Deep Sea Supply : Financial report and Presentation 4Q 2015

In 4Q 2015, Deep Sea Supply ("DESS" or "Company") reports consolidated revenues

of MUSD 22.9 and EBITDA of MUSD 10.5 (46%). Following ordinary depreciation of

MUSD 13.0, extraordinary impairments of book value of vessels of MUSD 117.2,

financial expenses of MUSD 5.5 and negative currency items of MUSD 0.7, the pre-

tax profit was negative MUSD 126.3.

For the twelve months period ended 31 December 2015, the Company reports

consolidated revenues of MUSD 132.4, EBITDA of MUSD 69.2 (52%) and pre-tax

result of negative MUSD 119.8.

Comparing 4Q 2015 financial figures with 3Q 2015, revenues decreased by MUSD

10.7. The main reason for this was lower utilization due to vessels coming off

long term charters not being replaced by new contracts. The vessels' operating

expenses decreased with MUSD 1.9 from 3Q 2015 to 4Q 2015, mainly due to vessels

in lay-up and underlying cost reductions.

Cash and cash equivalents were MUSD 87.1 by the end of 4Q 2015, which is an

increase of MUSD 25.2 compared to MUSD 61.8 by the end of 4Q 2014. Net interest

bearing debt was MUSD 407.2 by the end of 4Q 2015, which is a decrease of MUSD

52.8 from end of 4Q 2014 due to increased cash position and repayment of

borrowings.

When testing the book value of all assets for possible impairments, the Company

has considered both market valuations received from independent ship brokers and

an internal cash flow valuation on a per vessel basis. Such cash flow valuation

reflects the current low contract coverage, significant number of vessels in

lay-up and a very difficult market outlook.

The result of these tests shows an impairment of book values of USD 123.7 mill

for the total fleet on a consolidated basis. Of this, USD 6.5 mill is deducted

from deferred gain in the balance sheet, resulting in a P&L effect of the

extraordinary impairment of USD 117.2 mill.

Following the impairment, book value of the fleet was MUSD 714.5 by the end of

4Q 2015 compared to MUSD 880.3 end of 4Q 2014. Total shareholder's book equity

is MUSD 322.5, and the Company's value adjusted equity is 37.2%. Total number of

outstanding shares in the Company was 261,197,194 at the end of the quarter.

The Company's bank loan facilities, except the senior loan facility, are

maturing in 2019 or later. The senior loan has maturity date end of October

2016 and a balloon payment of USD 117 mill. The dialogue with the banks to

refinance this balloon payment is in progress and will continue in the next

months.

The Company has sold the two AHTS vessels "Sea Lynx" and "Sea Bear". The vessels

will be delivered to new Owners within February 2016. "Sea Lynx" was 100% owned

by the Company, while "Sea Bear" was owned by Ship Finance International Ltd

("SFI") and leased to the Company under a 12 year sale and leaseback agreement

entered into in 2008. Following the sale of "Sea Lynx" and the termination of

the sale and leaseback agreement with SFI for "Sea Bear", the Company's loans

are reduced by USD 21.9 mill and the cash reduced by USD 6.6 mill. The sale and

termination will give a book loss of USD 17.0 mill which will be included in the

1Q 2016 financials.

During the fourth quarter of 2015, the company saw a continued weakening of the

global OSV markets. In Brazil, the situation remains difficult with reduced

activity and foreign flagged vessels being blocked by vessels with local flag.

The North Sea spot market is challenging with unsustainable rate levels and low

utilization. No improvement in the market situation for OSVs is expected in the

short to medium term. Following the sale of two AHTS vessels, the Company has no

vessels in the North Sea spot market. The contract coverage for 2016 for the

Company is not satisfactory. DESS is currently pursuing some term opportunities,

however the competition is fierce and rate levels are low.

As a consequence of the weak market, Deep Sea Supply will continue to lay up

vessels that do not have any fixed activity the next months. In addition to

laying up vessels to reduce cost, the Company is working hard to further reduce

operating expenses for the vessels in operation.

The 50% owned joint venture with BTG ("DESS BTG") which owns 21 vessels, is in a

challenging financial position with a significantly reduced contract backlog

following the expiry of many term charters without new contracts being entered

into. The cash position was USD 25.7 mill end of 2015, and the Company is

dependent on certain adjustments of its financial obligations going forward. The

financing of DESS BTG is non-recourse to Deep Sea Supply Plc.

On a consolidated basis, the Board is pleased that the Company has been able to

further strengthen its balance sheet and build its cash position through 2015.

Limassol, 19 February 2016

Deep Sea Supply Plc

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

DESSC_4Q 2015 Presentation:

http://hugin.info/136132/R/1987471/729510.pdf

DESSC_4Q 2015 Financial Report:

http://hugin.info/136132/R/1987471/729512.pdf

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