GOTHENBURG, Sweden, Oct. 22, 2004 (PRIMEZONE) --
-- An agreement has been signed to sell the two V-MAX tankers to the newly formed company Arlington Tankers Ltd. The consummation of the sale of the two vessels is conditioned on the completion by Arlington Tankers of its public offering and bank financing. The sale to Arlington Tankers is not taken into account in this interim report. See also the enclosed press release.
-- Profit after tax SEK 114.0 (42.2) million -- SEK 2.39 (0.88) per share - SEK 44.8 (-14.4) million profit on the sale of ships (Stena Constellation) included - Forecast for full year: SEK 170 million (SEK 3.56 per share) -- same as earlier forecast
-- Forecast profit per share after tax: SEK 3.28
-- Full-year forecast includes additional capital gain of approx. SEK 45 million on the sale of ships (Stena Congress)
-- Two Panmax tankers with ice class 1A ordered by Concordia, whose share in the vessels will be 50%. They will be employed on 10-year time charters with Fortum, the Finnish energy group
-- 10-year time charter contracts signed for two of the six P-MAX tankers on order
SALES AND RESULT
January - September
Consolidated sales for the first nine months amounted to SEK 308.0 (549.8) million. The result after financial items was SEK 123.7 (35.0) million, which included a profit of SEK 44.8 (-14.4) million on the sale of ships. The result after tax was SEK 114.0 (42.2) million, which corresponds to a result per share after tax of SEK 2.39 (-0.88).
3rd quarter
Consolidated sales in the third quarter amounted to SEK 82.8 (100.7) million. The result after financial items was SEK 18.5 (-25.8) million. The result after tax was SEK 13.8 (-26.1) million, which corresponds to a result per share after tax of SEK 0.29 (-0.55).
Sales and result per operating segment
Sales and the result for the period refer in their entirety to the large tanker/VLCC segment. All the costs in the product tanker segment relate to the P-MAX tankers under construction and are included in the investments for the period.
THE FLEET
Panamax tankers with ice class 1A ordered At the end of August, Concordia Maritime ordered two Panamax product tankers with Finnish/Swedish ice class 1A and has a 50% share in the joint venture which will own the two vessels.
At the same time, a 10-year time charter contract was signed for both vessels with the Finnish energy group Fortum, which plans to employ the vessels primarily in the transportation of refined products from the Baltic Sea to the North American market.
The tankers Stena Polaris and Stena Poseidon will be built at the Brodosplit shipyard in Croatia where six ice-strengthened Stena P-MAX product tankers are currently being built for Concordia Maritime.
The Stena Polaris and the Stena Poseidon will have a deadweight of 75,000 tons, a length of 228 m and a beam of 32 m. They have been specially designed for traffic in difficult ice conditions in the Baltic Sea and will have full double hulls, i.e. a double hull protecting not only the cargo tanks but also the fuel tanks and lube oil tanks. The total contract price for the two vessels is approx. SEK 700 million and delivery will take place in 2006 and at the beginning of 2007.
10-year time-charter contracts signed for two P-MAX tankers
At the beginning of September, Concordia Maritime signed two 10-year time charter contracts for two Stena P-MAX tankers with Progetra S.A.
Progetra S.A. is a rapidly expanding logistics company, which cooperates closely with a number of Russian oil companies. Today, the company's business consists mainly of overland transportation and the operation of a number of oil terminals in Russia. This deal means that Concordia has now secured employment for four of the six P-MAX tankers on order as 5-year time charter contracts for two vessels had previously been signed with the French oil company TOTAL.
V-MAX
The Group's two V-MAX VLCCs, the Stena Vision and the Stena Victory, continued to operate on the West Africa-US East Coast trade under the terms of their time charter contract with the US oil company Sunoco. This contract was renewed in May and runs until mid-2007.
Existing vessels Type Employment on delivery Period Stena Vision V-MAX Time-chartered Sunoco Q2, 2004 -- Q2, 2007 Stena Victory V-MAX Time-chartered Sunoco Q2, 2004 -- Q2, 2007 Vessels on order Stena Paris P-MAX Time-chartered TOTAL Q4, 2005 -- Q4, 2010 Stena Provence P-MAX Time-chartered TOTAL Q1, 2006 -- Q1, 2011 Stena Primorsk P-MAX Time-chartered Progetra Q3, 2006 -- Q3, 2016 Stena Progetra P-MAX Time-chartered Progetra Q4, 2007 -- Q4, 2017 Stena Performance P-MAX Open market Q4, 2007 Stena Progress P-MAX Open market Q1, 2008 Stena Polaris (50%) Panamax 1A Time-chartered Fortum Q4, 2006 -- Q4, 2016 Stena Poseidon (50%)Panamax 1A Time-chartered Fortum Q1, 2007 -- Q1, 2017
VLCC
The two remaining Concordia Class VLCCs were sold at the beginning of the year for conversion in the offshore industry. One of them, the Stena Constellation, was delivered to the buyer on 29 June. The second tanker, the Stena Congress, will be delivered to the buyer in the fourth quarter. During the first half of the year, the average freight rate was USD 24,000 per day. During the third quarter, the average freight rate for the Stena Congress was USD 20,000 per day.
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.
TANKER MARKET
The tanker market continues to be very strong. Freight rates for modern large-tanker tonnage are currently over USD 100,000 per day. The market for product tankers is improving, particularly for the transportation of fuel oil and similar products.
FREIGHT MARKET
JANUARY, 1999 -- OCTOBER, 2004
Source: Platou
THE SHIPBUILDING AND SECOND-HAND MARKETS
Yard prices are at historically high levels. The yards' limited capacity over the next three years, in combination with high steel prices, is pushing up prices. In 2004, the price of tanker tonnage has risen 25-30%. Many yards are being hit by higher prices for input goods, particularly steel, for orders already signed. Prices of second-hand tonnage have also been rising sharply as a result of the shipbuilding prices in combination with the strong freight market. In the last 12 months, the price of modern tanker tonnage has risen more than 40%.
Shipyard prices Prices of second-hand tonnage (5 years)
Source: Platou
EQUITY
Equity per share is SEK 23.68 (21.78). The SEK/USD exchange rate on 30-09-2004 was 7.36 (7.66). On 31-12-2003, equity per share was SEK 21.51 and the SEK/USD exchange rate was 7.28.
The decrease in value of the SEK in the SEK/USD exchange rate has increased equity by SEK 14 (-155) million, equivalent to SEK 0.29 (-3.26) per share.
LIQUIDITY AND FINANCING
In order to secure the borrowing requirements arising as a result of the investments in new tonnage, the old credit facility was replaced with new financing at the end of June. The new credit facility, which has a duration of about seven years, totals USD 250 million of which USD 100 million is already at the disposal of the Group, while USD 150 million will be made available as the P-MAX tankers are delivered. The Group's disposable liquid funds, including unutilised credit facilities, amounted to SEK 611 (320) million on 30 09 2004. Disposable liquid funds on 31 12 2003 totalled SEK 320 million.
INVESTMENTS
Investments during the period amounted to SEK 69.9 million and consist of advance payments to the shipyard and project costs relating to the vessels on order. Also included is SEK 2.0 million in capitalised interest.
RELATED COMPANY TRANSACTIONS
Concordia purchases services on a regular basis from the Stena Sphere. These payments cover the following services:
-- Vessel charter Payment is based on a commission of 1.25% on freight rates.
-- Commission on the purchase and sale of vessels Payment is based on a commission of 1% on purchases and sales.
-- Operation of any jointly chartered vessels Payment is based on a fixed price per month and vessel.
-- Purchases of bunker oil Payment is based on a commission of about 0.1% per ton purchased.
-- Administration, marketing, insurance, technical follow-up and development of Concordia's fleet Payment is based on a fixed price per month and vessel. In the case of technical consulting services for newbuilding projects, an hourly rate is charged on current account, which is then charged to the project.
-- Office rent and office services for Concordia's personnel A fixed price per year is charged.
All related company transactions take place on commercial terms and at market-related prices.
PARENT COMPANY
The Parent Company's sales totalled SEK 8.8 (13.2) million. Intergroup invoicing accounted for SEK 7.3 (13.0) million of this amount. The result after financial items was SEK -7.4 (-1.1) million. The Parent Company's disposable liquid funds, including unutilised credit facilities, amounted to SEK 22.2 (20.2) million. There were no investments during the period.
FORECAST
Concordia's result is currently not affected by short-term upswings and downturns on the tanker market.
The Group's two V-MAX tankers are signed to time-charter contracts at fixed freight rates until mid-2007.
The remaining vessel in the so-called Concordia Class, the Stena Congress, will soon sail on her last voyage after which she will be delivered to the buyer at the end of November.
The forecast for the full year is SEK 170 million before tax (including the capital gain on ship sales), which is equivalent to SEK 3.56 per share. This is the same as the previous forecast. The forecast for the profit per share after tax is SEK 3.28.
The sale of the V-MAX tankers to Arlington Tankers is not taken into account in the forecast. If the sale is concluded, it is estimated that the capital gain will amount to about SEK 500 million.
ACCOUNTING PRINCIPLES AND METHODS OF CALCULATION
As of 1 January, the Company has applied the Swedish Financial Accounting Standards Council's recommendation no. 29 relating to remuneration to employees. This will have no significant effect on the consolidated income statement and balance sheets. In all other respects, the accounting principles and methods of calculation applied are the same as those applied in the Annual Report for 2003.
Preparations for the transition to International Financial Reporting Standards (IFRS) As of 1 January 2005, all listed companies in the EU must comply with IFRS (previously IAS). A gradual adjustment has been in progress for a number of years in the form of implementation of the Swedish Financial Accounting Standards Council's recommendations, which are based on IFRS.
Work on preparing for the transition to IFRS is continuing and the Company's assessment is that the transition should not cause any problems.
REPORTS AND INFORMATION
This interim report has not been examined by the Company's accountants.
The result for the full year will be published on 17 February, 2005.
Historical and current reports, together with news and comments on the Company and the tanker markets, can be found on our web site www.concordia-maritime.se.
Goteborg, 21 October, 2004
CONCORDIA MARITIME AB (publ) Hans Noren President Concordia Maritime AB (publ) Danmarksterminalen SE-405 19 GOTHENBURG SWEDEN Company number: 556068-5819
Concordia Maritime is an international tanker shipping company, which owns two 313,000 dwt Stena V-MAX VLCCs delivered in 2001. These vessels are designed for maximum loading capacity in shallow waters. In addition to having mandatory double hulls, the vessels were built according to a new concept for safer oil transportation with double main engines in two completely separate engine rooms, double rudders and steering gear, two propellers and double control systems. In 2003, six vessels, which will be built in accordance with the MAX concept, were ordered. These vessels, Stena P-MAX, are product tankers of about 49,900 dwt. In 2004, two Panmax tankers of about 75,000 dwt, in which the company has a 50 per cent share, were ordered. The new vessels will be delivered over a 2-year period from December, 2005. All the vessels are built to very high specifications as regards both customer satisfaction and lifespan. All the vessels on order will be built to ice class 1A or 1B specifications.
INNOVATION AND PERFORMANCE
Our mission is to generate a profit by providing our customers with safe, cost-effective tanker transportation based on innovation and performance
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Concordia Interim and Pressinfo