FAR - Results 3Q 2005

Thursday, 10. November 2005 13:09

Results for the 3rd quarter 2005
Farstad Shipping achieved an operating income of NOK 549.9 million
for the 3rd quarter (NOK 384.1 million) inclusive profit from sale of
vessels of NOK 120.6 million (no sale of vessels in 2004). The
operating costs for the period were NOK 208.4 million (NOK 215.0
million).

The operating profit (EBIT) was NOK 233.9 million (NOK 61.4 million)
after depreciation of NOK 107.6 million (NOK 107.7 million). Net
finance was negative NOK 16.9 million (positive NOK 17.9 million).
Currency gain of NOK 43.0 million is booked (NOK 13.4 million).
Further an unrealized currency loss of NOK 31.9 million (gain of NOK
40.0 million) is booked due to the adjustment of the company's
long-term liabilities in foreign currency. The profit after taxes was
NOK 214.7 million (NOK 68.2 million). The Group's cash flow*) for the
period is NOK 356.5 million compared to NOK 146.9 million for the
same period in 2004.

Results as per 30.09.2005
The operating income at 30.09 was NOK 1,357.4 million (NOK 1,142.0
million). The operating costs were NOK 638.3 million (NOK 640.0
million) and ordinary depreciations NOK 313.3 million (NOK 324.6.
million). The operating profit (EBIT) was NOK 405.8 million (NOK
177.3 million).

Net finance was negative NOK 134.4 million (negative NOK 106.8
million) after an unrealized currency loss of NOK 208.3 million (NOK
27.6 million). A realized currency gain of NOK 163.2 million is
booked during the half year (NOK 35.8 million). The result after
taxes was NOK 269.5 million (NOK 56.9 million). The Group's cash
flow*) for the period is NOK 793.1 million, compared to NOK 422.7
million for the same period in 2004.

*) Pre-tax profit + depreciation and deferred maintenance + change on
revaluation of long-term liabilities in foreign currency.

Financing and capital structure
In the balance sheet at 30.09.05, interest-bearing mortgage debt and
leasing liabilities together total NOK 3.842,1 million (NOK 3,772.7
million at 30.09.04). Of the company's debt 20.2% is in USD, 14% in
GBP, 60.3% in NOK, 2.5% in AUD and 3.1% in EUR. Interest-bearing
current assets at 30.09.05 were NOK 936.1 million (NOK 499.9
million).

The Group's booked equity at 30.09.05 was NOK 2,462.5 million (NOK
2,114.7 million) corresponding to NOK 63.14 (NOK 54.22) per share.
Equity ratio was 37.2% (34.1%).

Farstad Shipping obtains valuations of the fleet twice each year, as
at 30.06 and 31.12. Therefore no estimates are obtained at 30.09.05.
Based on the valuation of the vessels (charter-free) from 3
independent brokers in July, the value-adjusted equity capital per
share before tax was calculated at NOK 109.05 (NOK 84.18). This gives
a value adjusted equity ratio of 50.6% (44.5%).

The quarterly report has been prepared in accordance with IFRS
(International Financial Reporting Standards) and the accounting
principles used are in accordance with principles used in the last
annual report. In the quarterly report comparative figures in
question for 2004 are restated in accordance with IFRS.

The Fleet
Lady Sandra (AHTS, 1998) was, according to the purchase option we
had, aquired in August. The vessel has been on a bareboat charter
since she was delivered from the yard. Far Scotsman (PSV, 1982) and
Far Swan (PSV, 2001) were delivered to the new owners in August and
September respectively. In addtiton, agreements were reached to sell
the Far Spirit (PSV, 1983) and the Far Server (PSV, 1991). The sale
of Far Spirit was completed in October, while Far Server will be
delivered to the new owners in November. Except for Far Swan these
sales are a consequence of the company's fleet renewal and the fact
the prices achieved were equal to the valuation of the vessels at
30.06. Far Swan was sold because the price was considerably higher
than the brokers' valuation at 30.06.05 and approx. 50 million higher
than the newbuilding price in 2001.

Lady Elizabeth (PSV, 1983) has during the period been transferred
from the Far East to the Dutch sector. Lady Margaret (AHTS, 1994) has
also been transferred from the Far East. After an upgrade the vessel
started on a 2 year contract for Shell in Nigeria at the end of
August.

During the quarter long-term contracts have been achieved for Lady
Dawn (AHTS, 1982), Lady Valisia (AHTS, 1983), Lady Cynthia (AHTS,
1987), Far Sky (AHTS, 1991), Far Service (PSV, 1995) and Far Viscount
(PSV, 1982).

Of the company's fleet 2 - 3 vessels have traded a good spot market
in the North Sea. The rate and the employment level for the fleet in
the Far East/Australia improved compared to the first half year.

The Market
The demand for supply vessels in the North Sea continued to increase
during the 3rd quarter and was 23% higher than for the 3rd quarter in
2004, and 8.5% higher than in the 2nd quarter. However, the available
North Sea fleet has increased considerably, and was 20% higher at
30.09 than at the same time last year. The increased activity has
given an average utilization of approx. 95% for the total North Sea
fleet, resulting in high rates during parts of the quarter. The
average utilization ratio for the 2nd quarter 2005 was approx. 93%.
The average for the 3rd quarter 2004 was 91%. The market in
Australia/the Far East has continued to show steady improvement.

The basic conditions promise a high activity level going forward. The
development in the rate level in 2006 will depend on whether the
increased activity is sufficient to absorb, in particular, the number
of platform vessels to be delivered.

The contract coverage for the Farstad-fleet for the first half year
2006 is approx. 75%. For the 2nd half year 2006 the contract coverage
is now approx. 55%. The contract coverage is higher for the PSV-fleet
than for the AHTS fleet.

Shareholder matters
The company's share has during the quarter been traded between NOK
80.50 and NOK 96.75 and was NOK 92.50 at the end of the quarter. The
share price at 30.09.05 values the company to approx. NOK 3.6
billion. The number of shareholders is approx. 1,450. Foreign
shareholders own approx. 17% of the shares.


The Board of Directors


Contacts:
CEO Terje J.K. Andersen - tel. 90 03 05 11
CFO Torstein L. Stavseng - tel. 91 10 70 01


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Author:
Hugin
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