SFL – First Quarter 2005 Results

  • Ship Finance reports net income of $30.0 million and earnings per share of $0.40 for the first quarter of 2005.
  • Ship Finance announces an ordinary cash dividend of $0.45 per share, and a supplementary extraordinary dividend of $0.05 per share.
Ship Finance International Limited (“Ship Finance” or the “Company”) reports total operating revenues of $82.9 million, operating income of $51.5 million and net income of $30.0 million for the first quarter of 2005. Operating revenues include finance lease interest income and finance lease service revenue in addition to charter revenues for those six vessels currently trading under long term charters to third parties. In the first quarter of 2004, revenues also included charter revenues for the period prior to the vessels commencing trading under the charters with Frontline Ltd. (“Frontline”). In 2005, all but six of the vessels are trading under the Frontline charters. The average daily time charter equivalents (“TCEs”) earned by Frontline in the first quarter in the spot and time charter period market from the Company’s VLCCs, Suezmax tankers, and Suezmax OBO carriers were $77,500, $55,200 and $35,800, respectively. In accordance with US GAAP, no accrual has been made to recognise any amounts receivable under the profit sharing arrangements with Frontline. However, the Company estimates that this would be approximately $33.5 million for the first quarter of 2005 while $20.0 million was estimated for the first quarter of 2004.
In February 2005, the Company completed the refinancing of its bank debt facility, thereby improving the margins by 55 basis points. The Company has entered into interest rates swaps with a total notional principal amount of $578.8 million and an average interest rate of 3.7 percent. In the first quarter other financial items include a gain of $12.1 million that is attributable to the mark to market valuations of interest rate swaps as LIBOR increased in the quarter.
As at March 31, 2005, the Company had total cash and cash equivalents of $115.7 million, of which $3.7 million is restricted. Cash provided by operating activities in the quarter was $200.7 million, net cash used in investing activities was $207.0 million and net cash generated from financing activities was $89.1 million.  In March 2005 the Company sold the Suezmax Front Fighter for net proceeds of $67.8 million. The proceeds of the sale were used in part to fund the acquisition of three vessels from Frontline in the first quarter of 2005, Front Century, Front Champion and Golden Victory. The vessels have been chartered back to Frontline following the structure in place for the other vessels chartered to Frontline. A gain of approximately $28 million was incurred upon the sale of Front Fighter, however, this gain has been deferred in the financial statements as the termination of this charter with Frontline gave rise to discounted rates for the new charters established for Front Century and Front Champion. This deferred gain is being amortised over the life of the new charters, in line with the embedded discounts.
The full report is enclosed on the following link: