Belships recorded an operating income in the second quarter of 2006 of USD 11,772,000 (second quarter 2005: USD 16,460,000). The company’s operating result amounted to USD 2,098,000 (USD 2,477,000). In the second quarter of 2006, Belships (Far East) won a tax dispute in Singapore and this produced a contribution to Belships ASA’s result of USD 1.9 million, of which USD 1.2 million has been included in other financial income, while the remaining amount has been booked as a tax cost reduction.
Profit after tax in the second quarter was USD 3,345,000 (USD 855,000)

Generally the market for dry bulk ships was stable in the second quarter, with the exception of handysize and handymax ships, for which the rate level increased.
The anticipated weakening of the rate level failed to materialise due to the continued high growth rate in the Far East. In addition, we saw a surprisingly strong growth in US imports of cement and steel, something which particularly affect the smaller ships.
In the course of the quarter, Elkem Chartering (EC) obtained a better portfolio balance and this led to improved results.
The handymax ships in EC continued on their charters without operational interruptions and with results on a line with those of the preceding quarter.
Belships own tonnage, the M/S Belnor and the M/S Belisland, also sailed on their charters without operational interruptions and with results as anticipated.

The company’s solidity and financial position were strengthened in the course of the second quarter. At 30 June, the Group’s liquid reserves totalled USD 15.0 million, against 12.7 million at 31 March. The company’s mortgage debts were USD 13.3 million at the end of the second quarter. Book value per share amounted to NOK 5.06 and the book equity ratio at 30 June was 49.8%.
The market value of the M/S Belnor is substantially higher than her book value.
Belships acquired in the second quarter 58,000 own shares at an average cost of NOK 6.87 per share and now owns 258,000 own shares.
In June, the company decided to issue a new unsecured senior bond loan in the Norwegian market with a first tranche of NOK 100 million and a borrowing limit of NOK 200 million.

The dry bulk market has shown substantial strength so far in the third quarter, and with EC’s current ship portfolio, we expect satisfactory results from the company’s Handysize operations. EC has good contractcover for 2006 and 2007.
The M/S Belnor, the M/S Belisland and EC’s Handymax ships continue on their respective charters and will generate good results.
There is now growing optimism in the market for dry bulk ships. So far, we have not seen any signs of the usual summer weakening in the market, and this could be an indication that also the second half of the year will be good. It is remarkable that demand has developed so strongly that the market has, without difficulties, been able to absorb the high number of new buildings, in a historic perspective, without any significant scrapping of older tonnage.

Oslo, 11 August 2006