The first four months of the year Belships recorded gross income of USD 10.8 million (1998: USD 22.4 million), an operating result of USD -1.6 million (USD -1.0 million) and a net result of USD -3.0 million (USD -3.4 million).
This is the first period for which Belships has submitted accounts denominated in USD. This is expected to provide a better reflection of the company's operations and position since all material transactions, assets and liabilities are denominated in USD. Accounting figures for previous periods have been restated to aid comparison.

The introduction of Norway's new Financial Reporting Act at the start of the year has not had any major effects, except for changing the accounting treatment of dry-docking costs. Such costs were previously offset against provisions for future costs, but are now being treated as prepayments and charged against profit on a straight-line basis through to the next dry-docking. The USD 2.0 million impact of this change in accounting policy has been credited directly to shareholders' equity.
The reduction in the group's turnover is primarily attributable to lower activity in the Panmax dry bulk carrier market and the sale of two product carriers during the second half of 1998.

The product carrier business recorded an operating result of USD -0.03 million (USD -0.50 million), the gas carrier business an operating result of USD -0.70 million (USD -0.60 million), the Panmax/Capesize dry bulk carrier business an operating result of USD -0.50 million (USD 0.10 million), the Handymax dry bulk carrier business an operating result of USD -0.10 million (USD 0.10 million) and the ship management business an operating result of USD -0.02 million (USD 0.20 million).

The product carrier market was more stable during the period than for a number of years, with a major refinery fire on the US West Coast generating increased activity and boosting freight rates. Meanwhile the activity in the gas carrier market fell back after a seasonal upturn early in the year, with rates generally unchanged.
However, the period may have marked the end of several years of falling freight rates in the dry bulk carrier market: after a poor start to the year, rates rose sharply during the South American grain season. Coupled with indications that the Asian Crisis may be tailing off, this brought a fresh air of optimism in the segment. In addition, the group has already begun to reap the rewards of the reorganisation of the Belships Trading ship management operation at the start of the year.

Belships does not anticipate any major changes in the product carrier market, with the return of demand growth in the Far East being counteracted by a high number of newbuilding deliveries. The gas carrier market is not expected to improve much either, but it is hoped that the cost cutting efforts at Gibson Gas Tankers, both onshore and at sea, will begin to have an impact towards the end of the year. There are probably grounds for some optimism about the outlook for the dry bulk market based on a recovery expected in the Far East and the reduction in the world fleet seen in 1998 and so far in 1999.

Belships' cash flow and financial position improved substantially during the period due to the disposal of its stake in Western Bulk Shipping. The group's liquid assets climbed from USD 6.3 million to USD 9.2 million during the period and its secured debt was cut from USD 95.3 million to USD 91.5 million. The equity/assets ratio stood at 12.3% at the period-end.
The market value of the company's fleet remains approximately USD 5 million below its book value but has not been written down as the fleet is considered to be a long-term investment.

Oslo, 17 June 1999
The Board of Directors of BELSHIPS ASA

For full report with tables, please follow the enclosed link

1st Tertiary 1999