Belships ASA - Report 2nd quarter 2020 - Seite 2

The recent vessel transactions signal the competitive advantage Belships has in sourcing ship finance. Belships’ fleet continues to increase and improve with only modest cash investments. Taking into consideration nine acquisitions and two divested vessels over the past 12 months the net cash effect is about USD 3m. The Japanese Ultramax bulk carriers entering the fleet represent the highest quality and lowest fuel consumption available in the market today.

Financial and corporate matters
At the end of the quarter, cash and cash equivalents was USD 34.4m. Mortgage debt was USD 143.7m, while net lease obligation was USD 141.9m.

Belships recorded an impairment loss of USD 4.9m in the quarter. The impairment relates to the four oldest vessels in the fleet.

During January and February, Belships hedged some of its spot exposure by selling FFA contracts maturing from Q2 2020 to Q1 2021. A majority of the contracts were realised in the second quarter, generating a cash effect of USD 2.0m. At the end of the quarter, the remaining FFA portfolio comprised 450 days at an average rate of USD 9 400 per day.

As part of the consideration for BELHAVEN and based on the authorisation granted by the Annual General Meeting on 14 May 2020, the Board of directors resolved to increase the Company's share capital by the issuance of 15,950,699 new shares to the sellers. Following the registration of the share capital increase with the Norwegian Register of Business Enterprises, the Company's share capital was increased to NOK 456,350,808, divided by 228,175,404 shares, each with a par value of NOK 2.
At the end of the quarter, book value per share amounted to NOK 6.55 (USD 0.67), corresponding to an equity ratio of 34 per cent.

Market highlights
In the second quarter, the Baltic Supramax 58 index averaged USD 5 210 net per day, with the market still reeling from the continued outbreak of COVID-19. Demand was hampered by global lockdowns and a widespread and historic slump in economic activity. On the supply side, scrapping virtually came to halt as travel bans and restrictions hindered any meaningful recycling of older vessels, so even though spot rates plummeted the net increase in the supply of vessels came in above projections.