Earnings 2nd Quarter 2003

Belships’ operating income for the 2nd quarter of 2003 amounted to USD 10,500,000 (2nd quarter of 2002: USD 4,903,000).  The company’s operating profit amounted to USD 311,000 (USD -1,121,000).  The favourable profit trend which occurred during the 1st quarter continued during the 2nd quarter, and the company’s operating profit for the first half of the year amounted to USD 1,067,000 (-379,000).
The company’s operating profit for the 2nd quarter of this year includes a USD 0.4 million loss incurred from the sale of the M/S Belmaj, while the company’s operating profit for the same period last year contained a USD 0.3 million loss from the sale of the gas ship M/T Quentin.  The company posted a loss after tax for the 2nd quarter amounting to USD -241,000 (USD -1,498,000).  The minority’s share of profits amounted to USD -412,000 (USD -565,000) and is linked in its entirety to the ownership stakes in Gibson Gas Tankers.  Belships’ share of the reported results thus constitutes USD 171,000 (USD -933,000).
The quarterly accounts have been prepared in accordance with the standards relating to interim accounts.  The accounting principles employed are the same as those used for the 2002 annual accounts.
Product tankers generated an operating profit of USD 571,000 during the 2nd quarter (USD 132,000).  This improvement is primarily attributable to a strong market. 
Gas tankers were responsible for an operating loss of USD -803,000 (USD -1,111,000) during the 2nd quarter. This development has been affected by continuing difficult market conditions for this type of ship.  High operating expenses for some of the company’s ships have also served to produce a negative contribution during this period. 
The operating profit for dry cargo ships amounted to USD 638,000 (USD 55,000) for the 2nd quarter.  The dry cargo market continued to strengthen from the first to the second quarter.
Those companies involved in technical management posted an operating profit of USD 107,000 (USD 84,000).
After the war in Iraq was concluded, the market for product tankers experienced a drop.  Falling rates were most prevalent in the Atlantic Ocean and especially in the Caribbean.  However, towards the end of the quarter this trend reversed and rates strengthened again.
Despite the drop in rates M/T Belgrace posted a very satisfactory profit.  Belships is continuing to operate the OBO ships, M/S Belgreeting and M/S Belguardian, on a commercial basis, even though we no longer have ownership stakes in these ships. 
The dry cargo market is continuing to improve, primarily due to the growth in demand in China.
The handymax ship, M/S Belnor, has been contracted out to Korean charterers on a two-year timecharter at a net rate of USD 10,600 per day.  This will ensure a satisfactory result for the ship during this period.
The operating company Elkem Chartering also contributed positive results.  Apart from its core activities in the Atlantic Sea which are planned to be further strengthened, Elkem Chartering is also heavily involved in the handymax segment with three ships being hired on long-term charters.  
As mentioned in the previous quarterly report, the capesize ship, Belmaj, was delivered to new owners in June. 
Our participation in capesize chartering activities run by Bocimar in Belgium resulted in a positive contribution.
The market for small gas ships was flat or slightly weaker during the quarter.  The results posted by Gibson Gas Tankers were unsatisfactory.
Belships strengthened its financial position during the 2nd quarter as a result of positive developments in its results and the sale of M/S Belmaj.
As at 30 June our liquid assets totalled USD 7.5 million, compared to USD 4.8 million at the end of the 1st quarter.  Our mortgage debt was reduced by USD 5.8 million during the 2nd quarter and amounted to USD 45.9 million as at 30 June.  The book value per share, excluding minority interests, amounted to NOK 5.18, and the book equity ratio amounted to 28.7% as at 30 June. 
Brokers’ estimates for some of the company’s ships are still lower than the capitalised values shown on the balance sheet.  Based on estimates of discounted future cash flows from its ships, the company does not think it is necessary to undertake any write-downs. 
During the summer the rates for product tankers have once again improved, especially in the East.  If this tendency continues, the M/T Belgrace will continue to produce good results.
We are expecting to see further improvements in the dry cargo segment.  The panmax ship, M/S Belisland, was delivered to us on a long-term charter in August, and at the same time it commenced a 2-year charter with European charterers, at a rate that will contribute  approximately USD 2,600 per day during the period. 
We are also expecting better results from Elkem Chartering during the remainder of the year.
As usual the market for small gas tankers has been quiet during the summer period.  There are some expectations in the market that rates will be higher during the remainder of the year. 
Oslo, 19 August 2003

For further information, please contact Managing Director Mr. Sverre J. Tidemand or Financial Director Mr. Jo E. von Koss on phone no. +47 22 52 76 00.