Ships and other fixed assets
excl. dry dock
costs dry dock
excl. dry dock
costs dry dock
|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 fixed 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|
|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|
|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 financing 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 financed by mortgage debt. The transaction is considered as a financial lease. The ship was at time of delivery chartered to Cargill for 10-14 months.
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 fixed 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.
The table below shows sensitivity in the impairment tests.
|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 offset 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 effect. If the general charter rate decrease more than expected, this will have a negative impact and additional impairment based on underlying broker values.
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 financial 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 office 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.