annual report 2001

Contents

Financial summaryHighlights 2Company profile 4Directors' report 6Consolidated accounts 10Statements of income 10Balance sheets 1 1Cash flow statements 12Notes to the accounts 13Accounts – Leif Höegh & Co. ASA 31Statements of income 31Balance sheets 32Cash flow statements 33Notes to the accounts 34Auditors' report 39Shareholder relations and analytical information 40President's report 4475 years - Anniversary 46HUAL 48Contract shipping 54LNG 56Dry bulk 58Höegh Lines 60Reefers 64Höegh Fleet Services 66Organisation 68The fleet 69Words and expressions 70

Financial calendar:Report 1st quarter 18.04.02Report 2nd quarter 10.07.02Report 3rd quarter 18.10.02Preliminary report 2002 13.02.03

Annual general meeting24.04.2002

Financial summary:

1) Operating profit before sales gain and depreciation

Amounts in 2001 2000 1999 1998 1997

Statements of incomeFreight revenues, net USD mill 680 774 486 505 491Operating profit beforesales gain and depreciation USD mill 164 124 64 113 103Operating profit USD mill 102 56 23 71 81Net profit USD mill 83 19 (38) 51 66

Balance sheetsVessels and other fixed assets USD mill 1 083 1 170 855 796 721Current assets USD mill 253 258 217 192 166Total assets USD mill 1 336 1 428 1 072 988 887

Equity at book value including minority interests USD mill 468 420 376 441 403Long term debt USD mill 783 923 604 500 437Current liabilities USD mill 80 85 92 47 47Total liabilities and equity USD mill 1 336 1 428 1 072 988 887

Equity ratio % 36 29 35 45 45

Key figures per shareEBITDA 1) USD 5.16 3.64 2.14 3.77 3.43Earnings USD 2.62 0.60 (1.25) 1.69 2.19Cashflow USD 4.71 3.03 1.66 2.95 2.55Price/earnings ratio 3.35 13.90 - 6.9 9.3Price/cash flow ratio 1.86 2.80 7.0 4.0 8.0Dividend NOK 2.00 0 0 4.00 4.00Dividend ratio % 8.6 0 0 29.6 35.8Market price per 31 December NOK 79.00 74.00 95.00 89.00 150.00Equity at book value USD 15.80 12.80 12.50 14.70 13.40

Hual 66%Contract shipping 15%Höegh Lines 10%Reefer 9%

Hual 64%Contract shipping 13%Höegh Lines 9%Reefer 14%

Operating profit beforesales gain and depreciation

per sector

Investments per sector atbook value

highlights

highlights

2

3

2001• Focus on HUAL• Sale of Cool Carriers AB• Höegh Galleon entering long term contract• LNG vessel ordered• Liner activity terminated• Sale of remaining shares in Teekay for USD 60 million• Repurchase of 9% own shares for USD 28 million

2000 1999 1998

2002

• LHC buys Ugland InternationalHolding's 50% share in HUAL.

• Three large, flexible car carriers deli-vered.

• The LNG carrier Höegh Galleon rebuiltfor 17 years T/C to Enron.

• Sale of two older liner vessels.• LHC acquires Safmarine’s 50% share

in Unicool Ltd.• Sale of three reefer vessels.• Additional new share capital of

USD 51 million.• Sale of Teekay shares in the amount

of USD 60 million.• Repurchase of 10% of own shares for

USD 27 million.

• LHC sells its 33.6% holding in BonaShipholding Ltd. to Teekay ShippingCorporation (TK) in return for sharesin TK.

• The car carrier Hual Transporter isdelivered and two small car carriersaquired and included in Euro MarineCarrier (EMC).

• LHC increases its holding in Unicoolto 100%.

• LNG carrier Norman Lady upgradedand fixed on 20-year timecharter toEnagas.

• HFS establishes Manila office forrecruiting and training crew in thePhilippines.

• LHC sells liner service between theUS Gulf/East Coast and SoutheastAsia, including four vessels, to EgonOldendorff oHG and charters the ves-sels back on a two-year timecharterto spring 2001.

• Programme to modernise and increa-se HUAL's capacity continues with thedelivery of the first of six new carcarriers, Hual Trader, and the purcha-se of two second hand car carriers byJoint Vessels Ltd, a joint venture bet-ween LHC and Ugland InternationalHoldings plc.

• Mystic Lady, sister ship to one ofLHC's existing LNG carriers, is pur-chased.

• Car carrier Carib Star sold forscrap in January

• Reefer vessel Spring Bridesold in February

• Repurchase of own shares forUSD 3 million

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company profileLeif Höegh & Co (LHC) is an international shipping company thatoffers competitive transportation and logistics solutions for customers worldwide within selected industrial shipping segments.

USD millionFreight revenues, netOperating profit

HUAL

2001 2000 1999 1998 1997495 408 227 233 22261 46 37 53 46

Contract shipping - LNG/dry bulk

2001 2000 1999 1998 199749 55 39 42 2617 17 12 13 7

5

Höegh Lines

2001 2000 1999 1998 199793 132 126 126 13814 2 (5) 20 19

Reefers

2001 2000 1999 1998 199739 174 96 104 10621 4 (9) (8) 17

Founded by Leif Høegh in 1927, LHCbuilds on a long shipping tradition. TheHøegh family owns or controls 59.6% ofthe shares in the company, ensuring astable ownership structure and a long-term perspective on the company's stra-tegy and operations.

LHC's main strategy is to be a majorplayer in the industrial Ro/Ro segment,combined with a portfolio of vessels onlong-term contracts that generate astable income and cash flow. The targetis to increase the long-term return oninvested capital through reduced diversi-fication and a sharper focus on profi-table segments. LHC also aims to main-tain the financial strength needed todevelop existing activities and establishpositions in new segments wheneverappropriate.

LHC is involved in the following busi-nesses:

HUALTransportation of cars, trucks and otherhigh/heavy Ro/Ro cargoes. HUAL ope-rates a fleet of 40 vessels in the deep-seasegment and four in the short-sea seg-ment, making it one of the world's lar-gest car carrier operators.

Contract shipping Includes both LNG and dry bulk carriers.LHC operates four LNG carriers transportingliquefied natural gas on long-term contracts.The company has ownership interests inthree of these vessels and is one of onlya limited number of established playersin this market. LHC also operates twodry bulk carriers on long-term charters.

Reefers LHC has ownership interests in 14 reefervessels operated under the commercialmanagement of Lauritzen Cool AB, theworld's largest operator of this type of tonnage.

Höegh LinesFollowing the sale of the traditional linerbusiness in March 2001, Höegh Lines isfocusing on open hatch vessels, speciali-sing in timber and forest products. Thecompany operates 10 vessels. HöeghLines is the world's fifth largest operatorin the open hatch segment and enjoysstrong and longstanding relationshipswith quality customers.

Höegh Fleet ServicesHöegh Fleet Services (HFS) is a separatecompany responsible for the technicalmanagement, crewing, safety and qualityof the fleet, along with purchasing, insu-rance and newbuilding projects. In HFS,LHC has a strong technical organisationthat underpins the group's position in allits markets.

Leif Höegh & Co (LHC) is a worldwide shipping company withhead office in Oslo, Norway. LHC can look back on a year withincreasing activity in its core segments, being the transportation ofRo/Ro cargoes and liquefied natural gas (LNG). The acquisition ofthe remaining 50% share of HUAL in 2000, and the subsequentintegration of the business into LHC, are already producing results.Two major contracts for LNG vessels were entered into. However,all business segments have been contributing to 2001 becoming arecord year for LHC.

directors' report

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directors' report – stronger focus produces better results

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Results LHC generated substantially improvedresults in 2001. Operating profit beforesales gain and depreciation increased by32% to USD 164 million and by 84% toUSD 102 million, while ordinary profitbefore tax improved from USD 23 milli-on to USD 99 million. Earnings per shareamounted to USD 2.62 and cash flowper share to USD 4.71.

The improvement came as a result ofstrategic decisions over a number ofyears and good commercial operations,especially in the Ro/Ro segment, butalso for contract shipping, Höegh Linesand the reefer vessels. Return on totalassets after tax was 9.7% against 6.3% in2000. The Board is satisfied with theresults and the company's developmentin 2001.

Financial position The acquisition of HUAL in 2000, whichwas financed partly through debt andpartly through a rights' issue, represen-ted a substantial investment for the com-pany. The positive development through2001 has substantially improved thecompany’s financial position. The equityratio by end 2001 was 36%, which isonly just below the company's long-termtarget of minimum 40%.

As a consequence of increased focus onthe core business segments during 2001,LHC sold its remaining shares in TeekayShipping Corporation with a gain of USD 36 million and its shares in GorthonLines AB with a gain of USD 4 million.Höegh Lines' liner business was alsofinally handed over to its new owner,and Cool Carriers AB was sold.

LHC has used its strong cash flow to re-duce debt by USD 137 million, of whichUSD 50 million was extraordinary.

Liquidity in the form of bank depositsand marketable securities amounted toUSD 178 million at the year-end, thesame as a year earlier.

The Board confirms, as required by §3–3of the Financial Reporting Act (Norway),

that the annual accounts have been pre-pared on a going concern basis.

HUALHUAL generated for 2001 an operatingprofit of USD 61 million, representing62% of LHC's total operating profit.

During 2001, major organisational changeswere made in HUAL. In addition, costreductions and focus on logistics and flexibility have contributed to the impro-ved result. In a market which developedclose to flat, HUAL strengthened its posi-tion in the Far East through the acquisitionof Kiwi Car Carriers' operations in NewZealand and a co-operation with China's leading shipping company, China OceanShipping (Group) Company (Cosco).Activity in the European short-sea marketwas increased through the French sub-sidiary, Cetam. These measures contri-buted to greater flexibility in both thedeep-sea and short-sea markets at a timeof considerable uncertainty as to themarket development.

The Board is satisfied with HUAL's pro-gress in 2001.

Contract shipping Contract shipping consists of vessels onlong term contracts, producing stableincome. The company's goal is for thissegment to produce 20–30% of LHC'stotal operating profit.

LNGWithin contract shipping, LNG is the mostimportant area for LHC. The companyhas been involved in the transportationof LNG for 30 years and currently opera-tes four vessels, of which one is whollyowned and two partly owned.

In 1998 LHC bought a 1974-built LNGcarrier for little more than scrap value.In March 2001 the vessel began a 17-year charterparty to Enron LNG Shippingat a rate offering a good return on inve-sted capital. Enron has now applied forprotection under US bankruptcy legisla-tion (Chapter 11), which has resulted inuncertainty about the company's abilityto meet its commitments under the char-

terparty. However, the Board is of theopinion that the vessel will be attractiveto other entities with LNG transportationneeds, should the contract be breached.

In December LHC and Mitsui OSK Linesplaced a joint order for a new LNG carrieron certain conditions on the basis of a20-year contract to Statoil, as operatoron behalf of certain owners in theSnøhvit field. Statoil will also participatein the joint venture company.

Dry bulk LHC's dry bulk business consists primarilyof two wholly owned Capesize vesselson long-term charterparties. The companyhas also been exposed to the spot mar-ket through one vessel chartered in. Thebulk market was weak throughout theyear due to a combination of newbuil-ding deliveries and slow growth in theglobal economy.

Contract shipping generated an operatingprofit of USD 17 million in 2001, whichwas unchanged from last year. TheBoard is satisfied with the result.

Other segments ReefersThe commercial management companyCool Carriers AB was sold in January 2001to J. Lauritzen A/S. However, LHC retainedits exposure to the reefer market throughthe ownership of 15 vessels participating inthe Lauritsen-Cool pool. The reefer seg-ment generated an operating profit of USD 21 million in 2001 (including salesgains of USD 15 million), compared withUSD 4 million in 2000. The segment seemsto be in a positive development, withincreasing vessel values.

Höegh LinesLHC's longstanding involvement in theliner business came to an end on 5 March2001 in accordance with an agreemententered into in 1998. The remainingbusiness consisted of 11 open-hatchvessels. Höegh Lines generated an ope-rating profit of USD 14 million in 2001,compared with USD 2 million in 2000.The return on capital employed isacceptable.

directors' report

Höegh Fleet ServicesIt was also a good year for Höegh FleetServices (HFS), which is responsible for39 vessels. HFS can look back on a yearwith no major accidents, which is verysatisfactory and a confirmation that thelong term investment in training andeducation is paying off. This will remaina focus area for the company also in thecoming years.

In 2001 HFS became the first foreigncompany to be awarded a licence to ope-rate a crewing office in China. Three carcarriers will be crewed by Chinese sea-men from 2002 onwards. Crewing inChina represents interesting opportunitiesand HFS will be looking to develop thisfurther in the years ahead alongside theoperation in the Philippines.

HFS' crewing office in Manila has pro-ven a success. Great emphasis has been placed on recruiting and educating localstaff. This is very important in light ofthe increasing shortage of qualified seamen.

HFS has also identified a substantialpotential for efficiency gains in the ope-ration of the vessels. 2002 will thereforebring an efficiency drive, which isexpected to have a positive impact onprofitability already in its first year.

Level playing field Shipping is an international business fea-turing strong global competition.Norwegian shipping companies haveplayed an important role in ensuring thatshipping and associated industries

remain a major force in Norway todayand make a key contribution bothdirectly and indirectly to economicgrowth and employment. In order to defend and develop thisposition, it is essential that Norwegianshipping companies can compete withtheir foreign counterparts on a levelplaying field. This is not the case today.For the year 2001, LHC will pay a consi-derable amount in taxes. In additioncomes the tonnage tax, amounting toUSD 2.1 million. This tax has quadrupledover the last years and is considerablyhigher than in other European countries.It needs to be reduced and also to beredefined from an operating expense totax. LHC is working, i.a through theNorwegian Shipowners' Association, toimprove the present system and bring itmore in line with the practice in otherleading European shipping nations.

Shareholder relations The company's shares traded well belowtheir underlying book value in 2001, andalso low in relation to the company's ear-nings and cash flow. The Board thereforedecided to exercise the authority grantedby the 2000 annual general meeting tobuy back shares in the company. The2001 annual general meeting decided tocancel the shares bought back in late2000 and early 2001 and authorised theBoard to buy back another 10% of thecompany's remaining shares. 9% hadbeen bought back by the year-end andan additional 1% has been purchased in2002. The Board will recommend to the2002 annual general meeting that these

shares will be cancelled, in combinationwith a renewed authorisation for furtherrepurchase.

During the past 15 months, LHC hasbought back own shares for a totalamount of USD 58 millon. This has beena good investment compared to alternati-ve investment projects. The repurchaseshave increased the underlying value ofthe remaining shares and were thereforeattractive for the company's shareholders.

The Board will propose to the annualgeneral meeting that a dividend of NOK 2.00 per share is paid for 2001. Thelevel of dividend must be viewed in thecontext of substantial buy-backs of ownshares over the last 15 months.

Human resources LHC had a total of 2 383 employees atyear-end, compared with 2 131 at thebeginning of the year. 2 020 worked atsea and the remaining 363 on land. Thecrews manning the vessels are capableand well educated, employed throughthe company's various recruitment officesand trained by the company itself.

A new option scheme was introducedfor 19 senior managers of the companyin 2001. Once again the Board wishes tothank management and employees fortheir hard work during the year.

Environment Through HFS, LHC has invested heavilyin measures to reduce the environmentalimpact of its operations. This year LHC

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directors' report

Westye Høegh Leif O. Høegh

is introducing green accounts, whichinclude the parameters that it wishes tomonitor in the years ahead.

In July HFS was certified under ISO14001 by Det Norske Veritas. ISO 14001is a voluntary environmental manage-ment standard under which a companycommits itself to making specific improve-ments. Towards the end of the year LHCbecame the first shipping company inthe world to join the World BusinessCouncil for Sustainable Development,which the company sees as a recogniti-on of its focus on continued improve-ments in environmental performance.For 2001, a separate EnvironmentalReport will be issued together withLHC's annual report.

Absence through illness totalled 1.58% in2001, compared to 1.66% the previousyear, which is considered low for theindustry. Even so, the Board wishes to

stress that work on reducing absencewill continue.

Working environment throughout thecompany is satisfactory.

Leif Höegh & Co ASAThe parent company Leif Höegh & Co.ASA generated a net profit for the yearof NOK 379 million. Proposed distributionof the net profit for the year:

Dividend NOK 65 millionOther equity NOK 314 millionTotal distributed NOK 379 million

The free equity of the company was atyear end NOK 2 887 million.

Outlook The slow growth in the global economyseen in 2001 is expected to continue into2002, but with some signs of a recoveryin the second half of the year. Thanks to

HUAL's ability to adapt profitably tochanging market conditions demonstratedin 2001 and its new sharper focus, com-bined with cost efficiency, the Ro/Ro seg-ment is expected to generate operatingprofit for 2002 in line with 2001. The out-look for the LNG business holds a degreeof uncertainty in connection with theEnron contract, but we feel confident withregard to continued or alternative employ-ment on equivalent terms. Earnings forcontract shipping as a whole are notexpected to show any significant variationsin 2002. Coupled with unchanged orslightly improved earnings for the reeferfleet and unchanged or slightly reducedearnings for Höegh Lines, the group'soperating profit should be much the sameas in 2001. However, net profit is expec-ted to be lower than the net profit for2001, which included gains on the sale ofCool Carriers and the shares in Teekayand Gorthon Lines.

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directors' report

The Board of LEIF HÖEGH & COOslo, 6 March 2002

Westye HøeghChairman

Leif O. HøeghVice Chairman

Truls Bergersen Jörgen Ekberg

Karl Otto Gilje Truls Holthe Gunnar Reitan Thor Jørgen GuttormsenPresident

Karl Otto Gilje Truls Bergersen Truls Holthe Jörgen Ekberg Gunnar Reitan

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(USD 1 000) Note 2001 2000 1999

Freight revenues 680 353 773 646 486 088

Voyage expenses (289 024) (402 601) (219 937)

Income on T/C basis 391 329 371 045 266 151

Charterhire expenses (109 469) (137 272) (110 117)

Crew expenses (39 673) (37 522) (27 571)

Other operating expenses 4 (69 837) (64 056) (53 590)

General administrative expenses 5 (8 341) (8 621) (10 645)

Operating profit before sales gain and depreciation 15 164 009 123 574 64 228

Gain/(loss) on sale of fixed assets 15 176 908 (3 562)

Ordinary depreciation 12 (74 340) (64 525) (37 726)

Write-down fixed assets 12 (2 363) (4 380) 0

Operating profit 102 482 55 577 22 940

Profit/(loss) associated companies 11 329 (15 520) 1 178

Profit (loss) from disposal of associated companies 11 4 244 0 (50 679)

Interest income 9 042 9 727 11 119

Interest expenses (51 430) (59 312) (29 152)

Other financial items 6 34 102 32 513 3 975

Ordinary profit before tax 98 769 22 985 (40 619)

Tax 7 (15 594) (3 499) 2 905

Net profit 83 175 19 486 (37 714)

Minority’s share 0 (909) (124)

Earnings per share/diluted earnings per share 18 2.62 0.60 (1.25)

statements of income 01.01 – 31.12consolidated

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The Board of Leif Höegh & CoOslo, 06.03.2002

(USD 1 000) Note 2001 2000 1999

ASSETSDeferred tax assets 7 2 769 9 568 8 588Goodwill 12 76 126 85 524 646Total intangible fixed assets 78 895 95 092 9 234Vessels 963 234 1 023 902 691 665Newbuildings 0 0 43 949Other tangible fixed assets 23 303 21 333 23 709Total tangible fixed assets 12 986 537 1 045 235 759 323Investments in shares 11 4 660 15 805 78 475Long term receivables 13 194 14 202 7 868Total financial fixed assets 17 854 30 007 86 343Total fixed assets 1 083 286 1 170 334 854 900

Bunkers and inventory 7 039 15 720 9 551Receivables 67 976 64 041 52 682Marketable securities 10 121 798 112 639 98 197Bank deposits 9 55 923 65 625 56 611Total current assets 252 736 258 025 217 041

Total assets 1 336 022 1 428 359 1 071 941

SHAREHOLDERS' EQUITY AND LIABILITIESShare capital 9 375 10 416 8 945Treasury shares (840) (985) 0Share premium reserve 55 311 55 311 5 663Total paid in equity 63 846 64 780 14 608Other equity 403 769 354 902 360 677Total retained earnings 403 769 354 902 360 677Minority interests 0 0 909Total shareholders’ equity 2 467 615 419 682 376 194

Pension obligations 5 5 861 4 175 4 451Total provisions 5 861 4 175 4 451

Mortgage debt/lease obligations 14 781 295 915 914 598 105Other long term liabilities 1 299 3 356 1 728Total long term liabilities 782 594 919 270 599 833

Other current liabilities 13 79 952 85 232 91 463Total current liabilities 79 952 85 232 91 463

Total shareholders’ equity and liabilities 1 336 022 1 428 359 1 071 941Guarantees and long term charter commitments 17Pledges 14

balance sheets 31.12 consolidated

Westye HøeghChairman

Leif O. HøeghVice Chairman

Truls Bergersen Jörgen Ekberg

Karl Otto Gilje Truls Holthe Gunnar Reitan Thor Jørgen GuttormsenPresident

(USD 1 000) 2001 2000 1999

CASH FLOW FROM OPERATIONAL ACTIVITIES

Profit before tax 98 769 22 985 (40 619)

Tax paid (6 024) (4 802) (4 105)

Loss/(gain) on sale of fixed assets (15 176) (908) 3 563

Ordinary depreciation 74 340 64 522 37 726

Write down of fixed assets 2 363 4 383 0

Profit associated companies (4 573) 15 520 49 501

Movements in stocks, accounts receivable

and accounts payable (7 775) (23 758) 31 800

Movements in other short term items (4 610) 3 058 (4 853)

Sale/(purchase) of marketable securities (9 159) (14 442) 6 666

Net cash flow from operational activities 128 156 66 558 79 679

CASHFLOW FROM INVESTMENT ACTIVITIES

Sale of fixed assets 1 649 33 129 42 474

Purchase of fixed assets (8 250) (269 868) (132 149)

Payments made on newbuilding contracts 0 0 (10 524)

Sale of shares in other entities 32 414 0 65 976

Purchase of shares in other entities 0 (96 910) (133 467)

Net cash flow from investment activities 25 813 (333 649) (167 690)

CASH FLOW FROM FINANCIAL ACTIVITIES

Long term loans raised 0 401 822 148 205

Repayment of long term loans (136 677) (145 013) (45 100)

Changes in long term receivables 1 008 (4 705) 3 885

Rights issue 0 51 156 0

Sale/(purchase) of treasury shares (28 002) (27 154) 0

Dividends paid 0 0 (15 789)

Net cash flow from financing activities (163 671) 276 106 91 201

Net movements in cash and cash equivalents (9 702) 9 014 3 190

Cash and cash equivalents per 01.01 65 625 56 611 53 421

Cash and cash equivalents per 31.12 55 923 65 625 56 611

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cashflow statements 01.01 – 31.12consolidated

NOTE 1 ACCOUNTING POLICIES

The accounts have been prepared in accordancewith the 1998 Norwegian Accounting Act andgenerally accepted accounting principles inNorway.

The principal accounting policies applied bythe group are presented below:

A) Basis of consolidation Group companiesThe LHC group comprises the parent companyLHC and companies in which LHC directly orindirectly controls more than 50% of the voting capital (see also C below).

As specified in Note 11 to the accounts,LHC also has a number of subsidiaries that arenot consolidated. These are agent offices and/-or small companies with very limited activityand are immaterial to the consolidated accounts.

The group accounts have been prepared onthe basis of uniform accounting policies.

The companies included in the groupaccounts prepare accounts in both the localcurrency and USD, with the latter being used toprepare the group accounts as the main part ofthe transactions are in USD. All transactions inother currencies than USD are included in theaccounts at the rate of exchange at the date ofthe transaction.

Elimination of inter-company balances,transactions, profits and shareholdings All inter-company balances, transactions andprofits are eliminated in the group accounts.

Shares in subsidiaries are eliminated in linewith the principles of acquisition accounting.Any excess of the purchase price paid for sub-sidiary over the book value of its equity at thetime of acquisition or formation is allocated tothe relevant assets and depreciated over theestimated useful economic life of these assets.Any amount that cannot be allocated to specificassets in this way is reported separately asgoodwill and amortised on a straight-line basisover a period of 10 years or the economic life.Subsidiaries acquired in stages are consolidatedon the basis of the value of their identifiableassets and liabilities at the time of consolida-tion, with any discrepancies in the premiums/-discounts allocated to identifiable assets and

liabilities between previous acquisitions ofshares and consolidation being recorded directlyagainst equity.

B) Reporting by segmentsThe division of the group's business into differ-ent segments is based on the group's internalmanagement and reporting systems and anassessment of risk and return profiles. Trans-actions between the various segments areundertaken at market prices and are eliminatedin the group accounts.

C) Investments in other companiesThe company's investments in joint venturesare included in the group accounts using theproportional consolidation method, which meansthat only LHC's share of income, expenses,assets and liabilities are included in the accounts.

Several vessels owned by the LHC groupoperate under various pool agreements. Thecompanies participating and contributing ves-sels include external partners as well as LHCand its subsidiaries. Pools are treated as jointventures and their income, assets and liabilitiesare therefore included in the group accounts atpercentages corresponding to the group's interests.

Companies in which LHC holds or controlsbetween 20% and 50% of the shares and whichare not joint ventures are included in theaccounts using the equity method if theseinvestments are of a long term nature and LHCgroup has considerable influence.

Other long term investments in shares andlimited partnerships are included at cost and written down to net realisable value in the eventof a drop in value for reasons that cannot beconsidered temporary. Such writedowns are re-versed if the basis for writedown no longer isvalid for them. Investments in subsidiaries,associated companies and joint ventures aredealt with similarly in the parent companyaccounts.

D) Depreciable assetsDepreciable assets are recorded in the balancesheet at cost less depreciation and writedowns.

Vessels are depreciated on a straight-linebasis over a useful economic life of 25 years,except in the case of capesize dry bulk carriers

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notes consolidated

and gas carriers which are depreciated over 20years and 30 years, respectively. Upgrading ofgas carriers for long term charter agreements isdepreciated over the time charter period if thisperiod expires after the vessel is 30 years. Thevessels' scrap value is taken into account.Depreciation of office equipment is reportedunder administration expenses.

A vessel is written down to market value(discounted cashflows/broker assessments) ifits forecasted nominal future cashflows are lessthan its book value. Such writedowns arereversed if the basis for writedown is no longerpresent.

E) Newbuilding contractsInstalments paid on newbuilding contracts andrelated interest charges are capitalised.

F) Foreign exchangeForeign exchange items are included in theaccounts at year end exchange rates. Foreignexchange gain/loss is included under financialitems in the statements of income. Forwardcontracts which do not represent hedging arevalued together at market rate. Net unrealisedloss is expensed.

Profit/loss on future forward contractsentered into in order to convert currency expo-sure on liquid assets from NOK to USD areincluded in the accounts. Rate of exchangebetween NOK/USD is 9.01 at year-end.

G) Expenses related to new loans raisedAll expenses related to new loans raised arecapitalised and depreciated over the repaymentperiod of the loan. In the event of refinancing,the remaining capitalised expenses are chargeddirectly against profit and loss.

H) LeasingRights and obligations in respect of vesselschartered in on the basis of finance leases areincluded in the balance sheets under vesselsand long term liabilities, respectively. The inter-est element of rental payments is included ininterest expenses and the capital element istreated as a reduction of the long term liability.The lease obligations are the remaining part ofthe principal amount outstanding. Rights tovessels chartered out on the basis of financeleases are included in the balance sheets as

long term receivables. The interest element ofrental payments is included in interest incomeand the capital element is treated as a reductionof these long term receivables.

I) Financial current assetsMarketable financial current assets held in atrading portfolio are recorded at net realisablevalue, while other marketable financial currentassets are recorded at the lower of cost andnet realisable value.

Financial current assets in the form ofshares and bonds not held in a trading portfolioare treated as two separate portfolios and val-ued on a portfolio basis. Option premiums arenetted against shares. Unrealised losses onfinancial instruments not used as an interestrate hedge are charged against profit and loss.

J) Income recognition Revenues and expenses relating to voyagesunder way at the year-end are recognised onthe basis of the number of days the voyagelasts each side of the year-end.

K) Timecharters and freight contractsThe values of long term charters and otherfreight contracts are assessed at the year-endand provisions are made for estimated losses.These assessments are performed on a portfoliobasis for contracts relating to the same operation.

L) Periodic maintenanceClassification-related expenses and upgradingin connection with the dry-docking of vesselsare capitalised and depreciated over the periodto the next classification/dry-docking (normally60 months). The same applies to expenses forclass certification. When second-hand vesselsare purchased and newbuildings are delivered,a proportion of the price paid is deducted andcapitalised as classification expenses. Whenvessels are sold, capitalised expenses arecharged against profit as part of the capitalgain/loss on the sale. Other maintenanceexpenses are charged directly against profit.

M) Bunkers and other inventoriesInventories are reported at the lower of costand net realisable value on a first-in/first-outbasis.

notes consolidated

14

N) Extraordinary itemsAccording to the classification criteria appliedby the company, income and expenses mustbe unusual, irregular and substantial to bereported as extraordinary. The effects of changesin accounting policies and the correction ofmaterial errors are recorded directly againstshareholders’ equity.

O) Pension and pension liabilitiesPension expenses and liabilities are included inthe statements of income and balance sheetsin line with the Norwegian accounting standard.The year's net pension expenses comprise thepension benefits accrued during the periodadjusted for future wage growth and estimatedinterest on pension liabilities, less the estimatedreturn on pension scheme assets and the effectsof any changes in schemes and estimates.

P) Tax The year's tax charge includes both the taxpayable for the period and the change indeferred tax. For the part of the group's opera-tions falling outside Norway's special taxscheme for shipowning companies, deferredtax liabilities/assets are calculated at 28% oftemporary timing differences and tax lossesbrought forward. Temporary timing differencesthat reverse or may reverse during the sameperiod are offset and reported net. Net deferredtax assets considered recoverable on the basisof future earnings are reported in the balancesheets as intangible fixed assets.

The present value of deferred tax related totemporary timing differences in companies covered by the special tax scheme for ship-owning companies is considered immaterial asthe company does not expect the taxableincome that these differences represent tomaterialise in the foreseeable future. This ass-essment is based on the company's dividendpolicy, its liquid assets, the fleet's market value,the distributable taxed equity in those parts ofthe group not covered by the new tax scheme,and the company's intention to continue itsshipping activities.

Q) Cash flow statementThe cash flow statements have been preparedusing the indirect method. The cash and cashequivalent figures exclude shares and financialinstruments with a maturity of more than threemonths from the date of acquisition.

R) Contingent assets and liabilitiesProvisions are made for contingent lossesdeemed probable and quantifiable. Contingentgains are not recognised.

S) Estimates The accounts are based on the informationavailable at the time the accounts are produced.The effects of changes in estimates areaccounted for in the statements of income dur-ing the same period in which the estimates arechanged.

T) Classification of balance sheet items Current assets and liabilities are defined as thosethat fall due for payment within one year ofbeing purchased/taken out and those relatingto the working capital cycle. Other items areclassified as fixed assets and long term liabilities.First year repayments of long term debt is classi-fied as long term debt.

U) ReceivablesTrade and other receivables are recorded attheir nominal value less a provision for antici-pated bad debts.

V) Earnings per shareEarnings per share is calculated by dividing thenet result on a time weighted average of out-standing shares during the reporting period.Treasury shares are considered in the calcula-tion. Shares which are bought back during thereporting period are weighted in accordancewith the time they have been outstanding.When the share options are in the money, theywill be included in the calculation of dilutedearnings pr share.

notes consolidated

15

NOTE 2 MOVEMENTS IN EQUITY

ShareShare Treasury premium Other Minority

(USD 1 000) capital shares reserve equity interest Total

Shareholders’ equity

on 01.01.2001 10 416 (985) 55 311 354 940 0 419 682

Amortization of shares (1 041) 1 041 0

Net profit 83 175 83 175

Dividend (7 240) (7 240)

Treasury shares (896) (27 106) (28 002)

Shareholders’ equity

on 31.12.2001 9 375 (840) 55 311 403 769 0 467 615

In July treasury shares (10%) were formally amortized in accordance with the decision at the annual genaral meeting in April 2001. The LHC Board was at the same meeting authorised to buyback another 10% of the outstanding shares. LHC has as of 31.12.2001 bought 2 934 710 (9%) own shares. In January and February 2002 another 300 700 shares were purchased. Buying own shares is considered as an attractive investment in relation to the underlying values inthe company.

The share capital consists of : Number Face value Book value

Shares 32 625 000 NOK 2 65 250 000

NOTE 3 MAJOR TRANSACTIONS IN 2001 AND SUBSEQENT EVENTS

Major transactions in 2001:• Sale of Cool Carriers AB to J. Lauritzen A/S for USD 36 million with a sales gain of USD 13 mil-

lion after adjustments for deferred tax assets of USD 8 million• Sale of the shares in Gorthon Lines AB for USD 14 million• Sale of the remaining shares in Teekay Shipping Ltd for USD 60 million. (Gain USD 36 million)• LHC, together with Mitsui O.S.K. Lines Ltd., entered into a 20-year timecharter with Statoil for

transportation of LNG from the Snøhvit field. In this connection an agreement has been madefor building a LNG-vessel of 145 000 m3.

Subsequent events:• Sale of Carib Star and Spring Bride

notes consolidated

16

NOTE 4 OTHER OPERATING EXPENSES

(USD 1 000) 2001 2000 1999

Services 10 316 8 317 5 243

Docking expenses 7 242 6 422 5 080

Spare parts/consumables 27 561 25 936 24 147

Damage 3 923 3 094 6 040

Insurances 6 412 5 143 4 086

Administrative expenses – ship management/other 9 324 9 244 6 603

Tonnage expense 2 141 2 051 566

Miscellaneous operating expenses 2 918 3 849 1 825

Total 69 837 64 056 53 590

NOTE 5 WAGES, PENSIONS, NUMBER OF EMPLOYEES, AUDITOR'S FEE, EMPLOYEELOANS, ETC

Wages

(USD 1 000) 2001 2000 1999

Wages (excluding seamen) 18 896 22 466 19 192

Employer's tax 2 616 3 699 4 120

Pension expenses 2 328 1 581 1 288

Other benefits 2 116 2 276 1 078

Total 25 956 30 022 25 678

The Group’s administrative expenses related to the operation and management of vessels areincluded under “Voyage expenses” and “Other operating expenses”, respectively. “General admi-nistrative expenses” therefore covers expenses relating to the group's top management, president'soffice and finance & accounting.

The group had an average of 363 office-based employees during the year, compared with 423in 2000 and 426 in 1999. The number of seamen were 2 020 (1 708 in 2000 and 1 506 in 1999).Total loans to employees in 2001 amounted to USD 576 000 (USD 734 000 in 2000 and USD 734 000 in 1999).

notes consolidated

17

Remuneration to leading employeesVice-

(USD 1 000) President Board Chairman Chairman

Salaries 188 237 121

Pension expenses 36 54 20

Other benefits 14 14

Remuneration 60

The President is for 2001 awarded a bonus in the amount of USD 44 000, which will be paid in 2002.

The President of the parent company is entitled to 24 months salary in the event his employment isterminated before he reaches 60, less any salary from new employment. The President had, per 31December 2001, a loan from the company in the amount of NOK 4 million. No instalments are pre-sently required on the loan, which is interest bearing at 6% p.a. The loan is guaranteed by a thirdparty.

Incentive program for group managementA share option program has been established which gives 19 executives of the company the rightto purchase up to 325 000 shares in LHC. The Board has been authorized to issue options up to500 000 shares. 46% of the options can be exercised on March 10, 2002 and the remaining 54%on March 3, 2003.

A condition for exercising the options is that the executive is employed by the company at thetime the option is being exercised. The options were offered on June 15th, 2000 at a value of NOK98.50 per share on March 10, 2002 and on the 11th of June 2001 at a value of NOK 79 per shareon March 3, 2003. The President was offered 40,000 options under the program.

Auditor’s fee

(USD 1 000) 2001 2000 1999

Auditing 348 617 542

Consulting and other services 144 170 76

Total 492 787 618

notes consolidated

18

PensionsLHC operates its own pension scheme for employees. The scheme provides for a retirement pensionof 66% of the final annual salary up to a maximum of 12 times the social security multiplier after 30years' service. The scheme also provides for disability pensions and benefits for surviving spousesand dependants. All pension payments are coordinated with anticipated benefits from the govern-ment.

In addition to the pension obligations funded through the group pension scheme, LHC hasunfunded pension obligations in respect of supplementary pensions for salaries in excess of 12times (and up to a maximum of 24 times) the social security multiplier, and in respect of early reti-rement pensions.

2001 2000 1999

The following assumptions are used to estimate

future pension obligations:

Discount rate of interest 6% 6% 6%

Return on pension scheme assets 7% 7% 7%

Wage growth/inflation 4% 4% 4%

Pension adjustment 3% 3% 2%

The year's pension expenses are

calculated as follows (USD 1 000):

Present value of benefits accrued this year (2 030) (1 816) (737)

Interest payable on pension obligations

accrued this year (1 618) (1 482) (1 317)

Estimated return on scheme assets 1 574 1 591 1 435

Amortisation (254) 126 221

Net pension expenses (2 328) (1 581) (398)

Net pension assets/obligations

per 31. December (USD 1 000):

Obligations (30 521) (29 847) (23 726)

Assets 21 533 24 000 21 283

Net pension assets/(obligations) (8 988) (5 847) (2 443)

Impact of changes in estimats, differences

between estimated and actual returns

and changes in pension schemes not included

in statement of income 3 127 1 672 (2 008)

Net pension obligations reported in balance sheets (5 861) (4 175) (4 451)

No. of persons covered by the scheme:

Retired 166 180 220

Active 257 239 174

notes consolidated

19

NOTE 6 OTHER FINANCIAL ITEMS

(USD 1 000) 2001 2000 1999

Dividends 1 535 3 535 2 475

Gain/loss on shares/bonds 33 607 37 197 2 077

Exchange gains/losses 813 (1 061) (5 019)

Value regulation of financial assets in a trading portfolio (279) (9 865) 2 944

Value regulation of other financial current assets 164 (471) 0

Other Items (1 738) 3 178 1 499

Total 34 102 32 513 3 975

NOTE 7 TAX

Tax charge:

(USD 1 000) 2001 2000 1999

Tax payable 16 293 4 578 1 647

Change in deferred tax (699) (1 079) (4 552)

Tax 15 594 3 499 (2 905)

USD 2.1 million in tonnage expense is included under other operating expenses. Group companiescovered by the special tax scheme for shipowning companies generated no taxable income duringthe year. Deferred tax assets related to finance loss carried forward under the tax scheme for ship-owning companies is not recorded in the accounts.

Tax effect of timing differences

(USD 1 000) 31.12.01 31.12.00 31.12.99

Companies outside tax scheme for shipowning companies:

Shares, fixed assets (704) 1 135 1 594

Uncovered pension obligations (1 641) (1 170) (1 246)

Other (424) (1 544) (1 413)

Tax loss brought forward 0 (15 472) (13 119)

Limitation in deferred tax asset 0 7 483 5 596

Deferred tax asset (2 769) (9 568) (8 588)

notes consolidated

20

(USD 1 000) 2001 2000 1999

28% tax on profit before tax 27 655 5 907 (11 373)

Permanent differences 36 308 41

Result regarding tax scheme for shipowning companies (9 180) (9 928) 8 520

Consolidation Unicool/retirement Bona 4 566 5 325 (5 689)

Changes in deferred tax assets (7 483) 1 887 5 596

Tax 15 594 3 499 (2 905)

Equity within tax scheme for shipowning companies:

(USD 1 000) 2001 2000 1999

Negative account for taxed income 419 166 501 719 501 719

Accumulated retained, untaxed income 167 230 66 592 53 123

Total untaxed equity under tax scheme for

shipowning companies 586 396 568 311 554 842

Deferred tax 0 0 0

Paid-in capital and the negative account for taxed income is translated into USD at historical rates

of exchange for entry under the tax scheme.

NOTE 8 FINANCIAL MARKET RISK/OFF BALANCE SHEET

FINANCIAL INSTRUMENTS

The Company makes use of different financial instruments in managing financial risks.

Interest rate riskInterest rate risk arises in the short and medium term from floating interest rate debt. Fixed interestrate contracts are entered into when this seems advantageous. As of 31.12.2001 LHC had fixedapprox. 90% of the outstanding floating rate debt through interest rate swaps. The contracts expire between 2002 and 2008. Per year-end unrealised loss on these swaps amounted to USD 1.9 million. Hedge accounting is applied, hence the loss is not recorded.

Exchange rate riskFreights, ships, loans, etc. are mostly denominated in USD. The company is therefore only expo-sed to currency fluctuations to a limited extent since the currency used for reporting is also USD.The largest exposure is in NOK through general administrative expenses and wages. These wereper year-end covered by a substantial liquidity in NOK.

notes consolidated

21

Currency instruments per 31.12.2001

Average Gain/Amount forward loss

Currency forward contracts per 31.12.2001 in 1 000 rate Maturity (USD 1 000)

Sell USD/buy NOK USD 58 800 9.05 2002 (312)

Sell USD/buy EUR JPY 0 90.44 2005 41

Sell JPY/buy NOK JPY 0 7.67 2002 41

Sell EUR/buy NOK EUR 6 215 8.34 2002 205

Sell GBP/buy USD GBP 800 1.4 2002 (23)

Delta adjusted Gain/

Amount exposure lossCurrency options per 31.12.2001 in 1 000 (USD 1 000) Maturity (USD 1 000)Sell USD/buy NOK USD 55 000 (15 600) 2002 418

Credit risk and liquidity riskCredit risk and liquidity risk are considered to be low.

NOTE 9 BANK DEPOSITS

(USD 1 000) 2001 2000 1999

By currency:

USD 33 374 35 813 34 788

NOK 4 863 3 008 4 068

GBP 11 783 12 787 11 269

Others 5 903 14 017 6 486

Total 55 923 65 625 56 611

The equivalent of USD 11.9 million of these deposits was held in restricted accounts, of whichUSD 0.9 million in respect of employee taxes withheld and USD 11 million (GBP 7.6 million) in con-nection with the leasing of Hual Trader.

notes consolidated

22

NOTE 10 MARKETABLE SECURITIES

(USD 1 000) 2001 2000 1999

Bonds, denominated in NOK 45 915 21 812 54 534

Bonds, denominated in other currencies 62 562 26 130 18 456

Shares, valued at market value principle 14 216 11 096 4 108

Shares with sold options 11 220 18 910 12 355

Shares with guaranteed sales price 5 968 5 091 5 509

Market value sold options (1 355) (1 800) (3 719)

Total shares and options valued at market value principle 30 049 33 297 18 253

Shares, valued at lowest value principle (1 507) 24 785 6 036

Other marketable securities (15 221) 6 615 918

Total 121 798 112 639 98 197

Cost price for shares and options valued at market value principle was USD 30.2 million.

Bonds denominated in NOK:

Duration Cost Market(USD 1 000) (year) price value

Kingdom of Norway 1.8 619 615

Municipal 1.6 3 945 3 918

Financial institutions 1.3 17 704 17 585

Private issuers 2.2 23 056 22 900

Interest accrued 896 896

Total 1.8 46 220 45 915

Bonds denominated in other currencies:

Duration Cost price Cost Market(USD 1 000) (year) in currency price value

USD 2.3 45 605 45 605 59 056

EUR 3.5 1 397 1 930 1 227

GBP 8.4 784 1 120 1 189

Interest accrued 1 090 1 090

Total 2.4 49 745 62 562

LHC had per 31.12.2001 written call and put options on 22 listed companies. The market value ofthe underlying shares was USD 11.2 million. Normal time to maturity is 3 to 4 months.

By writing options, the risk of the share ownership is approximately 46% of the risk of buyingshares without writing options. The underlying shares represent security for non-standardised opti-ons. For the standardised options, the security consists of governmental bonds, shares and asmall cash amount. Market value of shares with guaranteed sales price was per 31.12.2001 USD 6million. The underlying shares are security for the agreements. Average lock-up time was per year-end approximately 2 months.

notes consolidated

23

NOTE 11 SHARES (FIXED ASSETS)

(USD 1 000) 2001 2000 1999

Shares in asssociated companies: (see specification below) 2 108 13 001 28 818

Shares in other companies 2 552 2 804 49 657

Total 4 660 15 805 78 475

Consolidated companies owned by Leif Höegh & Co. ASA:

Registered Holding HoldingCompany office capital % votes %

Leif Höegh & Co. Shipping AS Oslo 100 100

Höegh Fleet Services AS Oslo 100 100

HUAL AS Oslo 100 100

Liquimarine Gandria Shipping AS* Oslo 50 50

Höegh Holdings B.V. Amsterdam 100 100

Leif Höegh (U.K.) Ltd. London 100 100

Pacific Commerce Line Holding Ltd. Vancouver 100 100

Lawhill Shipping Ltd. Liberia 81 81

Ugland Auto Carriers AS Oslo 100 100

Fox Bay Ltd. Jersey 100 100

Consolidated companies owned by other consolidated companies:

Registered Holding HoldingCompany office capital % votes %

Methane Carriers Ltd.* Oslo 50 50

Liquimarine Gandria Chartering Ltd.* Oslo 50 50

Joint Vessels Ltd. Oslo 100 100

Höegh Galleon Gas Ltd. Oslo 100 100

HFS China Ltd. Quanzhou 51 51

Lateen Shipping Inc. Liberia 100 100

Auto Marine Feeder B.V. Amsterdam 60 60

CETAM S.A.R.L. Paris 100 100

HUAL Benelux B.V. Amsterdam 100 100

HUAL France S.A.R.L. Paris 100 100

HUAL North America Inc. New York 100 100

HUAL Germany Gmbh Bremen 100 100

HUAL Japan K.K. Yokohama 100 100

HUAL U.K Ltd. London 100 100

Pacific Commerce Line Ltd. Liberia 100 100

Pacific Commerce Line Inc. Vancouver 100 100

* Joint Ventures

notes consolidated

24

Specification associated companies:

Year of Registered Holding HoldingCompany acquisition office capital % votes %

Euro Marine Carrier B.V. 1990 Amsterdam 24.5 24.5

HFS Philippines Inc. 1998 Manila 25 25

LHC Real Estate Philippines Inc. 1998 Manila 40 40

Manx Car Carrier Ltd. 1990 Amsterdam 24.5 24.5

2001 2001 2001 2000 1999Gorthon Lines AB Other Total Total Total

Book value of equity at time

of acqusition 16 012 2 090 18 102 18 867 138 259

Excess value 9 381 0 9 381 9 381 9 381

Purchase price 25 393 2 090 27 483 28 248 147 640

Premium value per 31.12. 0 0 0 0 8 443

Calculation of year's earnings:

Share of year’s earnings 237 92 329 854 2 116

Write down 0 0 0 (7 931) 0

Depreciated excess value 0 0 0 0 (938)

Write down excess value 0 0 0 (8 443) 0

Share of year’s earnings 237 92 329 (15 520) 1 178

Calculation of book value per 31.12.:

Book value 01.01. 10 133 2 058 12 191 28 612 111 590

Share of year’s earnings 237 92 329 (15 520) 1 178

Dividends 0 0 0 (110) 0

Gain/loss from disposal of

associated companies 4 244 0 4 244 0 (50 679)

Increase 0 29 29 19 13 231

Retirement (14 613) (71) (14 684) 0 (46 502)

Book value per 31.12. 0 2 108 2 108 13 001 28 818

Excess value allocated to tangible assets in connection with investments in associated companiesis depreciated on a straight-line basis based on the remaining lifetime of the assets. In 1999 the shares in Bona Shipholding Ltd. were sold with a loss of USD 50 million.

notes consolidated

25

Goodwill:

(USD 1 000) Aquisition year Cost Depreciation

PCL 1993 1 722 10 year straight line

HUAL 2000 92 253 10 year straight line

Total 93 975

NOTE 13 OTHER CURRENT LIABILITIES

(USD 1 000) 2001 2000 1999

Holiday pay, tax withheld and social security 2 777 2 043 2 513

Tax payable 10 131 539 (438)

Tonnage expense 1 836 1 982 739

Suppliers 4 070 5 105 12 016

Amounts owed to pool partners and external ship managers 0 0 3 316

Accrued ship management and administrative expenses 38 600 65 832 43 906

Accrued interest on mortgage debt 3 564 5 767 5 751

Other short term debt 9 866 1 811 23 659

Dividend 7 240 0 0

Crew related liabilities 1 868 2 153 0

Total 79 952 85 232 91 463

notes consolidated

26

NOTE 12 FIXED ASSETSAcc. depre- Acc.* Net book Depre- Write- Depre-

Cost Additions Disposals ciation write- value ciation downs ciation(USD 1 000) 01.01. 2001 2001 31.12. downs 31.12. 2001 2001 2000

Vessels 1 259 284 4 035 2 305 403 517 50 581 806 914 58 148 2 363 52 003

Vessels, leased 169 396 0 0 13 076 0 156 320 6 535 0 4 092

Capitalised classification costs 11 101 193 0 0 0 11 294 0 0 0

Containers 3 206 0 3 206 0 0 0 33 0 319

Goodwill 93 975 0 0 17 849 0 76 126 9 398 0 7 376

Other fixed assets 21 968 8 536 1 940 16 560 0 12 009 226 0 702

Total 1 558 930 12 764 7 451 451 002 50 581 1 062 663 74 340 2 363 64 522

Other fixed assets comprise primarily vehicles, fixtures and fittings. Depreciation charges of USD 1.7 million are included in administrative

expenses.

* Accumulated write-downs include write-downs of the reefer vessels at the time of consolidation.

NOTE 14 MORTAGE DEBT AND LEASE OBLIGATIONS

Book Average value rate of

(USD 1 000) Currency 31.12.01 interest

Loans from financial institutions USD 627 263 4.8%

Loans from financial institutions, leasing USD 154 032

Total 781 295

Approx. 90% of the loans are fixed by interest rate swaps.

Repayment schedule: 2001 2000 1999

Less than one year 86 405 77 548 72 319

Between one and five years 502 750 448 700 228 514

More han five years 38 108 228 945 241 394

Total 627 263 755 193 542 227

Repayment schedule leasing: 2001 2000 1999

Less than one year 5 829 6 686 3 839

Between one and five years 106 517 21 653 9 196

More han five years 41 686 132 282 42 843

Total 154 032 160 621 55 878

Secured debt 2001 2000 1999

Book value of pledged assets:

Containers 0 1 194 2 005

Vessels 912 484 701 248 624 510

Total 912 484 702 442 626 515

In addition to the above pledged assets the debt is secured through assignment of vessel earningsand insurances. The agreements have financial covenants related to minimum liquidity and in onecase net asset value related to a company own by Leif Höegh & Co. Shipping AS. The company is incompliance with these clauses as of December 31, 2001.

notes consolidated

27

NOTE 15 REPORTING BY SEGMENT(USD 1 000)

LHC's business consists mainly of transportation by sea. The group's interest-bearing liabilitieshave not been allocated to the different segments as each segment is not responsible for its ownfinancing. There were no material transactions between segments in 1999, 2000 or 2001.Management reportering in LHC is not divided in geographical areas.

HUAL Contract shipping2001 2000 1999 2001 2000 1999

Freight revenues, net 494 536 408 294 227 350 49 231 55 416 39 109

Voyage expenses (236 677) (200 666) (103 157) (5 536) (13 983) (2 138)

Income on T/C basis 257 859 207 628 124 193 43 695 41 433 36 971

Charterhire expenses (96 056) (77 783) (49 214) (5 934) (8 273) (5 870)

Crew and other operating

expenses (46 886) (41 176) (22 777) (11 755) (8 443) (11 029)

General administrative expenses 0 0 0 0 0 0

Operating profit before capital

gains and depreciation 114 917 88 669 52 202 26 006 24 717 20 072

Gain/(loss) on sale

of fixed assets (198) (598) 0 0 0 0

Ordinary depreciation (51 512) (42 016) (15 208) (9 436) (8 229) (8 257)

Fixed assets write-downs (1 808) 0 0 0 0 0

Operating profit/loss 61 399 46 055 36 994 16 570 16 488 11 815

Book value of vessels 616 556 658 286 313 442 131 829 136 850 124 921

Net non interest bearing debt (13 535) (10 836) (5 270) (793) 1 983 1 299

Investments during the year 0 472 753 109 069 4 415 21 329 8 762

notes consolidated

28

Höegh Lines Reefers2001 2000 1999 2001 2000 1999

Freight revenues, net 92 721 131 679 126 153 38 991 174 329 95 905

Voyage expenses (46 237) (83 400) (77 053) (573) (104 528) (39 222)

Income on T/C basis 46 485 48 279 49 100 38 418 69 801 56 683

Charterhire expenses (7 479) (21 051) (18 214) 0 (30 165) (38 591)

Crew and other operating

expenses (21 316) (23 090) (27 899) (23 442) (22 481) (19 145)

General administrative expenses 0 0 0 0 0 0

Operating profit before capital

gains and depreciation 17 690 4 138 2 987 14 976 17 155 (1 053)

Gain/(loss) on sale

of fixed assets 0 1 506 (3 574) 15 374 0 (98)

Ordinary depreciation (4 141) (4 142) (4 806) (9 001) (8 965) (8 140)

Fixed assets write-downs 0 0 0 (555) (3 880) 0

Operating profit/loss 13 549 1 502 (5 393) 20 794 4 310 (9 291)

Book value of vessels 87 685 91 508 99 441 133 705 137 258 153 679

Net non interest bearing debt (1 183) 4 683 254 (560) (10 861) 6 522

Investments during the year 0 0 0 0 21 031 0

Administration/other

2001 2000 1999

Freight revenues, net 4 871 3 925 166

Voyage expenses (6) (23) (25)

Income on T/C basis 4 865 3 902 141

Charterhire expenses 0 0 0

Crew and other operating expenses (6 105) (6 387) (664)

General administrative expenses (8 340) (8 621) (10 645)

Operating profit before capital

gains and depreciation (9 580) (11 106) (11 168)

Gain/(loss) on sale

of fixed assets 0 0 0

Ordinary depreciation (250) (1 673) (319)

Fixed assets write-downs 0 0 0

Operating profit/loss (9 830) (12 779) (11 487)

Book value of vessels 0 0 0

Net non interest bearing debt 0 0 0

Investments during the year 0 0 0NOTE 16 RELATED PARTIES TRANSACTIONS

notes consolidated

29

Leif Höegh & Co. rents offices at Wergelandsveien 7 from Höegh Invest AS, a company owned bythe Høegh family. The lease covers a floor area of 6 335 m2 plus basement/store and parking. Thetotal annual rent was USD 1.4 million in 2001 and the lease runs until 31 December 2010. Thecompany also rents Prinsessealléen 8 from Gadus AS, also owned by the Høegh family. The annual rent is USD 0.1 million.

NOTE 17 GARANTEES AND LONG TERM CHARTER COMMITMENTS

The group is a partner in limited partnerships and liable for partnership capital not yet called ofUSD 2.4 million. The group has no operational charter commitments exceeding one year as of31.12.2001.

NOTE 18 EARNINGS PER SHARE

The calculation is based on an average number of outstanding shares adjusted for treasury shares.Due to LHC's purchase of treasury shares the number of shares in the calutaion was per 01.01.2001 32 821 905 and per 31.12.2001 29 690 290. Options given to leading employees were out of themoney per 31.12 2001, and have therefore no effect on the calculation of diluted earnings per share.

NOTE 19 PRO-FORMA INFORMATION

In connection with the purchase of the car transportation activities from UIH pro-forma informationwas produced as follows

(USD million): 1999

Freight revenues 635

Operating profit 40

Ordinary profit before tax (38)

Earnings per share (1.15)

The pro-forma accounts must be regarded as an illustration as the uncertainty connected the suchaccounts is considerable higher than historic accounting figures. The pro-forma accounts are pro-duced based on the audited accounts for and 1999 and are adjusted for the purchase of the cartransportation activities from UIH 1st quarter 2000.

notes consolidated

30

(NOK mill.) Note 2001 2000

Operating income and expenses:

Freight revenues 299 158

Income on T/C-basis 299 158

Crew expenses 3 (129) (75)

Ordinary depreciation 9 (1) (2)

Write-down fixed assets 9 0 (5)

Charterhire expenses 0 (22)

Other operating expenses (134) (80)

Gain on sale of assets 6 0

Operating profit 41 (25)

Interest income –/(expenses) from

consolidated companies 115 39

Interest income 17 4

Other financial income 4 372 334

Write-down financial fixed assets (4) (197)

Currency exchange gain/(loss) 5 19

Interest expenses 0 (17)

Group contribution 0 15

Other financial expenses (8) (48)

Ordinary profit before tax 538 123

Tax 5 (159) 84

Net profit 2 379 208

Dividend 2 65 0

statements of income 01.01 – 31.12

31

Leif Höegh & Co. ASA

(NOK million) Note 2001 2000

ASSETSDeferred tax asset 5 44 88Total intangible assets 44 88Tangible fixed assets 60 39Total tangible fixed assets 9 60 39Shares in consolidated companies 8 1 284 1 671Loans to consolidated companies 123 102Shares in associated companies 8 0 30Other shares 8 1 5Long term receivables consolidated companies 1 016 0Long term receivables 58 55

Total financial fixed assets 2 481 1 863Total fixed assets 2 585 1 989

Receivables consolidated companies 1 245 1 436Other assets 60 27Marketable securities 6 21 196Bank deposits 7 36 9Total current assets 1 362 1 668

Total assets 3 947 3 657

SHAREHOLDERS' EQUITY AND LIABILITIES Share capital 65 73Treasury shares (6) (7)Share premium reserve 460 460Total paid in equity 520 525Other equity 2 887 2 821Total retained earnings 2 887 2 821Total shareolders' equity 2 3 407 3 346

Pension obligations 3 53 37Total provisions 53 37

Mortgage debt/lease obligations 10 0 17Loans from consolidated companies 304 184Other long-term liabilities 4 4Total long-term liabilities 308 205

Other current liabilities 180 68Total current liabilities 11 180 68

Total shareholders’ equity and liabilities 3 947 3 657

Pledges 12Guarantees 10

balance sheets 31.12

32

Leif Höegh & Co ASA

The Board of Leif Höegh & CoOslo, 06.03.2002

Westye HøeghChairman

Leif O. HøeghVice Chairman

Truls Bergersen Jörgen Ekberg

Karl Otto Gilje Truls Holthe Gunnar Reitan Thor Jørgen GuttormsenPresident

(NOK million) 2001 2000

CASHFLOW FROM OPERATIONAL ACTIVITIES

Profit before tax 538 123

Tax paid (28) (2)

Loss/(gain) on sale of fixed assets 6 0

Ordinary depreciation 15 7

Write-down of fixed assets 0 4

Write-down financial fixed 4 34

Movements in stocks, accounts receivable and accounts payable (920) (500)

Liquidation loss subsidiaries 0 221

Movements in other short term items 8 3

Sale/purchase of marketable securities 175 177

Net cash flow from operational activities (202) 67

CASH FLOW FROM INVESTMENT ACTIVITIES

Sale of fixed assets 14

Purchase of shares in other entities 427 (151)

Purchase of fixed assets (53) (10)

Net cashflow from investment activities 388 (161)

CASH FLOW FROM FINANCIAL ACTIVITIES

Long term loans raised 136

Payment on long term loans (17) (1)

Changes in long term receivables (24) (84)

Rights’ issue 0 434

Sale/(purchase) of treasury shares (254) (254)

Net cash flow from financing activities (159) 95

Net movements in cash equivalents 27 1

Cash and cash equivalents per 01.01. 9 8

Cash and cash equivalents per 31.12. 36 9

cashflow statements 01.01 – 31.12

33

Leif Höegh & Co ASA

NOTE 1 ACOUNTING POLICIES

The group and parent company apply identical accounting policies and reference should be madeto note 1 to the group accounts. The parent company accounts are prepared in NOK and includeshares in subsidiaries joint ventures and associates using the cost method.

NOTE 2 EQUITYShare

Share Treasure premium Other(NOK million) capital shares reserve equity Total

Equity 01.01. 2001 73 (7) 460 2 821 3 346

Amortization of shares (8) 8 0

Net profit 379 379

Dividend (65) (65)

Treasury shares (7) (248) (255)

Equity 31.12.2001 65 (6) 460 2 887 3 407

Principal shareholders on 31.12.2001:

Shares Votes

Pomor Holdings Ltd.* 9 153 200 28.06%

Gadus International Ltd* 9 153 200 28.06%

Bank Morgan Stanley AG Zurich 4 067 225 12.50%

Leif Höegh & Co. ASA 2 934 710 9.00%

Folketrygdfondet 1 400 500 4.30%

Leif Höegh’s Stiftelse 845 833 2.60%

Fraternitas* 602 766 1.85%

Verdipapirfondet Skagen Vekst 464 300 1.40%

Ajavoff AS* 287 961 0.88%

Argon Ltd.* 241 666 0.74%

Parkveien 55 AS* 18 602 0.06%

Subtotal 29 169 963 89.40%

Others 3 455 037 10.60%

Total 32 625 000 100.00%

* The Høegh family controls indirectly 59.6% of the shares.

notes Leif Höegh & Co ASA

34

Shares held by top management, board members and related parties:

No ofName Position shares

Board

Jörgen Ekberg 4 000

Karl Otto Gilje 5 000

Truls Holthe 7 250

Leif O. Høegh Vice Chairman 9 153 200

Westye Høegh Chairman 890 727

Management

Thor Jørgen Guttormsen President 79 639

Total 10 139 816

NOTE 3 PAYROLL EXPENSES, PENSIONS, NUMBER OF EMPLOYEES, AUDITOR'S FEES,EMPLOYEE LOANS, ETC

(NOK million) 2001 2000

Wages and salaries 91 49

Employer's contributions 13 8

Pension expenses 20 14

Other benefits 5 4

Total 129 75

The company had an average of 150 employees during the year, compared with 87 in 2000. Totalloans to employees in 2001 are NOK 5 millions (NOK 4 millions in 2000). For remuneration of groupmanagement, see note 5 in the consolidated accounts.

Auditor's fees

(NOK million) 2001 2000

Auditing 0.7 0.7

Consulting and other services 1.1 0.7

Total 1.8 1.4

PensionsRegarding assumptions of estimated future pension obligations (calculated at a closing rate ofexchange of 9.01) and calculated pension expenses (calculated at an average rate of exchange of9.01) see note 5 in the consolidated accounts.

notes Leif Höegh & Co ASA

35

NOTE 4 OTHER FINANCIAL INCOME

Other financial income consists mainly of income from sale of Teekay shares.

NOTE 5 TAX

(NOK million) 2001 2000

Tax effects from tax increasing (tax reducing) differences:

Marketable securities (2) (1)

Shares (27) (19)

Pension obligations (15) (10)

Tax losses brought forward 0 (55)

Other (0) (2)

Total (44) (88)

28% tax on result before tax 151 35

Permanent differences (28%) 1 1

Liquidation of Unicool 0 7

Prior years corrections 8 0

Change in deferred tax asset 0 (127)

Tax 159 (84)

notes Leif Höegh & Co ASA

36

NOTE 6 MARKETABLE SECURITIES

(NOK million) 2001 2000

Shares, valued at lowest value principle 4 196

Shares, valued at market value principle 17 0

Total 21 196

NOTE 7 BANK DEPOSITS

NOK 4.6 million of the company's bank deposits were held in a restricted account in respect ofemployee taxes withheld. (NOK 3.1 million in 2000.)

NOTE 8 SHARES (FIXED ASSETS)

BookRegistered Holding Holding value

Shares in group companies office capital % votes % (NOK mill.)

Leif Höegh & Co Shipping AS Oslo 100 100 1 165

HUAL AS Oslo 100 100 9

Höegh Holdings B.V. Amsterdam 100 100 131

Others (21)

Total 1 284

notes Leif Höegh & Co ASA

37

NOTE 9 FIXED ASSETS Accumulated Book Depre- Depre-

Cost Addition Disposals depreciation value ciation ciation(NOK million) 01.01. 2001 2001 31.12. 31.12. 2001 2000

Containers 21 0 21 0 0 0 1

Forklifts etc. 0 2 0 1 1 1 0

Other fixed assets 100 39 0 80 59 14 5

Total 121 41 21 81 60 15 6

Other fixed assets comprise primarily of vehicles, fixtures and fittings. The associated depreciation charges of NOK 14 million are included in other

operating expenses.

NOTE 10 MORTAGE DEBT AND LEASE OBLIGATIONS

(NOK million) 2001 2000

Repayment schedule:

Less than one year 0 3

Between one and five years 0 14

More than five years 0 0

Total 0 17

Secured debt:

Pledged assets at book value

Containers 0 6

Sum 0 6

NOTE 11 OTHER CURRENT LIABILITIES

(NOK million) 2001 2000

Holiday pay, tax withheld and social security 16 9

Tax payable 87 2

Suppliers 6 6

Short term loans 0 33

Accruals for future loss 0 13

Dividend 65 0

Other short term debt 6 5

Total 180 68

NOTE 12 GUARANTEES AND LONG TIME CHARTER COMMITMENTS

In connection with financing of vessels owned by group companies, the company has given gua-rantees totalling USD 273 million. The company has also issued a guarantee in the amount of GBP4.6 million related to the financing Hual Trader. In addition the company has guaranteed USD 3.5million (24.5%) of a loan raised by Euro Marine Carriers B.V. (EMC) to finance two vessels. HöeghHoldings B.V. holds a 24.5% stake in EMC.

notes Leif Höegh & Co ASA

38

39

auditor’s report

shareholder relations and analytical information

LHC aims to give shareholders a good return on their investments relative to the underlying risks associated with the company's activities.

shareholder relations

40

shareholder relations

41

2001 2000 1999 1998 1997Earnings per share (USD) 2.62 0.60 (1.25) 1.69 2.19Price/earnings ratio per share 3.35 13.90 - 6.90 9.30Cash flow per share (USD) 4.71 3.03 1.66 2.95 2.55Price/cash flow ratio per share 1.86 2.80 7.10 4.00 8.00Dividend per share (NOK) 2.00 0.00 0.00 4.00 4.00Dividend ratio (%) 8.60 0.00 0.00 29.60 35.80Share price on 31 December (NOK) 79.00 74.00 95.00 89.00 150.00

Repurchase treasury shares:No. of shares (million) 3.1 3.4Average share price (NOK) 81.39 73.92Total purchase amount (USD mill.) 28.00 27.00

The LHC share:

Dividend/repurchase of treasury sharesThe payment of dividend will dependon the company's earnings and invest-ment needs in a cyclical business. LHCwill, however, as an alternative also con-sider repurchase of own shares if believedto be more optimal for creating value forshareholders.

The Board will propose to the annualgeneral meeting that a dividend of NOK 2.00 per share is paid for 2001.The size of the proposed dividend mustbe viewed in context with the company'sconsiderable repurchase of treasury sha-res. Over the last 15 months, own shareshave been bought for a total amount ofUSD 58 million.

ShareholdersA total of 5.9 million LHC shares weretraded in 2001 (49.5 million in 2000) andthe number of shareholders in the com-pany at year-end was 1 606 (1 827 end

2000). The foreign shareholding increa-sed from 67.0% to 72.4% during theyear, and shares owned or controlled bythe Høegh family increased from 53.2%to 59.6%. As in previous years, employeeswere invited to purchase LHC sharesworth NOK 7 500 at a price of NOK 6 000.The offer was taken up by 154 employeeswho acquired a total of 16 478 shares.The company's other principal share-holders are shown in the table.

The year 2000 annual general meetingauthorised the Board to buy back up to10% of the company's shares. This aut-hority was exercised in full and the sha-res were cancelled in July 2001. The2001 annual general meeting authorisedthe Board to repurchase a further 10% ofthe company's shares, which has nowbeen fully utilised. The Board considersthe price paid for the shares to be attrac-tive relative to the company's underlyingvalues, as well as earnings and cashflow.

LHC's share price on the Oslo StockExchange increased with 6.8% fromNOK 74 to NOK 79 during the year,with a low of NOK 68 in July and a highof NOK 87 in August. During the sameperiod, the Oslo Stock Exchange's trans-portation index and all-share indexdecreased by 10.3% and 14.8%, respecti-vely. The stock market value of LHC per31 December 2001 was at NOK 2 577million, a decrease of NOK 105 millioncompared to a year earlier.

Investor relationsLHC aims to keep shareholders, analystsand investors updated about the compa-ny's operations by providing regularinformation and presentations. Thepublication dates for the company'squarterly interim reports are given in theannual report.

The company's website at www.hoegh.noincludes a special section with infor-mation for investors. Reports, presenta-tions, press releases and other relevantinformation are immediately made avai-lable on the website.

Number of shares and share capital The table below shows movements in the company's share capital and number ofshares since the quotation of Leif Höegh & Co. ASA on the Oslo Stock Exchange(OSE) in 1987:

Change in Par value Total NumberYear Transaction share capital of shares share capital of shares1987 Quotation on OSE 10 56 000 000 5 600 0001988 Rights’ issue 4 000 000 10 60 000 000 6 000 0001990 Share split (1:5) 2 60 000 000 30 000 0002000 Rights’ issue 12 500 000 2 72 500 000 36 250 0002001 Cancellation of shares 7 250 000 2 65 250 000 32 625 000

Shares owned directly or indirectly by board members and the presidentof Leif Höegh & Co

Leif O. Høegh 9 153 200Westye Høegh 890 727Truls Holthe 7 250Karl Otto Gilje 5 000Jörgen Ekberg 4 000Thor Jørgen Guttormsen 79 639Total 10 139 816 (31.1%)

Distribution of shares per 31December 2001

Shareholders SharesNumber % Number %

1–100 439 27.3 20 112 0.1101–1 000 838 52.2 321 870 1.01 001–10 000 272 16.9 793 876 2.4Over 10 000 57 3.6 31 489 142 96.5Total 1 606 100.0 32 625 000 100.0

analytical information

42

Shareholders in Leif Höegh & Co per 31 December 2001

Shares VotesShares owned or controlled by the Høegh family: 19 457 395 59,6%

Other principal shareholders:Bank Morgan Stanley AG Zürich 4 067 225 12.5%Leif Höegh & Co. ASA 2 934 710 9.0%Folketrygdfondet 1 400 500 4.3%Leif Höegh’s Stiftelse 845 833 2.6%Verdipapirfondet Skagen Vekst 464 300 1.4%Storebrand Livsforsikring 250 034 0.8%Vital Forsikring 189 415 0.6%Morgan Grenfell 130 302 0.4%Deutsche Bank AG 120 833 0.4%Norsk Kjøttsamvirke 120 000 0.4%State Street Bank & Trust 116 830 0.3%Total 30 097 377 92.3%

Other shareholders (holdings <100,000) 2 527 623 7.7%Total No. of shares 32 625 000 100.0%

55

70

85

100

–– LHC-stock

–– All-share index Oslo OSE

–– Transportation index Oslo OSE

Development of the LHC share relative to the transportationand all-share indexes for the period 01.01.01 - 15.02.02

01.01.2001

Share price

15.02.2002

Analytical information

Exchange ratesThe group's income is primarily denomi-nated in USD or converted into USD.Expenses are also mainly denominatedin USD, with the exception of admini-stration expenses in the region of NOK 350 million or 8% of total expenses.

The values of vessels and other vessel-related assets are expressed in USD.Cash may be invested in either USD orNOK; in the latter case, foreignexchange gain/loss will arise as a resultof movements in the NOK/USDexchange rate. All debt is denominatedin USD.

Interest rates All loans are based on floating interestrates. Interest rate hedging is entered intowhen considered advantageous. Thegroup had interest rate swaps and otherhedge contracts amounting to USD 590million at year-end. These contractsmature in 2002-2007 and cover a substan

tial proportion of the group's mortgagedebt. This means that the group's exposu-re to fluctuations in interest rates is cur-rently limited.

BunkerIn 2002, the vessels operated by thecompany will consume approximately700 000 tons of bunker fuel, of which450 000 tons are for own account. About15% of own consumption (70 000 tons)is covered by bunker clauses. Thismeans that a change in bunker prices ofUSD 10 per ton would affect the group'searnings by USD 3.8 million. However,hedges can be used to limit the impactof price movements.

ValuationLHC wants the valuation of the companyto be primarily based on growth in ear-nings and cash flows and does notpublish figures for value-adjusted equity.At year-end the company's shares weretrading at 55% of book equity.

analytical information

43

Figures in 2001 2000 1999 1998 1997

Profitability:Operating margin 1) % 26 15 9 23 28Return on equity 2) % 19 5 (10) 12 16Return on total assets 3) % 10 6 (1) 8 11

Liquidity:Cash and marketable securities USD mill 178 178 154 156 143Cashflow 4) USD mill 149 103 49 88 73Net interest USD mill (42) (50) (18) (20) (16)Current ratio 5) % 348 303 239 400 353Debt service ratio 6) % 25 14 11 26 26Net interest bearing debt USD mill 605 741 443 339 280

Financial ratios and key figures

Freight income Impact on net profit (USD million) 2001 2000 1999 1998Change in T/C income of USD 1 000 per day 19 18 14 12

1) Operating profit as a percentage of income on T/C basis2) Profit before tax, less tax, as a percentage of average

shareholders' equity including minority interests3) Profit before tax, plus financial expenses, as a percent-

age of average total assets

4) Profit before tax, plus depreciation, less income fromassociated companies, less tax payable and less gainon sale of vessels, with no adjustments for minorityinterests

5) Current assets as a percentage of current liabilities 6) Cashflow as a percentage of net interest bearing debt

president's report

A very good year, during which the company's focus on a fewchosen shipping segments has produced results. Also, thanksto the dedicated efforts from the staff of our technical manage-ment company, HFS, we can look back on a year without seri-ous incidents.

president’s report

44

president’s report

2001 was a good year for LHC. Despite the downturn in the global economy, thecompany managed to sustain high levels of earnings in its core segments. HUALdemonstrated an ability to adapt to new market conditions and opened new routesto meet customers' needs and requirements. Given that the Ro/Ro segment accountsfor two thirds of the company's business, HUAL's flexibility and expertise are keyfactors to generate good results. It will be important to build further on HUAL's mar-ket position in the future in order for the Ro/Ro business to continue its profitablegrowth.

In recent years LHC has adopted a strategy of reducing the number of segments andis concentrating on the areas with the best long-term returns on capital employed.This resulted in the sale of a number of non-strategic assets in 2001, triggering signi-ficant sales gains in some cases. Together with a strong cash flow from operatingactivities, the proceeds from these transactions have been used to substantially reducethe company's debt. LHC's financial position improved considerably during the year,putting it in a strong position to grow further in its core areas.

LNG is another focus area for LHC and it is a pleasure to report that some importantmilestones were reached during the year, when the company secured two majornew LNG contracts. Over the last two years LHC has actively pursued a policy ofnot ordering new LNG carriers unless long term employment is guaranteed. Thecompany is looking to increase its involvement in the transportation of LNG in thefuture by offering creative solutions for an evolving industry.

The management company Höegh Fleet Services (HFS) had a good year with noserious accidents. The healthy improvement in the accident statistics was largely dueto the development of safety and accident-prevention systems. Cost-cutting measuresalso had a positive impact on the results for the year and are expected to contributefurther in the future.

As we put this successful year behind us, I am confident that, with such dedicatedand professional personnel both at sea and on land, the company will be able toreport good results also in the future.

Thor J. GuttormsenPresident

45

anniversary – 75 years75 years have passed since Leif Høegh invested his savingsand his dreams in an oil tanker which was ordered from OdenseStaalskibsverft in Denmark in the spring of 1927. Sufficient capitalwas raised through a public offering in SkibsaktieselskapetAtlantica on June 3rd, 1927. With a degree in economics andseveral years' experience in the shipping industry with Wilh.Wilhelmsen, Leif Høegh reached his first important milestone atthe age of 31. The tanker was named Varg and entered intoservice in August 1928.

Based on his background from shippingand keen interest in finance and econo-mics, Leif Høegh became a successfulshipowner, leaving a company with morethan 40 vessels and 1 300 employees bythe time of his death in 1974.

Leif Høegh originally saw possibilities ina growing tanker market. His first tankerdid well, and in 1929/30 he ordered fourmore large tankers on the basis of ten-year charters. By taking advantage of theeconomic cycles, he invested the ear-nings generated by the tankers in goodyears in new vessels at low prices inbad years – vessels which were thenable to take full advantage of the boommarket in 1936–39. At the outbreak ofwar in 1939 the management companyLeif Höegh & Co (LHC) operated a fleetof 13 vessels.

Leif Høegh considered liner shipping,with its more stable earnings, as a usefulcounterbalance to his tankers, and withthe help of Kerr Steamship in New Yorkthe company was able to join the Silver-Java Pacific Line. In February 1937,Höegh Silverlight left Calcutta for the USWest Coast, marking the start of morethan 60 years in the liner business.

After World War II the liner activity wasexpanded to include Höegh Lines, origi-nally sailing from the US East Coast to

the Arabian Gulf and India. The sailingpattern was changed several times overthe years, but as of 1989 Höegh Linesoperated a service between the US EastCoast and Southeast Asia.

The company's West Africa service star-ted as an outsider in 1948, but was acti-vely expanded and later strengthenedwith a French subsidiary, Société Navalede l'Ouest. With efficient Ro/Ro vessels,the West Africa Line had grown into oneof three leading operators in this tradeby the time of its sale to a French com-pany in 1991.

However, oil tankers were the company'sfoundation for many years. Profit fromthe tanker operation supported the linerservices, and for a long period LHC wasone of Norway's leading tanker compa-nies, with large vessels fixed on timecharters to the oil companies.

In the 1960s Leif Høegh loosened thereins and brought in a new managementteam. Commercial developments andtechnological progress prompted thecompany to diversify beyond its traditio-nal tanker and liner businesses. The tan-ker operation grew to include combinedoil/bulk/ore (OBO) carriers and gas car-riers, and a move into the car/bulk tradeled furthermore to specialised forest pro-duct carriers and Ro/Ro car carriers.

Together with Ugland, the joint ventureHöegh-Ugland Auto Liners (HUAL) wasestablished in 1970, which grew into oneof the world's leading transporters ofcars and high/heavy Ro/Ro cargoes.

Under its revised strategy and second-generation management, LHC achievedgood results in the 1970s. However, inthe 1980s a combination of heavy debttied to an extensive fleet renewal pro-gramme and weak freight markets led tofinancial difficulties. These were over-come in close cooperation with thecompany's creditors. In December 1987the various shipholding companies weremerged with the management company,and LHC replaced AS Atlantica as thecompany listed on the Oslo StockExchange.

LHC's modern fleet placed it in a strongposition to benefit from the recovery inthe freight market that began in 1987,resulting in both satisfactory earningsand rising vessel values. Already in theautumn of 1989 the company was ableto refinance its debt and release itselffrom the stringent terms of the agree-ments entered into with its creditors in1987. The foundation for a new strategyhad been laid. The tanker/OBO activitieswere transferred in 1992 to a separatecompany, Bona Shipholding, whichgrew into a major player in the OBO

46

and Aframax segments. LHC moved intothe reefer business in 1994 by acquiringCool Carriers.

In 1997 LHC was a diversified shippingcompany where activities and ownershipinterests included container/bulk carriers,liner vessels, LNG carriers, bulk carriers,car carriers, oil tankers and reefers.

The company's subsequent developmenthas been heavily influenced by the down-turn in the Asian economy and increa-sed competition. Globalisation and easiermarket access have resulted in greaterspecialisation, leading LHC to focus ononly a few profitable segments.

The development of Bona Shipholding,with its fleet of 34 vessels, continuedwhen the company was merged withTeekay Shipping Corporation, the world'sleading operator of medium-sized oiltankers in 1999. At a later stage LHCsold all its shares in the company andhas now no interests at all in oil tankers,its initial focus area.

Furthermore, it became difficult to ope-rate the liner service from the US EastCoast to Southeast Asia and India profi-tably due to the strong growth in thecontainer traffic. In March 2001 thishistorically important part of LHC wasterminated. However, Höegh Lines liveson through a fleet of open hatch/bulkcarriers operating across the Pacific andbetween Europe and South America.

Another area where containerisation hasresulted in structural changes is in thereefer market. The management companyCool Carriers was sold to LauritzenReefers in 2001, although LHC has retai-ned ownership in 14 reefer vessels.

LHC is now focusing on two main areas:HUAL and contract shipping.

The most important event of recentyears in the Ro/Ro segment was theacquisition of Ugland InternationalHolding's 50% stake in HUAL after 30years of successful cooperation. Thiswas a major effort, but it has also givenLHC full control over HUAL's long-termdevelopment. A high level of activity ismaintained to further develop the globalbusiness.

The contract shipping activity consists oflong-term contracts with reliable charte-rers and includes the company's LNGand bulk shipping operations. Two largebulk carriers on long-term charters havebeen acquired, and the LNG activity hasbeen strengthened with the renewal oflong-term charters for two existing ves-sels. LHC has also been selected to parti-cipate in the development of the Snøhvitfield in the Barents Sea through contractsfor the transportation of LNG. The com-pany's strategy is for contract shipping toaccount for 20–30% of its operating profit.

This streamlining process has enabledthe Board and management to focus onthe company's core segments with aview to making better use of its humanand financial resources.

Responsibility for technical managementand newbuilding projects has beentransferred to a separate company,Höegh Fleet Services. This has resultedin a more focused and systematic tech-nical management organisation, whichagain has resulted in more efficient fleetoperation and lower costs. The company'shuman resources have also been develo-ped, primarily in the Philippines with anew crewing office focusing on recruit-ment and in-depth training with a viewto supplying the fleet with able andloyal officers and crew. More recently, asimilar venture has been established inChina to meet additional needs for skilledseamen in the future.

There has also been another generationchange on the ownership side, with thecontrolling interests in LHC now splitbetween the third generation representedby Leif O. Høegh and Morten W. Høegh.

The company is now celebrating its 75thanniversary with a leaner, more specia-lised and focused organisation. Thefinancial results for 2001 were the bestin the company's history and bode wellfor the future.

47

48

HUALHUAL is LHC's largest business unit, accounting for 66% of thegroup's operating profit before sales gain and depreciation in2001. The takeover of the remaining shares in HUAL in 2000and the subsequent integration of the company during 2001have paid off and laid a good foundation for the future.

HUAL

49

(USD 1 000) 2001 2000 1999 1998 1997Freight revenues 494 536 408 294 227 350 232 696 222 359Voyage expenses (236 677) (200 666) (103 157) (94 273) (99 076)Income on T/C-basis 257 859 207 628 124 193 138 423 123 283Charterhire expenses (96 056) (77 783) (49 214) (60 139) (54 192)Operating expenses (46 886) (41 176) (22 777) (16 083) (15 297)Operating profit before salesgain and depreciation 114 917 88 669 52 202 62 201 53 794Gain on sale of vessels (198) (598)Ordinary depreciation (51 512) (42 016) (15 208) (8 860) (7 905)Write-down (1 808)Operating profit 61 399 46 055 36 994 53 341 45 889

Book value vessels 616 556 658 286 313 442 218 211 147 199Investments 0 472 753 109 069 79 679 2 178

HUAL

Results

Share of Consolidated operating profit beforesales gain and depreciation

66%

50

HUAL

Focused and more flexible 2001 was LHC's first full year as soleowner of HUAL. Changes in the marketposed some real challenges for HUAL'sorganisation during the year, but theintegration of the business into the LHCsystem, together with changes madeinternally at HUAL, have clearly fortifiedthe company. The work put in during2001 and the way in which the companymanaged to overcome fresh challengeshave shown that the takeover was theright course of action.

The deep-sea market remains HUAL'score business, but the company has alsostepped up its involvement in the short-sea market in recent years and plans tocontinue doing so.

Improving on logistics solutions HUAL further developed its logisticssolutions during the year in a bid to

constantly set new standards for state-of-the-art logistics. In a sector where com-petition is fierce and good capacity utili-sation is vital for profitability, it is impor-tant to stay one step ahead in this area –for both the customer and HUAL.

The diversity of HUAL's customer basemakes for enormous variations in custo-mers' logistics and transportation require-ments. Meeting customers' needs andexpectations is therefore a real challengefor HUAL. This means that the companyincreasingly needs to get involved inother parts of the value chain for Ro/Rocargoes, which has been achieved byentering into alliances with other playersin the chain. This strategy is to be cont-inued, with HUAL concentrating its invest-ments in the integration of the valuechain on IT systems and skills. HUALaims to be a specialist in its field, butneeds to invest in IT to facilitate com-

munication along the value chain if it isto be able to retain and strengthen itsposition. By exchanging information atseveral levels, HUAL is helping to createvalue for customers and at the sametime strengthening its own position.

Flexible fleet ensures more stableoperation HUAL carried proportionally fewer newcars in 2001. New cars accounted forjust 50% of cargo volumes, down from58% the previous year, while used carsaccounted for 30% and high/heavyRo/Ro cargoes for 20%. HUAL expectsthis trend to continue and that the com-bination of the company's presence inall three Ro/Ro segments and a flexiblefleet will put it in a position to tacklefuture changes in market structure with-out any negative impact on its earnings.New vehicle models, that are taller thanthe traditional cars that many of today's

51

HUAL

car carriers were designed to transport,has fuelled demand for vessels with thecapacity to transport this type of vehicle.HUAL's modern and flexible fleet hasbeen able to exploit this opportunityand substantially strengthen its relation-ships with several carmakers. The com-pany expects demand for more flexiblevessels to continue growing in thecoming years.

Operations 2001 was a year of major changes andchallenges in HUAL's markets. The yearbegan with a steep fall in exports fromthe Far East, which has been the com-pany's most important market for thelast 20 years, and also due to Far Eastbased automakers transferring largerproportions of their production toEurope. This was a major challenge forHUAL, which spent the first part of theyear restoring its market balance.

HUAL has built up close relationshipswith some of the world's leading andbest known carmakers over a number ofdecades, including Nissan, Subaru,Daewoo, DaimlerChrysler, BMW, Ford, GMand Renault. The key to these relation-ships is a market-oriented organisation,good logistics solutions and a flexiblefleet. At the year-end HUAL operated afleet of 40 vessels in the deep-sea seg-ment, all of them PCTCs, and four short-sea vessels in Europe and the Caribbean,each with a capacity of 450–850 cars.

Financial performance HUAL turned in a satisfactory perfor-mance despite a relatively poor start tothe year, with the deterioration in themarket out of the Far East being largelyoffset by a strong market out of Europeand North America.

In response to the changes in the market,HUAL has taken a number of steps toincrease the flexibility of its market posi-tion. This led to further changes inHUAL's cargo composition, with the pro-portion of new cars being reduced infavour of used cars and high/heavyRo/Ro cargoes. HUAL generated an operating profit of USD 61 million in2001. Given the market conditions, thiswas a good performance.

Key events HUAL acquired the operation of KiwiCar Carriers of New Zealand in Decemberas part of a strategy to strengthen itsfoothold in the market out of the FarEast. Kiwi Car Carriers is the market lea-der in the transportation of used carsfrom Japan to New Zealand and thetakeover has given HUAL a strong posi-tion also in this market.

52

HUAL

HUAL expects China to play an increas-ingly important role in the Ro/Ro marketover the next decade. Domestic demandfor Ro/Ro cargoes is growing strongly,and the production of cars for export isexpected to get under way in a fewyears. HUAL entered into a cooperationwith China's largest shipping company,Cosco, during the year, making HUALCosco's partner in the transportation ofall Ro/Ro cargoes in and out of China.

The company expects the alliance tohave a major impact in the years ahead.

In line with its strategy of offering logis-tics solutions tailored to customers' needs,HUAL entered in 2001 into an agree-ment for the acquisition of a majoritystake in the logistics and forwardingcompany Autotrans. This company hasoffices in Paris and Le Havre and specia-lises in logistics for new and used cars,but also has a 50% holding in a stevedorecompany. The acquisition means thatHUAL can now extend the range of ser-vices it offers the French market toinclude forwarding, logistics and steve-dore services as well as deep-sea andshort-sea shipping.

HUAL's short-sea company CETAM andFrench shipping company Louis DreyfusArmateurs signed a letter of intent withAirbus Industrie G.I.E. in December forthe construction of a newbuilding to bedelivered at the beginning of 2004, inclu-ding an option for a second vessel in2007. Both vessels will operate on 20-year charters to Airbus, carrying aircraftparts and components from ports in theUK, Germany, Spain and France toBordeaux, from where they will be trans-ported to Toulouse for final assembly.

Market SituationThe number of cars transported by seanaturally reflects the number of newcars sold around the world. The globaleconomic situation deteriorated in the

NewbuildingsScrappedNet addition

-100

-50

0

50

100

150

200

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

Net addition to the world car carrier fleet (1 000 ceu)

53

HUAL

second half of 2001, particularly follow-ing the terrorist attacks in the USA.Although various sales incentives boostednew car sales in the USA and in someEuropean countries after the attacks, globalnew-car sales fell by 1.3% on an annualbasis from the record year 2000.

Far East exports of new cars developedunevenly in 2001, with growth to theMiddle East, South America and someother countries, whereas shipments toEurope fell. In the US market there wasa decline in imports from Japan, whichwas more than offset by increased volu-mes from both South Korea and Europe.European exports of both new and usedcars increased to several destinations.Shipments of high/heavy rolling stockcontinued at a high level in 2001, parti-cularly from Europe to oil-exportingcountries. In addition, shipments of usedcars from Japan increased during theyear. It is estimated that seaborne ship-ments of used cars exceeded 1 millionunits for the first time in 2001.

The total demand for car carrying tonnagethus remained relatively stable in 2001.At the same time the car carrier fleetincreased by 5% due to the delivery of15 newbuildings with only five smallvessels sold for demolition. As a netresult there was a slight fall in the aver-age utilisation rate in the global car carrier fleet. However, changing tradingpatterns and longer round-trips resultedin a relatively tight market.

Market OutlookWith the global economy in recession,production and sales of new cars areexpected to fall somewhat in 2002, parti-cularly in the first half of the year. Thisapplies also to South America and mostof the Asian emerging markets, whereeconomic growth forecasts have beenrevised down in response to weakerexternal demand and exports. The mainexception is China, which appears toride out the downturn reasonably well.

Japanese exports of new cars to the tra-ditional car markets in North America and Europe are thus likely to declinesomewhat also in 2002. Exports to someof the other car markets could also beweak, especially to the Middle East ifthere is a decline in the region’s oil export revenues. A depreciation in thevalue of the yen would, however, improveJapan’s competitiveness. Korean exportsare currently forecast to remain stable and this also applies to European exports of both new cars and used cars. Shipments of used cars are expected togrow as they increasingly become acceptable lower-cost alternatives to newcars in emerging markets. The slowdown inindustrial activity worldwide in 2002 couldhave a negative impact on the demand forsome high/heavy Ro/Ro cargoes.

It is expected that changing trading pat-ters and longer round-trips will result in a relatively stable demand for total car carrying tonnage also in 2002, although

there could be a decline in the numberof new cars transported by sea. The sup-ply of tonnage will increase with thedelivery of 12 new car carriers.However, the resulting decline in thecapacity utilisation rate of the globalfleet is likely to trigger an increase indemolition activity. There is a largescrapping potential in the car carrierfleet, as vessels built prior to 1980 areconsidered unsuitable for today’s cargomix. Several vessels have already beenearmarked for demolition by early 2002.A more modest growth in the supply oftonnage will set the stage for a recoveryin the fleet utilisation rate as soon asdemand picks up again.

54

contract shippingContract shipping is a key area for LHC. Especially within theLNG sector major contracts were entered into, which will producesubstantial growth in coming years. Contract shipping represen-ted 15% of the operating profit before sales gain and depre-ciation in 2001.

contract shipping

55

contract shipping

(USD 1 000) 2001 2000 1999 1998 1997Freight revenues 49 231 55 416 39 109 41 165 25 399Voyage expenses (5 536) (13 983) (2 138) (2 994) (1 197)Income on T/C-basis 43 695 41 433 36 971 38 171 24 202Charterhire expenses (5 934) (8 273) (5 870) (10 938) (8 263)Operating expenses (11 755) (8 433) (11 029) (8 412) (7 984)Operating profit before salesgain and depreciation 26 006 24 717 20 072 18 821 7 955Gain on sale of vessels 0 0 0 0 3 140Ordinary depreciation (9 436) (8 229) (8 257) (6 438) (3 515)Write-down 0 0 0 0 0Operating profit 16 570 16 488 11 815 12 383 7 580

Book value vessels 131 829 136 850 124 921 128 370 120 777Investments 4 415 21 329 8 762 13 960 100 415

Results

Share of Consolidated operating profit beforesales gain and depreciation

15%

56

contract shipping LNG

LNGThe LNG business took a major step for-ward in December 2001 when LHC andMitsui O.S.K. Lines Ltd. (MOL) togetherordered a new LNG carrier fromMitsubishi Heavy Industries in Japan for a20-year charterparty to Statoil as operatoron behalf of the stakeholders in theSnøhvit field. The contract is a recognitionof the expertise that LHC has built upthrough almost 30 years' continous opera-tion in the gas market, and further streng-thens the company's commitment to theLNG industry.

Operations LHC was involved in the operation offour LNG carriers at the beginning of2002. Höegh Galleon, which is whollyowned by LHC, Norman Lady andHöegh Gandria, in which LHC has a50% stake, and Matthew, which isowned by Tractebel. All four vesselsoperated satisfactorily in 2001.

LHC's gas carriers transport liquefiednatural gas (methane) at atmosphericpressure and -161°C on long-term charters.Höegh Gandria has been fixed until2006, Höegh Galleon until 2017 andNorman Lady until 2012 with an optionto extend to 2019. LHC has built up astrong position based on long experienceand a good track record in this market,which generate stable and healthy ear-nings for the company.

The last couple of years have experi-enced an LNG market with very highnewbuilding activity. LHC has taken thisopportunity to safeguard its existingbusiness by focusing on raising thequality of its technical, operational andcommercial services. The company hasalso built up its skills base, partly throughthe management contract for the Matthew.

Key events The agreement to build a new LNG car-rier for use in connection with theSnøhvit project was a new milestone forLHC. The newbuilding, in which LHC,MOL and Statoil will have ownershipinterests, will enter into a 20-year con-tract, with two five-year extension opti-ons. It will be the largest vessel of itskind and used mainly to transport LNGto Spain and the USA. The Snøhvit fieldlies off the coast of the northernmostpart of Norway, which means that thevessel needs to be specially equipped tocope with some of the world's harshestweather conditions, making additionaldemands in terms of safety and the envi-ronment.

2001 has seen a renewed drive by theLNG industry towards floating productionplants and receiving terminals. LHC isactively involved in this developmentand contributes at the front edge in thedevelopment of new floating LNG tech-nology solutions. The company has

during the past year developed a comb-ined LNG transportation and regasificati-on concept, which is a flexible and envi-ronment friendly solution to deliveringnatual gas to the market. This may offerLHC opportunities of integration in thelogistic chain of the LNG industry.

In April 2000, a 17-year charterparty forthe Höegh Galleon was entered intowith Enron LNG Shipping. The Chartererhas filed for Chapter 11 bankruptcy pro-ceedings in the USA. Enron is presentlymeeting its obligations towards LHC.However, in case of possible defaultunder the charterparty, the likelihood ofsatisfactory alternative employment isconsidered good.

Financial performance The transportation of LNG is a steadysource of income for LHC as the vesselsoperate on long-term charters, contributingsignificantly to LHC's cash flow and goodfinancial results. The gas fleet generatedan operating profit of USD 11 million in2001, the same as last year. LHC expectsthe earnings in this market to continuegrowing in the years ahead as new LNGcontracts are entered into.

Market situationThe LNG trade reached 104 million ton-nes in 2001, accounting for approx. 25%of the global trade in natural gas.

57

contract shipping LNG

Excess LNG production capacity continu-es to find its way to the market, leadingto growing sales of LNG on spot andshort-term timecharters. Over the pastthree years the USA has been the largestbuyer of these cargoes, followed bySpain and South Korea. However, salesof LNG on spot and short-term timechar-ters amount to only 5–6% of the totaltrade in LNG. The strong rise in the USgas price since 1998 has resulted in asignificant growth in interactions betwe-en the US and the European market.

The contracting activity for new LNG car-riers continued in 2001, and at year-endthe orderbook totalled 48 vessels withoptions for further 20–21 vessels.Furthermore, it is estimated that some10–15 vessels in the orderbook are notcommitted to long-term employment.However, some of these orders havebeen placed by large multinational oiland gas companies which have interestsin several export and import projects.

Market outlookThe clean-burning characteristics ofnatural gas have made it the fuel ofchoice in virtually all new power plants,and industrialised nations have investedheavily in the natural gas storage anddistribution infrastructure that will sup-port this new age of gas. The demandfor natural gas is forecast to grow by an

average annual growth rate of 3.2% forthe next 20 years. The current downturnin the global economy is likely to resultin a somewhat lower growth rate in2002. Continued growth in the LNG tradeis expected, as expansions of existingfacilities under construction in Trinidad,Nigeria and Qatar are completed. Suchexpansions are also planned in Oman,Malaysia, Brunei, Indonesia and Australia.Several other countries are marketing newLNG projects.

In the US market, natural gas priceshave fallen steadily through 2001.However, just as the laws of supply anddemand kicked in to bring prices downfrom last winter’s soaring heights, thesame process is now working to build afloor beneath the market. The USA, thebiggest gas user of all, will be unable tomeet its burgeoning requirements fromdomestic supplies and piped gas fromCanada alone, supporting the view thatLNG will be a viable component, howe-ver small, for market growth in the yearsahead.

In the European market, Spain, Italy andTurkey have so far been the main moversbehind the recent growth in LNG imports.However, Europe is looking for supplydiversification, and with the opening upof the European gas market through theGas Directive, new buyers will be looking

for supplies that could fit with new LNGprojects. New gasification terminals arecurrently under construction in Turkeyand Portugal, with several others plan-ned in the Mediterranean area.

The expansion of the world LNG fleetwill mostly be based on long-term trade,but it could also help boost the develop-ment of short-term trade. The increase inthe number of long-term LNG contractson a fob basis could be a contributingfactor to this development, with buyersseeking lower costs by encouragingmore flexible vessel use.

Norman Lady

Höegh Gandria

Höegh Galleon

Matthew

58

contract shipping dry bulk

dry bulk Contrary to the previous year, the drybulk market fell sharply during thesecond half of 2001. The downturn wasworse than anticipated, especially for thelarger bulk vessels.

Operations At the start of 2002 LHC's dry bulk fleetconsisted of two wholly owned vessels,the 1996-built SG Prosperity and 1997-built SG Enterprise, both on long-termcharters to a company in the Shouganggroup in Hong Kong, running until2012. The vessels operated according toplan during the year and returned thebudgeted results.

LHC has also chartered in one vesselson T/C-basis to carry coal and ore under

contracts of affreightment from Brazil toChina and from Australia to Europe.Another two vessels were chartered infor short periods during the year tocover contractual obligations.

Financial performance A shortage of capacity at the beginningof the year forced LHC to charter inexternal tonnage at high rates whichgenerated a loss for the T/C-operation ofUSD 0.8 million. Earnings from long-term charters were as expected. The drybulk fleet as a whole generated an ope-rating profit of USD 6 million, the sameas the year before.

Market situationThe dry bulk market deteriorated shar-

ply through 2001. The global economyslumped and worldwide steel productionmoved steadily lower, leading to fewershipments of coking coal and iron ore toEurope, Japan and other Asian steel pro-ducing countries. These declines wereonly partly offset by a sharp growth inChinese iron ore imports, triggered by a10% increase in the country’s steel pro-duction.

In addition, short-haul Chinese andIndonesian steam coal exports to therest of Asia were rising sharply, displacinglonger-haul shipments and having anegative effect on tonne-mile demand.The grain trade also contributed to thesecond half’s weakness, as there was amodest seasonal decline relative to the

59

contract shipping dry bulk

first half of 2001. In tonne-mile terms,total dry bulk trade declined by 2% inthe past year.

While slumping trade demand certainlyplayed a part, the rapid growth in thedry bulk fleet also contributed to the drybulk market downturn. Over the pastyear, the fleet grew by 4.4%, with thelargest growth in the Panamax segment.Driven by the above supply anddemand fundamentals, the Capesize andPanamax sectors were hit especiallyhard in 2001, with rates moving back tolevels last seen in the middle of 1999.

Market outlookGiven the slowdown in the global eco-

nomy, the growth in demand for drybulk tonnage is expected to remainweak through most of 2002. Steel pro-duction is forecast to fall further, withChina appearing to ride out the down-turn reasonably well also in 2002.However, total Asia’s iron ore importsare projected to grow only modestly, asinventories are likely to be trimmed inresponse to the slowdown in output.

Although the global steam coal trade isexpected to grow also in 2002, Chineseexports will continue to displace longer-haul shipments. Chinese grain importsare expected to increase over thecoming year, but these gains will bemostly offset by lower imports into the

Middle East. All in all, dry bulk demandis expected to grow by less than 1% in2002.

In the medium term, the picture looksmuch brighter as regards the supply sideof the equation. Most of the remainingpart of the large bulk carrier orderbookwill be delivered by end 2002/early2003. Demolition of bulk carriers pickedup substantially in 2001, and the poormarket outlook for most of 2002 willensure a continued high level of demoli-tion. A more modest growth in the sup-ply of dry bulk tonnage will set the stagefor a recovery in the fleet utilisation rateas soon as demands picks up again.

60

Höegh Lines

Höegh Lines sharpened its focus substantially during the yearwith the final handover of its traditional liner service toGermany's Egon Oldendorff oHG. Höegh Lines also strengthenedits position in the open hatch, leading to good financial results.

Höegh Lines

Handover of liner service to new owners – focus on open-hatch shipping

Liner service 6 vessels (until 05/2001)

WCSA – Med/North Europe 3 vessels

Pacific Commerce Line 3 vessels

Norsul Höegh Pool 4 vessels

61

Höegh Lines

(USD 1 000) 2001 2000 1999 1998 1997Freight revenues 92 721 131 679 126 153 126 345 137 855 Voyage expenses (46 237) (83 400) (77 053) (66 171) (74 057) Income on T/C-basis 46 485 48 279 49 100 60 174 63 789 Charterhire expenses (7 479) (21 051) (18 214) 0 (377) Operating expenses (21 316) (23 090) (27 899) (33 732) (39 054) Operating profit before salesgain and depreciation 17 690 4 138 2 987 26 442 24 367Gain on sale of vessels 0 1 560 (3 574) Ordinary depreciation (4 141) (4 142) (4 806) (6 829) (5 559) Write-down 0 Operating profit 13 549 1 502 (5 393) 19 613 18 808

Book value vessels 87 685 91 508 99 441 142 734 147 473 Investments 0 0 0 2 089 44 592

Results

Operations Höegh Lines controlled a fleet of 11open-hatch vessels at the year-end, tenof which were wholly owned. The com-pany had operational responsibility foreight of these vessels, which operated inthe Atlantic and Pacific Oceans, whilethe other three vessels have been char-tered out to other operators. Besides ser-vicing freight contracts with its own ton-nage, Höegh Lines exploited openingsin the market by chartering in additionaltonnage to fill positions and charteringout its own tonnage when it had sparecapacity.

Three of Höegh Lines' open-hatch ves-sels sail for Pacific Commerce Line(PCL), a wholly owned subsidiary ofLHC, operating between the west coastof North America and Japan, SouthKorea, Hong Kong, China and Taiwan.Four vessels, two of them owned byLHC, operate in the Norsul joint venture,sailing between Northern Europe andthe east coast of South America. Threevessels sail from the west coast of SouthAmerica to the Mediterranean andNorthern Europe and back via the eastcoast of North America.

Höegh Lines strives constantly to growits business, improve its financial perfor-mance and develop its services. Thecompany's goal is to strengthen the regi-

onal positions that it has built up. A majordrive to improve cost effectiveness hasbeen implementet to ensure good resultsin the future. This, combined with ahigh-quality fleet of well managed vessels,puts the company in a good position.

Financial performance2001 brought continued growth in theopen-hatch business and further improve-ments in Höegh Lines' financial perfor-mance, thanks primarily to increasedcontract cargoes from South America toEurope throughout the year. Togetherwith growth in imports of steel productsfrom the Far East, this resulted in bettervessel capacity utilisation and bettervoyage results. However, higher oil pri-ces for most of the year led to higherbunker costs, which had a negativeimpact on earnings.

Höegh Lines generated an operatingprofit of USD 13.5 million in 2001.

Key eventsAfter more than 60 years in the traditio-nal liner business, the company handedover its liner service during the first halfof the year. New owner Egon OldendorffoHG has continued to operate the ser-vice in a slightly modified form and haschartered in two Höegh Lines vessels.

Share of Consolidated operating profit beforesales gain and depreciation

10%

62

Höegh Lines

Höegh Lines strengthened its position inthe South American market during theyear with a new long-term contract forthe transportation of forest products bet-ween Chile and Europe. The contracthas cemented the company's position inthis market, in which it has now opera-ted for more than a decade.

One vessel was returned from a longterm charterer during the year and isnow employed in the the lines' ownoperations. One chartered-in vessel wasreturned to its owners.

Market SituationThe seaborne trade in forest productsincreased only marginally in 2001, com-pared with the long-term trend of 3%annual growth. The lumber trade suffe-red most, with a decline of more than2%. This was mainly due to the poor

economic situation in the key Japanesemarket, where a 6.5% fall in housingstarts resulted in a substantial decline inthe country’s imports of lumber. Japan’simports of pulp also declined. Europe’seconomy turned out to be weaker thanpreviously anticipated, with a negativeimpact on the import demand for mostcommodities. The same applied to SouthAmerica and most Asian markets, withthe exception of China, where importsof various forest products increasedsharply.

The North American forest product mar-ket in 2001 was influenced by fallingconsumption, excess supply, falling pri-ces and falling exports. However, anincrease in shipments of forest productsfrom South America to the Asian andEuropean markets offset the declinefrom North America.

The trade in most other minor dry bulkcommodities declined, particularly thesteel products trade which fell by morethan 4%, mainly due to lower USimports.

There was only a small increase in thesupply of open hatch tonnage in 2001,and the utilisation rate in the fleet remai-ned relatively stable. However, the openhatch market was negatively influencedby both the conventional handysize bulkcarrier market and the containershipmarket, both of which deteriorated shar-ply in 2001, especially in the second halfof the year.

Market outlookThe forecast global economic recessionin 2002 is expected to lead to fallingdemand for forest products, includingpaper and paperboard. The economic

63

Höegh Lines

malaise will also keep a lid on thedemand for other minor dry bulk com-modities worldwide.

China will be one of the few growingmarkets during this difficult period. Thecountry’s pulp imports, for example,increased by close to 20% in 2001. Chinais also potentially a huge market forwood products and other constructionmaterials. On balance, the outlook forAsian markets is positive. Lower ship-ments of forest products to Japan, wherethe economy is projected to remainweak for quite some time, are likely tobe offset by greater volumes to China,Taiwan, Korea and the Philippines.

The orderbook for open hatch vessels(with both gantry and conventionalcranes) was equivalent to 10% of the

existing fleet at end 2001. Based onscheduled deliveries, the supply of openhatch tonnage will increase by around2.5% in 2002, which is expected to leadto a decline in the utilisation rate in thefleet. However, with 13% of the existingopen hatch fleet already 25 years ormore, there is a large scrapping potentialin a weak market, setting the stage for arecovery in the utilisation rate in thefleet as soon as demand picks up again.

64

reefersLHC sold its commercial operation, Cool Carriers AB, with effectfrom 1 January 2001, contributing to the consolidation in a ree-fer market that has been weak for years, but which now seemsto be slowly improving.

reefers

65

reefers

USD 1 000) 2001 2000 1999 1998 1997Freight revenues 38 991 174 329 95 905 104 364 106 304 Voyage expenses (573) (104 528) (39 222) (33 259) (29 671) Income on T/C-basis 38 418 69 801 56 683 71 105 76 633Charterhire expenses 0 (30 165) (38 591) (44 290) (39 209) Operating expenses (23 442) (22 481) (19 145) (14 770) (14 630) Operating profit before salesgain and depreciation 14 976 17 155 (1 053) 12 045 22 794Gain on sale of vessels 15 374 (98) 1 383 3 100 Ordinary depreciation (9 001) (8 965) (8 140) (8 488) (9 040) Write-down (555) (3 880) (12 450) Operating profit 20 794 4 310 (9 291) (7 510) 16 854

Book value vessels 133 705 137 258 153 679 115 808 143 317 Investments 0 21 031 0 0 0

Results

OperationsSince the sale of Cool Carriers, 14 of the15 vessels in which LHC has ownershipinterests, have been operated byLauritzen Cool in Stockholm while onevessel has been employed in the Arcticpool in Copenhagen. Five reefers dry-docked for scheduled maintenanceduring the year. Otherwise there was nodisruption to operations.

Financial performanceRates were disappointing during the tra-ditional high season from February toMay, but were up somewhat over theyear as a whole, thanks to an improvedmarket during the low season (2nd halfof the year).

The reefer business generated an opera-ting profit of USD 21 million in 2001 (ofwhich USD 15 million were sales gain).

Market situationThe reefer market improved slightly in2001. Although the high season wassomewhat disappointing, the marketimproved during the summer months,primarily due to increased imports ofbananas by Russia and the Baltic region.In addition, a steady flow of frozen pro-duce from the USA to Russia supportedthe market. The high flow of citrus fromArgentine, Brazil and South Africa alsocontributed to the firmness in the spotmarket.

The market continued to be relativelystrong in the second half of the year,

especially for smaller vessels whichbenefitted from the Moroccan trade. Themarket for the larger vessels also gradu-ally improved due to strong increase inSpanish exports of citrus to the USA andshipments of frozen poultry from theUSA to the Baltic.

The substantial shipments of fruit andother produce in combination withincreasing delays in St. Petersburg, andno lay-up vessels beeing activated, addedup to a tighter market. There were alsosome improvements on the supply side,as the specialised reefer fleet contractedfor the third year in succession. Thespot market was up 9% on averagecompared to 2000. During the autumn,fixtures in the 12 months timechartermarket improved by 5%–7%.

Although there is still some excess capa-city in the reefer vessel fleet, 2001 seemsto have been a year when some sort ofstability returned to the industry, helpedby the recent consolidations.

Market outlookThe poor economic outlook, with itseffect on consumer confidence andspending, could have a modest negativeimpact on the reefer trade in 2002.Although the trade largely includes move-ments of necessary foodstuffs, part of itmay be regarded as luxury items.

Other uncertainties relate to climatic fac-tors, as bad weather hit some areas inCentral America and the Caribbean

towards the end of 2001. On a positivenote, both apple inventories and cropsin Europe are lower than a year ago. Atthe same time, reports from South Africaindicate that the weather conditions canprove to be very good for the comingdeciduous season, which has createdoptimism among exporters. It is alsoexpected that banana producers inEcuador and Costa Rica will increaseproduction in order to compensate forthis year’s loss induced by strikes comb-ined with climatic factors. All in all,volumes of key cargoes do look set toequal, if not surpass, those shippedduring last season.

The age profile of the specialised reefervessels suggests scrapping to more thanoffset the few newbuildings still in theorderbook, and a contraction in the spe-cialised reefer fleet is expected also in2002. The fundamentals thus suggestsome improvement in the fleet utilisationrate. A negative factor is the surge in ree-fer container capacity coming onto themarket during the next couple of years.

Share of Consolidated operating profit beforesales gain and depreciation

9%

66

Höegh Fleet ServicesFocus on preventive action pays off

The focus Höegh Fleet Services (HFS) have had on accident pre-vention for many years proved very successful in 2001. Emphasishas also been on the planning of a major increase of the fleet’soperating efficiency and on the development of a crewing office inChina.

Höegh Fleet Services

67

Höegh Fleet Services

HFS's role is to be a service providerand partner for the rest of LHC. By stri-ving constantly to improve crew trainingand operation/control systems, HFS islaying vital foundations for the quality ofthe tonnage that LHC can offer its custo-mers. HFS is responsible for the techni-cal management and crewing of the ves-sels in which LHC has ownership orcommercial interests. Besides technicalmanagement and the recruitment andtraining of officers and crew, HFS hasthe overall responsibility for safety,quality, purchasing, insurance and new-building projects.

HFS will be investing resources in incre-asing the fleet's operating efficiency in2002. A preliminary project has identifi-ed considerable potential for efficiencygains. By tapping this potential, LHC willbe able to improve its profitability.

At the beginning of 2002 HFS wasresponsible for a fleet of 39 vessels withan average age of 15 years. LHC owns38 of the vessels.

Safety and qualityHFS was awarded its ISO 14001 certificatein June 2001. The coming year will seethe company giving priority to imple-menting the environmental improvementsidentified and building up the environ-mental database set up as part of thecertification process. These improvementsinclude projects to do with ballast watermanagement, waste management andemissions of CFCs and exhaust gases.These projects are already under wayand will be monitored closely by HFS.Fresh targets will also be identified aspart of this improvement process.

HFS stepped up its accident preventionprogramme during the year and willcontinue this work in 2002. The ratio ofnear-accidents to actual accidents is cur-rently one-to-one but should be in theregion of ten-to-one. HFS is focusingparticularly on the reporting of near-accidents and what the company canlearn from them. This topic was raised at all of the officer conferences held in2001.

The Safety & Quality department carriedout 38 audits on board vessels, seven athead office (department by department)and one at HFS Philippines during theyear. Contingency seminars were alsoarranged in connection with the confe-rences.

Officer conferencesDuring the year HFS arranged two confe-rences for European officers on the LNGvessels as well as three conferences forsenior and junior officers with safety andaccident prevention as their main theme.These conferences play an importantrole in the work to tie seagoing personnelcloser to the company.

HFS substantially increased the numberof Chinese seamen during the year andwill therefore be organising an equiva-lent conference programme for itsChinese officers.

Office in ChinaWhen HFS opened its office in China inDecember 2000, it was the first JointVenture crewing office with a foreignpartner ever to be granted a businesslicence in the country. It was also a keymilestone for HFS, which worked hardduring the year to build up the office,which now has four employees.

The idea behind the office in China is toincrease the company's recruitment base.Two car carriers were transferred fromFilipino to Chinese crews during theyear, with a third set to follow duringthe first quarter of 2002. HFS had 157Chinese nationals employed by year-end.This move into the Chinese market ispart of a long-term strategy. Chinese sea-men are well trained and there aregrounds for continued expansion there.

Besides operating LHC's vessels, HFSwill be considering broadening its ope-rations in China and the Philippines toinclude crew management services alsofor third parties.

Office in the PhilippinesHFS' Manila office remains its largest andmost important. At the year-end HFS hadaround 1 600 Filipino seamen employedand the Manila office had 33 staff mem-bers. The office is now run exclusively bylocals and continued its successful deve-lopment in 2001. One reason for this wasthat its premises doubled in size to inclu-de extensive training and conference faci-lities, making it possible to hold morecourses in-house, ensuring a better fol-low-up and cost-efficiency.

Accidents 2001 brought major improvements in theaccident statistics. There has been nomajor incidents/accidents to report.

Dry-docking Ten vessels dry-docked in 2001.

Centralised maintenance solutionIn 1999 HFS began work on switchingfrom a local maintenance system onboard each vessel to a centralised stockcontrol/maintenance system (AMOSMaintenance & Purchase) managed fromHFS' offices. The company now hasdirect access to the vessels' maintenancestatus and stock levels. The system alsoenables HFS to introduce standards inareas like purchasing, which is expectedto further improve the fleet's operatingefficiency and financial performance. In2001 the focus was on implementing thesystem throughout the existing fleet.

Retirement Olav Foss, who served as chairman ofHFS since the company was formed inMarch 1995, chose not to seek reelectionat the annual general meeting in 2001.HFS would like to thank him for hishard work and valuable contribution tothe company during the start-up phase.

68

Per Øivind Rosmo

CONTROLLER

Erik Norman

FINANCE/IR

Tor Løchsen

ACCOUNTING

Trond Evju

DRY BULK

Stephan Tschudi-Madsen

GAS

Charles Jensen

ORGANISATION

Olav Sollie

BUSINESSDEVELOPMENT

Roar Flom

FINANCE/CONTRACTSHIPPING

Karl Terjesen

HUAL

Erik Falkenberg

HÖEGH LINES

Johannes Tvedte

HFS

Erik A. Grinnes

PRESIDENT'S STAFF

Thor Jørgen Guttormsen

PRESIDENT

HÖEGH FLEET SERVICES

BOARD OF

DIRECTORS

LEIF HÖEGH & COBOARD OF DIRECTORS

organisation

the fleet

LHC SHARE CARGOVESSELS (%) BUILT DWT CAPACITY

HUAL TRAILER 100 1980 15 593 5 250 CEU

HUAL TRAMPER 100 1980 12 169 3 550 CEU

HUAL TRUBADOUR 100 1980 12 169 3 550 CEU

HUAL TROPICANA 100 1980 11 977 3 550 CEU

HUAL TRACER 100 1981 12 969 3 640 CEU

HUAL TRAPPER 100 1981 12 961 3 640 CEU

HUAL TREKKER 100 1981 11 977 3 550 CEU

HUAL TRINITY 100 1981 12 987 5 550 CEU

HUAL TRANSIT 100 1981 17 938 5 550 CEU

HUAL TRAPEZE 100 1983 16 694 4 110 CEU

HUAL TRAVELLER 100 1983 15 370 3 710 CEU

HUAL TROTTER 100 1983 15 370 3 710 CEU

HUAL TROPHY 100 1987 20 600 5 910 CEU

HUAL TRIBUTE 100 1988 21 385 5 910 CEU

HUAL TRITON 100 1988 23 069 6 400 CEU

HUAL TRICORN 100 1988 23 069 6 400 CEU

HUAL TRIUMPH 100 1988 20 885 5 910 CEU

HUAL TRIDENT 100 1995 20 600 6 100 CEU

HUAL TROOPER 100 1995 20 600 6 100 CEU

HUAL TRADER 100 1998 21 502 6 100 CEU

HUAL TRANSPORTER 100 1999 21 347 6 100 CEU

HUAL TREASURE 100 1999 22 138 6 100 CEU

CITY OF ROME 100 1999 2 779 805 CEU

CITY OF PARIS 100 1999 2 793 805 CEU

HUAL ASIA 100 2000 20 400 6 100 CEU

HUAL EUROPE 100 2000 20 400 6 100 CEU

HUAL TROVE 100 2000 22 000 6 100 CEU

NORMAN LADY 50 1973 50 922 87 000 M3

HÖEGH GALLEON 100 1974 50 922 87 000 M3

HÖEGH GANDRIA 50 1977 71 630 126 000 M3

SG ENTERPRISE 100 1997 211 485

SG PROSPERITY 100 1997 211 202

HÖEGH MERCHANT 100 1977 44 895 1 724 TEU

HÖEGH MERIT 100 1977 44 926 1 724 TEU

HÖEGH MUSKETEER 100 1977 44 892 1 724 TEU

HÖEGH MARLIN 100 1977 45 063 1 740 TEU

HÖEGH MASCOT 100 1977 45 063 1 740 TEU

AUGUST OLDENDORFF 100 1979 43 571 1 492 TEU

MAX OLDENDORFF 100 1979 44 016 1 492 TEU

HÖEGH MISTRAL 100 1986 30 402 1 204 TEU

HÖEGH MONAL 100 1996 49 755 2 217 TEU

HÖEGH MORUS 100 1997 49 755 2 217 TEU

SUMMER FLOWER 100 1984 13 556 589 903 cbft

SUMMER BREEZE 100 1985 13 613 588 955 cbft

SUMMER MEADOW 100 1985 13 584 590 134 cbft

SUMMER WIND 100 1985 13 636 589 258 cbft

ERIKSON CRYSTAL 81 1989 6 120 265 770 cbft

IVORY DAWN 100 1991 10 412 527 399 cbft

CRYSTAL PRINCE 100 1992 7 721 375 000 cbft

CRYSTAL PRIDE 100 1992 7 721 375 000 cbft

CRYSTAL PRIMADONNA 100 1992 7 721 375 723 cbft

CRYSTAL PRIVILEGE 100 1992 7 721 375 477 cbft

CARIBBEAN REEF 100 1993 10 614 515 862 cbft

CORAL REEF 100 1993 10 614 516 530 cbft

LADY RACISCE 36 2000 12 914 590 227 cbft

LADY KORCULA 36 2000 12 914 590 227 cbft

HUAL

LNG

Dry bulk

Höegh Lines

Reefer

words and expressions

Bareboat charter: Chartering a vessel with all crewand operating expenses for charterer's account

Capesize vessel: Dry bulk vessel over 140,000 dwt

Charter a vessel: To hire a vessel (in or out)

Charterparty (C/P): An agreement about chartering avessel for a single voyage (voyage charterparty) or fora longer period (timecharter party = T/C)

CEU – Car Equivalent Unit: A measurement for aRo/Ro vessels cargo carrying capacity

Contract shipping: Long term agreement for the hireof vessels at fixed rates

Deep Sea market: Market for sea transportation overlong distances

Dry bulk cargo: Mainly grain, coal and ore

DWT (Dead Weight Ton): The vessel's cargo capacitymeasured in tons of cargo and supplies

Freight income on T/C-basis: Freight income lessvoyage related costs (excluding operating expenses)

General cargo: Liner cargo not being carried in containers

Handymax vessel: Dry bulk vessel of 35-50,000 dwt

Handysize vessel: Dry bulk vessel of 10-35,000 dwt.

ISO 14001: International environmental standard

LNG vessel: A vessel carrying LNG (Liquefied NaturalGas) cooled to minus 160 degrees Celsius

Membrane tanker: LNG vessel with a containmentsystem of the membrane type

Multipurpose vessel: General cargo vessel alsoequipped for carrying containers

Open Hatch vessel: A vessel with hatches withoutoverhang, used for carrying containers and dry bulkcommodities

Operating expenses: Include crewing costs and allexpenses related to the technical management of thevessels including insurance

Panamax vessels: Maximum size of a vessel for thepassage of the Panama Canal

PCC – Pure Car Carrier: Vessel for transporting standard passenger cars

PCTC – Pure Car Truck Carrier: Vessel for transpor-ting rolling stock (cars, buses, a.o.)

Pool: A cooperation between owners who place vessels in a jointly controlled operational unit wherefreight income on T/C-basis is divided between thepartners according to a predetermined key

Ro/Ro vessel: A vessel carrying rolling stock (Rollon/Roll off), such as cars carriers, liner vessels or acombination of these

Short Sea market: Market for sea transportation overshort distances

Spherical tanker: LNG vessel with a containmentsystem of the spherical type

Spot rate: Describes rate for single voyages agreedon the basis of current market situation

TEU: Twenty feet Equivalent Unit, i.e. a 20 foot container. Used for measuring a vessels containercapacity

Voyage expenses: Mainly bunkers/fuels, port expen-ses, canal dues and cargo handling expenses

Owned/ Managed Chartered in Chartered inleased for others >12 months <12 months Total

Car carriers 28.0 8.0 9.0 45.0LNG 2.0 1.0 3.0Dry bulk 2.0 1.0 3.0Open Hatch 10.0 1.0 1.0 12.0Reefers 13.5 13.5Total 55.5 1.0 10.0 10.0 76.5

Total fleet operated by Leif Höegh & Co Consolidated per 31 December 2001

Wergelandsveien 7, P.o. Box 2596 Solli, N-0203 Oslo, Phone: +47 22 86 97 00, Telex 70935 HSHIP, Fax: +47 22 20 14 08E mail: lhc@hoegh.no, Internet: www.hoegh.no, Org No: 921482957

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