Second quarter 2005 – Successful delivery of the third container vessel and strong second quarter profitability (18.08.05)
During the first half of 2005, Aker American Shipping ASA (AKASA) has made significant achievements, and laid the foundation for the future.
• During second quarter of 2005 a 10 ship lease contract was finalized with Overseas Shipholding Group, Inc. (OSG), securing shipbuilding backlog until 2010 and ship lease operations until 2015.
• The third container vessel of a four ship series was successfully delivered to Matson Navigation Company (Matson) May 19, ahead of schedule.
• A private placement and secondary offering was completed securing net proceeds of $118.5 million in new equity.
• Listing of Aker American Shipping ASA at the Oslo Stock Exchange took place July 11.
• EBITDA was $6.3 million for second quarter and $10.2 for the half year.
• During second quarter of 2005 a 10 ship lease contract was finalized with Overseas Shipholding Group, Inc. (OSG), securing shipbuilding backlog until 2010 and ship lease operations until 2015.
• The third container vessel of a four ship series was successfully delivered to Matson Navigation Company (Matson) May 19, ahead of schedule.
• A private placement and secondary offering was completed securing net proceeds of $118.5 million in new equity.
• Listing of Aker American Shipping ASA at the Oslo Stock Exchange took place July 11.
• EBITDA was $6.3 million for second quarter and $10.2 for the half year.
- Operating revenues as a result of the sale to Matson of the third and fourth container vessels were $200 million in the first half of 2005. (No revenues were recognized in 2004 due to no external contracts in place at that time.) Revenues in second half of 2005 will be at a normalized level according to the percentage of completion earned for the fourth container vessel during the period.
- EBITDA of $10.2 million in first half of 2005 after reporting $6.3 million in Q2. The same period last year had a loss of $10.4 million.
- Operating profit of $7.2 million year to date compared to an operating loss of $13.2 million first half of 2004.
The proforma numbers contain the impact on interest cost from the $273.3 million improvement in equity; debt to equity conversion ($120.7 million), new paid-in equity ($118.5 million) and contribution in kind ($34.1 million). The adjusted numbers are the historical financials from AKASA (Q2 2005) and Kvaerner ASA (KPSI) in earlier periods. The difference is only in profit/(loss) before tax and net profit/(loss).
The result in Q2 is higher than the Q1 result partly due to a successful delivery of NB 003 to Matson on May 19, which was ahead of schedule. The fourth container vessel was approximately 50% complete by end of June 2005, and is scheduled for delivery in May 2006. The project is developing according to plan, where in particular steel availability has improved recently.
- New equity of $124 million secured by end of June 2005. The equity was paid on July 7 and is included as receivable from DNB Nor and Enskilda as of June 30, 2005. Net amount received will be approximately $118.5 million after deduction of $6 million in transaction costs, which is booked against the equity.
- Construction loan facility of $90 million for the fourth container vessel secured from Caterpillar Financial Services, with first draw down in beginning of July 2005.
Jones Act Market
The U.S. coast wise laws, referred to as Jones Act, require all commercial vessels operating between U.S. ports to be built, owned, operated and manned by U.S. citizens and to be registered under the U.S. flag. In 1996 certain amendments were enacted to the U.S. vessel documentations laws, allowing increased non-U.S. participation in the ownership of vessels operating in the Jones Act trade under certain conditions.
In June the AKASA Group entered into agreements for the construction and bareboat charter of 10 newbuild Jones Act product tankers. The vessels have been chartered to OSG which again will charter the vessels to end customers in the Jones Act market.
The Oil Pollution Act (OPA 90) was enacted in 1990 as a result of the Exxon Valdez oil spill. OPA 90 requires all tankers in U.S. waters to have double hull by 2015.
The Jones Act Product Tanker market has remained strong in the second quarter due to a combination of stable demand and limited availability of suitable tonnage. Industry experts report charter rates at a level 30% higher than same period in 2004. The total Jones Act Product Carrier fleet consists of 43 vessels, totalling 1.8 million dwt. Some 60% of this fleet is not double hull and will be phased out over the next ten years as a result of the OPA 90 regulations.
Operations
Production of the first product tanker commenced April 14. The main focus has been on planning and preparation for the construction of the tankers, in particular availability of steel and material. Currently, close to 100% of the material for the first tanker is committed. Production start of the second tanker will take place in Q4 of 2005.
Outlook
Aker American Shipping ASA expects that the second half of the year will have a result at the level of first half of the year. The company recognizes profit according to percentage of completion which means that there might be fluctuations from quarter to quarter dependant on level of activity in the period.
As the transition is made from the sale of Container Vessels to the bareboat charter of Product Tankers, revenues from ship sales will end with delivery of the fourth container vessel in Q2 next year. There will be revenues from participation in ship operations in the US Jones Act Product Tanker market starting in Q4 of 2006 when the first product tanker chartered to OSG goes into operation.
Definitions
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting, and the accounting principles in the report are consistent with the principles which will be used for annual reporting.
The AKASA group commenced operations 28 June 2005, by AKASA taking control over the shares in KPSI. From a reporting standpoint the takeover date is assumed to be 30 June 2005. The reported profit and loss statements, cash flows, equity reconciliations and 2004 balance sheet are thus proforma statements showing historic KPSI accounts under IFRS accounting.
August 17th, 2005
Board of Directors
Aker American Shipping ASA
Contact information:
Aker American Shipping ASA
2100 Kitty Hawk Avenue
Philadelphia, PA 19112-1808
USA
Tel: + 1 215 875 2600
David Meehan,
President & CEO
Tel: + 1 215 875 2601
Mob: + 1 215 203 2708
Jan Ivar Nielsen
CFO
Tel: + 1 215 875 2678
Mobile: + 1 215 203 2713
Disclaimer
This press release includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Aker American Shipping ASA and its subsidiaries and affiliates (the "Aker American Shipping Group") lines of business. These expectations, estimates, and projections are generally identifiable by statements containing words such as "expects,” "believes,” "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the Aker American Shipping Group’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although Aker American Shipping ASA believes that its expectations and the information in this Press release were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this Press release. Neither Aker American Shipping ASA nor any other company within the Aker American Shipping Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Press release, and neither Aker American Shipping ASA, any other company within the Aker American Shipping Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Press release.
Aker American Shipping ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the press release, other than what is required by law.
The Aker American Shipping Group consists of many legally independent entities, constituting their own separate identities. Aker American Shipping is used as the common brand or trade mark for most of these entities. In this press release we may sometimes use "Aker American Shipping”," "Group, "we," or "us," when we refer to Aker American Shipping companies in general or where no useful purpose is served by identifying any particular Aker American Shipping company.
- EBITDA of $10.2 million in first half of 2005 after reporting $6.3 million in Q2. The same period last year had a loss of $10.4 million.
- Operating profit of $7.2 million year to date compared to an operating loss of $13.2 million first half of 2004.
The proforma numbers contain the impact on interest cost from the $273.3 million improvement in equity; debt to equity conversion ($120.7 million), new paid-in equity ($118.5 million) and contribution in kind ($34.1 million). The adjusted numbers are the historical financials from AKASA (Q2 2005) and Kvaerner ASA (KPSI) in earlier periods. The difference is only in profit/(loss) before tax and net profit/(loss).
The result in Q2 is higher than the Q1 result partly due to a successful delivery of NB 003 to Matson on May 19, which was ahead of schedule. The fourth container vessel was approximately 50% complete by end of June 2005, and is scheduled for delivery in May 2006. The project is developing according to plan, where in particular steel availability has improved recently.
- New equity of $124 million secured by end of June 2005. The equity was paid on July 7 and is included as receivable from DNB Nor and Enskilda as of June 30, 2005. Net amount received will be approximately $118.5 million after deduction of $6 million in transaction costs, which is booked against the equity.
- Construction loan facility of $90 million for the fourth container vessel secured from Caterpillar Financial Services, with first draw down in beginning of July 2005.
Jones Act Market
The U.S. coast wise laws, referred to as Jones Act, require all commercial vessels operating between U.S. ports to be built, owned, operated and manned by U.S. citizens and to be registered under the U.S. flag. In 1996 certain amendments were enacted to the U.S. vessel documentations laws, allowing increased non-U.S. participation in the ownership of vessels operating in the Jones Act trade under certain conditions.
In June the AKASA Group entered into agreements for the construction and bareboat charter of 10 newbuild Jones Act product tankers. The vessels have been chartered to OSG which again will charter the vessels to end customers in the Jones Act market.
The Oil Pollution Act (OPA 90) was enacted in 1990 as a result of the Exxon Valdez oil spill. OPA 90 requires all tankers in U.S. waters to have double hull by 2015.
The Jones Act Product Tanker market has remained strong in the second quarter due to a combination of stable demand and limited availability of suitable tonnage. Industry experts report charter rates at a level 30% higher than same period in 2004. The total Jones Act Product Carrier fleet consists of 43 vessels, totalling 1.8 million dwt. Some 60% of this fleet is not double hull and will be phased out over the next ten years as a result of the OPA 90 regulations.
Operations
Production of the first product tanker commenced April 14. The main focus has been on planning and preparation for the construction of the tankers, in particular availability of steel and material. Currently, close to 100% of the material for the first tanker is committed. Production start of the second tanker will take place in Q4 of 2005.
Outlook
Aker American Shipping ASA expects that the second half of the year will have a result at the level of first half of the year. The company recognizes profit according to percentage of completion which means that there might be fluctuations from quarter to quarter dependant on level of activity in the period.
As the transition is made from the sale of Container Vessels to the bareboat charter of Product Tankers, revenues from ship sales will end with delivery of the fourth container vessel in Q2 next year. There will be revenues from participation in ship operations in the US Jones Act Product Tanker market starting in Q4 of 2006 when the first product tanker chartered to OSG goes into operation.
Definitions
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting, and the accounting principles in the report are consistent with the principles which will be used for annual reporting.
The AKASA group commenced operations 28 June 2005, by AKASA taking control over the shares in KPSI. From a reporting standpoint the takeover date is assumed to be 30 June 2005. The reported profit and loss statements, cash flows, equity reconciliations and 2004 balance sheet are thus proforma statements showing historic KPSI accounts under IFRS accounting.
August 17th, 2005
Board of Directors
Aker American Shipping ASA
Contact information:
Aker American Shipping ASA
2100 Kitty Hawk Avenue
Philadelphia, PA 19112-1808
USA
Tel: + 1 215 875 2600
David Meehan,
President & CEO
Tel: + 1 215 875 2601
Mob: + 1 215 203 2708
Jan Ivar Nielsen
CFO
Tel: + 1 215 875 2678
Mobile: + 1 215 203 2713
Disclaimer
This press release includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Aker American Shipping ASA and its subsidiaries and affiliates (the "Aker American Shipping Group") lines of business. These expectations, estimates, and projections are generally identifiable by statements containing words such as "expects,” "believes,” "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the Aker American Shipping Group’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although Aker American Shipping ASA believes that its expectations and the information in this Press release were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this Press release. Neither Aker American Shipping ASA nor any other company within the Aker American Shipping Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Press release, and neither Aker American Shipping ASA, any other company within the Aker American Shipping Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Press release.
Aker American Shipping ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the press release, other than what is required by law.
The Aker American Shipping Group consists of many legally independent entities, constituting their own separate identities. Aker American Shipping is used as the common brand or trade mark for most of these entities. In this press release we may sometimes use "Aker American Shipping”," "Group, "we," or "us," when we refer to Aker American Shipping companies in general or where no useful purpose is served by identifying any particular Aker American Shipping company.
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