Belships ASA : Report Q4 2018

HIGHLIGHTS 
· Operating income of USD 36.8 m (Q4 2017: USD 42.3 m)
· EBITDA of USD 5.8 m (USD 8.6 m) 
· Net result of USD 14.2 m (USD 16.0 m)
· All ships operating normally - modern fleet - average age 5 years
· USD 30 million fixed charter backlog
· Efficient utilization of ships trading in the spot market
· The merger with Lighthouse effective from 10 December
 
 
The merger between Belships and the Lighthouse companies was completed at 10 December 2018. This merger constitutes a reverse acquisition under IFRS. Comparative figures for 2017 and figures up until 10  December 2018 reflect information from the Lighthouse group only. From 10 December 2018 legacy Belships is incorporated at fair value. Since legacy Belships is the legal acquirer, financial statements are prepared based on legacy Belships accounting principles. Based on above comparative financial information referred to relates to historical financial information from Lighthouse Group. EPS is calculated based on actual outstanding shares in Belships ASA. 
 
4th quarter 2018 results
Belships operating income in 4th quarter 2018 was USD 36.8 million (Q4 2017: USD 42.3 million), while EBITDA amounted to USD 5.8 million (USD 8.6 million). The Group's operating result amounted to USD 16.0 million (USD 17.0 million), while net result for 4th quarter 2018 was USD 14.2 million (USD 16.0 million). The figures for 4th quarter 2018 includes purchase bargain gain of USD 12.8 million, while 4th quarter 2017 includes impairment reversal of USD 9.5 mill.
 
Fleet status
Belships concentrates on the dry bulk market, with 15 modern Supramax/Ultramax in service. 
M/S Belstar, M/S Belnor and M/S Belisland 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. M/S Belforest, M/S Belocean and M/S Belnippon are all on time charter to Cargill, an A-rated world leader within agricultural services. Next open position will be M/S Belnippon in March. The remaining 9 ships are operated in the spot market by Belships' subsidiary Lighthouse Navigation in Bangkok. Lighthouse Navigation had on average 18 vessels on charter during 2018.
 
All ships have sailed without significant off-hire. The technical management for the Lighthouse ships is still in the process of being transferred to Belships Management (Singapore). Currently 3 ships are transferred and the remaining 6 ships will soon follow.  When this transfer is competed, technical management for all ships is handled by Belships Management (Singapore).
 
Newbuilding program
Belships' remaining newbuilding program with Imabari Shipbuilding in Japan consists of one 63 000 dwt eco-design Ultramax bulk carrier on a long-term T/C-in agreement incl. purchase option for delivery within first half 2020. 
 
Financial and corporate matters
As per 31 December the Group's cash totaled USD 32.0 million. The mortgage debt as per 31 December was USD 107.0 million, while net lease obligation was USD 40.8 million. In addition Belships has a long-term loan facility of SGD 2 million, secured by the lease agreement for our Singapore office. As at 31 December all loan covenants are met.
 
Hedging the Group's interest exposure on bank loan is considered on an ongoing basis. The hedging level of interest rate exposure is currently around 40%. 
 
At the end of the 4thd quarter of 2018, the book value per share amounted to NOK 6.16 (USD 0.71), while the equity ratio was 42.1 %. 
 
Market highlights
The Capesize-index ended the 4th quarter at USD 14 797 per day, whereas the Kamsarmax-index ended at USD 12 002 per day. The Supramax-index ended the quarter at USD 11 030 per day. 
 
During January the Baltic Dry Index has fallen severely, and as per today the Cape index stands at USD 5 873 per day, Kamsarmax-index at USD 6 834 per day and Supramax-index at USD 7 933 per day. Baltic S&P Assessment's valuation of a 5-year old Supramax is currently USD 18.5 million.  
 
Outlook
The dry bulk market has been severely hit by the US-China trade tension, in conjunction with a string of additional negative factors like cyclone season in Australia, swine flu outbreak in China and most recently, the deadly dam collapse at a Vale mine in Brazil. The normal slowdown before Chinese New Year in February has put additional pressure on activity and freight rates. 
 
5 of Belships' ships are on long-term charter, and the remaining 10 ships are all operated in the spot market. The market for Supramax/Ultramax has seen a rapid improvement after Chinese New Year and we expect this to continue, especially when the US-China trade tension eventually comes to an end.
 
Belships' charter coverage represents a future nominal gross hire of around USD 30 million. 
  
Focus remains to continue developing Belships as an owner and operator of modern bulk carriers to reputable counterparts, building a portfolio of quality ships and robust charter parties that will generate distributable cash flows. The Company now controls a fleet of 16 dry bulk carriers and aim to enhance its earnings potential with a combination of charter backlog and spot exposure. Complementing management activities create a complete in-house operational structure, ideally positioning Belships as a platform for further growth. The company will concentrate on the dry bulk market and expect to benefit from a fully in-house commercial and technical management. 
 
 
27 February 2019
 
THE BOARD OF BELSHIPS ASA
 
 
 
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.


Report Q4 2018