2. 2
FORWARD LOOKING STATEMENTS
This presentation contains forward looking statements. These statements are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including Ship Finance management's examination of historical operating trends, data
contained in the Company’s records and other data available from third parties. Although Ship Finance believes that these
assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies
which are difficult or impossible to predict and are beyond its control, Ship Finance cannot give assurance that it will achieve or
accomplish these expectations, beliefs or intentions.
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, fluctuations in currencies and interest rates, general market conditions including
fluctuations in charter hire rates and vessel values, changes in demand in the markets in which we operate, changes in demand
resulting from changes in OPEC's petroleum production levels and world wide oil consumption and storage, developments regarding
the technologies relating to oil exploration, changes in market demand in countries which import commodities and finished goods and
changes in the amount and location of the production of those commodities and finished goods, increased inspection procedures and
more restrictive import and export controls, changes in our operating expenses, including bunker prices, dry-docking and insurance
costs, performance of our charterers and other counterparties with whom we deal, timely delivery of vessels under construction within
the contracted price, 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 the Company with the
Securities and Exchange Commission.
3. 3
2Q 2013 highlights
• Net income of $25.1 million ($ 0.29/share) for the quarter
» Aggregate charter revenue of $153.7 million ($1.78/share)(1)
» EBITDA(2) of $121.5 million ($1.41/share)
• First quarter dividend of $0.39 per share
» Dividend yield(3) of approx. 9.9%
• Focus on accretive growth
» Nearly $1 billion of new investments in 2Q 2013
1) Charter revenues includes total charter hire from all vessels and rigs, including assets in 100% owned subsidiaries classified as ‘Investment in associates’ and accrued cash sweep income.
2) EBITDA is a non- GAAP measure and includes assets in 100% owned subsidiaries classified as 'Investment in associates'. For more details please see 2Q-13 press release Appendix 1: Reconciliation of Net Income
to EBITDA.
3) Quarterly cash dividend, annualized / SFL share price $15.69 (August 27, 2013)
Charter
revenue
2Q-13
OFFSHORE
52%
TANKERS
27%
LINER
13%
DRY BULK
8%
4. 4
Contracted 4 x 8,700 teu container vessels
• Vessels to be built at Daewoo Shipyard in Korea
» First class builder of container vessels
» High specifications and historical low prices
» Attractive delivery positions in 2014 and 2015
• Highly versatile vessel class suitable for most trade
patterns
» Fits the Panama Canal after the expansion is finished in
mid-2015
» Bosporus-max (easy access to Black Sea)
» High reefer capacity adds flexibility
» The vessels will be marketed for medium- to long-term
charters
5. 5
$600 million acquisition of West Linus
• West Linus
» Harsh environment jack-up drilling rig
» Under construction at Jurong Shipyard with delivery late 2013
» 5 year sub-charter to ConocoPhillips
• 15 year bareboat charter to North Atlantic Drilling Limited
» Adding >$800m to SFL’s charter backlog
» Frontloaded charter with >$400m payable first 5 years
» Put-option to NADL = limited residual exposure
• Financing
» $475m bank facility with limited recourse to SFL
» NADL will compensate us for interest rate volatility
» $125m equity investment by SFL in 2Q 2013
• Attractive return on invested equity
» $19m ($0.21/share) average net cash contribution per year during
sub-charter period
6. 66
$5.8 billion charter backlog(1)
1) Fixed charter backlog as of June 30, 2013, excluding future cash sweep/profit share, net of any seller’s credit and assuming certain call options are not exercised
Charterers by Mkt. Cap Remaining Charter Term(1)
5–10 yrs
27%
> 10 yrs
68%
0–5 yrs
5%
> $5bn
38%
< $5bn
48%
Private
14%
7. 77
$0m
$200m
$400m
$600m
$800m
$1,000m
$1,200m
$1,400m
04 05 06 07 08 09 10 11 12 2Q
13
Loan comittment Scrap @ $400/ldt Outstanding loan
.
• Only abt. 50% ($218m) drawn on loan
facilities at quarter-end
• $203m available on revolving credits
• Loan amortization continues (>$70m/year)
• 22 vessels remaining
• Only double-hull VLCCs and Suezmaxes
• Cash sweep feature provides significant
upside potential if market recovers
Vessels on charter to FRO
Frontline vessels and financial exposure
Financial leverage on FRO vessels
Number of vessels to FRO Financing relating to FRO vessels
1) Source: Clarkson Research Services
2) Gross available amount per 2Q 2013 including undrawn amounts on the revolving credits
(1)
-
10
20
30
40
50
04 05 06 07 08 09 10 11 12 2Q
13Single Hull/OBO Suezmax VLCC
8. 88
638
102
140
120
301
25
0
200
400
600
800
Fixed-rate
revenues
Cash
sweep
OPEX +
G&A
Net
interest
Loan
amort.
Net
contribution
$ mill.
Contributions from projects last 12 months(1)
1) Not as accounted per US GAAP – used as an internal guideline to assess the Company’s core business.
2) Fixed charter revenues and return on financial investments
3) Ordinary installments relating to the Company’s projects, assuming all loans fully drawn. Excluding prepayments when vessels are sold
• Large performing fleet with significant cash flow
» $523m EBITDA-equivalent last twelve months
» $102m net cash-flow from projects after interest and debt amortization
(3)(2)
$176m
$74m debt amortization
related to FRO vessels
9. 99
SFL operational performance
• Pro-forma illustration of cash flow (1)
» Not as accounted for under US GAAP
» Used as an internal guideline to assess the Company's performance
» Excluding extraordinary and non-cash items and profit share
2Q 2013 1Q 2013
$ mill. $/share $ mill. $/share
Fixed charter hire
VLCC 30.1 0.35 30.2 0.35
Suezmax 9.0 0.10 9.6 0.11
Chemical Tankers 1.5 0.02 1.5 0.02
Liner (Container and Car Carriers) 20.2 0.23 19.4 0.23
Drybulk incl. OBOs 12.9 0.15 13.4 0.16
Offshore 80.0 0.93 78.9 0.93
Sum fixed charter hire 153.7 1.78 152.8 1.79
Vessel operation expenses and G&A (34.8) (0.40) (33.6) (0.39)
Financial investments 2.5 0.03 2.4 0.03
Accumulated cash sweep/profit share 0.1 0.00 0.0 0.00
EBITDA including accumulated cash sweep 121.5 1.41 121.6 1.43
1) Including cash flow in subsidiaries accounted for as ‘investment in associate’
10. 1010
Profit & loss
INCOMESTATEMENT Full year
(in thousands of $ June, 30 Mar, 31 2012
except per share data) 2013 2013 (audited)
Charter revenues - operating lease 36,455 35,541 137,035
Charter revenues - finance lease 42,364 43,545 190,198
Revenues classified as Repayment of investment in
finance leases (12,928) (13,999) (59,717)
Profit share income 100 - -
Cash sweep income - - 52,176
Total operating revenues 65,991 65,087 319,692
Gain on sale of assets andtermination of charters - 18,025 47,386
Vessel operating expenses (23,898) (23,331) (94,914)
Administrative expenses (1,944) (1,967) (8,942)
Depreciation (14,304) (14,033) (55,602)
Total operating expenses (40,146) (39,331) (159,458)
Operating income 25,845 43,781 207,620
Results in associate 7,018 8,512 43,492
Interest income fromassociates and long term
investments 5,632 5,648 22,633
Interest income, other 1,808 1,712 4,541
Interest expense (18,281) (20,600) (88,985)
Amortization of deferred charges (2,712) (2,591) (5,866)
Other financial items (882) (2,106) (2,026)
Impairment adjustment to investments - - (3,353)
Mark to Market of Derivatives 6,636 (1,978) 7,780
Taxes - - -
Net income 25,064 32,378 185,836
Basic earnings per share ($) 0.29 0.38 2.31
Weighted average number of shares 86,135,604 85,248,056 80,594,399
Common shares outstanding 93,260,000 85,250,000 85,225,000
Three months ended
11. 1111
Balance sheet
BALANCESHEET June, 30 Mar, 31 Dec 31, 2012
(in thousands of $) 2013 2013 (audited)
ASSETS
Short term
Cash and cash equivalents 41,023 64,820 60,542
Available for sale securities 66,690 56,488 55,661
Amount due fromrelated parties 1,089 1,222 54,203
Other current assets 70,448 74,866 72,226
Long term
Newbuildings and vessel deposits 105,337 59,211 69,175
Vessels and equipment, net 1,026,111 1,040,261 1,041,126
Investment in finance leases 1,055,901 1,058,958 1,086,989
Investment in associate 29,549 243,456 232,891
Amount due fromrelated parties - Long term 573,591 189,011 221,884
Deferred charges 47,755 49,956 23,740
Other long-termassets 63,756 51,316 54,652
Total assets 3,081,250 2,889,565 2,973,089
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short term
Short termand current portion of long terminterest bearing
debt 275,124 130,937 157,689
Other current liabilities 23,030 14,472 30,602
Amount due to related parties 12,208 11,191 9,227
Long term
Long terminterest bearing debt 1,474,168 1,565,154 1,673,511
Other long termliabilities 87,479 105,882 107,292
Stockholders’ equity 1,209,241 1,061,929 994,768
Total liabilities andstockholders’ equity 3,081,250 2,889,565 2,973,089
12. 1212
Liquidity and financing
• $261 million in total available liquidity
» $41 million cash and cash equivalents
» $220 million available under revolving credit lines
• $67 million in available for sale securities
» Mainly senior secured bonds
• Debt overview
» $1.7 billion consolidated interest-bearing debt at quarter
end, including $0.6 billion of senior unsecured notes
» $1.2 billion bank loans in subsidiaries account for as
‘Investment in associate’
13. 1313
127
241 198 183 183 160 100
395
97
272 337 603
84
72
125 99
350
0
100
200
300
400
500
600
700
800
900
2H 13 2014 2015 2016 2017 2018 2019 2020-2025
$m
Bank debt - scheduled repayments Bank debt - amounts to be refinanced Senior notes
Staggered debt maturity(1)
1) Amounts also including debt in unconsolidated wholly owned subsidiaries
2) Including currently undrawn amounts available under revolving credits
• Several debt facilities have recently been refinanced at attractive terms
» 8.5% Senior notes due 2013 refinanced with $350 mill. convertible notes due 1Q 2018
» West Polaris refinanced with $420 mill. of bank debt with maturity in 1Q 2018
» West Hercules refinanced with $375 mill. of bank debt with maturity in 2Q 2019
• New $475 million loan facility in connection with the acquisition of West Linus
» Maturity in 2Q 2019
Ultra-deepwater rig West Taurus
will be refinanced later this year
(2)
14. 1414
4 x 4,800 teu container vessels
• Expected delivery 4Q13 - 2Q14
• $161m remaining investment
• $147m available in a bank facility
Newbuilding overview
4 x 8,700 teu container vessels
• Expected delivery in 3Q14 – 1Q15
• $306m remaining investment
• Debt will be arranged in due course
Jack-up drilling rig
• Expected delivery in 4Q 2013
• $405m remaining investment
• $405m available in a bank facility
52
462
256
102
0
50
100
150
200
250
300
350
400
450
500
3Q 2013 4Q 2013 2014 2015
$ mill.
Committed financing Remaining ship yard installments
15. 1515
Covenant compliance
1) Including $204 million in available undrawn credit lines with maturity in excess of .12 months
2) Excluding short-term portion of long-term debt
3) Including $145 million of deferred equity
Free cash(1)
> $25m $245m
Working capital(2)
> 0 $74m
Book equity ratio(3) > 20% 42%
Minimum Value Clauses (where applicable) In compliance
Ship Finance has never experienced any violations of bank covenants,
despite the volatility in the shipping and offshore markets
16. 1616
Summary
1) EBITDA is a non- GAAP measure and includes assets in 100% owned subsidiaries classified as 'Investment in associates'. For more details please see 2Q-13 press release Appendix 1: Reconciliation of Net
Income to EBITDA.
2) Quarterly cash dividend, annualized / SFL share price $15.69 (August 27, 2013)
• Reported net income of $25m ($0.29/share) in the first quarter
» EBITDA(1)
equivalent cash flow of $122 million ($1.41/share)
• Declared first quarter dividend of $0.39 per share
» 9.9% dividend yield(2)
• Premium access to capital
» More than $2 billion has been raised last 12 months
» Bank debt, bonds, convertible notes and equity
• Growth opportunities in multiple segments
» Acquisition of West Linus in combination with 15-year bareboat charter
» Contracted four 8,700 teu container vessels
