BEL – Result per 3rd quarter 2001

Belships recorded operating income of USD 6,595,000 (2000: USD 14,058,000) in the third quarter of 2001. Operating income for the first three quarters totalled USD 30,196,000 (USD 44,386,000). The company’s third-quarter operating result was USD -166,000 (USD 724,000), while operating results for the first three quarters totalled USD 3,215,000 (USD 458,000). The fall in operating income compared with last year is due primarily to reduced activity in the company’s Panmax operation and the sale of the M/S Belstar at the end of 2000. Profit performance reflects the general downturn in the markets in which Belships operates.
The third-quarter net result was USD -778,000 (USD -513,000), while the net result for the first nine months totalled USD 391,000 (USD -2,655,000).

The product carrier business generated an operating result of USD 967,000 (USD 838,000) in the third quarter. Operating results for the first nine months were USD 3,618,000 (USD 947,000).
The gas tank business recorded a third-quarter operating result of USD -567,000 (USD 236,000), while accumulated operating results for the first three quarters totalled USD 264,000 (USD 195,000).
The Panmax/Capesize bulk business reported an operating result of USD -814,000 (USD -733,000) in the third quarter. The operating result for the first three quarters was USD -1,024,000 (USD -1,440,000).
The Handymax bulk business recorded a third-quarter operating result of USD 234,000 (USD 568,000) and operating results for the first three quarters totalling USD 661,000 (USD 1,388,000).
The ship management business reported an operating result of USD 164,000 (USD -22,000) in the third quarter, and operating results for the first three quarters totalling USD 248,000 (USD -50,000).

The M/S Belgallantry continued on its time charter in the third quarter, while the two other OBO carriers and the M/T Belgrace operated in the spot market. None of the vessels were dry-docked during the quarter or off-hire for any significant period.
At Gibson Gas Tankers, the 3,200 cbm vessels continued on their time charters, while the 6,000 cbm vessels operated in the pool managed by the Dutch company A.Veder. The M/T Ettrick’s charter was renewed for a further 12 months during the third quarter at a somewhat lower time charter rate because of the weaker market. The M/T Eildon was off-hire for 78 days during the quarter owing to engine breakdown and ordinary docking.
The Panmax operation Belships Trading fulfilled its previous commitments on both the shipping and cargo sides, but no new contracts were signed during the quarter.
The M/S Belmaj sailed throughout the quarter in the Capesize pool managed by Belgian company Bocimar. Belships also has a smal participation in a timecharter-pool managed by Bocimar. M/S Belnor continued on its time charter.

The fall in interest rates during the first six months continued through into the third quarter. During the quarter, Belships fixed interest periods of 3 to 12 months. The company is keeping under review the possibility of more long-term interest rate hedging contracts.
At 30 September, Belships’ liquid assets had fallen to USD 9.8 million compared with USD 11.3 million at the close of the second quarter, and mortgage debt was cut by USD 1.7 million during the third quarter to USD 64.9 million at 30 September. Shareholders’ equity at the end of the period was equivalent to 28.2% of assets or NOK 7.54 per share excluding minority interests.
The fleet’s estimated market value at the end of the period was USD 1.9 million under book value. Based on the accounting policies applied by the company, there is no need, in the company’s opinion, to write down the fleet.
Belships has a capitalised tax advantage of USD 3 million at 30 September, the same amount as reported in the second quarter and at year-end 2000. The company is aware that there may be some uncertainty regarding the value of the tax advantage, but in the light of the development of the company’s balance sheet value and expectations of future earnings, this balance sheet item has not been adjusted.
In September, Belships’ majority shareholder Sonata AS made a mandatory bid to acquire shares in Belships. The bidder received acceptances for a total of 3,499,112 shares. When the bid is implemented, the Tidemand family, who own Sonata AS, will control 56.15% of the shares in Belships.

The product carrier market weakened further in the third quarter as a result of the falling demand for oil, which is itself a consequence of the general economic slowdown. It is uncertain how long the slowdown will last, as it will also depend, among other things, on political developments as a result of the war against terrorism.
Trends in the gas carrier market are still poor and earnings for the rest of the year are expected to remain at a level unchanged compared with the third quarter.
The dry bulk market also deteriorated during the third quarter. The economic slowdown and substantial deliveries of new tonnage give little cause for optimism in the short term.

Oslo, 8th November 2001