President's View

Our business activities during the third quarter were stable and generated a profit and cash flow somewhat better than planned.

The operating result was SEK 22.6 million. This was our best quarter since the first quarter of 2005. Cash flow (EBITDA) after nine months is SEK 2.78 per share.
All the vessels in our fleet are signed to fixed time charter contracts and we have financing on favourable terms for the remainder of the newbuilding program. We thus have a stable platform and resources for new investments. This is especially important in these times of financial instability and nervousness in the financial markets.

The state of the financial market has now resulted in downward price adjustments for, in principle, all forms of financial investments. This also applies to our holdings, which are calculated at their market value on each accounting date and the effect included in the income statement.

At the end of the quarter, the value of our shareholding in Arlington Tankers had fallen about 25% compared with the beginning of the year and has since fallen a further 30%. This change in value is recorded directly to equity.

As mentioned in the previous interim report, the board of Arlington Tankers has proposed a merger with the US shipping company General Maritime. The companies have not yet made a final detailed proposal public. Shareholder meetings, which will vote on the proposal, will be held at the beginning of December at the earliest. We are continuing our evaluation of the proposed deal.

Even if the tanker markets so far do not seem to have been affected to any appreciable extent by the crisis in the financial markets, a general downturn in the so-called real economy will, of course, also affect this market in the form of lower demand.
A concrete example of the direct impact on shipping is that many shipping companies do not have the financing in place for their newbuilding orders and the lack of a functioning loan market could then result in difficulties in taking delivery of the vessels from the shipyards. This could provide business opportunities.

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