TTA reports FY 2010 financial results

Bangkok, 29 November 2010 -- Thoresen Thai Agencies Plc ("TTA") announced a net profit of THB 795.57 million and earnings per share of THB 1.12 for FY 2010, compared to a net profit of THB 1,831.71 million and earnings per share of THB 2.56 in FY 2009.

TTA reported total operating revenues of THB 18,386.51 million and total operating expenses of THB 17.545.04 million. The resulting operating profit of THB 841.47 million fell 42.32% from FY 2009's THB 1,458.78 million.

President & CEO M.L. Chandchutha Chandratat: "The decrease in TTA's profit was primarily due to the significant losses from Mermaid Maritime Public Company Limited ("Mermaid") that resulted from the decrease in asset utilisation in both the subsea engineering and drilling segments. These losses were offset by the profit growth of the Infrastructure Group, primarily Baconco, and the relatively stable profits of the Transport Group, primarily the dry bulk shipping business.

The breakdown of net profit contribution to TTA:

Segment Analysis

Transport Group is comprised of our dry bulk shipping, shipping services, and oil and gas tanker businesses. Our dry bulk shipping business remains the major contributor to the Transport Group's performance, generating a net profit (excluding exchange loss) of THB 1,113.34 million for FY 2010, compared to net profit of THB 719.38 million a year ago. The Transport Group contributed 128.38% to TTA's net profit in FY 2010 vis-à-vis 57.62% in FY 2009.

Energy Group is comprised of Mermaid and coal mining. Mermaid delivered a minus THB 193.98 million contribution to TTA. Mermaid took delivery of or acquired four modern subsea engineering vessels and had difficulties to employ them consistently, which resulted in a subsea fleet utilisation of 40%. On the drilling side, MTR-1 was not working for the entire FY 2010.

Infrastructure Group is comprised of coal logistics, fertiliser and logistics, third party logistics, and ship supply and warehouse businesses. Baconco made net profit contributions of THB 211.7 million, while UMS showed clear signs of turnaround in the second half of FY 2010 and recorded a net profit contribution of THB 79.14 million to TTA.

The holding company lost THB 328.07 million, down from a profit of THB 344.88 million last year. In FY 2009, a number of extraordinary items were recorded, including THB 676.33 million in gains by repurchasing our convertible bonds and THB 287.21 million of negative goodwill from the Baconco acquisition. This year, there was only a THB 9.63 million gain from repurchasing our convertible bonds and a THB 157.33 million gain from a currency swap transaction.

At the end of FY 2010, cash and cash equivalents were THB 8,458.19 million, a decrease of THB 2,260.71 million from FY 2009. The major acquisitions in the past financial year included 1) the THB 1,073.22 million final payment for a new-build dry bulk vessel ; 2) the THB 1,112.63 million acquisition of a second hand dry bulk vessel ; 3) the acquisition of four subsea engineering vessels for a total of THB 4,829.00 million; 4) the THB 904.52 million acquisition of Petrolift ; 5) the THB 248.58 million acquisition of Subtech; and 6) the THB 3,962.05 acquisition of UMS.

"Over the past eighteen months, TTA has expanded into other businesses to ensure a more balanced and diversified earning profile, as the fundamentals of the dry bulk shipping business weakened. Results of our diversification strategy will not appear overnight, and some investments have shown success more rapidly than others. We strongly believe that within three years of beginning our diversification efforts, we will manage a portfolio of complementary businesses and generate more stable revenues than if TTA remained a pure dry bulk business. This higher financial stability provides us ongoing opportunities to grow and expand our businesses," M.L. Chandchutha concluded.

Outlook

TTA believes China's import policy remains the key driver for the global dry bulk market in the next few years. Going forward, we do not expect the same strong recovery in Chinese imports as we saw in 2009. On the supply side, the current order books still look massive as total new build dry bulk vessels due for delivery in 2011 and 2012 are 1,278 vessels and 821 vessels, respectively. We expect significant oversupply to weigh down the dry bulk market for some time.

We may find it challenging to ensure a high level of utilisation of our subsea fleet in 2011 as vessel availability increases but immediately available contracts are limited. However, as oil prices stabilised and move upwards in line with global economic recovery, a reasonable utilisation rate will be observed for existing drilling rigs and additional requirements for drilling rigs will be inevitable.

With our recent acquisition of the Baria Serece Port, Baconco should be able to maximise the capacity utilisation of its existing and new warehousing services in addition to fertilisers. Coal prices are rising and local cement production is expected to improve in FY 2011. Thus, we expect UMS' average coal prices and sales volumes to either stabilise or increase in line with the market conditions.

About TTA

Thoresen Thai Agencies Public Company Limited ("TTA") is a strategic investment holding company listed on the Stock Exchange of Thailand. Its investment strategy is to grow through a balanced and diversified business portfolio of transport, energy, and infrastructure assets, both domestically and internationally. Previously, TTA has primarily invested in the dry bulk shipping and related shipping services businesses. The company has since expanded its investments into other business areas, such as offshore services through Mermaid Maritime Public Company Limited, fertilisers and logistics through Baconco Co., Ltd., coal-related businesses through Merton Group (Cyprus) Limited and Unique Mining Services Public Company Limited, petroleum tankers through Petrolift, Inc, and ports through Baria Joint Stock Company of Service for Import Export of Agro Forestry Products and Fertilizers.

For media inquiry, please contact:
Corporate Communications Department, Thoresen Thai Agencies Plc.
Ravisada Angkeeros or Ornsutee Kanchanomai
Tel: 02 254 8437 ext. 393 or 290
Email: ravisada_a@thoresen.com OR ornsutee_k@thoresen.com