HIGHLIGHTS
FIRST QUARTER RESULTS
The Board of Frontline Ltd. is pleased to announce net income of $279.7 million for the first quarter of 2005, equivalent to earnings per share of $3.74. Operating income for the quarter was $309.3 million compared to $471.7 million in the fourth quarter of 2004 – this decrease reflects the lower market rates experienced in the first quarter of 2005 compared to the exceptionally strong fourth quarter in 2004. The average daily time charter equivalents (“TCEs”) earned in the spot and period market by the Company’s VLCCs, Suezmax tankers and Suezmax OBO carriers were $77,500, $55,200 and $35,800 respectively compared to $111,200, $85,000 and $31,100 respectively in the fourth quarter of 2004. In the first quarter of 2005, the Company reported a gain from sale of assets of $28.5 million as a result of the sale of one Suezmax.
Interest income was $8.7 million in the quarter, of which, $5.8 million relates to restricted deposits reported in Independent Tankers Corporation (“ITC”). The Company recorded interest expense of $61.1 million in the quarter, of which $16.0 million relates to ITC. During the first quarter, Ship Finance International Limited (“Ship Finance”) refinanced its $1,058.0 million facility and the new facility is for $1,087.0 million. In connection with this refinancing, $11.7 million in deferred charges relating to the old facility were written off.
The total for other financial items for the quarter was a net gain of $20.4 million compared to a net gain of $17.1 million in the fourth quarter of 2004. Movements in interest rates in the quarter have resulted in valuation gains of $12.6 million on interest rate swaps in the first quarter compared to $5.9 million in the fourth quarter of 2004. As at March 31, 2005, the Company had interest rate swaps with a total notional principal of $628.8 million of which $578.8 million relates to Ship Finance. The mark to market valuation of freight future agreements in the first quarter has resulted in a loss of $5.2 million compared to a gain of $0.7 million in the fourth quarter. Other financial items also includes a gain of $12.7 million on the sale of marketable securities.
The Company recorded a foreign exchange gain of $6.9 million in the first quarter compared to a loss of $9.8 million on the fourth quarter of 2004. This has arisen due to Yen debt in subsidiaries and certain Yen currency contracts and reflects the weakening of the Yen from 103.1 at December 31, 2004 to 107.55 at March 31, 2005.
The Company sold in the first quarter its remaining 10.7 percent holding in Golden Ocean Group Limited that was held after the spin off in 2004 resulting in a net gain of $12.8 million, of which, $11.8 million has been classified as discontinued operations.
As at March 31, 2005, the Company had total cash and cash equivalents of $783.5 million which includes $589.6 million of restricted cash. Restricted cash includes $309.6 million relating to deposits in ITC and $271.0 million in Frontline Shipping Limited and Frontline Shipping II Limited. As of May 23, 2005, the Company has cash breakeven rates on a TCE basis for VLCCs and Suezmaxes of $27,565 and $20,850 respectively.
The results for the quarter ended March 31, 2004 have been restated to reflect discontinued operations related to the dry bulk operations sold during 2004.
The full report is available on the following link: