R EPORT AT SEPTEMBER 30

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1 F A R S T A D S H I P P I N G A S A R EPORT AT SEPTEMBER 3

2 R E P O R T A T S E P T FREIGHT INCOME FARSTAD SHIPPING (SORTED BY SECTOR) % Norwegian sector British sector Far Star after the naming ceremony in the Geirangerfjord. Brazil Far East/Australia WestAfrica Photo: Torstein L. Stavseng THIS IS FARSTAD SHIPPING Farstad Shipping s strategy is to be a longterm, important international operator of large, modern, offshore service vessels. Farstad Shipping has concentrated its activities in that part of the market which demands the largest and most advanced tonnage, Anchor Handling Tug Supply Vessels (AHTS) > 1. hp and Platform Supply Vessels (PSV) > 2. dwt. The company will maintain a longterm charter strategy. The company s fleet consists of 34 vessels, of which 15 are PSV s, 18 are AHTS and one is a flexible pipelaying vessel. Of these, 2 PSV s and 7 AHTS are jointly owned through the collaboration with P&O, Australia (Farstad has a 5% share), while 1 AHTS is chartered to this company under a bareboat charterparty. Farstad Shipping has 1 AHTS on order to be delivered in February 2. Altogether 4 employees in Ålesund and Aberdeen direct the company s activities. At the moment 19 vessels are stationed in the North Sea, 7 in Brazil, and 8 in Australia/the Far East. The vessels in the Far East are operated by P&O. The number of crew is approx. 7. THE RESULT PER 3 SEPTEMBER 1999 For the first three quarters of 1999 Farstad Shipping achieved an operating income of NOK million (NOK million in 1998). No vessel has been sold in The operating income for 1998 includes sales gains of NOK 62. million. The result before taxes was NOK 83.5 million. The corresponding result per was NOK mill. The Group's cash flow*) for the period was NOK million, compared to NOK million (inclusive NOK 62. million in sales gains) in The operating costs in the period were NOK million (NOK 25.7 million). The operating profit before depreciation and finance, excluding sales gains, was NOK million (NOK 254. million). Ordinary depreciation amounted to NOK million (NOK 82,7 million). Freight revenues and operating costs are apportioned between AHTS and PSV in the following manner (NOK 1,): AHTS PSV Freight revenues 289,811 49% 298,517 51% Vessel crew costs (79,925) 47% (9,94) 53% Vessel operating costs (6,637) 54% (5,791) 46% Administration divided per vessel (17,68) 51% (17,123) 49% Operating result before depreciation 131,569 48% 14,59 52% Depreciation (56,842) 5% (56,65) 5% Vessel operating result 74,727 47% 83,859 53% Net financial costs were NOK 76,7 million (NOK 39,8 million). Included in the financial cost is an unrealised disagio of NOK 19.8 million (NOK 2.9 million) due to the adjustment of the company s mortgage debt in foreign currency. For the third quarter the operating profit before sales gains and depreciation was NOK 81,6 million (NOK 12.7 million) and the operating result NOK 39.8 million (NOK 73.3 million). Net financial items were minus NOK 27.6 million (minus NOK 2. million). For the third quarter an additional disagio of NOK 1.9 million is included in the financial cost (agio of NOK 12.5 million in 1998) due to the adjustment of the company s mortgage debt in foreign currency. The result before taxes was NOK 12.2 million (NOK 71.3 million). Cash flow*) for the third quarter was NOK 55.8 million compared to NOK 88.2 million for the same period in *) Pretax profits + depreciation + change on revaluation of debt in foreign currency.

3 E M B E R 3, NOK CASH FLOW PER SHARE (BEFORE TAX) Exclusiv salesgains Inclusiv salesgains The Company s 2 largest shareholders at : Number % 1. Tyrholm & Farstad A/S , 2. Odin Norge ,9 3. Sverre A. Farstad 1.. 2,2 4. Jan H. Farstad 1.. 2,2 5. Storebrand Livsforsikring ,1 6. NOR Forsikring AS ,8 7. Bankers Trust Company 65. 1,4 8. DnB RealVekst ,3 9. Storebrand Skadeforsikring ,1 1. Credit Suisse Equity 4.,9 11. DnB RealInvest 397.6,9 12. Det Stavangerske Dampskibs ,9 13. Tine Pensjonskasse 335.,7 14. Brown Brothers Harris 3.,7 15. Vesta Liv AS 279.2,6 16. Gulfmark Offshore 268.9,6 17. Verdipapirfondet AVA 256.6,6 18. Vital Forsikring AS 25.,6 19. Vesta Forsikring 226.8,5 2. Aksjespar Postbanken 217.6,5 Total 2 largest shareholders ,3 Other shareholders ,7 Total shares , Interestbearing mortgage debt at was NOK million. Approx. 45% of the company s mortgage debt is in NOK, the remaining part in foreign currency (USD, GBP, AUD). Interestbearing current assets were NOK 2.8 million. The Group s equity capital at was NOK million corresponding to NOK 28. per share. Farstad Shipping obtains valuation estimates of the company s tonnage twice a year, at 3 June and at the yearend. Thus broker estimates were not obtained per Due to the uncertainty in development of values since , the company has chosen not to publish calculations of the valueadjusted equity per share per 3.9. New valuation estimates will be obtained at the end of the year. For further information of the valuation estimates, see our report per THE FLEET Far Strider (PSV) and Far Supplier (PSV) were delivered by Kværner Govan, Glasgow on January 12th and March 12th, respectively. Far Sovereign (AHTS) was delivered by Langsten Slip & Båtbyggeri AS on 25th June and Far Star (PSV) was delivered by Brattvaag Skipsverft AS on 19th August Regarding the vessels charterparties, see page 7. THE MARKET The demand for supply vessels in the North Sea during the first halfyear has been on the same level as for the same period in However, the increase in available tonnage resulted in a fall in the average utilisation of the North Sea tonnage in the period from approx. 95% in the first halfyear 1998 to approx. 89% in During the third quarter the activity in the North Sea has been marked by increasing surplus tonnage which has resulted in an average utilisation for the North Sea tonnage of less than 85%. For the same period in 1998 the average utilisation was 9798%. Three of Farstad s AHTS have been trading the spotmarket during the third quarter and one PSV has been laidup. The market is not expected to improve throughout the autumn and winter season The activity in Australia/the Far East has been on a low level during the third quarter and periodically up to five of our vessels have been without work. A slight improvement is expected in the fourth quarter. In Brazil the activity is still on a high level. At the time Far Sovereign started her operations for Petrobras at the end of September, seven Farstad vessels were operating in the area. A difficult future market situation is expected for the supply industry. A high oil price together with the oil companies willingness to invest in exploration will be deciding factors for the improvement of the market situation. An improvement of the North Sea market will depend on the reduction of available tonnage which can be achieved by vessels beeing laidup or vessels being chartered to other markets. SHAREHOLDER MATTERS The share quotation has moved between NOK 19. and NOK 24.3 during the first 6 months. During the third quarter the share quotation has moved between 21.5 and 27.3 and was at the end of the third quarter NOK The quotation per gives a market value of the company of approx. NOK 1.5 million. There are approx shareholders. Foreign shareholders own approx. 5.7% of the shares. Aalesund, 28 October 1999

4 P R O F I T A N D L O S S A C C O U N T FARSTAD SHIPPING ASA GROUP (NOK 1) OPERATING INCOME: Freight income Other income Profit on sale of fixed assets 3. quarter ,312 1, quarter , ,328 3, ,91 1,845 62,5 Total ,52 3,648 62,5 Total operating income 19, , , ,76 768,75 OPERATING EXPENSES: Crewing expenses vessels Other operating expenses vessels Administration (56,571) (4,97) (11,47) (45,562) (3,849) (9,61) (17,19) (111,428) (34,83) (131,575) (89,155) (3,) (184,671) (122,528) (4,43) Total operating expenses (19,11) (86,12) (316,25) (25,73) (347,629) Operating profit before depreciation 81,585 12, , ,3 421,76 Depreciation (41,741) (29,389) (115,896) (82,653) (118,893) Operating result 39,844 73,272 16, ,377 32,183 FINANCIAL ITEMS: Financial income Financial expenses 4,83 (32,448) 2,82 (4,81) 18,97 (95,612) 8,6 (48,41) 16,36 (76,181) Net financial items (27,645) (2,8) (76,75) (39,81) (59,875) Pretax profit 12,199 71,264 83,51 193, ,38 Taxes (636) (558) (2,712) (1,199) (1,844) Profit 11,563 7,76 8, ,377 24,464 Profit per share (NOK) Cash flow per share (NOK) NOK million OPERATING INCOME (BEFORE SALE OF FIXED ASSETS) NOK million CASH FLOW (BEFORE TAX AND SALE OF FIXED ASSETS) 1. quarter 2. quarter 3. quarter 4. quarter 1. quarter 2. quarter 3. quarter 4. quarter

5 B A L A N C E S H E E T FARSTAD SHIPPING ASA GROUP (NOK 1) ASSETS: Fixed assets: Goodwill Vessels etc. Deferred maintenance cost Contracts newbuildings Other longterm receivables Shares 5,121 2,624,326 42,517 44,472 1, ,697 1,784,776 43,37 182, ,33 1,83,998 42,591 26, Total fixed assets 2,718,44 2,18,19 2,87,647 Current assets: Account receivables, freight income Other shortterm receivables Other securities Bank deposits 116,182 38,822 21,13 171, ,8 48,731 2,496 13, ,189 28,817 21, ,175 Total current assets 347, , ,438 Total assets 3,66,276 2,31,377 2,369,85 LIABILITIES AND EQUITY: Equity: Share capital ( of NOK 1,) Share premium reserve Other equity Profit of the period 45, , ,871 8,798 45, , ,42 192,377 45, , ,391 Total equity 1,269,394 1,169,522 1,172,116 Liabilities: Longterm liabilities: Other longterm debt Interestbearing mortgage debt 1,72,662 1,411 1,34,511 2,68 1,61,843 Total longterm liabilities 1,72,662 1,35,922 1,63,911 Shortterm liabilities: Bank overdraft Debt to suppliers Allocated to dividends Other shortterm liabilities 4,373 53,847 7,46 45,99 51,483 37,374 45,329 5,355 Total shortterm liabilities 94,22 14, ,58 Total liabilities 1,796,882 1,14,855 1,196,969 Total liabilities and equity 3,66,276 2,31,377 2,369,85

6 F L E E T G A L L E R Y

7 T H E F A R S T A D F L E E T Owner Year built Design BHP DWT iii ) Employment iv ) at Photo No: AHTS ANCHORHANDLING / TUG / SUPPLY CONTRACT OVERVIEW AT Farstad Supply AS 2 UT ,5 years 1 Farstad Supply AS 1999 UT March 2 Farstad Supply AS 1998 UT 722 L 18 Spot 3 Farstad Supply AS 1997 UT Sept. 2 4 Farstad Supply AS 1993 UT Nov. 5 5 Farstad Supply AS 1993 UT Aug. 3 + opt. 6 Farstad Supply AS 1991 ME 33 II 144 Spot 7 Farstad Supply AS 1983 ME Dec. 1 8 Farstad Supply AS 1983 ME Nov. 1 9 Farstad Supply AS 198 UT March IOS (5%) i ) 1987 Hudong 98 Spot 11 IOS (5%) 1983 ME Dec IOS (5%) 1983 Amels 156 Nov IOS (5%) 1983 ME Spot 14 IOS (5%) 1983 Bolsønes 128 Spot 15 IOS (5%) 1991 ME 33 II 132 Dec. 16 IOS (5%) 1983 UT April ii ) 1998 KMAR Dec Farstad Supply AS 1999 UT Aug Farstad Supply AS 1999 VS Nov. 1 2 Farstad Supply AS 1999 VS Jan. 4+opt. 21 Farstad Supply AS 1996 UT Feb Farstad Supply AS 1995 UT April +opt. 23 Farstad Supply AS 1991 UT 75 3 Jan. 2+opt. 24 Farstad Supply AS 1991 UT 75 3 April 5+opt. 25 Farstad Supply AS 199 UT 75 L 3796 Dec. 1+opt. 26 Farstad Supply AS 1983 UT 76 L 333 Sept. +opt. 27 Farstad Supply AS 1982 UT 75 omb. 43 Aug. 6+opt. 28 Farstad Supply AS 1982 ME Laid up 29 Farstad Supply AS 1984 ME Nov. 6 3 Farstad Supply AS 1983 UT Nov Farstad Supply AS 1982 H/R omb. 154 Dec Farstad Supply AS 1982 H/R 154 Nov. 99+opt. 33 IOS (5%) 1983 ME Oct IOS (5%) 1982 ME Sept. +opt. 35 FAR SANTANA FAR SOVEREIGN FAR SENIOR FAR SAILOR FAR FOSNA FAR GRIP FAR SKY FAR CRUSADER FAR CENTURION FAR TURBOT LADY CYNTHIA LADY AUDREY LADY ELAINE LADY VALISIA LADY DAWN FAR SEA FAR MINARA LADY SANDRA PSV PLATFORM SUPPLY VESSEL CONTRACT OVERVIEW AT FAR STAR TBN FAR SUPPLIER FAR STRIDER FAR SUPPORTER FAR SERVICE FAR SERVER FAR SCANDIA FAR SUPERIOR FAR GRIMSHADER LOCHNAGAR FAR SCOTSMAN FAR SLEIPNER FAR SPIRIT FAR SUN FAR VISCOUNT LADY ELIZABETH LADY KARIANN i ) ii ) P/R International Offshore Services ANS The vessel is chartered by IOS on a 5 years bareboat charterparty. iv ) Certain freight contracts contain clauses which give the charterer the right to cancel the contract. Contracts Charterer s option iii ) BHP for AHTS, DWT for PSV

8 FARSTAD SHIPPING ASA P.O.Box 131, 61 lesund Notenesgt.14 Norway Tel: Fax: Tlx: TYFAR N post@farstad.no FARSTAD SHIPPING LTD. Farstad House, Badentoy Avenue. Badentoy Park, Portlethen, Aberdeen AB12 4YB Scotland Tel: Fax: Tlx: aberdeen@farstad.co.uk