FAR - Results 1Q 2006

Thursday, 11. May 2006 08:56

Results for the 1st quarter 2006
Farstad Shipping achieved an operating income of NOK 417.0 million
for the 1st quarter (NOK 382.1 million). The operating costs for the
period were NOK 223.5 million (NOK 212.3 million).

The operating profit (EBIT) was NOK 124.9 million (NOK 101.4 million)
after depreciation of NOK 68.6 million (NOK 68.4 million). Net
finance was negative NOK 10.9 million (negative NOK 89.8 million).
Currency loss of NOK 1.4 million is booked during the 1st quarter
(gain of NOK 64.0 million). Further an unrealized currency gain of
NOK 23.1 million (loss of NOK 120.0 million) is booked due to the
adjustment of the company's long-term liabilities in foreign
currency. The profit after taxes was NOK 102.9 million (NOK 15.6
million). The Group's cash flow*) for the period was NOK 159.5
million compared to NOK 200.1 million for the same period in 2005.

*) 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 31.03.06, interest-bearing mortgage debt and
leasing liabilities together total NOK 3.691.9 million (NOK 3,715.3
million at 31.03.05). Of the company's debt, 55.4% is in NOK, 26.8%
in USD, 12.4% in GBP, 3.1% in EUR and 2.3% in AUD. Interest-bearing
current assets at 31.03.06 were NOK 1,065.7 million (NOK 740.3
million).

The Group's booked equity at 31.03.06 was NOK 3,189.8 million (NOK
2,789.2 million) corresponding to NOK 81.79 (NOK 71.52) per share.
Equity ratio was 44.1% (40.5%).
Farstad Shipping obtains valuations of the fleet twice each year, as
at 30.06 and 31.12. Therefore, no estimates are obtained at 31.03.06.
Based on the valuation of the vessels (charter-free) from 3
independent brokers in January 2006, the value-adjusted equity
capital per share was calculated at NOK 119.15 (NOK 98.06). A
dividend of NOK 3.00 per share (NOK 5.00) is included in these
figures. This gives a value adjusted equity ratio of 53.5% (48.3%).
For further information regarding the values at 31.12.05, we refer
to the company's annual report for 2005.

The quarterly report has been prepared in accordance with today's
International Financial Reporting Standards (IFRS) and
interpretations, and the IAS 34 standard for quarterly reporting. The
accounting principles used are in accordance with principles used in
the last annual report.

The Fleet
In January BHP Billiton Petroleum (BHPB) entered into charter
agreements for the anchor handling tug supply vessel (AHTS) Lady
Caroline (2003) and the new build Far tbn Sword (AHTS due for
delivery from Aker Brevik in May 2006) for a period of 330 to 420
days. Start-up is scheduled to commence in June. The vessels will
support BHPB's drilling program off north-west Australia.

Far Saltire's (AHTS, 2002) contract was extended by further 5 months
till June 2006. The vessel will operate for BHPB and Woodside on the
Australian sector. Lady Melinda (PSV, 2003) was awarded a 6 months
contract by Technip in Angola scheduled to start in January.

In addition Petrobras declared the options for Far Crusader
(AHTS,1983) till January 2007, Far Centurion (AHTS,1983) till March
2007 and Far Sea (AHTS,1991) till July 2006. The vessels will
continue to operate on the Brazilian sector.

In January a contract was signed with Aker Yards to build a UT 751 E
platform supply vessel (PSV). The hull for the PSV will be built in
Romania and outfitting yard will be Aker Yards Brevik. Delivery of
the vessel is scheduled for July 2007. The vessel will upon delivery
enter into the long term contract that was awarded by Norsk Hydro in
December 2005.

In February contracts were awarded for a period of approx 12 months
plus 2 x 6 months options with ENI and Inpex for the AHTS vessels Far
Saltire (UT722, 16,600 bhp) and Lady Astrid (UT712-2, 12,240 bhp).
The vessels will support the drilling programs of each company off
the North West coast of Australia.

In March Norsk Hydro awarded our company with a Letter of Intent for
the long term Charter of a PSV. The Contract is for a firm period of
32 months with additional option periods of 5 x 1 year. Commencement
of the Contract is August 2006 and will in it's first phase be
serviced by Far Symphony (PSV type Ulstein P105, 2003) up until she
is replaced by a new build of type UT751E. The new build was ordered
at Aker Yards Brevik for delivery in December 2007. At the same time
an anchor handling tug supply vessel of type UT712L was ordered at
the same yard for delivery in March 2008. The AHTS new build UT712L
is part of Farstad's general fleet renewal.

Of the company's fleet only the AHTS vessel Far Sovereign has traded
the North Sea spot market during the quarter. The AHTS Far Scout
returned to the North Sea mid March after operation in Mauritania.
The vessel has traded the spot market after arrival in the North Sea.
The fleet in the Far East/Australia and Brazil has been fully
occupied during the period.

The contract coverage for the Farstad-fleet for the remainder of 2006
is approx. 88% and approx. 40% for 2007. The PSV fleet has higher
contract coverage than the AHTS fleet.

The Market
The demand for supply vessels in the North Sea during the 1st quarter
was approx. 2% higher than for the 4th quarter in 2005, and 19%
higher than in the 1st quarter 2005. Except for January there has
been good balance between supply and demand. The available North Sea
fleet has increased by 10% since the 1st quarter in 2005, the whole
increase is in the PSV fleet. During the 1st quarter the fleet
increased by 7 vessels. The increase in activity has so far absorbed
the growth in the fleet and both the PSV and the AHTS fleet have
obtained good rates during the quarter. The average utilization ratio
for the 1st quarter 2005 for the total North Sea tonnage was approx.
93%. The average for 4th quarter 2005 was 94% and 90% for the 1st
quarter 2005. Also the markets outside the North Sea show steady
improvement resulting in higher rate levels.

High oil prices, the oil companies increased focus on exploration and
the contracting of new rigs are positive for the demand of supply
vessels. This is also the fact for the increasing need for renewal of
older and smaller tonnage. The large number of PSV on order creates
an uncertainty regarding the market balance for this type of tonnage
in the future.

Shareholder matters
The company's share has during the quarter been traded between NOK
92.00 and NOK 108.00 and was NOK 102.75 at the end of the quarter.
The share price at 31.03.06 values the company to approx. NOK 4.0
billion. The number of shareholders is approx. 1,400. Foreign
shareholders own approx. 16.5% of the shares.

The annual general meeting will be held at the company's premises on
May 11. The Board of directors will propose a dividend of NOK 3.00
per share (NOK 5.00 per share in 2004). The share will be traded ex
dividend on May 12. Payment of dividend will take place on May 31.


The Board of Directors

Contacts:
CEO Karl-Johan Bakken - tel. 90 10 56 97
CFO Torstein L. Stavseng - tel. 91 10 70 01


The report including tables can be downloaded from the following
link:
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Author:
Hugin
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