Earnings per 30 June 2007

Belships achieved an operating income in the 2007 2nd quarter of USD 13,370,000 (2nd quarter 2006: USD 11,772,000). The company’s operating result was USD 2,847,000 (USD 2,098,000). The increase in operating income and the positive result performance are mainly related to positive developments in Elkem Chartering’s Handysize operations.
Profit after tax in the 2nd quarter was USD 1,987,000 (USD 3,346,000). Last year’s result included a tax reimbursement from Singapore of USD 1.9 million.
The report for the 2nd quarter was submitted in accordance with IAS (International Accounting Standard) 34, and consistent accounting principles were used in relation to the accounts submitted at 31 December 2006.
Growth in China continues to force dry cargo rates upwards. The demand for dry bulkers rose by around 7% on an annual basis, which is just above 1% more than the increase in supply. Despite the authorities’ efforts, the queue of ships waiting for cargo in Australia has not been reduced to any significant extent. Elkem Chartering’s time charter vessels were off-hire for around 60 days due to ordinary dry-docking in the 2nd quarter. In spite of this, earnings from Handysize operations improved. The two Handymax vessels continued on their charters with results as expected. At the end of June the newbuilding M/S Northern Light was delivered to Elkem Chartering on a 5 years charter, with the charterer’s option for an extension of two years. The rate is very favourable compared to current market rates. The vessel will form part of the Handysize operations.
In Belships, the Handymax vessel M/S Belnor and the Panmax vessel M/S Belisland continued on their charters with results as expected.
The product carrier M/T Belaia has commenced its 5-year charter. The result reflects non-recurring expenses in connection with the delivery of the vessel.
The management company in Singapore delivered improved results compared to the preceding quarter. In June, Belships concluded 5 newbuilding contracts at Yangzhou Dayang Shipyard in China. The vessels will be delivered in 2009/2010/2011. 5-year charters have been concluded for two of the vessels to Korean charterers, while the other three have been chartered out to Canadian charterers for a period of 10 years, with a right for Belships to sell one or two of the vessels after 5 or 7 years. The average annual operating result for each vessel will amount to around USD 3 million.
The company’s solidity and financial position are robust.
In June, the company raised a loan of USD 20 million to part-finance the first payment of the newbuilding contracts, totalling USD 39.2 million, which corresponds to 20% of the contract sum. Total cost price for the vessels is USD 196 million.
At 30 June, the Group’s liquid reserves amounted to USD 20.4 million, against USD 41.2 million at 31 March. A dividend of USD 3.2 was paid during the quarter. The company’s mortgage debt was USD 30.3 million at the end of the 2nd quarter. In addition, the company has a bond loan of USD 16.8 million.
At the end of the 2nd quarter, book value per share amounted to NOK 6.88, while the book equity ratio was 33.8%.
The market value of the of the company’s fixed assets is substantially higher than their book value.
Elkem Chartering expects a contribution from Handysize operations in the 2nd half-year in line with what was achieved in the first half.
Belships own tonnage and Elkem Chartering’s two Handymax vessels are expected to produce contributions corresponding to those of the first half-year, with certain reservations concerning unexpected interruptions.
Contributions from the tanker M/T Belaia will most likely increase in the next quarters.
As announced, the M/S Belnor was sold for delivery in October/November and the gains of USD 22 million will be taken to income in the 4th quarter.
Oslo, 23 August 2007