Belships 4Q Results

Belships fourth quarter operating income was $18.98, versus $7.8 million in 4Q 2002. The company's operating result totaled $4.2m. The operating income and operating result were affected by a strong dry bulk market. The product carrier business generated an operating result of $133,000 in the fourth quarter. The gas carrier business generated an operating result of $740,000 in the same period. The improvement is primarily due to the fact that, because of previous write-downs, there was no depreciation posted for the quarter. The dry bulk business generated an operating result for the fourth quarter of $4.1m. The positive results of Elkem Chartering (EC) have already been reported. M/S Belnor and M/S Belisland and our capesize cooperation with Bocimar have also provided satisfactory contributions. The ship management business generated an operating result of (-$295,000).

Operations

The market for handysize product carriers improved during the quarter and the demand for second hand ships rose substantially. Belships decided to sell M/T Belgrace and the company’s engagement in this sector is therefore currently over, apart from its commercial operating responsibility for M/S Belguardian and M/S Belgreeting.

The timing for entering and leaving this market is critical and the board is optimistic about an interesting product carrier market over the next 3-4 years. A long-term time charter with the option to purchase was therefore entered into with a Japanese shipping company for a 48,000-dwt product carrier which is to be delivered at the end of 2006.

The dry bulk market reached new heights towards the end of the year. The main driving force was the increased demand from China, but there is also significant waiting time in many ports due to a lack of land-based infrastructure. As both M/S Belnor and M/S Belisland are on fixed time charters, it is primarily through its 50 percent ownership in Elkem Chartering (EC), the operating company, that Belships has enjoyed the record high dry bulk market. The strong market however made it possible to extend the time charter coverage for M/S Belisland to five years from delivery in the summer of 2003, and their contribution to results will be about $900,000 per year for the period. The company’s capesize cooperation with Bocimar contributed $700,000 in the fourth quarter. Elkem Chartering (EC) is involved in the handymax segment through long term, time charters for three modern ships. M/S Legend Phoenix has relet for the entire fixed period at a rate which will contribute to Belships' results by just under $1 m per year. M/S Belpareil which EC took delivery of at the beginning of 2003 is relet until the first quarter of 2005 and will give a results contribution to Belships of around USD 2 million in 2004. M/S Pax Phoenix will continue to sail in a pool operated by French interests until the end of 2004.

Financials

At the end of the fourth quarter the group's cash position was $10 m compared with $8.3 m at the end of the previous quarter. Mortgage debt was reduced from $45.1 m to $18.6 m, primarily due to the winding up of the involvement in the gas segment. The equity ratio as at December 31 was 44.8 per cent. The sale of M/T Belgrace will give a profit of approximately $500,000 in the first quarter and give Belships a net liquidity contribution of approximately $4 m. The market value of M/S Belnor is higher than the book value.