- Ship Finance reports a net income of $31.2 million and earnings per share of $0.42 for the second 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.
Second Quarter and Six Months Results
Ship Finance International Limited (“Ship Finance” or the “Company”) reports total operating revenues of $94.3 million, operating income of $61.9 million and net income of $31.2 million for the second quarter of 2005. Earnings per share for the quarter were $0.42. In 2005, all but nine of the Company’s vessels are trading under long term charters to Frontline Ltd (“Frontline”). One of these vessels, the Company’s first containership, is on a medium term time charter to an unrelated third party.
In the second quarter, operating revenues include $9.4 million of accrued profit share due from Frontline under long term charter agreements. The Company estimates that an additional $41.3 million in profit share has accumulated, however this cannot yet be accounted for in accordance with U.S. generally accepted accounting principles. The unrecognised income of $41.3 million will be recognised in the third and fourth quarters provided Ship Finance’s vessels continue to earn in excess of the fixed charter rates received from Frontline. The average daily time charter equivalents (“TCEs”) earned by Frontline in the second quarter in the spot and time charter period market from the Company’s VLCCs, Suezmax tankers, and Suezmax OBO carriers were $51,200, $35,300 and $36,400, respectively.
In June 2005, the Company drew down $191.5 million under its new $350 million bank debt facility. As at June 30, 2005, the Company had interest rate swaps with a total notional principal of $578.8 million and an average interest rate of 3.9 percent. In the second quarter other financial items include a loss of $8.3 million that is attributable to the mark to market valuations of interest rate swaps compared with a gain of $12.1 million in the first quarter.
Ship Finance announces net income of $61.2 million for the six months ended June 30, 2005 equivalent to earnings per share of $0.82. The average daily time charter equivalents (“TCEs”) earned by Frontline in the spot and time charter period market from the Company’s VLCCs, Suezmax tankers, and Suezmax OBO carriers were $65,100, $45,000 and $36,100, respectively.
As at June 30, 2005, the Company had total cash and cash equivalents of $52.6 million, of which $2.7 million is restricted. Cash provided by operating activities in the quarter was $43.6 million, net cash used in investing activities was $221.5 million and net cash generated from financing activities was $115.7 million. In June 2005 the Company sold three Suezmax tankers, Front Spirit, Front Emperor and Front Lillo for net proceeds of $92.0 million. The proceeds of the sale were used to fund the concurrent acquisition of three similar vessels from Frontline, namely Front Target, Front Traveller and Front Transporter. The vessels have been chartered back to Frontline following the structure in place for the three similar vessels whose charters were terminated. A gain of approximately $22.3 million was incurred upon the sale of these vessels; however, this gain has been deferred in the financial statements as the termination of the original charters with Frontline gave rise to discounted rates for the new charters established for Front Target, Front Traveller and Front Transporter. This deferred gain is being amortised over the life of the replacement charters, in line with the embedded discounts.
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