BEL – Report per 3rd Quarter 2002

Financial performance
Belships recorded a third-quarter operating income of USD 4,492,000 (third quarter 2001: USD 6,595,000) and a third-quarter operating result of USD -1,260,000 (USD -166,000). The gas carrier market continued its negative development in the period and accounted for the majority of the negative operating result. The product carrier and large bulk markets were also weak, but the operating results in these segments were close to the break-even point.
The group generated a post-tax result of USD -1,947,000 (USD -778,000) in the third quarter and USD -3,587,000 (USD 391,000) in the first three quarters of the year. Minority interests in Gibson Gas Tankers accounted for USD -1,636,000 of the result, making Belships’ share USD -1,951,000.
Segmental results
The product carrier business generated an operating result of USD -80,000 (USD 967,000) in the third quarter, the gas carrier business an operating result of USD -1,084,000 (USD -567,000) and the dry bulk business an operating result of USD -222,000 (USD -580,000). The company’s stake in Elkem Chartering AS is not included in the third-quarter figures as the formal transfer of shares took place on 31 October 2002. The ship management business generated an operating result of USD 186,000 (USD 164,000).
The product carrier market was weak in the third quarter, which can be attributed in part to the fear of a war against Iraq. Following a docking, M/T Belgrace operated in the spot market in the Far East, as did the OBO ship M/S Belguardian, which also underwent a routine docking in July. The OBO ship M/S Belgreeting operated in the Atlantic.
The rates for small gas carriers continued to fall during the summer, and in addition the vessels in the Veder pool had long waiting times for cargo, adding up to very poor results for Gibson Gas Tankers. As a result the decision was made to dissolve the pool. In the near future the gas carriers will be assigned time charters.
The dry bulk market showed a marked improvement during September, especially in the Atlantic and on routes to the East. This improvement has gradually been mirrored throughout the rest of the world. The main factors behind this development are relatively few new dry bulk carriers and strong demand from China. The third-quarter results for our dry bulk activity do not reflect this market situation because these improvements only appeared at the end of the period.
Financial position and other information
Liquid assets at the end of the third quarter totalled USD 7.2 million, compared to USD 8.6 million at the end of the previous quarter, while mortgage debt was reduced from USD 56.3 million to USD 55.8 million. Shareholders’ equity at the end of the period was equivalent to 26.1% of assets, or NOK 5.24 per share excluding minority interests.
Belships ASA’s total outlay in connection with the acquisition of shares and share issue in Elkem Chartering AS totalled NOK 11 million. Belships’ stake in the company is 50%.
The market value of some of the company’s ships is lower than their book value, it being difficult to calculate the ships’ real value due to the limited liquidity in the market. The value of the ships was not written down in the period.
The market for product carriers is uncertain, but the operating results are expected to be about the same for the remainder of the year. It is doubtful whether the gas carrier market will improve in the near future, but a seasonal upswing is expected around the new year.
The results for the fourth quarter are expected to reflect the improved rates for dry bulk activities. As already mentioned, the development in China is of great importance for demand, and although it appears to be sustainable for the time being, there is every reason to follow the developments very carefully.

Oslo, 5 November 2002