Interim Report

OUR POSITION INTERIM REPORT FOR CONCORDIA MARITIME AB (publ) 1.1 - 31.3 1999 ¤ First quarter profit of MSEK 10.7 (30.7) ¤ Good start to year but falling freight rates due to OPEC cutback ¤ Low freight rates expected to continue over summer ¤ Continued good ship operation with high quality at low costs ¤ V-MAX project continues to be very promising RESULT The Group's profit for the first quarter was SEK 10.7 (30.7) million. Sales amounted to SEK 217.8 (269.8) million. The profit per share after tax was SEK 0.56 (1.17) and SEK 0.40 (0.72) after full conversion. NET WORTH AND EQUITY Net worth per share after full conversion is calculated at SEK 27.49 (31.51) based on the valuation carried out by four independent shipbrokers on 31-12- 1998. The SEK/USD exchange rate on 31-03-1999 was 8.30 (7.98). Equity after full conversion had increased to SEK 21.15 (18.87) per share as of 31-03-1999. LIQUIDITY AND INVESTMENTS The Group's disposable liquid funds, including unutilised credit facilities, amounted 31.03.1999 to SEK 160.3 million (31-12-1998: SEK 128.1 million). Investments during the period were negligible. FREIGHT MARKET FOR VLCCs (TURBINE TANKERS) [REMOVED GRAPHICS] In the first months of 1999, the freight rates for VLCCs were higher than in the last quarter of 1998 due to continued stockpiling of crude oil. This resulted in relatively good demand for large-tanker tonnage in spite of a mild winter. Freight rates fluctuated just over the break-even level for our VLCCs and were clearly profitable for our ULCCs. The average freight rate for Concordia's VLCCs was USD 20,200 (25,900) per day and USD 31,500 (28,700) per day for its ULCCs in the first quarter. The break-even level is USD 19,000 for the VLCCs and USD 20,000 for the ULCCs. At the beginning of the year, oil prices fell to a record-low level of USD 9.50 per barrel as a result of extremely high stocks. At a meeting in March, the OPEC members agreed to cut oil production by 1.7 million barrels per day to improve their oil revenues. This should be added to last year's 2.6 million barrels per day reduction. After the decision, oil prices rose to USD 15-16 per barrel. This has resulted in a drastic reduction in transportation as the oil refineries are now using the large stocks they built up earlier. The majority of the analysts had not expected such a dramatic reaction to OPEC's decision. The large oil stocks would, of course, have been used anyway, but now they will probably be gradually depleted over a period of about six months instead of over a longer period. This will result in a weak freight market in the months immediately ahead after which the conditions for an upswing in freight rates will improve. Rising oil prices have also resulted in rising bunker prices which could have negatively affected Concordia since our total bunkers consumption is high. As in previous years, however, we have fixed the price of bunkers via forward contracts which means that, strictly speaking, we are not affected by the price increases. During the period, 12 VLCCs were delivered from the shipyards. At the same time, 10 VLCCs were scrapped or converted. After the end of the period, no VLCCs have been delivered although 2 vessels have been sold for scrap or conversion. Few vessels were ordered due to the fact that many shipping companies have profitability problems and are thus unable to act despite the low newbuilding prices. Stena V-MAX Progress on the Stena V-MAX project is continuing according to plan and negotiations are in progress with the shipyard and their subcontractors to ensure that the vessels are built in the best possible way. Our customer, Sun Company, expects great transportation improvements from the new project. VESSELS Concordia's vessels continue to trade with low daily running costs - USD 9,500 per day for the VLCCs and USD 11,500 for the ULCCs. One ULCC and two VLCCs were dry-docked during the period. Dry-dockings were carried out according to plan and as budgeted. During dry-docking, all Concordia's vessels underwent CAP classification and had their CAP 1 certificates - the highest grade - renewed. RELATED COMPANY TRANSACTIONS During the first quarter, the chartered Aframax tanker STENA CONCERTINA was re-delivered. After this, the joint charter business with Stena Bulk consists of one VLCC and one Aframax tanker. MILLENNIUM PROBLEM The program initiated in 1997 to deal with the transition to the year 2000 is proceeding as planned. Equipment and systems which could cause problems were identified in 1998. A small number of systems on each ship have been marked for further examination. Safety checks of these systems are expected to be completed in August. UPDATE OF FULL-YEAR FORECAST In the Preliminary Report for 1998, the Board of Directors presented a full- year forecast for 1999 of SEK 50 million. This was based on anticipated freight rates of USD 20,500 per day for the VLCCs and USD 26,500 per day for the ULCCs. During the first quarter, freight rates were at about these levels. In April, however, they have fallen and are showing signs of remaining weak in the near future. OPEC has cut oil production with the result that oil prices have risen at the same time as the oil companies are currently utilising their large stocks. This has resulted in less demand for oil transportation. The freight rates could fluctuate considerably in the months immediately ahead and this could result in a low result for the first six months of the year. Concordia's result for the full year depends on the duration of the weak freight market. A full-year profit of about SEK 10 million, i.e. break-even during the remaining three quarters, would require an average freight rate of about USD 18,000 per day for the VLCCs and USD 24,000 per day for the ULCCs which is in line with current broker forecasts. SENSITIVITY ANALYSIS A change of USD 1,000 per day in the freight rates during the remaining nine months will affect Concordia's annual result by about SEK 13 million. For further information about this Interim Report or Concordia in general, please contact Lars Carlsson, President, phone: +46-31 855 003 or +46-705 855 101, or Jan-Erik Hammer, Financial Manager, phone: +46-31 855 046 or +46-704 855 046. This Interim Report has not been examined by the Company's auditors. Gothenburg, 27 April, 1999 CONCORDIA MARITIME AB Lars Carlsson President CONSOLIDATED INCOME STATEMENT - SWEDISH GAAP (SEK million) 3 months 3 monthsWhole year 1999 1998 1998 Average exchange rate SEK/USD 8.00 8.02 7.95 Net sales 217.8 269.8 1,102.9 Total income 271.8 269.8 1,102.9 Operating costs, ships -119.0 -149.9 -593.8 Other external costs -16.3 -10.9 -56.7 Personnel costs -39.8 -35.7 -154.7 Depreciation according to plan -24.4 -24.3 -95.9 Total operating costs -199.5 -220.8 -901.1 Operating result 18.3 49.0 201.8 Other interest income and similar profit/loss items 1.5 7.4 15.4 Interest expenses and similar profit/loss items -9.1 -25.7 -103.2 Financial net -7.6 -18.3 -87.8 Result after financial items 10.7 30.7 114.0 CONSOLIDATED BALANCE SHEET - SWEDISH GAAP, SUMMARY (SEK million) 3 months 3 monthsWhole year 1999 1998 1998 Exchange rate SEK/USD on accounting date 8.30 7.988.07 Assets Fixed assets 1,436.5 1,215.5 1,417.1 Current assets 168.2 176.9 205.8 Cash and bank balances 126.5 569.2 128.1 Total assets 1,731.2 1,961.6 1,751.0 Equity and liabilities Equity 775.4 655.4 735.0 Provisions 29.2 53.5 53.1 Long-term liabilities 835.5 1,188.6 820.2 Current liabilities 91.1 64.1 142.7 Total equity and liabilities 1,731.2 1,961.6 1,751.0 CONSOLIDATED STATEMENTS OF CHANGE IN FINANCIAL POSITION, SUMMARY (SEK million) 3 months 3 monthsWhole year 1999 1998 1998 Cash flow provided by operating activities before changes in working capital35.1 55.0 205.8 Change in working capital -14.0 -9.2 51.6 Cash flow provided by operating activities 21.1 45.8257.4 Cash flow provided by investing activities -4.5 6.2-253.5 Cash flow after investing activities16.6 52.0 3.9 Cash flow provided by financing activities -13.5 18.2-375.2 Conversion differences -4.7 -4.3 -4.0 Change in cash and bank balances -1.6 65.9 -375.3 PER-SHARE DATA* (SEK) 31-03-99 31-03-98 31-12-98 Profit after tax 0.56 1.17 4.38 Profit after tax after full conversion 0.40 0.722.79 Cash flow 1.29 2.09 7.69 Cash flow after full conversion 0.82 1.23 4.64 Equity 28.48 24.93 27.00 Equity after full conversion 21.15 18.87 20.31 Net worth 39.63 47.94 38.14 Net worth after full conversion27.49 31.51 26.64 Share price on accounting date 11.00 21.30 11.50 *) The total number of shares is 27,222,272 shares. The total number of shares after full conversion is 47,894,136 shares. Definitions: see Annual Report, 1998 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/29/19990429BIT00260/bit0001.doc The full report http://www.bit.se/bitonline/1999/04/29/19990429BIT00260/bit0002.pdf The full report