THE two largest shareholders in Belfast plc, Ewart, must be looking at their investment with some dismay as they are nursing very substantial paper capital losses. If they are not to lose out heavily, Ewart's shares will have to rise substantially.

Dublin solicitor, Mr Noel Smyth, paid £5.6 million sterling for his holding of 8,242,717 shares last May giving him a crucial 26.5 per cent stake. That works out at 68p per shares. At the time that looked expensive as it represented a 15p premium on the then market price. But the shares have not gone anywhere since then. Indeed they were down to 50p last week before recovering to 51p in London on Friday. And he is now staring at a paper loss of some £1.4 million.

Hong Kong based businessman, Mr Brian O'Connor, now the new chairman of Ewart, is not faring any better. He purchased his 4,944,942 shares, giving him a 15.9 per cent stake, for around £3.46 million sterling, or around 70p per share. He is now looking at a paper loss of almost £1 million.

The dividend payments go a little way towards reducing the losses but not by much. Ewart, last Wednesday, declared an unchanged interim dividend of 0.5p net per share. An unchanged total of 1.1p would represent a return of only 1.6 per cent.

So what is the scope for Ewart's shares to move sharply ahead? Wednesday's interim results would hardly breed much confidence. Mr O'Connor, in his debut as chairman, said he was "pleased" to announce the "significant" increase in first half pre tax profit from £511,063 to £710,029. While he conceded that the growth was achieved with the benefit of additional investment income, the reality is that they were pretty poor results.

That investment income represented life assurance policies that had matured at a premium, yet it was used to boost earnings per share from 1.66p to 1.87p. It is a non recurring item and although it could be deemed to be an acceptable accounting treatment by some people, it should, of course, be excluded when judging the results. This exclusion indicates a 15.5 per cent drop in profits.

Ewart is promising a better performance in the second six months. They would want to be.

The results could be boosted by development profits. And some brokers are projecting a rise in profits from £1.15 million to £1.8 million.

Ewart owns 90 per cent of the Laganbank development Company, which is developing the potentially lucrative Belfast property development. It is obliged to buy out the outstanding 10 per cent but has been unable to agree a price. This is now being decided by an arbitrator. The outcome will give a very good idea about the valuation of that development.

Ewart has not made any profit projections for the £40 million development. The company will be participating in the development through a 25 per cent stake in the proposed new Hilton hotel. The benefits from that are difficult to evaluate because Ewart has not released any relevant data. However, the other properties could generate between £2.5 million and £3 million over a two year period. It could add between 20p and 30p to the net assets per share in the period up to 2001.

Ewart is capitalised at only £15.8 million. The share price of 51p is on an 18.9 per cent discount to the net asset value of share of 62.9p. This compares unfavourably with Green Property's discount of around 6 per cent.

Green is much more active and is perceived to be a more go go company. The perception of Ewart is different. It shocked the market last year when the High Court ordered it to pay fees of £150,000 plus interest to a firm of financial consultants in connection with the abortive takeover of Switzers. The boosting of earnings with income from assurance policies must be seen to be cosmetic. And last year's decision not to allow the press to attend its annual general meeting was hardly a progressive act.

Ewart has often been touted in a positive manner because it is the only publicly quoted Northern Ireland property company. And as such it is in a strong position to reap the benefits from the ceasefires. It does indeed have that potential. But that potential will have to be translated into a considerable boosting of its income, and net assets, and soon. Otherwise the two major shareholders will lose heavily from their investments.