Belships

Quarterly Report • Feb 14, 2014

4TH QUARTER 2013

RESULTS

Belships revenue in 4th quarter of 2013 was USD 6,680,000 (Q4 2012 : USD 6,663,000), while EBITDA amounted to USD 2,344,000 (USD 2,110,000). The company's operating profit amounted to USD 1,315,000 (USD 46,000), while total comprehensive income for 4th quarter of 2013 was USD 693,000 (USD -715,000). Total comprehensive income for 2013 was USD -157,000 (USD -1,689,000).

The Board proposes a dividend of NOK 0.05 per share for 2013. Accounts for 4th quarter of 2013 have been prepared in accordance with IAS 34 Interim Financial Reporting and are consistent with the principles applied in the annual accounts for 2012, taking into account the amendment to IAS 19 effective from 1st January 2013. The interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU.

MARKET

Capesize market improved during 4th quarter and ended the year at USD 39,000 per day. Spot market has thereafter softened and is now around USD 8,000 per day. Panamax and Supramax indices ended 4th quarter at USD 15,500-16,000 per day, but have subsequently fallen to around USD 10,000 per day. The index for the total bulk market is approximately 1,100 points. Baltic Exchange value of 5 years old Supramax and Panamax is USD 24.7 million and USD 25.5 million respectively. Ship values have risen steadily over the past 12 months.

BUSINESS

M/S Belnor, M/S Belstar and M/S Belocean sails on their longterm charters with Canpotex in Canada. Canpotex is among the world's largest exporter of potash, a fertilizer product that is imported in large quantities by countries like China, India and Brazil. Net T/C rate is USD 16,000 per day, which is a good rate in today's market.

All ships have sailed without significant off-hire, and operating costs for 2013 are close to budget. Technical management of owned tonnage is handled by Belships Management (Singapore), which has full technical management of a total of 20 ships.

In June Belships signed a contract with Imabari Shipbuilding in Japan for the construction of 2 x 61,000 dwt eco-design Supramax bulk carriers for delivery the second half of 2015 and first half of 2016 at a price of USD 28.25 million each. One of the newbuildings will be swapped for the remaining charter period for either M/S Belnor or M/S Belocean at a net rate of USD 17,300 per day.

M/T Belaia will at the end of this month be returned to the owners, which is closely related to Imabari Shipbuilding. In return, the ship will be replaced with an eco-design Supramax newbuilding from Imabari with delivery Q1 2017 for long-term lease with purchase options. The terms of the new lease will be closely related to the terms of the lease for M/T Belaia, except that the lease term is for eight years with three annual renewal options. Purchase option may be exercised at the end of year 4 at JPY 2.91 billion, with an annual decrease of JPY 110 million. With this lease Belships ASA will get three identical Supramax bulk carriers with eco-design from Imabari Shipbuilding for delivery from 4th quarter of 2015 to 1st quarter of 2017.

FINANCIAL AND OTHER MATTERS

At 31 December, the Group's cash totaled USD 14.3 million compared to USD 13.3 million at 30 September 2013. The company's debt was USD 47.9 million per 30 September and is reduced by USD 1.3 million during Q4.

After yearend Belships has entered into a new term loan facility of USD 50 million for its three bulk carriers already in service. The new loan agreement is secured for a period of 6 years from February 2014 and both margin and other conditions will be an encouraging improvement compared to the terms of the existing financing. The Company has also received offers for funding of its newbuilding program, but has not yet accepted any offers.

Impairment tests for the company's assets are performed in accordance with IAS 36. The vessels and charter parties are valued based on observable market values. Based on these internal valuations, no adjustment has been made in the 4th quarter.

At the end of the 4th quarter of 2013, book value per share amounted to NOK 8.70, while the equity ratio was 56.1%.

OUTLOOK

Going forward Belships ASA will concentrate 100% on the dry bulk market .

Newbuilding prices for bulk carriers have tightened up both in Japan and China, and the earliest delivery in Japan is now 1st half of 2017. Supramax contracts from Japan is today priced at USD 32-33 million. The total seaborne trade of bulk commodities are expected to rise by 5.6 % p.a. in 2014-15, while growth in bulk fleet adjusted for scrapping is estimated to be around 3-4% p.a., after many years of double-digit fleet growth. The capacity utilization will consequently improve, and a tightening of rates can be expected.

Belships' vessels are sailing on long-term charter parties to a reputable counterpart, and short-term market fluctuations will not affect the company's earnings and cash flow. Existing charter parties represent future nominal revenues of USD 115 million.

The focus going forward will be to further develop Belships ASA as a long term tonnage provider of modern bulk carriers to reputable charterers. We aim to build up a portfolio of ships and charters that will provide a steady return while minimizing the residual risk exposure through a duration spread.

Oslo, 13th February 2014 The Board of BELSHIPS ASA

		UNREVISED	UNREVISED	UNREVISED	REVISED
		2013	2012	2013	2012
USD 1 000	Note	Oct – Dec	Oct – Dec	Jan – Dec	Jan – Dec
Freight income		5 555	5 545	22 094	22 032
Other operating income		1 125	1 118	3 879	3 863
Total operating income	1	6 680	6 663	25 973	25 895
Timecharterhire		-1 164	-1 177	-4 660	-4 380
Operating expenses ships		-1 234	-1 449	-5 059	-5 337
General administrative expenses		-1 938	-1 927	-6 920	-4 633
Depreciation on fixed assets		-1 029	-1 110	-4 251	-4 683
Write-down on fixed assets	2	0	-954	-2 700	-4 954
Total operating expenses		-5 365	-6 617	-23 590	-23 987
Operating profit		1 315	46	2 383	1 908
Interest income		63	31	142	103
Interest expenses		-586	-552	-2 040	-2 444
Currency exchange gain/(-loss)		-132	77	208	-198
Other financial items		68	-238	-681	-872
Net financial items		-587	-682	-2 371	-3 411
Result before taxes		728	-636	12	-1 503
Tax expense		-32	-79	-166	-186
Net result for the period		696	-715	-154	-1 689
Hereof non-controlling interests		24	31	60	46
Hereof majority interests		672	-746	-214	-1 735
Comprehensive income
Remeasurements loss		-3	0	-3	0
Total comprehensive income		693	-715	-157	-1 689
Hereof non-controlling interests		24	31	60	46
Hereof majority interests		669	-746	-217	-1 735
Earnings per share (USD)		0.01	-0.03	0.00	-0.07
Diluted earnings per share (USD)		0.01	-0.03	0.00	-0.07

Consolidated Statement of Comprehensive Income

Balance sheet

		UNREVISED	RESTATED
		2013	2012
USD 1 000	Note	31 Dec	31 Dec
ASSETS
Fixed assets
Ships	2	95 424	102 153
Newbuilding contracts	3	5 650	0
Other fixed assets		3 088	3 332
Total fixed assets		104 162	105 485
Current assets
Trade debtors		12	53
Other receivables		968	1 302
Bank deposits		14 282	10 204
Total current assets		15 262	11 559
Total assets		119 424	117 044
EQUITY AND LIABILITIES
Equity
Paid-in capital		43 305	29 001
Retained earnings		23 252	23 469
Non-controlling interests		401	319
Total equity		66 958	52 789
Long-term liabilities
Mortgage debt	4	42 460	47 308
Other long-term liabilities		816	1 075
Pension obligations	5	1 644	2 176
Total long-term liabilities		44 920	50 559
Short-term liabilities
Current portion of mortgage debt		5 138	5 138
Bond issue		0	5 987
Trade creditors		562	538
Other short-term liabilities		1 846	2 033
Total short-term liabilities		7 546	13 696
Total equity and liabilities		119 424	117 044

Cash flow statements

	UNREVISED	REVISED
	2013	2012
USD 1000	Jan – Dec	Jan – Dec
Funds generated from operations
Operating profit	2 383	1 908
Depreciations on fixed assets	4 251	4 683
Write-down on fixed assets	2 700	4 954
Share-based payment transaction expense	12	8
Diff. between pension exp. and paid pension premium	-197	-46
Recognition of pension obligations	0	-2 500
Change in trade debitors and trade creditors	65	-60
Change in other short-term items	-320	-145
Tax payable	-75	-299
Net cash flow from operations	8 819	8 503
Funds generated from investing activities
Prepayment newbuilding contracts	-5 650	0
Change in other investments	-221	-168
Net cash flow from investments	-5 871	-168
Funds flow from financing activities
Repayment of long-term debt	-10 609	-9 446
Share issue	14 292	0
Interest paid	-2 040	-2 006
Purchase of stakes in Belships bond issue	0	-1 112
Financial expenses paid	-513	-313
Net cash flow from financing	1 130	-12 877
Net change in cash and cash equivalents during the period	4 078	-4 542
Cash and cash equivalents at start of period	10 204	14 746
Cash and cash equivalents at end of period	14 282	10 204

Statement of change in equity

		Majority interest
			Paid-in		Retained
USD 1000			Share	Other		Non
	Share	Treasury	premium	paid-in	Other	controll.	Total
31 December 2013 (UNREVISED)	capital	shares	reserves	equity	equity	interests	equity
Equity as at 31 December 2012	6 722	-166	7 009	15 436	23 469	319	52 789
Share issue	7 550	0	6 742	0	0	0	14 292
Net result for the period	0	0	0	0	-214	60	-154
Comprehensive income	0	0	0	0	-3	0	-3
Share-based payment transact. exp.	0	0	0	12	0	0	12
Items related to non-controll. interests	0	0	0	0	0	22	22
Equity as at 31 December 2013	14 272	-166	13 751	15 448	23 252	401	66 958
31 December 2012 (RESTATED)
Equity as at 31 December 2011	6 722	-166	7 009	15 428	24 986	454	54 433
Amn.IAS19 relating to est. deviat.*	0	0	0	0	218	0	218
Equity as at 1 January 2012	6 722	-166	7 009	15 428	25 204	454	54 651
Net result for the period	0	0	0	0	-1 735	46	-1 689
Share-based payment transact. exp.	0	0	0	8	0	0	8
Non-controlling interests	0	0	0	0	0	-181	-181
Equity as at 31 December 2012	6 722	-166	7 009	15 436	23 469	319	52 789

*) Reference to note 5

Key financial figures

		2013	2012
		31 Dec	31 Dec
EBITDA	USD 1000	9 334	8 975
Interest coverage ratio		1.01	0.43
Current ratio	%	202.25	84.40
Equity ratio	%	56.07	44.92
Earnings per share (weighted number of shares in 2013)	USD	0.00	-0.07
Earnings per share (weighted number of shares in 2013)	NOK	-0.03	-0.38
Number of shares (excl. treasury shares)		46 804 000	24 304 000
Weighted number of shares (excl. treasury shares)		33 679 000	24 304 000

Notes to the accounts

The amounts are not revised.

Note 1 Segment information

Period 1 January – 31 December, 2013

	Dry	Product	Ship		Group
USD 1 000	cargo	tank	mgmt.	Admin.	transact.	TOTAL
Net freight income	17 189	4 541	0	0	364	22 094
Other operating income	0	0	4 001	710	-832	3 879
Total operating income	17 189	4 541	4 001	710	-468	25 973
Timecharterhire	0	-4 660	0	0	0	-4 660
Operating expenses ships	-5 484	0	0	0	425	-5 059
General administrative expenses	-51	-56	-3 706	-3 150	43	-6 920
Depreciations on fixed assets	-4 086	0	-57	-108	0	-4 251
Impairment of ships	-2 700	0	0	0	0	-2 700
Total operating expenses	-12 321	-4 716	-3 763	-3 258	468	-23 590
Operating profit	4 868	-175	238	-2 548	0	2 383
Interest income	2	0	26	114	0	142
Interest expenses	-1 845	0	0	-195	0	-2 040
Currency exchange gain/(-loss)	-3	0	51	160	0	208
Other financial items	-113	-4	-85	-479	0	-681
Net financial items	-1 959	-4	-8	-400	0	-2 371
Result before taxes	2 909	-179	230	-2 948	0	12
Taxes	0	0	-166	0	0	-166
Net result of the period	2 909	-179	64	-2 948	0	-154
Operating income as at 31 Dec 2012	17 304	4 362	3 912	317	0	25 895
Operating income as at 31 Dec 2013	17 189	4 541	4 001	710	-468	25 973
Operating profit as at 31 Dec 2012	2 025	-77	236	-276	0	1 908
Operating profit as at 31 Dec 2013	4 868	-175	238	-2 548	0	2 383

Note 1 Segment information, continued

1 Jan – 31 Mar, 2013							1 Jan – 31 Mar, 2012
USD 1 000	Dry cargo	Product tank	Ship manag.	Admin./ Elimin.	Total	Dry cargo	Product tank	Ship manag.	Admin./ Elimin.	Total
Net freight income	4 137	1 118	0	89	5 344	4 324	985	0	92	5 401
Other operating income	0	0	1 013	-26	987	0	0	892	9	901
Total operating income	4 137	1 118	1 013	63	6 331	4 324	985	892	101	6 302
Timecharterhire	0	-1 143	0	0	-1 143	0	-928	0	0	-928
Operating expenses ships	-1 429	0	0	106	-1 323	-1 194	0	0	108	-1 086
General administrative exps.	-6	-11	-825	-834	-1 676	-109	-24	-854	1 597	610
Depreciations fixed assets	-1 028	0	-13	-20	-1 061	-1 291	0	-16	-22	-1 329
Impairment of ships	0	0	0	0	0	-4 000	0	0	0	-4 000
Operating profit	1 674	-36	175	-685	1 128	-2 270	33	22	1 784	-431

1 Apr – 30 Jun, 2013						1 Apr – 30 Jun, 2012
	Dry	Product	Ship	Admin./		Dry	Product	Ship	Admin./
USD 1 000	cargo	tank	manag.	Elimin.	Total	cargo	tank	manag.	Elimin.	Total
Net freight income	4 328	1 130	0	90	5 548	4 327	1 077	0	88	5 492
Other operating income	0	0	879	-30	849	0	0	1 001	-13	988
Total operating income	4 328	1 130	879	60	6 397	4 327	1 077	1 001	75	6 481
Timecharterhire	0	-1 165	0	0	-1 165	0	-1 087	0	0	-1 087
Operating expenses ships	-1 300	0	0	106	-1 194	-1 551	0	0	107	-1 444
General administrative exps.	-8	-24	-788	-807	-1 627	106	-13	-858	-840	-1 605
Depreciations fixed assets	-1 037	0	-13	-19	-1 069	-1 088	0	-16	-22	-1 126
Operating profit	1 983	-59	78	-660	1 342	1 794	-23	127	-680	1 219

1 Jul – 30 Sep, 2013 1 Jul – 30 Sep, 2012

	Dry	Product	Ship	Admin./		Dry	Product	Ship	Admin./
USD 1 000	cargo	tank	manag.	Elimin.	Total	cargo	tank	manag.	Elimin.	Total
Net freight income	4 401	1 152	0	94	5 647	4 333	1 166	0	94	5 593
Other operating income	0	0	949	-31	918	0	0	902	-46	856
Total operating income	4 401	1 152	949	63	6 565	4 333	1 166	902	48	6 449
Timecharterhire	0	-1 188	0	0	-1 188	0	-1 188	0	0	-1 188
Operating expenses ships	-1 415	0	0	107	-1 308	-1 472	0	0	114	-1 358
General administrative exps.	0	-11	-941	-727	-1 679	0	-10	-884	-817	-1 711
Depreciations fixed assets	-1 037	0	-17	-38	-1 092	-1 081	0	-14	-23	-1 118
Impairment of ships	-2 700	0	0	0	-2 700	0	0	0	0	0
Operating profit	-751	-47	-9	-595	-1 402	1 780	-32	4	-678	1 074

1 Oct – 31 Dec, 2013							1 Oct – 31 Dec, 2012
	Dry	Product	Ship	Admin./		Dry	Product	Ship	Admin./
USD 1 000	cargo	tank	manag.	Elimin.	Total	cargo	tank	manag.	Elimin.	Total
Net freight income	4 323	1 141	0	91	5 555	4 320	1 133	0	92	5 545
Other operating income	0	0	1 160	-35	1 125	0	0	1 117	1	1 118
Total operating income	4 323	1 141	1 160	56	6 680	4 320	1 133	1 117	93	6 663
Timecharterhire	0	-1 164	0	0	-1 164	0	-1 177	0	0	-1 177
Operating expenses ships	-1 340	0	0	106	-1 234	-1 552	0	0	103	-1 449
General administrative exps.	-37	-10	-1 152	-739	-1 938	-33	-12	-1 017	-865	-1 927
Depreciations fixed assets	-984	0	-14	-31	-1 029	-1 060	0	-17	-33	-1 110
Impairment of ships	0	0	0	0	0	-954	0	0	0	-954
Operating profit	1 962	-33	-6	-608	1 315	721	-56	83	-702	46

Note 2 Impairment of ships

Impairment tests for the company's assets are performed in accordance with IAS 36. The vessels are valued based on observable market values, and charter parties entered into. Based on these internal valuations the ships' book value was adjusted by USD 2.7 million in the 3rd quarter, in addition to ordinary depreciation.

Note 3 Newbuilding contracts

Total newbuilding commitments amounts to USD 56.5 million of which USD 5.65 million was paid in 2 quarter of 2013. Further payments are 10% on 5 June 2014, 10% on 30 September 2014 for the first newbuilding and 30 March 2015 for newbuilding no. 2, 10% at launching and the remaining 60% upon delivery.

Note 4 Mortgage debt

Mortgage debt as at 31 December 2013 was USD 47.9 million. Arrangement fee associated with the loan is recorded as a reduction of debt in the balance sheet and amortized over the loan period in accordance with the amortized cost principle.

Note 5 Pension obligations

Remaining not amortized estimate deviations amounted to approximately USD 0.2 million both at 31 December 2011 and at 31 December 2012. In line with the amendment to IAS 19 as accounted for in the financial statements for 2012, the amount is entered directly against equity at 1 January 2013. Capitalized pension obligations are reduced by same amount. Comparative figures have been restated accordingly.

Fleet list

As at 13 February 2014

T/C-period
minimum
03/14

1 Payable gross rate to owner is 12,795 USD/day until March 2014. The ship will be redelivered to owners at expiry of current c/p to Lauritzen Tankers around March 2014.

2 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.

3 Belships has signed an agreement with Canpotex Shipping Services Ltd to replace M/S Belnor or M/S Belocean with one of the newbuildings. The rate will be adjusted to 17.300 usd/day net with effect from the date of delivery and until the expiry of the existing c/p period.

4 Delivery during 1st quarter of 2017 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 2.91 billion, with an annual decrease of JPY 110 million.

Location: Lilleakerveien 4, 0283 Oslo, Norway Post: Box 23 Lilleaker, N-0216 Oslo, Norway Phone +47 22 52 76 00 Fax +47 23 50 08 82 chartering@belships.no www.belships.com Enterprice No. NO930 776 793 MVA