Results 3rd Quarter 2006

Belships recorded an operating income in the third quarter of 2006 of USD 13,748,000 (third quarter 2005: USD 16,194,000). The company’s operating result amounted to USD 2,384,000 (USD 1,263,000). These positive developments are connected with the M/S Belnor and Elkem Chartering’s handysize operations.
Profit after tax in the third quarter amounted to USD 1,238,000 (USD 663,000).
The operating profit for the first nine months of the year was USD 5,075,000 (USD 6,523,000) and the profit after tax USD 5,090,000 (USD 3,414,000).
The dry bulk market continued to strengthen throughout the quarter, and the rates reached the highest level since early in 2005. Once more, one of the main factors for this was the vigorous growth in the China steel industry, but generally good economic conditions also contributed.
Elkem Chartering chartered in vessels early in the summer for medium term periods at rates that are producing good results in the handysize operations, but freight contracts entered into previously naturally pull the results down.
The handymax ships continue on their respective charters with good results, even though an operational interruption in connection with the docking of the Pax Phoenix diminished their contribution somewhat.
Belships own tonnage, the M/S Belnor and the M/S Belisland, also sailed on their charters with results as anticipated.
Financial position and other matters
The company’s solidity and financial position were strengthened during the third quarter. As at 30 September, the Group’s liquid reserves totalled USD 33.5 million, against 16.00 million at 30 June. In addition to a positive cash flow from operations, the company was received USD 15.1 million through taking up a debenture loan of NOK 100 million. This loan was paid out in July/August and is hedged against USD. The company’s mortgage debts were reduced during the quarter by USD 1.5 million and amounted at the end of the third quarter to USD 11.8 million. Book value per share was NOK 5.64 and the book equity ratio at 30 September was 36.8%.
The market value of the M/S Belnor is substantially higher than her book value.
Belships acquired in the third quarter 144,000 own shares at an average cost of NOK 8.54 per share and owned at the end of the quarter 402,000 own shares. A further 20,000 shares were acquired in October, at a price of NOK 8.49 per share.
The dry bulk market has continued to improve in the fourth quarter, and even though there are signs that may indicate a slow-down in economic activity in the USA, we expect the market to remain strong for the rest of the year.
Handysize operations in Elkem Chartering are expected to continue generating positive contributions. The freight portfolio is continually being developed and will form a basis for expansion.
The Pax Phoenix charter has been extended until the end of 2008 at a rate that will yield a contribution to Belships of around USD 2 million a year.
Three years have now passed since the upswing in rates began in earnest, and this is the longest period with high dry bulk rates in modern times. The inflow of new buildings will decline in the coming three years, and if the increase in demand should last, the prospects are promising.

Oslo, 2nd November 2006