COMPANY PRESENTATION Q4 2019
FEBRUARY 2020 Important information
This presentation has been prepared by Belships ASA (the “Company”) exclusively for information purposes. This presentation is confidential and may not be copied, distributed, reproduced, published or passed on, directly or indirectly, in whole or in part, or disclosed by any recipient, to any other person (whether within or outside such person's organisation or firm) or published in whole or in part, by any medium or in any form for any purpose or under any circumstances.
The information in this presentation speaks as of 21 February 2020 and the Company assumes no obligation to amend, correct or update the information in this presentation. None of the Company or any of their respective directors, officers, employees, agents, affiliates, advisors or any person acting on their behalf, shall have any liability whatsoever, whether direct or indirect, in contract, tort or otherwise) for any loss whatsoever arising from any use of this presentation, or otherwise arising in connection with this presentation.
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| Disclaimer | 2 Investment highlights
Fully integrated Shareholder Founded 1918 Ability to deliver ship owning friendly strategy and stock listed accretive and operating and corporate since 1937 growth company governance
| Investment highlights | 3 Agenda
Highlights – Q4 2019 5
Company introduction 6
Market update 15
Strategy 19
| Agenda | 4 Highlights – Q4 2019
Continued spot performance and growth Key figures
• Operating income of USD 40.4 million (Q4 2018: USD 29.2m) Q4 2019 FY 2019 • EBITDA of USD 7.4m (USD 5.9m) Average TCE Average TCE • Net result of USD 2.1m (USD 1.2m, excl. purchase bargain gain) USD 11 992/day USD 11 201/day • Net TCE earnings per ship of USD 11 992 per day versus BSI index of USD 10 226 net per day BSI index USD 10 266/day net BSI index USD 9 451/day net
• 70% of total ship days in Q1 2020 have been booked at USD 9 625 net per day
• Average cash breakeven per vessel about USD 9 500 per day EBITDA EBITDA for next 12 months USD 7.4m USD 32.2m • Ship-for-shares acquisition of 2017-built 63 000 dwt Ultramax for delivery in Q2 2020
• Bareboat agreement with purchase options for 64 000 dwt Ultramax for delivery 2H 2020 Net result Net result
• BELEAST delivered to its charterer in December for the agreed USD 2.1m USD 5.1m bareboat and subsequent sale
• Agreement for bareboat charter and subsequent sale of PACIFIC LIGHT
• Modern fleet with an average age of 5 years including newbuildings
• Initiated carbon footprint fleet study
| Highlights – Q4 2019 | 5 Integrated owner and operator of geared dry bulk vessels
Three profitable business segments enhancing knowhow and earnings
Shipowning Commercial operations Technical & Crewing
24x Supra/Ultramax bulk carriers Chartering performed by our subsidiary Complete technical management Lighthouse Navigation (50.01%) Head office with industry low G&A In-house crewing platform Lighthouse engages in cargo trading, liner services and agency
| Company introduction | 6 Creating the best in-class listed dry bulk company
Fully integrated Lean & effective Proprietary deal flow Strong sponsors Corporate governance owner / operator organization and financing
Ambitious targets
1 2 3 4 5
The most attractive Cost and earnings Double the fleet Attractive share Leading total return midsize fleet leadership from the merger liquidity and trading
In progress In progress Target
| Company introduction | 7 Recent transactions
• 2020 Ultramax Bareboat - In October, Belships agreed a 7-year bareboat charter for a 61 000 dwt Ultramax bulk carrier newbuilding from Shin Kurushima, Japan. The estimated cash breakeven for the Vessel upon delivery is about USD 11 000 per day including operational expenses. The vessel was delivered in February 2020 and named BELAJA. Belships paid a sum of USD 3m prior to delivery. The agreement comes with purchase options below current market values and can be exercised after the fourth year until the end of the charter.
• 2020 Ultramax Bareboat - In December, Belships announced it had entered into agreement for a 10-year bareboat charter of a 64 000 dwt Ultramax bulk carrier newbuilding. The vessel will be delivered by Imabari Shipyard during second half of 2020. Estimated cash breakeven for the vessel upon delivery is about USD 10 750 per day including operational expenses. Belships will pay a sum of USD 3m upon signing contract, expected to occur during March 2020. The agreement comes with purchase options below current market values and can be exercised after the fourth year until the end of the charter.
• 2017 Ultramax ship-for-shares (NOK 7.15 per share) - In December, acquisition was announced for a modern secondhand Ultramax bulk carrier from Japanese Owners for a price of USD 24.5m. The 63 000 dwt vessel was built in 2017 by Imabari Shipyard. Delivery is expected during the second quarter of 2020. The payment for the vessel will be settled by issuing new shares equivalent to 50 per cent of the purchase price at a subscription price of NOK 7.15 per share, and the remaining in cash upon delivery. Utilising Accordion Tranche basis 60% financing, the transaction will have a positive cash effect of about USD 2.45 million.
• PACIFIC LIGHT bareboat and subsequent sale - Belships has entered into an agreement with Marti Shipping & Ship Management of Turkey for a bareboat charter and subsequent sale of PACIFIC LIGHT. The 50 000 dwt bulk carrier was built in 2007, and is currently the oldest ship in Belships’ fleet. Belships will realize a gain of approximately USD 2.4m upon delivery in March or April 2020. The Charterer has an obligation to purchase the vessel within 24 months and the net cash flow during the period will be approximately USD 1.8m after repayment of outstanding loans.
| Company introduction | 8 Pushing the growth agenda – net cash invested USD 2.7m
Cash effect recent transactions (USDm)
5 x bareboat charters for Ultramax 4 x ship for share 2 x oldest vessels with purchase options transactions Supramax divested (USD 12.0m) + USD 4.3m + USD 5.1m
0.0
| Company introduction | 9 Purchase options provide flexibility and reduce risk
Overview of vessel purchase options 2020 – 2031
USD USD USD USD USD USD USD USD USD USD USD USD 22.5m 19.5m 21.2m 20.0m 20.9m 20.2m 19.0m 17.9m 19.2m 17.2m 15.1m 14.3m 10
9 options 9 options 9 options 9 Average purchase option price 8 options 8
7 Option to purchase 8 x five year old 6 Ultramax vessels at an average price of USD 20.9m per vessel in 2024 5 options 5
4 options 4
Average age 3 options 3 options 3 options 3 of vessels
2 options 2 options 2
1 options 1 5.0 5.5 5.7 6.7 5.5 6.2 7.2 8.2 9.0 10.3 11.0 12.0 yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
| Company introduction | 10 Modern fleet of 24 vessels with average age of ~5 years
Ultramax vessels Supramax vessels
Vessel Built DWT Yard Ownership Vessel Built DWT Yard Ownership BELMAR (NEWBUILD) 2021 64,000 Japan BB-in1 BELOCEAN 2011 58,000 Dayang Owned BELFAST (NEWBUILD) 2020 64,000 Japan BB-in2 BELNOR 2010 58,000 Dayang Owned BELAJA (NEWBUILD) 2020 61,000 Shin Kurushima BB-in3 BELSTAR 2009 58,000 Dayang Owned BELMOIRA (NEWBUILD) 2020 61,000 Shin Kurushima BB-in3 BELCARGO 2008 58,000 Tsuneishi Owned BELFUJI (NEWBUILD) 2020 63,000 Imabari TC-in4 BELFRI 2007 55,000 Kawasaki Owned 8 x Supramax8 x BELRAY (NEWBUILD) 2019 61,000 Shin Kurushima BB-in5 BELORIENT 2008 50,000 PT Pal Owned BELNIPPON 2018 63,000 Imabari TC-in6 BELFORT 2008 50,000 PT Pal Owned BELHAVEN (TBD) 2017 63,000 Japan Owned7 PACIFIC LIGHT1 2007 50,000 PT Pal Owned BELISLAND 2016 61,000 Imabari BB-in8 1) To enter into two year bareboat charter during March or April 2020. The vessel will be sold to the charterers as part the agreement. 9
16 x Ultramax16 x BELFOREST 2015 61,000 Imabari BB-in BELINDA 2016 63,000 Hantong Owned BELMONT 2016 63,000 Hantong Owned BELATLANTIC 2016 63,000 Hantong Owned SOFIE VICTORY 2016 63,000 New Times Owned BELPAREIL 2015 63,000 Hantong Owned BELSOUTH 2015 63,000 Hantong Owned
1) On Delivery 2H 2021 ten years bareboat charter with purchase options after fourth year. 2) Delivery 2H 2020 ten years bareboat charter with purchase options after fourth year. 3) Delivery Q1 2020 for seven years bareboat charter with purchase options after fourth year. 4) Delivery Q1 2020 for eight years time charter with purchase options after fourth year. 5) Delivered in October 2019 seven years bareboat with purchase options after fourth year. 6) Eight years time charter with purchase options after fourth year. 7) Delivery Q2 2020. 8) Fifteen years bareboat charter with purchase options after fifth year. 9) Twelve years bareboat charter with purchase options after third year.
There are no purchase obligations on any of the lease agreements. | Company introduction | 11 Ultramax segment – superior risk/reward
Comparison last 10 years
$35,000 Capesize Ultramax Kamsarmax USD 15 094/day USD 12 304/day USD 12 064/day $30,000 Standard deviation: 162% Standard deviation: 55% Standard deviation: 65%
$25,000 Ultramax
$20,000
$15,000 Average day per
$10,000
$5,000
$- Jan.10 May.10 Jul.10 Oct.10 Jan.11 Apr.11 Jul.11 Oct.11 Jan.12 Apr.12 Jul.12 Oct.12 Jan.13 Apr.13 Jul.13 Oct.13 Jan.14 Apr.14 Jul.14 Oct.14 Jan.15 Apr.15 Jul.15 Oct.15 Dec.15 Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 Sep.19 Dec.19
Ultramax: BSI58 plus 10% premium. BSI58 is BSI52 plus $293 per day prior to 2015 Kamsarmax: BPI82 2018-2019, BPI74 plus $1 300 day prior to 2018 Capesize: BCI 5TC 2014-2019, BCI 4TC prior to 2014 | Company introduction | 12 Source: Baltic Exchange, Belships 19% outperformance of the BSI index in 2019
Belships TCE vs BSI 58 (net USD per day)
Belships BSI 58 Premium against BSI58: +19%
$11,118 $11,992
$11,359 $11,201 $10,996
$11,886
$10,226 $9,451
$8,061 $7,525
Q1-19 Q2-19 Q3-19 Q4-19 2019
Source: Baltic Exchange, Belships | Company introduction | 13 2020 guidance – low cash break even and cost base
4.0 7,000 TCE guidance – Q1 2020 OPEX and G&A guidance - 2020
3.5 6,000
Dry docking $402 Open 3.0 G&A days $417 5,000
30% 2.5 4,000 ~70% booked 2.0 G&A at USD 9,625 $3.5m 3,000 1.5 OPEX $4,900 2,000 1.0 70% 1,000 Covered 0.5 days
- - Total Per day
Cash break even next twelve months Low G&A and OPEX compared to peers ~USD 9,500/day
| Company introduction | 14 Market update
• 2019 - The year of trade wars and iron ore supply disruption, both set to normalise this year
• CORONA - Dramatic start to 2020 driven by negative economic impacts stemming from Corona virus, shutdowns and extended Chinese New Year
• IMO 2020 - Fuel price differences between 3.5 and 0.5 per cent sulphur content peaked at USD 300 per mt in December
• ORDERBOOK/SUPPLY - Historically low orderbook and fleet growth to decrease sharply from 2H 2020
• STIMULUS - Leading indicators are pointing to continued economic growth, low interest rates and energy prices. Continued credit growth and economic stimulus in Chinese economy
• REBOUND - Near-term outlook much depends on when China resumes normal activity, which may lead to positive effect from pent-up demand on top of normal volume normalisation
• CONTANGO - Forward rates for remaining days in 2020 have already started to move
| Market update | 15 Belships’ Cargo mix
Cargo per category - 2019 Supramax/Ultramax shipments – agricultural and minerals 35 140 Volume increase 2013-2019: + 74%
30 120 Last four quarters (million (million quarters four Last 25 100
23% 21% 20 80
39 % 15 60 Per quarter (million mt) mt
10 40 )
5 20
8% 6% 3%
0 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 0
Urea Wheat Sugar Salt Copper Bauxite
Diverse cargo base reduces risk Strong and stable volume growth
Source: Fearnleys | Market update | 16 Low orderbook – lowest fleet growth since 2001-2003
Supramax and Ultramax – historical orderbook Supramax and Ultramax – orderbook per quarter
25.0 4.0 Existing Ordered 3.5
20.0 3.0
2.5 15.0
2.0 Million dwt Million 10.0 dwt Million 1.5
1.0 5.0
0.5
0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 0.0 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22
Supra/Ultramax orderbook Orderbook contracted before 2016 7% 40%
Source: Fearnleys | Market update | 17 Markets started to improve in February
FFA rates for 2020 (USD per day) HFO vs VLSFO spread (USD per mt)
$237 FFA curve in February 2020 $10,600 $10,400 $222 Forward curve in January 2020 $9,600 $9,700 $208
$194
Forward curve in February 2020
$170 $171 $166 $163
$5,500
Spot Apr-20 Q2-20 Q3-20 Q4-20 Q1-20 Q2-20 Q3-20 Q4-20
2020 FFA rates 2020 HFO vs VLSFO spread Supramax ~USD 10.000/day ~USD 197 per mt Ultramax ~USD 11,300/day
Source: Baltic Exchange, DnB Markets | Market update | 18 Strategy
Growth Liquidity Capital discipline
. Capacity to increase the fleet to 30 . Continue to build free float through . Low costs and cash break-even vessels ship for shares transactions where . Strong balance sheet . Additional ship-for-share deals or accretive . Build dividend capacity optional leases . Capital markets and IR
| Strategy | 19 Our main offices
Belships ASA Lighthouse Navigation Belships Management Oslo Bangkok Singapore +47 22 52 76 00 +66 2 654 3100 +65 6507 3939 [email protected] [email protected] [email protected]