Ships and other fixed assets
excl. dry dock
costs dry dock
excl. dry dock
costs dry dock
|Cost per 1 January||168 230||4 849||173 079||4 963||8 475||145 490||3 709||149 199||4 920|
|Additions||0||140||140||235||20 531||22 740||1 140||23 880||183|
|Disposals||0||0||0||-1 179||-29 006||0||0||0||-140|
|Cost per 31 Desember||168 230||4 989||173 219||4 019||0||168 230||4 849||173 079||4 963|
|Depreciations per 1 Jan.||77 905||2 165||80 070||3 565||4 250||60 381||1 088||61 469||3 565|
|Depreciation for the year||3 365||1 086||4 451||146||0||3 701||1 077||4 778||123|
|Impairment/reversal(-)||-2 544||0||-2 544||0||0||13 823||0||13 823||0|
|Disposals||0||0||0||-1 109||-4 250||0||0||0||-131|
|Deprec. as at 31 Dec.||78 726||3 251||81 977||2 602||0||77 905||2 165||80 070||3 556|
|Book value per 31 Dec.||89 504||1 738||91 242||1 417||0||90 325||2 684||93 009||1 407|
|Other fixed assets||0||0||0||415||0||0||0||0||276|
|Book value at 31 Dec.||89 504||1 738||91 242||1 832||0||90 325||2 684||93 009||1 683|
Spesification of the group’s ships
|Total fleet||168 224||-30 491||-48 230||1 739||91 242|
|ship||Built year||Ownership||Cost price||Ordinary depreciations||Accumulated impairments||Capitalised drydock exps.||Book value|
|M/S Belstar||2009||100 %||40 542||-10 512||-15 554||208||14 684|
|M/S Belnor||2010||100 %||39 891||-9 705||-13 268||65||16 983|
|M/S Belocean||2011||100 %||38 317||-7 309||-18 036||393||13 365|
|M/S Belforest||2015||BBC||26 734||-1 602||-1 372||495||24 255|
|M/S Belisland||2016||BBC||22 740||-1 363||0||578||21 955|
owned ships (supramaxes)
M/S Belstar, M/S Belnor and M/S Belocean were delivered from Yangzhou Dayang yard in China in 2009, 2010 and 2011. Belstar and Belnor are employed on 10-year time charters to Canpotex Shipping Services Ltd from time of delivery, at a net rate of USD 16 000 per day. 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.
M/S Belocean has from 2016 been fixed on time charter to Cargill International S.A of Switzerland. Net average rate in 2017 was USD 7 006 per day.
Reference is made to note 13 regarding financing of the ships.
chartered ships (ultramaxes)
M/S Belforest and M/S Belisland was delivered from Imabari Shipbuilding in Japan in 2015 and 2016. The ships are leased on bareboat for a period of 12 years with purchase options from year 3 onwards for Belforest and a period of 15 years with purchase options from year 5 onwards for Belisland. Both leases are considered as financial leases. Belforest was from time of delivery fixed on time charter to Cargill. Average rate in 2017 were USD 7 375 per day. Belisland was from delivery chartered on long-time charter contract to Canpotex Shipping Services to 2021 at a net rate of USD 17 300 per day.
All the ships have operated satisfactorily over the year. The counterparty risk with the charterers is considered to be low.
IMPAIRMENT TESTS/CALCULATION OF RECOVERABLE AMOUNT
During 2017 the dry bulk market has improved (charter rates/ship values) and it is expected that the positive market momentum will continue. The Group has over the last years recorded significant impairment on its ships. As described in note 3, with improved market conditions the net present value of ships on long-term timecharter to Canpotex decreases, while the net present value of ships on short to medium timecharter to Cargill increases, due to this the company has tested the recoverable amount on its vessels in accordance with IAS 36.
On the ships M/S Belocean and M/S Belforest the impairment test resulted in a reversal of USD 7.5 million, which is a part of prior year’s impairment charges. The reversal is based on improvements in rates in 2017 and market expectations for future market rates based on broker valuations. The ships M/S Belstar and M/S Belnor were impaired with USD 5.0 million, due to shorter remaining period on long-term timecharters. No impairment indicators exists on Belisland, the ship has not been impaired historically. The recoverable amount on the ships are shown in the table below, while the method and estimates applied in the impairment test is described in note 3.
For calculations of the net present value of the estimated fair value of the remaining 2-4 years timecharter, the Group has calculated the variance between the contractual rate and the current observable market rate for similar ships 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 LIBOR at 1.75%, and the margin was fixed at 4.25%, 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.
The table below shows sensitivity in the impairment tests of the ships.
|Change in market value of the ships (incl. c/p agreements) when:|
|WACC increase with 1%||-27||-50||0||0||0||-77|
|WACC decrease with 1%||27||52||0||0||0||79|
|Market rate increase 5% and ship values increase 2.5%||-13||-197||334||606||0||730|
|Market rate decrease 5% and ship values decrease 2.5%||-2||172||-334||-606||0||-770|
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 valuations.
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 expenses are depreciated until 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.