FAR - Results 2Q 2007

Wednesday, 22. August 2007 15:04



Farstad Shipping achieved an operating income of NOK 571.9 million
for the 2nd quarter. The operating profit (EBIT) was NOK 196.1
million. The profit after taxes was NOK 166.8 million.

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______________________________________________________________

Results for the 2nd quarter 2007
Farstad Shipping achieved an operating income of NOK 571.9 million
for the 2nd quarter (NOK 437.6 million for the corresponding period
in 2006). The operating costs for the period were NOK 291.6 million
(NOK 228.7 million). The cost increase is due to the expansion of the
fleet and crewing numbers.

The operating profit (EBIT) was NOK 196.1 million (NOK 141.0 million)
after depreciation of NOK 84.2 million (NOK 67.9 million). Net
finance was negative NOK 10.1 million (negative NOK 26.4 million).
Currency gain of NOK 2.6 million is booked during the 2nd quarter
(loss of NOK 9.1 million). Further an unrealized currency gain of NOK
31.3 million (gain of NOK 16.5 million) is booked due to the
adjustment of the company's long-term liabilities in foreign
currency. The profit after taxes was NOK 166.8 million (NOK 110.5
million). The Group's cash flow*) for the period was NOK 238.9
million compared to NOK 166.0 million for the same period in 2006.

Results as per 30.06.2007
The operating income at 30.06 was NOK 1,256.9 million (NOK 854.6
million) inclusive profit from sale of vessels of NOK 140.1 million
(no vessel sold in the first half-year 2006). The operating costs
were NOK 568.0 million (NOK 452.2 million) and ordinary depreciation
NOK 162.3 million (NOK 136.5 million). The operating profit (EBIT)
was NOK 526.6 million (NOK 265.9 million).

Net finance was negative NOK 31.7 million (negative NOK 37.2 million)
after an unrealized currency gain of NOK 45.2 million (gain NOK 39.6
million). A realized currency gain of NOK 12.3 million is booked
during the half year (loss NOK 10.5 million). The result after taxes
was NOK 457.6 million (NOK 213.3 million). The Group's cash flow*)
for the period is NOK 612.0 million, compared to NOK 325.6 million
for the same period in 2006.

*) 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 30.06.07, interest-bearing mortgage debt and
leasing liabilities together total NOK 4,502.7 million (NOK 3,820.3
million at 30.06.06). Of the company's interest-bearing debts, 51.2%
is in NOK, 25.0% in USD, 19.7% in GBP, 2.3% in EUR and 1.8% in

AUD. Interest-bearing current assets at 30.06.07 were NOK 1,335.4
million (NOK 995.4 million). Payment of dividend of NOK 117.0 million
to the shareholders was made in May.

The Group's booked equity at 30.06.07 was NOK 3,914.3 million (NOK
3,206.8 million) corresponding to NOK 100.37 (NOK 82.22) per share.
Equity ratio was 44.0% (43.3%).

Based on the valuation of the vessels (charter-free) from 3
independent brokers at 30.06.07, the value-adjusted equity capital
per share was calculated at NOK 217.07 (NOK 135.83). This gives a
value adjusted equity ratio of 63.0% (55.8%). Average increase in
fleet value is approx. 14% since the end of 2006.

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
There were no changes in the fleet during the 2nd quarter.

During the 1st quarter the AHTS vessels Far Crusader (1983) and Far
Centurion (1983) were sold, while the newbuilds AHTS Far Sound
(March), PSV Far Spirit (March) and AHTS BOS Turquesa (January) were
delivered.

During the 3rd quarter the PSV Lady Elizabeth was sold and delivered
to the new owners in July. An agreement is reached to sell the AHTS
Lady Margaret and delivery to the new owners is expected to take
place at the end of August. The sale of the two vessels will give a
booked profit in the 3rd quarter of approx. NOK 54 million.

We have also during the quarter taken over a contract for an AHTS
newbuild of type UT 712L at Aker Yards Brevik. The vessel will be
delivered in September 2008.

Since the previous report the following charters lasting more than 12
months have been secured:

* Far Sleipner (PSV, ME202, 1984) and Far Santana (AHTS, UT730,
2000) has been awarded extension of their contracts with
Petrobras, Brazil, for 2 years.
* Lady Cynthia (AHTS, HF270, 1987) has been awarded extension of
the contract with JVPC in Vietnam for 1 year + 1 year option.
* Coogee has secured the Lady Valisia (AHTS, ME 303,1983) and the
Lady Gerda (AHTS, HF270,1987) for a 13-15 month drilling campaign
of the North-West of Australia.
* Petrobras has contracted the Far Swift (PSV, UT755L, 2003) for
two years commencing in Brazil this September. The vessel has
been providing similar services in Mexico and will proceed to
Brazil when the current charter ends in August.
* Arrendadora Ocean Mexicana in Mexico has renewed the charter of
the Far Scotia (PSV, UT755, 2001) for two years with an option
for a further year.
* Talisman has confirmed a one year charter with four by 6 month
extension options for the Far Supporter (PSV, UT750, 1996)
commencing in November 2007.
* Woodside Petroleum will charter the AHTS vessels Lady Dawn (AHTS,
Bolsønes, 1983) and Lady Audrey (AHTS, ME303, 1983) for one year.


AHTS Far Scout, AHTS Far Sound and PSV Lady Elizabeth have during the
period traded the spot market in the North Sea. The remaining part of
the fleet has had close to full employment except for vessels that
have been drydocked.

The contract coverage of the Farstad Fleet is approx. 89% for the
2nd half year 2007 and approx. 56% for 2008. These figures do not
include charterers' options to extend certain contracts.

The Market
2nd quarter has been characterized by strong activity in all markets
and our new charter committments are at improved rate levels.
However, the spot market in the North Sea has not reached the
expected rate levels mainly due to lower activity than expected.

The market balance for the supply vessel fleet is still good despite
of a net fleet increase of approx. 13% of large and medium-sized
vessels the last year. The demand for supply vessels is still good.
High oil prices, the oil companies' increased focus on exploration,
increase in sub sea activity and the contracting of new rigs are
positive for our market sector. This also goes for the increasing
need for renewal of older tonnage. The large number of vessels on
order creates some uncertainty regarding the market balance in the
future.

For a long time the focus has particularly been on the large number
of PSVs still on order, but the substantial AHTS newbuild activity
the last six months may give rise to a correction in the market in
the longer term also for the AHTS vessels subject to the nature of
future demand. It will also be a challenge for the offshore industry
to crew all the new vessels with the essential competencies required

Shareholder matters
The company's share has during the quarter been traded between NOK
145.50 and NOK 164.00 and was NOK 163.00 at the end of the quarter.
The share price at 30.06.07 values the company to approx. NOK 6.4
billion. The share was traded ex dividend of NOK 3.00 on Friday May
11. The number of shareholders is 1,350. Foreign shareholders own
approx. 15% of the shares.



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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