151.8m (USD 205.3m)
• EBITDA of USD 56.4m (USD 57.1m) including USD 10.1m from Lighthouse Navigation
• Net result of USD 49.8m (USD 35.2m)
• Declared dividend of USD 18.4m (NOK 0.75 per share)
• TCE of USD 24 155 gross per day for owned fleet
• 90 per cent of ship days in Q4 2022 are fixed at USD 22 900 gross per day
• 64 per cent of ship days in the next four quarters are fixed at USD 22 300 gross per day
• Modern fleet of 31 vessels with an average age below four years and daily cash breakeven for 2023 of about USD 10 900 per vessel

Q3 2022	Q3 2021
Average TCE	Average TCE
USD 24 155/day	USD 26 714/day
EBITDA	EBITDA
USD 56.4m	USD 57.1m
Net result	Net result
USD 49.8m	USD 35.2m
Financial position
Assets	Equity and liabilities
Cash and cash equivalents	Book value Equity
USD 116.3m	USD 281.9m

Ships USD 724.3m

Other assets USD 133.6m

Interest bearing debt USD 585.7m

Other liabilities USD 106.6m

Lighthouse Navigation – Dry Bulk Operating

Track Record

Profitable every year since inception in 2009

Risk Management

Skin in the game - leading employees invested

Growth

Offices in 4 countries with 80 employees

Volume

Operating about 60 vessels*

Performance

Average EBITDA of USD 9.6m last 12 quarters

Ultramax – Superior Risk/Reward

Average earnings per day - Last 3 years – Strong outperformance of index vessels

Supramax: BSI58 Kamsarmax: BPI82 Capesize: BCI 5TC Source: Baltic Exchange

Lowest fleet growth in decades

Supra/Ultramax order book

ORDERBOOK/SUPPLY - The order book for Supra/Ultramax bulk carriers is about 7 per cent. In relative terms, we are heading towards the lowest rate of supply growth in 30 years.

78x Supra/Ultramax bulk carriers have been delivered year-to-date. 24x vessels are scheduled to be delivered for the remaining part of the year

103x vessels are scheduled to be delivered in 2023, however, it may be lower as some orders are usually, delayed, cancelled or incorrectly reported.

The new regulations (EEXI) in 2023 might cause a slight contraction on the supply side as older vessels may have to reduce their maximum sailing speed. However, high bunker prices have already resulted in a moderate reduction in average sailing speeds, therefore reducing the chance for any dramatic effects from new regulations in January 2023.

NEWBUILDING PRICES: Ordering activity for bulk carriers remains low, cost inflation and high demand from other shipping segments has reduced the available shipbuilding capacity for bulk carriers for the next 2-3 years. A Japanese Ultramax newbuilding would today cost in the region of USD 37m with delivery in 2025.

SECONDHAND VESSEL VALUES: The value of a 5-year old Japanese-built Ultramax today is in the region of USD 30m. With current earnings, it remains clearly in favour of buying existing vessels ratherthan contracting newbuildings.

Market Update - Short Term Headwinds

Current freight market - Spot and FFA

RATES – The Baltic Supramax Index (BSI-58) averaged 19 700 per day – down from 28 900 in Q2. The Baltic Exchange Supramax spot index is currently about USD 13 600. Freight Forward Agreements (FFA) currently indicate a market average of about USD 13 300 for the remaining part of the year, with Ultramax bulk carriers earning an additional premium.

DEMAND – According to Fearnleys, total Supramax shipment volumes ended at 250 million tons, unchanged from the previous quarter. This is, however, about 5 per cent lower compared to last year, when 264 and 255 million tons were shipped in Q2 and Q3 2021, respectively.

Port congestion has reversed from earlier this year and is now close to pre-Covid normalised levels. This increase in sailing efficiency has affected rates negatively in the quarter markedly.

China has continued to fight the pandemic with severe lockdowns in major cities. The war in Ukraine exposed energy and commodity shortages which has accelerated inflation. Usual volumes of wheat, corn, fertilizers and steel products have been prevented from moving out of the Black Sea or Northwestern Russian ports. In sum, fears of demand destruction from high commodity prices and rising interest rates have subdued near term GDP forecasts.

FOOD, ENERGY AND INFRASTRUCTURE – Seaborne iron ore is predominantly driven by Chinese demand for steel production, whereas minor bulks tend to correlate closer with wider GDP growth. Rising inflation and recession fears has lowered GDP growth estimates, still positive for 2023. China economic stimulus expected to continue which tends to support infrastructure and dry bulk demand.

Significant de-risk: Highly Profitable Contract Coverage

Cash breakeven for remaining open days in 2023 is below zero

Payout since Dividend Policy Q2 2021

Focus on returning value to shareholders

Undervalued – Strong Downside Protection

Potential free cash flow yield next four quarters

60%

Significant free cash flow and dividend capacity even in lower markets

Free cash flow is defined as: Cash flow from operations less the aggregate of i) Debt and lease payments ii) Dry docking expenses {USD/NOK 10.3, Share price NOK 15, BSI 13 551} – basis 9 Nov 22

Free cash flow yield basis Belships' current contract coverage and contribution from Lighthouse Navigation equal to average last 12 quarters

Belships ASA – A Safe Harbour in High Seas

Modern Ultramax Fleet

31x vessels with an average age of 3.6 years

Fully Financed

Fixed interest rates on 75% of debt

Market Uncertainty

Short term headwinds vs lowest orderbook in 30 years

Solid Contract Coverage

Dividend capacity secured for 2023

Value

Discount to NAV and outsized dividend yield

Important Information

This presentation has been prepared by Belships ASA (the "Company") exclusively for information purposes. This presentation is confidential and may not be copied, distributed, reproduced, published or passed on, directly or indirectly, in whole or in part, or disclosed by any recipient, to any other person (whether within or outside such person's organisation or firm) or published in whole or in part, by any medium or in any form for any purpose or under any circumstances.

The information in this presentation speaks as of 9 November 2022 and the Company assumes no obligation to amend, correct or update the information in this presentation. None of the Company or any of their respective directors, officers, employees, agents, affiliates, advisors or any person acting on their behalf, shall have any liability whatsoever, (whether direct or indirect, in contract, tort or otherwise) for any loss whatsoever arising from any use of this presentation, or otherwise arising in connection with this presentation.

The contents of this presentation shall not be construed as legal, business or tax advice, and the furnishing of this presentation should not be considered as the giving of investment advice by the Company or any of its directors, officers, agents, employees or advisers. Prospective investors should consult its own legal, business or tax advisor as to legal, business or tax advice.

This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forwardlooking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or subsidiaries or any such person's directors, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments.

This presentation has been prepared for information purposes only, and does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for any securities in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter into, any investment activity.

This presentation is subject to Norwegian law and any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo district court as legal venue.

Consolidated Statement of Income and Financial Position

	Q3	Q3	YTD Q3	YTD Q3
USD 1 000	2022	2021	2022	2021	2021
Gross freight revenue Note	210 459	238 169	720 177	511 150	808 237
Voyage expenses	-59 381	-34 306	-151 895	-93 666	-164 929
Net freight revenue 2	151 078	203 863	568 282	417 484	643 308
Management fees	726	1 397	7 027	4 569	7 366
Operating income 2	151 804	205 260	575 309	422 053	650 674
Share of result from j/v and assoc. comp.	6 327	3 598	25 214	6 081	14 323
T/C hire expenses	-84 036	-125 262	-369 256	-260 187	-400 710
Ship operating expenses	-12 785	-14 675	-39 845	-35 040	-50 457
Operating expenses management companies	-3 677	-10 689	-20 080	-21 605	-30 756
General and administrative expenses	-1 218	-1 090	-5 469	-3 463	-4 795
Operating expenses	-95 389	-148 118	-409 436	-314 214	-472 395
EBITDA	56 415	57 142	165 873	107 839	178 279
Depreciation and amortisation 3	-10 814	-6 780	-28 149	-20 633	-28 735
Gain on sale of ships 3	9 966	0	22 274	0	15 333
Other gains/(-losses)	-1 695	0	2 874	-6 739	-4 048
Operating result (EBIT)	53 872	50 362	162 872	80 467	160 829
Interest income	303	224	403	655	815
Interest expenses	-7 297	-4 000	-18 013	-10 841	-15 881
Other financial items	553	-950	-4 893	-1 294	-2 308
Currency gains/(-losses)	2 626	-798	2 675	-946	-1 325
Net financial items	-3 815	-5 524	-19 828	-12 426	-18 699
Result before taxes	50 057	44 838	143 044	68 041	142 130
Taxes	-291	-9 619	-2 184	6 173	-8 708
Net result	49 766	35 219	140 860	74 214	133 422
Hereof majority interests	46 674	25 024	120 427	55 503	103 983
Hereof non-controlling interests	3 092	10 195	20 433	18 711	29 439
Earnings per share	0.20	0.14	0.56	0.29	0.54
Diluted earnings per share	0.19	0.14	0.55	0.30	0.53

Consolidated statement of income Consolidated statement of financial position

		30 Sep	30 Sep	31 Dec
USD 1 000		2022	2021	2021
NON-CURRENT ASSETS	Note
Intangible assets		0	11 178	0
Ships	3	724 314	511 766	580 628
Prepayment of ships		13 500	0	0
Property, Plant, and Equipment		3 806	4 375	4 227
Investments in j/v and assoc. companies		25 057	5 779	13 997
Other non-current assets		104	2 373	821
Total non-current assets		766 781	535 471	599 673
CURRENT ASSETS
Assets held for sale		0	21 349	23 933
Bunker inventory		15 288	14 963	16 492
Current receivables		75 893	64 031	52 332
Cash and cash equivalents		116 302	106 461	105 204
Total current assets		207 483	206 804	197 961
Total assets		974 264	742 275	797 634
EQUITY AND LIABILITIES
Equity
Paid-in capital		157 839	158 678	158 802
Retained earnings		91 739	49 773	82 739
Non-controlling interests		32 371	23 131	31 378
Total equity		281 949	231 582	272 919
NON-CURRENT LIABILITIES
Long-term interest bearing debt	4	516 613	386 354	412 881
Other non-current liabilities		1 633	2 189	1 757
Total non-current liabilities		518 246	388 543	414 638
CURRENT LIABILITIES
Current portion of interest bearing debt	4	69 133	30 243	24 467
Other current liabilities		104 936	91 907	85 610
Total current liabilities		174 069	122 150	110 077
Total equity and liabilities		974 264	742 275	797 634

Uniform and Modern Fleet of 31 Bulk Carriers

Vessel	Built	DWT	Yard	Vessel	Built	DWT	Yard
Newbuild TBN BELMONDO	2023	64 000	Imabari	BELNIPPON	2018	63 000	Imabari
BELYAMATO	2022	64 000	Imabari	BELAFONTE	2017	63 000	Imabari
BELTOKYO	2021	64 000	Imabari	BELHAVEN	2017	63 000	Imabari
BELFORCE	2021	61 000	Dacks	BELTIGER	2017	63 000	New Times
BELKNIGHT	2021	61 000	Dacks	BELISLAND	2016	61 000	Imabari
BELTRADER	2021	61 000	Dacks	BELINDA	2016	63 000	Hantong
BELGUARDIAN	2021	61 000	Dacks	BELMONT	2016	63 000	Hantong
BELMAR	2021	64 000	Imabari	BELATLANTIC	2016	63 000	Hantong
BELFAST	2021	64 000	Imabari	BELLIGHT	2016	63 000	New Times
BELAJA	2020	61 000	Shin Kurushima	BELFRIEND	2016	58 000	Tsuneishi
BELMOIRA	2020	61 000	Shin Kurushima	BELTIDE	2016	58 000	Tsuneishi
BELFUJI	2020	63 000	Imabari	BELVEDERE	2015	66 000	Mitsui
BELGRACE	2020	63 000	Imabari	BELFOREST	2015	61 000	Imabari
BELTANGO	2020	64 000	Mitsui	BELHAWK	2015	61 000	Imabari
BELFORTE	2019	64 000	Mitsui	BELSOUTH	2015	63 000	Hantong
BELRAY	2019	61 000	Shin Kurushima