FAR - Results 4Q 2006 / Results 2006

Thursday, 15. February 2007 13:33



Results for the 4th quarter 2006
Farstad Shipping achieved an operating income of NOK 549.5 million
for the 4th quarter (NOK 481.5 million inclusive profit from sale of
vessels of NOK 64.4 million in the 4th quarter 2005). The operating
costs for the period increased by NOK 26.2 million compared to the
3rd quarter this year. This increase is due to a combination of
increased number of vessels, increased crew expenses and increase in
estimated pension obligations.

The operating profit (EBIT) was NOK 208.3 million (NOK 190.2 million
inclusive sales profit) after depreciation of NOK 77.3 million (NOK
69.8 million). Net finance was negative NOK 51.9 million (negative
NOK 49.6 million). A currency gain of NOK 0.1 million (NOK 29.7
million) is realized during the quarter and an unrealized currency
gain of NOK 16.6 million (loss of NOK 56.5 million) is booked due to
the adjustment of the company's long-term liabilities in foreign
currency. NOK 33.9 million is booked as financial expenses connected
to an increase of the company's leasing liabilities.

The profit after taxes was NOK 143.7 million (NOK 154.4 million
inclusive sales profit of 64.4 million). The Group's cash flow*) for
the period is NOK 217.1 million compared to NOK 267.0 million
inclusive sales profit for the same period in 2005.

Results as per 31.12.2006
The operating income at 31.12 was NOK 1,940.9 million (NOK 1,815.7
million inclusive sales profit of 161.9 million). The operating costs
were NOK 953.8 million (NOK 861.0 million) and ordinary depreciations
NOK 286.4 million (NOK 281.4. million). The operating profit (EBIT)
was NOK 700.7 million (NOK 673.3 million inclusive sales profit of
161.9 million).

Net finance was negative NOK 125.9 million (negative NOK 184.2
million) following an unrealized currency gain of NOK 22.7 million
(loss NOK 264.8 million). A realized currency gain of NOK 22.7
million is booked (gain NOK 192.8 million). The profit after taxes
was NOK 543.3 million (NOK 501.4 million inclusive sales profit of
161.9 million). The Group's cash flow*) for the period is NOK 838.5
million, compared to NOK 1,035.4 million inclusive sales profit 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 31.12.06, interest-bearing mortgage debt and
leasing liabilities together total NOK 4,141.7 million (NOK 3,832.9
million at 31.12.05). Of the company's debt 26.6% is in USD, 11.7% in
GBP, 57.0% in NOK, 2.0% in AUD and 2.7% in EUR. Interest-bearing
current assets at 31.12.06 were NOK 973.6 million (NOK 1,192.6
million).

The Group's booked equity at 31.12.06 was NOK 3,533.7 million (NOK
3,086.0 million) corresponding to NOK 90.61 (NOK 79.13) per share.
Equity ratio was 43.8% (42.4%).

Based on the valuation of the vessels (charter-free) from 3
independent brokers at 31.12.06, the value-adjusted equity capital
per share before tax was calculated at NOK 170.87 NOK 115.28). This
gives a value adjusted equity ratio of 59.5% (51.7%).

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
During the quarter the following charters lasting more than 12 months
have been secured:

* Far Sailor (AHTS, UT722, 1997) and Far Senior (AHTS, UT722L,
1998) have both been extended for 2 years with Petrobras in
Brasil.
* The newbuild tbn. Far Spirit (PSV, VS470) has been chartered by
BP Angola for a period of 2 years plus 1 year option. Delivery
from the yard at the end of March 2007.
* Lady Grete (PSV, UT755L, 2002) will start on a 3 year contract
(plus 1 year option) working for Reliance in India.
* Lady Sandra (AHTS, KMAR404, 1998) will start on a 13 month
contract (plus options) supporting a exploration drilling program
for Peak.
* Far Strider (PSV, VS483, 1999) has been extended for 1 year plus
1 year to Chevron Texaco.


AHTS Far Strait (UT712L) was delivered from Aker Brevik in December.
After trading the spot market in the North Sea for approx. 1 month
the vessel left for Australia to start on a long-term contract for
Woodside. Also Far Stream (UT712L) left the North Sea during the
quarter to start on long-term work in Australia. AHTS Far Scout
(UT722L, 2001) has this period traded the spot market in the North
Sea.

In October an agreement was reached with Aker Yards AS, Tomrefjord to
build 4 AHTS of the type UT731CD for delivery in 2009 and 2010. The
vessels are designed for tomorrow's market of anchor handling tug
supply vessels and powered with 25000 BHP.

After the turn of the year (at the end of January) AHTS Far Crusader
(1983) was delivered to the new owners. AHTS BOS Turquesa (Farstad
owns 50%) was delivered from the yard in Brazil in February and
immediately started on its 8 years contract for Petrobras.

Farstad Shipping has a fleet of 48 vessels (27 AHTS, 21 PSV) and 12
vessels under construction. (7 AHTS, 1 CSV, 4 PSV). One AHTS
(1983-built), Far Centurion, will be delivered to the new owners in
March, whilst 5 newbuilds are scheduled for delivery during 2007.

The contract coverage of the Farstad fleet is approx. 90% for the 1st
half year of 2007 and approx. 60% for the 2nd half of 2007. The
contract coverage for 2008 is approx. 35%. These figures do not
include charterers' options to extend certain contracts.

The Market
The market balance for the supply vessel fleet is still good despite
of a net increase of 85 large and medium-sized vessels in 2006
(approx. 14%). Of these 61 were PSV vessels. In 2007 the PSV fleet is
expected to increase by 53 units, while the number of AHTS is
expected to increase by 40 vessels. The demand for supply vessels is
increasing in most markets. However, we are expecting a correction in
the market for PSV vessels as a consequence of the large number of
vessels that will still be under construction at the end of 2007. The
rate level for the AHTS fleet is expected to be good also in the near
future, but the construction activity has strongly increased in this
segment in the past year. There are now 135 large and medium-sized
AHTS on order. High oil prices, the oil companies increased focus on
exploration, and the contracting of new rigs are positive for the
demand in this segment.

Shareholder matters
The company's share has during the quarter been traded between NOK
116.50 and NOK 139.00 and was NOK 135.50 at the end of the year. The
share price at 31.12.06 values the company to approx. NOK 5.3
billion. The number of shareholders is approx. 1,400. Foreign
shareholders own approx. 16% of the shares.

Annual General Meeting 10th May 2007
The Board of directors will propose a dividend of NOK 3.00 per share
for 2006 (NOK 3.00 per share for 2005).


The Board of Directors



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



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Author:
Hugin
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