FAR - Results for the 3rd quarter 2007

Wednesday, 14. November 2007 16:31

Farstad Shipping achieved an operating income of NOK 616.6 million
for the 3rd quarter, including profit from sale of vessels of NOK
56.0 million. The operating costs for the period were NOK 234.2
million. The profit after taxes was NOK 173.5 million.


Results as per 3rd quarter 2007

Farstad Shipping achieved an operating income of NOK 616.6 million
for the 3rd quarter (NOK 536.8 million for the same period in 2006).
The income includes profit from sale of vessels with NOK 56.0 million
(no sale of vessels in 3rd quarter 2006). The operating costs for the
period were NOK 295.6 million (NOK 237.7 million). The increase is
due to more vessels and increased manning costs. The pressure in the
supplier industry contributes to increased costs.

The operating profit (EBIT) was NOK 234.2 million (NOK 226.6 million)
after depreciation of NOK 86.8 million (NOK 72.6 million). Net
finance was negative NOK 38.4 million (negative NOK 36.8 million).
Currency gain of NOK 5.7 million is booked during the 3rd quarter
(gain of NOK 33.1 million). Further, an unrealized currency gain of
NOK 5.3 million (loss of NOK 33.5 million) is booked due to the
adjustment of the company's long term liabilities in foreign
currency. The profit after taxes was NOK 173.5 million (NOK 186.5
million). The Group's cash flow *) for the period was NOK 277.3
million compared to NOK 295.9 million for the same period in 2006.

Results as per 30.09.2007
The operating income at 30.09.2007 was NOK 1,873.5 million (NOK
1,391.4 million). The income includes profit from sale of vessels
with NOK 196.1 million (no sale of vessels in 2006). The operating
costs were NOK 863.5 million (NOK 689.9 million), and ordinary
depreciation NOK 249.1 million (NOK 209.1 million). The operating
profit (EBIT) was NOK 760.9 million (NOK 492.5 million).

Net finance was negative NOK 70.1 million (negative NOK 74.0 million)
after an unrealized currency gain of NOK 50.5 million (gain NOK 6.1
million). Currency gain of NOK 18.0 million has been realized so far
this year (gain NOK 22.6 million). The result after taxes was NOK
631.1 million (NOK 399.6 million). The Group's cash flow *) for the
period is NOK 889.4 million, compared to NOK 621.4 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 30.09.2007 interest-bearing mortgage debt and
leasing liabilities together total NOK 4,297.2 million (NOK 4,049.7
million at 30.09.2006). Of the company's debt, 53.4% is in NOK, 23.9%
in USD, 18.8% in GBP, 2.2% in EURO and 1.7% in AUD. Interest bearing
current assets at 30.09.2007 were NOK 1.388.1 million (NOK 1.040.4

The Group's booked equity at 30.09.2007 was NOK 4,136.6 million (NOK
3,342.6 million)
Corresponding to NOK 106.07 (NOK 85.71) per share. Equity ratio was
46.5% (43.1%).

Farstad Shipping estimates the valuation of the vessels
(charter-free) from 3 independent brokers twice a year, by the turn
of the year and by the half-year. There is no estimate of the values
by 30.09. Based on the valuation of the vessels made in July 2007,
the value-adjusted equity capital per share was calculated at NOK
223.80 (NOK 141.08). This gives a value adjusted equity ratio of
64.8% (55.5%).

If the Government's tax proposal is approved, see below, the tax
claim will be charged as an expence in 4th quarter, and the equity
capital will be reduced correspondingly.

This 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
PSV Lady Elizabeth (1983) and AHTS Lady Margaret (1993) were sold
during the 3rd quarter. The buyers of Lady Margaret also took over
our joint-venture company in Nigeria, and our involvement in Nigeria
is terminated. Far Crusader (AHTS 1983) and Far Centurion (AHTS
1983) were sold earlier this year (1st quarter). These sales are
important regarding renewal of the Company's fleet.

Three new vessels have been delivered to the Company so far this
year, AHTS Far Sound (March), PSV Far Spirit (March) and AHTS BOS
Turquesa (January). Two more vessels should have been delivered
during the 3rd quarter, but due to delays from the shipyards, the
deliveries will take place in the 4th quarter.

Farstad Shipping has taken over a new building contract for an AHTS,
UT712L, under construction by Aker Yards Brevik. The ship will be
delivered in September 2008.

Two vessels have been operating in the North Sea during the 3rd
quarter. The rest of the fleet has been fully employed with exception
of one vessel which has been under repair during the period. In
particular, 3 older vessels in the Far East have been off-hire for
extended dockings.

The contract coverage of the Farstad-fleet for the 4th quarter is 94%
and approx. 59% for 2008. The figures do not include the charterers
options for extending some of the contracts.

The Market
There is a world-wide increased demand for supply vessels. The North
Sea spot-market has not resulted in the expected increase of the rate
level, but the market balance is still good. High oil prices, the oil
companies increased focus on exploration, increased activity sub-sea
and a considerable contracting of new rigs, are positive for the
demand of supply vessels.
This is underscored by the demand for the replacement of older
tonnage. There are, however, more than 700 supply vessels under
construction for delivery during a 3-year period, and a large number
of new operators are entering the industry. This gives reason for
consideration, and a correction of the market is expected. The large
number of new-builds is also a challenge regarding crew.

Shareholder matters
The company's share has during the quarter been traded between NOK
138.00 and NOK 170.00 and was NOK140.00 at the end of the quarter.
The share price at 30.09.2007 values the company to approx. NOK 5.5
billion. The number of shareholders is approx. 1.380. Foreign
shareholders own approx. 14% of the shares.

Extraordinary General Meeting
Later today there will be an extraordinary General Meeting. Ms
Astrid Koppernæs is proposed as a new member of the Board. Ms
Koppernæs has experience from the oil industry. The company will then
fulfill the demand for female representation of the Board.

Shipping tax regime
In connection with the introduction of a new shipping tax regime from
01.01.2007, the Government has proposed that the existing tax regime
shall be reversed, with the consequence that the results from the
last 11 years will be taxable. If this proposition is approved, the
company will have a tax liability which there has been no reason to
accrue for in the earlier accounts. The tax liabilities are
estimated to approx. NOK 1 billion, of which 2/3 are payable during a
10 year period. The remaining amount can be used for environmental
investments. The company has given a more detailed orientation of
the consequences of the proposed changes in a press release dated

The Board is concerned that the Government has decided a policy
introducing rules that even can be in conflict with the Constitution
of Norway, §97. Stability and predictable conditions are necessary
in order to maintain and develop the maritime industry in Norway. The
new proposal gives a clear benefit for the companies that earlier
have decided to establish their activities outside Norway.

The Board of Directors

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

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