OPERATIONAL PROFIT ABOVE FORECAST AND
A POSITIVE OUTLOOK FOR the NEW, PURE PLAY OFFSHORE GROUP

Highlights
Preliminary net profit for 2004 of US$ 46 million after a net charge of US$ 68 million related to the sale of the Shipbuilding division. Net operational profit of US$ 114 million before the exceptional charge, well above forecast, will be the basis for a 50% dividend proposal.
Expected net profit for 2005 of US$ 125 million under IFRS accounting principles.
No further impact on the 2005 results of the Shipyard disposal.
The lease and operate contracts for the FPSO for the Kikeh field in Malaysia have been awarded to a joint-venture of Single Buoy Moorings and MISC.
1. Financial
The unaudited result for 2004 is a net profit currently estimated at US$ 46 million (US$ 1.39 per share). This figure is after deduction of a US$ 68 million net charge for impairment of the entire equity value of the Shipbuilding division, for which the sale agreement was signed mid January 2005.

The Shipbuilding division impairment charge is regarded as being of an extraordinary nature and a proposal will be made for a dividend based upon approximately 50% of the result before this charge (US$ 114 million or US$ 3.44 per share). This treatment is consistent with the two previous years, when costs relating to the restructuring and then closure of van der Giessen de Noord were also considered to be of an extraordinary nature.

The volume of turnkey orders delivered in 2004 was low and turnover dropped to US$ 1,340 million (2003: US$ 1,849 million). This decrease was higher than expected with completion of the Offshore Division’s SNEPCO Bonga and Exxon Yoho FSO projects moving into 2005.

The Offshore Division as a whole generated net profit presently estimated at US$ 101 million (2003: US$ 96.9 million).

The balance of the consolidated result is generated from the return to profitability of Shipbuilding Division operations, a positive result from NKI, gains on sale of real estate and Holding income and expenses.

Excluding the impact of the Shipbuilding Division sale, cash flow at US$ 310 million and EBITDA at US$ 385 million both exceed the Group’s previous forecasts.

Long-term debt decreased from its mid-year level to under US$ 1.3 billion and the year-end cash position was satisfactory at US$ 146 million. Capital expenditure amounted to US$ 245 million.

2. Development Order Portfolio

2.1 Deliveries 2004
Deliveries in 2004 included the following major contracts:
A deepwater export system for the Kizomba A development of ExxonMobil offshore Angola.
Seven CALM terminals for clients in Nigeria, India, Yemen, United Kingdom, UAE and Indonesia.
A turret system to Teekay for the mooring of an FSO at the Big Oil field of Unocal in Thailand.
The world’s largest cutter suction dredger for Jan de Nul.
Two 16000 cubic meter hopper dredgers for Boskalis.
2.2 New Orders 2004

New orders in 2004 totalled US$ 1,839 million (US$ 1,387 million excluding Shipbuilding) and a selection of the most important awards, already announced in previous press releases, include:

In the Offshore Division:
The full contract scope for the supply of a disconnectable riser turret mooring for the Enfield FPSO of Woodside, Australia.
The sale of the small FPSO Jamestown to Trafigura.
The order from Enterprise Products Operating L.P. for a semi-submersible hull and mooring system for the Independence Hub Facility in the Gulf of Mexico (former Atwater Valley).
The EPC contract from Agip KCO for three flash gas compression barges for the Kashagan Field in the Caspian Sea offshore Kazakhstan.
A three-year lease and operate contract from Petronas Carigali (Turkmenistan) Sdn. Bhd. for an Extended Well Test system in the Caspian Sea offshore Turkmenistan, comprising a jack-up production barge and a small FSO.
A lease and operate contract from Petrobras for an FPSO for the Golfinho field for an initial period of seven years with options for extension.
The FEED contract for a SeaStar TLP for BHP Billiton’s Neptune prospect in the Gulf of Mexico.
A total of ten orders for CALM buoys and complete CALM terminals for clients in China, Korea, India, UAE, Indonesia, Nigeria, Ghana and Mexico.
In the Shipbuilding Division:

A contract for the supply of two Ro-Pax ferries from the Danish company Bornholmstrafikken.
A contract from Tenix Defence PTY, Ltd. of Australia for a multi-role vessel for the New Zealand Navy.
An order for an offshore supply vessel from the Norwegian company Solstad Shipping AS.
Contracts for standard cutter suction dredgers of the beaver type destined for dredging contractors in Iran, Latvia, Colombia and Indonesia.
2.3 Portfolio end 2004

Orders in hand at the end of 2004 were US$ 5,299 million (US$ 4,708 million excluding Shipbuilding) compared with US$ 4,760 million (US$ 4,034 million excluding Shipbuilding) at the end of 2003. The order portfolio includes the non-discounted value of the Group’s seventeen long-term lease contracts for FPSOs and FSOs.

2.4 LATEST DEVELOPMENT: KIKEH FPSO
IHC Caland’s fully owned subsidiary Single Buoy Moorings Inc, in Joint Venture with Malaysia International Shipping Corporation Berhad (MISC), has today January 31, 2005 officially been awarded the lease and operate contracts for an FPSO to be deployed on the Kikeh field in Block K offshore Malaysia, operated by Murphy Sabah Oil Co Ltd under a Production Sharing Agreement with Petronas.

The contracts are for a firm initial duration of eight years and include options for five subsequent extension periods of three years each. First oil is scheduled for the second half of 2007.

The FPSO will be based on the conversion of one of the Stena "C" class vessels recently acquired by SBM. The unit will incorporate a process plant for producing 120,000 barrels of oil per day and will be fitted with large capacity water and gas treatment and re-injection facilities. The FPSO will be permanently moored in a waterdepth of 1320 meters by means of an external turret system.

The portfolio value of IHC Caland’s share of this order will be in excess of 400 million US Dollars. As the order has been received after the end of 2004 this amount is not included in the figure mentioned in 2.3.

3. Expectations for 2005
Under IFRS the projected 2005 net profit of the Group in its new configuration is US$ 125 million. No further impact is to be expected on the 2005 results as a consequence of the Shipyard disposal.

The fleet of leased FPSOs and FSOs is expected to generate about 75% of the total net profit, on turnover of US$ 575 million, with turnkey sales projects contributing the remaining 25%.

EBITDA is projected to rise to US$ 420 million and Cash flow to US$ 345 million. Capital expenditure is also expected to accelerate to US$ 550 million.

4. IFRS
The 2004 opening equity, results and closing equity under current accounting principles will be fully reconciled to IFRS, audited, and disclosed with the Group’s 2005 interim report and annual report as stipulated in the transition provisions.

Shareholders’ equity is expected to be reduced by over US$ 50 million as at 31 December 2004. The principal reasons for this cumulative adjustment are the change of depreciation method to straight line, and elimination from fixed asset values of capitalised marketing and general overheads. These combined adjustments will have a positive effect on lease fleet profits from 2006 onwards.

As mentioned earlier, the 2005 expectation of net profit has been developed under IFRS. Under the Group’s existing accounting principles it is estimated that the projected profit would have been approximately US$ 10 million higher (US$ 135 million). The principal components of this difference are:

Straight-line depreciation under IFRS replaces the interest equalisation method increasing the 2005 charge.
Marketing and general overheads are no longer capitalised into fixed asset values under IFRS, reducing fixed cost recoveries but lowering depreciation.
Turnkey project profits are recognised on a percentage of completion basis under IFRS instead of at completion, improving 2005 results.
Goodwill is no longer depreciated under IFRS but subject to annual impairment test.
Stock options are expensed under IFRS.
The forecast 2005 result does not take into account any potential variances resulting from application of IAS 39 on the accounting treatment of derivative contracts. This standard is of significant importance for the Group, which operates a full hedging policy in respect of both foreign currency and interest rate exposure. Any non-effectiveness (as defined in the standard) of such hedge contracts will lead to fluctuations in their market value being recognised through the profit and loss account.

Despite this development, the Group maintains its full hedging policy.

In general the Group expects that earnings volatility will be higher under IFRS than under its previous accounting principles.

The 31 December 2004 portfolio reported earlier still reflects the completed contract accounting method for turnkey projects. Under IFRS such projects will be accounted for using the percentage of completion method, under which the year-end order portfolio would have been approximately US$ 500 million lower due to the stage of completion of several projects to be delivered from 2005 onwards.

5. Market developments for 2005
After one and a half years of slow market conditions, it is now clear that a strong renewal of activity is coming and the increasing thirst for oil and gas from Asia and particularly China and India is likely to sustain the industry for a number of years and not just be a mere bubble as was the case in 2001 and 2002.

In the lease sector the recent successes in Turkmenistan, Brazil and Malaysia have boosted the portfolio of the Group. Furthermore, the Group’s view that five, possibly six FPSOs on lease basis should be awarded in the industry during 2005 remains valid today. They include major prospects in Australia, Mauritania, Mexico, and Brazil as well as potential further development of the Generic FPSO approach with the oil Majors, mainly in West Africa.

In the turnkey supply sector the major projects will evolve around three types of products:

The traditional mooring systems including CALM terminals, deepwater export terminals and large and complex turrets.
Turnkey floating facilities such as FPSOs, FSOs and monohull process barges.
Atlantia’s products, now including both TLPs and semi-submersible platforms. These facilities are typically in demand in a maturing deep offshore industry as they are competitive solutions for the "tie-back" development alternatives. They are expected to represent an increasing share of the Group activity in the years to come.
The Group’s parts and services activities continue to grow and deliver good results. The construction of the new offshore installation vessel is progressing and the ship is expected to be delivered on time in January 2006. It will help to grow the turnover and results of the division further in the coming years.

The Gas Business Development Group is busy with several prospects, including an involvement in the large Floating Storage and Regasification Units for the USA market where it seems that the Majors intend to project manage these capital intensive facilities themselves, at least as a starting mode. Here, the Group continues to develop specialized mooring and transfer technology as these elements will be in demand under component supply contracts.

6. Conclusion
The buoyant demand for the Group’s products during the second half has led to results well above forecast (before exceptional charges).

There is satisfaction from the improvement in Atlantia’s business. It is expected that demand will continue and ultra deep facilities will become a major component in the future growth of IHC Caland.

Also, the success in obtaining an FPSO lease contract from Petrobras, under the most severe competition ever met, is encouraging.

Although the adoption of IFRS will have a negative impact in 2005 and will introduce additional volatility to results, the Group firmly expects that 2005 will be a good year.