Preliminary result 2002

Belships recorded an operating income of USD 7,839,000 (2001: USD 6,652,000) and an operating result of USD -1,080,000 (USD -1.503.000) in the fourth quarter of 2002. The gas carrier market weakened further in the fourth quarter, resulting in the negative operating result. The product carrier and dry bulk markets showed positive trends and these segments returned a profit in the quarter.
The group generated a post-tax result of USD -1,067,000 (USD -2,235,000) in the fourth quarter and USD -4,742,000 (USD -1,844,000) for the year. Minority interests in Gibson Gas Tankers accounted for USD -2,104,000 of the result, making Belships' share USD -2,638,000.
The product carrier business generated an operating result of USD 228,000 (USD 377,000) in the fourth quarter, the gas carrier business an operating result of USD -837,000 (USD -1,090,000) and the dry bulk business an operating result of USD 74,000 (USD -475,000). Belships acquired a 50% stake in Elkem Chartering which are included in the accounts from 31 October. Elkem Chartering generated an operating result for the group of USD 368,000 in the fourth quarter.
The ship management business generated an operating result of USD -46,000 (USD -147,000).
The market for product carriers was relatively weak in 2002, but the rates rose towards the end of the year due to the strike in Venezuela and concerns about war. The two OBO ships, M/S Belgreeting and M/S Belguardian, as well as M/T Belgrace were employed in the spot market or under short timecharters during this period. In February a contract was entered into for sale of the share in the OBO ships, with effect from 28 February 2003. This will give an accounting gain of approximately USD 0.5 million in the first quarter of 2003.
Over a long period China has shown strong growth, however, from a modest base the economy has now become so large that it is seriously impacting world trade growth. This has had a positive effect on the dry bulk market, where ore imports and reduced coal exports due to the country's own needs significantly pushed up the rates for bulk carriers during the second half of the year.
The acquisition of a 50% stake in Elkem Chartering increased Belships' explosure to this sector during the year. This has brought us a large step forward in our endeavour to build up a long-term cargo base. Elkem Chartering is primarily engaged in the handy size segment operating in the Atlantic, but also has a handymax operation based in the Indian Ocean. Belships' wholly owned handymax ship, M/S Belnor, operated on a fixed timecharter until the middle of November and was employed in the spot market for the rest of the year. The capesize vessel, M/S Belmaj, continued sailing in the Bocimar's pool. The rates in this segment rose sharply during the last few months of the year, but due to time delays this will not be fully reflected in earnings until 2003.
Building up the cargo base in the panmax segment suffered a setback due to continued uncertainty regarding the start-up of the long-term freight contract in India. If this contract is realised we will most probably have to renegotiate the terms. Work on the cargo side of this segment continues and the outlook here is good.
The small gas carrier market that Belships is engaged in through its ownership of Gibson Gas Tankers, went from bad to worse during 2002. The ships sailing in a pool administered by Anthony Veder were strongly affected by this through poor rates and long waiting times for cargo. The financial burden on GGT made it necessary to discontinue the pool and for them to be contracted out on timecharter. This work is nearly complete and will improve earnings, though the results will still be weak.
At the end of the fourth quarter, the group had liquid assets of USD 5.5 million, down from USD 7.2 million at the end of the previous quarter, while the mortgage debt was reduced from USD 56.3 million to USD 55.2 million. Shareholders' equity at the end of the period was equivalent to 25.2% of assets or NOK 4.68 per share excluding minority interests.
Broker's estimates for some of the group's ships were, as for the previous quarter, lower than the book value. Based on estimates of discounted future cash flows for the ships, the company did not find it necessary to write down any of the ships as at 31 December 2002.
The economic picture and threat of war make the outlook uncertain. Despite this we expect the dry bulk market to return satisfactory earnings in the future. The product carrier market is seeing significant deliveries of newbuildings but this, until now, has been balanced by an increase in the scrapping of older vessels.
Gibson Gas Tankers is dependent on a general increase in the market rates in order to fully service the company's debt. If the coming years' earnings reflect historical averages, the outlook for servicing both debts and equity is satisfactory. 
Oslo, 18th February 2003

4th Quarter 2002