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/
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