Belships ASA : Report 4th quarter 2015


· Operating income of USD 5.9 m (Q3: USD 5.5 m)
· EBITDA of USD 2.2 m (USD 2.7 m)
· Net result of USD -20.0 m (USD -4.2 m)
· Impairment of the fleet included with USD -19.9 m (USD -4.5 m)
· All vessels operating normally – modern fleet – average age 4.3 years
· Contract coverage 100% for delivered vessels – USD 78 million fixed charter backlog
· Belforest delivered 25 September and employed to Cargill for a period of 10-14 months


Fourth quarter 2015 results

Belships operating income in 4th quarter 2015 was USD 5,900,000 (Q3 2015: USD 5,477,000), while EBITDA amounted to USD 2,213,000 (USD 2,713,000). The Group’s operating result amounted to USD -19,101,000 (USD -2,882,000), while total comprehensive income for 4th quarter 2015 was USD -20,017,000 (USD -4,163,000). Comprehensive income for 2015 was USD -30,173,000 (2014: USD -1,700,000). The increased loss is mainly explained by impairment of the fleet.

Impairment tests of the company’s assets were performed in accordance with IAS 36. The ships, newbuildings and charterparties are valued based on observable market values. Based on these valuations and assumptions, book value of the fleet has been reduced by USD 19.9 million in the 4th quarter, in addition to ordinary depreciation of USD 1.4 million.


Fleet status

M/S Belstar, M/S Belnor and M/S Belocean have continued the long-term contracts to Canpotex of Canada. 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. Net time charter rate is USD 16,000 per day, which is a favorable rate in the present market. The newbuilding, M/S Belforest, was delivered to Cargill ex yard in September for a 10-14 month period at charter rate of around USD 8,000 per day.

The ships have sailed without significant off-hire, and operating expenses for 4th quarter 2015 are close to budget. Technical management is handled by Belships Management (Singapore), with a total fleet of 20 ships under technical management.


Newbuilding program

Belships’ remaining newbuilding program with Imabari Shipbuilding in Japan includes one 61.000 dwt eco-design Ultramax bulk carrier for delivery in March 2016. In addition Belships has signed a long-term lease agreement incl. purchase option for a slightly larger sister vessel with delivery 1st quarter 2017.  


Financial and corporate matters

As per 31 December the Group’s cash totaled USD 8.0 million compared to USD 9.8 million as per 30 September 2015.

The mortgage debt balance as per 31 December was USD 41.3 million and was reduced by USD 1.25 million during the quarter. Remaining newbuilding commitment amounts to USD 16.8 million and was reduced by USD 2.8 mill. 1 February 2016. Belships has a loan facility covering 70% of the lower of contract price and market value at the time of delivery. Net lease obligation as at 31 December was USD 22.5 mill. In addition Belships has a long-term loan facility of SGD 2 million, secured by the lease agreement for our Singapore office.

The ship values dropped significantly towards the end of the year. In order to avoid breach of loan covenants, Belships received a waiver from ship mortgage lender in December 2015. Main revised terms in the waiver period until 1 January 2017 are as follows: Minimum cash USD 4 million, minimum value 90% and on-demand guarantee from main shareholder of USD 5 million.

In August 2011 Belships entered into an interest rate swap agreement with 2 years forward start at 2.2% with a remaining duration of 3 years covering USD 15 million, reducing by USD 5 million per year. Another interest swap agreement with forward start was entered into in June 2015 at a rate of 1.9% and with a duration of 5 years covering USD 20 million, reducing by USD 2 million per year. Hedging the Group’s interest exposure is considered on an ongoing basis. The hedging level of interest rate exposure is currently around 70%. The long-term interest rate is at a historical low level.

At the end of the 4th quarter of 2015, the book value per share amounted to NOK 6.56 (USD 0.74), while the equity ratio was 34%.


Market highlights

The Capesize-index ended the fourth quarter at USD 4,695 per day, whereas the Panamax-index ended at USD 3,692 per day. The Supramax-index ended the quarter at USD 4,703 per day. As per today the Cape index stands at USD 2,776 per day, Panamax-index at USD 2,417 per day and Supramax-index at USD 2,580 per day.

The dry bulk market has continued the downward trend as a result of China’s reduced demand for imported dry cargoes (in particular coal) and the oversupply of tonnage. This has pushed down the market values and freight rates for all sizes. 

International iron ore prices are still very low, and the possible effect for shipping is that China will be forced to shut down loss-making inland production and import more of its iron ore, helping to absorb some of the tonnage overcapacity. This will be of vital importance for the Capesize segment going forward. The smaller sized vessels could benefit from a growing Chinese exports of steel products and imports of minor bulks like bauxite, fertilizer, soya beans and grains.



Belships is concentrating 100% on the dry bulk market, with 3 x 58,000 dwt Supramax plus 1 x 61,000 dwt Ultramax in service and 1 x Ultramax newbuilding under construction by Imabari Shipbuilding in Japan for delivery around 15 March 2016. In addition we will take delivery of a 63,000 dwt Ultramax from Imabari Shipbuilding in Q1 2017 for long term lease incl. purchase option.



New vessel ordering is now down to almost zero and the high scrapping activity continues. Scrapping, cancellations and conversions together with very little new ordering are helping to mitigate the net supply growth, which for 2016 is expected to be about 1.5% according to Fearnresearch. They expect the scrapping to increase from 32.6 m dwt in 2015 to around 38 m dwt in 2016, and a growing number of non-deliveries may further dampen the fleet growth.

Belships vessels are chartered out on fixed rates to reputable counterparts, representing a future nominal gross hire of USD 78 million. M/S Belisland with delivery in March, will be swapped with M/S Belocean for the remaining 5 year period of the c/p with Canpotex, adding USD 1,300/day to net t/c hire. M/S Belocean will then be seeking new employment, and we are now marketing the vessel for a 12 month period. 

Focus will be to further develop Belships as an owner/operator of modern bulk carriers to reputable counterparts. Our ambition is to build a portfolio of quality vessels and robust charter parties that will generate distributable cash flows.

Oslo, 11 February 2016


This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.