The Second Quarter Financial Results

Ref. No. COR:MS/EL07011e/pc

15 May 2007

Subject : The Second Quarter Financial Results

To : The President of the Stock Exchange of Thailand

Overview

Thoresen Thai Agencies Public Company Limited (the "Company" or "TTA") reported a consolidated net profit for the three-month period that ended on 31 March 2007 (the "2007 Second Quarter") of Baht 1,291.86 million, which included an exchange gain of Baht 270.02 million, and earnings per share of Baht 2.01.

During the three-month period that ended on 31 March 2006 (the "2006 Second Quarter"), TTA recorded a consolidated net profit of Baht 1,051.78 million, which included an exchange gain of Baht 487.20 million, and earnings per share of Baht 1.63.

Total operating revenues for the 2007 Second Quarter were Baht 4,921.90 million, total operating expenses were Baht 3,197.25 million, and other expenses were Baht 636.19 million. The Company generated cash from operating activities and financing activities of Baht 3,037.99 million and Baht (95.17) million, respectively, and used Baht 2,528.47 million for investing activities. Cash and cash equivalents increased by Baht 414.35 million during the 2007 Second Quarter.

The average TC rate, including contributions from chartered-in tonnage, increased 34.11% from USD 10,777 per vessel per day in the 2006 Second Quarter to USD 14,453 per vessel per day in the 2007 Second Quarter, and available vessel days decreased 2.94% from 4,149 days in the 2006 Second Quarter to 4,027 vessel days in the 2007 Second Quarter.

The increase in the consolidated net profit was primarily due to stronger TC rates and a stronger Thai Baht currency.

Business Group Analysis

TTA will discuss our financial results based on our three business groups: the Dry Bulk Shipping Group, the Offshore Services Group, and the Shipping Services Group.

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Thoresen Thai Agencies Public Company Limited

Dry Bulk Shipping Group: The Dry Bulk Shipping Group recorded a consolidated net profit of Baht 887.75 million, excluding exchange gains. The net profits of the Dry Bulk Shipping Group increased 20.89% between the three-month period that ended on 31 December 2006 (the "2007 First Quarter") and the 2007 Second Quarter.

The higher net profit was primarily due to higher TC rates. The average TC rate, including contributions from chartered-in tonnage, increased 13.01% from USD 12,789 per vessel per day in the 2007 First Quarter to USD 14,453 per vessel per day in the 2007 Second Quarter.

Our total fleet cargo volume from 1 October 2006 to 31 March 2007 remained strong at 6.4 million revenue tons. Based on ongoing client discussions, we believe that strong demand from our core markets of China, Southeast Asia, India, and the Middle East will continue throughout our current financial year.

TTA had a total of 4,027 vessel days available in the 2007 Second Quarter, compared to 4,140 vessel days available in the 2007 First Quarter. In February 2007, the Company took delivery of M.V. Thor Horizon, a modern 47,111 DWT second-hand vessel. During the last couple of months, the Company has fixed out a few more vessels on time charter for periods between seven months and three years. Vessel operating expenses increased 7.46%, because the number of chartered-in-vessels rose in line with higher client demands, and the most recent chartered-in-vessels were chartered-in at much higher rates as well.

The Dry Bulk Shipping Group has already placed 31% of our available capacity on time charters for the current financial year and 17% of our available capacity on time charters for the next financial year, which will provide earnings visibility into next year.

The dry bulk shipping market continued its strong performance in the 2007 Second Quarter. Supramax spot rates exceeded US$ 36,000 per day during the 2007 Second Quarter and continued its upward path through the current quarter (US$ 44,481 per day as of 11 May 2007). Average earnings on a Supramax vessel were US$31,684 per day for the quarter.

China's important role in the dry bulk shipping market remains intact. Chinese iron ore, steam coal, and grain imports continue at high levels. In addition to these trades, China doubled its steel exports from 29.5 million tonnes in 2005 to 54.5 million tonnes in 2006.

A recent presentation from R.S. Platou estimates 2007 dry bulk demand growth of over 6.7% in volume terms. The supply side should experience a fleet growth of 6.6%, suggesting that supply and demand fundamentals are tight. Port congestion, especially in Australia, has caused freight rates to increase dramatically. R.S. Platou estimates that port congestion has tied up almost eight percent of the world's Capesize fleet, which is almost double than normal. Once port congestion eases, a correction in freight rates is expected. But, the supply and demand balance will remain more or less at present levels, with utilisation rates between 93 percent and 96 percent in the next few years.

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Thoresen Thai Agencies Public Company Limited

The increasing second hand values of modern dry bulk vessels has continued. The value of a five year old Supramax has risen to US$ 52.09 million as of 11 May 2007, which is an all-time high.

The dry bulk shipping market has also experienced an increase in ton-miles. Brazil is expected to increase its relative market share as iron ore exporter during 2007, which will have a positive ton-miles effect. There has been growth in steam coal imports to China, which means that neighbouring countries of China will have to source coal from areas with longer sailing distances like Indonesia and Australia.

Since the first two quarters of 2007 have been strong, we expect a year-on-year improvement in the Dry Bulk Shipping Group.

Offshore Services Group: Mermaid Maritime Public Company Limited ("MMPLC") posted strong quarterly results. The drilling segment generated approximately 45.76% and 69.51% of MMPLC's total revenues and profits, respectively. Both drilling rigs, MTR-1 and MTR-2, were fully operational in the 2007 Second Quarter, working in Indonesia and Thailand, respectively.

The offshore rig market continues to show strength across all categories and classes of mobile offshore drilling units. The volatility in oil prices experienced over the last months has so far not affected the oil companies' demand for offshore drilling units. In addition, although there have been several more newbuild orders, dayrates have continued to increase.

The market sentiment for tender rigs is sound, and the increased dayrate level for jack-ups has had a positive effect on dayrates for tender rigs. In addition, oil companies continue to enter into term contracts well in advance of commencement, which provides good opportunities to build the order backlog and facilitate further organic growth. The Company expects the favourable market environment to prevail.

The assets in our sub sea engineering segment had a 51% utilisation rate during the quarter and generated approximately 54.35% and 34.07% of MMPLC's revenues and profits, respectively. Exploration, development and maintenance and upgrading of existing installations are being carried out to capacity. This has resulted in a very tight market for most types of offshore service vessels in all geographical areas, including Southeast Asia. Surprisingly, the winter season was the best ever for MMPLC, and vessel utilisation in the 2007 Second Quarter was particularly high.

The future market is anticipated to continue with a high level of activity. In 2007-2008, demand for vessels is expected to increase as a result of the higher number of drilling rigs in operation, combined with extensive development activity. Despite strong price pressure and long delivery times, the number of vessels on order is still relatively high. This is anticipated to have a negative impact on today's high profit margins.

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Thoresen Thai Agencies Public Company Limited

Excluding exchange gains, MMPLC made a total revenue contribution of Baht 1,012.05 million and a net profit contribution (after deducting minority interests) of Baht 153.14 million to TTA's financial results.

Shipping Services Group: The Shipping Services Group made a net profit contribution (after deducting minority interests) of Baht 40.65 million, excluding exchange gains, to TTA's financial results. Thoresen Shipping FZE made the highest net contributions, followed by Fearnleys (Thailand) Ltd., which recorded higher commission income and profits in line with the strong freight market.

Excluding foreign exchange gains and minority interests, the 2007 Second Quarter marked the fourth consecutive quarter of higher consolidated net profits for TTA, which demonstrates the benefits of our ongoing diversification strategy and the strength of both the dry bulk shipping and offshore markets.

 

Yours faithfully,
Thoresen Thai Agencies Public Company Limited