FRO - Preliminary Fourth Quarter and Financial Year 2006 Results
Press release from Frontline Ltd. 27.02.2007
Frontline reports net income of $134.6 million and earnings per share of $1.80 for the fourth quarter of 2006.
Frontline reports annual net income of $516.0 million and earnings per share of $6.90.
Frontline announces a cash dividend of $2.05 per share.
Frontline to spin off its remaining approximately 11 percent of Ship Finance International Limited.
Fourth Quarter and Financial Year 2006 Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces net income of $134.6 million for the fourth quarter of 2006, equivalent to earnings per share of $1.80. Net operating income for the quarter was $220.4 million compared to $184.7 million in the third quarter, including a gain on sale of assets of $73.8 million compared to $nil in the third quarter.
The earnings reflect the weakening of the market in the fourth quarter. 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 $48,000, $31,200 and $34,200, respectively compared with $59,800, $40,000 and $30,800, respectively in the third quarter. The results show a continued differential in earnings between single and double hull tonnage. The results also reflect the dry-dockings of four vessels in the quarter, that Front Sunda was off hire for the full quarter, together with other unscheduled off hire creating approximately 298 days in lost income. Operating costs continued at above normal level caused by the fact that the dry-dockings were expensed in the quarter. Administrative expenses have increased by $4.4 million compared to the third quarter with $2.7 million of this being attributable to increased administrative costs in Ship Finance International Limited ("Ship Finance"). Of the total administrative expenses for the year, $3.2 million has been incurred in relation to the Company's FPSO subsidiary and $5.5 million relates to Ship Finance. There has been a general increase in administrative expenses as a result of increased audit fees and costs related to the Company's compliance with the Sarbanes-Oxley Act.
Interest income was $13.8 million in the quarter, of which $6.4 million relates to restricted deposits held by subsidiaries reported in Independent Tankers Corporation ("ITC") and $0.8 million relates to Ship Finance. The Company recorded interest expense of $52.6 million in the fourth quarter of which $15.0 million relates to ITC and $27.2 million relates to Ship Finance.
Other financial items in the fourth quarter were a gain of $0.2 million compared to a loss of $10.1 million in the third quarter. Valuation gains of $1.0 million were recorded in interest rate swaps, all of which relates to Ship Finance, in the fourth quarter compared to losses of $16.4 million in the third quarter. As at December 31, 2006, the Company had interest rate swaps with a total notional principal of $738.7 million, all of which relates to Ship Finance. The valuation of freight future agreements to market value has resulted in a loss of $1.2 million compared to a loss of $2.0 million in the third quarter.
Frontline announces net income of $516.0 million for the year ended December 31, 2006, equivalent to earnings per share of $6.90. The average TCEs earned in the spot and period market by the Company's VLCCs, Suezmax tankers, and Suezmax OBO carriers for the twelve month period ended December 31, 2006 were $57,800, $37,800 and $31,700, respectively.
As at December 31, 2006, the Company had total cash and cash equivalents of $827.1 million which includes $61.6 million in Ship Finance and $623.1 million of restricted cash. Restricted cash includes $336.5 million relating to deposits in ITC and $269.2 million in Frontline Shipping Limited and Frontline Shipping II Limited.
The payment of a dividend in excess of the net income result is supported by cash released in transactions completed in the first quarter of 2007.
As of February 2007, the Company has cash breakeven rates on a TCE basis for VLCCs and Suezmaxes of $30,200 and $22,600, respectively.
The full report is available in the link below.
February 27, 2007
The Board of Directors
Questions should be directed to:
Bjørn Sjaastad: Chief Executive Officer, Frontline Management AS
+47 23 11 40 99
Inger M. Klemp: Chief Financial Officer, Frontline Management AS