Improved EBITDA due to increased revenues and gain on sales. Soft market but good cost control

Thursday, 24. February 2011 07:01
In Q410 DESSC's revenues increased to USD 37.3 mill. (compared to USD 30.3 mill.
in Q409) due to an increased fleet, higher utilization ratio and improved rates.
A sale of "Sea Otter" and "Sea Marten" resulted in a USD 10 mill. gain. Vessels'
operating expenses (when adjusted for an increased fleet) have reduced by 3%
compared to Q409 and EBITDA improved to USD 26 mill. (USD 12.6 mill.). Net
income before taxes was USD 8.7 mill. (-USD 3.3 mill).

Full year 2010 revenues were USD 132.3 mill compared to USD 167.6 mill in 2009,
or a reduction of 21%. EBITDA was USD 62.8 mill compared to USD 111.5 mill in
2009 or a reduction of 44%. The pre-tax result was USD 0.1 mill compared to USD
43.2 mill in 2009.

The market for offshore supply vessels remained soft in Q410. The relocation of
vessels to Brazil continued in Q410 and DESSC has currently 5 PSVs on long term
charter to Petrobras and 3 AHTS on short/medium term contracts to other
charterers in Brazil. DESSC has furthermore established a subsidiary in Rio and
has one newbuilding large PSV on order at STX in Brazil.

An important part of DESSC's strategy is to gain market access to new local
markets for its vessels. In Q111, DESSC reflagged "Sea Weasel" to Malaysian flag
and the vessel was sold to a Malaysian joint venture where DESSC participates as
owner and operator. The Company looks positively at developing new market
opportunities in Malaysia.

In Q111, DESSC sold the 11 year old AHTS vessels "Sea Cougar" and "Sea Wolf 1"
at attractive prices. The strategic reason behind this sale was renewal of the
Company's fleet.

The long term market fundamentals remain in place with a high oil price. E&P
spending for 2011 is expected to increase by 15% compared to 2010, which again
is expected to lead to an increased demand for AHTS and PSVs.

In the short and medium term, DESSC is expecting a soft Q111. There are many
available OSVs worldwide and a significant number of vessels will be delivered
also in 2011. However, bright spots include the recent tightening of the North
Sea spot market, an increase in international outstanding term requirements and
the continued trend of old vessels leaving the market.

The Company is expected to benefit from strategic moves made in Brazil and
Malaysia, and expects increased utilization of the fleet based on these

As the Company has previously announced, the Norwegian tax authorities, after
reviewing the Company's tax return for 2006, claim that the sales price of
shipbuilding contracts sold to Cyprus subsidiaries should have been higher. The
Board of DESSC strongly disagrees with the tax authorities' assessment of this
case. No allocation has been done in the accounts for 2010.

Following the revised tax legislation applicable for Norwegian Shipping
Companies made after the High Court decision in February 2010, DESSC has booked
a tax liability of NOK 15.8 mill. (USD 2.8 mill.) fully recognized in 2010. The
tax is payable over 3 years.

The Board suggests no dividend distributions in 4Q10. It is the Company's
intention to revert to its former dividend strategy as and when the market

Limassol, 24 February 2011
Deep Sea Supply Plc

This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.

DESSC Q410 Complete version:

DESSC Q410 Presentation:

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Source: Deep Sea Supply via Thomson Reuters ONE

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