ENPNewswire-March 1, 2017--SFL - Fourth Quarter 2016 Results
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Release date- 28022017 - Hamilton, Bermuda - Ship Finance International Limited ('Ship Finance' or the 'Company') today announced its preliminary financial results for the quarter ended December 31, 2016.
Declaration of fourth quarter dividend of $0.45 per share, the Company's 52nd consecutive quarterly dividend
Successful issuance of $225 million of senior unsecured convertible notes due in 2021 and repurchase of $166 million of convertible notes due in 2018
Continued diversification and renewal of fleet with the delivery of the first of two 19,200 TEU container vessels and agreement to sell one 1998-built VLCC
Earned $7.0 million, or $0.07 per share, of profit share during the quarter
Ole B. Hjertaker, CEO of Ship Finance Management AS, said in a comment: 'Ship Finance continued to diversify its portfolio of assets and counterparty exposure in the fourth quarter, following a strategy we have employed since our inception. Our continued performance is supported by our diversified $3.7 billion contract backlog with a weighted average charter period of nearly nine years as well as our exposure to market strength in various segments through profit sharing agreements and spot market employment.
We have also taken prudent steps to strengthen our balance sheet and improve our financial flexibility. Several new vessels will be added to our growing fleet in 2017, and we are consistently evaluating investment opportunities that will allow us to continue to return value to our shareholders.'
Dividends and Results for the Quarter Ended December 31, 2016
The Board of Directors has declared a quarterly cash dividend of $0.45 per share. The dividend will be paid on or around March 30 to shareholders on record as of March 16, and the ex-dividend date on the New York Stock Exchange will be March 14, 2017. The Company reported total U.S. GAAP operating revenues on a consolidated basis of $97.8 million, or $1.05 per share, in the fourth quarter of 2016. This number excludes $7.3 million of charter revenues classified as 'repayment of investment in finance leases' and $48.3 million of charter revenues earned by 100% owned assets classified as 'investment in associate'. Inclusive of those revenues, the total charter revenues were $153.5 million, or $1.64 per share.
The 50% profit share agreement with Frontline Shipping Limited ('Frontline') contributed $6.8 million above the contracted base charter rates, or $0.07 per share, in the fourth quarter. There was also a $0.2 million profit share in the fourth quarter relating to some of our other vessels. Reported net operating income pursuant to U.S. GAAP for the quarter was $33.7 million, or $0.36 per share, and reported net income was $28.5 million, or $0.31 per share. This is after an impairment charge of $5.3 million related to two vessels and a $8.8 million negative impact from repurchase of convertible notes, in addition to a $9.9 million gain arising from mark-to-market valuation of hedging instruments.
As of December 31, 2016, and adjusted for subsequent sales, the fixed rate charter backlog from the Company's fleet of 73 vessels and rigs was approximately $3.7 billion, with an average remaining charter term of 4.8 years, or 8.6 years if weighted by charter revenue. Some of the charters include purchase options which, if exercised, may reduce the fixed charter backlog and average remaining charter term, but will increase capital available for new investments. Additionally, several charters include a profit sharing feature that may increase our operating results.
Including newbuildings, the Company owns 18 crude oil, product and chemical tanker vessels, of which 16 vessels are employed on long term charters. The crude oil tanker market improved from the third quarter into the fourth quarter, and the vessels chartered to Frontline earned daily rates well above the base charter rates in the period. A profit share of $6.8 million was earned in the quarter, up from $5.4 million in the previous quarter, and is payable to Ship Finance in March.
The Company also has exposure...