RESULTS
On 4 July 2011, Belships sold its 50% shareholding in Elkem Chartering AS (EC). In accordance with IFRS 5, the investment in EC has been presented as a discontinued operation in the quarterly report. The figures commented upon below are, as a result, only related to the remaining operations. Note 1 shows the result by segment with Elkem Chartering separated as a discontinued operation. Figures in relation to Elkem Chartering have been further specified in Note 2.
Belships operating revenues amounted to USD 7 087 000 in the second quarter of 2011 (q2 2010: USD 4 379 000). The company's operating profit was USD 731 000 (USD 439 000). The increase in operating revenues is mainly related to M/S Belnor and M/S Belocean, delivered in May 2010 and March 2011, respectively.
The comprehensive income for the second quarter of 2011 was a loss of USD 795 000 (loss of USD 1 129 000).
The accounts for the second quarter 2011 have been prepared in accordance with IAS 34 Interim reporting and are consistent with the principles applied in the annual accounts. The interim accounts have been prepared in accordance with International Financial Reporting Standards (IFRS).

OPERATIONS
The market for large dry bulk ships was weak also in the second quarter, with rates barely covering operating costs.  For smaller ships, the rates were considerably better, but the tendency is still a weaker development as a result of too many newbuildings coming into the market.
The company's shares in Elkem Chartering AS were, as mentioned above, sold in July. In spite of EC amounting to about 50% of the consolidated operating revenues, the sale's effect on the result is negligible. The shares were sold with a minor loss and therefore had an insignificant effect on the Group's equity. The sale frees up liquidity that can be used in Belships ASA core activities.
M/S Belnor, M/S Belstar, M/S Belocean and M/T Belaia all continued their respective charter parties without any notable downtime. 

FINANCIAL AND OTHER MATTERS
As of 30 June, the Group's cash and cash equivalents amounted to USD 21.6 million, compared with USD 21.2 million at 31 March 2011.  The amount includes the sales proceeds for EC.
The company's mortgage debt was USD 60.7 million as of 30 June 2011, and was reduced by USD 1.3 million over the course of the second quarter. In addition, Belships has a bond loan of NOK 97.8 million (USD 18.2 million.). NOK 36.1 million of the loan was repaid in early July. The remaining amount falls due in 2012 and 2013. Over the course of the quarter, the company bought back NOK 7.2 million of the loan. The loan is currency-hedged against USD.
The company has carried out impairment tests for the company's assets in accordance with IAS 36. The ships are tested on the basis of observable market values and charter parties entered into. Based on these internal evaluations, there is currently no need for write-downs.
At the end of the first second of 2011, the recorded value per share was NOK 11.63, while the recorded equity-to-assets ratio was 37.3%.

OUTLOOK
The Baltic Dry Index has continued to drop through the second quarter and the index is currently down almost 90% from the all-time high in May 2008. The decline has been most severe for the capesize segment, where the index is now about USD 11 000/day, while the supramax index is about USD 13 250/day. The second-hand values are back to the level from spring 2009 following the market collapse in the autumn 2008.
Due to many deliveries of newbuildings, the rate development for dry bulk ships is expected to remain weak. As all of Belships' dry bulk ships sail on long-term charter parties, short-term market fluctuations will not affect earnings. 
The market value for product tankers, such as M/T Belaia, is showing a positive tendency.

Oslo, 18 August 2011

The Board of BELSHIPS ASA