FAR - Results 4Q 2005 / Results 2005

Thursday, 16. February 2006 18:32

Implementation of IFRS
From the 1st quarter 2005 Farstad Shipping ASA has prepared its
financial accounts in accordance with International Financial
Reporting Standards (IFRS). In order to present comparable figures
the opening balance as at 1.1.04 was adjusted according to IFRS
principles. The opening balance at 1.1.05 is further adjusted to
allow for principles not required at 1.1.04. In the 1st quarter of
2005 we presented the preliminary, not revised effects of IFRS.
Based on an updated evaluation in connection with the annual accounts
for 2005, we have made further changes to the previous presented
material. The most significant correction is the effect of new
principles for depreciation of the fleet. The result of this for the
3 first quarters of 2005 is NOK 101.8 mill. in reduced depreciation.
The principles for the changes are described in a separate
attachment. In addition is shown the incorporated changes as well as
the adjusted quarterly accounts for 2004 and for the first three
quarters of 2005.

Results for the 4th quarter 2005
Farstad Shipping achieved an operating income of NOK 481.5 million
for the 4th quarter (NOK 419.6 million) inclusive profit from sale of
vessels of NOK 64.4 million (NOK 30.1 million). The operating costs
for the period were NOK 221.4 million (NOK 210.1million).

The operating profit (EBIT) was NOK 190.2 million (NOK 136.3 million)
after depreciation of NOK 69.8 million (NOK 73.2 million). Net
finance was negative NOK 49.6 million (positive NOK 13.9 million).
Currency gain of NOK 29.7 million is booked during the 4th quarter
(loss of NOK 11.9 million). Further an unrealized currency loss of
NOK 56.5 million (gain NOK 60.5 million) is booked due to the
adjustment of the company's long-term liabilities in foreign
currency. The profit after taxes was NOK 154.4 million (NOK 151.5
million). The Group's cash flow*) for the period was NOK 267.0
million compared to NOK 162.9 million for the same period in 2004.

Results as per 31.12.2005
The operating income at 31.12 was NOK 1,815.7 million (NOK 1,561.6
million) inclusive profit from sale of vessels of NOK 161.9 million
(NOK 30.1 million). The operating costs
were NOK 861.0 million (NOK 849.6 million) and ordinary depreciations
NOK 281.4 million (NOK 298.1. million). The operating profit (EBIT)
was NOK 673.3 million (NOK 413.9 million).

Net finance was NOK 184.2 million (NOK 92.9 million) after an
unrealized currency loss of NOK 264.8 million (currency gain of NOK
32.9 million). A realized currency gain of NOK 192.8 million is
booked in 2005 (currency gain of NOK 23.9 million). The result after
taxes was NOK 501.4 million (NOK 308.9 million) after a tax charge of
NOK 12.3 million (NOK 12.1 million). The Group's cash flow*) for the
period is NOK 1,035.4 million, compared to NOK 586.2 million for the
same period in 2004.

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

Financing and capital structure
In the balance per 31.12.05, interest-bearing mortgage debt and
leasing liabilities together totals NOK 3,832.9 million (NOK 3,557.6
million at 31.12.04). Of the company's interest-bearing liabilities
55.4% are in NOK, 26.8% in USD, 12.2% in GBP, 3.1% in EUR and 2.5% in
AUD. Interest-bearing current assets at 31.12.05 were NOK 1,192.6
million (NOK 567.4 million).

The Group's booked equity at 31.12.05 was NOK 3.086.0 million (NOK
2,773.6 million) corresponding to NOK 79.13 (NOK 71.12) per share.
Equity ratio was 42.4% (41.3%).
Farstad Shipping obtains valuations of the fleet each year, as at
30.06 and 31.12. Based on the valuation of the vessels (charterfree)
from 3 independent brokers at 31.12.05, the value-adjusted equity
capital per share before tax was calculated at NOK 115.28 ( NOK
96.90). This gives a value adjusted equity ratio of 51.7% (48.9%).

The Fleet
Far Spirit (PSV, 1983) and Far Server (PSV, 1991) were delivered to
their new owners in October/November 2005. The sales are part of the
company's fleet renewal and the prices achieved correspond to the
values of the vessels at 30.06.

In October an agreement was reached with Aker Langsten AS,
Tomrefjord, for delivery of an anchor handling tug supply vessel
(AHTS) in June 2007. The vessel is the first of the UT 732 CD
design. Powered with 27.500 BHP, it will be the largest and most
advanced vessel in the Farstad-fleet. In November a contract was
signed with West Contractors AS, Ølensvåg, for the building of a
platform supply vessel for delivery in January 2007. The vessel is of
VS470 MKII design and will have a cargo carrying capacity of approx.
3.500 DWT.

In December Norsk Hydro informed Farstad Shipping that they would
enter into a 5 year contract (with 3 x 1 year option) for a PSV
newbuild of UT751 E design (approx. 4.500 DWT). Start-up for the
contract is April 2006 and it will be operated by Far Supporter (PSV,
UT 750), 1996) until delivery of the newbuild. In January 2006 an
agreement was reached with Aker Yards (Brevik Construction AS) for
the building of the vessel, delivery July 2007.

During the period the following charter agreements have been reached:

Lady Sandra (AHTS, KMAR 404, 1998) duration 14 months plus options.
The charterer is Shell Sarawak Berhad (SSB), and the vessel will
support the semi-submersible rig Atwood Falcon on Shell's deepwater
drilling program in Malaysia. Start-up for the contract is December
2005.

Lady Caroline (AHTS, UT712, 2003) and Far Tbn Sword (AHTS UT712L
delivery April 2006 from Aker Brevik) for a period of 330 to 420
days, starting at the end of May. The charterer is BHP Billiton
Petroleum (BHPB). The vessel will support BHBP's drilling program off
north-west Australia. In addition Far Saltire's (AHTS, UT728, 2002)
contract has been extended by a further 5 months till June 2006. The
vessel will operate for BHBP and Woodside on the Australian sector.

Lady Melinda (PSV, UT755, 2003) has been awarded a contract by
Technip in Angola for 6 months with options, starting in January.

Petrobras has declared the options for AHTS Far Crusader (AHTS,
ME303, 1983) till January 2007, Far Centurion (AHTS, ME303, 1983)
till March 2007 and Far Sea (AHTS, ME303II, 1991) till July 2006. The
vessels will continue to operate on the Brazilian sector.

Of the company's fleet only one vessel has traded the North Sea spot
market during the quarter. The rate level and the employment for the
fleet in the Far East/Australia have been on level with the 3rd
quarter.

The Market
The demand for supply vessels in the North Sea during the 4th quarter
was approx. 20% higher than for the 4th quarter in 2004, but approx.
4% lower than for the 3rd quarter. During the quarter there has been
a good balance between supply and demand. The available fleet in the
North Sea has increased by 15% compared to the year-end 2004/2005.
The strong increase in activity this quarter has given an average
utilization ratio of 94% for the total North Sea fleet. This has
resulted in a high rate level most of the quarter. The average
utilisation for the 3rd quarter 2005 was 95%, and 91% for the 4th
quarter 2004 .The average for the year was 93% compared to 88% for
2004. The market in Australia/The Far East has improved during 2005.

The market trend is very promising in the near future. High oil
prices, the oil companies increased focus on exploration and the
contracting of new rigs are positive for the demand of supply
vessels. The high market activity has resulted in the need of renewal
of older and smaller tonnage.

The contract coverage for the Farstad-fleet in the first 6 months of
2006 is approx. 90% and approx. 66% for the second half year. For
2007 the contract coverage is now approx. 27%.

Shareholder matters
The company's share has moved between NOK 81.00 and NOK 97.00 during
the quarter and was NOK 97.00 at the end of the quarter. The share
price at 31.12.05 values the company to approx. NOK 3.78 billion.
The number of shareholders was 1,444. Foreign shareholders own 16.8%
of the shares.

New Managing Director
In November the Board of Farstad Shipping ASA appointed Karl-Johan
Bakken as new managing director in Farstad Shipping ASA.

He will succeed Terje J.K. Andersen who will retire in May 2006.
Karl-Johan Bakken will, however, take up his new position from
January 1, 2006.

Karl-Johan Bakken holds a M.Sc in Naval Architecture from the
Norwegian Institute of Technology in Trondheim. He joined Farstad
Shipping with a 15 years experience from Ulstein/Rolls-Royce. He
entered the position as COO in 1999.

Annual General Meeting 11th May 2006
The Board of directors will propose a dividend of NOK 3.00 per share
(NOK 5.00 per share in 2004).


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:
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