Belships ASA : Rapport 1. kvartal 2014

Belships operating income in 1st quarter 2014 was USD 6,079,000 (Q1 2013: USD 6,331,000), while EBITDA amounted to USD 2,121,000 (USD 2,189,000). The decrease in operating income is mainly related to M/T Belaia, which was redelivered in the beginning of March 2014. The company’s operating profit amounted to USD 1,124,000 (USD 1,128,000), while total comprehensive income for 1st quarter 2014 was USD 295,000 (USD 494,000). 
The accounts for 1st quarter of 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting and are consistent with the principles applied in the annual accounts for 2013 and relevant changes to IFRS effective from 1 January 2014. The interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU.
In January Capesize spot rates fell to USD 8,500 per day, then went up to USD 25,500 per day in March before ending the quarter around USD 19,500 per day. Spot rates have subsequently fallen to below USD 10,000 per day.  Supramax spot rates ended the quarter at USD 11,400 per day, but are now around USD 9,500 per day. The valuation of a 5 year old Supramax is now USD 26.5 million according to the Baltic Exchange S&P assessment. 
M/S Belnor, M/S Belstar and M/S Belocean have continued the long term charter parties to Canpotex of Canada. Canpotex is one of the world’s biggest exporters of potash, a fertilizer product imported in large volumes by countries such as China, India and Brazil. Net T/C-rate is USD 16,000 per day, which is a favourable rate in the present market. 
All ships have sailed without significant off-hire, and operating expenses for 1st quarter 2014 are close to budget. Technical management of our owned ships is handled by Belships Management (Singapore), which has technical management of 20 ships in total. 
In June 2013 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 4th quarter 2015 and 2nd quarter 2016. One of the newbuildings will at the time of delivery be swapped with either M/S Belnor or M/S Belocean for the balance period of charter party with Canpotex. The new charter hire will be USD 17,300 per day net. 
Furthermore, Belships ASA has entered into a long term lease agreement incl. purchase option for a third Supramax n/b from Imabari Shipbuilding for delivery 1st quarter 2017. 
31 March the Groups’ cash totaled USD 16.7 million compared to USD 14.3 million as of 31 December 2013. 
The Board has proposed a dividend of NOK 0.05 per share for 2013.
In 1st quarter the three bulk carriers already in service were refinanced with a new term loan facility of USD 50 million for a period of six years. Both the margin and other conditions are improved compared to the previous facility. 
The refinancing also improved the liquidity position by USD 1.5 million. Received offers for funding of the newbuilding program has not been accepted, due to expectation of favorable offers closer to time of delivery.
Belships plans to use surplus liquidity for payment of newbuilding commitments due in June and September amounting to USD 5.5 million and USD 2.8 million respectively. 
Impairment tests for the company’s assets were performed in accordance with IAS 36. The ships and charter parties are valued based on observable market values. Based on these valuations and assumptions, no adjustment has been made in the 1st quarter.
At the end of the 1st quarter of 2014, the book value per share amounted to NOK 8.60, while the equity ratio was 55.4%. 
Belships ASA is concentrating 100% on the dry bulk market. In accordance with this strategy M/T Belaia has been redelivered to its owners. As part of this agreement, the redelivered ship will be replaced by an eco-design Supramax n/b from Imabari for delivery 1st quarter 2017 for long term lease incl. purchase options. The lease period will be for 8 years with 3 yearly options to extend. Purchase option can be declared from end of  4th year at JPY 2.91 billion, with a yearly reduction of JPY 110 million. Through this lease agreement Belships ASA will have three identical Supramax sister ships with eco-design from Imabari for delivery from 4th quarter 2015 until 1st quarter 2017. 
Newbuilding prices for bulk carriers have increased both in Japan and China, and earliest delivery in Japan is now end of 2017 or early 2018. New Supramax contracts from Japan are now priced around USD 32-33 mill. 
The total seaborne dry bulk trade is expected to increase by 5-6% p.a. in 2014-15, whereas the fleet adjusted for demolition is expected to grow around 4-5 % p.a. in the same period after many years of double digit growth. The dry bulk fleet capacity utilization will therefore improve, and a gradual rate increase may be expected. 
Belships’ vessels are chartered out long term on a fixed rate to a reputable counterpart, and short term market fluctuations will therefore not affect with the company’s cash flow. The charter parties represent a future nominal gross hire of USD 110 million. 
Focus will be to further develop Belships ASA as an owner/operator of modern bulk carriers to reputable counterparts. Our ambition is to build a portfolio of ships and charter parties that will generate distributable cash flows.
Oslo, 8 May 2014

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