Knightsbridge Shipping Limited (NASDAQ:VLCCF)
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Knightsbridge Tankers Ltd. Announces Preliminary Fourth Quarter
and Financial Year 2004 Results
HAMILTON, Bermuda, Feb. 15 /PRNewswire-FirstCall/ -- Knightsbridge Tankers
Limited (the "Company") is pleased to report record fourth quarter and full
year results. The Company reports net income of $29.9 million and earnings per
share of $1.75 for the fourth quarter of 2004. The average daily time charter
equivalents ("TCEs") earned by the Company's five VLCCs in the quarter was
$84,300 compared with $53,800 in the immediately preceding quarter. In March
2004, the Company's long-term bareboat charters with Shell International
expired and the vessels commenced trading under new employment regimes. Three
of the vessels have been contracted under medium-term time charters, of which
two include market related profit sharing arrangements, and two vessels are
operating in the spot market.
Net interest expense for the quarter was $0.9 million compared with $1.8
million for the quarter ended September 30, 2004. This decrease reflects the
maturity in August 2004 of an interest rate swap, which had fixed 91% of the
outstanding debt. Throughout the fourth quarter of 2004 all bank debt was
floating rate debt.
The net increase in cash and cash equivalents in the quarter was $5.5 million.
The increase had resulted from cash generated from operating activities of
$25.3 million less net cash of $2.7 million used to repay the Company's loan
facility and dividend payments of $17.1 million. As of January 31, 2005, the
Company has an average cash breakeven rate for its vessels of $15,780 per
vessel per day.
For the financial year ended December 31, 2004 the Company reports annual net
income of $85.8 million and earnings per share of $5.02. The average daily
TCE's earned in 2004 was $68,700. Net interest expense for the period was $7.3
million (2003: $9.3 million).
The net increase in cash and cash equivalents in 2004 was $35.4 million. The
Company generated cash from operating activities of $106.6 million and made
total distributions of $77.8 million to its shareholders. In addition, net cash
of $14.6 million was realized on refinancing the vessels in March 2004, of
which $8.4 million has been used for subsequent installment payments. In
connection with the termination of the Shell charters, the refinancing and the
change in employment of the vessels, the Company now retains higher working
capital reserves. In addition, four of the Company's vessels are scheduled to
drydock in 2005 at an estimated cost of approximately $1.0 million per vessel.
On February 14, 2005, the Board declared a dividend of $1.75 per share. The
record date for the dividend is February 25, 2005, ex dividend date is February
23, 2005, and the dividend will be paid on or about March 11, 2005.
THE MARKET
The strong VLCC market that we experienced in the third quarter of 2004
continued into the fourth quarter at even higher levels. Except for the very
beginning of the quarter and the very end, the market from the Middle East to
the Far East stayed above $90,000 per day in timecharter equivalents for the
whole quarter. The average timecharter equivalent for the Arabian Gulf to East
was approximately US$160,000 per day, as compared to US$67,000 per day in the
third quarter. The continued strong market was a result of the high world oil
demand especially into China and the USA, and improving world economic activity
in general. Most of the additional demand was met by increased production in
the Middle East, resulting in increased ton miles.
According to IEA, the average OPEC oil production, including Iraq, in the
fourth quarter of 2004 was approximately 29.62 million barrels per day (b/d),
an increase of about 1.5 percent from the third quarter when they produced
about 29.19 million b/d. During the quarter OPEC continued their policy of
'producing what is needed to supply the market', but despite this oil prices
stayed extremely firm during the whole period.
IEA estimates that world oil demand averaged 84.36 million b/d in the fourth
quarter, an increase of 2.74 percent from the fourth quarter of 2003. IEA
further predicts that the average demand for 2005 will be 83.99 million b/d.
An increasing number of oil analysts think that demand for oil in 2005 will be
considerably higher than what IEA is predicting.
The world trading VLCC fleet totalled 442 vessels at the end of the fourth
quarter 2004, an increase of 6 vessels or 1.4 percent over the quarter. Two
VLCC's were scrapped in the period and 8 were delivered. The total order book
is now at 84 vessels for delivery through 2009. This represents 19.05 percent
of the current VLCC fleet. A total of 8 VLCC's were ordered during the
quarter.
The tanker market looks healthy for 2005. The freight futures market seems to
be very optimistic, and at the moment it is possible to sell freight futures
for the year 2005 at a level that equates to approximately US$58,000 per day on
VLCC, and US$46,000 per day for 2006.
OUTLOOK AND STRATEGY
The Board believes the fundamentals of supply and demand point towards a firm
tanker market in 2005.
The Board announces that the 2005 Annual General Meeting ("AGM") of the Company
will be held on June 27, 2005 in Hamilton, Bermuda. At this AGM the Board
intends to propose a change to the Company's bye-laws to remove the current
restrictions on the Company's business activities. When the Company was
organized in 1996 the Company's bye-laws included a specific bye-law, Bye- Law
83, that, in essence, limited its activities to its original leasing,
chartering and financing transactions. These specific purposes are no longer
relevant to the Company's operations since the termination of the Shell
charters and related UK tax leases, and such limitations are not usual for
traditional ship owning and operating companies. The Board has no present plan
or intention to change the Company's business. However, the Board believes that
a vessel owning and operating company needs flexibility and that it is no
longer appropriate to limit, by means of its bye-laws, the powers of the
Company to engage in the full potential range of business activities including
renewal of the fleet over time. Amending the bye-laws will allow the Board to
consider fully any inquiries that the Company may receive with respect to
proposed business combinations, or to pursue potential vessel acquisitions, or
business combinations on its own initiative. In the absence of a change to the
Company's bye-laws, the Company may be required to seek shareholder approval of
each such transaction.
FORWARD LOOKING STATEMENTS
Matters discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to encourage
companies to provide prospective information about their business. Forward-
looking statements include statements concerning plans, objectives, goals,
strategies, future events or performance, and underlying assumptions and other
statements, which are other than statements of historical facts.
Knightsbridge desires to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and is including this
cautionary statement in connection with this safe harbor legislation. The words
"believe," "except," "anticipate," "intends," "estimate," "forecast,"
"project," "plan," "potential," "will," "may," "should," "expect" "pending and
similar expressions identify forward-looking statements.
The forward-looking statements in this document are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, our management's examination of historical
operating trends, data contained in our records and other data available from
third parties. Although we believe that these assumptions were reasonable when
made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict
and are beyond our control, we cannot assure you that we will achieve or
accomplish these expectations, beliefs or projections.
In addition to these important factors, important factors that, in our view,
could cause actual results to differ materially from those discussed in the
forward-looking statements include the strength of world economies and
currencies, general market conditions, including fluctuations in charterhire
rates and vessel values, changes in demand in the tanker market, as a result of
changes in OPEC's petroleum production levels and world wide oil consumption
and storage, changes in Knightsbridge's operating expenses, including bunker
prices, drydocking and insurance costs, the market for Knightsbridge's vessels,
availability of financing and refinancing, changes in governmental rules and
regulations or actions taken by regulatory authorities, potential liability
from pending or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to accidents or
political events, and other important factors described from time to time in
the reports filed by Knightsbridge with the Securities and Exchange Commission.
February 14, 2005
The Board of Directors
Knightsbridge Tankers Limited
Hamilton, Bermuda
Questions should be directed to:
Contact: Ola Lorentzon
+ 46 703 998886
Inger M. Klemp
+ 47 23 11 40 76
KNIGHTSBRIDGE TANKERS LIMITED FOURTH QUARTER REPORT (UNAUDITED)
2003 2004 INCOME STATEMENT 2004 2003
Oct-Dec Oct-Dec (in thousands of $) Jan-Dec Jan-Dec
(audited)
22,626 42,564 Total operating revenues 135,695 75,246
Operating expenses
-- 4,152 Voyage expenses 14,240 --
-- 3,113 Ship operating expenses 9,868 --
218 218 Administrative expenses 1,114 864
4,398 4,304 Depreciation 17,219 17,593
4,616 11,787 Total operating expenses 42,441 18,457
Other income/(expenses)
26 185 Interest income 449 55
(2,628) (1,042) Interest expense (7,877) (9,332)
266 (4) Other financial items 13 (50)
(2,336) (861) Net other (7,415) (9,327)
income/(expenses)
15,674 29,916 Net income 85,839 47,462
17,100 17,100 Average number of ordinary 17,100 17,100
shares outstanding
$ 0.92 $ 1.75 Earnings per Share ($) $ 5.02 $ 2.78
BALANCE SHEET 2004 2003
(in thousands of $) Dec 31 Dec 31
ASSETS
Short term
Cash and cash equivalents 41,653 6,312
Other current assets 22,008 22,665
Long term
Vessels and equipment, net 301,500 --
Vessels under capital lease, net -- 319,408
Deferred charges and other long-term assets 392 58
Total assets 365,553 348,443
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Short term interest bearing debt 11,309 125,397
Other current liabilities 4,974 7,519
Long term
Long term interest bearing debt 120,400 --
Stockholders' equity 228,870 215,527
Total liabilities and stockholders' equity 365,553 348,443
2003 2004 STATEMENT OF CASHFLOWS 2004 2003
Oct-Dec Oct-Dec (in thousands of $) Jan-Dec Jan-Dec
(audited)
OPERATING ACTIVITIES
15,674 29,916 Net income 85,839 47,462
Adjustments to reconcile net
income to net cash provided by
operating activities
4,398 4,304 Depreciation and amortisation 17,219 17,593
93 16 Other 110 372
(12,444) (8,916) Change in operating assets and 3,420 (12,487)
liabilities
7,721 25,320 Net cash provided by operating 106,588 52,940
activities
INVESTING ACTIVITIES
-- -- Compensation on vessel 690 --
redelivery
-- -- Net cash provided by investing 690 --
activities
FINANCING ACTIVITIES
-- -- Proceeds from long-term debt, 139,556 --
net of fees paid
-- (2,691) Repayments of long-term debt (133,688) --
(7,695) (17,100) Dividends paid (77,805) (46,854)
(7,695) (19,791) Net cash used in financing (71,937) (46,854)
activities
26 5,529 Net increase/(decrease) in cash 35,341 6,086
and cash equivalents
6,286 36,124 Cash and cash equivalents at 6,312 226
start of period
6,312 41,653 Cash and cash equivalents at 41,653 6,312
end of period
DATASOURCE: Knightsbridge Tankers Limited
CONTACT: Ola Lorentzon, +46-703-998886, or Inger M. Klemp,
+47-23-11-40-76, both for Knightsbridge Tankers Limited
Web site: http://www.knightsbridgetankers.com/