SFL CORPORATION LTD.
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Date: May 27, 2020
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By:
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/s/ Ole B. Hjertaker
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Name:
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Ole B. Hjertaker
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Title:
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SFL Management AS
(Principal Executive Officer)
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Preliminary Q1 2020 results and quarterly cash dividend of $0.25 per share
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• |
65th consecutive quarterly dividend declared, $0.25 per share
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• |
Operating revenue of $122 million, and net loss of $87 million in the first quarter, including approximately $114 million in non-cash negative adjustments
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• |
Received charter hire1 of approximately $161 million in the quarter from the Company’s vessels and rigs, including $6.4 million of profit share
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Adjusted EBITDA2 of $94 million from consolidated subsidiaries in addition to $26 million from wholly-owned non-consolidated subsidiaries
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• |
Increased the fixed rate charter backlog by approximately $230 million, including charter extensions for ten container vessels and a vessel acquisition
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Acquisition of a 2020-built scrubber fitted VLCC for $65 million with a seven year charter to Landbridge Group and underlying three year sub-charter to an oil major
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INCOME STATEMENT
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Three months ended
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Full year
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(in thousands of $
except per share data) |
Mar 31,
2020
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Dec 31,
2019
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2019
(audited)
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Charter revenues - operating lease
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96,546
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96,385
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383,059
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Charter revenues - finance lease and vessel loan (net of charter hire treated as Repayments)(1)
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18,944
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19,615
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70,175
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Profit share income, vessels
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5,863
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3,877
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5,615
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Profit share income, scrubber fuel-cost savings
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543
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-
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-
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Total operating revenues
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121,896
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119,877
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458,849
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Gain/(loss) on sale of assets and termination of charters
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2,275
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-
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-
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Vessel operating expenses
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(40,390)
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(34,985)
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(134,434)
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Administrative expenses
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(3,512)
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(2,238)
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(10,203)
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Depreciation
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(27,173)
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(28,297)
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(116,381)
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Vessel impairment charge
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(80,511)
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(34,141)
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(60,054)
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Operating (loss)/ income
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(27,415)
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20,216
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137,777
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Results in associates(2)
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2,512
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3,918
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17,054
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Interest income from associates (2)
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3,532
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3,532
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14,128
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Interest income, other
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907
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1,527
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5,936
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Interest expense
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(34,224)
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(34,844)
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(136,974)
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Amortization of deferred charges
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(1,972)
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(1,923)
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(8,084)
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Gain or (loss) on Investments in debt and equity securities
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(13,562)
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27,859
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67,701
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Income (expense) related to non-designated derivatives
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(23,380)
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3,908
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(2,255)
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Other financial items
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6,548
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(551)
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(6,106)
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Taxes
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-
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-
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-
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Net (loss)/income
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(87,054)
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23,642
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89,177
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Basic earnings per share ($)
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-0.81
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0.22
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0.83
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Weighted average number of shares(3)
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107,630,752
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107,625,468
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107,613,610
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Common shares outstanding(3)
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107,632,337
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107,625,468
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107,625,468
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(1) |
‘Charter revenues – finance lease and vessel loan’ are reported net of charter hire classified as ‘Repayment of Investment in finance leases and vessel loans’ under US
GAAP, which for the three months ended March 31, 2020 was $12.003 million (three months ended December 31, 2019: $12.040 million; full year 2019: $44.142 million).
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(2) |
Three of our subsidiaries were accounted for as ‘Investment in associates’ during the quarter. The contribution from these subsidiaries is reflected in our consolidated
Income Statement as a combination of ‘Results in associates’ and ‘Interest income from associates’.
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(3) |
The weighted average number of shares and the number of common shares outstanding excludes approximately 11.8 million shares issued by SFL as part of share lending
arrangements in connection with the Company’s offering of the 2021 and 2023 Notes. The shares are owned by SFL and will be returned on or before maturity of the Notes in 2021 and 2023, respectively, thus they are excluded in the
calculation of earnings per share.
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BALANCE SHEET
(in thousands of $) |
Mar 31,
2020
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Dec 31, 2019
(audited)
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ASSETS
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Short term
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Cash and cash equivalents(1)
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206,474
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199,521
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Restricted cash
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11,467
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3,495
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Investment in marketable securities
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60,231
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74,079
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Amount due from related parties
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14,744
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22,399
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Investment in finance leases and vessel loans, current portion
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56,990
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56,189
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Other current assets
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40,836
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34,804
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Long term
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Vessels and equipment, net
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1,321,967
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1,404,705
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Vessels and equipment under finance lease, net
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727,189
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714,476
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Investment in finance leases and vessel loans
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891,481
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938,198
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Investment in associates(2)
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30,586
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42,161
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Amount due from related parties - Long term(2)
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314,000
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327,616
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Other long term assets
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106,530
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67,727
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Total assets
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3,782,495
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3,885,370
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Short term
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Short term and current portion of long term interest bearing debt
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257,571
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253,059
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Amount due to related parties
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2,584
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3,980
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Finance lease liability, current portion
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82,395
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68,874
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Other current liabilities
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51,125
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39,923
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Long term
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Long term interest bearing debt, net of deferred charges
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1,336,195
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1,355,029
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Finance lease liability, long term portion
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1,020,177
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1,037,553
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Deficit in associates(2)
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12,938
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-
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Other long term liabilities
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85,601
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20,583
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Stockholders’ equity
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933,909
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1,106,369
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Total liabilities and stockholders’ equity
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3,782,495
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3,885,370
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(1) |
Not including cash held by 100% owned subsidiaries accounted for as ‘Investment in associates’
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(2) |
Three of our subsidiaries were accounted for as ‘Investment/deficit in associates’ at quarter end. Our investment is a combination
of equity classified as ‘Investment/deficit in associates’ and intercompany loans included within ‘Amount due from related parties, long term’.
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STATEMENT OF CASHFLOWS
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Three months ended
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Full year
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(in thousands of $)
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Mar 31,
2020
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Dec 31,
2019
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2019
(audited)
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OPERATING ACTIVITIES
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Net income
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(87,054)
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23,642
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89,177
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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30,773
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30,973
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129,769
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Vessel impairment charge
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80,511
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34,141
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60,054
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Adjustment of derivatives to fair value recognised in net income
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23,221
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(3,752)
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3,449
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(Gain) or loss on Investments in debt and equity securities
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13,562
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(27,859)
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(67,701)
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Results in associates
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(2,512)
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(3,918)
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(17,054)
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Loss (gain) on sale of assets and termination of charters
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(2,275)
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-
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-
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Repayment of Investment in finance leases and vessel loans
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12,003
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12,040
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44,143
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Other, net
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(8,919)
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540
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8,170
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Change in operating assets and liabilities
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15,202
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(7,411)
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(300)
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Net cash provided by operating activities
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74,512
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58,396
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249,707
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INVESTING ACTIVITIES
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Additions to finance leases and vessel loans
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(30)
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(120,000)
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(211,065)
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Purchase of vessels and capital improvements in progress
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(23,394)
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(10,287)
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(39,326)
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Proceeds from sale of vessels and termination of charters
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34,581
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-
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-
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Cash received from (paid to) associates(1)
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7,876
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(3,584)
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15,925
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Other assets / investments
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(61,737)
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84,587
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64,585
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Net cash provided by/ (used in) investing activities
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(42,704)
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(49,284)
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(169,881)
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FINANCING ACTIVITIES
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Repayments of finance lease liability
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(3,855)
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(17,051)
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(63,663)
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Proceeds from long and short term debt
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122,231
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182,480
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458,781
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Repayment of long and short term debt
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(64,859)
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(71,768)
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(208,538)
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Resale (repurchase) of Company bonds
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(31,060)
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-
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(80,749)
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Discount received on debt repurchased
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-
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-
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1,654
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Expenses paid in connection with securing finance
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(1,371)
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(420)
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(4,261)
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Principal settlements of cross currency swaps, net
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(298)
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-
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(41,769)
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Cash dividends paid
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(37,671)
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(37,669)
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(150,659)
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Net cash provided by/ (used in) financing activities
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(16,883)
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55,572
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(89,204)
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Net increase/ (decrease) in cash, cash equivalents and restricted cash
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14,925
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64,684
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(9,378)
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Cash, cash equivalents and restricted cash at beginning of period
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203,016
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138,332
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212,394
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Cash, cash equivalents and restricted cash at end of period
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217,941
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203,016
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203,016
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(1) |
Three of our subsidiaries were accounted for as ‘Investment/deficit in associates’ during the quarter. The ‘Cash received from (paid
to) associates’ is only a part of the contribution from these subsidiaries. The net cash balance is recorded under ‘Interest income from associates’ and reflected in the Company’s Income Statement.
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(in thousands of $)
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SFL
Deepwater
Ltd
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SFL
Hercules Ltd
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SFL
Linus Ltd
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Total
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Charter revenues - finance lease (net of charter hire treated as
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Repayment of investment in finance leases)(1)
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4,477
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4,210
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6,147
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14,834
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Interest expense, related party(2)
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(1,271)
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(900)
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(1,361)
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(3,532)
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Interest expense, other
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(1,900)
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(2,217)
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(2,563)
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(6,680)
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Other items(3)
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(1,705)
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(208)
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(197)
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(2,110)
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Net (loss)/income(4)
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(399)
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885
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2,026
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2,512
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(1) |
‘Charter revenues – finance lease’ are reported net of charter hire classified as ‘Repayment of investment in finance leases’ under US GAAP, which for the three months
ended March 31, 2020 was $11.359 million (SFL Deepwater Ltd, $3.854m; SFL Hercules Ltd, $4.076m; SFL Linus Ltd, $3.429m).
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(2) |
‘Interest expense, related party’ from these subsidiaries appears in the Company’s consolidated income statement as ‘Interest income from associates’.
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(3) |
‘Other items’ includes credit loss provision of $2.052 million. From January 1, 2020, the Company adopted the new credit loss accounting standard requiring the Company to
measure expected credit losses for financial assets, including vessels and rigs that are classified as investment in financial leases.
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(4) |
‘Net (loss)/ income’ from these subsidiaries appears in the Company’s consolidated income statement as ‘Results in associates’.
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(in thousands of $)
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SFL
Deepwater
Ltd |
SFL
Hercules Ltd
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SFL
Linus Ltd |
Total
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Cash and cash equivalents
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8,366
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1,734
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-
|
10,100
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Investment in finance leases
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273,834
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284,863
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369,934
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928,631
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Other assets
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2,310
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2,011
|
131
|
4,452
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Total assets
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284,510
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288,608
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370,065
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943,183
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Short term and current portion of long term interest bearing debt
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11,827
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16,154
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12,073
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40,054
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Other current liabilities
|
4,416
|
1,918
|
3,264
|
9,598
|
Long term interest bearing debt
|
168,205
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181,731
|
211,947
|
561,883
|
Long term loans from shareholders, net
|
113,000
|
80,000
|
121,000
|
314,000
|
Stockholder’s (deficit)/ equity(1)
|
(12,938)
|
8,805
|
21,781
|
17,648
|
Total liabilities and stockholder’s (deficit)/equity
|
284,510
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288,608
|
370,065
|
943,183
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(1) |
‘Stockholder’s (deficit)/equity’ from these subsidiaries appears in the Company’s consolidated balance sheet as ‘Investment/deficit
in associates’.
|
Adjusted EBITDA
|
Three months ended
|
|
Mar 31, 2020
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||
(in thousands of $)
|
Company
(excluding 100%
owned associates)
|
100% owned
associates
|
Net cash provided by operating activities
|
74,512
|
7,737
|
Non cash movements in other assets and liabilities
|
(10,928)
|
8,244
|
Interest related to Non- Designated Derivatives
|
159
|
-
|
Interest expense
|
34,224
|
6,680
|
Interest income, other
|
(729)
|
-
|
Interest (income) expense from associates
|
(3,532)
|
3,532
|
Adjusted EBITDA (1)
|
93,706
|
26,193
|
(1) |
‘Adjusted EBITDA’ is a non-GAAP measure. It represents cash receipts from operating activities before net interest and capital
payments.
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