Interim report for Concordia Maritime AB (publ) 1.1 - 30.6 2001

INTERIM REPORT FOR CONCORDIA MARITIME AB (publ) 1.1 - 30.6 2001 · Result after financial net: SEK 141.7 (26.3) million · Forecast for 2001: SEK 250 million · Very weak freight market during second quarter · VLCCs continue to generate good revenues due to freight contracts · Poor second quarter for ULCCs · The two new V-MAX tankers, Stena Vision and Stena Victory, delivered Sales and result Consolidated sales amounted to SEK 642.8 (497.4) million. The profit after financial items was SEK 141.7 million (26.3, which included a profit of 25.5 on the sale of ships). The profit per share after tax was SEK 2.97 (1.17) and SEK 2.75 (0.84) after full conversion. The year began with very good freight rates. April saw the beginning of a dramatic downturn in the freight market and freight rate levels fell more than 50 per cent since their peak in March and April. Sales are distributed geographically over the following markets (in %): US 41, Saudi Arabia 25, UK 11, South Africa 9, Switzerland 5, Japan 6 and others 3. The distribution of net sales is based on the respective customer's domicile. VLCC Coverage in the form of freight contracts and so-called Freight Futures enabled Concordia's VLCCs (Very Large Crude Carriers) to retain the first quarter's average freight rate of USD 33,500 (15,400) per day. USD 18,000 per day is required to cover the vessels' daily running costs and capital costs (breakeven) in 2001. ULCC Concordia's ULCCs (Ultra Large Crude Carriers) Stena King and Stena Queen have been hard hit by the freight market downturn. The average freight rate was USD 36,000 (20,500) per day for the period January- June. During the first three months of the year, the freight rate was as high as USD 57,800 per day but fell to only USD 14,400 per day in the second quarter.. Breakeven for these two vessels is USD 19,000 per day. V-MAX The first Stena V-MAX tanker, the Stena Vision, was delivered at the end of April and was followed by the second vessel, the Stena Victory, at the end of June. After her first voyage on the spot market, the Stena Vision was delivered to the American oil company Sun on a 3-year time- charter contract. The Stena Victory has also been signed to a 3-year charter with Sun and will be delivered to the charterer in September. Other vessels The self-discharging salt carriers Kure and Conveyor are signed to satisfactory charters. Dry-docking During the second quarter, two VLCCs and one ULCC were dry-docked. No vessels were dry-docked during the same period, last year. The reduced income due to the planned dry-dockings, has affected the result for the period in an amount of SEK 35 million. Allocations for shipyard costs are distributed evenly during the period between dry-dockings. The vessels are regularly dry-docked about once every third year. The shipyard costs for the three vessels exceeded the allocations made by SEK 10 million, which is charged to the result for the quarter. Management and operation During the period, the fleet continued to be operated with a focus on safety and quality and the cost of ongoing ship operation remained at a low level. The phasing in of the new V-MAX vessels has proceeded according to plan as regards both cost and operation. Hydrostatically balanced loading (HBL) is now utilised on all Concordia's remaining Concordia Class VLCCs. HBL is an environmental protection system introduced by the UN agency The International Maritime Organisation (IMO) for vessels more than 25 years old and reduces the risk of oil spills caused by grounding and other hull damage. The classification societies' quality system, CAP, which, among other things, specifies true hull strength in addition to the basic classification requirements, has become increasingly important when chartering older vessels. This benefits Concordia, which has had its vessels CAP classified with very good results for many years. Equity Equity per share after full conversion is SEK 31.86 (20.96). The SEK/USD exchange rate on 30-06-2001 was 10.84 (8.81). Liquidity and financing The Group's disposable liquid funds, including unutilised credit facilities, amounted to SEK 254.8 (680.8) million on 30-06-2001 while the corresponding figure on 31-12-2000 was SEK 724.5 (699.9) million. In accordance with the terms of the financing agreement, some excess liquidity has been blocked in a separate account with the financing banks. On 30-06-2001, SEK 43.6 million was blocked in this way. The Group's existing fleet is financed via a credit facility of originally USD 165 million raised during the spring of 1999. This credit facility is amortised on an ongoing basis and amounted to USD 148.1 million at the end of the period. Convertible debenture loan In 2000, the major part of the outstanding convertible loan stock was converted into shares and the convertible debt fell from SEK 237.7 million to SEK 65.6 million during the year. During the first half of 2001, the conversions continued and the convertible debt was reduced to SEK 20.9 million. The convertible debenture loan falls due in April, 2002 and conversion may take place until 1 April, 2001. During the period, conversion resulted in the number of shares increasing by 3,887,010 shares to 46,079,984 shares. Investments Investments during the period totalled SEK 557.7 million and consisted of payments relating to the V-MAX tankers Stena Vision and Stena Victory, now delivered. Related company transactions and charter cooperation with Stena Bulk The joint charter business between Concordia and Stena Bulk consists of a multi-year freight contract which is roughly equivalent to the employment of one VLCC. Concordia's four VLCCs and Stena's VLCC Stena Conductor are operated in a pool where the result is divided equally per vessel. In order to hedge the revenues generated in the pool for VLCCs together with Stena Bulk, two vessels have been time-chartered and a freight swap equivalent to the capacity of 1.3 VLCCs has been signed. The contract expires at the end of 2001 and corresponds to a freight rate of about USD 36,000 per day. Cooperation with other departments at Stena, such as Marketing, Technology, Finance, Bunker and Insurance, remains unchanged. Stena's subsidiary Northern Marine Management is responsible for the technical management of Concordia's two ULCCs. Concordia's subsidiary Universe Tankships performs management assignments for two of Stena's large tankers. Parent Company The Parent Company's sales totalled SEK 8.8 (13.7) million. Intergroup invoicing accounted for SEK 8.6 (1.5) million of this amount. The result after financial items was SEK -12.1 million (19.5, which included a profit of SEK 25.5 million on the sale of ships). The Parent Company's disposable liquid funds, including unutilised credit facilities, amounted to SEK 8.9 (47.9) million while the corresponding figure on 31- 12-2000 was SEK 10.9 million. There were no investments during the period. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/15/20010815BIT01080/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/08/15/20010815BIT01080/bit0002.pdf The full report