President's view

Summary of 2006
In 2006, the company’s business activities developed well. Four P-MAX tankers have now been delivered. These vessels have exceeded our customers’ expectations. During the year, we placed an order for a further four vessels of this type. This means that the P-MAX fleet consists of ten vessels — four delivered and six on order.

With the signing of an additional charter agreement with TOTAL at the beginning of the year, six of the P-MAX vessels will have employment fixed for five years or more following their delivery. TOTAL’s decision to charter a third P-MAX tanker is particularly encouraging in view of the fact that these vessels were developed in close cooperation with the company.

In May, the reduction gear on the chartered VLCC Stena Vision broke down. The costs amounting to approx. SEK 10 million, mainly in the form of deductibles, have been charged to the profit as Concordia Maritime has an undertaking relating to the operation of the vessel entered into in conjunction with its sale to Arlington Tankers in 2004. It is anticipated that it will be some months before the vessel is once more deployed in regular traffic.

The dispute between Concordia Maritime and Halliburton originating from the sale of a vessel in 2000 has now finally been settled. The court’s decision meant that the buyers was granted 1/3 of the original claime. Since previously made reservations does not cover the full amount payable the operating result is charged with an additional SEK 30 million. At the time of writing, it has not been decided whether or not an appeal will be lodged.

Accordingly, approx. SEK 92 million of the profit for the year of SEK 52.5 million before tax was generated by our new tonnage together with financial income. Items of a non-recurring nature amounting to approx. SEK 40 million have been included in the VLCC operating segment.

Events in 2007
The Panamax tanker Stena Poseidon, built in a joint venture with Neste Shipping, was delivered on 17 January, 2007 and simultaneously entered into her ten year charter.

The future
The P-MAX tankers delivered so far generated an EBITDA (earnings before interest, tax, depreciation and amortisation) of about USD 15 million during the year. A further two P-MAX vessels will be delivered at the end of 2007/beginning of 2008.