Report 2nd quarter 2008

Belships' operating income in the 2nd quarter of 2008 was USD 25,705,000 (2nd quarter 2007: USD 13,370,000). The company's operating profit totalled USD 4,884,000 (USD 2,847,000). This increase in operating profit is related to Elkem Chartering's handysize operations, which also contributed a positive profit development.
Profit after tax in the 2nd quarter was USD 4,477,000 (USD 1,987,000).
Profit after tax in the first half-year was USD 8,342,000 (USD 9,936,000). Last year's profit includes realised gain of USD 6.5 million upon terminating the charter party of M/S Belpareil.
The half-yearly accounts for the period 1 January to 30 June 2008 have been prepared in accordance with IAS 34, Interim Financial Reporting. The information in the half-yearly report gives a true picture of the enterprise's and the Group's assets, liabilities, financial position and results as a whole and a true overview of the information required in section 5-6 fourth subsection of the Norwegian Securities Trading Act.
The rates for dry bulkers reached historic top levels in the 2nd quarter. The build-up of stocks, particularly in China, combined with the accumulation of ships in ports of loading and discharging was the main reason for this increase in rates. Towards the end of the quarter, the market fell back somewhat. The handysize operations of Elkem Chartering (EC) achieved good results, not least thanks to good capacity utilisation of the fleet in relation to the freight portfolio. The ship portfolio was somewhat strengthened during the quarter.
The supramax vessels M/S Pax Phoenix and M/S Legend Phoenix continued on their respective time charters without any significant interruptions. The same applied to Belships' own tonnage, the M/S Belisland and the M/T Belaia.
Delivery of the five newbuildings from Yangzhou Dayang in China has been pushed forward from one to three months. The first vessel will be delivered in May 2009.
In May, USD 4.7 million was paid as a dividend to shareholders. At 30 June, the Group's liquidity reserves totalled USD 50.7, against USD 51.0 at 31 March. At the end of the 2nd quarter, the company had a debt of USD 20.0 million relating to the bridge financing of the company's newbuildings. In addition, Belships has a bond loan of NOK 100 million (USD 19.5 million). This loan has been hedged against currency risks and the unrealised gain from this totalled USD 4.0 million at 30 June. This amount has been booked under Other fixed assets.
Both Belships and EC have organised their operations in such a way that estimated tax payable is limited.
At the end of the 2nd quarter, book value per share amounted to NOK 10.88, while the book equity ratio was 48.6%.
Charter parties for chartered tonnage have substantial values that are not reflected in the company's balance sheet.
For the first time in 3 years, the dry bulk market entered into a quieter period during the summer. This development may possibly have been caused by suspended industrial activity in China in connection with the Olympic Games. Most market observers expect a new squeeze in the fourth quarter.
In EC, it seems that the good results from handysize operations will continue in the present quarter.
A vessel on a long-time charter will be returned to the owner earlier than originally agreed and EC will in return receive a compensation of just over USD 7 million (Belships' share USD 3.5 million). This amount will be taken to income in the 3rd quarter. The M/S Belisland will be offhire for approximately one week in connection with periodic dry-docking in the 3rd quarter. The other vessels are expected to continue without any interruptions, thereby producing a contribution on a par with that of the 2nd quarter.
Oslo, 21 August, 2008

2nd Quarter 2008