Ship Finance Reports Preliminary Q2 Results
Ship Finance International Limited today [Aug 28] have announced its preliminary financial results for the quarter ended June 30, 2012.
The Board of Directors has declared a quarterly cash dividend of $0.39 per share, and Ship Finance has now paid dividends for 34 consecutive quarters. The dividend will be paid on or about September 28, 2012 to shareholders of record as of September 14, 2012. The ex-dividend date will be September 12, 2012.
The Company reported total U.S. GAAP operating revenues on a consolidated basis of $83.6 million, or $1.06 per share, in the second quarter of 2012. This number excludes $14.8 million of revenues classified as ‘repayment of investments in finance lease’, and also excludes $88.0 million of charter revenues earned by assets classified as ‘investment in associate’.
The cash sweep agreement with Frontline had a positive effect of $16.3 million, or $0.21 per share in the second quarter. The cash sweep for the full year 2012 is payable in March 2013, and a total of $29.9 million has accumulated in the first two quarters.
There was a $0.6 million, or $0.01 per share, accrual to the 25% profit share for revenues in excess of the original base rates in the quarter. Following Frontline’s $50 million prepayment of profit share in 2011, another $48 million of profit share will need to accumulate before profit share revenues are recognized in the consolidated accounts.
The Company recorded a $21.7 million book gain relating to the termination of the Horizon Lines charters in the second quarter. The gain includes $16 million relating to second-lien notes received, $1.7 million relating to warrants received and $4.0 million in fuel and inventory. At the end of the quarter, the book value of the warrants was reduced by $0.5 million to $1.2 million through an asset impairment charge.
Reported net operating income pursuant to U.S. GAAP for the quarter was $66.4 million, or $0.84 per share, and reported net income was $61.2 million, or $0.77 per share.
Ole B. Hjertaker, Chief Executive Officer in Ship Finance Management AS said in a comment: “We continue to deliver positive results and have paid quarterly cash dividends since our operations began in 2004.
“Our fleet renewal is progressing well and we have sold six older OBOs and VLCCs over the last year and at the same time taken delivery of seven newbuilding drybulk vessels. We still have another six newbuildings to be delivered in 2012-2013, but very low remaining net capital expenditures after financing.
Mr Hjertaker continued: “The spot market is challenging in many segments and few shipping companies have access to capital for new investments right now. Concurrently, we have seen both secondhand and newbuilding prices fall sharply over the last 12 months, to levels not seen for a decade.
“While we have been cautious and not made new investments for some time, the current market environment could prove to be an interesting time to invest selectively in modern assets with the aim to build our long-term distribution capacity.”
